"Circular 230 is a hybrid document containing the rules, regulations, ethical/conduct provisions, and disciplinary procedures that apply to those who practice before the IRS.
The language now codified as Section 330 was originally enacted in 1884 as part of a War Department appropriation for “horses and other property lost in the military service.”[5] See, e.g., H.R.
The rules were changed effective January 1, 2011, and for a time imposed certain requirements on individuals engaging in the business of preparing U.S. federal tax returns.
[14] Persons preparing tax returns must not: Section 10.27 of Circular 230 has traditionally included restrictions on contingent fee arrangements between taxpayers and their representatives.
In July 2014, however, those restrictions were struck down by the U.S. District Court for the District of Columbia "with respect to the preparation and filing of Ordinary Refund Claims, where 'preparation and filing' precedes the inception of any examination or adjudication of the refund claim by the IRS and any formal legal representation on the part of the practitioner."
Thus, according to IRSAC, Circular 230 is not intended to be utilized as an enforcement tool for isolated acts of incompetence or disreputable conduct.
Instead, it is intended to more broadly protect the tax system from those practitioners who have demonstrated a clear pattern of failing to meet generally recognized standards of professional conduct.
If an officer or employee of the Internal Revenue Service has reason to believe a practitioner has violated any provision of Circular 230, the officer or employee will promptly make a written report of the suspected violation on Form 8484, Report of Suspected Practitioner Misconduct.
The report will explain the facts and reasons upon which the officer’s or employee’s belief rests and must be submitted to OPR.
Periodically, the Internal Revenue Bulletin lists an announcement of disciplinary sanctions for the Office of Professional Responsibility.