The lawyer clarifies the limited rights of unregistered preparers in tax court proceedings (2023)

24. April 2017vonLeslie book 1 Comment

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Taxpayers who have filed a petition with the tax court often still rely on their tax preparers to try to resolve the matter. Most unlicensed tax preparers are not licensed to practice before IRS Counsel attorneys. Despite this, the IRS, in a 2014 Chief Counsel Notice, emphasized that Counsel attorneys should interact with a taxpayer's representative when there is a valid Power of Attorney on file authorizing the representative to act on the taxpayer's behalf.

Last week in noticeCC-2017-007The lawyer explained his previous procedure and discussed issues related to an agent who is an "unregistered return arranger".

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As we previously discussed, after the court denied the service's plan to require unlicensed creators to pass a test and meet continuing education requirements, the service launched a voluntary testing and training program calledAnnual enrollment season program(see e.gSome more updates on the IRS annual filing season program and eligible loan errors).As part of this program, unlicensed preparers complete an 18-hour continuing education course and a federal tax law test. The tax preparer seeking certification of compliance with the annual filing season program must also renew their taxpayer identification number (PTIN) and agree to comply with and be subject to the obligations of Circular 230, which address duties and limitations on exercise before duty, and Circular 230 § 10.51 dealing with sanctions and objectionable conduct. Benefits of participating in the Annual Filing Season Program include membership in a searchable database of preparers and the right to represent taxpayers in audits, but not before appeal, legal counsel, or collections.

This ability to represent is an important advantage for unregistered creators; It was generally available to all signing creators prior to 2015, although the service has since limited representation to those unregistered creators who comply with the annual sign-up season program, the service hoped through its ill-fated mandatory testing to generate interest and demand for what he required and educational regime.

Form 2848 now has a designation specifically for the class of non-enrolled preparers who elect to enter the annual Enrollment Season program; Designation “h” which stands for “Unregistered Returnee”.

The Chief Counsel's statement last week discussed the limitations of these representation rights for unregistered returnees. Above all, representation is still limited to matters relating to the examination of a tax return. A challenge for the service is to draw the line between assisting in an audit matter and a matter going beyond an audit because the taxpayer has filed a petition with the tax court, often with shadow assistance from an unlicensed preparer. Despite the limitations on the powers of representation of unregistered return preparers, the Service has clarified in the most recent Chief Counsel Notice that "where the involvement of an unregistered return preparer is beneficial to the resolution of the case, lawyers with the unregistered return facilitator may preparers work together, in a non-representative capacity, to establish the facts of a case.”

In the notice, Counsel therefore addresses the issue in a practical way. Most tax court cases involve pro se taxpayers, and many court disputes are of fact. My experience is that in many cases involving a third party can be helpful in resolving the case. The 2017 Chief Counsel Notice states that the Preparer may assist the taxpayer in gathering information or substantiating statements on tax returns and that the Counsel's attorneys may allow the Preparer to attend meetings.

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The notice reminds their attorneys to clarify with the taxpayer and the preparer that there is no general authority for the unregistered tax return preparer to represent taxpayers in tax court proceedings and that the attorney has no obligation to communicate with the preparer or the Preparers even include meetings when the preparer is acting abusively or when the preparer's interests conflict with the taxpayer's interests.

There are a few points worth emphasizing in the notice. First, with the increasing reach of special due diligence penalties applicable to eligible loans, it becomes slightly more likely that a conflict between a preparer and a taxpayer can arise. In addition, attorney's communications with unregistered preparers, as with other third parties who are not representatives of a taxpayer, could expose the Service to potential 6103 violations if the communications are made without taxpayer involvement. As such, the notice reminds their attorneys that they should only communicate with the unregistered preparer when the taxpayer is "present either in person or by telephone, or in the capacity of the unregistered tax preparer as a third party or potential witness." As I suspect that taxpayers may not fully appreciate the limited powers of unregistered preparers, the notice also states that "Legal Department attorneys should clarify with both the petitioner and the unregistered tax return preparer that unregistered." Tax refund preparers are not authorized to represent petitioners to the Chief Counsel, even if the petitioner purports to consent to the representation.”


