AICPA Supports Proposed Amendments Governing Practice before the IRS

December 20, 2012

The American Institute of CPAs’ Nov. 29, 2012 comments to the Internal Revenue Service (IRS) support the Service’s proposed amendments to Circular 230, the Regulations Governing Practice before the IRS. 

The AICPA noted that it particularly appreciates the simplification provided through the elimination of complex rules under §10.35 governing covered opinions. 

If issued in final form in 2013, the proposed changes to Circular 230 would have a significant impact on CPAs and other tax professionals, the AICPA said.

Some of the major provisions under the proposed regulations include:

• Written Advice: The proposed amendment eliminates the complicated and costly “covered opinion” rules in current Circular 230 §10.35, and expands the written advice requirements of §10.37.

Proposed §10.37 would establish one standard for all written tax advice by providing that practitioners must: (1) base all written advice on reasonable factual and legal assumptions; (2) exercise reasonable reliance; and (3) consider all relevant facts the practitioner knows or should know.

• Disclaimers: The disclaimers in email and other writings are eliminated under the proposed amendments.  The overuse of these disclaimers has resulted in clients ignoring the disclaimer outright.

• General Standard of Competence: The revised §10.35 establishes a general standard that a practitioner must exercise competence when engaged in practice before the IRS.  Proposed §10.35 defines competent practice to include the knowledge, skill, thoroughness, and preparation necessary for the matter for which the practitioner is engaged.

In some instances, the AICPA suggested modifications to the proposed amendments.