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NLT Pro Network Community Preparer Training

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Chapter 1: Overview of Circular 230

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This chapter introduces the key principles of Circular 230, which governs the ethical conduct of tax professionals. It highlights the importance of competence, due diligence, and client confidentiality. Tax professionals must follow these standards to avoid penalties such as fines, suspension, or disbarment. This chapter ensures practitioners understand their responsibilities and maintain compliance while representing clients before the IRS.

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1. A client is unhappy with their previous tax preparer and asks if you can help them resolve issues from their past returns. You’re unfamiliar with some of the tax credits they mentioned. What should you do?
Review the previous returns, even if you're not sure about the credits. Refer the client to a colleague who specializes in that area. Tell the client to return to their previous preparer for assistance. Research the credits thoroughly to ensure you have the right knowledge before proceeding.
2. During a client meeting, you realize their business has significant issues with record-keeping. How should you handle the situation according to Circular 230?
Prepare the tax return based on estimates provided by the client. Explain the importance of accurate records and request proper documentation before filing. Proceed with filing and let the IRS request more information if needed. Refuse to file the return until the client hires a bookkeeper.
3. You want to expand your practice to include more complex tax services, but you lack the experience. What’s the best approach under Circular 230?
You want to expand your practice to include more complex tax services, but you lack the experience. What’s the best approach under Circular 230? a) Advertise your new services and learn as you go. b) Take on a few cases to gain hands-on experience without informing the clients of your limited background Take on a few cases to gain hands-on experience without informing the clients of your limited background. Engage in continuing education courses on the new services before offering them. Hire another practitioner to handle these services while you remain the main contact.
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