SECTION -1 PRACTICES & PROCEDURES
Chapter -1 – Practice before the IRS
1) Who is responsible for matters related to Practice and Procedures?
A.
Office Responsible For
1. Office of Professional Practitioner Conduct
Responsibility Disciplinary Proceedings
Sanctionable Acts
2. Return Preparer Office Issuing PTIN’s
Acting on Applications for
Enrollments
Special Enrollment
Examination (SEE)
Administering Competency
Test
Continuing Professional
Education
2) What is Practice before the IRS? -(CRAP2)
Communicating with the IRS on behalf of the Taxpayer regarding
o Taxpayer Rights/Privileges/Liabilities under Laws and Regulations
administered by the IRS.
Representing a Taxpayer
o At conferences/hearings/meetings with the IRS
Preparing, Filing or Submitting Documents to the IRS on behalf of the Taxpayer
Advising on
o Preparation/Filing/Submission of documents to the IRS, Including Tax
Return
Providing a client with
o Written Tax Advice on one or more Federal Tax returns
SECTION -1 PRACTICES & PROCEDURES
3) Who can Practice before the IRS?
A. Any Individual may for Compensation
a. Prepare or Assist with the Preparation of Tax Return
b. Claim for Refund
c. Appear as witness before the IRS
d. Furnish Information at the request of IRS Officers or Employees
The following Individuals are allowed to practice according to the Regulations
contained in CIRCULAR 230
Attorneys CA EA
CPA’s
I U
Enrolled Agents
Enrolled Retirement Plan Agents
Enrolled Actuaries
Appraisers
Unenrolled Return Preparers
Low Income Taxpayer Clinic Students Interns
IRS AFSP (Annual Final Season Program) Preparers
CAUTION: The above Enrolled Individuals must not be currently under Suspension or
Disbarment.
SECTION -1 PRACTICES & PROCEDURES
4) What is the Scope of Unenrolled Return Preparers?
A.
Dos DON’Ts
May represent Taxpayers only May not represent Taxpayers
before Revenue Agents or before Appeal Officers or Revenue
Customer Support Officers or Council of the IRS or
Representatives of the IRS Department of Treasury.
He is an Individual Other than May not Execute Closing
Attorney or CPA or EA or Any Agreements.
Other Authorized preparer: May not execute Extension of
Who prepares and signs Statutory Period for Tax
Tax Returns as Paid Assessment or Collection of Tax
Preparer May not execute Waivers or Sign
Who prepares a return but any document on behalf of the TP
is not required to sign the Even if he completes Form
Return 8821(Tax Information
Authorization) he Cannot
Represent Taxpayer before the IRS
5) Who is Denied from Practice?
A.
An Individual who is involved in Incompetence and Disreputable Conduct
are not allowed to Practice before the IRS
Being convicted of any Criminal Offence under the Internal Revenue
Laws involving Dishonesty or Breach of Trust.
Knowingly giving False or Misleading Information in connection with
Federal Tax Matters
Soliciting of Employment
Willfully Failing to File a Federal Tax Return
Evading or Attempting to Evade any Federal Tax Payment
Misappropriating or Failing to Properly and Promptly Remit Funds
received from clients towards Payment of Taxes to the IRS or State or
Local Tax Departments
Directly or Indirectly Attempting to Influence the Official Actions of the
IRS Officer or Employee using
Threats
Coercions or Duress
False Accusation
SECTION -1 PRACTICES & PROCEDURES
Offering Gifts
Personal Favors
Being Disbarred or Suspended for practice as an Attorney or CPA or EA
or Actuaries etc
Knowingly Aiding and Abetting another person to practice before the IRS
during the period of Suspension or Disbarment or Ineligibility of that
other person
Using Abusive Language or Statements
Circulating or Publishing False or Malicious Matters related to the
practice before the IRS
Giving a False or Incompetent Opinion Knowingly or Recklessly or
through Gross Incompetence
Practices with an Intent to Defraud Willfully and Knowingly
Under the above situations the U.S Department of Treasury after Notice to the
practitioner and an opportunity for proceeding may Censure or Disbar or Suspend an
Individual from Practice before the IRS as per Circular 230 on the grounds of
Incompetent or Disreputable Conduct.
