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CHECKPOINT LEARNING® WEBINARS

Ethics for Tax Professionals

Presented by:

Ethics for Tax Professionals

Abe Carnow, CPA

2

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Abe Carnow, CPA

Abe Carnow, CPA, has been an instructor with Gear Up TaxSeminars since 1990. He teaches individual taxation, businesstaxation, tax ethics, and IRS audit and collection work. He has beenteaching webinars for quite a while. He has a tax only practice inSouthern California, helping out small businesses and individuals.Fun facts: Abe graduated UCLA with a BA in Psychology and is amagician member of the Magic Castle in Hollywood.

Upon completion of this webinar, participants should be able to—

Learning Objectives


• Describe the changes at the IRS relating to ethics

• Identify how to navigate Circular 230

• Explain how the AICPA SSTS statements further illuminate Circular 230

• Walk away with a better focus on ethical guidance during this time of virus


Basics of Ethics

• We will be looking most closely at Circular 230.

• Following that we will look at the AICPA SSTS, Statements of Standards for Tax Services.

• What changes are happening at the IRS and the OPR, the Office of Professional Responsibility?

• Thoughts on the virus and ethics.



Most Recent Changes, PTIN

• Proposed reg would reduce Preparer Tax Identification Number (PTIN) user fee

• Preamble to Prop Reg REG-117138-17; Prop Reg §300.12

• In a proposed reg, IRS has proposed a reduction in the fee for applying for and renewing Preparer Tax Identification Numbers (PTINs).

• Background. Code Sec. 6109(a)(4) authorizes IRS to prescribe regs for the inclusion of a tax return preparer's identifying number on a return, statement, or other document required to be filed with IRS.


PTIN

• Final regs provide that the identifying number of a tax return preparer is the individual's PTIN or such other number prescribed by IRS in forms, instructions, or other appropriate guidance. The PTIN regs require a tax return preparer who prepares or who assists in preparing all or substantially all of a tax return or claim for refund to have a PTIN. (Reg. § 1.6109-2(d))

• Final regs also provide that, in order to apply for or renew a PTIN, one has to pay $33 per year plus an outside vendor fee. (Reg. §300.12(b)) The outside vendor fee, which was set at $17 for both new applications and renewal applications, is paid directly to the vendor. (T.D. 8742, 10/29/2015)


PTIN

• At the current time, as a result of case that has been remanded to the trial court (see D.C. Circuit vacates and remands; IRS may charge PTIN fees), IRS is not charging the PTIN fee. (https://www.irs.gov/tax-professionals/ptin-requirements-for-tax-return-preparers)

• IRS proposes reduction in fee. In a proposed reg, IRS has proposed that the fee be reduced to $21 per year (Prop Reg §300.12(b)) plus $14.95 directly payable to the outside vendor. (Preamble to Prop Reg REG-117138-17) (Bargain, eh?)

• Applicability date. The proposed change would apply to applications for or renewal of a PTIN filed on or after the date that is 30 days after these regs are published as final regs in the Federal Register. (Prop Reg §300.12(d))



Sharyn Fisk, New Chief of Office of Professional Responsibility

• IRS selects longtime tax professional, Sharyn Fisk, to lead the Office of Professional Responsibility

•

• More In News

• IR-2019-202, December 9, 2019

• WASHINGTON — The Internal Revenue Service today announced the selection of Sharyn M. Fisk to lead the agency’s Office of Professional Responsibility (OPR).


OPR Chief

• Fisk has most recently been a professor of tax at the College of Business Administration at Cal Poly Pomona and active in the nation’s tax community in a variety of roles. She will assume leadership of OPR in early 2020.

• “This is a critical position for the nation’s tax community. Sharyn Fisk is extremely well respected both internally at the IRS and throughout the tax professional communities. She has a strong set of skills and experience in many different settings that will serve the IRS well in this role,” said IRS Commissioner Chuck Rettig. “Taxpayers, the IRS and the tax community rely on this office to help uphold strong professional standards among tax professionals. We look forward to Ms. Fisk providing meaningful, fair and equitable guidance while also strengthening the oversight of tax professionals.”


S. Fisk

• Fisk’s extensive background in the tax community includes having represented thousands of individuals, businesses and corporate taxpayers before the IRS, the Department of Justice Tax Division, federal and state courts and state taxing authorities. These matters involved civil examinations and appeals, criminal investigations and tax collection issues. Fisk, a certified tax law specialist with the California State Bar, has also served as an adjunct professor teaching graduate and undergraduate level tax at several colleges and universities and recently concluded a term as a member of the IRS Advisory Council (IRSAC).

• Fisk previously served as an attorney-advisor for the Honorable Maurice Foley, United States Tax Court in Washington, D.C., and has volunteered to assist unrepresented taxpayers for the pro se tax court calendar. In addition, she has served as director of Cal Poly Pomona’s VITA program and participated in the American Bar Association’s Adopt-A-Base program, where she provided training to military VITA volunteers at a naval base in San Diego.



OPR Head

• Fisk is a past chair of the taxation section of the Los Angeles County Bar Association and previously chaired a task force on behalf of the Standards of Tax Practice Committee for the ABA Taxation Section. She has served as a former chair of the Tax Policy, Practice and Legislation Committee, articles editor of the California Tax Lawyer, and as a member of Executive Committee for the Taxation Section of the State Bar of California. Fisk has lectured before national, state and local tax professional organizations. She holds a B.A. in Journalism from San Diego State University, a J.D. from Rutgers University and an LL.M in taxation from the New York University School of Law. Fisk has three children and is married to Nelson Fisk, a retired Marine Lieutenant Colonel.


Polling Question Number 1

• The current chief of OPR is:

• A. Sharyn Fisk

• B. Chuck Rettig

• C. Karen Hawkins


Circular 230

• Let us start with Circular 230.



31 USC 330

• 31 U.S.C. §330. Practice before the Department (a) Subject to section 500 of title 5, the Secretary of the Treasury may — (1) regulate the practice of representatives of persons before the Department of the Treasury; and (2) before admitting a representative to practice, require that the representative demonstrate —

• (A) good character;

• (B) good reputation;

• (C) necessary qualifications to enable the representative to provide to persons valuable service; and

• (D) competency to advise and assist persons in presenting their cases.


Notice the 4 Traits

• Good character

• Good reputation

• Necessary qualifications to enable the representative to provide to persons valuable service; and

• Competency to advise and assist persons in presenting their cases

• Notice that, at least not yet, the Internal Revenue Code has not yet been mentioned in this webinar.


