Practice Before the IRS

The Director of Practice is responsible for administering and enforcing the regulations governing practice before the IRS. These regulations are published in pamphlet form as Treasury Department Circular 230. The director's responsibility includes making determinations on applications for enrollment to practice and conducting disciplinary proceedings relating to those allowed to practice.

What Is Practice Before the IRS

A person is practicing before the IRS if he or she:

• Communicates with the IRS for a taxpayer regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS,
• Represents a taxpayer at conferences, hearings, or meetings with the IRS, or
• Prepares and files necessary documents with the IRS for a taxpayer.

Just preparing a tax return, furnishing information at the request of the IRS, or appearing as a witness for the taxpayer is not practice before the IRS. These acts can be performed by anyone.

Who Can Practice Before the IRS

Any of the following individuals can practice before the IRS. However, any individual who is recognized to practice (a recognized representative) must file a written declaration with the IRS that he or she is qualified and authorized to represent you. Part II of Form 2848 is a declaration that can be used for this purpose.

Attorneys. Any attorney who is not currently under suspension or disbarment from practice before the IRS and who is a member in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or of the District of Columbia may practice before the IRS.

Certified public accountants (CPAs). Any CPA who is not currently under suspension or disbarment from practice before the IRS and who is duly qualified to practice as a CPA in any state, possession, territory, commonwealth, or in the District of Columbia may practice before the IRS.

Enrolled agents. Any enrolled agent may practice before the IRS.

Enrolled actuaries. Any individual who is enrolled as an actuary by the Joint Board for the Enrollment of Actuaries may practice before the IRS. The practice of enrolled actuaries is limited to certain Internal Revenue Code sections that relate to their area of expertise, principally those sections governing employee retirement plans.

Unenrolled return preparers. Any individual other than an attorney, CPA, enrolled agent, or enrolled actuary who prepares a return and signs it as the return preparer is an unenrolled return preparer. Also, any individual who prepares a return and is not required to sign it as the preparer is considered to be an unenrolled preparer.

Limited practice. An unenrolled return preparer may represent the taxpayer only concerning the tax liability for the year or period covered by the return that he or she prepared. Also, an unenrolled return preparer is permitted to represent taxpayers only before the Examination Division of the IRS and is not permitted to represent taxpayers before the Appeals, Collection, or any other division of the IRS.

Unenrolled return preparers cannot perform the following activities for another taxpayer.

• Sign claims for refund.
• Receive refund checks.
• Sign consents to extend the statutory period for assessment or collection of tax.
• Sign closing agreements regarding a tax liability.
• Sign waivers of restriction on assessment or collection of a tax deficiency.

For more information on these limits, get Publication 470. This publication is actually a separate printing of Revenue Procedure 81-38.

Practice denied. The Director, after giving notice and an opportunity for a conference, can deny eligibility for limited practice before the IRS to any unenrolled preparer or other unenrolled individual (discussed next) who has engaged in disreputable conduct. This conduct includes, but is not limited to, the list of items under Disreputable Conduct shown later under What Are the Rules of Practice.

Other unenrolled individuals. Because of their special relationship with a taxpayer, the following unenrolled individuals can represent the specified taxpayers before the IRS, provided they present satisfactory identification and, except in the case of an individual described in (1) below, proof of authority to represent.

1. An individual. An individual can represent himself or herself before the IRS and does not have to file a written declaration of qualification and authority.
2. A family member. An individual family member can represent members of his or her immediate family. Family members include a spouse, child, parent, brother, or sister of the individual.
3. An officer. A bona fide officer of a corporation (including parents, subsidiaries, or affiliated corporations), association, organized group, or, in the course of his or her official duties, an officer of a governmental unit, agency, or authority can represent the organization he or she is an officer of before the IRS.
4. A partner. A general partner can represent the partnership before the IRS.
5. An employee. A regular full-time employee can represent his or her employer. An employer can be, but is not limited to, an individual, partnership, corporation (including parents, subsidiaries, or affiliated corporations), association, trust, receivership, guardianship, estate, organized group, governmental unit, agency, or authority.
6. A fiduciary. A trustee, receiver, guardian, personal representative, administrator or executor can represent the trust, receivership, guardianship, or estate. See Fiduciary under When Is a Power of Attorney Not Required, later.

Representation Outside the United States

An unenrolled individual can represent any individual or entity before IRS personnel who are outside the United States.

Authorization for Special Appearances

The Director of Practice can authorize an individual who is not otherwise eligible to practice before the IRS to represent another person for a particular matter. The prospective representative must request this authorization in writing from the Director of Practice. However, it is granted only when extremely compelling circumstances exist. If granted, the Director of Practice will issue a letter that details the conditions related to the appearance and the particular tax matter for which the authorization is granted.

