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KAREN BREHMER: OK. It is the top of the hour. So for those of you who are just joining us, welcome to today's webinar, Th Office of Professional Responsibility: Circular 230 and Practicing Before the IRS. We're glad you're joining us today. My name is Karen Brehmer and I am a Stakeholder Liaison with the Internal Revenue Service, and I'll be your moderator for today's webinar, which is slated for 120 minutes. Before we begin, if there's anyone in the audience that is with the media, please send an e-mail to the address on the slide. Be sure to include your contact information and the news publication you're with. Our Media Relations and Stakeholder Liaison staff will assist you and answer any questions you may have. As a reminder, this webinar will be recorded and posted to the IRS Video Portal in a few weeks. The portal is located at Please note, when you are viewing it on the Video Portal, you're viewing an archived version. You can't get continuing education credit or a Certificate of Completion. But still, for those of you who need to watch it on the Video Portal, at least you get all the information you were looking for. We hope you won't experience any technology issues today, but if you do, this slide shows helpful tips and reminders. We've posted a Technical Help Document that you can download from the Materials section on the left side of your screen.

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During the presentation, we'll take a few breaks to share knowledge-based questions with you. At those times, a polling style feature will pop-up on your screen with a question and multiple-choice answers. Select the response you believe is correct by clicking on the Radio Button next to your selection, and then click Submit. Some people may not get the polling question, and this may be because you have your Pop-Up Blocker on. So please take a moment to disable your Pop-Up Blocker now so you can answer the question. If you have a topic-specific question today, please submit it by clicking the Ask Question dropdown arrow to reveal the Textbox. Type your question in the textbox and then click Send. Now this is really important, please do not enter any sensitive or taxpayer-specific information. Again, welcome and thank you for joining us. Today the Office of Professional Responsibility will share information on Circular 230 and practicing before the IRS. Sharyn Fisk is the Director, Office of Professional Responsibility. She was named as the Director in January 2020. As Director she is responsible for the IRS oversight of tax professionals who practice before the IRS as set-out in Treasury Circular 230. And with that, let's begin our discussion. Sharyn, I'll turn it over to you.

SHARYN FISK: Thank you, Karen. Hello. I'm Sharyn Fisk, the new Director of the Office of Professional Responsibility at the IRS. I am pleased to have so many attendees joining us today to learn about the Office of Professional Responsibility, Circular 230 and practicing before the IRS. During today's webinar I will briefly explain the statutory background for regulating the practice of representatives before the Treasury Department, define what it means to practice before the IRS, highlight key provisions in Circular 230 that are important for you to remember, and walk through OPR's investigative and disciplinary process. I've also provided a helpful resources document with links to information to assist you and further understanding today's discussion. Let's start with a brief background regarding the statutory and regulatory authority involved. The statutory authority to address the conduct of representatives before the IRS is not found in Title 26, the Internal Revenue Code. Instead, it appears in Title 31 of the U.S. Code Section 330. This is important. OPR is independent from Title 26, which enforces which is enforced by other divisions in the IRS. As you can see, the statute is old. The Secretary of Treasury delegated the authority to regulate the practice of representatives of persons before the Internal Revenue Service to the IRS Commissioner. This statute also sets the criteria individuals must have to be representative. The statute authorizes the disciplinary actions the Secretary can take against those represent excuse me, against those representatives who are incompetent, disreputable, who violate the regulations prescribed under Section 330 of Title 31. The Secretary also is authorized to impose monetary penalties against these individuals and, in certain circumstances, entities with which the individuals are affiliated. Paragraph C, which was added later to the statute, authorizes the Secretary to regulate certain appraisers. Now the last paragraph of Section 330 authorizes the Secretary to impose standards for giving certain written advice. Our discussion today is centering on Section 330 of Title 31's Authorization to Regulate Practitioners Before the IRS and to make determinations about those practitioners' fitness to practice. Besides Section 330 of Title 31, other authorities govern those who practice before the Treasury Department. These include Treasury Circular 230, which Karen mentioned earlier. And this Treasury was issued in 1921 another oldie, but goodie. It's been revised periodically over its nearly 100 years with the most recent revision in June 2014. Section 10.1 of Circular 230 provides for the Commissioner of the IRS to establish the Office of Professional Responsibility, which we're going to call OPR because you know the IRS loves to use those acronyms. Section 10.1 also delegates authority to OPR to administer Circular 230, a delegation order and two Revenue Procedures relating to limited practice for unenrolled return preparers are also part of the legal authority pertaining to practice before the IRS. Circular 230 sets forth the requirements for practicing before the IRS, basically the duties and obligations a practitioner is expected to meet the rules regarding the IRS' authority to sanction an individual for violations of Circular 230, the specific sanctions that can be imposed for violating duties and obligations, and describes the administrative disciplinary procedures. Now Circular 230 is composed of four subparts. Subpart A contains provisions regarding individuals who may practice before the IRS. These are defined as attorneys, CPAs, enrolled agents and other enrolled professionals, and certain designated professionals. Subpart B contains the regulations that identify various kinds of ethical behavior and professional responsibility the IRS believes are appropriate to monitor and oversee for individuals who practice before the IRS. Many of these key provisions in Subpart B will be discussed today. Subpart C lists the sanctions that can be imposed, the violations and describes the forms of disreputable and incompetent conduct that are actionable. Subpart D details how the disciplinary process works to ensure due process protections a taxpayer excuse me, a practitioner is entitled to throughout this whole process. And now I think it's time for our first polling question. Karen? BREHMER: Yep, it certainly is time for our first polling question. Here is the question. The documenting the documents regulating practice before the IRS is, A, Form 2848; B, Circular 230; C, Form 8821; D, Annual Filing Season Program. So take a moment and read that over again, and then click on the Radio Button that best answers the question. And I'll give you a few more seconds to make your selection. OK. We're going to stop the polling now and let's share the correct answer on the next slide. And the correct response is B, Circular 230 provides the rules for practicing before the IRS. Ninety-eight percent, that is very good. Clearly everybody is listening, Sharyn, and with these questions get tougher as we go along, right? But FISK: Correct. BREHMER: we'll have you go we'll have you go ahead, Sharyn, and continue the presentation. FISK: Fantastic. In the meantime, I was peeking at some of the Q&;A, so I want to send a shout-out to a couple of my former students who are on this webinar. Alright. Let's get into practice before the IRS and what it means to do that practice before the IRS. Alright. Congress, in enacting Section 330 of Title 31, contemplated that only individuals professionally and ethically fit to represent the interest of taxpayers, claimants and others are eligible to practice before the Treasury Department, which includes the IRS. So what is this fitness to practice? Actually, this requires practitioners to be of good character, good reputation, have the qualifications to provide a valuable service to clients, and the competence to advise and assist clients in representing their cases and their clients to IRS. Section 10.2(a)(4) defines practice before the IRS. And as you can see the definition is very abroad, notice it states all matters.

Practice contemplates all matters connected with the presentation to the IRS regarding taxpayer's right, liabilities and privileges under laws and regulations administered by the IRS.

And this can include laws not contained in Title 26. For example, we know that taxpayers must report their ownership or signatory authority over foreign bank accounts that contain more than $10,000 at anytime during the taxable year on Schedule B of their 1040 and through filing a report of Foreign Bank Account and Financial Accounts form, generally called the FBAR. The requirement to report foreign bank account is not found in Title 26, the Internal Revenue Code.

Instead, it is in Title 31 of the U.S. Code. Practice does not, however, include mere paid tax return preparation, which was the issue in the Loving versus IRS case. I put a link to this case on the resources document if you'd like additional information regarding the litigation and the status of unenrolled preparers under Circular 230. If you are an unenrolled preparer who merely prepares a tax return, then you are not covered by Circular 230. However, if you engage in representation authorized through the IRS' Annual Filing Season Program, which have established Revenue Procedure 2014-42, you are subject to the provisions of Circular 230. Now if you're not familiar, this program allows for limited representation right for unenrolled preparers who, after 2015, prepared and fined federal tax returns and now there is a subsequent examination of one of those returns. When a tax professional signs and it submits to the IRS a Form 2848, Power of Attorney and Declaration of Representative, that practitioner is engaging in representation before the IRS. You'll notice the Form 2848's title is Power of Attorney and Declaration of Representative. That is because every time you sign a 2848, you are declaring under the penalty of perjury that you are subject to the regulations contained in Circular 230.

While most of us think practitioners who represent clients at meetings or conferences or hearings with the IRS as the ones practicing before the IRS, practice can constitute many actions, including those who do not necessarily involve direct interaction with the IRS. For example, practice can include preparing or filing documents to be submitted to the IRS, corresponding or communicating with the IRS, rendering written tax advice and providing appraisals for tax position. Under Circular 230, those who practice before the IRS include Attorneys, CPAs, Enrolled Agents, Enrolled Retirement Plan Agents, Enrolled Actuaries, preparers possessing an Annual Filing Season Program Record of Completion and appraisers who submit appraisals supporting tax positions. How about another polling question, Karen? BREHMER: That sounds like a great idea. OK. Audience, here's our second polling question. Which of the following may practice before the IRS? Your choices are, A, Attorneys; B, Certified Public Accountants; C, Enrolled Agents or D, all of the above. So take a moment and click the Radio Button that best answers the question. I know there are a lot of people on the webinar today, and so we want to make sure everybody has time to answer the polling question. So again, take a look at the question, take a look at the answers and then click on that Radio Button. And enjoy this question because the polling questions get longer as we get to the ones that come later. OK.