Subpart B is the most important part and we will focus our attention here



Subpart B continues


AICPA SSTS: Statement on Standards for Tax Services

• This publication sets forth ethical tax practice standards for members of the AICPA: Statements on Standards for Tax Services (SSTSs or Statements). Although other standards of tax practice exist, most notably Treasury Department Circular No. 230 and penalty provisions of the Internal Revenue Code (IRC), those standards are limited in that (1) Circular No. 230 does not provide the depth of guidance contained in these Statements, (2) the IRC penalty provisions apply only to income-tax return preparation, and (3) both Circular No. 230 and the penalty provisions apply only to federal tax practice.


Virus and Ethics

• This course is revised as of April 20, 2020 (good vibes, 20, 20, 20). We are all dealing with the virus (NOT fun) and doing our best to help clients. I think there is quite a bit in the intersection of virus and ethics. Let me cut to the chase and address some of them.



IR-2020-66

• If you have taken Laurie Stillwell’s update classes on the virus, you might have run across IR-2020-66. This speaks of IRS extending more tax deadlines.

• 2016 unclaimed refunds – deadline extended to July 15

• For 2016 tax returns, the normal April 15 deadline to claim a refund has also been extended to July 15, 2020. The law provides a three-year window of opportunity to claim a refund. If taxpayers do not file a return within three years, the money becomes property of the U.S. Treasury. The law requires taxpayers to properly address, mail and ensure the tax return is postmarked by the July 15, 2020, date.


Notice 2020-23

• We have just cited IR-2020-66. The IR (Information Releases) are reader friendly. The IR cites Notice 2020-23. It states:

• C. Relief With Respect to Specified Time-Sensitive Actions

• Affected Taxpayers also have until July 15, 2020, to perform all Specified Time-Sensitive Actions, that are due to be performed on or after April 1, 2020, and before July 15, 2020. This relief includes the time for filing all petitions with the Tax Court, or for review of a decision rendered by the Tax Court, filing a claim for credit or refund of any tax, and bringing suit upon a claim for credit or refund of any tax. This notice does not provide relief for the time period for filing a petition with the Tax Court, or for filing a claim or bringing a suit for credit or refund if that period expired before April 1, 2020.


Homework Assignment

• I just prepared a 2016 1040 for a client. I am guessing you might have some 2016 delinquent returns. Maybe not. Maybe only I have strange clients. But I doubt it.

• While the 2016 cannot be efiled, at least not on my software, you can still mail them in. Keep proof of mailing, however, as it seems the Service Centers are not processing their mail.

• It is not too late to file those 2016 returns.

• Ah, but what if their records are not perfect. Delinquent filers, dare I say it, don’t generally keep meticulous records. Amazingly enough, some do have fabulously detailed records. But many don’t.




• Circular 230 can be found as part of:

• A. 26 USC

• B. 31 USC

• C. 11 USC


SSTS Number 4

• And we return to the AICPA SSTS. Let us look at Number 4 which allows us to use estimates (and not just for 2016 returns, mind you).

• 4. — Statement on Standards for Tax Services No. 4, Use of Estimates

• Introduction

• 1. This Statement sets forth the applicable standards for members when using the taxpayer's estimates in the preparation of a tax return. A member may advise on estimates used in the preparation of a tax return, but the taxpayer has the responsibility to provide the estimated data. Appraisals or valuations are not considered estimates for purposes of this Statement.


SSTS Number 4 (or is it 3.8?)

• Statement• 2. Unless prohibited by statute or by rule, a member may use the taxpayer's

estimates in the preparation of a tax return if it is not practical to obtain exact data and if the member determines that the estimates are reasonable based on the facts and circumstances known to the member. If the taxpayer's estimates are used, they should be presented in a manner that does not imply greater accuracy than exists.

• Explanation• 3. Accounting requires the exercise of professional judgment and, in many

instances, the use of approximations based on judgment. The application of such accounting judgments, as long as not in conflict with methods set forth by a taxing authority, is acceptable. These judgments are not estimates within the purview of this Statement. For example, a federal income tax regulation provides that if all other conditions for accrual are met, the exact amount of income or expense need not be known or ascertained at year end if the amount can be determined with reasonable accuracy.



Number 4

• 4. When the taxpayer's records do not accurately reflect information related to small expenditures, accuracy in recording some data may be difficult to achieve. Therefore, the use of estimates by a taxpayer in determining the amount to be deducted for such items may be appropriate.

• 5. When records are missing or precise information about a transaction is not available at the time the return must be filed, a member may prepare a tax return using a taxpayer's estimates of the missing data.

• 6. Estimated amounts should not be presented in a manner that provides a misleading impression about the degree of factual accuracy.


Estimates, Have to Love Them

• 7. Specific disclosure that an estimate is used for an item in the return is not generally required; however, such disclosure should be made in unusual circumstances where nondisclosure might mislead the taxing authority regarding the degree of accuracy of the return as a whole. Some examples of unusual circumstances include the following:

• a. A taxpayer has died or is ill at the time the return must be filed.

• b. A taxpayer has not received a Schedule K-1 for a pass-through entity at the time the tax return is to be filed.

• c. There is litigation pending (for example, a bankruptcy proceeding) that bears on the return.

• d. Fire or computer failure has destroyed the relevant records.


How Does This Help Us?

• Notice that estimates can be used.

• They should be used.

• You should not wait until the client has perfect records.

• They never will.

• Use estimates.

• And encourage the client to get better over time.

• They might.

• I love SSTS Number 4.

• And it is helpful in audits (remember those?)



Circular 230, 10.33

• 10.33 is, in my opinion, the MOST important section in Circular 230. It tells us the standards that must be met before we take a position on a tax return. Let us look at the language first and then analyze it.

• Reg § 10.33. [Circular 230] Best practices for tax advisors.

• (a) Best practices. Tax advisors should provide clients with the highest quality representation concerning Federal tax issues by adhering to best practices in providing advice and in preparing or assisting in the preparation of a submission to the Internal Revenue Service. In addition to compliance with the standards of practice provided elsewhere in this part, best practices include the following:


10.33 More

• (1) Communicating clearly with the client regarding the terms of the engagement. For example, the advisor should determine the client's expected purpose for and use of the advice and should have a clear understanding with the client regarding the form and scope of the advice or assistance to be rendered.

