Practice Before the IRS; Attorney's Fees Tax Proceedings (Portfolio 620)

Tax Management Portfolio, Practice Before the IRS; Attorney's Fees in Tax Proceedings, No. 620-2nd, discusses the practice regulations in Circular No. 230 with a special focus on the rules governing practice before the IRS by attorneys, certified public accountants, enrolled agents, and enrolled actuaries.

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Tax Management Portfolio, Practice Before the IRS; Attorney's Fees in Tax Proceedings, No. 620-2nd, discusses the practice regulations in Circular No. 230 with a special focus on the rules governing practice before the IRS by attorneys, certified public accountants, enrolled agents, and enrolled actuaries.

Also discussed are power of attorney and tax information authorization filing requirements, which are imposed on all categories of representatives with respect to practice before the IRS. Circular No. 230 also prescribes rules for the issuance of tax opinions, disciplinary proceedings for violations of Circular No. 230, and disciplinary hearings before Administrative Law Judges.

While focusing on the practice rules for attorneys and CPAs, this Portfolio also considers the requirements for practice before the IRS by non-attorneys and non-CPAs. The enrollment procedures for qualifying to practice, the procedures for establishing technical competency by written examination, and the steps in applying for enrollment are all discussed. In addition, this Portfolio considers limited practice before the IRS as well as statutory and regulatory prohibitions relating to representation before the IRS by former government officers and employees.
Also discussed are §7430 and the requirements for attorney's fees and other costs involved in an administrative or court proceeding.


Joe B. Cogdell, Jr.

Joe B. Cogdell, Jr., B.A., J.D., University of Arkansas; LL.M. in Taxation, Southern Methodist University; member of North Carolina, Oklahoma and Arkansas Bars.