We are going to stop the polling now and we'll share the correct answer on the next slide. And the correct response is D, Attorneys, Certified Public Accountants and Enrolled Agents may all practice before the IRS. OK. You guys are nailing this. You got 99 percent correct, so obviously you already knew this or you learned it because of what Sharyn told you. So, Sharyn, I think we will continue, and it looks like the key provisions of Circular 230 is what you have up next. FISK: Yes, it is, Karen. Alright. Though all provisions of Circular 230 are important, we're going to limit our discussions to key provisions that practitioners may typically encounter in their practice. The key provisions of Circular 230 we'll discuss relate to matters associated with dealing with your client, communicating with the IRS and best practices and standards for practitioners practicing before the IRS. So our first one, Section 10.20 addresses a practitioner's duty to provide information. The practitioner must not interfere with any lawful IRS attempt to obtain information unless, in good faith, the practitioner reasonably believes the information sought is privileged. Well, there are several types of privileges. The most common privileges asserted in a matter before the IRS is your training client privilege. Let's say, for example, you're handling an IRS audit for your client. The IRS has issued an Information Document Request seeking documents related to a transaction reported on your client's return. Your client tells you she's boxed up all the documents regarding the transaction and given them to her brother-in-law who is a lawyer. Your client wants you to tell the IRS documents will not be provided in response to the IDR because they're protected under the attorney-client privilege. Are these documents protected under the attorney-client privilege? It depends. Was the brother-in-law acting as your client's attorney regarding the transaction? If not, then just giving documents to an attorney to hold does not make those documents privileged communication. If you are unsure if a privilege applies, you can consult with a lawyer. If neither the client nor the practitioner possesses or sorry, what if neither the client nor the practitioner possess the information sought? Under 10.20, a practitioner must promptly inform the IRS of that fact and provide any information regarding who may have possession of the requested information. Although the practitioner is not required to make inquiries of anyone other than the client or verify information provided by the client regarding the person or persons in possession of the recorded information. A practitioner cannot advise a client to submit any document to the IRS that's frivolous, or contains misinformation in a manner demonstrating an intentional disregard of a rule or regulation. However, it is allowable to advise a client to submit document that disregards a rule or regulation if the submission of such document evidences a good faith challenge for that rule or regulation.

BREHMER: Sharyn, I'm going to ask you a couple of questions here. I think it's interesting what you said about that the practitioner should inform the IRS that they don't have the information if they don't have the information. I guess, what you're saying is at least then the IRS employee knows that the reason they didn't supply it is because they don't have it, which is different from refusing to comply with the request, either the taxpayer refused or the power of attorney refused. Can you say more about that? FISK: Absolutely. Informing the IRS employee whether the taxpayer has possession of the requested document is very important. For the taxpayer, it's relevant as to whether the application of the Cohan rule should be applied to allow reasonable estimates for missing information. It's important as to whether penalties are going to be appropriate in this case, even important to the level of the taxpayer cooperation, which has ramifications for potential criminal referral or investigation. Now for the practitioner, responding to the request displays your due diligence and your efforts to the standards under Circular 230. Now I'm going to give you a practitioner tip from my old days of private practice. When responding to an IDR, if your client tells you they do not have the requested information, you may want to write in your response to the IRS, quote, "To the best of the taxpayer's knowledge, they are not in possession of the documents requested," end quote.

This is because sometimes the taxpayer later finds those documents, and we don't to be, in anyway, mislead the IRS. BREHMER: Right, that's a very good tip. As far as we know, we don't have those documents today. If they show up later, it doesn't look quite so suspicious or something. And then FISK: Right. If they find files or a computer or something BREHMER: Yes, yes. FISK: and they realize they have it. BREHMER: Yes. You also made a comment that I really didn't understand and I want you to elaborate on it. Earlier you said if the you give an example or explain that more? FISK: Sure. So, typically when new tax laws are submission of such documents evidence as a good faith knowledge to the rule or regulation, can enacted, they don't come with a lot of guidance. We know that right now with check the current legislation coming out. So it's up to the Treasury and the IRS to draft regulations, may issue revenue rulings or revenue procedures to provide that guidance. Sometimes practitioners reasonably believe, in good faith, that the guidance issued is incorrect or went beyond what Congress intended or that a newly enacted code provision is unconstitutional. In these cases, practitioners may advise their clients to take a position the tax or excuse me, the practitioner reasonably believes is correct, intending to address this disagreement with the IRS.

Some of these matters ultimately end up in litigation in the courts deciding the issue. And this is where we get a lot of our great tax law on taxation or excuse me, a lot of our great case law on taxation. Just remember, the practitioner must have a reasonable belief and it has to be made in good faith that the that the advice they are giving is correct. BREHMER: OK, that makes more sense. So if they disagree with the revenue ruling or revenue procedure, they could advise their client to do something different, but they have had to do some research to say why they believe it's incorrect or why they believe it's unconstitutional. They can't just be I don't like it, so we're going to do it this way, it has to be FISK: Exactly.

BREHMER: stronger than that. FISK: That's what we call your reasonable basis. It has to be based on something other than your feeling. BREHMER: OK, great. OK. Thank you for clarifying those two points. I will give you back the floor and you can go ahead. FISK: Excellent.

Alright. On the 10.21, this section addresses your duty regarding the client's error or omission. This section is often misunderstood. If you learn that a client has not complied with the Internal Revenue Code or made an error in or omission from a return or other documents submitted to the IRS, you have a duty to promptly inform the client of non-compliance error or omission, and advise the client about the consequences under the code and regulation of that non-compliance error or omission. A best practice would also include advising the client about what to do about the non-client error or omission, but that is not required under Circular 230 adjusted but not required. For example, let's say a new client asks you to prepare his 2019 return. As part of your regular due diligence, you ask this client for copies of his last two federal returns. In reviewing the new client's past returns, you discover an error was made in calculating the client's net operating loss. The result of which would affect the client's NOL carryforward to 2018 and leave no NOL carryforward to 2019. Under Section 10.21, you have a duty to promptly inform your new client of this error and advise the client about the consequences of such error. And when we talk of consequences, we're talking about an examination exposure, additional tax liability, interest and potential penalties on that additional tax liability. Although not required under Circular 230 as a best practice, you should advise your new client on how to fix this problem, in this case, filing an amended 2018 return reporting the correct NOL carryforward amount. What happens if this new client doesn't want to amend his 2018 return? The Code does not require a taxpayer to fix a past error.

Moreover, you do not have a duty to file an amended return or other corrective document with the IRS. In fact, if you did do so without the client's permission, it can expose you to a malpractice issue. Of course, the client doesn't want to fix his 2018 return, he's going to suffer the consequences. Now what happens if the client insists on using the erroneous NOL carryforward on his 2019 return because he's concerned if it's not reported consistently with 2018 return, the IRS will notice this and it may lead to an audit of the prior year's tax returns. Your due diligence responsibilities under Circular 230 prevents you from preparing a return you know is incorrect. You cannot prepare, sign or submit the 2019 federal return for this client with the erroneous NOL reporting on it. To recap, 10.20 requires just two things from you promptly inform the client of the non-compliance and advise them about the consequences of that non-compliance under the Code and regulation. And remember, you cannot knowingly perpetuate the non-compliance error or omission. A due diligence provision under Section 10.22 and 10.34 state everything you need to know by a good practice before the IRS.

You must exercise due diligence to ensure the accuracy representations, both oral or written, that you make to your client or the IRS. This includes preparing or approving for submission to the IRS or filing anything that relates to a tax matter, forms, tax returns, documents, affidavits, protests, you got it. You have an obligation to your client to make sure you're giving them correct and accurate information, and you have an obligation to the IRS to make sure the representations you make on behalf of your client are accurate and complete. How do you exercise this due diligence? Well, when it's concerning your own work product, you need to know the relevant facts regarding your client's tax matter. Ask your client questions. Make reasonable inquiries if the information you're getting from the client appears to be incorrect, inconsistent or incomplete. You don't have to audit your client, but you can't ignore the implications of other information you've been given whether by the client or someone else. Now, 10.34 provides that a practitioner, quote, "may rely, in good faith and without verification, on client information," end quote, but that does mean you can be willfully blind. You have not met your due diligence obligations on 10.34 and 10.22 if you fail to ask questions you should ask or if you say to the client, directly or indirectly, "You don't tell me that because if you tell me that I'm going to have to give you bad news." Now sometimes your client may not give you all the relevant information, either by accident or intentional. And the information you have gathered from your client does not appear on its face to be inconsistent, incomplete or inaccurate, and you haven't gotten any information from other third parties that the information your client has provided you is incorrect, inconsistent or incomplete. In this case, you have met your due diligence duties under Circular 230. I want to give you an example. A taxpayer, a U.S. citizen, receive inheritance upon the passing of his mother who was also a U.S. citizen.

The inheritance includes over $10,000 held in a foreign bank account. That same year, the taxpayer meets with the CPA to have his federal return prepared. As part of her due diligence, the CPA reviews the client's completed tax organizer, asks about any changes that occurred during that tax year. The client informs his CPA about his inheritance from his U.S. mother and asks if the inheritance needs to be reported on his return. The client does not, however, mention the part the part of his inheritance is cash held in a foreign bank account. Not being tax-savvy, the client does not know that this is an important tax fact. The CPA, being knowledgeable about taxation of U.S. inheritances, informs the client that the inheritance from his mother, a U.S. citizen, does not need to be reported on the client's return. In giving this advice, the CPA does not know and has no reason to know that the client has inherited cash held in a foreign bank account. As we mentioned, the client is a U.S. citizen and the mother was a U.S. citizen. The CPA prepares and files the client's return without reporting the foreign bank account on Schedule B as we recall ownership of a foreign bank account is required and reported on Schedule B of a taxpayer's 1040. In this situation besides FBAR form. In this situation, although there is now in error on the client's federal return, the CPA has exercised her due diligence and asking questions of the client. She did not know and had no reason to know about the foreign bank account or that the client had inadvertently omitted a relevant fact or that there was any willful blindness on the part of the CPA. Accordingly, there was no Circular 230 violation in this situation. Now, to exercise your due diligence about your work product, you also need to determine which facts are material. As we just noticed right here, there was a material fact that was inadvertently omitted. You're the tax professional. It's up to you to determine which facts are pertinent or significant, not the client. For example, the client lists on their tax organizer that they had a $20,000 capital gain. How do you know it was a capital gain? Maybe all or some of its ordinary income, maybe some of it is subject to depreciation recapture, something your client may not know about. Exercising due diligence requires you to ask additional questions sothe proper characterization of this gain can be determined. Besides knowing the material facts to exercise your due diligence regarding your work product, you also need to know the applicable legal authorities to the tax matter.

