An investment in knowledge pays the best interest.
In September 2012 the Treasury issued proposed changes to Circular 230, the rules governing practice before the IRS. Final regulations were finally issued, effective June 12, 2014. Here were changes and clarification in multiple areas. They include:
-Negotiation of taxpayer checks. Circular 230 prohibits tax preparers/practitioners from negotiating taxpayer checks. The Service clarified that this prohibition does not apply to an individual acting solely in the capacity of a trustee of a trust or administrator/executor of an estate because that person is acting as the taxpayer, not as the taxpayer’s representative. This clarification does not help elder law attorneys acting in dual capacities if they are acting as tax practitioners
- General standards of competence. The final regulations clarify that competence requires the “appropriate level of” knowledge, skill, thoroughness, and preparation necessary for the matter for which the practitioner is engaged.
- General Circular 230 Compliance. Practitioners before the IRS are subject to discipline for violations of all aspects of Circular 230. This includes meeting the practitioners’ own tax filing and tax payments. In my own tax controversy practice I see attorneys who have not filed multiple years of required business and personal tax returns, and that have not paid the tax due.
- Reliance on other professionals. Practitioners may reasonably rely on other professionals. However, such reliance is prohibited when the practitioner knows or reasonably should know that the other person is not competent or lacks the qualifications to provide the advice. Likewise, reliance is not reasonable when the other person has a conflict of interest. This provision is very helpful for elder lawyers addressing tax issues who obtain assistance from qualified tax attorneys, CPAs, appraisers and the like.
-Written advice and Email footers. Perhaps the most well known and anticipated changes were with the written advice rules. The new regulations remove the separate provision for covered opinions (tax shelter type opinions).