• (2) Establishing the facts, determining which facts are relevant, evaluating the reasonableness of any assumptions or representations, relating the applicable law (including potentially applicable judicial doctrines) to the relevant facts, and arriving at a conclusion supported by the law and the facts. (FIRAC, more coming up on this.)


10.33 Continuing

• (3) Advising the client regarding the import of the conclusions reached, including, for example, whether a taxpayer may avoid accuracy-related penalties under the Internal Revenue Code if a taxpayer acts in reliance on the advice.

• (4) Acting fairly and with integrity in practice before the Internal Revenue Service.

• Notice how (4) above returns us to the Four Traits we discussed earlier. Acting fairly and with integrity. Important words.



Taking a Position on the Return, and Thoughts on the Virus

• When we assist a client, we have to take a position on the return. Is this taxable? If so, when, what year? Capital gain or ordinary income? Is this deductible? If so, where? Schedule A or some other schedule? Or is it nondeductible?

• With the virus, I believe many of us will return to study Code Section 108. Remember that Code Section?

• § 108 Income from discharge of indebtedness.

• (a) Exclusion from gross income.

• (1) In general.

• Gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if—


So many decisions, so little time

• So, how do we comply with 10.33. When I worked for the IRS and, yes, I worked for the IRS for 16 years, I really did, they taught us a wonderful formula: FIRAC. Which stands for:

• Facts

• Issue

• Rule of law

• Argument/Analysis

• Conclusion


Sgt. Joe Friday said: Just the Facts

• Let us look at 10.34 to help us get to the facts:

• Reg § 10.34. [Circular 230] Standards with respect to tax returns and documents, affidavits and other papers.

• (a) Tax returns.

• (1) A practitioner may not willfully, recklessly, or through gross incompetence—

• (i) Sign a tax return or claim for refund that the practitioner knows or reasonably should know contains a position that—

• (A) Lacks a reasonable basis;



Dragnet

• (B) Is an unreasonable position as described in section 6694(a)(2) of the Internal Revenue code (Code) (including the related regulations and other published guidance); or

• (C) Is a willful attempted by the practitioner to understate the liability for tax or a reckless or intentional disregard of rules or regulations by the practitioner as described in section 6694(b)(2) of the Code (including the related regulations and other published guidance).

• (ii) Advise a client to take a position on a tax return or claim for refund, or prepare a portion off a tax return or claim for refund containing a position, that—


10.34 More

• (A) Lacks a reasonable basis;

• (B) Is an unreasonable position as described in section 6694(a)(2) of the Code (including the related regulations and other published guidance); or

• (C) Is a willful attempt by the practitioner to understate the liability for tax or a reckless or intentional disregard of rules or regulations by the practitioner as described in section 6694(b)(2) of the Code (including the related regulations and other published guidance).

• (2) A pattern of conduct is a factor that will be taken into account in determining whether a practitioner acted willfully, recklessly, or through gross incompetence.


10.34

• (b) Documents, affidavits and other papers.

• (1) A practitioner may not advise a client to take a position on a document, affidavit or other paper submitted to the Internal Revenue Service unless the position is not frivolous.

• (2) A practitioner may not advise a client to submit a document, affidavit or other paper to the Internal Revenue Service—

• (i) The purpose of which is to delay or impede the administration of the Federal tax laws;

• (ii) That is frivolous; or



10.34

• (iii) That contains or omits information in a manner that demonstrates an intentional disregard of a rule or regulation unless the practitioner also advises the client to submit a document that evidences a good faith challenge to the rule or regulation.

• (c) Advising clients on potential penalties.

• (1) A practitioner must inform a client of any penalties that are reasonably likely to apply to the client with respect to—

• (i) A position taken on a tax return if—

• (A) The practitioner advised the client with respect to the position; or


10.34

• (B) The practitioner prepared or signed the tax return; and

• (ii) Any document, affidavit or other paper submitted to the Internal Revenue Service.

• (2) The practitioner also must inform the client of any opportunity to avoid any such penalties by disclosure, if relevant, and of the requirements for adequate disclosure.

• (3) This paragraph (c) applies even if the practitioner is not subject to a penalty under the Internal Revenue Code with respect to the position or with respect to the document, affidavit or other paper submitted.


10.34(d)

• (d) Relying on information furnished by clients. A practitioner advising a client to take a position on a tax return, document, affidavit or other paper submitted to the Internal Revenue Service, or preparing or signing a tax return as a preparer, generally may rely in good faith without verification upon information furnished by the client. The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete.



F A C T S

• Under 10.34(d) we can rely upon information furnished us by the clients. Hence, organizers, interviews, zoom, phone calls, emails, documentation, dropbox, and faxes. So many ways to communicate today. We do not have to have person to person meetings. As a matter of fact, I told my clients I was not going to meet with them in person, before the virus guidelines were fully announced. But, then again, I, like you, can work virtually. I use zoom, drop box, phone, and remote communication approaches. So do you.

• AICPA SSTS 3 states:

• 3. — Statement on Standards for Tax Services No. 3, Certain Procedural Aspects of Preparing Returns

• Introduction

• 1. This Statement sets forth the applicable standards for members concerning the obligation to examine or verify certain supporting data or to consider information related to another taxpayer when preparing a taxpayer's tax return.



• True or False

• Circular 230, 10.34(d) mandates that you audit the client’s information prior to completing the return.


AICPA SSTS Number 3

• Statement

• 2. In preparing or signing a return, a member may in good faith rely, without verification, on information furnished by the taxpayer or by third parties. However, a member should not ignore the implications of information furnished and should make reasonable inquiries if the information furnished appears to be incorrect, incomplete, or inconsistent either on its face or on the basis of other facts known to a member. Further, a member should refer to the taxpayer's returns for one or more prior years whenever feasible.

• 3. If the tax law or regulations impose a condition with respect to deductibility or other tax treatment of an item, such as taxpayer maintenance of books and records or substantiating documentation to support the reported deduction or tax treatment, a member should make appropriate inquiries to determine to the member's satisfaction whether such condition has been met.



Number 3

• 4. When preparing a tax return, a member should consider information actually known to that member from the tax return of another taxpayer if the information is relevant to that tax return and its consideration is necessary to properly prepare that tax return. In using such information, a member should consider any limitations imposed by any law or rule relating to confidentiality.

• Explanation

• 5. The preparer's declaration on a tax return often states that the information contained therein is true, correct, and complete to the best of the preparer's knowledge and belief based on all information known by the preparer. This type of reference should be understood to include information furnished by the taxpayer or by third parties to a member in connection with the preparation of the return.


