KAREN BREHMER: OK. It is the top of the hour. So for those of you who are just joining us,
welcome to today's webinar, Th Office of Professional Responsibility: Circular 230 and
Practicing Before the IRS. We're glad you're joining us today. My name is Karen Brehmer and I
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Textbox. Type your question in the textbox and then click Send. Now this is really important,
please do not enter any sensitive or taxpayer-specific information. Again, welcome and thank
you for joining us. Today the Office of Professional Responsibility will share information on
Circular 230 and practicing before the IRS. Sharyn Fisk is the Director, Office of Professional
Responsibility. She was named as the Director in January 2020. As Director she is responsible
for the IRS oversight of tax professionals who practice before the IRS as set-out in Treasury
Circular 230. And with that, let's begin our discussion. Sharyn, I'll turn it over to you.
SHARYN FISK: Thank you, Karen. Hello. I'm Sharyn Fisk, the new Director of the Office of
Professional Responsibility at the IRS. I am pleased to have so many attendees joining us today
to learn about the Office of Professional Responsibility, Circular 230 and practicing before the
IRS. During today's webinar I will briefly explain the statutory background for regulating the
practice of representatives before the Treasury Department, define what it means to practice
before the IRS, highlight key provisions in Circular 230 that are important for you to remember,
and walk through OPR's investigative and disciplinary process. I've also provided a helpful
resources document with links to information to assist you and further understanding today's
discussion. Let's start with a brief background regarding the statutory and regulatory
authority involved. The statutory authority to address the conduct of representatives before the
IRS is not found in Title 26, the Internal Revenue Code. Instead, it appears in Title 31 of the
U.S. Code Section 330. This is important. OPR is independent from Title 26, which enforces
which is enforced by other divisions in the IRS. As you can see, the statute is old. The
Secretary of Treasury delegated the authority to regulate the practice of representatives of
persons before the Internal Revenue Service to the IRS Commissioner. This statute also sets the
criteria individuals must have to be representative. The statute authorizes the disciplinary
actions the Secretary can take against those represent excuse me, against those
representatives who are incompetent, disreputable, who violate the regulations prescribed under
Section 330 of Title 31. The Secretary also is authorized to impose monetary penalties against
these individuals and, in certain circumstances, entities with which the individuals are
affiliated. Paragraph C, which was added later to the statute, authorizes the Secretary to
regulate certain appraisers. Now the last paragraph of Section 330 authorizes the Secretary to
impose standards for giving certain written advice. Our discussion today is centering on Section
330 of Title 31's Authorization to Regulate Practitioners Before the IRS and to make
determinations about those practitioners' fitness to practice. Besides Section 330 of Title 31,
other authorities govern those who practice before the Treasury Department. These include
Treasury Circular 230, which Karen mentioned earlier. And this Treasury was issued in 1921
another oldie, but goodie. It's been revised periodically over its nearly 100 years with the
most recent revision in June 2014. Section 10.1 of Circular 230 provides for the Commissioner
of the IRS to establish the Office of Professional Responsibility, which we're going to call OPR
because you know the IRS loves to use those acronyms. Section 10.1 also delegates authority to
OPR to administer Circular 230, a delegation order and two Revenue Procedures relating to
limited practice for unenrolled return preparers are also part of the legal authority pertaining
to practice before the IRS. Circular 230 sets forth the requirements for practicing before the
IRS, basically the duties and obligations a practitioner is expected to meet the rules regarding
the IRS' authority to sanction an individual for violations of Circular 230, the specific
sanctions that can be imposed for violating duties and obligations, and describes the
administrative disciplinary procedures. Now Circular 230 is composed of four subparts. Subpart
A contains provisions regarding individuals who may practice before the IRS. These are defined
as attorneys, CPAs, enrolled agents and other enrolled professionals, and certain designated
professionals. Subpart B contains the regulations that identify various kinds of ethical
behavior and professional responsibility the IRS believes are appropriate to monitor and oversee
for individuals who practice before the IRS. Many of these key provisions in Subpart B will be
discussed today. Subpart C lists the sanctions that can be imposed, the violations and
describes the forms of disreputable and incompetent conduct that are actionable. Subpart D
details how the disciplinary process works to ensure due process protections a taxpayer excuse
me, a practitioner is entitled to throughout this whole process. And now I think it's time for
our first polling question. Karen? BREHMER: Yep, it certainly is time for our first polling
question. Here is the question. The documenting the documents regulating practice before the
IRS is, A, Form 2848; B, Circular 230; C, Form 8821; D, Annual Filing Season Program. So take a
moment and read that over again, and then click on the Radio Button that best answers the
question. And I'll give you a few more seconds to make your selection. OK. We're going to
stop the polling now and let's share the correct answer on the next slide. And the correct
response is B, Circular 230 provides the rules for practicing before the IRS. Ninety-eight
percent, that is very good. Clearly everybody is listening, Sharyn, and with these
questions get tougher as we go along, right? But FISK: Correct. BREHMER: we'll have
you go we'll have you go ahead, Sharyn, and continue the presentation. FISK: Fantastic. In
the meantime, I was peeking at some of the Q&;A, so I want to send a shout-out to a couple of my
former students who are on this webinar. Alright. Let's get into practice before the IRS and
what it means to do that practice before the IRS. Alright. Congress, in enacting Section 330
of Title 31, contemplated that only individuals professionally and ethically fit to represent
the interest of taxpayers, claimants and others are eligible to practice before the Treasury
Department, which includes the IRS. So what is this fitness to practice? Actually, this
requires practitioners to be of good character, good reputation, have the qualifications to
provide a valuable service to clients, and the competence to advise and assist clients in
representing their cases and their clients to IRS. Section 10.2(a)(4) defines practice before
the IRS. And as you can see the definition is very abroad, notice it states all matters.
Practice contemplates all matters connected with the presentation to the IRS regarding
taxpayer's right, liabilities and privileges under laws and regulations administered by the IRS.
And this can include laws not contained in Title 26. For example, we know that taxpayers must
report their ownership or signatory authority over foreign bank accounts that contain more than
$10,000 at anytime during the taxable year on Schedule B of their 1040 and through filing a
report of Foreign Bank Account and Financial Accounts form, generally called the FBAR. The
requirement to report foreign bank account is not found in Title 26, the Internal Revenue Code.
Instead, it is in Title 31 of the U.S. Code. Practice does not, however, include mere paid tax
return preparation, which was the issue in the Loving versus IRS case. I put a link to this
case on the resources document if you'd like additional information regarding the litigation and
the status of unenrolled preparers under Circular 230. If you are an unenrolled preparer who
merely prepares a tax return, then you are not covered by Circular 230. However, if you engage
in representation authorized through the IRS' Annual Filing Season Program, which have
established Revenue Procedure 2014-42, you are subject to the provisions of Circular 230. Now
if you're not familiar, this program allows for limited representation right for unenrolled
preparers who, after 2015, prepared and fined federal tax returns and now there is a subsequent
examination of one of those returns. When a tax professional signs and it submits to the IRS a
Form 2848, Power of Attorney and Declaration of Representative, that practitioner is engaging in
representation before the IRS. You'll notice the Form 2848's title is Power of Attorney and
Declaration of Representative. That is because every time you sign a 2848, you are declaring
under the penalty of perjury that you are subject to the regulations contained in Circular 230.
While most of us think practitioners who represent clients at meetings or conferences or hearings
with the IRS as the ones practicing before the IRS, practice can constitute many actions,
including those who do not necessarily involve direct interaction with the IRS. For example,
practice can include preparing or filing documents to be submitted to the IRS, corresponding or
communicating with the IRS, rendering written tax advice and providing appraisals for tax
position. Under Circular 230, those who practice before the IRS include Attorneys, CPAs,
Enrolled Agents, Enrolled Retirement Plan Agents, Enrolled Actuaries, preparers possessing an
Annual Filing Season Program Record of Completion and appraisers who submit appraisals
supporting tax positions. How about another polling question, Karen? BREHMER: That sounds
like a great idea. OK. Audience, here's our second polling question. Which of the following
may practice before the IRS? Your choices are, A, Attorneys; B, Certified Public Accountants;
C, Enrolled Agents or D, all of the above. So take a moment and click the Radio Button that best
answers the question. I know there are a lot of people on the webinar today, and so we want to
make sure everybody has time to answer the polling question. So again, take a look at the
question, take a look at the answers and then click on that Radio Button. And enjoy this
question because the polling questions get longer as we get to the ones that come later. OK.
We are going to stop the polling now and we'll share the correct answer on the next slide. And
the correct response is D, Attorneys, Certified Public Accountants and Enrolled Agents may all
practice before the IRS. OK. You guys are nailing this. You got 99 percent correct, so
obviously you already knew this or you learned it because of what Sharyn told you. So, Sharyn,
I think we will continue, and it looks like the key provisions of Circular 230 is what you have
up next. FISK: Yes, it is, Karen. Alright. Though all provisions of Circular 230 are
important, we're going to limit our discussions to key provisions that practitioners may
typically encounter in their practice. The key provisions of Circular 230 we'll
discuss relate to matters associated with dealing with your client, communicating with the IRS
and best practices and standards for practitioners practicing before the IRS. So our first one,
Section 10.20 addresses a practitioner's duty to provide information. The practitioner must not
interfere with any lawful IRS attempt to obtain information unless, in good faith, the
practitioner reasonably believes the information sought is privileged. Well, there are several
types of privileges. The most common privileges asserted in a matter before the IRS is your
training client privilege. Let's say, for example, you're handling an IRS audit for your
client. The IRS has issued an Information Document Request seeking documents related to a
transaction reported on your client's return. Your client tells you she's boxed up all the
documents regarding the transaction and given them to her brother-in-law who is a lawyer. Your
client wants you to tell the IRS documents will not be provided in response to the IDR because
they're protected under the attorney-client privilege. Are these documents protected under the
attorney-client privilege? It depends. Was the brother-in-law acting as your client's attorney
regarding the transaction? If not, then just giving documents to an attorney to hold does not
make those documents privileged communication. If you are unsure if a privilege applies, you
can consult with a lawyer. If neither the client nor the practitioner possesses or sorry,
what if neither the client nor the practitioner possess the information sought? Under 10.20, a
practitioner must promptly inform the IRS of that fact and provide any information regarding who
may have possession of the requested information. Although the practitioner is not required to
make inquiries of anyone other than the client or verify information provided by the client
regarding the person or persons in possession of the recorded information. A practitioner cannot
advise a client to submit any document to the IRS that's frivolous, or contains misinformation
in a manner demonstrating an intentional disregard of a rule or regulation. However, it is
allowable to advise a client to submit document that disregards a rule or regulation if the
submission of such document evidences a good faith challenge for that rule or regulation.