Educating yourself or, if necessary, finding an expert upon whom you can rely is needed.

Finally, you need to apply the material facts to the applicable law. Sometimes your professional conclusion is not tax treatment that your client was hoping for. Your due diligence obligation to your client is to tell them that, even if they don't want to hear it. This is what Circular 230 means and its requirement to determine the accuracy of a representation to the client. Now, if you're relying on the work products of another, there are several ways to meet your due diligence requirements. Under the safe harbor provision in 10.22, you will be deemed to have exercised reasonable due diligence if you use reasonable care in selecting, engaging, supervising, training, overseeing or evaluating the individual's work you're relying upon.

Reasonable care is based on the facts and circumstances of the situation. If you rely on another tax professional or a third party who prepared a document, like an appraiser, you may rely on their work unless you have reason to question it or there is no Circular 230 requirement regarding documenting the information you receive from clients and others or the advice you provide to your clients. It's a good practice to maintain a written record of such communication, such documentation can assist during an IRS examination or claims of alleged malpractice. I have provided here an example of the recent OPR case where appraisers were disciplined, failing to meet the due diligence standard in Section 10.22. In this case, OPR reached a settlement with a group of appraisers accused of aiding in the understatement of federal tax liabilities by overstating facade easements for charitable donation purposes. These appraisers prepared reports, valuing the facade easement donated over several years. On behalf of each donating taxpayer, the appraiser completed a Form 8283 certifying that the appraiser did not fraudulently or falsely overstate the value of the facade easement. However, in valuing those facade easements without substantive investigation, the appraisers improperly applied just a flat percentage with the fair market value of the underlying properties prior to the easement's donation. Under the settlement, the appraisers admitted to violating 10.22(a)(2)10.22(a)(1) for failing to exercise due diligence and the preparation of documents relating to IRS matters, in this case, the appraisal and the 8283. And they admitted to violating 10.22(a)(2) for failing to determine the correctness of written representations made to the Treasury. And we realize these appraisers did not file the return, they merely provided documentation that was used or positioned on the return. So in this case, appraisers were not only disqualified from presenting evidence or testimony in any administrative proceeding before the Treasury or IRS, they also received monetary penalties in this case. 10.27 addresses fees practitioners can charge their clients. Your fee structure can take into account the complexity of a return in determining the appropriate fee. However, your fee should not be based on a sliding scale depending on how much your client's refund is going to be. A contingency fee cannot be charged for the preparation of an original return. Now, contingency fees can be charged in a limited situation in connection with an IRS examination or challenge to an original return, amended return or refund claim, services rendered in connection with the determination of statutory interest or penalties assessed by the IRS or for services in connection with a judiciary proceeding arising under the Internal Revenue Code. Section 10.29 addresses Conflicts of Interest. To comply with this section, a practitioner first must determine whether a conflict exists. Now, conflicts can occur when representing related taxpayers. For example, in representing a married in an IRS examination, a conflict can arise if one of the spouses seeks innocent spouse treatment. Conflicts can also arise when representing a partnership and the partners or corporation and its shareholders. Conflicts can arise also when there is a significant risk that your representation of one client will be materially limited by your representation of another client or a former client or by your own personal interest or your responsibilities to a third party like a fiduciary beneficiary or someone whom you own a contractual or other legal obligation. An example of a conflict of interest is when a practitioner promotes a transaction, prepares the return reporting that transaction and defends the taxpayer during an IRS examination of that transaction. In this situation, one has to wonder is the practitioner's interests adverse to the clients and that the practitioner maybe continuing to dispute that transaction to avoid a practitioner penalty or malpractice suit?

BREHMER: Um, Sharyn, can you say more about that one? It sounds like you're saying that maybe the practitioner is trying to get the IRS to agree to their position not because it was really a valid tax position, but because they're afraid if they lose the case the IRS might assert a penalty against that tax professional or maybe the taxpayer would sue the tax professional. Is that is that what you're getting at? FISK: Correct. In this situation, maybe the practitioner is looking at her own interest and not the interest of the client. The practitioner might be extending the dispute, going through exam, going through appeals, even going through litigation to avoid losing the case for as long as possible, to put off maybe having to return the fee for the transaction and to avoid a potential malpractice claim. And all of this is to the detriment of the client who's paying the practitioner to dispute the transaction with the IRS and is incurring accrued interest and possibly penalty for an invalid tax position that could have been resolved long ago. BREHMER: OK, I get that. I didn't even think about that, that if the practitioner keeps pushing the case through all that legal stuff, then and they lose in the end, then the taxpayer is not only going to pay the additional tax, but more interest, more penalty, and that they should have like given up a little while ago.

They should have admitted what was going on admitted defeat maybe. FISK: Exactly. Now we're talking about here a transaction we know is invalid, the practitioner knows it's invalid.

Now if it's a if there is a real legitimate dispute about the transaction, then yes, absolutely, go ahead and go through all the administrative rights and legal rights to defend that position. BREHMER: OK, that is helpful to have that clarification, too. I appreciate that.

OK. Would you continue please? FISK: Sure. Alright. So once we've concluded that a conflict exist, you must determine whether you can whether you reasonably believe you can provide competent, diligent representation to each affected client. If you cannot or if the conflict is legally prohibited, you must withdraw from the representation. If you believe that despite the conflict you can provide competent diligent representation to each effected client, you must obtain, in writing, a waiver of the conflict from each affected client at the time the conflict is known. This documentation must occur within 30 days of when the conflict arises. Getting a written conflict waiver after the tax matter is concluded or when the IRS the client raises the issue that there might have been a conflict is not going to be timely. You want to get those written conflict waivers within 30 days. Retain those written conflict waivers for three years after whatever engagement you were involved in has ended, and you must provide them to OPR if we request them. Recognizing whether a conflict of interest exists or whether you can provide competent diligent representation to each affected client can be tricky. Don't be afraid to seek help from various sources such as your state licensing authority, your malpractice carrier or an objective and knowledgeable third party. Also, Section 10.29 aligns with the American Bar Association's model rule on concurrent conflicts of interest. And the ABA has a substantial body of official comments and interpretations, and there are numerous tax court documents interpreting and implying the general conflict of interest rule. So you can use this whole body of information to help you understand how 10.29 may apply in a particular situation. 10.31, this one is easy. It's very clear regarding the negotiation of taxpayer's check. You can't do it. You may not cash, endorse, deposit into account you control with an electronic transfer or do anything comparable to check in your client's name as the taxpayer written from the U.S.

Treasury. It's still relevant whether your client says this is OK. Doing so is a violation of Title 26, subjecting you to a penalty under IRC Section 6695(f). Alright. Now we've covered part of Section 10.34 earlier about due diligence. Section 10.34(a) covers the standards for tax return preparation, return advice and the submission of other documents. This section applies when you assist or advise clients on reporting items on their tax returns. Section 10.34(a)states, you may not sign a tax return that lacks reasonable basis nor advise taking a position on a tax return that lacks a reasonable basis. So what's reasonable basis? The concept of regional basis in 10.34 is tied to the same concept of reasonable basis found in the IRC Section 6662, the accuracy-related penalty. In general, a reasonable basis means there is a greater than 25% possibility of success position taken on the return would be sustained if challenged. And the position on the return is disclosed. Section 10.34(a) also provides that you may not sign or advise a position on a return that is not that is unreasonable clarify that is unreasonable. The concept of unreasonable in 10.34(a) is tied to the term in IRC Section 6694, the preparer penalty, which defines an unreasonable position as one that lacks substantial authority that's a higher standard than reasonable basis. So the one it's one that lacks substantial authority, but does have reasonable basis, but was not disclosed. Last, Section 10.34(a) states you may not sign nor advise with respect to a tax return position that is a willful attempt to understate a tax liability, either by you or your client or that is a reckless or intentional disregard of the rules and regulation. As was with general diligence standard in 10.22, this section requires you to understand the applicable laws to your client's relevant facts. In this context, patterns are going to matter. A single mistake is not what OPR looks for when considering fitness practice under Circular 230, but numerous errors, multiple demonstrations of recklessness or disregard to the rules and regulations or frequent displays of incompetence is going to get our attention. Subsection B of 10.34 sets forth the due diligence standards for documents and other papers. When taking positions on documents that are submitted to the IRS, you may not advise a frivolous position. You also may not advise making a submission that would be frivolous or with a submission that's intended to delay or impede tax administration. BREHMER: Hey, Sharyn, can you give us an example of a frivolous submission?

What does that mean? FISK: Oh, yes, I can. Alright. Making a submission for the sole purpose of stopping collections can be a violation of 10.34(b) depending on the facts and circumstances. Let's say your client has an outstanding tax liability, but he doesn't he doesn't have the funds to pay that tax liability in full. Even though the client acknowledges he is personally liable for the underlying tax liability, you advise him to complete and submit Form 14039 that's the identity theft affidavit claiming that the tax liability is actually the result of identity theft and you do this for the purpose of putting a hold on collection action. Your client follows your advice. He completes the form and he sends it to the IRS.

You have violated Section 10.34(b) by advising your client to make a frivolous claim or impede tax administration. It is irrelevant that you personally did not complete that Form 14039 or that you are not the one who submitted to the IRS. BREHMER: OK, that is a really helpful example. I get that better now. The real issue is the taxpayer can't pay. And filing of an appeal to say you can't pay is fine, but filing a form to say that it's identity theft and it's not really the taxpayer's true tax liability when the taxpayer knows it's really his and the tax practitioner knows that that's really the taxpayer's liability, that's what that's what's not OK. That's what makes it frivolous. FISK: Correct. Also, you cannot advise making a submission that either contains or admits information that demonstrates an intentional disregard of the rules or regulations. So staying within this collection context and a collection matter, that would be submitting a financial statement you know omits some of your client's assets.

BREHMER: OK. Another good that was another good example. If the practitioner knows that the taxpayer has a car or a bank account or whatever, they can't submit a financial statement that's missing that bank account or that car because the tax practitioner knows that that really is the taxpayer asset taxpayer's asset and it has to be on that financial statement. FISK: Correct.

