Circular 230
Treasury rules governing the ethical conduct of practitioners who represent taxpayers before the IRS.
REG loves to test who Circular 230 actually covers and what triggers a sanction. The classic stem describes a CPA who learns of a client error or files a position, then asks for the required response. The answer hinges on a sharp duty: on discovering a return error or omission, the practitioner must promptly advise the client of the error and its consequences — but is not required to notify the IRS or correct it without the client’s consent (Section 10.21). Monetary penalties and the other sanctions are imposed by the OPR, not by a court or the AICPA.
The trap is conflating bodies. Professional Responsibilities also spans the AICPA Code and §6694 preparer penalties; Circular 230 is Treasury/IRS practice rules binding only on those who practice before the IRS. Don’t blur it with the Statute of Limitations — that caps assessment time, whereas Circular 230 caps conduct. Note the old §10.35 covered-opinion rules were withdrawn (2014); written advice now falls under §10.37’s reasonableness standard (some older banks still drill the repealed covered-opinion checklist).
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