Instructions
The Senior Partner of your Firm, S. Teddy Helm, has asked you research and provide advice in two scenarios:
#1. He asks that you review each of the following actions and answer whether each action can result in suspension or disbarment from practice before the IRS under Circular 230. In providing your answer, please provide a reference to the specific provision(s) of Circular 230, allowing or prohibiting the proposed action(s).
Action
1. Negotiating a client’s refund check
2. Receiving a fine for speeding through a school zone while on the way to the IRS office
3. Giving an IRS employee a present in hopes that they will issue a favorable opinion. The IRS employee swears to be impartial when deciding on the official opinion
4. A practitioner refuses to comply with the rules relating to practice before the IRS because he considers most of them to be unnecessary
5. Being charged with a felony that could render the practitioner unfit to practice before the IRS
#2. One of the members of your Firm, John Danger, a CPA, is authorized to practice before the IRS. He performed all of the following acts during the current year.
Teddy has asked you to determine whether each individual scenario is acceptable or not acceptable under Circular 230. As in Scenario #1, you must provide the specific provision(s) of Circular 230, allowing or prohibiting the proposed action(s).
Scenario
1. Represented two clients with conflicting interests. John reasonably believes that he can successfully represent both clients. Both of the clients have provided written consent as to the representation and the representation is not prohibited by law.
2. Endorsed his client’s tax refund and deposited it into the client’s account. His client requested that John deposit it because the client was out of town.
3. Noticed that one of his clients did not comply with an applicable revenue law. This noncompliance caused an error on her tax return. John immediately informed the IRS of this error. He did not inform the client since his client was on vacation and John did not want to bother her.
4. Advertised his fees for an initial consultation and his hourly rates. All of these were reasonably based.
5. Frank, a CPA who practices in the same area as John, has obtained his clients by deceptive and misleading advertising. Frank has assisted John throughout the year in his practice. However, John did not know that Frank obtained his clients in violation of Circular 230.
6. Charged a contingent fee in relation to an IRS examination of an original return.
7. A fee dispute arose between John and one of his clients. John is withholding his client’s records until the dispute is settled even though he did not prepare the document requested. The client needs the record requested in order to comply with his tax obligation.
Instructions:
Prepare a Memorandum, in standard form, addressed to S. Teddy Helm setting forth your conclusions with citations.