BREHMER: Sharyn, I'm going to ask you a couple of questions here. I think it's interesting what
you said about that the practitioner should inform the IRS that they don't have the
information if they don't have the information. I guess, what you're saying is at least then the
IRS employee knows that the reason they didn't supply it is because they don't have it, which is
different from refusing to comply with the request, either the taxpayer refused or the power of
attorney refused. Can you say more about that? FISK: Absolutely. Informing the IRS employee
whether the taxpayer has possession of the requested document is very important. For the
taxpayer, it's relevant as to whether the application of the Cohan rule should be applied to
allow reasonable estimates for missing information. It's important as to whether penalties are
going to be appropriate in this case, even important to the level of the taxpayer cooperation,
which has ramifications for potential criminal referral or investigation. Now for the
practitioner, responding to the request displays your due diligence and your efforts to the
standards under Circular 230. Now I'm going to give you a practitioner tip from my old days of
private practice. When responding to an IDR, if your client tells you they do not have the
requested information, you may want to write in your response to the IRS, quote, "To the best of
the taxpayer's knowledge, they are not in possession of the documents requested," end quote.
This is because sometimes the taxpayer later finds those documents, and we don't to be, in
anyway, mislead the IRS. BREHMER: Right, that's a very good tip. As far as we know, we don't
have those documents today. If they show up later, it doesn't look quite so suspicious or
something. And then FISK: Right. If they find files or a computer or something BREHMER:
Yes, yes. FISK: and they realize they have it. BREHMER: Yes. You also made a comment
that I really didn't understand and I want you to elaborate on it. Earlier you said if the
you give an example or explain that more? FISK: Sure. So, typically when new tax laws are submission of such documents evidence as a good faith knowledge to the rule or regulation, can
enacted, they don't come with a lot of guidance. We know that right now with check the current
legislation coming out. So it's up to the Treasury and the IRS to draft regulations, may issue
revenue rulings or revenue procedures to provide that guidance. Sometimes practitioners
reasonably believe, in good faith, that the guidance issued is incorrect or went beyond what
Congress intended or that a newly enacted code provision is unconstitutional. In these cases,
practitioners may advise their clients to take a position the tax or excuse me, the
practitioner reasonably believes is correct, intending to address this disagreement with the IRS.
Some of these matters ultimately end up in litigation in the courts deciding the issue. And
this is where we get a lot of our great tax law on taxation or excuse me, a lot of our great
case law on taxation. Just remember, the practitioner must have a reasonable belief and it has
to be made in good faith that the that the advice they are giving is correct. BREHMER: OK,
that makes more sense. So if they disagree with the revenue ruling or revenue procedure, they
could advise their client to do something different, but they have had to do some research to
say why they believe it's incorrect or why they believe it's unconstitutional. They can't just
be I don't like it, so we're going to do it this way, it has to be FISK: Exactly.
BREHMER: stronger than that. FISK: That's what we call your reasonable basis. It has to be
based on something other than your feeling. BREHMER: OK, great. OK. Thank you for clarifying
those two points. I will give you back the floor and you can go ahead. FISK: Excellent.
Alright. On the 10.21, this section addresses your duty regarding the client's error or
omission. This section is often misunderstood. If you learn that a client has not complied
with the Internal Revenue Code or made an error in or omission from a return or other documents
submitted to the IRS, you have a duty to promptly inform the client of non-compliance error or
omission, and advise the client about the consequences under the code and regulation of that
non-compliance error or omission. A best practice would also include advising the client about
what to do about the non-client error or omission, but that is not required under Circular 230
adjusted but not required. For example, let's say a new client asks you to prepare his 2019
return. As part of your regular due diligence, you ask this client for copies of his last two
federal returns. In reviewing the new client's past returns, you discover an error was made in
calculating the client's net operating loss. The result of which would affect the client's NOL
carryforward to 2018 and leave no NOL carryforward to 2019. Under Section 10.21, you have a
duty to promptly inform your new client of this error and advise the client about the
consequences of such error. And when we talk of consequences, we're talking about an
examination exposure, additional tax liability, interest and potential penalties on that
additional tax liability. Although not required under Circular 230 as a best practice, you
should advise your new client on how to fix this problem, in this case, filing an amended 2018
return reporting the correct NOL carryforward amount. What happens if this new client doesn't
want to amend his 2018 return? The Code does not require a taxpayer to fix a past error.
Moreover, you do not have a duty to file an amended return or other corrective document with the
IRS. In fact, if you did do so without the client's permission, it can expose you to a
malpractice issue. Of course, the client doesn't want to fix his 2018 return, he's going to
suffer the consequences. Now what happens if the client insists on using the erroneous NOL
carryforward on his 2019 return because he's concerned if it's not reported consistently with
2018 return, the IRS will notice this and it may lead to an audit of the prior year's tax
returns. Your due diligence responsibilities under Circular 230 prevents you from preparing a
return you know is incorrect. You cannot prepare, sign or submit the 2019 federal return for
this client with the erroneous NOL reporting on it. To recap, 10.20 requires just two things
from you promptly inform the client of the non-compliance and advise them about the
consequences of that non-compliance under the Code and regulation. And remember, you cannot
knowingly perpetuate the non-compliance error or omission. A due diligence provision under
Section 10.22 and 10.34 state everything you need to know by a good practice before the IRS.
You must exercise due diligence to ensure the accuracy representations, both oral or written,
that you make to your client or the IRS. This includes preparing or approving for submission to
the IRS or filing anything that relates to a tax matter, forms, tax returns, documents,
affidavits, protests, you got it. You have an obligation to your client to make sure you're
giving them correct and accurate information, and you have an obligation to the IRS to make sure
the representations you make on behalf of your client are accurate and complete. How do you
exercise this due diligence? Well, when it's concerning your own work product, you need to know
the relevant facts regarding your client's tax matter. Ask your client questions. Make
reasonable inquiries if the information you're getting from the client appears to be incorrect,
inconsistent or incomplete. You don't have to audit your client, but you can't ignore the
implications of other information you've been given whether by the client or someone else. Now,
10.34 provides that a practitioner, quote, "may rely, in good faith and without verification, on
client information," end quote, but that does mean you can be willfully blind. You have not met
your due diligence obligations on 10.34 and 10.22 if you fail to ask questions you should ask or
if you say to the client, directly or indirectly, "You don't tell me that because if you tell me
that I'm going to have to give you bad news." Now sometimes your client may not give you all
the relevant information, either by accident or intentional. And the information you have
gathered from your client does not appear on its face to be inconsistent, incomplete or
inaccurate, and you haven't gotten any information from other third parties that the information
your client has provided you is incorrect, inconsistent or incomplete. In this case, you have
met your due diligence duties under Circular 230. I want to give you an example. A taxpayer,
a U.S. citizen, receive inheritance upon the passing of his mother who was also a U.S. citizen.
The inheritance includes over $10,000 held in a foreign bank account. That same year, the
taxpayer meets with the CPA to have his federal return prepared. As part of her due diligence,
the CPA reviews the client's completed tax organizer, asks about any changes that occurred
during that tax year. The client informs his CPA about his inheritance from his U.S. mother and
asks if the inheritance needs to be reported on his return. The client does not, however,
mention the part the part of his inheritance is cash held in a foreign bank account. Not being
tax-savvy, the client does not know that this is an important tax fact. The CPA, being
knowledgeable about taxation of U.S. inheritances, informs the client that the inheritance from
his mother, a U.S. citizen, does not need to be reported on the client's return. In giving this
advice, the CPA does not know and has no reason to know that the client has inherited cash held
in a foreign bank account. As we mentioned, the client is a U.S. citizen and the mother was a
U.S. citizen. The CPA prepares and files the client's return without reporting the foreign bank
account on Schedule B as we recall ownership of a foreign bank account is required and reported
on Schedule B of a taxpayer's 1040. In this situation besides FBAR form. In this situation,
although there is now in error on the client's federal return, the CPA has exercised her due
diligence and asking questions of the client. She did not know and had no reason to know about
the foreign bank account or that the client had inadvertently omitted a relevant fact or that
there was any willful blindness on the part of the CPA. Accordingly, there was no Circular 230
violation in this situation. Now, to exercise your due diligence about your work product, you
also need to determine which facts are material. As we just noticed right here, there was a
material fact that was inadvertently omitted. You're the tax professional. It's up to you to
determine which facts are pertinent or significant, not the client. For example, the client
lists on their tax organizer that they had a $20,000 capital gain. How do you know it was a
capital gain? Maybe all or some of its ordinary income, maybe some of it is subject to
depreciation recapture, something your client may not know about. Exercising due diligence
requires you to ask additional questions sothe proper characterization of this gain can be
determined. Besides knowing the material facts to exercise your due diligence regarding your
work product, you also need to know the applicable legal authorities to the tax matter.
Educating yourself or, if necessary, finding an expert upon whom you can rely is needed.
Finally, you need to apply the material facts to the applicable law. Sometimes your professional
conclusion is not tax treatment that your client was hoping for. Your due diligence
obligation to your client is to tell them that, even if they don't want to hear it. This is what
Circular 230 means and its requirement to determine the accuracy of a representation to the
client. Now, if you're relying on the work products of another, there are several ways to meet
your due diligence requirements. Under the safe harbor provision in 10.22, you will be deemed to
have exercised reasonable due diligence if you use reasonable care in selecting, engaging,
supervising, training, overseeing or evaluating the individual's work you're relying upon.