Overall, the Notice appears to be helpful to all parties. As taxpayers become familiar with the limitations associated with creators who have not opted into the annual filing season program, the service encourages what it cannot mandate; that is, the use of preparers who have actually demonstrated a certain minimum level of competency and who demonstrate the additional accountability and visibility associated with the annual login season program. I think that the approach of incentivizing the use of some preparers over others, as long as that incentive is coupled with promoting the goal of good tax administration, rather than lining the pockets of some preparers over others, is a good model for IRS oversight about an industry that plays a key role in tax administration.


Filed under:Circular 230,Return Creation Ordinance

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The lawyer clarifies the limited rights of unregistered preparers in tax court proceedings (1) About Leslie Book

Professor Book is Professor of Law at the Charles Widger School of Law at Villanova University.


  1. The lawyer clarifies the limited rights of unregistered preparers in tax court proceedings (2)Ronald J Hoodsays

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    Apr 30, 2017 at 8:08 p.m

    I think there should be a written notice signed by the taxpayer stating that not only can the unregistered preparer not represent the taxpayer, but there is also no attorney-client privilege. Many taxpayers feel that communicating with tax advisors is privileged when it's not about criminal and fraud matters.


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What are the two exceptions allowing for limited disclosure? ›

These exceptions include: Disclosure to the IRS. Disclosure pursuant to a court order. Disclosure in response to a grand jury or congressional subpoena.

What does Circular 230 allow a tax preparer to do? ›

Circular 230 provides ethical guidance for all tax preparers. CPAs, attorneys, and enrolled agents (EAs) who are in good standing with the IRS are authorized to provide any tax-related services to clients, assuming that the CPA, attorney, or EA is competent to perform those services.

What happens if my tax preparer did not file? ›

If your tax preparer fails to file your return, and you file late, you will be penalized. If you can demonstrate that you took the necessary steps to file your tax return timely and that the return was late due to no fault of your own, it may be possible to have your penalties removed from your tax bill.

What is an allowable activity for an unenrolled return preparer? ›

Form 8821 authorizes an unenrolled return preparer to inspect or receive a taxpayer's confidential information in any office of the IRS (including TAS) for the type of tax and tax periods reflected on Form 8821. Form 8821 does not authorize an unenrolled return preparer to represent the taxpayer before the IRS.

What situations allow for disclosure without authorization? ›

While these are pretty straightforward, a few situations where disclosure without consent is legal can be a little trickier: justifiable disclosures in the public interest, disclosures to protect the patient or others from harm, reporting abuse and neglect.

Can a practitioner may not use or disclose any return information without the consent of the taxpayer in any situation? ›

A tax return preparer may use and disclose, without the taxpayer's written consent, tax return information that the taxpayer provides to the tax return preparer to pay for tax preparation services to the extent necessary to process or collect the payment.

What is Section 10.34 Circular 230? ›

230 §10.34. Written Tax Advice. In providing written advice concerning any Federal tax matter, you must (i) base your advice on reasonable assumptions, (ii) reasonably consider all relevant facts that you know or should know, and (iii) use reasonable efforts to identify and ascertain the relevant facts.

Who does IRS Circular 230 apply to? ›

Circular 230 refers to Treasury Department Circular No. 230. This publication establishes the rules governing those who practice before the U.S. Internal Revenue Service (IRS), including attorneys, certified public accountants (CPAs) and enrolled agents (EAs).

What are the rules of Circular 230? ›

Today, Circular 230, Regulations Governing Practice Before the Internal Revenue Service, contains rules governing the recognition of attorneys, certified public accountants, enrolled agents, enrolled retirement plan agents, registered tax return preparers, and other persons representing taxpayers before the Internal ...

Can a tax preparer E file your taxes without your signature? ›

In an effort to make electronic filing even more secure and paperless, the Internal Revenue Service now requires all taxpayers who file their tax returns electronically to also use electronic signatures. The IRS has eliminated the paper signature document for e-filed returns.

What is the penalty for tax preparer not signing return? ›

Failure to sign return – IRC § 6695(b): Penalty is $50 for each failure of a tax preparer to sign a tax return or refund claim (maximum penalty cannot be greater than $27,000 in calendar year 2022).

