What Is IRS Circular 230?

1. What Is Circular 230?

Circular 230 is the common name for Regulations Governing Practice Before the Internal Revenue Service, published by the U.S. Department of the Treasury. It sets the ethical and professional standards that federally authorized tax practitioners must meet when they represent, advise, or submit documents on behalf of taxpayers to the IRS.

The regulation is grounded in 31 U.S.C. §330, which authorizes the Secretary of the Treasury to regulate the conduct of those who practice before the Treasury Department. The operative rules appear in Title 31 of the Code of Federal Regulations, Part 10, and are reprinted as Treasury Department Circular No. 230.

First issued in 1921, Circular 230 has been amended many times over the decades. The most recent fully effective version is the June 2014 revision. Proposed amendments are under consideration to modernize several provisions, but until they are finalized, the 2014 regulations remain in force.

2. Who Is Subject to Circular 230?

Circular 230 applies to individuals who represent taxpayers before the IRS or provide written tax advice — not every person who prepares a return. The covered groups include:

• Attorneys — admitted to practice before a state bar and not currently suspended or disbarred.
• Certified Public Accountants (CPAs) — licensed by a state board and in good standing.
• Enrolled Agents (EAs) — federal tax practitioners licensed directly by the IRS, with unlimited representation rights.
• Enrolled Retirement Plan Agents (ERPAs) — limited to retirement plan matters. New enrollments are no longer accepted.
• Enrolled Actuaries — limited representation for specific pension-related issues.
• Appraisers — individuals submitting valuations used in federal tax matters.
• Annual Filing Season Program (AFSP) participants — non-credentialed preparers who voluntarily agree to follow key Circular 230 provisions in exchange for limited representation rights on returns they prepared and signed.

3. What “Practice Before the IRS” Means

Under §10.2(a)(4), “practice before the IRS” covers all matters connected with a presentation to the IRS relating to a taxpayer’s rights, privileges, or liabilities. In practice, this includes:

• Corresponding and communicating with the IRS on a taxpayer’s behalf.
• Representing a taxpayer during examinations, appeals, collections, or administrative hearings.
• Negotiating settlements or installment agreements.
• Providing written tax advice on transactions, plans, or arrangements with potential for tax avoidance or evasion.
• Preparing and filing documents, responses, and protests with the IRS.

Simple data entry or routine mathematical preparation of a return is generally not practice before the IRS. Giving legal or tax opinions, negotiating with an IRS officer, or filing a protest on behalf of a client clearly is.

4. Key Duties Under Circular 230

Circular 230 Subpart B sets the affirmative duties practitioners owe to clients and to the IRS. The table below summarizes the most frequently cited obligations.

★ indicates the provisions most frequently cited in OPR disciplinary actions.

Due diligence (§10.22) does not mean distrust of the client, but it does mean that a practitioner cannot accept client-provided figures as true when the numbers look inconsistent with other information on the return. Unusually large charitable contributions, for example, should prompt the practitioner to ask for documentation before signing.

Conflicts of interest (§10.29) arise more often than many taxpayers realize. A classic example is representing both spouses in a joint return matter when the couple is separating. The rule does not automatically forbid dual representation, but it requires reasonable belief of competent service to each client and written, informed consent from both.

5. Prohibited Conduct

Section 10.51 defines incompetence and disreputable conduct, which can lead to discipline. Examples include:

• Conviction of any criminal offense involving dishonesty or breach of trust.
• Making false or misleading statements to the IRS or to clients.
• Counseling a client to submit a false or fraudulent return.
• Falsifying records, documents, or tax submissions.
• Misappropriation of client funds.
• Charging an unconscionable fee for services.
• Willfully failing to file the practitioner’s own federal tax returns or pay tax when due.
• Threatening or misleading a person being represented with intent to defraud.

6. Sanctions for Violations

When the Office of Professional Responsibility finds a violation, the available sanctions under §10.50 include:

The disciplinary process generally moves through four stages:

7. Why Circular 230 Matters to Taxpayers

Circular 230 looks like a regulation aimed only at tax professionals, but its practical impact reaches every taxpayer who hires one.

• A built-in quality standard. Attorneys, CPAs, and EAs operate inside a regulatory structure where serious misconduct can end their career. That accountability is itself a form of consumer protection.
• Representation rights are tied to credentials. Only attorneys, CPAs, and EAs have unlimited rights to represent taxpayers on any matter before the IRS. AFSP participants and unregulated preparers have narrower rights or none at all.
• A path for complaints. If a tax professional misleads a client, misuses funds, or otherwise violates the rules, the taxpayer can file Form 14157 (general preparer complaint) or have misconduct reported via Form 8484 to OPR.
• Verification before engagement. The IRS’s Directory of Federal Tax Return Preparers with Credentials and Select Qualifications lets taxpayers confirm a preparer’s PTIN and credentials before handing over sensitive records.