Friday, September 2, 2011

OPR Outlines Activities Forbidden To Practitioners Under Suspension or Disbarment

Circular 230, as amended and in effect as of August 2, provides that tax return preparation is “practice” before the IRS. Accordingly, when the IRS Office of Professional Responsibility suspends or disbars a practitioner from “practice” what does that mean?

For OPR, the answer is very clear: because of Circular 230 section 10.79, tax practitioners who have been suspended or disbarred are prohibited from activities such as communicating with the IRS on behalf of taxpayer rights, representing taxpayers at IRS conferences, hearings, and meetings, and preparing and filing taxpayer documents with the IRS. Please note that preparation is prohibited even if the document is filed with the IRS by some one else. Furthermore, attempting to practice before the IRS while disbarred or suspended could keep practitioners from being reinstated. The guidance also said the degree to which individuals comply with the terms of their sanctions will affect whether they are reinstated.

Another restriction prohibits suspended or disbarred practitioners from rendering written advice on transactions that have a potential to reduce taxes. The IRS may be facing a court challenge, some have suggested, because of constitutional questions about the extent to which the service can regulate, and therefore prohibit, practitioners from communicating in writing with their clients about taxes in the absence of any return or document intended to be filed with the Service.

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