Daily Tax Update - August 19, 2010: IRS Proposes Modifications to Cir. 230 Regulations

The Daily Tax Update will be published on a periodic basis until Congress returns from its August recess on September 13th.

TREASURY AND IRS PROPOSE MODIFICATIONS TO CIRCULAR 230 REGULATIONS: Today, the IRS and Treasury issued proposed regulations modifying the general standards of practice before the IRS and the standards with respect to tax returns. Tax professionals and other interested parties have until October 7, 2010, to submit comments regarding the proposed regulations.

  • The proposed regulations provide new rules governing the oversight of tax return preparers, including the establishment of “registered tax return preparers” as a new class of practitioners.
  • The proposed regulations describe the process for becoming a registered tax return preparer and the limitations on a registered tax return preparer’s practice before the IRS.
  • Practice by registered tax return preparers is generally limited to preparing tax returns, claims for refund, and other documents for submission to the IRS.
  • A registered tax return preparer may prepare all or substantially all of a tax return or claim for refund, and sign a tax return or claim for refund, commensurate with the registered tax return preparer’s level of competence as demonstrated by written examination.
  • Additionally, the proposed regulations modify the applicable standards with respect to tax returns and withdraw previously proposed amendments issued on September 26, 2007.
  • The proposed regulations revise the standards for the preparation of tax returns to provide broader guidelines that, according to the preamble, are more appropriate for professional ethics standards. The proposed ethical guidelines are similar to the civil penalty standards in section 6694 for tax return preparers.
  • The proposed regulations also revise rules regarding continuing education providers, solicitation, procedures to ensure compliance, and incompetence and disreputable conduct.
  • For additional information, contact Mark J. Silvermanmsilverman@steptoe.com, Arthur L. Baileyabailey@steptoe.com, or Alexis A. MacIvor – amacivor@steptoe.com.
  • The regulations can be accessed here and here.

Revenue Ruling 2010-21, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin No. 2010-39, dated September 27, 2010.

Revenue Ruling 2010-27 providing various prescribed rates for September for federal income tax purposes, including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.