Circular 230: Who Is Actually Allowed to Represent You Before the IRS

Most people shopping for tax help never hear the words Circular 230. They should. It is the rulebook that decides who can stand between you and the IRS, what that person owes you, and what happens to them when they cheat you.

Circular 230 is the common name for Treasury regulations at 31 CFR Part 10, titled Regulations Governing Practice before the Internal Revenue Service. If you are about to pay someone to deal with the IRS for you, this is the regulation that governs the deal. Ten minutes with it will make you a much harder customer to fool.

What "practice before the IRS" means

Section 10.2(a)(4) defines practice before the Internal Revenue Service broadly. It covers all matters connected with a presentation to the IRS relating to a taxpayer's rights, privileges, or liabilities. The regulation lists examples: preparing and filing documents, corresponding and communicating with the IRS, and representing a client at conferences, hearings, and meetings.

Read that list again with a sales call in mind. Calling a revenue officer about your levy is practice. Negotiating a payment plan is practice. Sitting in an audit is practice. Submitting an offer in compromise package is practice. The parts of tax resolution you are actually paying for are the parts Circular 230 controls.

The people with full practice rights

Section 10.3 names who may practice. Three groups matter for nearly every buyer.

• Attorneys. Under section 10.2(a)(1), an attorney is a member in good standing of the bar of the highest court of any state, territory, possession, or the District of Columbia. Section 10.3(a) lets an attorney who is not suspended or disbarred from IRS practice represent a client by filing a written declaration of qualification and authority.
• Certified public accountants. Section 10.3(b) gives CPAs the same right on the same terms. Licensing comes from a state, territory, or the District of Columbia.
• Enrolled agents. Section 10.3(c) covers individuals enrolled by the IRS itself under Part 10. The IRS describes enrolled agent status as the highest credential it awards.

The IRS sums up the result on its credentials page: enrolled agents, CPAs, and attorneys have unlimited representation rights. They can represent clients on any matter, including audits, payment and collection issues, and appeals.

The people with limited rights

Two more enrolled categories exist, and both are narrow. Enrolled actuaries, under section 10.3(d), may practice only on issues tied to a specific list of retirement plan provisions. Enrolled retirement plan agents, under section 10.3(e), are limited to qualified retirement plan matters. If your problem is a tax debt, a levy, or an audit of your Form 1040, neither credential fits.

Then there are return preparers. The IRS explains that participants in its voluntary Annual Filing Season Program have limited representation rights: they may represent clients whose returns they prepared and signed, and only before revenue agents, customer service representatives, and similar employees, including the Taxpayer Advocate Service. They cannot handle appeals or collection matters. Preparers who hold only a PTIN and no credential cannot represent anyone for returns prepared after December 31, 2015. The limits on unenrolled preparers get their own chapter.

Practice rights under Circular 230 and IRS guidance

Firms do not practice. People do.

Here is the part most people miss. Section 10.2(a)(5) defines a practitioner as an individual described in section 10.3. Not a company. Not a call center. Not a brand.

That matters because many tax relief companies advertise as if the company itself represents you. It cannot. Some individual with a license has to sign the power of attorney and do the work. When you interview a firm, ask for the name and license number of the person who will sign your Form 2848 and talk to the IRS. If nobody can give you a name before you pay, you have learned what you needed to know. The Form 2848 chapter explains why that signature is the whole ballgame.

The exceptions: family, employees, fiduciaries

Section 10.7 lets some people appear without being practitioners. You can always represent yourself with satisfactory identification. An individual may represent a member of his or her immediate family. A regular full-time employee may represent the employer. A general partner or full-time employee may represent a partnership. A bona fide officer or full-time employee may represent a corporation.

Section 10.7(e) adds that a fiduciary, such as a trustee, executor, or guardian, is treated as the taxpayer, not as a representative. These exceptions are real, but they are personal. None of them lets a stranger on a sales floor represent you because you paid a fee.

What Circular 230 requires of the person you hire

Circular 230 is not just a gate. It is a code of conduct, and the rules in Subpart B are the ones buyers should know by heart.

• Section 10.21: if your representative learns you have not complied with the tax laws, or made an error or omission on something you filed, they must tell you promptly and explain the consequences.
• Section 10.22: due diligence in preparing and filing documents and in what they tell the IRS and what they tell you.
• Section 10.23: no unreasonable delay in the prompt disposition of any matter before the IRS.
• Section 10.27: no unconscionable fees, and contingent fees only in narrow situations. See contingent fees in tax representation.
• Section 10.28: at your request, prompt return of the records you need to comply with your federal tax obligations, generally even during a fee dispute.
• Section 10.29: no representation with a conflict of interest unless each affected client gives informed consent, confirmed in writing.
• Section 10.30: no false, fraudulent, coercive, misleading, or deceptive advertising or solicitation.
• Section 10.31: no endorsing or negotiating a government check issued to you for a federal tax liability, and no steering that payment into an account the practitioner controls.

Enforcement: who polices the rules

Section 10.50 lets the Secretary of the Treasury, or a delegate, censure, suspend, or disbar a practitioner who is incompetent or disreputable, who violates the regulations, or who willfully and knowingly misleads or threatens a client with intent to defraud. Censure is a public reprimand.

Within the IRS, that job belongs to the Office of Professional Responsibility. The IRS says OPR has exclusive delegated authority and oversight for practitioner conduct and discipline, and that it also has jurisdiction over Annual Filing Season Program participants. OPR publishes records of disciplined practitioners, which makes it one of the cheapest background checks available to you. The chapter on checking IRS disciplinary records walks through it.

How to use Circular 230 as a buyer

You do not need to memorize a regulation. You need four questions, and Circular 230 tells you why each one matters.

1. Who, by name, will sign the power of attorney and deal with the IRS? (Section 10.2 and 10.3: only individuals practice.)
2. What is that person's credential, and where can I verify it? (Section 10.3: attorney, CPA, or enrolled agent for full rights.)
3. How is the fee calculated, and is any part of it contingent on the result? (Section 10.27.)
4. If we part ways, how fast do I get my records back? (Section 10.28.)

A legitimate practitioner answers all four in one breath. A salesperson changes the subject. That difference is your first and best filter. The questions to ask before hiring chapter builds out the rest of the interview.