6) Who else can represent the Taxpayer?
A) The following Individuals may represent the Specified taxpayer before the IRS
because of their Special Relationship with the Taxpayer.
Other Individuals Comments
a. Taxpayer Taxpayer Himself or Herself
No written declaration is required
b. Family Member Immediate Family includes:
o Parents
o Brother or Sister
o Spouse
o Kids
c. Officer Of Corporation (Parents or
Subsidiary Affiliate)
Of Association or Organized
Group
Of Government (Unit or Agency or
Authority)
d. Partner Only General Partner
SECTION -1 PRACTICES & PROCEDURES
e. Employee Regular full-time employee
Note:
Fiduciary – He is the Trustee or Executor or Administrator or Guardian
or Personal Representative who stands in the Position of Taxpayer but
not as Representative before the IRS.
An Individual may represent an Individual or Entity Outside of US before
an officer of IRS if such representation also occurs outside of US.
Example: FBAR or FATCA cases
7) Who may not practice before the IRS?
A.
a. Individual who are Not Eligible or who have lost the privilege as a result of
certain actions may Not Practice before the IRS
b. Individuals lose their eligibility to practice before the IRS in the following
ways:
Not meeting the Requirement for Renewal for Enrollment (Continuing
Professional Education)
Being Suspended or Disbarred or Determined Ineligible for practice by
the office of professional responsibility for Violating Circular 230
Losing State License to Practice as an Attorney or CPA
Requesting an Enrolled Agent to be in Inactive Retirement Status
Enrolled Individuals who are on Inactive Roster for a period of Three
Years if he or She:
Fails to respond to notice on (Reg: Renewal) time
Fails to file the Renewal application on time
Does not satisfy the Renewal requirements
Note: Corporation or Associations or Partnerships or Other Persons are Not Individual
and hence they are Not Eligible to practice before the IRS.
8) Can a Suspended or Disbarred Practitioner practice again?
A.
1. Practitioners who are Suspended or Disbarred in a disciplinary proceeding
are Not Allowed to represent taxpayers During the Period of Suspension or
Disbarment
2. A Practitioner can seek Reinstatement from the Office of Professional
Responsibility at the earlier of specified period of Suspension or After 5
years of Disbarment
SECTION -1 PRACTICES & PROCEDURES
3. The Office of Professional Responsibility may grant Reinstatement:
If the Practitioner Future Conduct is not likely to be in violation of
Regulation and
Granting the Reinstatement is Not Contrary to Public Interest
Subject to other conditions for a Reasonable Period.
9) What are the duties (and restrictions) of Individuals subjects to Circular
230?
A.
Individuals subject to Circular 230 must promptly submit Records or
Information sort by the proper and lawful request from officers and
Employee of IRS Except for Privileged Information.
An Enrolled Individual who knows that His / Her client has not complied
with the Revenue codes (or) has made an Error or Omission on the Tax
Return has the responsibility to Advice the Client Promptly on Non-
compliance or Error or Omission and its Consequences.
Individuals subject to Circular 230 must exercise Due Diligence when
performing the following duties:
o Preparing or Assisting in the preparing or approving or filing of
Returns or Documents or Affidavits or Other Papers relating to IRS
Matters.
o Determining the Correctness of Oral or Written Representation
made:
To Clients
To IRS
10) What are the Restrictions of Individuals who are subject to Circular 230?
A.
They must not Unreasonable Delay the prompt disposition or Submission
of any matter before the IRS.
They must not knowingly directly or Indirectly Accept Assistance from
Disbarred or Suspended persons or Ex (Former) IRS employees.
