The Department of the Treasury and the Internal Revenue Service (IRS) have recently proposed significant updates to Circular 230, the regulations governing practice before the IRS. These changes aim to modernize the rules to better align with current tax practice and technological advancements.

Key Proposed Changes:

1. Removal of Obsolete Provisions: The proposed regulations suggest eliminating sections related to registered tax return preparers and outdated tax return preparation guidelines, reflecting legislative changes since the last amendments in 2011 and 2014.
2. Contingent Fees: Updates are proposed to the rules concerning contingent fees to align with current laws and practices.
3. Technological Competency Requirement: Recognizing the increasing reliance on digital tools, the proposed regulations would mandate that practitioners maintain technological proficiency as part of their practice before the IRS.
4. Clarification of OPR Jurisdiction: The proposed changes clarify that the IRS Office of Professional Responsibility (OPR) retains jurisdiction over practitioners who have been suspended or disbarred, ensuring continued oversight of professional conduct.
5. Appraiser Standards: The regulations propose establishing clear standards for appraisers, including criteria for disqualification, to ensure the integrity and accuracy of valuations submitted to the IRS.

Implications for Tax Professionals:

These proposed updates underscore the importance of staying informed about regulatory changes and maintaining competencies, especially in technology, to provide effective representation before the IRS. Tax professionals should review these proposed changes in detail to understand their potential impact on practice standards and compliance requirements.

For more information, refer to the IRS announcement: