Ethics
Circular 230 The Guide to Ethical Standards
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Disclaimer
This session is educational in nature and should not be
construed as tax advice.
The information presented is believed to be accurate, but is
based on very recent legislation that is changing with
agency guidance.
We have no obligation to update attendees, and we
encourage you to monitor authoritative guidance for
updates.
Every client situation is unique and tax professionals should
carefully consider the facts and circumstances of each
client in applying the tax laws.
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Your Presenters
Robin Gervais, EA , NTPI Fellow
• Intuit Manager and Tax Pro Instructor
• QuickBooks ProAdvisor
• Tax Practice Owner
• Small Business Owner for over 20 years
Steve Eubanks, EA, NTPI Fellow
• Intuit, Senior Tax Analyst Programmer, with Intuit since 1990
• Expertise: individual, corporate, non-profit, and depreciation
• Small Tax Practice Owner
Intuit Confidential and Proprietary
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Ethics – Circular 230
The Guide to Ethical Standards
What is the name of the document regulating
practice before the IRS?

A. Form 2848

B. Annual Filing Season Program

C. Circular 230

D. IRS does not have one.
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What are Ethics?

Defined by Merriam-Webster
1. A set of moral principles: a theory or system of moral values.
2. The principles of conduct governing an individual or a group.
https://www.merriam-webster.com/dictionary/ethic
Circular 230
 History

Title 31 United States Code section 330 (which is the
money and finance section of the code and not in Title
26 which is the IRC.)

In 1941, a series of statutes were combined into a
single governing circular
What does Title 31 do?

This title gives the authority to Treasury via the Office of Professional
Responsibility (OPR) to regulate the practice of representatives by:
Determining the “Fitness to Practice”
•

What is Fitness?
•
Fitness means good character,
•
good reputation,
•
the necessary qualifications to provide a valuable
service to clients,
•
and competence to advise and assist them in
presenting their cases.
Overview of the Subsections

Subpart A – Rules Governing Authority to Practice

Subpart B – Duties and Restrictions Relating to Practice
Before the IRS

Subpart C – Sanctions for Violation of the Regulations

Subpart D – Rules Applicable to Disciplinary Proceedings

Subpart E – General Provisions
Subpart A: What is Practice §10.2(a)4?
 Corresponding
and communicating with the IRS.
 Representing
a taxpayer at conferences, hearings,
or meetings with the IRS.
 Preparing
and filing documents with the IRS on
behalf of a taxpayer.
 Rendering
written advice with respect to any entity,
transaction, plan or arrangement, or other plan or
arrangement having a potential for tax avoidance or
evasion.
Subpart A: Who Is Subject to Circular 230?
 Practitioners
defined (§10.3):

Attorneys

CPAs

Enrolled Agents

Enrolled Actuaries

Enrolled Retirement Plan Agents

Registered Tax Return Preparers ***
RTRP and the Loving Case

The Loving Case overturned the ability of the
IRS to give itself the authority to regulate tax
professionals.

Not all tax preparers are under Circular 230.

Revenue Procedure 2014-42 established the
Service’s Voluntary Annual Filing Season
Program (AFSP).
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POLLING QUESTION #2
What type of practitioner are you?

A. Certified Public Accountant (CPA)

B. Enrolled Agent (EA)

C. Annual File Season Practitioner (AFSP)

D. Other (State Registered Preparer/
Enrolled Actuary/ERPA/Lawyer)

E. Non-Credentialed
Subpart B:
Duties and Restrictions
Relating to Practice

Provide information lawfully requested by IRS.

Advise clients promptly of any non-compliance.

Diligence as to accuracy.
Subpart C: Sanctions for Violations

Defines incompetence and disreputable conduct in
section 10.51.

Gives OPR exclusive authority for all matters
relating to practitioner discipline.
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Subpart D: Rules Applicable to
Disciplinary Proceedings

The practitioner has an opportunity to respond to
correspondence from OPR and should do so in a
timely manner.

If OPR is unsuccessful in negotiating, then
complaint moves on to IRS Chief Council.
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Let’s Deep Dive
Due Diligence and Competence
 Know
the facts
 Know
the relevant tax law
 Match
the facts to the law
Due Diligence and Competence
Form 8867
Tax Cuts and Jobs Act expanded Due Diligence for Head of
Household filing status and Credit for Other Dependents.

The penalty per failure to be diligent has increased to $540 for
returns or claims for refund filed in 2021.
Due Diligence and Competence
Form 8867-
Due Diligence and Competence
Best Practices
 Form
 In
8867
light of the Economic Impact Payment /
2020 Recovery Rebate Credit how do you
handle clients who don’t want to claim a
dependent?
Polling Question #3
What is the penalty per failure to be diligent
when filing the 8867 in 2021?

A. $530POLLING

B. $470

C. $540

D. $490
QUESTION #1
Due Diligence and Competence
14815 Page 1
https://www.irs.gov/pub/irs-pdf/f14815.pdf
Due Diligence and Competence
14815 Page 1 - CONT
https://www.irs.gov/pub/irs-pdf/f14815.pdf
Due Diligence and Competence
14815 Page 2
https://www.irs.gov/pub/irs-pdf/f14815.pdf
Due Diligence and Competence
 A tax
practitioner is required to exercise due
diligence when submitting documents to IRS.
 The
practitioner can rely on third-party
documents.
 The
tax professional cannot ignore facts.
Due Diligence and Competence
Practitioner Insights:
 Reviewing
documents or tax returns?
 Presenting
news to the client.
Due Diligence and Competence
 Standards
in Respect to Signing Tax Returns
§10.34
 Lacks
 Is
reasonable basis
an unreasonable position
 Willful
attempt to understate liability or advise of such
 Frivolous
Due Diligence and Competence
 Competence
§10.35

Requires knowledge

Become Competent!

Ask for help
Conflict of Interest §10.29
 Partnerships
 Divorces
 Audits
Return of Clients Records §10.29
 A tax
practitioner is required to return clients’
records even if the fees have not been paid.
 Client
records don’t include the practitioner’s
work product.
Disclosures §7216

Allowable Disclosures
 Unwritten Allowable
 Written Allowable Third Party Disclosures
FAQ’s for §7216/ Rev Proc 2013-14 and 2013-19
 Disclosure
without consent
 Unauthorized
Disclosure
Best Practices
Safeguarding Client Records

Lock drawers

Lock doors

Complex passwords: 12 alpha numeric & special characters

Password layers

MFA (Multi-Factor Authentication)

Encrypt & backup
Safeguarding Client Records
 Check
PTIN & EFIN activity
 SHRED
EVERYTHING!!!
 Anti-Virus
& Anti-Malware software
Safeguarding Client Records
 Don’t
use free WiFi! Use your
cellphone hotspot
 Secure
 IRS
portal
Pub 4557 – Safeguarding Taxpayer Data
 Written
Security Plan
Safeguarding Client Records
Resource for Written Security Plan NISTIR 7621

Written by: National Institute of Standards and
Technology (NIST) along with US Department of
Commerce.

Appendix D Worksheets
https://nvlpubs.nist.gov/nistpubs/ir/2016/NIST.IR.7621r1.pdf
Polling Question #4
4. How well did this session meet your
expectations?
 A. Significantly exceeded expectations
 B. Slightly better than expected
 C. Met my expectations
 D. Slightly below expectations
 E. Significantly lower than expectations
QUESTIONS
Thank You!
Please take the survey upon exit.
Ethics: Circular 230 The Guide to Ethical Standards
Presented By: Robin Gervais, EA