Reasonable care is based on the facts and circumstances of the situation. If you rely on
another tax professional or a third party who prepared a document, like an appraiser, you may
rely on their work unless you have reason to question it or there is no Circular 230 requirement
regarding documenting the information you receive from clients and others or the advice you
provide to your clients. It's a good practice to maintain a written record of such
communication, such documentation can assist during an IRS examination or claims of alleged
malpractice. I have provided here an example of the recent OPR case where appraisers were
disciplined, failing to meet the due diligence standard in Section 10.22. In this case, OPR
reached a settlement with a group of appraisers accused of aiding in the understatement of
federal tax liabilities by overstating facade easements for charitable donation purposes. These
appraisers prepared reports, valuing the facade easement donated over several years. On behalf
of each donating taxpayer, the appraiser completed a Form 8283 certifying that the appraiser did
not fraudulently or falsely overstate the value of the facade easement. However, in valuing
those facade easements without substantive investigation, the appraisers improperly applied just
a flat percentage with the fair market value of the underlying properties prior to the
easement's donation. Under the settlement, the appraisers admitted to violating
10.22(a)(2)10.22(a)(1) for failing to exercise due diligence and the preparation of documents
relating to IRS matters, in this case, the appraisal and the 8283. And they admitted to
violating 10.22(a)(2) for failing to determine the correctness of written representations made
to the Treasury. And we realize these appraisers did not file the return, they merely provided
documentation that was used or positioned on the return. So in this case, appraisers were not
only disqualified from presenting evidence or testimony in any administrative proceeding before
the Treasury or IRS, they also received monetary penalties in this case. 10.27 addresses fees
practitioners can charge their clients. Your fee structure can take into account the complexity
of a return in determining the appropriate fee. However, your fee should not be based on a
sliding scale depending on how much your client's refund is going to be. A contingency fee
cannot be charged for the preparation of an original return. Now, contingency fees can be
charged in a limited situation in connection with an IRS examination or challenge to an original
return, amended return or refund claim, services rendered in connection with the determination of
statutory interest or penalties assessed by the IRS or for services in connection with a
judiciary proceeding arising under the Internal Revenue Code. Section 10.29 addresses Conflicts
of Interest. To comply with this section, a practitioner first must determine whether a
conflict exists. Now, conflicts can occur when representing related taxpayers. For example, in
representing a married in an IRS examination, a conflict can arise if one of the spouses seeks
innocent spouse treatment. Conflicts can also arise when representing a partnership and the
partners or corporation and its shareholders. Conflicts can arise also when there is a
significant risk that your representation of one client will be materially limited by your
representation of another client or a former client or by your own personal interest or your
responsibilities to a third party like a fiduciary beneficiary or someone whom you own a
contractual or other legal obligation. An example of a conflict of interest is when a
practitioner promotes a transaction, prepares the return reporting that transaction and defends
the taxpayer during an IRS examination of that transaction. In this situation, one has to wonder
is the practitioner's interests adverse to the clients and that the practitioner maybe
continuing to dispute that transaction to avoid a practitioner penalty or malpractice suit?
BREHMER: Um, Sharyn, can you say more about that one? It sounds like you're saying that maybe
the practitioner is trying to get the IRS to agree to their position not because it was really a
valid tax position, but because they're afraid if they lose the case the IRS might assert a
penalty against that tax professional or maybe the taxpayer would sue the tax professional. Is
that is that what you're getting at? FISK: Correct. In this situation, maybe the
practitioner is looking at her own interest and not the interest of the client. The
practitioner might be extending the dispute, going through exam, going through appeals, even
going through litigation to avoid losing the case for as long as possible, to put off maybe
having to return the fee for the transaction and to avoid a potential malpractice claim. And all
of this is to the detriment of the client who's paying the practitioner to dispute the
transaction with the IRS and is incurring accrued interest and possibly penalty for an invalid
tax position that could have been resolved long ago. BREHMER: OK, I get that. I didn't even
think about that, that if the practitioner keeps pushing the case through all that legal stuff,
then and they lose in the end, then the taxpayer is not only going to pay the additional tax,
but more interest, more penalty, and that they should have like given up a little while ago.
They should have admitted what was going on admitted defeat maybe. FISK: Exactly. Now
we're talking about here a transaction we know is invalid, the practitioner knows it's invalid.
Now if it's a if there is a real legitimate dispute about the transaction, then yes,
absolutely, go ahead and go through all the administrative rights and legal rights to defend that
position. BREHMER: OK, that is helpful to have that clarification, too. I appreciate that.
OK. Would you continue please? FISK: Sure. Alright. So once we've concluded that a conflict
exist, you must determine whether you can whether you reasonably believe you can provide
competent, diligent representation to each affected client. If you cannot or if the conflict is
legally prohibited, you must withdraw from the representation. If you believe that despite the
conflict you can provide competent diligent representation to each effected client, you must
obtain, in writing, a waiver of the conflict from each affected client at the time the conflict
is known. This documentation must occur within 30 days of when the conflict arises. Getting a
written conflict waiver after the tax matter is concluded or when the IRS the client raises the
issue that there might have been a conflict is not going to be timely. You want to get those
written conflict waivers within 30 days. Retain those written conflict waivers for three years
after whatever engagement you were involved in has ended, and you must provide them to OPR if we
request them. Recognizing whether a conflict of interest exists or whether you can provide
competent diligent representation to each affected client can be tricky. Don't be afraid to seek
help from various sources such as your state licensing authority, your malpractice carrier or an
objective and knowledgeable third party. Also, Section 10.29 aligns with the American Bar
Association's model rule on concurrent conflicts of interest. And the ABA has a substantial
body of official comments and interpretations, and there are numerous tax court documents
interpreting and implying the general conflict of interest rule. So you can use this whole body
of information to help you understand how 10.29 may apply in a particular situation. 10.31,
this one is easy. It's very clear regarding the negotiation of taxpayer's check. You can't do
it. You may not cash, endorse, deposit into account you control with an electronic transfer or
do anything comparable to check in your client's name as the taxpayer written from the U.S.
Treasury. It's still relevant whether your client says this is OK. Doing so is a violation of
Title 26, subjecting you to a penalty under IRC Section 6695(f). Alright. Now we've covered
part of Section 10.34 earlier about due diligence. Section 10.34(a) covers the standards for tax
return preparation, return advice and the submission of other documents. This section applies
when you assist or advise clients on reporting items on their tax returns. Section
10.34(a)states, you may not sign a tax return that lacks reasonable basis nor advise taking a
position on a tax return that lacks a reasonable basis. So what's reasonable basis? The
concept of regional basis in 10.34 is tied to the same concept of reasonable basis found in the
IRC Section 6662, the accuracy-related penalty. In general, a reasonable basis means there is a
greater than 25% possibility of success position taken on the return would be sustained if
challenged. And the position on the return is disclosed. Section 10.34(a) also provides that
you may not sign or advise a position on a return that is not that is unreasonable clarify
that is unreasonable. The concept of unreasonable in 10.34(a) is tied to the term in IRC Section
6694, the preparer penalty, which defines an unreasonable position as one that lacks substantial
authority that's a higher standard than reasonable basis. So the one it's one that lacks
substantial authority, but does have reasonable basis, but was not disclosed. Last, Section
10.34(a) states you may not sign nor advise with respect to a tax return position that is a
willful attempt to understate a tax liability, either by you or your client or that is a
reckless or intentional disregard of the rules and regulation. As was with general diligence
standard in 10.22, this section requires you to understand the applicable laws to your client's
relevant facts. In this context, patterns are going to matter. A single mistake is not what OPR
looks for when considering fitness practice under Circular 230, but numerous errors, multiple
demonstrations of recklessness or disregard to the rules and regulations or frequent displays of
incompetence is going to get our attention. Subsection B of 10.34 sets forth the due diligence
standards for documents and other papers. When taking positions on documents that are submitted
to the IRS, you may not advise a frivolous position. You also may not advise making a submission
that would be frivolous or with a submission that's intended to delay or impede tax
administration. BREHMER: Hey, Sharyn, can you give us an example of a frivolous submission?
What does that mean? FISK: Oh, yes, I can. Alright. Making a submission for the sole
purpose of stopping collections can be a violation of 10.34(b) depending on the facts and
circumstances. Let's say your client has an outstanding tax liability, but he doesn't he
doesn't have the funds to pay that tax liability in full. Even though the client acknowledges he
is personally liable for the underlying tax liability, you advise him to complete and submit
Form 14039 that's the identity theft affidavit claiming that the tax liability is actually
the result of identity theft and you do this for the purpose of putting a hold on collection
action. Your client follows your advice. He completes the form and he sends it to the IRS.
You have violated Section 10.34(b) by advising your client to make a frivolous claim or impede
tax administration. It is irrelevant that you personally did not complete that Form 14039 or
that you are not the one who submitted to the IRS. BREHMER: OK, that is a really helpful
example. I get that better now. The real issue is the taxpayer can't pay. And filing of an
appeal to say you can't pay is fine, but filing a form to say that it's identity theft and it's
not really the taxpayer's true tax liability when the taxpayer knows it's really his and the tax
practitioner knows that that's really the taxpayer's liability, that's what that's what's not
OK. That's what makes it frivolous. FISK: Correct. Also, you cannot advise making a
submission that either contains or admits information that demonstrates an intentional disregard
of the rules or regulations. So staying within this collection context and a collection matter,
that would be submitting a financial statement you know omits some of your client's assets.
BREHMER: OK. Another good that was another good example. If the practitioner knows that the
taxpayer has a car or a bank account or whatever, they can't submit a financial statement that's
missing that bank account or that car because the tax practitioner knows that that really is the
taxpayer asset taxpayer's asset and it has to be on that financial statement. FISK: Correct.
BREHMER: Alright. OK. Thank you again. The floor is yours once again. FISK: Alright. So
we're now on the last part of 10.34. It is your obligation under 10.34 to advise your client of
penalty exposure and the opportunity to avoid penalties by making the disclosure on the tax
return. And we mentioned disclosure before when we talked about reasonable basis. A disclosure
can be made by attaching Form 8275 Disclosure Statement or a Form 8275-R Regulation Disclosure
Statement to the return. Now a written statement or an explanation could also be a disclosure.