3

• 6. The preparer's declaration does not require a member to examine or verify supporting data. However, a distinction should be made between (a) the need either to determine by inquiry that a specifically required condition, such as maintaining books and records or substantiating documentation, has been satisfied or to obtain information when the material furnished appears to be incorrect or incomplete and (b) the need for a member to examine underlying information. In fulfilling his or her obligation to exercise due diligence in preparing a return, a member may rely on information furnished by the taxpayer unless it appears to be incorrect, incomplete, or inconsistent. Although a member has certain responsibilities in exercising due diligence in preparing a return, the taxpayer has the ultimate responsibility for the contents of the return. Thus, if the taxpayer presents unsupported data in the form of lists of tax information, such as dividends and interest received, charitable contributions, and medical expenses, such information may be used in the preparation of a tax return without verification unless it appears to be incorrect, incomplete, or inconsistent either on its face or on the basis of other facts known to a member.


3 More

• 7. Even though there is no requirement to examine underlying documentation, a member should encourage the taxpayer to provide supporting data where appropriate. For example, a member should encourage the taxpayer to submit underlying documents for use in tax return preparation to permit full consideration of income and deductions arising from security transactions and from pass-through entities, such as estates, trusts, partnerships, and S corporations.

• 8. The source of information provided to a member by a taxpayer for use in preparing the return is often a pass-through entity, such as a limited partnership, in which the taxpayer has an interest but is not involved in management. A member may accept the information provided by the pass-through entity without further inquiry, unless there is reason to believe it is incorrect, incomplete, or inconsistent, either on its face or on the basis of other facts known to the member. In some instances, it may be appropriate for a member to advise the taxpayer to ascertain the nature and amount of possible exposure to tax deficiencies, interest, and penalties, by contact with management of the pass-through entity.



3 Conclusion

• 9. A member should make use of a taxpayer's returns for one or more prior years in preparing the current return whenever feasible. Reference to prior returns and discussion of prior-year tax determinations with the taxpayer should provide information to determine the taxpayer's general tax status, avoid the omission or duplication of items, and afford a basis for the treatment of similar or related transactions. As with the examination of information supplied for the current year's return, the extent of comparison of the details of income and deduction between years depends on the particular circumstances.

• Good practice standards are essential. During time of virus, good practice standards apply. But you can see that there is some flexibility when you review SSTS 3 and 4, and 10.33 and 10.34.



• Circular 230 10.34 is augmented by:

• A. SSTS Number 4

• B. SSTS Number 3

• C. Code Section 108


FIRAC

• We should use organizers to gather data. We should make reasonable inquiry. It is not our job to be an auditor. Estimates can be used. It is our job to help our clients comply with the tax law. Maybe it is my age, maybe it is my personality, but I am not into perfection. I work to be accurate, and I stand by my work. And I know the ethical guidance. I just want you to know that by studying the source documents, you might well find that you can go easier on yourself. Especially in this time of virus. I hope everyone is well and safe. And I hope some of us come out of this with, perhaps, some tweaking to our personality. You can do good work, comply with ethics, and be kind to yourself. And your clients.

• FIRAC. Start with the facts. The client has to be clear and honest. If they are not, well, you don’t have facts. Remember, facts are true.



Issue

• Is it taxable? Right now, April 2020, there are lots of questions about the economic stimulus. Along the lines of: Everyone I know received the stimulus refund, EXCEPT ME, WHY? I just tell them the IRS does NOT like them, that is why. Number one: The stimulus is not taxable by the IRS. Number two: The IRS loves everyone. The more they love you, the more letters they send to you. So, be grateful.

• If it is taxable, what year is it taxable in? Every once in a while, I deal with an IRC 1033, involuntary conversion. When is the gain taxable? What is the difference between realized and recognized gain?

• Capital gains or ordinary income?

• Deductions: current or deferred? Capitalized or current (hint: probably current)? Schedule A, or no?


Rule of Law

• Rule of law: Do some research. If you’ve taken Laurie’s virus classes recently, you know how she also gives us citations (thank you, Laurie). Laurie and I have taught together in Gear Up for a long time, and we are both source document people. In writing this webinar, I have RIA Checkpoint open on my desktop. Look up the rule of law. Read the Code Section. On the economic stimulus, I pulled the Code Section, printed it, and have it in my file folder in my desk drawer. Printed on paper. IRC 6428 if you are interested.

• Read the law. Read the regs. Read the court cases.

• Some of you have taken my Important Supreme Court Cases You Should Know About, Parts 1 and 2. In that course, we study 8 Supreme Court cases. Read the cases. You will learn a lot.


Analyze/Argue

• I am lucky to have worked for the IRS when I did. I had fabulous teachers and wonderful co-workers. For the most part I was surrounded by wonderful people. And the beauty of working for the IRS is you discover this:

• The taxpayer wants to deduct everything. The IRS wants you to deduct NOTHING. The taxpayer doesn’t want to pay tax on income. The IRS thinks everything is taxable.

• Pretty easy, isn’t it? So, become the IRS. If you think it is not taxable, the IRS will think it is. So, does IRC 108 apply? Is it DOI? COD?

• Argue, analyze.

• Have fun.



Conclusion

• And after FIRA, you get to the section C.

• Conclusion.

• It is taxable, it isn’t taxable, it is deductible, it isn’t deductible.

• And the great thing about being ethical is this:

• Once you’ve gone through the 4 steps and reached a conclusion and documented it all, you are audit proof.

• Well, not quite. But if the IRS asks you, why did you take this position (?), you have the answer because you took the steps before you reached the conclusion.


Virus and Ethics

• As explained on the webinars, there are tons of tax changes due to the virus. You should thoroughly study the law and assiduously follow it and look for opportunities to save clients tax dollars. After all, this is the purpose of the legislation, taking a Keynesian approach to flood the economy with money.

• And FIRAC will lead you to taking positions on the return which are correct and supportable.

• What degree of certainty must we have before we take a position on a return? 100%? Or a lesser amount?

• Now it is time to leave Circular 230, 31 USC 330, and go to 26 USC 6694, otherwise known as Section 6694 of the Internal Revenue Code.


IRC 6694

• § 6694 Understatement of taxpayer's liability by tax return preparer.

• (a) Understatement due to unreasonable positions.

• (1) In general.

