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IRSAC: IRS Must Update Circular 230


The Internal Revenue Service Advisory Council (IRSAC) Annual Report released on November 16 calls on the agency to "remove obsolete language and clarify inconsistent sections," primarily as a result of the decision in Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), which invalidated the IRS Registered Tax Return Preparer designation because it said the agency does not have the authority to regulate tax return preparers.  The IRSAC report noted that Circular 230 currently makes more than 50 references to the RTRP designation, even though it has no continuing significance or effect.

Steve Whitlock, head of the IRS Office of Professional Responsibility, said at the IRSAC meeting that the IRS is just beginning a conversation about possible changes to Circular 230 and will be consulting other members of the tax practitioner community about any proposed changes. 

Whitlock also acknowledge that Congress is unlikely to grant the IRS additional authority to regulate preparers following the Loving ruling, calling it "a very steep, uphill climb."  Going forward, he said, "Maybe we don't use the 'R word.' We talk about establishing standards, we don't talk about regulating the practice," he said.

The IRSAC report also address the tax preparer issue and said the IRS should request explicit statutory authority to enforce professional standards, and all preparers should be subject to Circular 230 standards "given the proliferation of preparer fraud and abuse"


The IRSAC report is available here.

#Ethics #NewsandInformation #IRS
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