Circular 230 — Complete Practitioner Compliance Guide for Tax Professionals

What Is Circular 230?

Circular 230 (formally titled "Regulations Governing Practice Before the Internal Revenue Service") is codified at 31 C.F.R. Part 10 and governs the conduct of tax professionals who practice before the IRS. It applies to enrolled agents (EAs), certified public accountants (CPAs), attorneys, enrolled retirement plan agents (ERPAs), enrolled actuaries, and other individuals who represent taxpayers before the IRS.

The IRS Office of Professional Responsibility (OPR) administers and enforces Circular 230. Violations can result in censure, suspension, or disbarment from practice before the IRS. Understanding Circular 230 is not optional for tax professionals — it is the foundation of ethical practice.

Key Circular 230 Obligations

Circular 230 imposes specific duties on practitioners. The most important provisions for daily practice are:

§10.21 — Knowledge of Client's Omission: If a practitioner knows that a client has not complied with the revenue laws, the practitioner must promptly advise the client of the noncompliance and the consequences. The practitioner is not required to report the noncompliance to the IRS, but cannot assist in continuing the noncompliance.

§10.22 — Diligence as to Accuracy: Practitioners must exercise due diligence in preparing, approving, and filing returns, documents, affidavits, and other papers. Reliance on the work of others is permitted if the practitioner uses reasonable care in selecting and supervising the other person.

§10.29 — Conflicting Interests: Practitioners may not represent a client if the representation involves a conflict of interest — unless all affected clients give informed written consent. Common conflicts include representing both spouses in a divorce with tax issues, or representing a business and its owner in an audit where their interests diverge.

§10.35 — Competence: Practitioners must possess the necessary competence to engage in practice before the IRS. Competence requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation. If a practitioner lacks competence in a particular area, they must either acquire the necessary competence or refer the matter to a competent practitioner.

§10.37 — Written Advice: Written advice (including email) must be based on reasonable factual and legal assumptions, must consider all relevant facts, and must not take into account the possibility that the return will not be audited. The "more likely than not" standard applies to written advice on tax shelters and listed transactions.

Enrolled Agent Continuing Education Requirements

Enrolled agents are required to complete continuing education (CE) to maintain their enrollment. Under IRS EA CE requirements, EAs must complete:

72 hours of CE per 3-year enrollment cycle, with a minimum of 16 hours per year. Of the 72 hours, at least 2 hours per year (6 hours per cycle) must be on ethics or professional conduct. CE must be obtained from IRS-approved CE providers.

EAs who fail to meet CE requirements risk having their enrollment suspended or terminated. The IRS sends renewal notices approximately 90 days before the enrollment expiration date. EAs should track their CE hours throughout the year using the IRS CE tracking system.

Frequently Asked Questions