As long as it's attached to the return, it's sufficient to put the IRS on notice of that
particular issue. How about we stop here for another polling question, Karen? BREHMER: OK,
let's do that. Alright. Audience, this is our third polling question. It's a long one. I'll
read it and I'll give you a time to answer it, too. Practitioner has a conflict of interest in
his representation of a new client. To be able to represent the new client, practitioner has
telephoned each client affected by his representing the new client, and each has waived the
conflict of interest. How soon following their verbal waiver must practitioner obtain written
confirmation from each affected client? And the choices are, A, no later than 30 days following
the client's granting of informed consent; B, no later than 60 days following the client's
granting of informed consent; C, no later than 90 days following the client's granting of
informed consent; or D, written confirmation is not a requirement. Take a moment. Read the
question again. Read your choices for your answers, and then click the Radio Button that best
answers the question. And I'll give you a few more seconds to make your selection. I'll be
quiet for a little bit, and then I'll give you a countdown. OK. We're going to stop the
polling in five seconds. Five, four, three, two, one. OK, we're going to stop the following now
and let's share the correct answer on the next slide. And the correct answer is A, no later
than 30 days following the client's granting of informed consent. Let's see how well you did.
Eighty-five percent, that is pretty darn good. Sharyn, 85 percent, I will leave it up to you.
If you want to provide some more detail on why that answer is correct, you can. Honestly, if
you want to continue, you certainly can do that as well. FISK: Sure, no problem. For the
for those folks that may have missed this, you can go back to Slide 46 and 47 regarding Section
10.29 and just kind of have the rational why we have that 30-day rule is to make sure that the
clients are immediately informed of a potential conflict and that their informed consent is
received before that representation goes too much further down the road, and while it's still
fresh in everyone's mind because, as you know, you may have told the client about the conflict.
But by the time the representation is done or something else pops up, the client may have
forgotten about that issue and you want something in writing to establish that you had that
discussion, you informed them and that they waived that conflict of interest. I think that'll
cover it. BREHMER: OK, very good. Thank you for that and please feel free to continue.
FISK: Sure, Alright. 10.35 provides you must be competent to practice before the IRS, and this
is going to come straight from that statutory requirement for fitness to practice. Competent
necessary for the matter for which the practitioner is engaged. For example, you can't just practice requires the appropriate level of knowledge, skill, thoroughness and preparation
rely on your tax software program and let it do all the work. You have to understand the
underlying tax laws applicable to your client's tax facts and tax matters so that you know when
that return is printed out from the program, whether it's correct or not, and this is where
continuing education can assist in building your expertise. It's essential to recognize when
you do not have the knowledge or understanding to advise a client and to determine whether you
can gain the knowledge and competency through research and reading. And if the competency
cannot be readily obtained, then you may need to retain a consultant. You may even need to refer
your client to somebody that does have the prerequisite expertise. For example, what if one of
your regular clients come to you for advice on an international business transaction he's
thinking of entering into. And you had no experience in international taxation. You're not
familiar with the laws governing taxation of international transactions, in which case you may
consider retaining the services of a consultant that does have the expertise in international
taxation or you may refer your client to a practitioner who does have such expertise. Now that
doesn't mean you're losing your client, you're just saying to your client, "I can handle your
regular matters. But for this particular situation, let's get some advice from an expert."
Advising your client on tax situations that you are not competent on can cause significant
adverse financial consequences not only to the client, but also to you. This can be more than an
OPR issue, it can also be a malpractice issue. Under Section 10.36, anybody in the firm or
business who have or shares the principal authority and responsibility for overseeing the firm's
practice that involves Circular 230 matters, which includes all tax, federal tax matters, and any
other laws and regulations administered by the IRS as the response has the reasonable excuse
me, has to take a reasonable step to ensure that everyone who's engaged in that firm is aware of
their duties and responsibilities under Circular 230. If the firm is not able or willing to
identify a principal person or persons who have authority and responsibility, OPR is authorized
to determine the logical principal person. That is important because the principal person is
subject to discipline under 10.36 if he or she failed to take reasonable steps to ensure that
the circular and its obligations are known to employees and are being properly followed. If
there's somebody else firm, an employee, an associate, an independent contractor violates
Circular 230, that individual who violated Circular 230 will be responsible for their misconduct
and they're going to receive appropriate discipline for that violation. And under 10.36, the
individual who should have assumed the oversight role and didn't follow through will also be
looked at to determine whether there should be some level of culpability attributed to that
person because of the lack of effort to educate and ensure compliance by the employee. There is
no requirement that the responsible person actually know about the misconduct. Even when the
person with principal authority for compliance has taken reasonable steps, he or she can be held accountable if a violation of Circular 230 occurs and the individual responsible for oversight
fails to take steps to stop the violation that he or she knows about or should know about. Now
these reasonable steps a firm could make to ensure its employees understand their obligation
under Circular 230 include creating a firm policy on adhering to the circular in an environment
that supports ethical behavior, putting controls in place to ensure oversight and review of
employees and their work product, setting policies and procedures regarding assignment of work
and workload that make sure matters are handled by employees who have the competency to do the
work and the time to do a thorough and complete job. Taking prompt and effective action
regarding the failures to adhere to Circular 230 and supporting mentorship and continuing
education so employees gain a knowledge needed to be competent advisors and understand their
ethical obligations. BREHMER: Thank you for that, Sharyn. I was a little confused on what
reasonable steps really meant, and I didn't really get the stuff with 10.35 and 10.36. So thank
you for clarifying that. And I think 10.37 comes next, right? FISK: Absolutely. Alright.
10.37 states that when you're given a written advice, you must make reasonable efforts to
determine the relevant facts. Remember we talked about this in 10.22 and 10.34, reasonably
consider those relevant facts, make reasonable, factual and legal assumptions in situations where
facts send out are known. It's not reasonable for you to rely on representations or statements
or agreements or anything else given to you or told to you if you know or should know that the
information is based on incorrect or incomplete or inconsistent representations or assumptions.
Think about when a client is saying this is a business expense, and you know that that
particular item or expense is completely unrelated to the practitioner's business excuse me,
practitioner, the taxpayers business. You also cannot play the audit lottery with your advice,
that is you may not give advice based on the assumption that the return will not be examined or
if it's examined, the issue is not going to be noticed. It's a best practice to document the
information you relied upon for your written advice. This record can assist during an IRS
examination because you know those pop-up years after the return has been filed. It helps if the
client has become incapacitated or passes away. You have a written history of what the thought
process was back then with the client or if a business change its hands or the employees you used
to deal within the business are no longer there, the ones you have the discussions with. It's
also helpful for a malpractice consideration. BREHMER: Those are really great pieces of advice
about the things that why they should document and all the things that might happen later that
meant really important as to why you should document I also wanted to ask you to say a little
bit more about audit lottery. I think some of our attendees might not really know what that
means or what you're talking about, even though you did explain it a bit, but could you do it
again, explain what audit lottery means. FISK: Sure. And it's a good thing if some of our
folks don't know what audit lottery is. That means they're not taking that into consideration
when they're taking a position on the return. So BREHMER: That's right. FISK: audit
lottery is a common expression that stands for the misconception that, of the millions of tax
returns filed a year, the IRS only audits a small percentage so that a non-compliant taxpayer's
return can be hidden among the millions of compliant taxpayer's return. And this belief is
incorrect because the IRS uses many methods such as modeling, and data analytics, and relational
analytics, et cetera to target our activities as precisely as possible. So you don't rely on
audit lottery, not good. BREHMER: Now that you've said more about it, I don't know why I've
even use that concept, it's not that same term I'm talking to my friends like I know what the IRS
is going to catch and what they're not going to catch, but you can't file a return based on what
they're not going to catch, what we're not going to catch. You know. FISK: Absolutely.
BREHMER: So, Alright FISK: Alright. Let's go on with written advice. BREHMER: Yes.
FISK: OK, OK. Section 10.37 provides you may rely on the advice of others in giving written
advice if the advice is reasonable and your reliance is in good faith considering all the facts
and circumstances. So basically, what's the reputation and the expertise of the individual who
is giving you this advice? Alright. We're going to move on to the exciting stuff, disreputable
conduct. Section 10.51 lists 18 examples of incompetence and disreputable conduct. We're going
to discuss a few of those. 10.51(a)(4) prohibits you from giving a false or misleading
information or participating, in any way, in providing false or misleading information to the
Department of Treasury or to any officer or employee or to any tribunal authorized to pass on
federal tax law matters. This covers anything you're going to submit testimony, affidavit,
declaration, tax returns and other forms, financial statements, protests, even applications you
might be filing like your PTIN application, enrollment application. 10.51(a)(7) identifies as
disreputable and incompetent conduct willfully assisting or, in some way, counseling, encouraging
or suggesting dual client or prospective client an illegal plan to evade federal taxes or the
payment of federal taxes or a violation of any federal tax law. We see this type of misconduct
arising with respect to collection matters, advising a client to transfer or hide assets from the
IRS or omitting assets on filings with the IRS. We see it with the non-filing of returns,
advising client not to file a return. We see with particular return positions taken on return.
Section 10.51(a)(13) covers false opinion that are knowingly, recklessly or grossly incompetent
in anyway. Disreputable and incompetent conduct also includes giving intentional or recklessly
misleading opinion. This provision applies both to oral and written opinions, and whether you're
giving those opinions to your client or whether you're giving them to the Treasury. Patterns
are important here, too. Frequent displays of incompetence is going to get our attention, not
the occasional foot-fault. Now to define a false opinion is one that contained knowing
misstatements of fact or law that asserts unwarranted position, that counsels or assists in
conduct known to be illegal or fraudulent or that conceal matters required by law to be
revealed. Reckless conduct means a highly unreasonable omission or misrepresentation. It
involves an extreme departure from the standards of ordinary care. 10.51 addresses recklessness
as something that would constitute a deviation to the extreme, something that falls far below
the ordinary reasonable practitioner standard. It's got to be bad. Gross incompetence is
described as gross indifference or grossly inadequate preparation or consistently failing to
perform your obligations to your client. Again, here we're looking at pattern. Karen, let's
pause here for another polling question. BREHMER: OK, yes, let's do that. So Audience, this is
our fourth polling question. Which of the following must a practitioner do if he knows his
client has omitted relevant information on a tax return? One, inform the client that he or she
has omitted relevant information; two, inform the client of the consequences of the omission of
the relevant information. And your choices are, A, one only; B, two only; C, both one and two;
and D, neither one nor two. That was a little bit longer question with some choices for answers
there, so take a minute. Read it again. Look at your options and then click on the Radio Button
you believe both closely answers this question. And I'm going to be quiet for a little bit, and
then I'll do a countdown to let you know we're coming to the end of our polling question time.
