A tax practitioner is suspended from practicing before the IRS under Circular 230. Which of the following activities is the suspended practitioner PROHIBITED from performing?
- ARepresenting a client at an IRS audit.
- BCommunicating with the IRS on behalf of a former client regarding a prior year's return.
- CPreparing tax returns for family members for no fee.
- DProviding tax advice to clients in writing, but not signing returns.
Show answer & explanationAnswer & explanation
Correct answer: A. Representing a client at an IRS audit.
Suspension from practice before the IRS prohibits a practitioner from representing taxpayers before the IRS. This explicitly includes activities such as appearing at an IRS audit, corresponding with the IRS on behalf of a client, or submitting documents to the IRS on behalf of a client. Preparing returns or providing general tax advice (not involving representation before the IRS) may still be permissible, but representing a client at an audit is a direct violation.
Why the other options are wrong
- B. Communicating with the IRS on behalf of a client (even a former one) constitutes 'practice before the IRS' and would be prohibited. However, representing at an audit is a more direct and undeniable example of this prohibition.
- C. Preparing tax returns for family members, especially without a fee, generally does not constitute 'practice before the IRS' and may be permissible.
- D. Providing tax advice without representing the client before the IRS or signing returns is generally not considered 'practice before the IRS' and may be permissible.
Circular 230 Practice Before IRS
'Practice before the IRS' includes all matters related to a client's rights, privileges, or liabilities under laws administered by the IRS, including representation, preparing documents, and communicating.
- Includes preparing and filing documents with the IRS.
- Includes communicating with the IRS on behalf of a client.
- Includes representing a client at conferences, hearings, or meetings.
- Suspension prohibits all such activities.
Memory trick: Suspended from IRS, no client's stress relief you bless.