• If a tax return preparer—

• (A) prepares any return or claim of refund with respect to which any part of an understatement of liability is due to a position described in paragraph (2), and

• (B) knew (or reasonably should have known) of the position,



6694 Penalty

• such tax return preparer shall pay a penalty with respect to each such return or claim in an amount equal to the greater of $1,000 or 50 percent of the income derived (or to be derived) by the tax return preparer with respect to the return or claim.

• (2) Unreasonable position.

• (A) In general. Except as otherwise provided in this paragraph, a position is described in this paragraph unless there is or was substantial authority for the position.


What does substantial mean?

• So, what does substantial mean? It means greater than the old standard of realistic possibility of being sustained on its merits, which quantitatively was a 1 in 3 chance, and less than more likely than not, which is greater than 50%. In numbers, this substantial standard is satisfied by a 40% certainty.

Realistic possibility of being sustained on its merits = 33.33%

Substantial = 40%

More likely than not = greater than 50%

• Regulations 1.6662-4(d) state:



• Substantial authority leads to an accuracy level of:

• A. 80%

• B. 40%

• C. 20%



1.6662-4(d)

• (a) Substantial authority.

• (1) Effect of having substantial authority. If there is substantial authority for the tax treatment of an item, the item is treated as if it were shown properly on the return for the taxable year in computing the amount of the tax shown on the return. Thus, for purposes of section 6662(d), the tax attributable to the item is not included in the understatement for that year. (For special rules relating to tax shelter items see §1.6662-4(g).)

• (2) Substantial authority standard. The substantial authority standard is an objective standard involving an analysis of the law and application of the law to relevant facts. The substantial authority standard is less stringent than the more likely than not standard (the standard that is met when there is a greater than 50-percent likelihood of the position being upheld), but more stringent than the reasonable basis standard as defined in §1.6662-3(b)(3). The possibility that a return will not be audited or, if audited, that an item will not be raised on audit, is not relevant in determining whether the substantial authority standard (or the reasonable basis standard) is satisfied.


Work to Do

• (3) Determination of whether substantial authority is present.

• (i) Evaluation of authorities. There is substantial authority for the tax treatment of an item only if the weight of the authorities supporting the treatment is substantial in relation to the weight of authorities supporting contrary treatment. All authorities relevant to the tax treatment of an item, including the authorities contrary to the treatment, are taken into account in determining whether substantial authority exists. The weight of authorities is determined in light of the pertinent facts and circumstances in the manner prescribed by paragraph (d)(3)(ii) of this section. There may be substantial authority for more than one position with respect to the same item. Because the substantial authority standard is an objective standard, the taxpayer's belief that there is substantial authority for the tax treatment of an item is not relevant in determining whether there is substantial authority for that treatment.


Nature of Analysis

• (ii) Nature of analysis. The weight accorded an authority depends on its relevance and persuasiveness, and the type of document providing the authority. For example, a case or revenue ruling having some facts in common with the tax treatment at issue is not particularly relevant if the authority is materially distinguishable on its facts, or is otherwise inapplicable to the tax treatment at issue. An authority that merely states a conclusion ordinarily is less persuasive than one that reaches its conclusion by cogently relating the applicable law to pertinent facts. The weight of an authority from which information has been deleted, such as a private letter ruling, is diminished to the extent that the deleted information may have affected the authority's conclusions. The type of document also must be considered. For example, a revenue ruling is accorded greater weight than a private letter ruling addressing the same issue.



Analysis

• An older private letter ruling, technical advice memorandum, general counsel memorandum or action on decision generally must be accorded less weight than a more recent one. Any document described in the preceding sentence that is more than 10 years old generally is accorded very little weight. However, the persuasiveness and relevance of a document, viewed in light of subsequent developments, should be taken into account along with the age of the document. There may be substantial authority for the tax treatment of an item despite the absence of certain types of authority. Thus, a taxpayer may have substantial authority for a position that is supported only by a well-reasoned construction of the applicable statutory provision.


Types of Authority

• (iii) Types of authority. Except in cases described in paragraph (d)(3)(iv) of this section concerning written determinations, only the following are authority for purposes of determining whether there is substantial authority for the tax treatment of an item: applicable provisions of the:

Internal Revenue Code and other statutory provisions;

proposed, temporary and final regulations construing such statutes;

revenue rulings and revenue procedures;

tax treaties and regulations thereunder, and Treasury Department and other official

explanations of such treaties;


More Authority

court cases;

congressional intent as reflected in committee reports, joint explanatory statements of managers included in conference committee reports, and floor statements made prior to enactment by one of a bill's managers;

General Explanations of tax legislation prepared by the Joint Committee on Taxation (the Blue Book);

private letter rulings and technical advice memoranda issued after October 31, 1976;

actions on decisions and general counsel memoranda issued after March 12, 1981 (as well as

general counsel memoranda published in pre-1955 volumes of the Cumulative Bulletin);



Even More Authority

Internal Revenue Service information or press releases;

and notices, announcements and other administrative pronouncements published by

the Service in the Internal Revenue Bulletin.

• Conclusions reached in treatises, legal periodicals, legal opinions or opinions rendered by tax professionals are not authority. The authorities underlying such expressions of opinion where applicable to the facts of a particular case, however, may give rise to substantial authority for the tax treatment of an item. Notwithstanding the preceding list of authorities, an authority does not continue to be an authority to the extent it is overruled or modified, implicitly or explicitly, by a body with the power to overrule or modify the earlier authority.


• In the case of court decisions, for example, a district court opinion on an issue is not an authority if overruled or reversed by the United States Court of Appeals for such district. However, a Tax Court opinion is not considered to be overruled or modified by a court of appeals to which a taxpayer does not have a right of appeal, unless the Tax Court adopts the holding of the court of appeals. Similarly, a private letter ruling is not authority if revoked or if inconsistent with a subsequent proposed regulation, revenue ruling or other administrative pronouncement published in the Internal Revenue Bulletin.

• There is a fascinating article by my good friend, Kip Dellinger, Hand-Wringing Over ‘Authority’, Tax Practice Expert, April 20, 2020. He states:


Virus and FAQs

• “Along with all the hand-washing, the tax profession appears to have a hand-wringing obsession over potential preparer and taxpayer penalty exposure for tax positions that lack authority — at least a minor one. The concern arises from the IRS’s issuing interpretations of tax law in the form of frequently asked questions that do not constitute “authority” for a tax position, for purposes of the taxpayer accuracy-related penalty imposed by section 6662 and the tax return preparer penalty under section 6694 (what does constitute authority is set forth in reg. section 1.6662-4). In fact, the IRS affirmatively indicated in some FAQ releases that the information does not constitute authority. In some cases, the IRS indicated — although not especially helpfully — that it’s considering publishing the information in a manner that does constitute authority.”