So we are going to stop the polling in five, four, three, two, one. OK. We'll stop the polling
now and we'll share the correct answer on the next slide. And the correct answer is, I got to
look at my own notes, C, both for one and two. So let's see how we did for oh, 97 percent.
Fabulous. You know even though that was a really high percentage, Sharyn, I'm still going to
ask you to elaborate on this one because I thought your example that you gave us earlier about
the NOL was really a good one. So just clarify what they do have to do, what they don't have to
do, what would constitute malpractice if they kind of went too far, I mean, whatever you'd like
to say to illustrate that point. FISK: Sure, I'm feeling good about this group. This group
knows what it's doing. Alright. So this is going to go back to Section 10.21 on slide 40. As
you correctly answered, the practitioner must do both of these. If a practitioner knows that a
client's failed to comply with the revenue laws or made an error or omission from a tax return,
form, affidavit, any document that the client submitted or executed under the U.S. revenue laws,
practitioner must promptly advise the client of the failure to comply and the consequences.
Now some practitioners may think that they find an error or omission are non-compliant, they must
correct the document or file a correction correcting document with the IRS. But as we
stressed before, 10.21 requires only the two things promptly inform the client of the problem
and advise them about the consequences for that non-compliance error omission under the code and
regulation. And, of course, as we've added, you can and should advise your client on how to fix
the error, omission or non-compliance, but it's really up to the client as to whether they want
to take that corrective action. And do remember, you cannot knowingly perpetuate the
non-compliance error or omission. BREHMER: OK. So I appreciate that. I know they got a good
percentage on this, but it's a question I end up getting often from tax professionals I deal
with, so I appreciate you taking the time to go over it. So now I think you're going to tell us
about OPR's investigative and disciplinary process. FISK: Yes. So in this part we're going to
talk about subparts C and D of Circular 230. OPR has the responsibility for practice standards
oversight. It independently investigates alleged violations. It proposes and negotiates
appropriate discipline for practitioners who have been found to violate Circular 230, and it
administers the administrative hearing and appeals process. Subpart C addresses the sanctions
for violating the regulations under Circular 230 and Section 10.50 authorizes the sanctioning of
practitioners. However built into this is a lot of due process for the practitioners.
Practitioners are going to have many opportunities to explain their conduct and we listen
carefully. Potential sanctions include disbarment, censure, suspension and even monetary
penalties, as I mentioned back on the case with respect to the appraisers. We are concerned
about reckless gross misconduct regarding the provisions of Circular 230, not the occasional
foot-fault by a practitioner. We all make mistakes. We are looking for somebody who is being
reckless doing gross misconduct. Section 10.52 details the violations for various provisions of
Circular 230 that are subject to sanctions. When we're looking at a practitioner's conduct,
we're going to look for willful violations, recklessness and, as I said, gross incompetence.
Occasional mistakes are not willful. They're not reckless or reflect gross incompetence, but a
pattern of mistakes is different matter. This slide and the next three slides provide examples
of the misconduct OPR sees. And some of this misconduct relates to the practitioners failing
to meet their Circular 230 responsibilities to their client, which is not exercising due
diligence, charging an unconscionable fee, improperly advising the client or conflicts of
interest that have not been waived. Some misconduct relates to a practitioner failing to meet
their Circular 230 responsibilities to the IRS such as advising the client to evade the
assessment or payment of taxes, preparing, signing or submitting a return or a claim that
contains an unreasonable position. Some misconduct relates to the practitioner's own behavior,
contemptuous conduct, non-compliance as to their federal returns and their tax obligation,
license suspended, revoked or disbarred for cause. Contemptuous conduct includes abusive
language, making false accusation or statement knowing them to be false, circulating and
publishing malicious and libelous matter. Criminal convictions are also a typical example of the
types of misconduct my office sees. These convictions involve criminal offenses under the
federal tax laws, crimes involving dishonesty or breach of trust, and any felony under federal or
state law with the conduct involved, renders the practitioner unfit to practice before the IRS.
We get our referrals from many sources. Referrals come to our office from IRS Revenue Agents,
and Revenue Officers, and Settlement Officers, and Appeals Officers. Section 10.53 actually
makes it mandatory for all IRS personnel to make referrals to us whenever employees suspect
there's been a violation of the circular. Practitioners should understand that OPR is separate
from the operating divisions administrating the internal revenue code. Remember I mentioned
those folks are under Title 26. We are under Title 31. And we exercise independent judgment at
every stage of a case. We also get information about convictions and civil injunctions from
Criminal Investigators and the Department of Justice, and we receive information on disciplinary
actions taken by state bars and accounting boards, and the U.S. Tax Court. It's also not
uncommon for us to receive complaints about a practitioner from current or former clients of that
practitioner, the practitioner's peers, former or current employees, business colleagues, etc.
Also, when we get a referral about a practitioner, we routinely check the practitioner's tax
compliance to make sure the practitioner has filed their individual federal tax returns, and
returns for any entity over which the practitioner has some control, and whether both have paid
all of their taxes, or making an effort to pay the outstanding tax liabilities. BREHMER: Hey
Sharyn, on that one, I know I've gotten questions from tax professionals about that. Can you
tell us more about non-compliance? If they are not compliant, do they have time to get
compliant? And if they do owe taxes but they have an installment agreement, is that considered
being in compliance or not? FISK: Sure. Practitioners will have time to get compliant if
they're being diligent about doing so. So we may contact them about a non-compliance, and they
may respond, I got behind, I had I was sick, I had family matters, business issues, whatever it
is. But I am getting my returns prepared, and getting ready to submit them. But we're not
going to be waiting years for a taxpayer to get their missing returns filed. BREHMER: Yes,
that's some clarification. FISK: Yes, that's tell them it's not going to work. When we
raise a non-compliance matter with the practitioner, it's typically because there's several years
of failure to file return. And again, we're not looking for a foot fault, a delinquent return
for one year return or returns for one year, that can be understandable. Sometimes, things
happen. But a pattern of filing delinquent returns is something that we will notice. BREHMER:
Yeah. FISK: If a practitioner can yes, now on the installment payment, or the outstanding
tax liability, if a practitioner cannot pay an outstanding tax liability, but it's in an
installment payment arrangement with the IRS , on that basis alone, the practitioner is not in
violation of Circular 230. Practitioner on an installment payment arrangement is meeting his or
her due diligence and standards of care under the circular. They're making an effort, and
cooperating with the IRS in getting that tax liability paid. It's the practitioner who is not
making any real effort to pay an outstanding tax liability that we're going to focus our efforts
on. BREHMER: OK. FISK: The ones who don't get into the installment agreement, or get into
the installment agreement and default, and then get into another one and default again, that kind
of practitioner. BREHMER: OK, Alright. Again, I appreciate you taking the time to go over
some examples because they're questions that we here quite often. So would you please continue?
FISK: Sure. Alright, now I mentioned there were IRS personnel has to there's mandatory
referral from them if they think something is a violation of Circular 230. There's also
mandatory referrals to OPR when specific penalties are imposed on a practitioner by IRS
personnel. And these penalties include IRC Section 6694, 6700, 6701, 7407, and 7408. Also,
when other penalties are imposed on a taxpayer, or a practitioner during an examination, this may
also lead to referral to OPR. Take for example, if during an examination, the taxpayer raises
reliance on a tax professional and descends to an accuracy-related penalty under IRC Section
6662. The Revenue Agent may look at the practitioner and the level and competence of the
advice upon which the taxpayer relied in order to determine whether a referral to OPR is
appropriate. Upon receiving the referral, OPR first determines whether it has jurisdiction over
the tax professional. That is if the tax practitioner practicing before the IRS, the OPR
investigations generally begin after the enforcement effort, or the IRS case has concluded. OPR
does not influence and generally does not participate ongoing IRS enforcement activities.
However, during these enforcement activities, IRS personnel may consult with OPR. IRS personnel
must not threaten an OPR referral during enforcement activities if it's going to trigger an
agency-created conflict of interest between practitioner and the taxpayer. In concluding our
investigations, we follow relevant leads to determine the facts regarding the issues raised in
the referral or complaint. And this could include collecting documents, speaking to the
referent, obtaining affidavits or other statements, searches of internal and external databases,
review of taxpayer case file documents, interviews of witnesses with direct knowledge, and
request for information issued to the practitioner and third parties. If we conclude there
appears to be an actual violation of Circular 230, we will issue them an allegation letter. Now
this letter will recite the relevant facts and identify specific acts or omissions that appear
to be violations of specific Circular 230 provision. And the practitioner is invited to respond
and offer the opportunity to confer with my office regarding these allegations and the evidence
we're relying upon. If my office determines that it has a basis to investigate a practitioner
for alleged violation, it may also conclude that additional information is needed before
determining how far we're going to take this case. A notice of alleged or excuse me, a notice
of an allegation provides a practitioner an opportunity to address the issues raised in a
referral or uncovered by us at an early stage in our consideration of a case. The practitioner
can elect not to respond, which generally is not a wise choice. We can often close a case at
this stage based on the practitioner's response to these early inquiries. And that's ordinarily
advantageous to the practitioners. BREHMER: Hey Sharyn, can you say more about that? I mean,
maybe what you said is obvious and evident. But why is it a good idea for the practitioner to
reply early in this process if they're being investigated? FISK: Early participation by a
practitioner can help the OPR understand both sides. Like the example I had given earlier about
the practitioner not knowing or having reason to know about the client's foreign bank account.
