The IRS has released final regulations which modify the standards governing written tax advice and also eliminates the complex opinion rules in Circular 230 by replacing them with a new competence standard. Section 10.35 now requires practitioners to “possess the necessary competence to engage in practice before the Internal Revenue Service” and states that “competent practice requires the appropriate level of knowledge, skill, thoroughness, and preparation necessary for the matter for which the practitioner is engaged.” The final rules also allow practitioners to remove the Circular 230 notices at the end of emails, which will make communications with clients less complex.
In the regulations, the IRS pointed out that individuals subject to Circular 230 requirements must meet minimum standards of conduct with respect to written tax advice, and those who do not should be subject to disciplinary action, including suspension or disbarment. In accordance with these principles, the regulations have been amended from time to time to address issues relating to tax opinions and written tax advice.
The new regulations modify the rules governing written tax advice along with some related provisions of Circular 230 to ensure that practitioners meet certain standards of conduct when serving as taxpayer representatives before the IRS. The new rules also modify the consequences of failing to meet those standards, including expedited suspension provisions.
