Ethical Considerations

AuthorW. Patrick Cantrell
Ethical Considerations
Practice before the IRS
I. Background Material
A. Governing Regulations
Title 31 of the U.S. Code authorizes the Secretary of the Treasury to reg-
ulate lawyers, certified public accountants, enrolled agents, enrolled
actuaries, and others who practice before the IRS.1 Regulations under
31 U.S.C.§330 are promulgated in 31 C.F.R. part 10 and are reprinted
as Treasury Department Circular 230.2
B. Director of the Office of Professional Responsibility (OPR)
The OPR director is appointed by the Commissioner. It is the director’s
responsibility to act upon all applications for enrollment to practice
before the IRS. He or she also presides over all matters involving dis-
ciplinary proceedi ngs.3
C. Definition of Practice
“Practice” includes all matters connected with a presentation to the
IRS or any of its employees relating to a client’s rights, privileges, or
liabilities under any law or regulation administered by the IRS.4
D. Parallel Autho rities
In addition to Circular 230, practitioners who are lawyers or CPAs must
also observe the rules of their respective professional organizations.
These rules are contained in the American Bar Association (ABA)
Model Rules and the American Institute of Certified Public Accoun-
tants (AICPA) Code of Professional Conduct. These professional asso-
ciation rules overlap with, but are not identical to, the rules contained
in Circular 230.
II. Persons Entitled to Practice
A. Persons Covered by Circular 230
The rules contained in Circular 230 govern the recognition of lawyers,
certified public accountants, enrolled agents, and other persons repre-
senting clients before the Internal Revenue Service.
B. Authority to Practice
Lawyers and CPAs who are not under suspension or disbarment may
practice before the IRS. Enrolled agents and enrolled actuaries may also
practice. Practice by enrolled actuaries is limited to matters involving
qualified and nonqualified employee plans. Government employees
may not practice before the IRS.5
C. Enrolled Agents (EAs)
Any person who successfully passes a written examination adminis-
tered by the IRS, demonstrating special competence in tax matters, may
be granted enrollment status. Former IRS employees may also be granted
enrollment status if they meet certain conditions. For example, they must
apply for enrollment within three years of leaving the IRS’s employ, and
they must have been employed there for five continuous years in a posi-
tion that required interpreting the Internal Revenue Code (I.R.C.) and
regulations.6 Applicants who have been approved will receive from the
director of practice an enrollment card, sometimes called a “treasury
card.” These cards must be renewed every three years.7 This three-year
period is referred to as the “enrollment cycle.
D. Continuing Education for EAs
To qualify for renewal enrollment, EAs must complete a minimum of
sixteen hours of continuing education in each year of an enrollment
cycle. Continuing education courses must be conducted by a qualify-
ing sponsor.8
E. Nonlicensed Representation
A person who is not a lawyer, CPA, or EA may represent a taxpayer
before the IRS if he or she fits within one of the following situations:
1. Individuals may appear on their own behalf before the IRS.
2. An individual may represent a member of his or her immediate
3. A regular full-time employee of an individual employer may
represent the employer.
4. A general partner or a regular full-time employee may represent
a partnership employer.
5. An officer or employee of a corporation may represent the
corporation (or similar organization).
Client Issues 409
6. A fiduciary may represent a trust, estate, and the like.
7. Any individual may prepare a tax return, appear as a witness for
the taxpayer before the IRS, or furnish information at the request
of the IRS.9
III. Client Issues
A. Fees
A tax practitioner cannot charge an “unconscionable” fee for repre-
senting a client before the IRS. Moreover, practitioners may not (with
certain exceptions) charge contingency fees for services rendered in
connection with any matter before the IRS. “Matter before the IRS”
includes tax planning or advice rendered in connection with prepara-
tion of claims for refund. One of the exceptions to this general rule is
where such a claim is filed within 120 days of a taxpayer’s receipt of
notice of examination of the original retur n.10
Tax practitioners may disseminate the following information to
the general public:
1. Fixed fees for specific routine services;
2. Hourly rates;
3. A range of fees for particular services;
4. Fees charged for an initial consultation; and
5. Responsibility for costs incurred.
B. Advertising and Solicitation
In any kind of advertising or other public communication, a tax prac-
titioner may not use statements that are false, deceptive, or misleading
in any way. Enrolled agents may not use the word “certified.” How-
ever, they may use the terms “enrolled” or “admitted to practice,” or
the designation “EA.” Tax practitioners may not make uninvited ver-
bal solicitations of business regarding IRS matters, including in-person
contacts and telephone communications, if such solicitation would vio-
late state or federal law. All permitted solicitations must clearly identify
the source of the information used in choosing t he recipient.11
It is a violation for a practitioner to persist in attempting to contact
a prospective client if such client has made it known that he or she
does not wish to be solicited. In the case of a radio or television ad, the
practitioner is required to retain a copy of the actual audio or video
transmission. In the case of direc t mailing, the practitioner must retain
a copy of each mailing along with a list of recipients. All such copies
must be retained for three years.12
C. Conflicts of Interest
A tax practitioner is expressly forbidden to represent conflicting inter-
ests in his or her practice before the IRS. The only exception to this

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