Circular 230

Circular 230’s formal name is Treasury Department Circular No. 230, and it is published as 31 CFR Part 10. Practice before the IRS means presenting any matter to the IRS about a taxpayer’s rights or liabilities. It includes preparing and filing documents, writing to the IRS and representing a client at a meeting or hearing. In Loving v. IRS (2014), a federal appeals court held that the IRS cannot regulate return preparation alone as practice.

Attorneys and CPAs may practice as long as they are not suspended or disbarred. Enrolled agents may too, and so may enrolled actuaries and enrolled retirement plan agents within their own fields. A few others, such as family members and a company’s officers, may act in limited cases. Only individuals can be enrolled or authorized to practice, not firms.

Practitioners owe due diligence and competence on every matter. They may not sign a return with a position that lacks a reasonable basis. A position the return does not disclose generally needs substantial authority, which is a higher bar. Other rules cover fees and conflicts of interest, and require returning a client’s records promptly when asked. Breaking the rules can lead to censure, suspension, disbarment or a monetary penalty.

Circular 230 is not a license. A CPA’s license comes from a state board, and Circular 230 governs the CPA’s work before the IRS. Enrolled agents, by contrast, are enrolled by the IRS under Circular 230’s own rules.