Circular 230 contains rules governing the recognition of attorneys, certified public accountants, enrolled agents, and other persons representing taxpayers before the IRS (“Tax Practitioner”). One of the most important duties of a practitioner is to provide information to the IRS.
Circular 230 § 10.20 provides that a Tax Practitioner must, when lawfully requested by the IRS, promptly submit records or information in any matter before the IRS unless the Tax Practitioner believes, in good faith and on reasonable grounds, that the records or information are privileged.
Where the requested records or information are not in the possession of, or subject to the control of, the Tax Practitioner or the Tax Practitioner’s client, the Tax Practitioner must promptly notify the IRS with the identity of any person who the Tax Practitioner believes may have possession or control of the requested records or information.
In addition, the Tax Practitioner must make reasonable inquiry of his or her client regarding the identity of any person who may have possession or control of the requested records or information, but the Tax Practitioner is not required to make inquiry of any other person or independently verify any information provided by the Tax Practitioner’s client regarding the identity of such persons.
Lastly, a Tax Practitioner may not interfere, or attempt to interfere, with any proper and lawful effort by the IRS to obtain any record or information unless the Tax Practitioner believes in good faith and on reasonable grounds that the record or information is privileged.
A Tax Practitioner should take the duty to provide information to the IRS seriously. However, a Tax Practitioner should also be very familiar with the various privilege rules in order to also protect the interest of his or her clients.
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