Circular 230
1-64.
- Best practices are discussed in Subpart B, § 10.33.
- The return of client’s records is discussed in Subpart B, § 10.28.
- Tax return positions are discussed in Subpart B, § 10.34.
- Due diligence is discussed in Subpart B, § 10.22.
Circular 230
1-65. a. SSTS No. 1. In preparing a tax return, a member should have a good-faith belief that a recommended position has a realistic possibility of being sustained if challenged; otherwise such a position should not be recommended by the member.
b. SSTS No. 4. A member may prepare tax returns that involve the use of the taxpayer’s estimates if it is impractical to obtain exact data and if the estimated amounts appear reasonable to the member.
c. SSTS No. 6. The member must advise the taxpayer promptly, whether or not the member prepared or signed the return in question, when he or she learns of an error in a previously filed tax return, an error in a return that is the subject of an administrative proceeding, or a taxpayer’s failure to file a required return. However, the member is neither obligated to inform the IRS of the situation nor may he or she do so without the taxpayer’s permission, except as provided by law.
Pages 22–25
1-66. a. Lowell Bar Association v. Loeb. The preparation of “simple” tax returns did not constitute the unauthorized practice of Massachusetts law because tax return preparation could not be identified as strictly within the legal discipline.
b. Bercu. The court held that Bercu could have provided tax advice if it had been incidental to the tax return work he regularly performed for his clients.
c. Sperry v. Florida. The U.S. Supreme Court held that a Federal statute that admitted nonattorneys to practice before Federal agencies (in this case, the Patent Office) took precedence over state regulation, thus CPAs and EAs were not engaged in the unauthorized practice of law when they were giving tax advice.
Pages 34-35
1-67. False. See Circular 230, § 10.29.
1-68. True. See Circular 230, § 10.7.
1-69. These fees would all be contingent fees if the IRS challenges a tax position. Under Circular 230 § 10.27 A, Contingent fee is any fee that is based, in whole or in part, on whether or not a position taken on a tax return or other filing avoids challenge by the IRS or is sustained either by the IRS or in litigation. A contingent fee includes a fee that is based on a percentage of the refund reported on a return, which is based on a percentage of the taxes saved, or that otherwise depends on the specific result attained.
Circular 230
1-70. Circular 230, § 10.32 (Practice of law) states that, “Nothing in the regulations in this part may be construed as authorizing persons not members of the bar to practice law.”
Circular 230