Abstract
Practitioners1 who appear before the Internal Revenue Service (IRS) are subject to the practice standards published in Treasury Department Circular 230.2 These standards cover “matters connected with a presentation to the Internal Revenue Service ... relating to a taxpayer’s rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service.”3 The Circular 230 standards apply to a broad range of practitioner conduct, including matters such as practitioner due diligence, conflicts of interest, fees, and the provision of tax advice. Circular 230 also contains sanction provisions that apply when the practice standards are violated and procedural rules governing disciplinary proceedings. The rules set forth in Circular 230 are administered and enforced by the Director of the Office of Professional Responsibility.
“Practitioners” are defined by Circular 230 to include attorneys, certified public accountants, enrolled agents and enrolled actuaries. Treasury Department Circular 230 (31 C.F.R. 330) (hereinafter “Circular 230”), §§ 10.2(d) and 10.3.
Statutory authority to promulgate the regulations published in Circular 230 is provided by 31 U.S.C. § 330.
In section 822(b) of the American Jobs Creation Act of 2004, Pub. L. No. 108–357, 118 Stat. 1587, Congress confirmed that the Treasury Department has authority to regulate under Circular 230 the rendering of written tax advice, amending 31 U.S.C. § 330 to provide: “Nothing in this section or in any other provision of law shall be construed to limit the authority of the Secretary of the Treasury to impose standards applicable to the rendering of written advice with respect to any entity, transaction plan or arrangement, or other plan or arrangement, which is of a type which the Secretary determines as having a potential for tax avoidance or evasion.”
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Most recently, on November 2, 2006, the Treasury Department and IRS published several sets of proposed (and, in some respects, temporary) regulations updating the “reportable transaction” regulations published under Code sections 6011, 6111 and 6112. See 71 Federal Register (F.R.) 64456 (temporary regulations relating to letter ruling requests to the IRS with respect to reportable transactions); 71 F.R. 64488 (proposed regulations relating to the categories of reportable transactions taxpayers are required to disclose to the IRS); 71 F.R. 64496 (proposed regulations relating to material advisor obligations to register reportable transactions with the IRS); 71 F.R. 64501 (proposed regulations relating to material advisor obligations to maintain “lists” with respect to reportable transactions).
Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, and Enrolled Actuaries Before the Internal Revenue Service, 31 C.F.R. Part 10, 49 F.R. 6719-01 (Feb. 23, 1984).
The pervasive nature of the tax shelter problem in the late 1990s was reflected in the popular press. Illustrative of the problem was a 1998 cover story in Forbes magazine was devoted to the “thriving industry of hustling corporate tax shelters.” NOVACK/SAUNDERS, “The Hustling of X Rated Shelters”, Forbes, December 14, 1998, 198, 203.
65 F. R. 30375 (May 11, 2000).
66 F. R. 3276 (Jan. 12, 2001).
Code section 6662(d)(2)(C)(iii) has since been renumbered section 6662(d)(2)(C)(ii). That statute broadly defined a “tax shelter” to include: “(I) a partnership or other entity, (II) any investment plan or arrangement, or (III) any other plan or arrangement, if a significant purpose of such partnership, entity, plan, or arrangement is the avoidance or evasion of Federal income tax.” Id. (emphasis added). Prior to 1997, the statute defined “tax shelter” by reference to a narrower category of transactions with a “principal purpose” of tax avoidance or evasion. See Taxpayer Relief Act of 1997, Pub. L. No. 105–34, 111 Stat. 788, § 1028(c) (substituting “a significant purpose” for “the principal purpose”).
67 F. R. 48760 (July 26, 2002).
68 F. R. 75186 (Dec. 30, 2003).
On April 19, 2005, the Treasury Department and IRS published revisions to the Final Covered Opinion Regulations to carve out from their application (1) written advice provided after a transaction was reported on a tax return (post-return advice), (2) written advice provided by a practitioner in the context of an employee-employer relationship, if the advice related to the tax liability of the employer (in-house counsel advice), and (3) negative written advice. 70 F.R. 28824. The technical corrections also revised the form of disclosure that was required for written advice subject to the heightened covered opinion standards and added a definition of “the principal purpose” to remove from the scope of the covered opinion standards written advice with respect to transactions claiming tax benefits consistent with a particular statute and with Congressional intent. Id.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2008 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Desmond, M.J. (2008). Opinion Standards for Tax Practitioners Under U.S. Department of the Treasury Circular 230. In: Schön, W. (eds) Tax and Corporate Governance. MPI Studies on Intellectual Property, Competition and Tax Law, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-77276-7_20
Download citation
DOI: https://doi.org/10.1007/978-3-540-77276-7_20
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-77275-0
Online ISBN: 978-3-540-77276-7
eBook Packages: Business and EconomicsBusiness and Management (R0)