TreasuryDepartmentCircular No. 230(Rev. 7-94)

Regulations Governing thePractice of Attorneys,Certified Public Accountants,Enrolled Agents,Enrolled Actuaries, and Appraisers before theInternal Revenue Service

Departmentof theTreasuryInternalRevenueService

Title 31 Code of Federal Regulations,Subtitle A, Part 10, revised as ofJuly 1,1994

Regulations Governingthe Practice of Attorneys,Certified Public Accountants,Enrolled Agents, EnrolledActuaries, and Appraisersbefore the InternalRevenue Service

This publication contains the revision ofTreasury Department Circular No. 230 ap-pearing in 31 F.R. 10773, dated August 13,1966, and includes the following amend-ments:

Amendment appearing in 31 F.R. 12638,dated September 27, 1966, which adds omit-ted section heading § 10.58.

Amendments appearing in 3 1 F.R. 13992,dated November 2, 1966, which addsubparagraphs (b) and (c) to § 10.57 and adda sentence at the end, and as a continuation,of paragraph (c) of § 10.5 1.

Amendments appearing in 31 F.R. 13205,dated August 19, 1970, which are intendedprimarily to clarify the language of certainprovisions of the regulations, strengthen cer-tain conflict of interest and disciplinary pro-visions, and update statutory references.

Amendment appearing in 36 F.R. 8671,dated May 11, 1971, which corrects error inthe August 19, 1970, amendments, which in-correctly added a new sentence tosubparagraph 10.3(c) rather than subpara-graph 10.3 (e).

Amendments appearing in 42 F.R. 38350,dated July 28, 1977, which eliminate out-dated terms and provisions, and which in-crease the restrictions on practice by formerGovernment employees.

Amendments appearing in 44 F.R. 4940, Amendments appearing in 51 F.R. 2875,dated January 24, 1979, which prescribe rules dated January 22, 1986, which require that

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TreasuryDepartmentCircularNo. 230(Rev. 7-94)

permitting the expansion of advertising andsolicitation provisions of the regulationsgoverning practice by attorneys, certifiedpublic accounts, enrolled agents and otherswho represent clients before the InternalRevenue Service.

Amendments appearing in 44 F.R. 4944,dated January 24, 1979, which prescribe rulesto permit enrolled actuaries to engage inpractice before the Internal Revenue Servicein connection with the provisions of the In-ternal Revenue Code involving pension plansunder the Employee Retirement Income Se-curity Act of 1974 (ERISA).

Amendments appearing in 49 F.R. 6719,dated February 23, 1984, which clarify whomay prepare a tax return and furnish infor-mation to the Internal Revenue Service, andset standards for providing opinions used inthe promotion of tax shelter offerings.

Amendments appearing in 50 F.R. 42014,dated October 17, 1985, which implementsection 156 of the Deficit Reduction Act of1984, 98 Stat. 695, to provide for the dis-qualification of appraisals and appraisers’testimony in connection with Treasury De-partment or Internal Revenue Service pro-ceedings with respect to any appraiser whohas been assessed an aiding and abettingpenalty under 26 U.S.C. 6701(a) after July18, 1984.

those who are enrolled to practice beforethe Internal Revenue Service renew theirenrollment on a periodic basis. A conditionof eligibility for renewal of enrollment willbe the satisfaction of continuing professionaleducation requirements. In addition, theamendments modify the regulations reflect-ing the transfer to the Office of Director ofPractice of certain functions formerly per-formed by the Commissioner of InternalRevenue relative to the enrollment of indi-viduals who wish to practice before the In-ternal Revenue Service.

Amendments appearing in 57 F.R. 41093,dated September 9, 1992, which relate to theprovisions of the regulations addressing ad-vertising and solicitation by those eligible topractice before the IRS, which were occa-

sioned by judicial determinations impactingon the subject.

Amendments appearing in 59 F.R. 3 1523,dated June 20, 1994, which establish taxreturn preparation standards and prescribethe circumstances under which a practition-er may be disciplined for violating thosestandards, limit the use of contingent feesfor preparing tax returns, clarify that certainexisting restrictions governing limited prac-tice before the IRS apply to all individualswho are eligible to engage in limited practicebefore the IRS, establish expedited proceed-ings to suspend individuals from practicebefore the IRS in cases in which certaindeterminations have been made by inde-pendent bodies, and permit attorneys andcertified public accountants in good standingto obtain or retain enrolled agent status.

PART 10-PRACTICE BEFORE THEINTERNAL REVENUE SERVICE

Sec.10.0 Scope of part.

Subpart A – Rules Governing Authority toPractice

10.1 Director of Practice.10.2 Definitions.10.3 Who may practice.10.4 Eligibility for enrollment.10.5 Application for enrollment.10.6 Enrollment.10.7 Representing oneself; participating in

rulemaking; limited practice; special appearances;and return preparation.

10.8 Customhouse brokers.

Subpart B – Duties and Restrictions Relatingto Practice Before the Internal Revenueservice

10.20 Information to be furnished.10.21 Knowledge of client’s omission.10.22 Diligence as to accuracy.10.23 Prompt disposition of pending matters.10.24 Assistance from disbarred or suspended per-

sons and former Internal Revenue Service em-ployees.

10.25 Practice by partners of Government employ-ees.

10.26 Practice by former Government employees,their partners and their associates.

10.27 Notaries.10.28 Fees.10.29 Conflicting interests.10.30 Solicitation.10.31 Negotiation of taxpayer refund checks.10.32 Practice of law.10.33 Tax shelter opinions.10.34 Standards for advising with respect to tax

return positions and for preparing or signing re-turns.

Subpart C — Rules Applicable to DisciplinaryProceedings

10.50 Authority to disbar or suspend.10.51 Disreputable conduct.10.52 Violation of regulations.10.53 Receipt of information concerning attorneys,

certified public accountants, enrolled agents, orenrolled actuaries.

10.5410.5510.5610.5710.5810.5910.6010.6110.6210.6310.64

Institution of proceeding.Conferences.Contents of complaint.Service of complaint and other papers.Answer.Supplemental charges.Reply to answer.Proof; variance; amendment of pleadings.Motions and requests.Representation.Administrative Law Judge.

10.65 Hearings.10.66 Evidence.10.67 Depositions.10.68 Transcript.10.69 Proposed findings and conclusions.10.70 Decision of the Administrative Law Judge.10.71 Appeal to the Secretary.10.72 Decision of the Secretary.10.73 Effect of disbarment or suspension; surrender

of card.10.74 Notice of disbarment or suspension.10.75 Petition for reinstatement.10.76 Expedited suspension upon criminal convic-

tion or loss of license for cause.

Subpart D — Rules Applicable to Disqualifi-cation of Appraisers

10.77 Authority to disqualify; effect of disqualifica-tion.

10.78 Institution of proceeding.10.79 Contents of complaint.10.80 Service of complaint and other papers.10.81 Answer.10.82 Supplemental charges.10.83 Reply to answer.10.84 Proof, variance, amendment of pleadings.10.85 Motions and requests.10.86 Representation.10.87 Administrative Law Judge.10.88 Hearings.10.89 Evidence.10.90 Depositions.10.91 Transcript.10.92 Proposed findings and conclusions.10.93 Decision of the Administrative Law Judge.10.94 Appeal to the Secretary.10.95 Decision of the Secretary.10.96 Final order.10.97 Petition for reinstatement.

Subpart E — General Provisions10.98 Records.10.100 Saving clause.10.101 Special orders.

Authority: Sec. 3.23 Stat. 258, secs. 2-12,60 Stat.237 et seq.; 5 U.S.C. 301, 500, 551-559, 31 U.S.C.1026; Reorg. Plan No. 26 of 1950, 15 FR 4935, 64Stat. 1280.3 CFR, 1949-1953 Comp., p. 1017.

Source: Treasury Department Circular 230, Re-vised, 31 FR 10773, Aug. 13, 1966, unless otherwisenoted.

Editorial Note: Nomenclature changes affecting thispart appear at 57 PR 41095, Sept. 9, 1992.

§10.0 Scope of part.

This part contains rules governing therecognition of attorneys, certified publicaccountants, enrolled agents, and other per-sons representing clients before the Inter-nal Revenue Service. Subpart A of this part

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sets forth rules relating to authority to prac-tice before the Internal Revenue Service;subpart B of this part prescribes the dutiesand restrictions relating to such practice;subpart C of this part contains rules relat-ing to disciplinary proceedings; subpart Dof this part contains rules applicable to dis-qualification of appraisers; and Subpart Eof this part contains general provisions, in-cluding provisions relating to the availabil-ity of official records.

(a) Attorney means any person who is amember in good standing of the bar of thehighest court of any State, possession, ter-ritory, Commonwealth, or the District ofColumbia.

