In-House Tax Professionals Must Comply with Circular 230

The IRS Office of Professional Responsibility recently issued a bulletin that provides answers to five frequently asked questions about whether and to what extent a company’s in-house tax professional falls under the disciplinary jurisdiction of OPR and is required to meet the standards in Circular 230.  

The CPA employee must “practice before the IRS,” and this is broadly defined as “all matters connected with a presentation to the IRS relating to a taxpayer’s rights, privileges, and liabilities” under the Internal Revenue Code and Treasury Regulations. Such a presentation includes but is not limited to: “[P]reparing documents; filing documents; corresponding and communicating with the Internal Revenue Service; rendering written advice with respect to any entity, transaction, plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion; and representing a client at conferences, hearings and meetings.” This does not include routinely preparing or reviewing a prepared return but would include the preparation of an amended tax return in representing the taxpayer in an IRS examination.    

The bulletin concludes, “Every attorney, CPA, EA or other tax professional who practices before the IRS is subject to Circular 230 regardless of whether they operate on their own as a solo practitioner, are with a firm, or are an employee or officer of an entity taxpayer. The precise application of the Circular’s standards to the professional will depend on the facts of each unique situation.”