The American Institute of CPAs (AICPA) has submitted recommendations to the Internal Revenue Service (IRS) for consideration of updates to the Treasury Department Circular No. 230.
Circular No. 230 governs the practice of various certified public accountants and other professionals before the IRS.
The AICPA’s proposals aim to clarify the responsibilities of tax practitioners and suggest revisions to ensure the regulations are current and relevant.
Its submission includes a recommendation to revise the requirement for practitioners to seek client agreement for disclosing errors.
Instead, it proposes that practitioners should advise clients on the importance of disclosure and the consequences of non-disclosure to the IRS.
The AICPA also calls for the removal of the mandate for tax practitioners to evaluate their own or their colleagues’ mental fitness, arguing that they are not qualified to make such assessments.
Further, the AICPA suggested removing the obligation for tax practitioners to have a business succession plan, stating that it exceeds the scope of Circular 230.
It also recommends modifying the definition of contingent fees to allow them in certain circumstances, aligning with the AICPA’s Code of Professional Conduct, contrary to the IRS’s current proposal for a complete ban.
In terms of valuation standards, the AICPA advises against specifying individual standards for appraisers, proposing instead that appraisals conform to the substance and principles of generally accepted appraisal standards.
This approach would require adherence to professional standards within the valuation discipline in a manner consistent with enforceable valuation standards, notes AICPA.
AICPA tax practice and ethics director Elizabeth Young said: “By having a clear and robust set of performance standards which outline the responsibilities of practitioners who represent clients in front of the IRS, we as members of the tax profession are reinforcing many of the principles outlined in the AICPA’s Guiding Principles of Good Tax Policy.”
The AICPA has also expressed a desire to present their case in person at the public hearing scheduled by the Treasury and IRS for 6 March 2025.
It highlights the impact of these regulations on their members and note that the current regulations have not been updated for over a decade.
This request follows an earlier plea by the AICPA for updates to the IRS’s Draft Publication 547 earlier this month.