(b) Certified Public Accountant meansany person who is duly qualified to prac-tice as a certified public accountant in anyState, possession, territory, Commonwealth,or the District of Columbia.

[59 FR 31526, June 20, 1994]

Subpart A — Rules GoverningAuthority To Practice

(c) Commissioner refers to the Commis-sioner of Internal Revenue.

(d) Director refers to the Director ofPractice.

$10.1 Director of Practice.

(a) Establishment of office. There is es-tablished in the Office of the Secretary ofthe Treasury the office of Director of Prac-tice. The Director of Practice shall be ap-pointed by the Secretary of the Treasury.

(b) Duties. The Director of Practice shall act upon applications for enrollment to

practice before the Internal RevenueService; institute and provide for the con-duct of disciplinary proceedings relating toattorneys, certified public accountants, en-rolled agents, enrolled actuaries and ap-praisers; make inquiries with respect tomatters under his jurisdiction; and performsuch other duties as are necessary or ap-propriate to carry out his functions underthis part or as are prescribed by the Secre-tary of the Treasury.

(e) Practice before the Internal RevenueService comprehends all matters connectedwith a presentation to the Internal RevenueService or any of its officers or employeesrelating to a client’s rights, privileges, or li-abilities under laws or regulations adminis-tered by the Internal Revenue Service. Suchpresentations include preparing and filingnecessary documents, corresponding andcommunicating with the Internal RevenueService, and representing a client at confer-ences, hearings, and meetings.

(f) Practitioner means any individual de-scribed in $10.3 (a), (b), (c), or (d) of thispart.

(g) A return includes an amended returnand a claim for refund.

(h) Service means the Internal RevenueService.

[59 FR 3 1526, June 20, 1994]

(c) Acting Director. The Secretary of theTreasury will designate an officer or em-ployee of the Treasury Department to actas Director of Practice in the event of theabsence of the director or of a vacancy inthat office.

§10.3 Who may practice.

[31 FR 10773, Aug. 13, 1966, as amended at 51FR 2878, Jan. 22, 1986]

$10.2 Definitions.

(a) Attorneys. Any attorney who is notcurrently under suspension or disbarmentfrom practice before the Internal RevenueService may practice before the Serviceupon filing with the Service a written dec-laration that he or she is currently qualifiedas an attorney and is authorized to repre-sent the particular party on whose behalfhe or she acts.

As used in this part, except where thecontext clearly indicates otherwise:

(b) Certified public accountants. Anycertified public accountant who is not cur-rently under suspension or disbarment from

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practice before the Internal Revenue Service the extent, if any, to which an Internal Rev-may practice before the Service. upon filing enue Service ruling or determination letterwith the Service a written declaration that coming under the herein listed statutoryhe or she is currently qualified, as a certi- provisions shall be applied without retro-fied public accountant and is authorized to active effect), and 29 US.C. 1083 (relatrepresent the particular party on whose be- ing to waiver of funding for nonqualifiedhalf he or she acts. plans).(c) Enrolled agents, Any person enrolled (2) An individual who practices beforeas an agent pursuant to this part may prac- the- Internal Revenue Service pursuant totice before the Internal Revenue Service. this subsection shall be subject to the pro-

(d) Enrolled Actuaries. (l) Any individual visions-of this part in the same manner aswho is enrolled as an actuary by the Joint attorneys, certified public accountants andBoard for the Enrollment of Actuaries enrolled agents.pursuant to 29 U.S.C. 1242 may practice (e) Others. Any individual qualifying un-before the Internal Revenue Service upon der §10.5(c) or §10.7 is eligible to practicefiling with the Service a written declaration before the Internal Revenue Service to thethat he/she is currently qualified as an extentprovided in those sections.enrolled actuary and is authorized to (f) Government officers and employees,represent the particular party on whose and others., An individual, including an of-behalf he/she acts. Practice as an enrolled ficer or employee of the executive, legisla-actuary is limited to representation with tive, or judicial branch of the United’ Statesrespect to issues involving the following Government; officer or employee of thestatutory provisions. District of Columbia; Member of Congress;

Internal Revenue Code (Title 26 U.S.C.)or Resident Commissioner, may not prac-

sections: 401 (qualification. of employeetice before the Service if such practicewould violate 18 U.S.C. 203 or 205.

plans), 403(a), (relating to whether an an-nuity plan meets the requirements of section

(g) State officers and employees. No offi-

404(a)(2)), 404 (deductibility of employercer or employee of any State, or subdivi-

contributions), 405 (qualification of bondsion thereof, whose duties require him to

purchase plans), 412 (funding requirementspass upon, investigate, or deal with tax

for certain employee plans), 413 (applica-matters of such State or subdivision, may

tion of qualification requirements to col-practice before the Service, if such State

lectively bargained plans and to plansemployment, may disclose facts or infor-

maintained by more than one employer),mation applicable to Federal tax matters.

414 (containing definitions and special rules [31 FR 10773, Aug, 13, 1966, as amended at 35

relating to the employee plan area), 4971FR 13205, Aug. 19,197O; 36 FR 8671, May 11,1971; 44 FR 4946, Jan. 24, 1979; 59 FR 31526,

(relating to excise taxes payable as a result June 20, 1994]of an accumulated funding deficiency un-der section 412), 6057 (annual registrationof plans), 6058 (information required in

§10.4 Eligibility for enrollment.

connection with certain plans of deferred (a) Enrollment upon examination. Thecompensation), 6059 (periodic report of ac- Director of Practice may grant enrollmenttuary), 6652(e) (failure to file annual regis-tration and other notifications by pension

to an. applicant who demonstrates specialcompetence in tax matters by written ex-

plan), 6652(f) (failure to file information amination administered by the Internalrequired in connection with certain plans Revenue Service and who has not engagedof deferred compensation), 6692 (failure to in any conduct which would justify thefile actuarial report), 7805(b) (relating to suspension or disbarment of any attorney,

i

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certified public accountant, or enrolled agentunder the provisions of this part.

(b) Enrollment of former Internal Rev-enue service employees. The Director ofPractice may grant enrollment to an ap-plicant who has not. engaged in any con-duct which would justify the suspensionor disbarment of any attorney, certifiedpublic accountant, or enrolled agent underthe provisions of this part and who, byvirtue of his past service and technicalexperience in the Internal Revenue Servicehas qualified for such enrollment, as fol-lows:

(1) Application for enrollment on accountof former employment in the Internal Rev-enue Service shall be made to the Directorof Practice .Each applicant will be supplieda form by the Director of Practice, whichshall indicate the information required re-specting the applicant’s qualifications. Inaddition to the applicant’s name, address,educational experience, etc., such informa-tion shall specifically include a detailed ac-count of the applicant’s employment in theInternal Revenue Service, which accountshall show (i) positions held, (ii) date ofeach appointment and termination thereof,(iii) nature of services rendered in each po-sition, with particular reference to the degreeof technical. experience involved, and (iv)name of supervisor in such positions, to-gether with such other information regard-ing the experience and training of the ap-plicant as may be relevant.

(2) Upon receipt of each such applica-tion, it shall be transmitted to the appropri-ate officer of the Internal Revenue Servicewith the request that a detailed report ofthe nature and rating of the applicant’s ser-vices in the Internal Revenue Service, ac-companied by the recommendation of thesuperior officer in the particular unit or di-vision of the Internal Revenue Service thatsuch employment does or does not qualifythe applicant technically or otherwise forthe desired authorization, be furnished tothe Director of Practice.

(3) In examining the qualification of anapplicant for enrollment on account of em-ployment in the Internal Revenue Service,the Director of Practice will be governedby-the following policies:

(i) Enrollment on account of such em-ployment may be of unlimited scope or maybe limited to permit the presentation ofmatters only of the particular class or onlybefore the particular unit or division of theInternal Revenue Service for which hisformer employment in the Internal RevenueService has qualified the applicant.

(ii) Application for enrollment on accountof employment in the Internal RevenueService must be made within 3 years fromthe date of separation from such employ-m e n t .

(iii) It shall be requisite for enrollmenton account of such employment that theapplicant shall have had a minimum-of 5years continuous employment in the Serviceduring which he shall have been regularlyengaged in applying and interpreting theprovisions of the Internal Revenue Codeand the regulations thereunder relating toincome, estate, gift, employment, or excisetaxes.

(iv) For the purposes of paragraph(b)(3)(iii) of this section an aggregate of 10or more years of employment, at least 3 ofwhich occurred within the 5 years preced-ing the date of application, shall be deemedthe equivalent of 5 years continuous em-ployment.

(c) Natural persons. Enrollment to prac-tice may be granted only to natural per-sons.

[31 FR 10773, Aug. 13,1966, as amended at 35FR 13205, Aug. 19,1970; 42 FR 38352, July28, 1977; 51 FR 2878, Jan. 22, 1986; 59 FR31526, June 20,1994]

§10.5 Application for enrollment.