Had that case ended up in OPR, having the practitioner explain the misunderstanding with the
client, whether this business is determining whether there's actionable case. And, now I'm
not saying that that particular case it was actionable, but if there is an actionable case, what
is the appropriate disciplinary action to take? BREHMER: So you just want to hear both sides of
the story. This compliant might come in and might say all kinds of things about the
practitioner and their behavior. But if the practitioner responds, then it's like, you have to
hear their side of the story. Is that a good way of saying it, too? FISK: It is. And the
earlier, the better, because that kind of sets the tone and the track for our investigation and
determination. BREHMER: OK, Alright. Well, thank you for that. And you're going to talk
about the OPR complaint process and tell us some more things about it? FISK: Yes. We're going
to get on to disputes and appeals. Often, the practitioner acknowledges the accuracy of the fact
identified in the allegation letter, and that he or she has actually violated Circular 230. In
many cases, settle at this point with mutually agreed sections for the violation. However, if
the practitioner in my office can't reach an agreement, we transmit the case to the Office of
Chief Counsel to initiate a final proceeding before an administrative law judge. The Office of
Chief Counsel will offer another opportunity to settle to the practitioner before starting this
hearing process. Should the practitioner decline that offer, the Office of Chief Counsel will
file a formal complaint with the administrative law judge, and a copy of that complaint is going
to be served on the practitioner. The Administrative Law Judge Office looks a lot like a civil
litigation. There's pleadings and motions and discovery, and often a hearing before the
administrative law judge, who ultimately issues a decision. That decision can sustain the
allegation and impose or modify the discipline requested by my office in the complaint, or the
decision can dismiss the case. After the administrative law judge's decision, both OPR and the
practitioner have the opportunity for an appeal to the Treasury Appellate Authority. Now, this
is an attorney in another division of the Office of Chief Counsel who had no previous
involvement with the case. A practitioner who wishes to appeal the Treasury official's final
decision from that Treasury Appellate Authority can take the matter to federal court. So what's
important here is that the OPR disciplinary process provides practitioners with multiple
opportunities to present his or her case, and there's an independent review of OPR's proposed
action by an administrative law judge. OPR has a range of options for closing a case. The most
common is a non-disciplinary closure, which is closed without action, or a soft letter. A
closed without action would be appropriate if we conclude there was no misconduct, or conduct
does not appear to have implications for future fitness to practice. A soft letter is often
used in tax compliance cases, where the practitioner is given an opportunity to correct the
filing, or the delinquent filings or payment issues before we decide whether formal action may
be necessary. Now, some of that correction may be getting into an installment payment plan.
Finally, corrected action generally results in closure of the case with a warning, where some
more something more formal is appropriate, the available actions escalate through the sanction
level. So we start with private reprimands, public censure suspension, and disbarment.
Censures are effectively public reprimands, because we publish a list of of censures,
suspension and disbarment in the Internal Revenue Bulletin. BREHMER: That is a hard word to
say. I was going to ask you, but now I'm more hesitant about how to pronounce the word. But I
was going to where can a practitioner learn more about these things you're talking about; public
censure censures, suspension suspensions, disbarment; I can't say any of the words either.
Where can they learn more? FISK: Circular 230. Also, we have a public list of disciplined
practitioners can be found on IRS.gov under Circular 230 practitioners. BREHMER: OK. So not
only are the rules of what you should do found in Circular 230, but also information about what
might happen to you are also in Circular 230. That's good to know. And then you say the
public list of disciplined practitioners is also on IRS. OK. Great. OK, thank you for
clarifying that. And please, proceed when you wish. FISK: Sure. Suspensions and disbarments
preclude the practitioner from practicing and representing taxpayers before the IRS until they
petition for reinstatement and reinstatement is granted by OPR. A suspension imposed by
administrative law judge's proceeding can go for a period of 1 to 59 months. While a suspension
imposed under Section 10.82, which we're going to talk about next, is expedited suspension
process, is indefinite. Now as I mentioned before, monetary sanctions are available which can
be up to the amount of compensation received or to be received as a result of the misconduct.
But OPR rarely imposes monetary sanctions as practitioners should not be able to buy their way
out of ethics violation. 10.82, as we mentioned. In certain cases, the OPR can suspend a
practitioner before filing a complaint. These cases involve practitioners who have already had
been adjudicated in failing to meet some specific standards after having been provided an
opportunity to be heard in another form. So what we're talking about here is a disbarment
proceeding, a conviction, court sanctions, those kinds of things. Under Section 10.82, OPR can
also impose a suspension before filing complaint if the practitioner is non-compliant with their
own federal taxes. This includes filing of their returns and the payment of their tax
obligations. Under Section 10.82, expedited suspension process, practitioners still have an
opportunity to be heard by OPR before the suspension takes place. The practitioner also has up
to two years after the suspension to request a formal proceeding. Alright, I think we have time
for our last final polling question. Karen? BREHMER: Yes, that's correct. So audience, this
is our fifth and final polling question, another long one. Which of the following would be
considered contemptuous conduct deemed disreputable under the regulations governing practice
before the IRS? One, using abusive language? Two, making false accusations? Three, publishing
libelous matter? Your choices are A, one and two only; B, one and three only; C, two and three
only; or D, one, two, and three. We'll take a minute. Read the question again. Read those
options again. Take a look at those answers, and then click on the Radio Button you believe most
closely answers this question. And again, we have a lot of people on. So I want to make sure
people have time to answer. And I'll give you a five second countdown. We're going to stop the
polling in five, four, three, two, one. And we're going to stop the polling now, and we'll
share the correct answer on the next slide. And the correct response is D; one, two, and three.
Let's see. And, 84 percent. Um, that's still a pretty good percentage, but I think one of the
things that you've talked about, Sharyn, that I found interesting was contemptuous conduct and
you talked about abusive language, you talked about publishing malicious or libelous matter.
Can you, I don't know, give us some example, or something like that for those things? FISK:
Sure. So we chatted about contemptuous conduct when we covered slide 73. And as we mentioned,
contemptuous conduct includes, in connection with the practice before the IRS, includes the use
of abusive language, knowingly making false accusations or statements, and circulating or
publishing malicious or libelous matter. And then if you wanted to look at the definition, it
is defined in Section 10.51(a)(12). And an example would be if a practitioner posted some
libelous matter on a social media page regarding the Revenue Agent. You know how social media
can get everyone in trouble. BREHMER: So maybe they're not happy with what the Revenue Agent
decided. But posting it on Facebook that so and so Revenue Agent is bad, would or a bad idea.
Safe to say it's a bad idea. FISK: Correct. BREHMER: OK, Alright. FISK: And not so much
bad. It's actually lies about ... BREHMER: Right. There you go. That's right. That's your
opinion that they didn't do a good job. But lies on Facebook or social media would be a
different story, OK. I think you have some resources to share with the audience. FISK: Yes, I
do. And we covered a lot today. And it's a lot to take in. So in the next few slides, I
identified helpful topic resources. They were initially linked, but may not have worked with
this webinar. So I provided a resource document for attendees to have the actual links to these
sites. So hopefully everyone's got a hold of these. And these resources can be assistance in
reaffirming what we've covered today. So there's regulations and or excuse me, there's the
publications and circulars, and forms. They can provide additional information now should you
want it, as well as resources in the future should something come up and you need to refresh
yourself or get clarification on a particular subject. I've also provided contact information
for the Office of Professional Responsibility. So if someone was inquiring to make a referral
regarding a practitioner, they could go about it a couple of ways. If it's regarding a return
preparer, you can file a Form 14157. And that form is going to go RPO. And if the practitioner
is under OPR's jurisdiction, or has had representational activities, it's going to get routed to
OPR. For practitioners covered under Circular 230, you can send any referrals to OPR through
its e-fax number there shown on the contact. Alright, back to you, Karen. BREHMER: OK,
thank you so much, Sharyn. Thank you for all the information you provided thus far. So again,
audience, it's me, Karen Brehmer and I'll be moderating the Q&;A session. Before we start the
Q&;A session, I want to thank everyone for attending today's presentation, the Office of Professional Responsibility, Practicing Before the IRS What you Need to Know. So earlier, I
mentioned that we want to know what your questions are that you have for Sharyn today. And
here's your opportunity. We do have lots of questions but there's still time to enter more. So
if you haven't input your questions, go ahead and click on the dropdown arrow next to Ask
Question, type in your question and click Send, and Sharyn will stay on with us and answer as
many questions as we have time for. I know we're not going to have time to answer all the
questions, but we will like I said, answer as many as we have time for. If you're participating
to earn a certificate and related Continuing Education Credits, you will qualify for one credit by participating for at least 50 minutes from the official start time of the webinar. And you
will qualify for two credits by participating for at least 100 minutes from the official start
time of the webinar. And that means that the chatting that we did at the beginning of the
session doesn't count towards the 50 or 100 minutes. So we're going to get started and get as
many questions as we can. First actually, Sharyn, many people asked you, asked if you would
tell us a little bit about yourself. You are obviously very knowledgeable about the topic, but
all we know is that you started in OPR in January 2020. Can you tell us a little bit about your
career, your prior history? I think you've said you've been a professor or something like that.
FISK: Yes. I did not come out of nowhere. BREHMER: OK. FISK: So after I finished my law
school, I got what's called Masters of Law in Tax. So it's another year specializing in just
tax law. And that provided me an opportunity to clerk at the U.S. Tax Court before the Honorable
Judge (Inaudible). So at the Tax Court, I wrote opinions, and got to see both sides of the
taxpayer's position, and the IRS's position. So it was a great way to start a career. From
there, I left the court and spent 20 years practicing in private practice, and my expertise is in
Tax Controversy. And I did that in the State of California, and I also became a Certified Tax
Law Specialist. So I'm familiar, I was a Circular 230 practitioner. And so I'm familiar with a
lot of the issues that may come up in your practice and the concerns you may have. I'd left the
firm and began teaching. I'm Assistant yes, I'm Assistant Professor of Tax. And this
opportunity arose for the Director of OPR, and it's something I was very much interested in, and
I had discussed and lectured on Ethics my entire career. And I couldn't resist a chance to see
if I could get this position. And I'm thrilled that I am here. BREHMER: Yes, we're thrilled
to have you here. So thank you for telling us more about yourself. OK, let's get to some
questions here. Um, let's see. A tax, a taxpayer does not want to accept advice about expenses
that aren't deductible. And insists on claiming such expenses, what should the tax practitioner
do? FISK: Well, in this case the tax practitioner does nothing. So the tax practitioner as
we mentioned under 10.22 and 10.34, you have your due diligence requirement. You can't,
regardless of how much that client insist, you cannot those positions on the return because you
know that they are inaccurate. And the client let's say the client proposes, I'll prepare the
return but you just file it for me. By filing it, you are making a submission to the IRS, so
you're just as culpable as a client with respect to that incorrect information. So as hard as
that may be, you're going to need to fire your client if they insist on taking an incorrect
position. BREHMER: OK, Alright. Thank you for that. Another question here, this person says
I have proof that another tax preparer has submitted a 1040X which is fraudulent with my name
and PTIN. I was the original tax preparer on the 1040 return, but not the 1040X. What do I do?