BREHMER: Alright. OK. Thank you again. The floor is yours once again. FISK: Alright. So we're now on the last part of 10.34. It is your obligation under 10.34 to advise your client of penalty exposure and the opportunity to avoid penalties by making the disclosure on the tax return. And we mentioned disclosure before when we talked about reasonable basis. A disclosure can be made by attaching Form 8275 Disclosure Statement or a Form 8275-R Regulation Disclosure Statement to the return. Now a written statement or an explanation could also be a disclosure.

As long as it's attached to the return, it's sufficient to put the IRS on notice of that particular issue. How about we stop here for another polling question, Karen? BREHMER: OK, let's do that. Alright. Audience, this is our third polling question. It's a long one. I'll read it and I'll give you a time to answer it, too. Practitioner has a conflict of interest in his representation of a new client. To be able to represent the new client, practitioner has telephoned each client affected by his representing the new client, and each has waived the conflict of interest. How soon following their verbal waiver must practitioner obtain written confirmation from each affected client? And the choices are, A, no later than 30 days following the client's granting of informed consent; B, no later than 60 days following the client's granting of informed consent; C, no later than 90 days following the client's granting of informed consent; or D, written confirmation is not a requirement. Take a moment. Read the question again. Read your choices for your answers, and then click the Radio Button that best answers the question. And I'll give you a few more seconds to make your selection. I'll be quiet for a little bit, and then I'll give you a countdown. OK. We're going to stop the polling in five seconds. Five, four, three, two, one. OK, we're going to stop the following now and let's share the correct answer on the next slide. And the correct answer is A, no later than 30 days following the client's granting of informed consent. Let's see how well you did.

Eighty-five percent, that is pretty darn good. Sharyn, 85 percent, I will leave it up to you.

If you want to provide some more detail on why that answer is correct, you can. Honestly, if you want to continue, you certainly can do that as well. FISK: Sure, no problem. For the for those folks that may have missed this, you can go back to Slide 46 and 47 regarding Section 10.29 and just kind of have the rational why we have that 30-day rule is to make sure that the clients are immediately informed of a potential conflict and that their informed consent is received before that representation goes too much further down the road, and while it's still fresh in everyone's mind because, as you know, you may have told the client about the conflict.

But by the time the representation is done or something else pops up, the client may have forgotten about that issue and you want something in writing to establish that you had that discussion, you informed them and that they waived that conflict of interest. I think that'll cover it. BREHMER: OK, very good. Thank you for that and please feel free to continue.

FISK: Sure, Alright. 10.35 provides you must be competent to practice before the IRS, and this is going to come straight from that statutory requirement for fitness to practice. Competent necessary for the matter for which the practitioner is engaged. For example, you can't just practice requires the appropriate level of knowledge, skill, thoroughness and preparation rely on your tax software program and let it do all the work. You have to understand the underlying tax laws applicable to your client's tax facts and tax matters so that you know when that return is printed out from the program, whether it's correct or not, and this is where continuing education can assist in building your expertise. It's essential to recognize when you do not have the knowledge or understanding to advise a client and to determine whether you can gain the knowledge and competency through research and reading. And if the competency cannot be readily obtained, then you may need to retain a consultant. You may even need to refer your client to somebody that does have the prerequisite expertise. For example, what if one of your regular clients come to you for advice on an international business transaction he's thinking of entering into. And you had no experience in international taxation. You're not familiar with the laws governing taxation of international transactions, in which case you may consider retaining the services of a consultant that does have the expertise in international taxation or you may refer your client to a practitioner who does have such expertise. Now that doesn't mean you're losing your client, you're just saying to your client, "I can handle your regular matters. But for this particular situation, let's get some advice from an expert." Advising your client on tax situations that you are not competent on can cause significant adverse financial consequences not only to the client, but also to you. This can be more than an OPR issue, it can also be a malpractice issue. Under Section 10.36, anybody in the firm or business who have or shares the principal authority and responsibility for overseeing the firm's practice that involves Circular 230 matters, which includes all tax, federal tax matters, and any other laws and regulations administered by the IRS as the response has the reasonable excuse me, has to take a reasonable step to ensure that everyone who's engaged in that firm is aware of their duties and responsibilities under Circular 230. If the firm is not able or willing to identify a principal person or persons who have authority and responsibility, OPR is authorized to determine the logical principal person. That is important because the principal person is subject to discipline under 10.36 if he or she failed to take reasonable steps to ensure that the circular and its obligations are known to employees and are being properly followed. If there's somebody else firm, an employee, an associate, an independent contractor violates Circular 230, that individual who violated Circular 230 will be responsible for their misconduct and they're going to receive appropriate discipline for that violation. And under 10.36, the individual who should have assumed the oversight role and didn't follow through will also be looked at to determine whether there should be some level of culpability attributed to that person because of the lack of effort to educate and ensure compliance by the employee. There is no requirement that the responsible person actually know about the misconduct. Even when the person with principal authority for compliance has taken reasonable steps, he or she can be held accountable if a violation of Circular 230 occurs and the individual responsible for oversight fails to take steps to stop the violation that he or she knows about or should know about. Now these reasonable steps a firm could make to ensure its employees understand their obligation under Circular 230 include creating a firm policy on adhering to the circular in an environment that supports ethical behavior, putting controls in place to ensure oversight and review of employees and their work product, setting policies and procedures regarding assignment of work and workload that make sure matters are handled by employees who have the competency to do the work and the time to do a thorough and complete job. Taking prompt and effective action regarding the failures to adhere to Circular 230 and supporting mentorship and continuing education so employees gain a knowledge needed to be competent advisors and understand their ethical obligations. BREHMER: Thank you for that, Sharyn. I was a little confused on what reasonable steps really meant, and I didn't really get the stuff with 10.35 and 10.36. So thank you for clarifying that. And I think 10.37 comes next, right? FISK: Absolutely. Alright.

10.37 states that when you're given a written advice, you must make reasonable efforts to determine the relevant facts. Remember we talked about this in 10.22 and 10.34, reasonably consider those relevant facts, make reasonable, factual and legal assumptions in situations where facts send out are known. It's not reasonable for you to rely on representations or statements or agreements or anything else given to you or told to you if you know or should know that the information is based on incorrect or incomplete or inconsistent representations or assumptions.

Think about when a client is saying this is a business expense, and you know that that particular item or expense is completely unrelated to the practitioner's business excuse me, practitioner, the taxpayers business. You also cannot play the audit lottery with your advice, that is you may not give advice based on the assumption that the return will not be examined or if it's examined, the issue is not going to be noticed. It's a best practice to document the information you relied upon for your written advice. This record can assist during an IRS examination because you know those pop-up years after the return has been filed. It helps if the client has become incapacitated or passes away. You have a written history of what the thought process was back then with the client or if a business change its hands or the employees you used to deal within the business are no longer there, the ones you have the discussions with. It's also helpful for a malpractice consideration. BREHMER: Those are really great pieces of advice about the things that why they should document and all the things that might happen later that meant really important as to why you should document I also wanted to ask you to say a little bit more about audit lottery. I think some of our attendees might not really know what that means or what you're talking about, even though you did explain it a bit, but could you do it again, explain what audit lottery means. FISK: Sure. And it's a good thing if some of our folks don't know what audit lottery is. That means they're not taking that into consideration when they're taking a position on the return. So BREHMER: That's right. FISK: audit lottery is a common expression that stands for the misconception that, of the millions of tax returns filed a year, the IRS only audits a small percentage so that a non-compliant taxpayer's return can be hidden among the millions of compliant taxpayer's return. And this belief is incorrect because the IRS uses many methods such as modeling, and data analytics, and relational analytics, et cetera to target our activities as precisely as possible. So you don't rely on audit lottery, not good. BREHMER: Now that you've said more about it, I don't know why I've even use that concept, it's not that same term I'm talking to my friends like I know what the IRS is going to catch and what they're not going to catch, but you can't file a return based on what they're not going to catch, what we're not going to catch. You know. FISK: Absolutely.

BREHMER: So, Alright FISK: Alright. Let's go on with written advice. BREHMER: Yes.

FISK: OK, OK. Section 10.37 provides you may rely on the advice of others in giving written advice if the advice is reasonable and your reliance is in good faith considering all the facts and circumstances. So basically, what's the reputation and the expertise of the individual who is giving you this advice? Alright. We're going to move on to the exciting stuff, disreputable conduct. Section 10.51 lists 18 examples of incompetence and disreputable conduct. We're going to discuss a few of those. 10.51(a)(4) prohibits you from giving a false or misleading information or participating, in any way, in providing false or misleading information to the Department of Treasury or to any officer or employee or to any tribunal authorized to pass on federal tax law matters. This covers anything you're going to submit testimony, affidavit, declaration, tax returns and other forms, financial statements, protests, even applications you might be filing like your PTIN application, enrollment application. 10.51(a)(7) identifies as disreputable and incompetent conduct willfully assisting or, in some way, counseling, encouraging or suggesting dual client or prospective client an illegal plan to evade federal taxes or the payment of federal taxes or a violation of any federal tax law. We see this type of misconduct arising with respect to collection matters, advising a client to transfer or hide assets from the IRS or omitting assets on filings with the IRS. We see it with the non-filing of returns, advising client not to file a return. We see with particular return positions taken on return.