The authorization letter from the Director of Practice should not be confused with a letter from an IRS service center advising an individual that he or she has been assigned a Centralized Authorization File (CAF) number (an identifying number that the IRS assigns representatives). The issuance of a CAF number does not indicate that a person is either recognized or authorized to practice before the IRS. It merely confirms that a centralized file for authorizations has been established for the representative under that number.

Who Cannot Practice

In general, individuals cannot practice before the IRS either because they are not eligible to practice, or because they have lost the privilege as a result of certain actions. The following individuals generally cannot practice before the IRS.

1. Individuals convicted of any criminal offense under the revenue laws of the U.S.
2. Individuals convicted of any offense involving dishonesty or breach of trust.
3. Individuals under disbarment or suspension from practicing as attorneys, CPAs, public accountants, or actuaries in any state, possession, territory, commonwealth, or in the District of Columbia, any federal court, or any body or board of any federal agency.
4. Individuals who are disbarred or suspended from practice before the IRS because they:
1. Refuse or have refused to comply with the regulations governing practice before the IRS.
2. Willfully and knowingly mislead or threaten a taxpayer with intent to defraud.
3. Have engaged in conduct or practices that are disreputable (see Disreputable Conduct, later).
5. Individuals whose applications for enrollment to practice before the IRS have been denied.
6. Officers or employees of the U.S. Government or of the District of Columbia.
7. Officers or employees of state governments with authority to act on state tax matters, if their employment may disclose facts or information on Federal tax matters.
8. Any member of Congress or Resident Commissioner (elect or serving) in connection with any matter for which he or she directly or indirectly receives, agrees to receive, or seeks any compensation.

Corporations, associations, partnerships, and other persons that are not individuals. These organizations (or persons) are not eligible to practice before the IRS.

How Does an Individual Become Enrolled

The Director of Practice can grant enrollment to practice before the IRS to an applicant who demonstrates special competence in tax matters by passing a written examination administered by the IRS. Enrollment also can be granted to an applicant who qualifies because of past service and technical experience in the IRS. In either case certain application forms, discussed next, must be filed. An applicant must not have engaged in any conduct that would justify suspension or disbarment by the IRS.

Form 2587. Applicants can apply to take the special enrollment examination by filing Form 2587, Application for Special Enrollment Examination. Parts 4 and 5 of the form should be mailed with the examination fee to the address shown on the form. The amount of the fee is also shown on Form 2587. The form is revised annually and is available in mid-June each year. The form must be returned to the IRS by July 31. To obtain Form 2587, see How To Get More Information, later.

Form 23. Applicants can apply for enrollment by filing Form 23, Application for Enrollment to Practice Before the Internal Revenue Service, with the Director of Practice. The application must include a check or money order in the amount of the fee shown on Form 23. To obtain Form 23, see How To Get More Information, later.

Period of enrollment. An enrollment card will be issued to each individual whose application is approved. The individual is enrolled until the expiration date shown on the enrollment card. To continue practicing beyond the expiration date, the individual must request renewal of the enrollment.

Form 8554. Applicants for renewal of enrollment must file Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service. To qualify for renewal, applicants generally must complete 72 hours of continuing professional education during each 3-year enrollment cycle. See Form 8554 for more information. To obtain Form 8554, see How To Get More Information, later.

What Are the Rules of Practice

An attorney, CPA, enrolled agent, or enrolled actuary authorized to practice before the IRS (referred to hereafter as a practitioner) has the duty to perform certain acts and is restricted from performing other acts. In addition, a practitioner cannot engage in disreputable conduct (discussed later). Any practitioner who does not comply with the rules of practice or engages in disreputable conduct is subject to disciplinary action. Also, unenrolled preparers must comply with most of these rules of practice and conduct to exercise the privilege of limited practice before the IRS. See Publication 470 for a discussion of the special rules for limited practice by unenrolled preparers.

Duties

Practitioners must promptly submit records or information requested by officers or employees of the IRS. When the Director of Practice requests information concerning possible violations of the regulations by other parties, the practitioner must provide it and be prepared to testify in disbarment or suspension proceedings. A practitioner can be excepted from these rules if he or she believes in good faith and on reasonable grounds that the information requested is privileged or that the request is of doubtful legality.

Confidentiality privilege. The confidentiality protection for certain communications between a taxpayer and an attorney (privileged communications) has been expanded to apply to similar communications between a taxpayer and any federally authorized tax practitioner. This new provision is effective for communications occurring after July 21, 1998.

