R4 Flashcards
(11 cards)
Circular 230
IRS publication addressing:
(1) Rules governing authority to practice before IRS
(2) Duties and restrictions relating to practice before the IRS
(3) Sanctions for violations of the regulations
(4) Rules applicable to disciplinary hearings
(1) Rules governing authority to practice before IRS
Unlimited representation rights (do not have to be the one who prepared or signed the return): attorney, CPA, enrolled agent
Limited: enrolled actuaries. retirement plan agents, registered tax return preparers
ALL must be registered with IRS
(2) Duties and restrictions relating to practice before the IRS
Information: can withhold if in good faith to be privileged, must inform IRS if they know of anyone possessing the IRS requested information
Due diligence is required: reasonable reliance is okay if the work of others
Prompt disposition of pending matters
No assistance allowed from suspended IRS employees
No notary allowed
Fees cannot be unconscionable or contingent
Duty of confidentiality with clients
Promptly return client records
- if there is a fee dispute causing the client to not return records, must:
(1) return records that must be attached to the return
(2) give client access to review and copy records if necessary to comply with tax obligations
No conflict of interest unless practitioner can competently represent client, no state or federal laws against it, or client waives it and gives wren consent
No false or misleading solicitation (copies of communication must be retained for 36 months
Cannot endorse or negotiate refund checks given by IRS (can hold for safekeeping)
Required competence
Best practices for tax advisors
(1) provide high-qualify representations
(2) communicate terms of engagement
(3) conclusions supported by law
(4) advise clients about conclusions reached
(5) act fairly and with integrity
(6) ensure all firm members follow these procedures
Practitioners can rely on information given by client unless it appears to be incorrect (then reasonable inquiries). If no inquiries, CPA risks getting a tax preparer penalty fee
Federal Tax Matters
Matters concerning application or interpretation of:
(1) revenue provision of IRC
(2) any law provision impacting obligations under the IRC
(3) any law or regulation administered by IRS
(3) Sanctions for violations of the regulations
Secretary of the Treasury may publicly suspend any practitioner from practice before the IRS if: incompetent, fails to comply with regulations, willfully and knowingly mislead or threatens client or prospective client
May petition for reinstatement after 5 years following suspension
PTIN
IRS Prepared Tax Identification Number, authorizes someone to prepare federal tax returns
No CPA license is required
Enrolled agent, CPA, Attorney, annual filing season program participant
Tax Return Preparer
Anyone who prepares or employs others persons to prepare for compensation any required federal tax return or claim federal tax refund
Must register with IRS and obtain PTIN
NOT a tax return preparer
Assistance (data entry)
Prepares return or claim for refund for an employer or as a fiduciary (trustee, executor)
Preparer’s compliance of authority
Sources to determine tax treatment include:
Provision of IRC and other statutory provisions
Revenue rulings and procedures, tax treaties
Court cases
Listed transactions, reportable transactions, tax shelters