Can someone file taxes if they didn't work? ›

Any year you have minimal or no income, you may be able to skip filing your tax return and the related paperwork. However, it's perfectly legal to file a tax return showing zero income, and this might be a good idea for a number of reasons.

What are the four due diligence requirements for tax return preparers? ›

The Four Due Diligence Requirements
  • Complete and Submit Form 8867. (Treas. Reg. section 1.6695-2(b)(1)) ...
  • Compute the Credits. (Treas. Reg. section 1.6695-2(b)(2)) ...
  • Knowledge. (Treas. Reg. section 1.6695-2(b)(3)) ...
  • Keep Records for Three Years.

What is a Preparer e file hardship waiver? ›

Specified tax return preparers use this form to request an undue hardship waiver from the section 6011(e)(3) requirement to electronically file returns of income tax imposed by subtitle A on individuals, estates, and trusts.

What does noncompliance for a tax preparer include? ›

Tax noncompliance (informally tax avoision) is a range of activities that are unfavorable to a government's tax system. This may include tax avoidance, which is tax reduction by legal means, and tax evasion which is the criminal non-payment of tax liabilities.

What circumstances can you share information without consent? ›

Information can be shared without consent if it is justified in the public interest or required by law. Do not delay disclosing information to obtain consent if that might put children or young people at risk of significant harm.

What are the two legally recognized exceptions to the informed consent requirement? ›

Exceptions to Informed Consent

Several exceptions to the requirement for informed consent include (1) the patient is incapacitated, (2) life-threatening emergencies with inadequate time to obtain consent, and (3) voluntary waived consent.

Under what circumstances can confidential information be disclosed? ›

You must have a reasonable basis for your belief that the disclosure is necessary, and you must be able to justify it. A disclosure is reasonably necessary if a reasonable person, who is properly informed, would agree that the disclosure was reasonable in the circumstances.

What are some exceptions for releasing patient information without patient consent? ›

Exceptions Under the HIPAA Privacy Rule for Disclosure of PHI Without Patient Authorization
  • Preventing a Serious and Imminent Threat. ...
  • Treating the Patient. ...
  • Ensuring Public Health and Safety. ...
  • Notifying Family, Friends, and Others Involved in Care. ...
  • Notifying Media and the Public.
Apr 3, 2020

Can you disclose PHI without written authorization? ›

Covered entities may use and disclose protected health information without individual authorization as required by law (including by statute, regulation, or court orders).

When must the signed disclosure and use consent be obtained by the tax preparer? ›

A taxpayer must provide written consent before a tax return preparer discloses or uses the taxpayer's tax return information.

What happens if you violate Circular 230? ›

If a tax professional violates Circular 230, he may be subject to discipline including suspension or total and permanent disbarment from practice before the IRS.

What are the four best practices under Circular 230? ›

The steps practitioners should use in providing advice to clients include:
  • Establishing the facts;
  • Determining relevancy;
  • Evaluating reasonableness of assumptions or representations;
  • Relating applicable law to relevant facts; and.
  • Arriving at a conclusion supported by the law and the facts.
Apr 13, 2010

What are Circular 230 due diligence requirements? ›

You have a reasonable belief in your ability to provide competent, diligent representation to each affected client; and, – Not legally prohibited; and, – EACH affected client waives conflict, by giving informed consent – in writing at the time conflict is known.

Is Circular 230 disclosure still required? ›

Then the IRS decided in about 2014 to require that tax practitioners stop using the Circular 230 disclaimer, so this was done, but the other disclaimers about confidentiality and misdirected email were retained. That's how we got to where we are, with many people using automatically added email disclaimers.

What is a conflict of interest tax preparer? ›

Conflicts of interest

Tax preparers have a duty to remain objective and, to a degree, independent from their clients. A situation in which clients have competing interests that could make it difficult for tax preparers to perform services fairly and objectively could be a conflict of interest.

What does the IRS require to be a tax preparer? ›

To become a CTEC registered tax preparer, you must: Take a 60-hour qualifying education course from a CTEC approved provider within the past 18 months. Purchase a $5,000 tax preparer bond from an insurance/surety agent. Get a Preparer Tax Identification Number (PTIN) from the IRS.