FISK: Then in that case, you've got a couple of issues. You have not only an one, keep the
document. Don't lose them. Because you want to make sure that no negative circumstances fall
upon you. That can actually be a criminal issue with respect to a fraudulent tax return. And
you can provide that information to OPR through referral process. You can send it through
e-signature. And if you want, we can look at it and if we determine that it also may have
criminal elements to it, we would forward and make a referral to IRS Criminal Investigation.
BREHMER: OK. So the preparer that feels like have been wronged in this case can be the person
who submits the complaint to OPR that say, this is bad, and I want you to take a look at it.
FISK: Absolutely. You want to protect your good name and your reputation. That's the most
valuable thing you have. BREHMER: OK. We did get quite a few questions on the Annual Filing
Season Program. And I'm going to start off by telling our audience something, and then I'm
going to turn it over to you. There's a lot of information on IRS.gov for people who don't
about the Annual Filing Season Program, and they want to learn about what it is, and how they do
this, how they get it. But Sharyn, would you try to explain the difference between what you
handle in the Office of Professional Responsibility, and what the other office with similar
acronym, Return Preparer Office, what they do? Can you help us all out with that? FISK: Sure.
Yes, they made it a little confusing with the OPR reversal RPO acronyms there. But OPR's
jurisdiction is solely limited to the jurisdiction provided to us under Circular 230. So we can
only take action on those practitioners who are covered by Circular 230. RPO handles the
registration and the testing, and the enrollment of the and the Enrolled Return Preparer's
Program they also handle the ASSP Program. Now they have no ability to discipline those folks.
That is not within their jurisdiction. And so and that's the Loving versus IRS issue. Now,
if you're interested in the Annual Filing Season Program, there was a Revenue Procedure I
mentioned in this program. And in the resource document I provided, there's a link to the
program providing information on how you can participate in that program. Now when we talk
about whether you are practicing before the IRS, there is that limited representation. And
that's only going to apply if you have a Annual Filing Season. If you only have the Annual
Filing Season Program to holder certificate of holder, that's it. You're a holder of the
certificate. And it's only going to apply for returns that you prepared and signed after 2014.
And it's only going to apply if the return you prepared after 2015. And if after 2015 one of
those returns get picked up for examination, you can represent your client with respect to that
return under this program. Now, if you do so, you're going to be covered under Circular 230.
And we will have authority over you which would include being able to discipline you should
there be any misconduct. BREHMER: OK, thank you. So there was a question that someone asked
about ASSP. And the situation is that the ASSP participant knows the rules you just mentioned.
The ASSP prepared a return for 2018, that return is not being audited by the Revenue Agent, but
the Revenue Agent is auditing 2016 and 2017 prepared by somebody else. And what happened in
this question here is that the Revenue Agent may not know the rules correctly about ASSP and hold
the person who's ASSP well, you can out of their you can represent the client no matter what
because you're an ASSP. The person say, I don't want to challenge the Revenue Agent. But what
am I supposed to do if this 2018 from where it's audited, and the Revenue Agent tells me that
I'm not qualified to represent when I believe I am qualified to represent based on the ASSP
rules? FISK: What you can do ... BREHMER: I hope you got it. FISK: Yes, I did. It kind
of goes back to the those faith positions if something is not right. So what that particular
return preparer could do is seek guidance from the Return Preparer's Office regarding that
situation. But as it's in the plain language of the statute that is limited to the return you
prepared that is being examined, then you would not have the right to represent with respect to
those prior years unless you get a Power of Attorney, POA, then you do have those
representational rights. BREHMER: OK, Alright. Again, there were a lot of questions about
ASSP. And for our audience today, if you have more questions about it, I would ask you to go to
IRS.gov, look up ASSP, what are the rules, because we're going to switch gears here to some other
questions that Sharyn is more on your ballpark I guess I would say, with specifically OPR
issues. So one question that came in, Sharyn, is that people would like to know a little bit
about what OPR has done in the past year as far as the number of referrals you've received, or
the number of actions you've taken. Do you have any numbers you can share with us on that?
FISK: Sure. And actually we post our numbers to our website, and then they're in our Business
Performance Review that l believe is also on our website. So we have our stats out there. And
each year, it's going to vary. A lot of them come in through the IRS referral process. But we
also get a significant amount through the state board and bar. In fact, we could get up to
1,200 year of referrals from state board and bars that we have to call through and see if we have
any practitioners that are within our jurisdiction. Another lump of data that came in 2016 and
will come again in 2020 is that we call through the what we call the Compliance Data
Warehouse, a list of all taxpayer information. And we look for practitioners who are not
compliant who have penalties, who have failed to file a return, who have had prepare penalties
and pose against them, and for some reason we haven't gotten that referral And the last time
we did that, there was a significant number of cases that we received in the thousands. And so
we're in a process of doing that again. On average, when it comes to looking at our stats, for
reprimands, I would say within the last quarter of 2020. 39 reprimands, one suspension, one
other sanction, 95 non-disciplinary actions. We've got 930 board and bars that are something we
need to look at. And we've gotten six appeals and restatement requests. So you can see we're
quite a busy office. BREHMER: For sure, cool. OK, thanks for sharing those stats and also
letting people know that those more information about that is available on the website. There
are a lot of questions that came in about conflict of interest, and a lot about divorced
individuals. Some of these questions are like variations on a theme. What about preparing tax
returns for divorced individuals, or individuals who are going through a divorce? What if they
are not amicable with each other? What if they are amicable with each other and they both come
to you and they say, we'd like you to prepare a return still. Can you talk about conflicts of
interest and divorced or divorcing clients? FISK: Sure. Return preparers, CPAs, they all get
into really tough positions, especially with respect to contentious divorce or separating
spouses. It's going to come down as I mentioned to your reasonable belief that you can do a
competent diligent job with respect to that information, or with respect to the tax information.
So first of all, you're going to make sure you get that written waiver from both the spouses.
But even if you do have their written waiver with respect to both spouses, if you're starting
to hear, well, I have some income but don't tell my spouse this, or I don't want my spouse to
know that I said I have these deductions you're going to start getting into a Conflict of
Interest problem. And when those things arise, somebody is always going to be looking for
somebody to be responsible. And sometimes they point at you. So you may, for your own
malpractice concerns and safety, want to say that you cannot represent both individuals when it
gets to that point. And you need to decide which one you can represent, or you decide you can't
represent both of them, and that may happen. If you feel you can competently and diligently
represent one of them, you make a referral to a qualified return preparer for the other spouse.
And then you can work with that other individual on the particular return. If it's gotten to
the point where you just know too much and you don't feel comfortable representing both of them,
then you're going to have to refer them both out. And I know that can be difficult. It also
can be difficult timing-wise, because this stuff is going to drag on right until the point that
that return is due. So you have that concern as well. BREHMER: OK, Alright. That is helpful.
I think that like you said, that issue with divorced or divorcing people is still common and
I'm so pleased that you took the time to address that one. So thank you for that. Two
questions that are sort of linked. How excuse me, how do you report a misconduct and can a
private citizen contact OPR directly? FISK: Yes, a private citizen can contact OPR. We have
the address there and the e-fax number. I have to peek at it again. Did we put a phone number
down, too? BREHMER: You don't have to repeat it. It's on the slide, or it's on your handout,
I'd imagine. FISK: Yes, I was just checking to see if our phone number is there. But we have
the e-fax number and we can store it. And absolutely, private individuals can make referrals to
OPR. And we're good to hear from them. And you folks no who is not being ethical and who's
doing misconduct. And that affects all of your reputations. BREHMER: Yes, OK. Thank you for
that. Just for our audience, we're going to go a little bit past the top of the hour Sharyn,
is going to stay in with us for a little bit longer and answer more questions? So this good
stuff. I hope you'll stick around. FISK: Sure. BREHMER: Sharyn, the next set of questions
have to do with fees. One person asked what is the minimum fee a practitioner can charge a
client for his service? Questions about fees where do you have examples of unconscionable fee? FISK: I don't know the minimum fee, but I would suggest enough to make sure you get food on
the table. BREHMER: That's why I asked you the question because there's not really have an
answer for that, is there? FISK: Yes, you could go to low income tax clinics and get it done
for free. But there is no requirement on a minimum fee. BREHMER: OK. And then about
unconscionable fees? Can you do you have can you give an example or if there's been a case
on it, or how would a practitioner know if their fee is unconscionable? FISK: I can't talk
about specific cases, but I can talk about examples. When I was a professor, part of my duty is
to run advise a Low-Income Tax Clinic and to work on VITA centers, director of VITA center.
And we would have a taxpayer come in and they initially had gone to a return preparer who quoted
like say, a $300 fee for doing the return. But when they went to pick up that return and it
ends up that this client was getting say, a $1,500 refund, they were getting a bill from the
practitioner that was $600 or $900, because the practitioner knew that they could afford to pay
it because they were getting those refunds. And there was no explanation as to why the fee
increased from the state of $300 to the now $600 or $900. And it wasn't it didn't have
anything to do with the complexity of the return because when they had agreed to the $300, it was
discussion of a 1040 and the appropriate schedules and the earned income credit. So the only
difference between the fee when they started the process and the fee at the conclusion of the
process when the return was ready to be filed was the knowledge that the taxpayer could afford
more than $300. BREHMER: OK. Bad idea to charge your clients based on what you seem they can
afford. FISK: Exactly. BREHMER: Alright. I'm jumping around a little bit on these
questions. I hope that's OK with you. FISK: That's fine. BREHMER: Here are two about the
investigation process. When do tax practitioners find out that they are being investigated? And
another question, if the person has been brought up on disciplinary charges where they continue
practicing while you are investigating? FISK: So as of the first one, you'll find out when OPR
reaches out with their allegation letter. And that's going to tell you that we've gotten a
referral, that we preliminary have looked at the information we've been provided, and determined
that there is violation, and what section of Circular 230 we think it's a violation of. Now,
the time period, depending on when we get the referral and when you get notified can vary,
depending on our attorney's workload, the type of information that we need to gather, there's no
real set time period. But we do want to get that out as timely as possible to make sure that we
can collect the relevant information, and that everyone's memories is they have recollection
of the incident. What's the second part of the question? BREHMER: I know. I had to leave it
here myself. I remember what it was. If a person has been brought up on disciplinary charges
and you're still investigating, may that person continue practicing while this investigation is
going on? FISK: Yes, they may. They have not been disciplined yet by OPR. They have not been
disbarred or sanctioned. So they can continue right up to the point where there is a final
determination. BREHMER: OK, that is helpful to know. And again, for our audience, Sharyn has
agreed to stay on a little bit past the top of the hour. So I know most people love the Q&;A
part. We hope you'll all stay with us for as long as Sharyn is able to stay with us and be
answering these questions. Another question came in. Let's say there's an unhappy client and
they make a complaint to OPR. They also make a complaint to the State Board of Accountancy. Are
the cases worked together or separately? And then if the Board of Accountancy determines that
no violation has occurred, does OPR just accept that fact, or do you do an independent
investigation above and beyond what the Board of Accountancy has done? FISK: Great question.
