The National Society of Accountants has called on the IRS to immediately revise the Circular 230 provision that states that tax preparers may not give tax advice that is not directly related to prepared tax returns.
“Although we are firmly supportive of the changes proposed to be made by this rulemaking, we are extremely disappointed that no changes are proposed to be made to §10.3(f)(3),” NSA President Harlan Rose wrote in a November 16 letter to IRS Acting Commissioner Steven T. Miller. The provision, included in Circ. 230 in 2010 after a comment period and hearing on the matter, provides that an RTRP’s authorization to practice under this part also “does not include the authority to provide tax advice to a client or another person.”
“Many NSA members meet with clients over the course of the year to discuss various matters that may have tax implications,” the letter continued. “These matters may involve pre-transaction advice … or matters as mundane as ensuring compliance with existing tax laws. Yet, on the face of it, §10.3(f)(3) would say that a registered tax return preparer does not have the authority to provide this tax advice because, strictly speaking, it is not necessary to prepare a tax return.”
“We are mindful that the preamble to the current regulations provides that this provision was inserted to make clear that the tax preparation privilege under §7525 of the Code does not apply to communications between a taxpayer and a registered tax return preparer because advice provided by a registered tax return preparer is intended to be reflected on a tax return and is not intended to be confidential or privileged. With all respect, the sentence in §10.3(f)(3) does not address the confidential or privileged nature of any advice. Rather, it states that registered tax return preparers do not have ‘the authority to provide tax advice to a client.’”
“This is unfair, unreasonable, and should be modified now, not in the next iteration of Circular 230,” Rose wrote.
Added NSA executive vice president John Ams, “They ask preparers to pay to register and take a test but they can’t give [such] advice? Let’s fix this now.”
Ams also added that NSA has received no response from the IRS yet, but anticipates that there will be dialog with the service soon.