Circular 230
Circular 230 is the Treasury Department publication that governs the practice of tax professionals before the IRS, establishing standards of conduct, penalties for violations, and rules for written tax advice.
Exam Tip
Circular 230 is HEAVILY tested on Part 3. Key topics: due diligence, conflicts of interest, return of client records, advertising rules, contingent fees (generally prohibited for original returns).
What is Circular 230?
Circular 230 (31 CFR Part 10) is the Treasury Department's regulations governing who may practice before the IRS and the rules they must follow. It applies to EAs, CPAs, attorneys, and other authorized practitioners.
Key Provisions
| Topic | Rule |
|---|---|
| Due diligence | Must exercise due diligence in preparing returns and documents |
| Conflicts of interest | Must obtain written informed consent from all parties |
| Client records | Must return client records upon request (even if fees unpaid) |
| Advertising | Cannot make false or misleading claims |
| Contingent fees | Generally prohibited for original returns |
| Written tax advice | Must consider all relevant facts and not rely on unreasonable assumptions |
Penalties for Violations
- Censure (public reprimand)
- Suspension from practice
- Disbarment from practice before IRS
- Monetary penalties
Exam Alert
Circular 230 is HEAVILY tested on EA Part 3. Focus on: due diligence requirements, conflicts of interest (written consent), return of client records (must return even if fees are owed), advertising rules, and contingent fees (prohibited for original returns but allowed for amended returns and claims for refund).
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Related Terms
Enrolled Agent (EA)
An Enrolled Agent is a federally authorized tax practitioner who has earned the privilege of representing taxpayers before the IRS by passing the Special Enrollment Examination (SEE) or through IRS experience.
Power of Attorney (Form 2848)
Form 2848 is the IRS Power of Attorney form that authorizes a qualified individual (EA, CPA, or attorney) to represent a taxpayer before the IRS, including the right to receive confidential tax information.
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