Tax professionals who charge clients contingent fees for preparing returns and other services before the IRS could face sanctions under new rules proposed by the U.S. Treasury Department. The proposed changes, issued on Friday, are intended to update Treasury Department Circular 230, which governs tax practitioners’ conduct before the Internal Revenue Service.
Under the proposed regulations, certain contingent fee arrangements would be deemed disreputable conduct. The regulations would apply to a broad range of tax professionals, including registered tax return preparers, enrolled agents, attorneys, certified public accountants (CPAs), enrolled retirement plan agents, enrolled actuaries, and other practitioners.
The proposed changes aim to make significant revisions to the regulation of contingent fees and withdraw a similar set of fee regulations proposed in 2009, according to the Treasury Department. Currently, tax practitioners can charge contingent fees for services related to the IRS’ examination of amended returns, refund claims, and certain whistleblower claims. They are also allowed to charge such fees for services connected to judicial proceedings and determining interest and penalties.