Section 10.51(a)(13) covers false opinion that are knowingly, recklessly or grossly incompetent in anyway. Disreputable and incompetent conduct also includes giving intentional or recklessly misleading opinion. This provision applies both to oral and written opinions, and whether you're giving those opinions to your client or whether you're giving them to the Treasury. Patterns are important here, too. Frequent displays of incompetence is going to get our attention, not the occasional foot-fault. Now to define a false opinion is one that contained knowing misstatements of fact or law that asserts unwarranted position, that counsels or assists in conduct known to be illegal or fraudulent or that conceal matters required by law to be revealed. Reckless conduct means a highly unreasonable omission or misrepresentation. It involves an extreme departure from the standards of ordinary care. 10.51 addresses recklessness as something that would constitute a deviation to the extreme, something that falls far below the ordinary reasonable practitioner standard. It's got to be bad. Gross incompetence is described as gross indifference or grossly inadequate preparation or consistently failing to perform your obligations to your client. Again, here we're looking at pattern. Karen, let's pause here for another polling question. BREHMER: OK, yes, let's do that. So Audience, this is our fourth polling question. Which of the following must a practitioner do if he knows his client has omitted relevant information on a tax return? One, inform the client that he or she has omitted relevant information; two, inform the client of the consequences of the omission of the relevant information. And your choices are, A, one only; B, two only; C, both one and two; and D, neither one nor two. That was a little bit longer question with some choices for answers there, so take a minute. Read it again. Look at your options and then click on the Radio Button you believe both closely answers this question. And I'm going to be quiet for a little bit, and then I'll do a countdown to let you know we're coming to the end of our polling question time.

So we are going to stop the polling in five, four, three, two, one. OK. We'll stop the polling now and we'll share the correct answer on the next slide. And the correct answer is, I got to look at my own notes, C, both for one and two. So let's see how we did for oh, 97 percent.

Fabulous. You know even though that was a really high percentage, Sharyn, I'm still going to ask you to elaborate on this one because I thought your example that you gave us earlier about the NOL was really a good one. So just clarify what they do have to do, what they don't have to do, what would constitute malpractice if they kind of went too far, I mean, whatever you'd like to say to illustrate that point. FISK: Sure, I'm feeling good about this group. This group knows what it's doing. Alright. So this is going to go back to Section 10.21 on slide 40. As you correctly answered, the practitioner must do both of these. If a practitioner knows that a client's failed to comply with the revenue laws or made an error or omission from a tax return, form, affidavit, any document that the client submitted or executed under the U.S. revenue laws, practitioner must promptly advise the client of the failure to comply and the consequences.

Now some practitioners may think that they find an error or omission are non-compliant, they must correct the document or file a correction correcting document with the IRS. But as we stressed before, 10.21 requires only the two things promptly inform the client of the problem and advise them about the consequences for that non-compliance error omission under the code and regulation. And, of course, as we've added, you can and should advise your client on how to fix the error, omission or non-compliance, but it's really up to the client as to whether they want to take that corrective action. And do remember, you cannot knowingly perpetuate the non-compliance error or omission. BREHMER: OK. So I appreciate that. I know they got a good percentage on this, but it's a question I end up getting often from tax professionals I deal with, so I appreciate you taking the time to go over it. So now I think you're going to tell us about OPR's investigative and disciplinary process. FISK: Yes. So in this part we're going to talk about subparts C and D of Circular 230. OPR has the responsibility for practice standards oversight. It independently investigates alleged violations. It proposes and negotiates appropriate discipline for practitioners who have been found to violate Circular 230, and it administers the administrative hearing and appeals process. Subpart C addresses the sanctions for violating the regulations under Circular 230 and Section 10.50 authorizes the sanctioning of practitioners. However built into this is a lot of due process for the practitioners.

Practitioners are going to have many opportunities to explain their conduct and we listen carefully. Potential sanctions include disbarment, censure, suspension and even monetary penalties, as I mentioned back on the case with respect to the appraisers. We are concerned about reckless gross misconduct regarding the provisions of Circular 230, not the occasional foot-fault by a practitioner. We all make mistakes. We are looking for somebody who is being reckless doing gross misconduct. Section 10.52 details the violations for various provisions of Circular 230 that are subject to sanctions. When we're looking at a practitioner's conduct, we're going to look for willful violations, recklessness and, as I said, gross incompetence.

Occasional mistakes are not willful. They're not reckless or reflect gross incompetence, but a pattern of mistakes is different matter. This slide and the next three slides provide examples of the misconduct OPR sees. And some of this misconduct relates to the practitioners failing to meet their Circular 230 responsibilities to their client, which is not exercising due diligence, charging an unconscionable fee, improperly advising the client or conflicts of interest that have not been waived. Some misconduct relates to a practitioner failing to meet their Circular 230 responsibilities to the IRS such as advising the client to evade the assessment or payment of taxes, preparing, signing or submitting a return or a claim that contains an unreasonable position. Some misconduct relates to the practitioner's own behavior, contemptuous conduct, non-compliance as to their federal returns and their tax obligation, license suspended, revoked or disbarred for cause. Contemptuous conduct includes abusive language, making false accusation or statement knowing them to be false, circulating and publishing malicious and libelous matter. Criminal convictions are also a typical example of the types of misconduct my office sees. These convictions involve criminal offenses under the federal tax laws, crimes involving dishonesty or breach of trust, and any felony under federal or state law with the conduct involved, renders the practitioner unfit to practice before the IRS.

We get our referrals from many sources. Referrals come to our office from IRS Revenue Agents, and Revenue Officers, and Settlement Officers, and Appeals Officers. Section 10.53 actually makes it mandatory for all IRS personnel to make referrals to us whenever employees suspect there's been a violation of the circular. Practitioners should understand that OPR is separate from the operating divisions administrating the internal revenue code. Remember I mentioned those folks are under Title 26. We are under Title 31. And we exercise independent judgment at every stage of a case. We also get information about convictions and civil injunctions from Criminal Investigators and the Department of Justice, and we receive information on disciplinary actions taken by state bars and accounting boards, and the U.S. Tax Court. It's also not uncommon for us to receive complaints about a practitioner from current or former clients of that practitioner, the practitioner's peers, former or current employees, business colleagues, etc.

Also, when we get a referral about a practitioner, we routinely check the practitioner's tax compliance to make sure the practitioner has filed their individual federal tax returns, and returns for any entity over which the practitioner has some control, and whether both have paid all of their taxes, or making an effort to pay the outstanding tax liabilities. BREHMER: Hey Sharyn, on that one, I know I've gotten questions from tax professionals about that. Can you tell us more about non-compliance? If they are not compliant, do they have time to get compliant? And if they do owe taxes but they have an installment agreement, is that considered being in compliance or not? FISK: Sure. Practitioners will have time to get compliant if they're being diligent about doing so. So we may contact them about a non-compliance, and they may respond, I got behind, I had I was sick, I had family matters, business issues, whatever it is. But I am getting my returns prepared, and getting ready to submit them. But we're not going to be waiting years for a taxpayer to get their missing returns filed. BREHMER: Yes, that's some clarification. FISK: Yes, that's tell them it's not going to work. When we raise a non-compliance matter with the practitioner, it's typically because there's several years of failure to file return. And again, we're not looking for a foot fault, a delinquent return for one year return or returns for one year, that can be understandable. Sometimes, things happen. But a pattern of filing delinquent returns is something that we will notice. BREHMER: Yeah. FISK: If a practitioner can yes, now on the installment payment, or the outstanding tax liability, if a practitioner cannot pay an outstanding tax liability, but it's in an installment payment arrangement with the IRS , on that basis alone, the practitioner is not in violation of Circular 230. Practitioner on an installment payment arrangement is meeting his or her due diligence and standards of care under the circular. They're making an effort, and cooperating with the IRS in getting that tax liability paid. It's the practitioner who is not making any real effort to pay an outstanding tax liability that we're going to focus our efforts on. BREHMER: OK. FISK: The ones who don't get into the installment agreement, or get into the installment agreement and default, and then get into another one and default again, that kind of practitioner. BREHMER: OK, Alright. Again, I appreciate you taking the time to go over some examples because they're questions that we here quite often. So would you please continue?

FISK: Sure. Alright, now I mentioned there were IRS personnel has to there's mandatory referral from them if they think something is a violation of Circular 230. There's also mandatory referrals to OPR when specific penalties are imposed on a practitioner by IRS personnel. And these penalties include IRC Section 6694, 6700, 6701, 7407, and 7408. Also, when other penalties are imposed on a taxpayer, or a practitioner during an examination, this may also lead to referral to OPR. Take for example, if during an examination, the taxpayer raises reliance on a tax professional and descends to an accuracy-related penalty under IRC Section 6662. The Revenue Agent may look at the practitioner and the level and competence of the advice upon which the taxpayer relied in order to determine whether a referral to OPR is appropriate. Upon receiving the referral, OPR first determines whether it has jurisdiction over the tax professional. That is if the tax practitioner practicing before the IRS, the OPR investigations generally begin after the enforcement effort, or the IRS case has concluded. OPR does not influence and generally does not participate ongoing IRS enforcement activities.

However, during these enforcement activities, IRS personnel may consult with OPR. IRS personnel must not threaten an OPR referral during enforcement activities if it's going to trigger an agency-created conflict of interest between practitioner and the taxpayer. In concluding our investigations, we follow relevant leads to determine the facts regarding the issues raised in the referral or complaint. And this could include collecting documents, speaking to the referent, obtaining affidavits or other statements, searches of internal and external databases, review of taxpayer case file documents, interviews of witnesses with direct knowledge, and request for information issued to the practitioner and third parties. If we conclude there appears to be an actual violation of Circular 230, we will issue them an allegation letter. Now this letter will recite the relevant facts and identify specific acts or omissions that appear to be violations of specific Circular 230 provision. And the practitioner is invited to respond and offer the opportunity to confer with my office regarding these allegations and the evidence we're relying upon. If my office determines that it has a basis to investigate a practitioner for alleged violation, it may also conclude that additional information is needed before determining how far we're going to take this case. A notice of alleged or excuse me, a notice of an allegation provides a practitioner an opportunity to address the issues raised in a referral or uncovered by us at an early stage in our consideration of a case. The practitioner can elect not to respond, which generally is not a wise choice. We can often close a case at this stage based on the practitioner's response to these early inquiries. And that's ordinarily advantageous to the practitioners. BREHMER: Hey Sharyn, can you say more about that? I mean, maybe what you said is obvious and evident. But why is it a good idea for the practitioner to reply early in this process if they're being investigated? FISK: Early participation by a practitioner can help the OPR understand both sides. Like the example I had given earlier about the practitioner not knowing or having reason to know about the client's foreign bank account.