This confidentiality privilege cannot be used in any administrative proceeding with an agency other than the IRS.

Communications that are protected. The protection of this privilege applies only to tax advice given to the taxpayer by any individual who is a federally authorized tax practitioner. Tax advice is advice in regard to a matter that is within the scope of the practitioner's authority to practice. The confidentiality protection applies to communications that would be privileged if between the taxpayer and an attorney and that relate to noncriminal:

• Tax matters before the IRS, or
• Tax proceedings brought in federal court by or against the United States.

Communications regarding corporate tax shelters. This protection of tax advice communications does not apply to certain written communications between a federally authorized tax practitioner and a director, shareholder, officer, employee, agent, or representative of a corporation. It does not apply if the communication involves the promotion of the direct or indirect participation of the corporation in any tax shelter.

Duty to advise. A practitioner who knows that his or her client has not complied with the revenue laws or has made an error in or omission from any return, document, affidavit, or other required paper has the responsibility to advise the client promptly of the noncompliance, error, or omission.

Due diligence. A practitioner must exercise due diligence when performing the following duties.

• Preparing or assisting in the preparation, approving, and filing of returns, documents, affidavits, and other papers relating to IRS matters.
• Determining the correctness of oral or written representations made by him or her to the Department of the Treasury.
• Determining the correctness of oral or written representations made by him or her to clients with reference to any matter administered by the IRS.

Restrictions

Practitioners are restricted from engaging in certain practices. The following paragraphs discuss some of those restricted practices.

Delays. A practitioner must not unreasonably delay the prompt disposition of any matter before the IRS.

Assistance from disbarred or suspended persons and former IRS employees. A practitioner must not knowingly directly or indirectly do the following.

• Employ or accept assistance from any person who is under disbarment or suspension from practice before the IRS.
• Accept employment as associate, correspondent, or subagent from, or share fees with, any person under disbarment or suspension from practice before the IRS.
• Accept assistance from any former government employee where provisions of these regulations or any federal law would be violated.

Performance as a notary. If the practitioner is a notary public and is employed as counsel, attorney, or agent in a matter before the IRS, or has a material interest in the matter, he or she must not engage in any notary activities relative to that matter.

Practice by partners of current and former government employees. A partner of an officer or employee of the executive branch of the U.S. Government, or of an independent agency of the U.S. or of the District of Columbia, cannot represent anyone in a matter before the IRS in which the officer or employee has (or had) a personal or substantial interest as a government employee. Although not discussed here, there are similar and additional restrictions on former government employees.

Negotiations of taxpayer refund checks. Practitioners who are income tax return preparers must not endorse or otherwise negotiate (cash) any refund check issued to the taxpayer.

Disreputable Conduct

Disreputable conduct by a practitioner includes such things as:

• Committing any criminal offense under the revenue laws, or committing any offense involving dishonesty or breach of trust,
• Knowingly giving, or participating in the giving of, false or misleading information in connection with federal tax matters,
• Soliciting employment by prohibited means as discussed in section 10.30 of T.D. Circular 230,
• Willful failure to file a tax return, evading or attempting to evade any federal tax or payment, or participating in such actions,
• Misappropriating, or failing to properly and promptly remit, funds received from clients for payment of taxes,
• Directly or indirectly attempting to influence the official action of IRS employees by the use of threats, false accusations, duress, or coercion, or by offering gifts, favors, or any special inducements,
• Being disbarred or suspended by the District of Columbia or any state, possession, territory, commonwealth, or any federal court, or any body or board of any federal agency,
• Knowingly aiding and abetting another person to practice before the IRS during a period of suspension, disbarment, or ineligibility (maintaining a partnership so that a suspended or disbarred person can continue to practice before the IRS is presumed to be a violation of this provision),
• Contemptuous conduct in connection with practice before the IRS, including the use of abusive language, making false accusations and statements knowing them to be false, or circulating or publishing malicious or libelous matter, and
• Giving a false opinion knowingly, recklessly, or through gross incompetence; or following a pattern of providing incompetent opinions in questions arising under the federal tax laws.

Reprimands, Disbarments, and Suspensions

The Director of Practice may reprimand or institute proceedings to suspend or disbar any attorney, CPA, or enrolled agent who the Director of Practice has reason to believe violated the rules of practice. Except in certain unusual circumstances, the Director will not institute a proceeding for suspension or disbarment against a practitioner until the facts (or conduct) which may warrant such action have been given in writing to that practitioner. Also, before proceedings are instituted, the Director will generally give the practitioner the opportunity to demonstrate or achieve compliance with the rules.

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