The Internal Revenue Service has issued regulations governing practice before the agency.
The final regulations under Circular 230 cover matters such as enrollment procedures, practice by former government employees and their associates, contingent fees, conflicting interests, penalties and suspension. For example, a practitioner is required to obtain written consent to representation from each affected client in order to represent conflicting interests.
The regulations have been modified to provide that failure to sign a return is not considered "disreputable conduct" if the failure is due to reasonable cause and not to willful neglect. In addition, the regulations adopt amendments authorizing the imposition of a monetary penalty in addition to, or in lieu of, any other sanction. The IRS's Office of Professional Responsibility also now has expanded authority to institute expedited suspension proceedings against practitioners who advance frivolous or obstructionist positions.
The Treasury Department has also proposed a separate set of regulations (Reg-138637-07) that would toughen the standards for advising clients and preparing returns. To sign a return, the practitioner needs to have a reasonable belief that the tax treatment of each position more likely than not would be sustained on its merits or that the position has a reasonable basis and has been disclosed to the IRS.
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