Had that case ended up in OPR, having the practitioner explain the misunderstanding with the client, whether this business is determining whether there's actionable case. And, now I'm not saying that that particular case it was actionable, but if there is an actionable case, what is the appropriate disciplinary action to take? BREHMER: So you just want to hear both sides of the story. This compliant might come in and might say all kinds of things about the practitioner and their behavior. But if the practitioner responds, then it's like, you have to hear their side of the story. Is that a good way of saying it, too? FISK: It is. And the earlier, the better, because that kind of sets the tone and the track for our investigation and determination. BREHMER: OK, Alright. Well, thank you for that. And you're going to talk about the OPR complaint process and tell us some more things about it? FISK: Yes. We're going to get on to disputes and appeals. Often, the practitioner acknowledges the accuracy of the fact identified in the allegation letter, and that he or she has actually violated Circular 230. In many cases, settle at this point with mutually agreed sections for the violation. However, if the practitioner in my office can't reach an agreement, we transmit the case to the Office of Chief Counsel to initiate a final proceeding before an administrative law judge. The Office of Chief Counsel will offer another opportunity to settle to the practitioner before starting this hearing process. Should the practitioner decline that offer, the Office of Chief Counsel will file a formal complaint with the administrative law judge, and a copy of that complaint is going to be served on the practitioner. The Administrative Law Judge Office looks a lot like a civil litigation. There's pleadings and motions and discovery, and often a hearing before the administrative law judge, who ultimately issues a decision. That decision can sustain the allegation and impose or modify the discipline requested by my office in the complaint, or the decision can dismiss the case. After the administrative law judge's decision, both OPR and the practitioner have the opportunity for an appeal to the Treasury Appellate Authority. Now, this is an attorney in another division of the Office of Chief Counsel who had no previous involvement with the case. A practitioner who wishes to appeal the Treasury official's final decision from that Treasury Appellate Authority can take the matter to federal court. So what's important here is that the OPR disciplinary process provides practitioners with multiple opportunities to present his or her case, and there's an independent review of OPR's proposed action by an administrative law judge. OPR has a range of options for closing a case. The most common is a non-disciplinary closure, which is closed without action, or a soft letter. A closed without action would be appropriate if we conclude there was no misconduct, or conduct does not appear to have implications for future fitness to practice. A soft letter is often used in tax compliance cases, where the practitioner is given an opportunity to correct the filing, or the delinquent filings or payment issues before we decide whether formal action may be necessary. Now, some of that correction may be getting into an installment payment plan.

Finally, corrected action generally results in closure of the case with a warning, where some more something more formal is appropriate, the available actions escalate through the sanction level. So we start with private reprimands, public censure suspension, and disbarment.

Censures are effectively public reprimands, because we publish a list of of censures, suspension and disbarment in the Internal Revenue Bulletin. BREHMER: That is a hard word to say. I was going to ask you, but now I'm more hesitant about how to pronounce the word. But I was going to where can a practitioner learn more about these things you're talking about; public censure censures, suspension suspensions, disbarment; I can't say any of the words either.

Where can they learn more? FISK: Circular 230. Also, we have a public list of disciplined practitioners can be found on under Circular 230 practitioners. BREHMER: OK. So not only are the rules of what you should do found in Circular 230, but also information about what might happen to you are also in Circular 230. That's good to know. And then you say the public list of disciplined practitioners is also on IRS. OK. Great. OK, thank you for clarifying that. And please, proceed when you wish. FISK: Sure. Suspensions and disbarments preclude the practitioner from practicing and representing taxpayers before the IRS until they petition for reinstatement and reinstatement is granted by OPR. A suspension imposed by administrative law judge's proceeding can go for a period of 1 to 59 months. While a suspension imposed under Section 10.82, which we're going to talk about next, is expedited suspension process, is indefinite. Now as I mentioned before, monetary sanctions are available which can be up to the amount of compensation received or to be received as a result of the misconduct.

But OPR rarely imposes monetary sanctions as practitioners should not be able to buy their way out of ethics violation. 10.82, as we mentioned. In certain cases, the OPR can suspend a practitioner before filing a complaint. These cases involve practitioners who have already had been adjudicated in failing to meet some specific standards after having been provided an opportunity to be heard in another form. So what we're talking about here is a disbarment proceeding, a conviction, court sanctions, those kinds of things. Under Section 10.82, OPR can also impose a suspension before filing complaint if the practitioner is non-compliant with their own federal taxes. This includes filing of their returns and the payment of their tax obligations. Under Section 10.82, expedited suspension process, practitioners still have an opportunity to be heard by OPR before the suspension takes place. The practitioner also has up to two years after the suspension to request a formal proceeding. Alright, I think we have time for our last final polling question. Karen? BREHMER: Yes, that's correct. So audience, this is our fifth and final polling question, another long one. Which of the following would be considered contemptuous conduct deemed disreputable under the regulations governing practice before the IRS? One, using abusive language? Two, making false accusations? Three, publishing libelous matter? Your choices are A, one and two only; B, one and three only; C, two and three only; or D, one, two, and three. We'll take a minute. Read the question again. Read those options again. Take a look at those answers, and then click on the Radio Button you believe most closely answers this question. And again, we have a lot of people on. So I want to make sure people have time to answer. And I'll give you a five second countdown. We're going to stop the polling in five, four, three, two, one. And we're going to stop the polling now, and we'll share the correct answer on the next slide. And the correct response is D; one, two, and three.

Let's see. And, 84 percent. Um, that's still a pretty good percentage, but I think one of the things that you've talked about, Sharyn, that I found interesting was contemptuous conduct and you talked about abusive language, you talked about publishing malicious or libelous matter.

Can you, I don't know, give us some example, or something like that for those things? FISK: Sure. So we chatted about contemptuous conduct when we covered slide 73. And as we mentioned, contemptuous conduct includes, in connection with the practice before the IRS, includes the use of abusive language, knowingly making false accusations or statements, and circulating or publishing malicious or libelous matter. And then if you wanted to look at the definition, it is defined in Section 10.51(a)(12). And an example would be if a practitioner posted some libelous matter on a social media page regarding the Revenue Agent. You know how social media can get everyone in trouble. BREHMER: So maybe they're not happy with what the Revenue Agent decided. But posting it on Facebook that so and so Revenue Agent is bad, would or a bad idea.

Safe to say it's a bad idea. FISK: Correct. BREHMER: OK, Alright. FISK: And not so much bad. It's actually lies about ... BREHMER: Right. There you go. That's right. That's your opinion that they didn't do a good job. But lies on Facebook or social media would be a different story, OK. I think you have some resources to share with the audience. FISK: Yes, I do. And we covered a lot today. And it's a lot to take in. So in the next few slides, I identified helpful topic resources. They were initially linked, but may not have worked with this webinar. So I provided a resource document for attendees to have the actual links to these sites. So hopefully everyone's got a hold of these. And these resources can be assistance in reaffirming what we've covered today. So there's regulations and or excuse me, there's the publications and circulars, and forms. They can provide additional information now should you want it, as well as resources in the future should something come up and you need to refresh yourself or get clarification on a particular subject. I've also provided contact information for the Office of Professional Responsibility. So if someone was inquiring to make a referral regarding a practitioner, they could go about it a couple of ways. If it's regarding a return preparer, you can file a Form 14157. And that form is going to go RPO. And if the practitioner is under OPR's jurisdiction, or has had representational activities, it's going to get routed to OPR. For practitioners covered under Circular 230, you can send any referrals to OPR through its e-fax number there shown on the contact. Alright, back to you, Karen. BREHMER: OK, thank you so much, Sharyn. Thank you for all the information you provided thus far. So again, audience, it's me, Karen Brehmer and I'll be moderating the Q&;A session. Before we start the Q&;A session, I want to thank everyone for attending today's presentation, the Office of Professional Responsibility, Practicing Before the IRS What you Need to Know. So earlier, I mentioned that we want to know what your questions are that you have for Sharyn today. And here's your opportunity. We do have lots of questions but there's still time to enter more. So if you haven't input your questions, go ahead and click on the dropdown arrow next to Ask Question, type in your question and click Send, and Sharyn will stay on with us and answer as many questions as we have time for. I know we're not going to have time to answer all the questions, but we will like I said, answer as many as we have time for. If you're participating to earn a certificate and related Continuing Education Credits, you will qualify for one credit by participating for at least 50 minutes from the official start time of the webinar. And you will qualify for two credits by participating for at least 100 minutes from the official start time of the webinar. And that means that the chatting that we did at the beginning of the session doesn't count towards the 50 or 100 minutes. So we're going to get started and get as many questions as we can. First actually, Sharyn, many people asked you, asked if you would tell us a little bit about yourself. You are obviously very knowledgeable about the topic, but all we know is that you started in OPR in January 2020. Can you tell us a little bit about your career, your prior history? I think you've said you've been a professor or something like that.

FISK: Yes. I did not come out of nowhere. BREHMER: OK. FISK: So after I finished my law school, I got what's called Masters of Law in Tax. So it's another year specializing in just tax law. And that provided me an opportunity to clerk at the U.S. Tax Court before the Honorable Judge (Inaudible). So at the Tax Court, I wrote opinions, and got to see both sides of the taxpayer's position, and the IRS's position. So it was a great way to start a career. From there, I left the court and spent 20 years practicing in private practice, and my expertise is in Tax Controversy. And I did that in the State of California, and I also became a Certified Tax Law Specialist. So I'm familiar, I was a Circular 230 practitioner. And so I'm familiar with a lot of the issues that may come up in your practice and the concerns you may have. I'd left the firm and began teaching. I'm Assistant yes, I'm Assistant Professor of Tax. And this opportunity arose for the Director of OPR, and it's something I was very much interested in, and I had discussed and lectured on Ethics my entire career. And I couldn't resist a chance to see if I could get this position. And I'm thrilled that I am here. BREHMER: Yes, we're thrilled to have you here. So thank you for telling us more about yourself. OK, let's get to some questions here. Um, let's see. A tax, a taxpayer does not want to accept advice about expenses that aren't deductible. And insists on claiming such expenses, what should the tax practitioner do? FISK: Well, in this case the tax practitioner does nothing. So the tax practitioner as we mentioned under 10.22 and 10.34, you have your due diligence requirement. You can't, regardless of how much that client insist, you cannot those positions on the return because you know that they are inaccurate. And the client let's say the client proposes, I'll prepare the return but you just file it for me. By filing it, you are making a submission to the IRS, so you're just as culpable as a client with respect to that incorrect information. So as hard as that may be, you're going to need to fire your client if they insist on taking an incorrect position. BREHMER: OK, Alright. Thank you for that. Another question here, this person says I have proof that another tax preparer has submitted a 1040X which is fraudulent with my name and PTIN. I was the original tax preparer on the 1040 return, but not the 1040X. What do I do?

