Circular 230 best practices.

• Author: Miller, John L.

Circular 230, Section 10.33, on best practices deals with providing advice and preparing a submission to the IRS. This section affects several aspects of tax practice, including clear client communications, the importance of the conclusions reached, acting fairly and with integrity, and having procedures to ensure best practices. Section 10.33 says about best practices:

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(a) Best practices. Tax advisors should provide clients with the highest quality representation concerning Federal tax issues by adhering to best practices in providing advice and in preparing or assisting in the preparation of a submission to the Internal Revenue Service. In addition to compliance with the standards of practice provided else where in this part, best practices include the following:

(1) Communicating clearly with the client regarding the terms of the engagement. For example, the advisor should determine the client's expected purpose for and use of the tax advice and should have a clear understanding with the client of the form and scope of the advice or assistance to be rendered.

(2) Establishing the facts, determining which facts are relevant, evaluating the reasonableness of any assumptions or representations, relating the applicable law (including potential applicable judicial doctrines) to the relevant facts, and arriving at a conclusion supported by the law and the facts.

(3) Advising the client regarding the import of the conclusions reached, including, for example, whether a taxpayer may avoid accuracy related penalties under the Internal Revenue Code if a taxpayer acts in reliance on the advice.

(4) Acting fairly and with integrity in practice before the Internal Revenue Service.

(b) Procedures to ensure best practices for tax advisors. Tax advisors with responsibility for overseeing a firm's practice of providing advice concerning Federal tax issues or of preparing or assisting in the preparation of submissions to the Internal Revenue Service should take reasonable steps to ensure that the firm's procedures for all members, associates, and employees are consistent with the best practices set forth in paragraph (a) of this section.

The steps practitioners should use in providing advice to clients include:

* Establishing the facts;

* Determining relevancy;

* Evaluating reasonableness of assumptions or representations;

* Relating applicable law to relevant facts; and

* Arriving at a conclusion supported by the law and the facts.

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