FAQs and Virus

• His article is logical and convincing. We can rely on this information.

• If you are reading the literature from the IRS, you are practicing FIRAC. Which is the whole point, isn’t it?

• “Consequently, there is every reason to believe that when a tax professional makes a reasonable effort to comply with the tax law and does not engage in an obvious effort to game the system regarding coronavirus tax issues, he or she should be given wide latitude when considering any penalty assertion. That includes that the tax professional relied on nonauthoritative published IRS guidance.”



• True or False

• This outline would provide authority under IRC 6662 regulations.


10,35 Competence

• Reg § 10.35. [Circular 230] Competence.

• (a) A practitioner must possess the necessary competence to engage in practice before the Internal Revenue Service. Competent practice requires the appropriate level of knowledge, skill, thoroughness, and preparation necessary for the matter for which the practitioner is engaged. A practitioner may become competent for the matter for which the practitioner has been engaged through various methods, such as consulting with experts in the relevant area or studying the relevant law.

• This is essentially the preamble to Circular 230.



Other Sections, Oldies but Goodies

• 10.21: 10.21 Knowledge of client's omission.• A practitioner who, having been retained by a client with respect to a matter administered by the Internal Revenue Service, knows that the client has not complied with the revenue laws of the United States or has made an error in or omission from any return, document, affidavit, or other paper which the client submitted or executed under the revenue laws of the United States, must advise the client promptly of the fact of such noncompliance, error, or omission. The practitioner must advise the client of the consequences as provided under the Code and regulations of such noncompliance, error, or omission.• The AICPA SSTS, Statement of Standards for Tax Services, provides additional

commentary on this.


10.21

• AICPA SSTS 6 states: While performing services for a taxpayer, a member may become aware of an error in a previously filed return or may become aware that the taxpayer failed to file a required return. The member should advise the taxpayer of the error and the potential consequences, and recommend the measures to be taken. Similarly, when representing the taxpayer before a taxing authority in an administrative proceeding with respect to a return containing an error of which the member is aware, the member should advise the taxpayer to disclose the error to the taxing authority and of the potential consequences of not disclosing the error. Such advice and recommendation may be given orally.

• It is the taxpayer’s responsibility to decide whether to correct the error. If the taxpayer does not correct an error, a member should consider whether to withdraw from the engagement and whether to continue a professional or employment relationship with the taxpayer. Although recognizing that the taxpayer may not be required by statute to correct an error by filing an amended return, a member should consider whether a taxpayer’s decision not to file an amended return or otherwise correct an error may predict future behavior that might require termination of the relationship.


Amended Returns

• The CARES Act and the other Virus changes bring about many opportunities for amending returns. It could even be that some clients, while staying at home, discovered some financial papers that change the result of returns already filed. If so, consider amending them.

• 10.22 Diligence as to accuracy.

(a) In general. A practitioner must exercise due diligence-

(1) In preparing or assisting in the preparation of, approving, and filing tax returns, documents, affidavits, and other papers relating to Internal Revenue Service matters;

(2) In determining the correctness of oral or written representations made by the practitioner to the Department of the Treasury; and

(3) In determining the correctness of oral or written representations made by the practitioner to clients with reference to any matter administered by the Internal Revenue Service.



10.23

• 10.23 Prompt disposition of pending matters.• A practitioner may not unreasonably delay the prompt disposition of any matter before the Internal Revenue Service.

• 10.27 Fees.• (a) In general.

• A practitioner may not charge an unconscionable fee in connection with any matter before the Internal Revenue Service.

• (b) Contingent fees.• (1) Except as provided in paragraphs (b)(2), (3), and (4) of this section, a practitioner

may not charge a contingent fee for services rendered in connection with any matter before the Internal Revenue Service


Fees

• (2) A practitioner may charge a contingent fee for services rendered in connection with the Service's examination of, or challenge to-

• (i) An original tax return; or

• (ii) An amended return or claim for refund or credit where the amended return or claim for refund or credit was filed within 120 days of the taxpayer receiving a written notice of the examination of, or a written challenge to the original tax return.

• (3) A practitioner may charge a contingent fee for services rendered in connection with a claim for credit or refund filed solely in connection with the determination of statutory interest or penalties assessed by the Internal Revenue Service.

• (4) A practitioner may charge a contingent fee for services rendered in connection with any judicial proceeding arising under the Internal Revenue Code.


Return of Client’s Records, 10.28

• 10.28 Return of client's records.

• (a) In general, a practitioner must, at the request of a client, promptly return any and all records of the client that are necessary for the client to comply with his or her Federal tax obligations. The practitioner may retain copies of the records returned to a client. The existence of a dispute over fees generally does not relieve the practitioner of his or her responsibility under this section. Nevertheless, if applicable state law allows or permits the retention of a client's records by a practitioner in the case of a dispute over fees for services rendered, the practitioner need only return those records that must be attached to the taxpayer's return. The practitioner, however, must provide the client with reasonable access to review and copy any additional records of the client retained by the practitioner under state law that are necessary for the client to comply with his or her Federal tax obligations.



10.28

• (b) For purposes of this section, records of the client include all documents or written or electronic materials provided to the practitioner, or obtained by the practitioner in the course of the practitioner's representation of the client, that preexisted the retention of the practitioner by the client. The term also includes materials that were prepared by the client or a third party (not including an employee or agent of the practitioner) at any time and provided to the practitioner with respect to the subject matter of the representation. The term also includes any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner, or his or her employee or agent, that was presented to the client with respect to a prior representation if such document is necessary for the taxpayer to comply with his or her current Federal tax obligations. The term does not include any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner or the practitioner's firm, employees or agents if the practitioner is withholding such document pending the client's performance of its contractual obligation to pay fees with respect to such document.


10.29, Conflict of Interest

• 10.29 Conflicting interests.

• (a) Except as provided by paragraph (b) of this section, a practitioner shall not represent a client before the Internal Revenue Service if the representation involves a conflict of interest.A conflict of interest exists if-

• (1) The representation of one client will be directly adverse to another client; or

• (2) There is a significant risk that the representation of one or more clients will be materially limited by the practitioner's responsibilities to another client, a former client or a third person, or by a personal interest of the practitioner.