They must not Act as Notary Public taking Acknowledgements certifying
papers or administering Oaths for any matters related to IRS.
They must not Endorse or Negotiate, or Encash Refund Check issued for a
Client or Taxpayer to the Enrolled Individual.
SECTION -1 PRACTICES & PROCEDURES
11) What is Taxpayer Advocate Service (TAS) IRS Pub:1546 (5107)?
A.
It is an Independent Organization within the IRS that helps Taxpayers
and protects Taxpayer rights.
They ensure that every Taxpayer is treated fairly and He knows and
understand his Rights.
They resolve problems the taxpayer can’t resolve with the IRS this service
is Free and Taxpayer will be assigned an Advocate.
TAS helps Taxpayer If:
o If IRS is Causing Financial Difficulty for taxpayer or his family or
his Business
o Taxpayer tried to contact IRS repeatedly but got No Response from
IRS
o Form 911 is filed to get assistance from TAS
12) What is Not Practice?
A.
Tax Preparation
Simply Furnishing Information
Appearing as Witness
Representing at Court
13) What is AFSP?
A.
AFSP stands for Annual Filing Season Program
AFSP is a Voluntary program design to encourage tax return prepares to
participate in continuing education (CE courses)
Return Preparers who complete AFSP will be given Record of Completion
to differentiate themselves in the market place and they will also be
included in the public data base of IRS used by taxpayer for searching
Qualified Tax Return Preparers.
The Directory of Federal Tax Return Preparers with Credentials and
select qualifications show the list of Enrolled Individuals who are actively
in practice and who have completed AFSP.
AFSP has 18 hours of continuous education, including
o 6 hours Annual Federal Tax Law Refresher (AFTR) course with
test.
o 10 hours on other federal law topics
o 2 hours on Ethics
The Enrolled Individuals are Exempt from 6 hours Federal Law Refresher
Course. However, they need 15 hours of continuing education each year
to obtain AFSP Record of Completion.
SECTION -1 PRACTICES & PROCEDURES
The 15 hours of continuing education includes:
o 3 hours on Federal Tax Law updates
o 10 hours on Other Federal Tax Law topics
o 2 hours on Ethics
Enrolled Individuals like Attorney’s or CPA’s or EA’s have Unlimited
Representation Rights and can represent their clients on Advanced Tax
matters like Audits, Appeals, Payment or Collection Process.
However, AFSP Holders will have Limited Representation Rights which
means they can represent clients for whom they prepare and sign but
only before Revenue Agents or Customer Service Representatives and
Taxpayer Advocate Services.
The following Individuals are Exempt from AFTR course:
o Enrolled Individuals
o SEE Part 1 Passed candidates in Past 2 years
o State Based Tax Return Preparers (Program Preparers)
Eg:-Oregon Board of Tax Practioner, California Tax
Educational Council, Mary State Board of Individual Tax
Preparers.
RTRP (Registered Tax Return Preparers) test passed candidates.
VITA (Volunteers Income Tax Assistant) or
Others Under TCA (Tax Compliance Act)
Additional Questions/Updates To be Included:-
14) What is the most significant benefit to Unenrolled Preparers of obtaining the
AFSP Record of Completion?
Rev. Proc. 2014-42 provides that Unenrolled Preparers with a Record of Completion
for the filing season through which they prepared tax returns and claims for refunds
on behalf of taxpayers may also represent those taxpayers before the IRS during an
audit of the respective returns.
Requirements to obtain the AFSP Record of Completion. Under Rev. Proc. 2014-42, tax
preparers may qualify to obtain the Annual Filing Season Program's Record of
Completion by meeting the following requirements each year.
1. Completion of an Annual Federal Tax Refresher (AFTR) Course
2. Completion of additional continuing education.
SECTION -1 PRACTICES & PROCEDURES
3. Consent to adhere to specific practice obligations outlined in Circular 230
15) Which Individuals are maintained in a Rooster and Made Public by IRS?
