Circular 230 Lecture Notes 1 
Chapter 26 – IRS Circular 230
Lecture Notes
I. Conflicts of Interest – Circular 230 §10.9(a) –
Circular 230 models it’s ethical standards on those contained in the ABA Rules of
Professional Conduct and the AICPA Code of Professional Conduct.
a. General Rule is contained in Circular 230 §10.9(a) which provides that: a CPA may not represent a client before IRS if the representation involves a conflict of interest.
b. Conflict of Interest occurs when:
i. Representing one client would be adverse to the interests of another client; or ii. There is a significant risk that the representation of one client will be materially compromised by your duties to another client, a former client, a third party or by the CPA’s personal interests.
c. Exception to the Rule Circular 230 §10.29 (b) & (c)-
i. If the CPA believes he or she can adequately represent all parties involved and all parties consent to the representation. ii. CPA is required to obtain the written consent by all parties affected and CPA must retain consents for a period of 36 months beginning upon the conclusion of the representation [ i.e. §10.29 (b) & (c )].
d. AICPA Code of Professional Conduct §102-2 provides that – a conflict of interest may occur if a member performs “professional service … or has a relationship … that could … be viewed as impairing the member’s objectivity.”
e. How do conflicts arise?
i. The friendly divorce –
1. Suggestion #1 – obtain a dual representation/disclosure letter from both spouses which lists the potential conflicts of interest and is signed by both spouses and their attorneys.
2. Suggestion #2 – when things begin to become unmanageable (and they will) consider disengaging from one or both parties and give sufficient notice of disengagement to the party(s) to allow the party(s) to obtain new representation. ii. Dispute between owners of a business (i.e. corporation, LLC, partnership, etc.).
1. Your client is the organization (i.e. the corporation) and not the individual
Lecture Notes
I. Conflicts of Interest – Circular 230 §10.9(a) –
Circular 230 models it’s ethical standards on those contained in the ABA Rules of
Professional Conduct and the AICPA Code of Professional Conduct.
a. General Rule is contained in Circular 230 §10.9(a) which provides that: a CPA may not represent a client before IRS if the representation involves a conflict of interest.
b. Conflict of Interest occurs when:
i. Representing one client would be adverse to the interests of another client; or ii. There is a significant risk that the representation of one client will be materially compromised by your duties to another client, a former client, a third party or by the CPA’s personal interests.
c. Exception to the Rule Circular 230 §10.29 (b) & (c)-
i. If the CPA believes he or she can adequately represent all parties involved and all parties consent to the representation. ii. CPA is required to obtain the written consent by all parties affected and CPA must retain consents for a period of 36 months beginning upon the conclusion of the representation [ i.e. §10.29 (b) & (c )].
d. AICPA Code of Professional Conduct §102-2 provides that – a conflict of interest may occur if a member performs “professional service … or has a relationship … that could … be viewed as impairing the member’s objectivity.”
e. How do conflicts arise?
i. The friendly divorce –
1. Suggestion #1 – obtain a dual representation/disclosure letter from both spouses which lists the potential conflicts of interest and is signed by both spouses and their attorneys.
2. Suggestion #2 – when things begin to become unmanageable (and they will) consider disengaging from one or both parties and give sufficient notice of disengagement to the party(s) to allow the party(s) to obtain new representation. ii. Dispute between owners of a business (i.e. corporation, LLC, partnership, etc.).
1. Your client is the organization (i.e. the corporation) and not the individual