Treasury Updates Final Regulations Governing Written Advice
The Regulations revise the requirements for those who practice before the IRS with regard to written advice, and updates other related provisions of Circular 330. Section 330 of title 31 of the United States Code authorizes the Secretary of the Treasury to regulate the practice of representatives of persons before the Treasury Department (Treasury). The Secretary has published regulations governing practice before the IRS in 31 CFR part 10 and reprinted the regulations as Treasury Department
Circular No. 230 (Circular 230).
Treasury and the IRS have consistently maintained that individuals subject to Circular 230 must meet minimum standards of conduct with respect to written tax advice, and those who do not should be subject to disciplinary action, including suspension or disbarment . In accordance with these principles, the regulations have been amended from time to time to address issues relating to tax opinions and written tax advice. These regulations modify the rules governing written tax advice as well as other related provisions of Circular 230 to ensure that practitioners meet certain standards of conduct when serving as representatives of persons before the IRS and modify the consequences of failing to meet those standards, such as the expedited suspension provisions.
On September 17, 2012, Treasury and the IRS published in the Federal Register (77 FR 57055) a notice of proposed rulemaking (REG-138367-06) proposing to amend Circular 230 by revising the rules governing written tax advice and other related provisions of Circular 230. Previously proposed amendments to the regulations regarding state or local bond opinions also were withdrawn. The proposed regulations sought to eliminate the complex rules governing covered opinions in current §10.35 and to expand the requirements for written advice under §10.37. The proposed regulations also proposed to broaden the requirement for procedures to ensure compliance under §10.36 beyond the opinion writing and tax return preparation context by requiring that an individual who is subject to Circular 230 with principal authority for overseeing a firm’s Federal tax practice take reasonable steps to ensure the firm has adequate procedures in place to comply with Circular 230.
The proposed regulations further sought to clarify that practitioners must exercise competence when engaged in the practice of representing persons before the IRS and that the prohibition on a practitioner endorsing or otherwise negotiating any check issued to a taxpayer in respect of a Federal tax liability applies to government payments made by any means, electronic or otherwise. Additionally, the proposed regulations expanded the categories of violations subject to the expedited proceedings in §10.82 to include failures to comply with a practitioner’s personal tax filing obligations that demonstrate a pattern of willful disreputable conduct and clarified the Office of Professional Responsibility’s scope of responsibility.
Written comments responding to the proposed regulations were received. A public hearing on the proposed regulations was held on December 7, 2012. After consideration of the public comments, the proposed regulations are adopted as revised by this Treasury decision.