Circular 230 – Who Is A US Tax Professional?

Circular 230 – Who Is A US Tax Professional?

Circular 230 – Who Is A US Tax Professional?We have read a tremendous amount about the shadowy world of offshore banking, and “asset protection” over the past several weeks, with good reason.  

There has been a proliferation of activity in the area, some of it perfectly legit, and some completely nefarious.

The United States Treasury has very simple criteria for individuals who are authorized to represent US Taxpayers, and they are spelled out in Circular 230, as promulgated by the Internal Revenue Service,  Office of Professional Responsibility [“OPR”]. The provisions of Treasury Circular No. 230 apply to:

• Attorneys
• Certified Public Accountants
• Enrolled Agents

The licensing of any professional who is member of each of these three groups is very easy to verify and you should NEVER retain or hire an individual for advice or representation in connection with a US tax matter without obtaining and verifying the individual’s license status.

Verification of License Status:

Attorneys –fightfraudamerica.com or martindale.com

• The American Bar Association states:
  “It is important, before hiring any lawyer, to contact the lawyer disciplinary agency in the state where the lawyer maintains a business address to confirm that the individual is in good standing as a member of the bar.”

Certified Public Accountants – cpaverify.org

• CPAverify.org is a CPA lookup tool populated by official state regulatory data sent from Boards of Accountancy to a central database. The website represents the first ever single-source national database of licensed CPAs and CPA firms. Determine a CPA or CPA firm’s credentials without having to search each of the 55 Boards of Accountancy website individually.

Enrolled Agents – [email protected]

• Need to verify whether someone is an enrolled agent? You may email requests for enrolled agent status verification directly to [email protected]. Please include the following information in your request:

  • First and Last Name
  • Complete Address (if available)
  • Enrolled Agent Number (if available)

Any Circular 230 Tax Practitioner will also have two additional means to verify their status:

• CAF – which is the designator maintained by the IRS central representation system [formatted as ####-####X]
• PTIN – IRS PTIN Lookup – Anyone with a Preparer Tax Identification Number (PTIN) can prepare a tax return for a client. However, tax return preparers have differing levels of skills, education and expertise.

There are all kinds of academic programs, marketing organizations, credentials, and designations that purport convey some level of tax knowledges. Within the United States, the authorities only recognize those within the ambit of Circular 230. When you consider the retention of an individual or firm for tax advice, always ask – ARE YOU PERSONALLY AUTHORIZED AS A CIRCULAR 230 tax professional. If so, please provide the attorney, certified public accountant or Enrolled Agent license information which is required to to complete IRS Form 2848 – Power of Attorney to represent a taxpayer before the Internal Revenue Service.

The IRS has substantially toughened up the rules for association with unlicensed individuals who procure clients for representation through the use of fraud or deception. Responsible tax practitioners would do well to steer clear of them as if the they were nuclear waste. 

Who is subject to discipline under Circular 230?

• State licensed Attorneys
• Certified Public Accountants authorized and in good standing with their state licensing authority who interact with tax administrative at any level and in any capacity. 
• Persons enrolled to practice before the IRS- Enrolled Agents, Enrolled Retirement Plan Agents, and Enrolled Actuaries.
• Persons providing appraisals used in connection with tax matters (e.g., charitable contributions; estate and gift assets; fair market value for sales gain, etc.).
• Unlicensed individuals who represent taxpayers before the examination, customer service and the Taxpayer Advocate Service in connection with returns they prepared and signed.  
• Licensed and unlicensed individuals who give written advice with respect to any entity, transaction, plan or arrangement; or other plan or arrangement, which is of a type the IRS determines as having a potential for tax avoidance or evasion. For this purposes “written advice” contemplates all forms of written material, including the content of an email, given in connection with any law or regulation administered by the IRS.
• Any person submitting a power of attorney in connection with limited representation or special authorization to represent before the IRS with respect to a specific matter before the Agency.

From Office of Professional Responsibility FAQs 

This section is excerpted “verbatim” from IRS OPR website, which should always be consulted for official information. We are providing it here in an effort to insure that those who not be as familiar have a quick reference.

What is the Office of Professional Responsibility (OPR)?

OPR supports the IRS’s strategy to enhance enforcement of the tax law by ensuring that tax professionals adhere to tax practice standards and follow the law. OPR is the governing body responsible for interpreting and applying the Regulations Governing Practice before the Internal Revenue Service (Treasury Department Circular 230). OPR has exclusive responsibility for practitioner conduct and discipline, including instituting disciplinary proceedings and pursuing sanctions. It functions independently of the Title 26 enforcement components of the IRS.
 

What is Circular 230?

Circular 230 is a document containing the statute and regulations detailing a tax professional’s duties and obligations while practicing before the IRS; authorizing specific sanctions for violations of the duties and obligations; and, describing the procedures that apply to administrative proceedings for discipline. Circular 230 is the common name given to the body of regulations promulgated from the enabling statute found at Title 31, United States Code § 330. This statute and the body of regulations are the source of OPR’s authority. Title 31 seeks to insure tax professionals possess the requisite character, reputation, qualifications and competency to provide valuable service to clients in presenting their cases to the IRS. In short, Circular 230 consists of the “rules of engagement” for tax practice. The underlying issue in all Circular 230 cases is the tax professional’s “fitness to practice” before the IRS.

What does “practice before the IRS” entail?

“Practice before the IRS” comprehends all matters connected with a presentation to the IRS, or any of its officers or employees, relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the IRS. Such presentations include, but are not limited to, preparing documents; filing documents; corresponding and communicating with the IRS; rendering oral and written advice with respect to any entity, transaction, plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion; and representing a client at conferences, hearings and meetings.

Receipt and Review of Complaints: OPR receives referrals about practitioners from a variety of sources. The majority of referrals come directly from IRS field personnel, such as Revenue Agents, Revenue Officers, Special Agents and Appeals/Settlement Officers. OPR also receives referrals from other government agencies, such as the Treasury Inspector General for Tax Administration (TIGTA), the Department of Justice and state licensing authorities. An OPR manager reviews all referrals when they arrive in OPR. If it appears that a violation of Circular 230 has occurred, the manager will assign the case to an attorney or paralegal for communication with the referred individual and for further investigation.

Contact Information For Tax Professional Regulation in the US

Internal Revenue Service
Office of Professional Responsibility
SE:OPR, Room 7238/IR
1111 Constitution Avenue NW
Washington, DC 20224
Fax Number (202) 317-6338

See Also Internal Revenue Bulletin:  2014-27 

I think my business partner is advising his clients to take credits for which they do not qualify. We have never had policies involving supervision or training since we are both licensed and neither of us “manages” the other. Can I be sanctioned for his negligent or reckless actions? Yes. The IRS may designate one or more individuals to be responsible for the firm’s compliance with Circular 230. If you know or should have known of others within your firm who are engaged in a pattern or practice in violation of Circular 230, you could be held accountable for failure to correct the noncompliance, even if it involves individuals who you do not supervise. Treasury Circular No. 230 §10.36.

I am associated with  marketing service that refers representation clients to me for a fee. Is this type of solicitation allowed? Yes, but you must be cautious about the referral service’s solicitation practices and advertising claims. You may not assist or accept assistance from any person or entity who obtains clients using false, fraudulent, or coercive claims or otherwise uses misleading or deceptive advertising. Treasury Circular No. 230 §10.30(d).