What is Section 7525 of the IRS Code? ›

Sec. 7525 provides a limited privilege to communications between a federally authorized tax practitioner and a taxpayer to the extent the communication would be considered privileged if it were between an attorney and a taxpayer.

What is not considered practice before the IRS per Circular 230? ›

Practitioner may not represent a client before the IRS if the representation involves a “conflict of interest.”

What is Section 10.21 of Circular 230? ›

Section 10.21 of Circular 230 requires any practitioner who knows or discovers that a client has not complied with the federal tax laws or that a client has made an error or omission on any return, document, affidavit, or other paper submitted or executed under the federal tax laws must advise the client promptly of ...

What is exception disclosure? ›

Disclosure Exception means a disclosure occurrence mandated under applicable law, to protect or pursue a legal right, or to enforce or challenge an award in any bona fide legal proceeding before a court or other judicial authority.

What are the exceptions to the Privacy Act? ›

Information compiled in reasonable anticipation of a civil action or proceeding. Material reporting investigative efforts pertaining to the enforcement of criminal law, including efforts to prevent, control or reduce crime or to apprehend criminals.

What are disclosure limitations? ›

Disclosure limitation method (also known as disclosure avoidance method) is a general term referring to a statistical technique used to manipulate the data prior to release to minimize the risk of inadvertent or unauthorized disclosure of personally identifiable information (PII).

What are the exceptions to the Privacy Act regarding consent? ›

Exceptions include: you've consented to an organisation or agency using or disclosing your personal information for a secondary purpose.

What is the golden rule of disclosure? ›

The formulation of the 'golden rule' of disclosure is unsurprising. The importance to the course and outcome of a criminal trial of the manner in which the prosecution discharges its duty of disclosure cannot be overestimated.

What are the 4 stages of disclosure? ›

Steps of disclosure
  • denial.
  • tentative disclosure.
  • active disclosure.
  • recantation.
  • reaffirmation.

What are the three types of disclosure? ›

Confidential Disclosure Agreements come in three types: Incoming, Outgoing, and Mutual.

What are the four acts that qualify as an invasion of privacy? ›

Those four types are 1) intrusion on a person's seclusion or solitude; 2) public disclosure of embarrassing private facts about a person; 3) publicity that places a person in a false light in the public eye; and 4) appropriation, for the defendant's advantage, of the person's name or likeness.

What are the three rights under the Privacy Act? ›

The Privacy Act provides protections to individuals in three primary ways. It provides individuals with: the right to request their records, subject to Privacy Act exemptions; the right to request a change to their records that are not accurate, relevant, timely or complete; and.

When can the right to privacy be limited? ›

It may come as a surprise that the Constitution of the United States does not specifically protect your right to privacy. In fact, state and federal laws can limit some individual privacy rights when there is a compelling government interest to do so.

What are the limits of a non-disclosure agreement? ›

NDA is only enforceable against the employer, unless the employee publicly reveals details that lead to identification of the employer. Exceptions: non-competes, proprietary information, trade secrets.

What are the three types of non-disclosure? ›

There are three types of NDAs: unilateral, bilateral, and multilateral.

How enforceable is a non-disclosure? ›

Violating an NDA can have serious consequences — NDAs are legally binding contracts. If an employee has violated an NDA, then the company may take legal action. The most common claims in NDA lawsuits include: Breach of the contract (such as the breach of NDA)

What are 4 exceptions to consent? ›

Children and Informed Consent

Some, but not all, examples of an emancipated minor include minors who are (1) under 18 and married, (2) serving in the military, (3) able to prove financial independence or (4) mothers of children (married or not).

What are the 3 instances where consent Cannot be given? ›

Consent cannot be given if you are asleep, unconscious, too drunk or high on drugs. Consent is a continuous process – just because you said 'yes' initially doesn't mean you can't change your mind.

On what grounds can confidentiality be breached? ›

Murder, manslaughter, rape, treason, kidnapping, child abuse or other cases where individuals have suffered serious harm may all warrant breaching confidentiality.


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