FISK: Then in that case, you've got a couple of issues. You have not only an one, keep the document. Don't lose them. Because you want to make sure that no negative circumstances fall upon you. That can actually be a criminal issue with respect to a fraudulent tax return. And you can provide that information to OPR through referral process. You can send it through e-signature. And if you want, we can look at it and if we determine that it also may have criminal elements to it, we would forward and make a referral to IRS Criminal Investigation.

BREHMER: OK. So the preparer that feels like have been wronged in this case can be the person who submits the complaint to OPR that say, this is bad, and I want you to take a look at it.

FISK: Absolutely. You want to protect your good name and your reputation. That's the most valuable thing you have. BREHMER: OK. We did get quite a few questions on the Annual Filing Season Program. And I'm going to start off by telling our audience something, and then I'm going to turn it over to you. There's a lot of information on for people who don't about the Annual Filing Season Program, and they want to learn about what it is, and how they do this, how they get it. But Sharyn, would you try to explain the difference between what you handle in the Office of Professional Responsibility, and what the other office with similar acronym, Return Preparer Office, what they do? Can you help us all out with that? FISK: Sure.

Yes, they made it a little confusing with the OPR reversal RPO acronyms there. But OPR's jurisdiction is solely limited to the jurisdiction provided to us under Circular 230. So we can only take action on those practitioners who are covered by Circular 230. RPO handles the registration and the testing, and the enrollment of the and the Enrolled Return Preparer's Program they also handle the ASSP Program. Now they have no ability to discipline those folks.

That is not within their jurisdiction. And so and that's the Loving versus IRS issue. Now, if you're interested in the Annual Filing Season Program, there was a Revenue Procedure I mentioned in this program. And in the resource document I provided, there's a link to the program providing information on how you can participate in that program. Now when we talk about whether you are practicing before the IRS, there is that limited representation. And that's only going to apply if you have a Annual Filing Season. If you only have the Annual Filing Season Program to holder certificate of holder, that's it. You're a holder of the certificate. And it's only going to apply for returns that you prepared and signed after 2014.

And it's only going to apply if the return you prepared after 2015. And if after 2015 one of those returns get picked up for examination, you can represent your client with respect to that return under this program. Now, if you do so, you're going to be covered under Circular 230.

And we will have authority over you which would include being able to discipline you should there be any misconduct. BREHMER: OK, thank you. So there was a question that someone asked about ASSP. And the situation is that the ASSP participant knows the rules you just mentioned.

The ASSP prepared a return for 2018, that return is not being audited by the Revenue Agent, but the Revenue Agent is auditing 2016 and 2017 prepared by somebody else. And what happened in this question here is that the Revenue Agent may not know the rules correctly about ASSP and hold the person who's ASSP well, you can out of their you can represent the client no matter what because you're an ASSP. The person say, I don't want to challenge the Revenue Agent. But what am I supposed to do if this 2018 from where it's audited, and the Revenue Agent tells me that I'm not qualified to represent when I believe I am qualified to represent based on the ASSP rules? FISK: What you can do ... BREHMER: I hope you got it. FISK: Yes, I did. It kind of goes back to the those faith positions if something is not right. So what that particular return preparer could do is seek guidance from the Return Preparer's Office regarding that situation. But as it's in the plain language of the statute that is limited to the return you prepared that is being examined, then you would not have the right to represent with respect to those prior years unless you get a Power of Attorney, POA, then you do have those representational rights. BREHMER: OK, Alright. Again, there were a lot of questions about ASSP. And for our audience today, if you have more questions about it, I would ask you to go to, look up ASSP, what are the rules, because we're going to switch gears here to some other questions that Sharyn is more on your ballpark I guess I would say, with specifically OPR issues. So one question that came in, Sharyn, is that people would like to know a little bit about what OPR has done in the past year as far as the number of referrals you've received, or the number of actions you've taken. Do you have any numbers you can share with us on that?

FISK: Sure. And actually we post our numbers to our website, and then they're in our Business Performance Review that l believe is also on our website. So we have our stats out there. And each year, it's going to vary. A lot of them come in through the IRS referral process. But we also get a significant amount through the state board and bar. In fact, we could get up to 1,200 year of referrals from state board and bars that we have to call through and see if we have any practitioners that are within our jurisdiction. Another lump of data that came in 2016 and will come again in 2020 is that we call through the what we call the Compliance Data Warehouse, a list of all taxpayer information. And we look for practitioners who are not compliant who have penalties, who have failed to file a return, who have had prepare penalties and pose against them, and for some reason we haven't gotten that referral And the last time we did that, there was a significant number of cases that we received in the thousands. And so we're in a process of doing that again. On average, when it comes to looking at our stats, for reprimands, I would say within the last quarter of 2020. 39 reprimands, one suspension, one other sanction, 95 non-disciplinary actions. We've got 930 board and bars that are something we need to look at. And we've gotten six appeals and restatement requests. So you can see we're quite a busy office. BREHMER: For sure, cool. OK, thanks for sharing those stats and also letting people know that those more information about that is available on the website. There are a lot of questions that came in about conflict of interest, and a lot about divorced individuals. Some of these questions are like variations on a theme. What about preparing tax returns for divorced individuals, or individuals who are going through a divorce? What if they are not amicable with each other? What if they are amicable with each other and they both come to you and they say, we'd like you to prepare a return still. Can you talk about conflicts of interest and divorced or divorcing clients? FISK: Sure. Return preparers, CPAs, they all get into really tough positions, especially with respect to contentious divorce or separating spouses. It's going to come down as I mentioned to your reasonable belief that you can do a competent diligent job with respect to that information, or with respect to the tax information.

So first of all, you're going to make sure you get that written waiver from both the spouses.

But even if you do have their written waiver with respect to both spouses, if you're starting to hear, well, I have some income but don't tell my spouse this, or I don't want my spouse to know that I said I have these deductions you're going to start getting into a Conflict of Interest problem. And when those things arise, somebody is always going to be looking for somebody to be responsible. And sometimes they point at you. So you may, for your own malpractice concerns and safety, want to say that you cannot represent both individuals when it gets to that point. And you need to decide which one you can represent, or you decide you can't represent both of them, and that may happen. If you feel you can competently and diligently represent one of them, you make a referral to a qualified return preparer for the other spouse.

And then you can work with that other individual on the particular return. If it's gotten to the point where you just know too much and you don't feel comfortable representing both of them, then you're going to have to refer them both out. And I know that can be difficult. It also can be difficult timing-wise, because this stuff is going to drag on right until the point that that return is due. So you have that concern as well. BREHMER: OK, Alright. That is helpful.

I think that like you said, that issue with divorced or divorcing people is still common and I'm so pleased that you took the time to address that one. So thank you for that. Two questions that are sort of linked. How excuse me, how do you report a misconduct and can a private citizen contact OPR directly? FISK: Yes, a private citizen can contact OPR. We have the address there and the e-fax number. I have to peek at it again. Did we put a phone number down, too? BREHMER: You don't have to repeat it. It's on the slide, or it's on your handout, I'd imagine. FISK: Yes, I was just checking to see if our phone number is there. But we have the e-fax number and we can store it. And absolutely, private individuals can make referrals to OPR. And we're good to hear from them. And you folks no who is not being ethical and who's doing misconduct. And that affects all of your reputations. BREHMER: Yes, OK. Thank you for that. Just for our audience, we're going to go a little bit past the top of the hour Sharyn, is going to stay in with us for a little bit longer and answer more questions? So this good stuff. I hope you'll stick around. FISK: Sure. BREHMER: Sharyn, the next set of questions have to do with fees. One person asked what is the minimum fee a practitioner can charge a client for his service? Questions about fees where do you have examples of unconscionable fee? FISK: I don't know the minimum fee, but I would suggest enough to make sure you get food on

the table. BREHMER: That's why I asked you the question because there's not really have an answer for that, is there? FISK: Yes, you could go to low income tax clinics and get it done for free. But there is no requirement on a minimum fee. BREHMER: OK. And then about unconscionable fees? Can you do you have can you give an example or if there's been a case on it, or how would a practitioner know if their fee is unconscionable? FISK: I can't talk about specific cases, but I can talk about examples. When I was a professor, part of my duty is to run advise a Low-Income Tax Clinic and to work on VITA centers, director of VITA center.