Table of Contents

Detailed Analysis

Part I

1:I. Introduction

1:II. Practice Regulations

A. Treasury Regulations

B. IRS Conference and Practice Requirements

C. Jurisdiction of Treasury Secretary

D. Jurisdiction of Director of the Office of Professional Responsibility

E. Inquiries

1. Inquiries to Director of the Office of Professional Responsibility

2. Inquiries to Alcohol and Tobacco Tax and Trade Bureau

1:III. Practice Before the IRS

A. In General

B. Appearance as Witness for Taxpayer

C. Summons by IRS to Appear as Witness

1:IV. Authorization to Practice

A. Why Authorization Is Necessary

B. Statutory Authorization for Attorneys and Certified Public Accountants

C. Administrative Authorization to Practice for Enrolled Agents

D. Administrative Authorization for Enrolled Retirement Plan Agent

E. Administrative Authorization for IRS Employees as Enrolled Agents

F. Administrative Authorization for IRS Employees as Enrolled Retirement Plan Agents

G. Authorization for Special Appearance

H. Limited Statutory Authorization for Government Officers and Employees

I. Administrative Authorization for Enrolled Actuaries

1:V. Application for Enrollment

A. Filing Procedures

1. IRS Form 23 Application

2. Execution

3. Fee

4. Where Filed

B. Temporary Recognition of Applicant

1. Requirements

2. Request Granted

3. Denial of Request

4. Withdrawal of Temporary Recognition

C. Processing of Application

1. Receipt of Application

2. Referral for Investigation

3. Status Inquiries

D. Enrollment of Applicant

1. Review of Report

2. Issuance of Enrollment Card

E. Enrollment Doubtful

1. Review of Report

2. Notification to Applicant

3. Applicant's Reply

4. Action on Reply

5. Conference Concerning Application

6. Suit to Compel Determination

F. Denial of Application

1. Reply to the Director

a. Contents of Reply

b. Conference with the Director

c. Decision by the Director

2. Appeal to Treasury Secretary

G. Term and Renewal of Enrollment

1. Renewal of Enrollment

2. Condition for Renewal

3. Qualifying Continuing Education Programs

4. Periodic Examination

5. Recordkeeping Requirements

6. Measurement of Continuing Education Hours

7. Waiver of Continuing Education Requirements

8. Failure to Comply with Continuing Education Requirements

9. Inactive Retirement Status

H. Termination of Enrollment

I. Maintenance of Rosters

1:VI. Limited Practice Without Enrollment

Introductory Material

A. Self-Representation

B. Relationship to Tax Entity

C. Rulemaking Proceedings

D. Foreign Representation

E. Individual Preparers of Tax Returns

1. In General

2. Definition of Preparer

3. Scope of Authority

4. Prohibited Conduct

5. Discipline and Appeals

1:VII. Tax Practitioner Program and Mailing List

1:VIII. Powers of Attorney and Tax Information Authorizations

A. Powers of Attorney

1. In General

2. When Power of Attorney Is Required

3. When Power of Attorney Is Not Required

4. Requirements of Power of Attorney

a. Contents

b. Declaration of Representative

c. Curing Defective Power of Attorney

5. IRS Form 2848

a. Signature Requirements

b. Multiple Representatives

c. CAF System

6. Non-IRS Forms

7. Filing Requirements

8. Revocation of Power of Attorney

9. Withdrawal by Representative

10. Power of Attorney Litigation

B. Copies of Notices

C. Refund Checks

D. Tax Information Authorization (Form 8821)

E. Third Party Designations

1:IX. Certain Prohibited or Restricted Representation

A. Statutory Prohibitions

B. Practice by Government Officers and Employees - Circ. No. 230

C. Practice by Former Government Employees - Circ. No. 230

1. General Rules

2. Firm Representation

3. Definitions

1:X. Practice Duties and Restrictions

Introductory Material

A. Furnishing Information

B. Knowledge of Client's Omission

C. Diligence as to Accuracy and Standards of Conduct

1. Due Diligence

2. Standard Applicable to Returns and Documents

3. Definitions

D. Prompt Disposition of Pending Matters

E. Assistance From Disbarred or Suspended Persons and Former Internal Revenue Service Employees

F. Notaries

G. Fees

H. Return of Client Records

I. Conflicting Interests

J. Advertising and Solicitation

1. In General

2. Standards for Electronic Filers

K. Negotiation of Taxpayer Refund Checks

L. Practice of Law

M. Best Practices

N. Tax Opinions and Return Positions

1. Post-June 20, 2005 Covered Opinions

a. Covered Opinion Defined

b. Requirements for Covered Opinions

(1) Determining the Facts

(2) Relating the Law to the Facts

(3) Considering All Significant Federal Tax Issues

(4) Providing an Overall Conclusion

c. Limited Scope Opinions

d. Competence Requirements

e. Disclosure Requirements

