Circular 230 update planned for 2021

By Dave Strausfeld, J.D.

Treasury intends to update the Circular 230 rules governing practice before the IRS, and external stakeholder groups are invited to submit suggested changes and revisions to the IRS’s Office of Professional Responsibility (OPR).

OPR plans to send Treasury “basically a redline of Circular 230,” said OPR Director Sharyn Fisk, speaking at a virtual meeting of the AICPA Tax Practice Responsibilities Committee on Dec. 17. Fisk said that OPR’s proposed updates to the practice rules will carry more weight if she can show that they also represent what the AICPA and other stakeholder organizations believe is needed to better govern the profession.

Other OPR goals for 2021 include helping to launch a new irs.gov secure submission platform in January 2021 for uploading electronically signed third-party authorization forms (Form 2848, Power of Attorney and Declaration of Representative, and Form 8821, Tax Information Authorization), said Fisk, who became OPR director in January.

Circular 230

In November, Treasury noted its intention to update Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), in its 2020–2021 priority guidance plan.

OPR can recommend revisions to these practice rules, Fisk said, but it is “not guaranteed that we will get every change we would request,” because Circular 230 is a Treasury regulation. Last revised in 2014, the regulation establishes the rules governing those who practice before the IRS, including attorneys, CPAs, and enrolled agents.

Fisk would like to receive comments “sooner rather than later,” and she welcomes suggestions for revisions either minor or large/structural. At this point, the potential scope of upcoming changes to Circular 230 is unknown.

E-signatures on third-party authorization forms

Another of OPR’s goals for 2021, Fisk said, is to help facilitate the e-signing of two commonly used forms: Forms 2848 and 8821.

In January 2021, the IRS will roll out a new irs.gov secure submission platform that will enable clients and practitioners to sign these authorization forms electronically (or in ink) and then upload the image of the form to the IRS.

Soon there will also be another option for digitally signing and submitting these authorizations because the Service is planning to unveil a more advanced system in the summer of 2021, Fisk said. This new platform will be “fully online,” Fisk noted, taking pains to avoid using the word “form” in connection with the more sophisticated system planned for launch in the summer. “It’s not a form and it’s not a 2848 and it’s not an 8821. It’s an online authorization.” That is, the operation will be electronic from beginning to end.

Mailing or faxing the forms to the IRS will continue to be allowed. (For more information, see the IRS webpage, “Electronic Signature Options Will Simplify Third-Party Authorizations.”) The IRS will provide further details about these electronic submission options soon, Fisk said.

Posting disciplinary decisions online

One of OPR’s other goals for 2021 is to post more disciplinary rulings online, Fisk said. In 2014, the IRS ceased publishing so-called final agency decisions (FADs), due to Sec. 6103 concerns about revealing confidential taxpayer information. FADs are written rulings issued by administrative law judges or Treasury’s appellate authority in contested disciplinary proceedings.

OPR’s decision to resume posting FADs on its website appears to be in response to a Freedom of Information Act lawsuit filed last May by Tax Analysts (Tax Analysts, No. 1:20-cv-01268 (D.D.C. 2020)).

Only a handful of FADs have been posted so far, Fisk said, but more will be redacted and published on the IRS website once they clear legal review, beginning with recent ones and then circling back to older cases.

Dave Strausfeld, J.D., (David.Strausfeld@aicpa-cima.com) is a JofA senior editor.

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