A) The Internal Revenue Service maintains and may make available for public inspection
a roster of:
1. Enrolled Agents, including individuals:
Granted active enrollment to practice.
Whose enrollment has been placed in inactive status for failure to meet
the requirements for renewal of enrollment.
Whose enrollment has been placed in inactive retirement status.
Whose offer of consent to resign from enrollment has been accepted by
the IRS
2. Individuals (and employers, firms or other entities, if applicable) censured,
suspended, or disbarred from practice before the IRS or upon whom a monetary
penalty was imposed
3. Disqualified Appraisers
4. Enrolled Retirement Plan agents, including individuals:
Granted active enrollment to practice
Whose enrollment has been placed in inactive status for failure to meet the
requirements for renewal of enrollment
Whose enrollment has been placed in inactive retirement status
Whose offer of consent to resign from enrollment has been accepted by the
IRS
5. Qualified Continuing Education Providers, including providers:
Who have obtained a qualifying continuing education provider number; and
Whose qualifying continuing education number has been revoked for failure to
comply with the requirements of this part.
16) What are the True Statements regarding the "Voluntary" Annual Filing Season
Program (AFSP) that the IRS launched mid-year 2014?
A) The requirements for obtaining the Annual Filing Season Program Record of
Completion and the changes related to limited representation of taxpayers by unenrolled
preparers before the IRS during audits are outlined in Rev. Proc. 2014-42.
The Annual Filing Season Program is voluntary and no tax return preparer is required
to participate.
Further, any individual may apply for and receive an Annual Filing Season Program
Record of Completion if he or she meets the requirements of this revenue procedure.
SECTION -1 PRACTICES & PROCEDURES
The AFSP does not restrict any individual from preparing and signing tax returns and
claims for refund nor does it change the requirement that paid tax return preparers
must obtain a Preparer Tax Identification Number (PTIN)
An Annual Filing Season Program Record of Completion is NOT required for an
Attorney,
CPA,
EA,
Enrolled Actuary, or
Enrolled Retirement Plan Agent to represent taxpayers before the IRS as
described in Section 10.3 of Circular 230.
The AFSP does not in any way affect or limit the ability of attorneys, CPAs, or EAs to
represent taxpayers before the IRS.
The rules governing the practice of such persons before the IRS are set forth in
Circular 230.
17) What are the True Statements regarding an Individual who fails to meet the
requirements of Eligibility for Renewal of Enrollment to Practice before the IRS?
An individual who fails to meet the requirements of eligibility for renewal of
enrolment will be notified of his noncompliance at his enrolment address by
first class mail.
The notice will state the basis for the determination of noncompliance and will
provide the individual an opportunity to furnish information in WRITING
relating to the matter WITHIN 60 DAYS of the date of the noncompliance
notice.
An individual will be placed on the inactive roster for a period of three years, if
he does the following:-
Fails to respond timely to the notice of noncompliance with the renewal
requirements.
Fails to file timely the application for renewal of enrollment.
Does not satisfy the requirements of eligibility for renewal of enrollment.
Inactive individuals must file an application for renewal and satisfy all
requirements for renewal within 3 years of being placed on the inactive roster.
After 3 years, he will be removed from the roster and the enrollment or
registration terminated.
SECTION -1 PRACTICES & PROCEDURES
18) When should the Internal Revenue Service file Supplemental Charges, by
amending a complaint with the permission of the Administrative Law judge
against the Respondent?
A) In general, the IRS may file supplemental charges, by amending the complaint with
the permission of the Administrative Law Judge, against the respondent (a person
against whom complaint is field), If EITHER of the following applies:
1. Giving False Information: It appears that the respondent, in the answer, falsely and
in bad faith, denies a material allegation of fact in the complaint, or states that the
respondent has insufficient knowledge to form a belief, when the respondent
possesses such information.
2. Presenting False Testimony: It appears that the respondent has KNOWINGLY
introduced false testimony during the proceedings against the respondent.