(1) Relationship Between Promoter and Practitioner

(2) Marketed Opinions

(3) Limited Scope Opinions

(4) Opinions Failing to Reach a More Likely Than Not Conclusion

(5) Advice Contrary to Disclosures

f. Oversight Requirements

2. Post-June 20, 2005 Written Advice Other Than Covered Opinions

3. Pre-June 21, 2005 Tax Shelter Opinions

a. Definitions

b. Due Diligence as to Factual Matters

c. Material Issues

d. Overall Evaluation

e. Partial Opinions

4. Avoidance of Understatement

5. Disciplinary Standards

O. Non-Tax Disclosures

1:XI. Disciplinary Proceedings

A. Authority to Sanction or Enjoin

B. Basis for Action

1. Disreputable Conduct

2. Any Violation

3. Tax Shelter Opinions

C. Preliminary Procedure

1. Notification to Representative

2. Response by Representative

3. Negotiated Dispositions

D. Institution of Proceeding

1. Complaint

2. Answer

3. Supplemental Charges

4. Reply to Answer

5. Variance Between Pleading and Proof

6. Motions and Requests

E. Hearing on Complaint

1. Parties to Proceedings

a. Administrative Law Judge

b. Representation

2. Discovery

3. The Hearing

a. Time and Place

b. Type of Hearing

c. Failure to Appear

4. Powers of Administrative Law Judge

a. General

b. Motions and Requests

c. Denied Motions

5. Conduct of Hearing

6. Administrative Law Judge's Decision and Appeal

7. Final Decision

8. Petition for Reinstatement

F. Procedure for Expedited Suspension

G. Disqualification of Appraisers

1. Authority to Disqualify

2. Circular No. 230 Regulations

a. Disciplinary Proceedings

b. Petition for Reinstatement

H. Discipline of Electronic Filers

1. Monitoring and Suspension

2. Administrative Review

a. Review of Denial of Participation in E-File Program

b. Review of Suspension from E-File Program

Part II

2:I. Introduction

2:II. Requirements of Section 7430

Introductory Material

A. Administrative or Court Proceeding

B. Type of Proceeding

C. Exhaustion of Administrative Remedies

1. In General

2. Exceptions to Exhaustion Requirement

D. Prevailing Party

1. IRS's Position Not Substantially Justified

a. In General

b. Determining What Is the IRS's Position

c. Examples Where IRS's Position Is Substantially Justified

d. Examples Where IRS's Position Not Substantially Justified

e. Effect of Jury Verdict

2. Taxpayer Substantially Prevails as to Amount in Controversy or Most Significant Issue

a. Amount in Controversy

b. Most Significant Issue

3. Filing Requirements

4. Net Worth Requirements

5. Qualified Offer

6. Creditors of Taxpayer

2:III. Limitations on Awards

A. No Award for Protracted Proceedings

B. Declaratory Judgments

2:IV. Recoverable Fees and Costs

Introductory Material

A. Reasonable Administrative Costs

1. Types of Costs

2. Limitations on Recoverable Costs

3. Cost of Living Adjustment

4. Specially Qualified Representative's Fees

5. Special Factor

B. Reasonable Litigation Costs

1. Types of Recoverable Costs

2. Limitations on Recoverable Costs

3. Cost of Living Adjustment

4. Special Factor

5. Other Costs

2:V. Procedures for Recovery of Costs and Fees

A. Administrative Costs and Fees

1. Request for Award

2. Location of Filing

3. Time for Filing

4. Appeal to Tax Court

B. Litigation Costs and Fees

1. Tax Court

a. Motion

b. Time for Filing

c. Disposition of Claims for Litigation and Administrative Costs

d. Appeal

2. Other Federal Courts

C. Multiple Actions

D. Standard of Appellate Review

2:VI. Recovery of Fees Under Other Statutes

Working Papers

Working Papers

Table of Worksheets

Worksheet 1 Treasury Dept. Circular No. 230 - Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents, and Appraisers before the Internal Revenue Service (Rev. April, 2008), reprinting, Regulations Governing Practice Before the Internal Revenue Service, 31 CFR Part 10, published September 26, 2007

Worksheet 2 Administrative Practice; General Provisions - 5 U.S.C. § 500; Individuals Qualified to Represent a Person Before the IRS

Worksheet 3 Practice Before the Treasury Department - 31 U.S.C. § 330

Worksheet 4 Limited Practice Without Enrollment - Rev. Proc. 81-38, 1981-2 C.B. 592

Worksheet 5 Summary of General Tax Procedure Rev. Proc. 61-18, 1961-2 C.B. 550

Worksheet 6 Unenrolled Persons - Rev. Proc. 68-29, 1968-2 C.B. 913 Scope of Recognition by the IRS

Worksheet 7 Pub. 947 - Practice Before the IRS and Power of Attorney

Worksheet 8 Pub. 216 - Conference and Practice Requirements (26 C.F.R. § § 601.501–509)

Worksheet 9 Sample Power of Attorney (Form 2848)

Worksheet 10 Sample § 10.35(b) Disclosure Clause

Worksheet 11 Section 10.35 Covered Opinion Flow Chart





Committee Reports:

Internal Revenue Manual:

Treasury Rulings: