Regulation of Individuals Practicing Before Treasury

Circular 230 authorizes Treasury to suspend or disbar from practice before the department a representative who (1) is incompetent; (2) is disreputable; (3) violates the rules regulating practice before the department; or (4) (with intent to defraud) willfully and knowingly misleads or threatens the person being represented (or a person who may be represented).

New Law

AJCA Section 822 amends 31 USC Section 330(b) to permit Treasury to censure any representative who violates regulations prescribed under this section, and to impose a monetary penalty on an individual or on the employer, firm or entity that the individual represents, if it knew, or reasonably should have known, about the conduct giving rise to the penalty. The monetary penalty is capped at the amount of gross income derived from the conduct giving rise to the penalty. The provision also clarifies Treasurys authority to impose standards applicable to written advice with respect to any entity, transaction plan or arrangement, or other plan or arrangement that Treasury determines as having a potential for tax avoidance or evasion.

Effective Date

The provision applies to actions taken after Oct. 22, 2004.

From Paul Manning, Washington, DC