What Is Circular 230 And Why Do I See It On Emails And Letters?
By Kent Anderson, Oregon Bankruptcy Attorney on Jul 30, 2007 in Lawyer to Lawyer, Oregon, Tax Issues
The Internal Revenue Service regulates what lawyers (including bankruptcy lawyers) and Certified Public Accountants can tell their clients, at least when they are giving advice about certain tax matters. Lawyers and CPAs and Enrolled Agents are allowed to represent taxpayers in their dealings with the IRS. A government publication, Circular 230, lists the rules that must be followed when representing taxpayers in front of the Internal Revenue Service; a failure to follow these rules exposes the practitioner to a possible fine or other sanctions.
IRS rules require that lawyers and other tax professionals tell the truth when talking to the IRS. They are also required to fully disclose possible penalties that may apply in gray areas when they advise clients to act in some ways that avoid tax. If a letter or email has the proper disclosure, it helps lawyers keep from making a mistake and breaking the rules.
The IRS sets high standards for tax professionals, including lawyers, CPAs and Enrolled Agents. Violation of IRS rules can result in a reprimand or even disbarment from practice before the IRS.
A Circular 230 disclaimer should say that any advice given to a taxpayer client is not intended and cannot be used for the purpose of avoiding penalties that are imposed by the IRS regarding the matters discussed in the letter or email. This statement is intended to eliminate the excuse that a taxpayer was following professional advice.
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