And we would have a taxpayer come in and they initially had gone to a return preparer who quoted like say, a $300 fee for doing the return. But when they went to pick up that return and it ends up that this client was getting say, a $1,500 refund, they were getting a bill from the practitioner that was $600 or $900, because the practitioner knew that they could afford to pay it because they were getting those refunds. And there was no explanation as to why the fee increased from the state of $300 to the now $600 or $900. And it wasn't it didn't have anything to do with the complexity of the return because when they had agreed to the $300, it was discussion of a 1040 and the appropriate schedules and the earned income credit. So the only difference between the fee when they started the process and the fee at the conclusion of the process when the return was ready to be filed was the knowledge that the taxpayer could afford more than $300. BREHMER: OK. Bad idea to charge your clients based on what you seem they can afford. FISK: Exactly. BREHMER: Alright. I'm jumping around a little bit on these questions. I hope that's OK with you. FISK: That's fine. BREHMER: Here are two about the investigation process. When do tax practitioners find out that they are being investigated? And another question, if the person has been brought up on disciplinary charges where they continue practicing while you are investigating? FISK: So as of the first one, you'll find out when OPR reaches out with their allegation letter. And that's going to tell you that we've gotten a referral, that we preliminary have looked at the information we've been provided, and determined that there is violation, and what section of Circular 230 we think it's a violation of. Now, the time period, depending on when we get the referral and when you get notified can vary, depending on our attorney's workload, the type of information that we need to gather, there's no real set time period. But we do want to get that out as timely as possible to make sure that we can collect the relevant information, and that everyone's memories is they have recollection of the incident. What's the second part of the question? BREHMER: I know. I had to leave it here myself. I remember what it was. If a person has been brought up on disciplinary charges and you're still investigating, may that person continue practicing while this investigation is going on? FISK: Yes, they may. They have not been disciplined yet by OPR. They have not been disbarred or sanctioned. So they can continue right up to the point where there is a final determination. BREHMER: OK, that is helpful to know. And again, for our audience, Sharyn has agreed to stay on a little bit past the top of the hour. So I know most people love the Q&;A part. We hope you'll all stay with us for as long as Sharyn is able to stay with us and be answering these questions. Another question came in. Let's say there's an unhappy client and they make a complaint to OPR. They also make a complaint to the State Board of Accountancy. Are the cases worked together or separately? And then if the Board of Accountancy determines that no violation has occurred, does OPR just accept that fact, or do you do an independent investigation above and beyond what the Board of Accountancy has done? FISK: Great question.

We do not work together with any bars or boards. We have separate work. So what can be, and this partly goes to the second question what can be a violation under a bar or an accounting board is different than what could be a violation under Circular 230. So even if a board or bar has determined that there is no disciplinary action to be taken, it is something that we absolutely will consider, but it is not determinative of whether OPR can discipline a practitioner. So we're going to look at what the referral is about, what the problem is. Now, let's put that in reverse. Let's say that the bar has disciplined a practitioner excuse me, say the accountancy board has disciplined a practitioner for failing to pay a fee or something like that, that is not a violation of Circular 230, so that is not going to cause us to take disciplinary action. So we are independent on what we are taking action on. BREHMER: So the bar and the board and OPR may be looking at different things, and that's one of the reasons why you don't take their word for it, I guess, positive or negative. You do your own thing. You do your own investigation. FISK: Correct. And we get the information from the board proceedings.

We hold their evidence that they're looking at, and we look at it as well. And as I mentioned, we also look at what was the underlying discipline about. And that applies also to conviction, so I may be adding on to my question here. We're looking at convictions and violations that are against moral turpitude that affect the practitioner's judgment. So a practitioner that has been received a DUI is not necessarily a Circular 230 violation. But a practitioner who steals the money out of their client's refunds or trust to pay for a drug habit, that would be a violation we would look at. BREHMER: OK. That's another good example. Nobody even that asked that one, but I know they're thinking it. A DUI isn't good, but it doesn't mean you can't be a good tax practitioner. Stealing money out of your client's trust account is not good. FISK: Correct. BREHMER: Alright. Another question came in here about what are the examples you gave us earlier, the example about the inherited money and it was in a foreign bank account, and the preparer didn't realize it. The person said, I'm confused about your example of a practitioner not revealing an inherited foreign account. That's question is a yes or no checkbox on Schedule B. The Schedule B was prepared and the box was checked no, wouldn't the Schedule B? FISK: That is very true. I forgot that that is a question on a tax organizer. I practitioner have the obligation to ask the taxpayer that question before completing and filing love it when something comes up like this. It makes my example better. BREHMER: But still, the tax preparer might ask, the tax preparer says no, no foreign bank account, because they don't even realize what they have from that inherited stuff from their mom. Isn't that ... FISK: That's true. Yes. And I've had clients who were themselves Naturalized U.S. Citizens. And so when they're looking at that question and then their account is in their home country, they're like, well it wasn't foreign. It wasn't foreign to me. I didn't understand what the question meant. So we can have that confusion. We also we all know I don't know how many of you actually get tax organizers from your clients, or if they do, really how thorough they are and how well your client understands the situation. So I'll have to modify my hypo to include that the client did not complete the tax organizer. BREHMER: There you go, Alright. So thank you for that question, because now it will be an even more interesting example next time we do this presentation, right. FISK: Right. They can play stomp the professor). I'm good. BREHMER: Right. A couple of questions came in about your example with the appraiser and how well, one of your examples with the appraisers, with the appraisers that knew that what they were doing was the wrong thing to do, and they got in trouble for it. But the questions are, how is the tax preparer supposed to know if another tax preparer on whom they are relying, or an appraiser on whom they are relying, how are they supposed to know if that person did everything correctly, is on the up and up, or whether there's maybe a reason to not trust what they've done or what they've provided? FISK: Yes. And so that does go back to the 10.34 where when we're not asking you to audit other tax professionals. We're looking to see really if you had reason to know something was off. If someone comes and they say that they are they practice expertise, they've got their licenses, they've been speaking on the subject. There's no need for you to question that. You're going to believe that individual is an expert that you can rely upon with respect to their work product. But if you happen to know that this individual or you've heard from others that this individual is incompetent, or that you're looking at their work product and it's making no sense whatsoever, or it's making outlandish assumptions and relying on speculative legal authority, then there's something there that you need to ask yourself can you really rely upon this? And I may have that come up in practice where an appraiser is relying on a particular position that was not legally viable. And I've contacted other appraisers to make sure that my understanding might not be off the mark, and I'm doing my due diligence to make sure whatever I'm giving to the IRS is to the best of my knowledge correct.

BREHMER: OK, Alright. That is helpful to know too. Let's see. I honestly think you just answered this question. A person asked for more information about no willful blindness in relation to Section 10.22 and 10.34. Is that what you were just talking about? You sensed something is wrong, your gut tells you something is wrong, bells and whistles are going off in your head. FISK: Yes ... BREHMER: Is there anything else you want to say about it? FISK: Oh, there's a little more. I mean, willful blindness can include what was my you're doing your client's return and they've got a 1099 that says that they're paying let's say $30,000 in mortgage interest. Sorry, it's not a 1099, it's 1098 if I have my forms right, thank you.

And so they've got a 1098. They give it to you saying that they've paid $30,000 in mortgage interest that year, and then they gave you their income and expenses for their business, and that's their only source of income, and they are making about $20,000-$25,000 that year. You kind of have to ask yourself, how can you afford to make the mortgage payment and that interest on income of $25,000? Now, maybe there's a good rationale, maybe they have an inheritance, maybe they have a savings, maybe they're liquidating their IRA account, there might be a reason.

But you need to ask that because on its face, that is not making sense. BREHMER: OK.

Alright. That example is great. Thank you so much for that example. I think we have to start wrapping up here. Those questions were great. Those answers you gave, Sharyn, were so illuminating. I appreciate that. But audience, that is all the time we have for questions.

So I want to thank you again, Sharyn, for sharing your knowledge and your expertise with us, and for answering those questions. Before we ... FISK: Ah, thank you very much. BREHMER: Yes.

What key points do you want the attendees to remember from today's webinar? FISK: Alright.

So our key points are Circular 230 contains the regulation governing practice before the Internal Revenue Service. The Office of Professional Responsibility supports effective of ax administration by ensuring all tax practitioners, tax preparers, and other third parties in the tax system adhere to professional standards and follow the law. Practitioners have a responsibility to their clients and to the tax administration system to include due diligence obligations and the best practices. There are key Circular 230 provisions regarding the duties and restrictions relating to the practice before the IRS, sanctions for violations of the regulation, and the disciplinary process. And that are the points. BREHMER: OK, great. Thank you, Sharyn. So audience, we are planning additional webinars throughout the year. To register for an upcoming webinar, please go to and do the keyword search webinars, and then select webinars for tax practitioners, or webinars for small businesses. When it's appropriate, we will be offering certificates and CE credits for upcoming webinars. We invite you to visit our Video Portal at There, you can view archived versions of our webinars. You can't get Continuing Education Credits or Certificates of Completion when you view an archived webinar on the Video Portal, but it is still awesome to get the information that was given out during that webinar. Again, a big thank you to Sharyn for a great webinar, and for sharing her experience with us, and for staying on extra, even extra credits for answering those questions.

And I want to thank you, our attendees for attending today's webinar, Office of Professional Responsibility, Practicing Before the IRS, What you Need to Know. Sharyn went over some great resources. So remember, there is that resource document available for downloading, and you can access it by clicking on the materials dropdown arrow on the left side of your screen. If you attended today's webinar for at least 100 minutes after the official start time, you will receive a Certificate of Completion that you can use with your credentialing organization for two possible CPE credits. If you stayed on for at least 50 minutes from the official start time of the webinar, you will qualify for one possible CPE credit. And again, the time that we spent chatting before the webinar started doesn't count for the 50 or 100 minutes. If you're eligible for continuing education from the IRS and you registered with your valid PTIN, your credit will be posted in your PTIN account. If you are eligible for continuing education from the California Tax Education Council, your credit will be posted to your CTEC account as well. And if you registered through the Florida Institute of CPAs, your participation information will be provided directly to them. If you qualify and have not received your certificate or your credit by June 25th, please e-mail us at on slide two. If you're interested in finding out who your local Stakeholder Liaison is, you may send us an e-mail using the address shown on the slide, and we'll send you that information. We would appreciate it if you would take a few minutes to complete a short evaluation before you exit. If you would like to have more sessions like this one, let us know. If you have thoughts on how we can make them better, please let us know of that as well. If you have requests for future webinar topics or pertinent information that you'd like to see in an IRS Fact Sheet, in a Tax Tip, or an FAQ on, then please include your suggestions in the comment section of the survey. And you want to click on the survey button on the right side of your screen to begin. And if it doesn't come up, check to make sure that you disabled your Popup Blocker. It has been a pleasure to be here with you today. And on behalf of the Internal Revenue Service and our presenter, Sharyn Fisk, we would like to thank you for attending today's webinar. It's important for the IRS to stay connected with the tax professional community, individual taxpayers, of industry associations, along with federal, state and local government organizations. You make our job a lot easier by sharing the information that allows for proper tax reporting. Thank you again for your time and attendance, and we wish you much success in your business or practice. You may exit the webinar at this time.