We do not work together with any bars or boards. We have separate work. So what can be, and
this partly goes to the second question what can be a violation under a bar or an accounting board is different than what could be a violation under Circular 230. So even if a board or bar
has determined that there is no disciplinary action to be taken, it is something that we
absolutely will consider, but it is not determinative of whether OPR can discipline a
practitioner. So we're going to look at what the referral is about, what the problem is. Now,
let's put that in reverse. Let's say that the bar has disciplined a practitioner excuse me,
say the accountancy board has disciplined a practitioner for failing to pay a fee or something
like that, that is not a violation of Circular 230, so that is not going to cause us to take
disciplinary action. So we are independent on what we are taking action on. BREHMER: So the
bar and the board and OPR may be looking at different things, and that's one of the reasons why
you don't take their word for it, I guess, positive or negative. You do your own thing. You do
your own investigation. FISK: Correct. And we get the information from the board proceedings.
We hold their evidence that they're looking at, and we look at it as well. And as I mentioned,
we also look at what was the underlying discipline about. And that applies also to conviction,
so I may be adding on to my question here. We're looking at convictions and violations that are
against moral turpitude that affect the practitioner's judgment. So a practitioner that has
been received a DUI is not necessarily a Circular 230 violation. But a practitioner who
steals the money out of their client's refunds or trust to pay for a drug habit, that would be a
violation we would look at. BREHMER: OK. That's another good example. Nobody even that asked
that one, but I know they're thinking it. A DUI isn't good, but it doesn't mean you can't be a
good tax practitioner. Stealing money out of your client's trust account is not good. FISK:
Correct. BREHMER: Alright. Another question came in here about what are the examples you
gave us earlier, the example about the inherited money and it was in a foreign bank account, and
the preparer didn't realize it. The person said, I'm confused about your example of a
practitioner not revealing an inherited foreign account. That's question is a yes or no checkbox
on Schedule B. The Schedule B was prepared and the box was checked no, wouldn't the
Schedule B? FISK: That is very true. I forgot that that is a question on a tax organizer. I practitioner have the obligation to ask the taxpayer that question before completing and filing
love it when something comes up like this. It makes my example better. BREHMER: But still,
the tax preparer might ask, the tax preparer says no, no foreign bank account, because they don't
even realize what they have from that inherited stuff from their mom. Isn't that ... FISK:
That's true. Yes. And I've had clients who were themselves Naturalized U.S. Citizens. And so
when they're looking at that question and then their account is in their home country, they're
like, well it wasn't foreign. It wasn't foreign to me. I didn't understand what the question
meant. So we can have that confusion. We also we all know I don't know how many of you
actually get tax organizers from your clients, or if they do, really how thorough they are and
how well your client understands the situation. So I'll have to modify my hypo to include that
the client did not complete the tax organizer. BREHMER: There you go, Alright. So thank you
for that question, because now it will be an even more interesting example next time we do this
presentation, right. FISK: Right. They can play stomp the professor). I'm good. BREHMER:
Right. A couple of questions came in about your example with the appraiser and how well, one
of your examples with the appraisers, with the appraisers that knew that what they were doing
was the wrong thing to do, and they got in trouble for it. But the questions are, how is the
tax preparer supposed to know if another tax preparer on whom they are relying, or an appraiser
on whom they are relying, how are they supposed to know if that person did everything correctly,
is on the up and up, or whether there's maybe a reason to not trust what they've done or what
they've provided? FISK: Yes. And so that does go back to the 10.34 where when we're not
asking you to audit other tax professionals. We're looking to see really if you had reason to
know something was off. If someone comes and they say that they are they practice expertise,
they've got their licenses, they've been speaking on the subject. There's no need for you to
question that. You're going to believe that individual is an expert that you can rely upon with
respect to their work product. But if you happen to know that this individual or you've heard
from others that this individual is incompetent, or that you're looking at their work product and
it's making no sense whatsoever, or it's making outlandish assumptions and relying on
speculative legal authority, then there's something there that you need to ask yourself can
you really rely upon this? And I may have that come up in practice where an appraiser is
relying on a particular position that was not legally viable. And I've contacted other
appraisers to make sure that my understanding might not be off the mark, and I'm doing my due
diligence to make sure whatever I'm giving to the IRS is to the best of my knowledge correct.
BREHMER: OK, Alright. That is helpful to know too. Let's see. I honestly think you just
answered this question. A person asked for more information about no willful blindness in
relation to Section 10.22 and 10.34. Is that what you were just talking about? You sensed
something is wrong, your gut tells you something is wrong, bells and whistles are going off in
your head. FISK: Yes ... BREHMER: Is there anything else you want to say about it? FISK:
Oh, there's a little more. I mean, willful blindness can include what was my you're doing
your client's return and they've got a 1099 that says that they're paying let's say $30,000 in
mortgage interest. Sorry, it's not a 1099, it's 1098 if I have my forms right, thank you.
And so they've got a 1098. They give it to you saying that they've paid $30,000 in mortgage
interest that year, and then they gave you their income and expenses for their business, and
that's their only source of income, and they are making about $20,000-$25,000 that year. You
kind of have to ask yourself, how can you afford to make the mortgage payment and that interest
on income of $25,000? Now, maybe there's a good rationale, maybe they have an inheritance,
maybe they have a savings, maybe they're liquidating their IRA account, there might be a reason.
But you need to ask that because on its face, that is not making sense. BREHMER: OK.
Alright. That example is great. Thank you so much for that example. I think we have to start
wrapping up here. Those questions were great. Those answers you gave, Sharyn, were so
illuminating. I appreciate that. But audience, that is all the time we have for questions.
So I want to thank you again, Sharyn, for sharing your knowledge and your expertise with us, and
for answering those questions. Before we ... FISK: Ah, thank you very much. BREHMER: Yes.
What key points do you want the attendees to remember from today's webinar? FISK: Alright.
So our key points are Circular 230 contains the regulation governing practice before the
Internal Revenue Service. The Office of Professional Responsibility supports effective of ax
administration by ensuring all tax practitioners, tax preparers, and other third parties in the
tax system adhere to professional standards and follow the law. Practitioners have a
responsibility to their clients and to the tax administration system to include due diligence
obligations and the best practices. There are key Circular 230 provisions regarding the duties
and restrictions relating to the practice before the IRS, sanctions for violations of the
regulation, and the disciplinary process. And that are the points. BREHMER: OK, great. Thank
you, Sharyn. So audience, we are planning additional webinars throughout the year. To register
for an upcoming webinar, please go to IRS.gov and do the keyword search webinars, and then select
webinars for tax practitioners, or webinars for small businesses. When it's appropriate, we
will be offering certificates and CE credits for upcoming webinars. We invite you to visit our
Video Portal at www.irsvideos.gov. There, you can view archived versions of our webinars. You
can't get Continuing Education Credits or Certificates of Completion when you view an archived
webinar on the Video Portal, but it is still awesome to get the information that was given out during that webinar. Again, a big thank you to Sharyn for a great webinar, and for sharing her
experience with us, and for staying on extra, even extra credits for answering those questions.
And I want to thank you, our attendees for attending today's webinar, Office of Professional
Responsibility, Practicing Before the IRS, What you Need to Know. Sharyn went over some great
resources. So remember, there is that resource document available for downloading, and you can
access it by clicking on the materials dropdown arrow on the left side of your screen. If you
attended today's webinar for at least 100 minutes after the official start time, you will receive
a Certificate of Completion that you can use with your credentialing organization for two
possible CPE credits. If you stayed on for at least 50 minutes from the official start time of
the webinar, you will qualify for one possible CPE credit. And again, the time that we spent
chatting before the webinar started doesn't count for the 50 or 100 minutes. If you're eligible
for continuing education from the IRS and you registered with your valid PTIN, your credit will
be posted in your PTIN account. If you are eligible for continuing education from the
California Tax Education Council, your credit will be posted to your CTEC account as well. And
if you registered through the Florida Institute of CPAs, your participation information will be
provided directly to them. If you qualify and have not received your certificate or your credit
by June 25th, please e-mail us at cl.sl.web.conference.team@irs.gov on slide two. If you're
interested in finding out who your local Stakeholder Liaison is, you may send us an e-mail using
the address shown on the slide, and we'll send you that information. We would appreciate it if
you would take a few minutes to complete a short evaluation before you exit. If you would like
to have more sessions like this one, let us know. If you have thoughts on how we can make them
better, please let us know of that as well. If you have requests for future webinar topics or
pertinent information that you'd like to see in an IRS Fact Sheet, in a Tax Tip, or an FAQ on
IRS.gov, then please include your suggestions in the comment section of the survey. And you
want to click on the survey button on the right side of your screen to begin. And if it doesn't
come up, check to make sure that you disabled your Popup Blocker. It has been a pleasure to be
here with you today. And on behalf of the Internal Revenue Service and our presenter, Sharyn
Fisk, we would like to thank you for attending today's webinar. It's important for the IRS to
stay connected with the tax professional community, individual taxpayers, of industry
associations, along with federal, state and local government organizations. You make our job a
lot easier by sharing the information that allows for proper tax reporting. Thank you again for
your time and attendance, and we wish you much success in your business or practice. You may
exit the webinar at this time.