IRS Rejects Proposed ABA Standards for Preparers Under Circular 230

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Several changes the American Bar Association tax section sought from IRS for the reporting of uncertain tax positions were not adopted in final rules under Circular 230, practitioners tell BNA. The tax section had recommended that the proposed amendment to Section 10.34 of Circular 230 state that disciplinary sanctions would not be imposed for undisclosed “non-tax shelter” return positions that meet the “realistic possibility of success on the merits” standard, and for disclosed positions that meet the “reasonable basis” standard. Instead, in final rules (T.D. 9527) issued Tuesday, IRS maintained the standards outlined in proposed rules, and adopted civil penalty standards requiring a substantial authority standard and reasonable basis with adequate disclosure.

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