Conflict of Interest

• (b) Notwithstanding the existence of a conflict of interest under paragraph (a) of this section, the practitioner may represent a client if-

• (1) The practitioner reasonably believes that the practitioner will be able to provide competent and diligent representation to each affected client;

• (2) The representation is not prohibited by law; and

• (3) Each affected client waives the conflict of interest and gives informed consent, confirmed in writing by each affected client, at the time the existence of the conflict of interest is known by the practitioner. The confirmation may be made within a reasonable period after the informed consent, but in no event later than 30 days.

• (c) Copies of the written consents must be retained by the practitioner for at least 36 months from the date of the conclusion of the representation of the affected clients, and the written consents must be provided to any officer or employee of the Internal Revenue Service on request.



Conflict of Interest

• If we return to 10.33, it speaks about:

• (1) Communicating clearly with the client regarding the terms of the engagement. For example, the advisor should determine the client's expected purpose for and use of the advice and should have a clear understanding with the client regarding the form and scope of the advice or assistance to be rendered.

• And it here where an engagement letter is so important.

• Check with your malpractice carrier. If you think there might be a conflict of interest, my guess is there might well be. Avoid conflicts of interest. Avoid legal entanglements. You can always find other clients.



• True of False

• If there is a conflict of interest among clients, you can only represent one client and must refer the other client(s) to another professional.


10.30 Advertising

• Here in Los Angeles, on the news station, there is a firm advertising they can help with the IRS, and they are the ONLY firm on the planet who is competent to do this. Their ad is so blazingly arrogant that it irritates my wife, Can they do this type of ad? Circular 230 states:

• 10.30 Solicitation.• (a) Advertising and solicitation restrictions.• (1) A practitioner may not, with respect to any Internal Revenue Service matter, in any

way use or participate in the use of any form of public communication or private solicitation containing a false, fraudulent, or coercive statement or claim; or a misleading or deceptive statement or claim. Enrolled agents, enrolled retirement plan agents, or registered tax return preparers, in describing their professional designation, may not utilize the term "certified" or imply an employer/employee relationship with the Internal Revenue Service.



Ads

• . Examples of acceptable descriptions for enrolled agents are "enrolled to represent taxpayers before the Internal Revenue Service," "enrolled to practice before the Internal Revenue Service," and "admitted to practice before the Internal Revenue Service." Similarly, examples of acceptable descriptions for enrolled retirement plan agents are "enrolled to represent taxpayers before the Internal Revenue Service as a retirement plan agent" and "enrolled to practice before the Internal Revenue Service as a retirement plan agent." An example of an acceptable description for registered tax return preparers is "designated as a registered tax return preparer by the Internal Revenue Service."

• (2) A practitioner may not make, directly or indirectly, an uninvited written or oral solicitation of employment in matters related to the Internal Revenue Service if the solicitation violates Federal or State law or other applicable rule, e.g., attorneys are precluded from making a solicitation that is prohibited by conduct rules applicable to all attorneys in their State(s) of licensure.


Subpart C


10.51

• There are 18 ways to fall afoul.

• Reg § 10.51. [Circular 230]Incompetence and disreputable conduct.

• (a) Incompetence and disreputable conduct. Incompetence and disreputable conduct for which a practitioner may be sanctioned under §10.50 includes, but is not limited to—

• (1) Conviction of any criminal offense under the Federal tax laws.

• (2) Conviction of any criminal offense involving dishonesty or breach of trust.

• (3) Conviction of any felony under Federal or State law for which the conduct involved renders the practitioner unfit to practice before the Internal Revenue Service.



18 ways!

• (4) Giving false or misleading information, or participating in any way in the giving of false or misleading information to the Department of the Treasury or any officer or employee thereof, or to any tribunal authorized to pass upon Federal tax matters, in connection with any matter pending or likely to be pending before them, knowing the information to be false or misleading. Facts or other matters contained in testimony, Federal tax returns, financial statements, applications for enrollment, affidavits, declarations, and any other document or statement, written or oral, are included in the term ``information.''

• (5) Solicitation of employment as prohibited under §10.30, the use of false or misleading representations with intent to deceive a client or prospective client in order to procure employment, or intimating that the practitioner is able improperly to obtain special consideration or action from the Internal Revenue Service or any officer or employee thereof.


10.51

• (6) Willfully failing to make a Federal tax return in violation of the Federal tax laws, or willfully evading, attempting to evade, or participating in any way in evading or attempting to evade any assessment or payment of any Federal tax.

• (7) Willfully assisting, counseling, encouraging a client or prospective client in violating, or suggesting to a client or prospective client to violate, any Federal tax law, or knowingly counseling or suggesting to a client or prospective client an illegal plan to evade Federal taxes or payment thereof.

• (8) Misappropriation of, or failure properly or promptly to remit, funds received from a client for the purpose of payment of taxes or other obligations due the United States.


More 10.51

• (9) Directly or indirectly attempting to influence, or offering or agreeing to attempt to influence, the official action of any officer or employee of the Internal Revenue Service by the use of threats, false accusations, duress or coercion, by the offer of any special inducement or promise of an advantage, or by the bestowing of any gift, favor or thing of value.

• (10) Disbarment or suspension from practice as an attorney, certified public accountant, public accountant or actuary by any duly constituted authority of any State, territory, or possession of the United States, including a Commonwealth, or the District of Columbia, any Federal court of record or any Federal agency, body or board.

• (11) Knowingly aiding and abetting another person to practice before the Internal Revenue Service during a period of suspension, disbarment or ineligibility of such other person.



10.51

• (12) Contemptuous conduct in connection with practice before the Internal Revenue Service, including the use of abusive language, making false accusations or statements, knowing them to be false or circulating or publishing malicious or libelous matter.

• (13) Giving a false opinion, knowingly, recklessly, or through gross incompetence, including an opinion which is intentionally or recklessly misleading, or engaging in a pattern of providing incompetent opinions on questions arising under the Federal tax laws. False opinions described in this paragraph (a)(13) include those which reflect or result from a knowing misstatement of fact or law, from an assertion of a position known to be unwarranted under existing law, from counseling or assisting in conduct known to be illegal or fraudulent, from concealing matters required by law to be revealed, or from consciously disregarding information indicating that material facts expressed in the opinion or offering material are false or misleading. For purposes of this paragraph (a)(13), reckless conduct is a highly unreasonable omission or misrepresentation involving an extreme departure from the standards of ordinary care that a practitioner should observe under the circumstances. A pattern of conduct is a factor that will be taken into account in determining whether a practitioner acted knowingly, recklessly, or through gross incompetence. Gross incompetence includes conduct that reflects gross indifference, preparation which is grossly inadequate under the circumstances, and a consistent failure to perform obligations to the client.


