Ethics Requirements for Tax Lawyers- OPR

Ethical Requirements for Tax Lawyers-OPR

The Office of Professional Responsibility (OPR) enforces Circular 230, which is the IRS code of professional conduct for persons who practice before the Internal Revenue Service. This includes accountants, as well as lawyers and others who represent individuals and businesses or prepare tax returns which are submitted to the Internal Revenue Service. Currently Karen Hawkins is the director of OPR. The previous director, its first, Cono Omarado, was the former head of the criminal investigation division (CID) of the Internal Revenue Service.

The law provides that OPR is independent of the Internal Revenue Service. Among its powers is to disbar, suspend and reprimand practitioners. Monetary penalties can also be assessed. In 2011, 726 cases were reviewed, which resulted in 7 disbarments, 161 suspensions, 280 reprimands and 245 no change actions. OPR no longer deals with the tax preparer issues and responsibility as IRS has now created the Return Preparer Office (RPO) to deal with these problems.

OPR generally will not bring a case for noncompliance that is more than five years old. It also considers remorse and rehabilitation of the practitioner involved. Those sanctioned will have their names published, both at the IRS website and in internal revenue bulletins. Most cases are resolved, by agreement with the practitioner involved. Where no agreement can be reached, the matter is sent to the IRS Chief Counsel's Office for review. In February 2012 OPR stated that monetary penalties would be used against firms and not individuals. OPR can access 100% of the gross income derived from inappropriate conduct as a penalty.

In cases where IRS has waived penalties to a taxpayer due to reliance on a tax adviser  OPR would like to know the name of the advisor so that appropriate follow up action could be taken.

OPR is regulatory and not substantive. It is not in the business of judging whether or not the advice that was given was correct but rather whether due diligence was done and conflict of interests avoided. They are not attempting to make and replace judgments made by practitioners.

In most first instances a reprimand is the most likely result of an investigation. Most referrals for OPR action originate from within IRS.

Of the more important sections of circular 230 are the following:

Section 10:23 prompt disposition.

Section 10:34 return documents and affidavits.

Section 10:21 knowledge of omission.

Section 10:27 contingent fees.

Section 10:37 requirements for written advice.

Section 10:51 incompetent and disreputable conduct.