Part 3 — Representation: CHEAT SHEET

Practice Before the IRS — What Counts

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Unlimited Practice Rights

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Key Circular 230 Duties

To Clients:

• Respond promptly to IRS requests

• Return records immediately (unpaid fees no excuse; may retain copies; state lien allowed)

• Maintain confidentiality (exceptions: required by law; defend self; prepare return)

• Written advice: reasonable assumptions + identify limitations + no unreasonable positions

To IRS:

• Exercise diligence in preparing returns/documents

• No false statements to IRS

• Disclose errors found on prior returns; advise client of consequences (cannot amend without consent)

• Don't delay matters unreasonably

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Tax Return Position Standards

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Conflicts of Interest

Rule: Cannot represent if conflict exists between clients OR between practitioner interest & client interest.

Exception: Written, informed consent from all affected parties if competent representation still possible.

Disclosure must include: Nature of conflict + consequences + client options (separate counsel).

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Fee Arrangements

✅ Allowed

• Fixed fee

• Hourly fee

• Percentage of refund (limited exceptions below)

❌ Prohibited

• Contingent fees (based on results/positions)

• Unconscionable (excessive) fees

✅ Contingent Fee Exceptions

• IRS examination/audit representation

• Claims for refund determination

• Interest & penalty abatement claims

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Discipline & Sanctions

Grounds for Sanction

Willful noncompliance, fraud, disreputable conduct, false opinions, incompetent representation, willful Circular 230 violation.

Types of Discipline

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Suspension Procedure

Show cause → Response (30 days) → Hearing (if contested) → ALJ decision → Appeal to Treasury Secretary → Federal court review

Expedited suspension: For felony convictions; no full hearing required.

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Enrolled Agent Status

How to Become EA

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Continuing Education

• 72 hours every 3 years (minimum 16/year)

• 2 hours/year ethics/professional conduct

• IRS-approved providers only; keep records 4 years

Renewal

• Form 8554 every 3 years

• Window: January 1 – March 31 of renewal year

• Enrollment number suffix determines cycle (0–3 → 2024 cycle; 4–6 → 2025 cycle; 7–9 → 2026 cycle)

• Inactive status available if CE not met; reactivate upon compliance

PTIN Requirement

• All paid preparers must have PTIN

• Annual renewal (January 1 window)

• Must appear on all returns prepared for compensation

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IRS Examination Types

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Statute of Limitations

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Includes	Excludes
Communicating with IRS on behalf of taxpayer	Preparing a return alone (by non-unlimited practitioners)
Representing at conferences, hearings, meetings
Preparing docs for IRS presentation (returns, claims, protests)
Written advice on federal tax matters with tax avoidance/evasion potential
Practitioner	Scope
EA, Attorney, CPA	All matters, all IRS levels
Enrolled Retirement Plan Agent	Retirement plans only
Enrolled Actuary	Actuarial matters only
Standard	Threshold	Consequence
Realistic possibility	~33% chance of success	Required to proceed without disclosure
Frivolous position	No rational basis	§6702 penalty ($5,000 to taxpayer); preparer sanctions
Undisclosed unreasonable	Can't sustain on merits	Violation; penalties/discipline
Sanction	Effect
Censure	Public written reprimand
Suspension	Temporary loss of practice rights (stated period)
Disbarment	Permanent/indefinite loss of practice rights
Path	Requirement
SEE Exam	Pass 3 parts (105+ scaled score); all within 3 years; submit Form 23 within 1 year
Former IRS Employee	5 years relevant experience; Form 23; Commissioner approval
Type	Scope	Venue
Correspondence	Narrow issues; most common	By mail
Office	Intermediate complexity	IRS office
Field	Complex; entire return	Taxpayer location
Situation	SOL
Standard	3 years from due/filing date (later)
25%+ omission	6 years
Fraud or failure to file	Unlimited

Taxpayer Rights During Exam

• Right to representation by qualified practitioner

• Right to appeal disagreement

• Right to privacy (reasonable procedures)

• Obligation to provide records

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Office of Professional Responsibility (OPR)

Enforces: Circular 230 compliance; investigates complaints; imposes sanctions.

Publication: Final discipline decisions posted on IRS website.