10.51

• (14) Willfully failing to sign a tax return prepared by the practitioner when the practitioner's signature is required by the Federal tax laws unless the failure is due to reasonable cause and not due to willful neglect.

• (15) Willfully disclosing or otherwise using a tax return or tax return information in a manner not authorized by the Internal Revenue Code, contrary to the order of a court of competent jurisdiction, or contrary to the order of an administrative law judge in a proceeding instituted under §10.60.

• (16) Willfully failing to file on magnetic or other electronic media a tax return prepared by the practitioner when the practitioner is required to do so by the Federal tax laws unless the failure is due to reasonable cause and not due to willful neglect.


10.51 End

• (17) Willfully preparing all or substantially all of, or signing, a tax return or claim for refund when the practitioner does not possess a current or otherwise valid preparer tax identification number or other prescribed identifying number.

• (18) Willfully representing a taxpayer before an officer or employee of the Internal Revenue Service unless the practitioner is authorized to do so pursuant to this part.




• Contemptuous conduct could include:

• A. Shaking hands with the agent

• B. Using abusive language

• C. Thinking bad thoughts about the agent


Discipline

• Justice.gov/tax


Sample action from Department of Justice

• FOR IMMEDIATE RELEASE

• Monday, March 16, 2020

• Federal Court Permanently Bars Former Liberty Tax Service Owners from Tax Preparation Business

• Court also orders disgorgement of $175,000

• A federal court in Tampa, Florida has permanently barred Steven Doletzky, formerly doing business as Liberty Tax Service, from operating a tax return preparation business and preparing federal tax returns for others, the Justice Department announced today.

• The court also ordered Doletzky to disgorge $175,000 of ill-gotten gains that the United States alleges he received from filing federal tax returns that claimed improper tax refunds, understated customers’ federal tax liabilities, or otherwise included false or fraudulent claims.



DOJ

• Doletzky was sued along with two co-defendants, Michael Garno and Michael Bass. According to the complaint, employees at stores owned by Doletzky, Garno, and Bass prepared federal income tax returns that claimed fraudulent claims for tax credits, including for education credits and the Earned Income Tax Credit (“EITC”). For example, the complaint alleges that from 2013 to 2015, Liberty Tax Service stores owned by Doletzky or his co-defendants prepared and filed federal income tax returns that claimed over 500 false claims for education credits. The court previously entered orders of permanent injunction and disgorgement against Garno and Bass. Doletzky, Garno, and Bass agreed to entry of the permanent injunctions and disgorgement judgments without admitting to factual allegations in the complaint.


More Fun Cases

• A federal court permanently enjoined Smart Ajayi, d/b/a Harplett Marketing LLC., Topps Tax Services and Smart Tax Services, and JoAnn Villarreal, both of Grand Prairie, Texas, from owning or operating a tax return preparation business and preparing tax returns for others, the Justice Department announced today. Ajayi and Villarreal consented to the relief.

• The complaint against Ajayi and Villarreal, which was filed in the U.S. District Court for the Northern District of Texas, alleges that Ajayi and Villarreal repeatedly understated their customers’ tax liabilities by fabricating noncash charitable deductions and creating false Schedules C with inflated or fraudulent business losses, to generate tax refunds. For example, the government alleges that Ajayi prepared a return on which he falsely reported that a customer with adjusted gross income of $34,027 made $19,759 in noncash charitable contributions. The complaint alleges that, over the course of years 2016 through 2018, Ajayi and Villarreal each filed hundreds of returns, and that by repeatedly understating their customers’ tax liabilities, Ajayi and Villarreal have caused the United States to lose substantial tax revenue.


One of my favorite cases

• News Release 2013-41, 04/12/2013

• Office of Professional Responsibility—disbarment.

• Headnote:

• IRS announced that OPR obtained disbarment of CPA whose irresponsible advice to clients constituted disreputable conduct under Circular 230.

• Reference(s): ¶ 76,559.7658;

• Full Text:

• Public Accountant Disbarred for Multiple Circular 230 Violations

• The Internal Revenue Service today announced that its Office of Professional Responsibility (OPR) obtained the disbarment of Certified Public Accountant Anthony A. Tiongson for charging unconscionable fees, giving irresponsible advice to clients and making false statements to federal and state authorities, among other things.



2013-41

• Tiongson is prohibited from preparing tax returns or representing taxpayers before the Internal Revenue Service for a minimum of five years. Tiongson practiced in California.

• “Practitioners who abuse the trust of their clients by charging unconscionable fees for taking frivolous positions on their tax returns can expect to hear from my office in the IRS,” said Karen L. Hawkins, director of OPR

• In a Final Agency Decision, the Administrative Law Judge (ALJ) disbarred Tiongson on March 1. The ALJ found that Tiongson's advice to clients to use Form 2555 to treat California earned income as foreign source income on at least fifty-two tax returns, constituted disreputable conduct under Circular 230, and his failure to research the legitimacy of the filing position specifically violated the Circular's due diligence standards.


Unbelievable

• The ALJ also found Circular 230 violations in Tiongson's use of a contingent fee structure and in the false statement to IRS Criminal Investigation regarding his fee structure. He was also found to have made false claims to the California Board of Accountancy that he ceased advising use of Form 2555 after becoming aware of the first IRS examination of his clients' returns.

• The ALJ also found that Tiongson violated Circular 230 by engaging in a pattern of delaying IRS examination and collection actions by repeatedly raising numerous frivolous arguments, long-rejected by the IRS and by case law. Tiongson's litigation threats against IRS employees, as part of client settlement proposals, were also determined to be violations.

• “The mere possession of a professional license does not give a practitioner the right to make his or her own rules, or to threaten IRS personnel doing their jobs,” Hawkins said.


Last Thoughts and Take Aways

• Remember to

• Facts

• Issue

• Rule of Law

• Argue/Analyze

• Conclude

• And Remember to be:



Conclusion

• (A) good character;

• (B) good reputation;

• (C) necessary qualifications to enable the representative to provide to persons valuable service; and

• (D) competency to advise and assist persons in presenting their cases.

Q&AWe will be happy to take questions at this time.


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