(a) Form; fee. An applicant for enroll-ment shall file with the Director of Practicean application on Form 23, properly ex-

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ecuted under oath or affirmation. Such ap-plication shall be accompanied by a checkor money order in the amount set forth onForm 23, payable to the Internal RevenueService, which amount shall constitute afee which shall be charged to each applicantfor enrollment. The fee shall be retained bythe United States whether or not the appli-cant is granted enrollment.

(b) Additional information; examination.The Director of Practice, as a condition toconsideration of an application for enroll-ment, may require the applicant to file ad-ditional information and to submit to anywritten or oral examination under oath orotherwise. The Director of Practice shall,upon written request, afford an applicantthe opportunity to be heard with respect tohis application for enrollment.

(c) Temporary recognition. Upon receiptof a properly executed application, the Di-rector of Practice may grant the applicanttemporary recognition to. practice pendinga determination as to whether enrollmentto practice should be granted. Such tempo-rary recognition shall not be granted if theapplication is not regular on its face; if theinformation stated therein, if true, is notsufficient to warrant enrollment to practice;if there is any information before the Di-rector of Practice which indicates that thestatements in the application are untrue; orwhich indicates that the applicant would nototherwise qualify for enrollment. Issuanceof temporary recognition shall not consti-tute enrollment to practice or a finding ofeligibility, for enrollment, and the tempo-rary recognition may be withdraw-n at anytime by the Director of Practice.

(d) Appeal from denial of application. TheDirector of Practice, in denying an applica-tion for enrollment, shall inform the appli-cant as to the reason(s) therefor. The appli-cant may, within 30 days after receipt ofthe notice of denial, file a written appealtherefrom, together with his/her reasons insupport thereof, to the Secretary of theTreasury. A decision on the appeal will be

rendered by the Secretary of the Treasuryas soon as practicable.

(Sec. 501, Pub. L. 82-137, 65 Stat. 290: 31U.S.C. 483a)

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38352, July 28, 1977; 51 FR 2878, Jan. 22,1986]

§10.6 Enrollment.

(a) Roster. The Director of Practice shallmaintain rosters of all individuals:

(1) Who have been granted active enroll-ment to practice before the Internal Rev-enue Service;

(2) Whose enrollment has been placed inan inactive status for failure to meet therequirements for renewal of enrollment;

(3) Whose enrollment has been placed inan inactive retirement status;

(4) Who have been disbarred or sus-pended from practice before the InternalRevenue Service;

(5) Whose offer of consent to resignationfrom enrollment to practice before the In-ternal Revenue Service has been acceptedby the Director of Practice under §10.55 ofthis part; and

(6) Whose application for enrollment hasbeen denied.

(b) Enrollment card. The Director ofPractice will issue an enrollment card toeach individual whose application for en-rollment to practice before the InternalRevenue Service is approved after the ef-fective date. of this regulation. Each suchenrollment card will be valid for the periodstated thereon. Enrollment cards issued in-dividuals before February 1, 1987 shall be-come invalid after March 31, 1987. An in-dividual having an invalid enrollment cardis not eligible to practice before the Inter-nal Revenue Service.

(c) Term of enrollment. Active enroll-ment to practice before the Internal Rev-enue Service is accorded each individualenrolled, so long as renewal of enrollmentis effected as provided in this part.

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(d) Renewal of enrollment. To maintainactive enrollment to practice before the In-ternal Revenue Service, each individual en-rolled is required to have his/her enrollmentrenewed as set forth herein. Failure by anindividual to receive notification from theDirector of Practice of the renewal require-ment will not be justification for circum-vention of such requirement.

(1) All individuals enrolled to practicebefore the Internal Revenue Service beforeNovember 1, 1986 shall apply for renewalof enrollment during the period betweenNovember 1, 1986 and January 31, 1987.Those who receive initial enrollment be-tween November 1, 1986 and January 31,1987 shall apply for renewal of enrollmentby March 1, 1987. The first effective dateof renewal will be April 1, 1987.

(2) Thereafter, applications for renewalwill be required between November 1, 1989

and January 31, 1990, and between No-vember 1 and January 31 of every thirdyear subsequent thereto. Those who receiveinitial enrollment during the renewal appli-cation period shall apply for renewal of en-rollment by March 1 of the renewal year.The effective date of renewed enrollmentwill be April 1, 1990, and April 1 of everythird year subsequent thereto.

(3) The Director of Practice will notifythe individual of renewal of enrollment andwill issue a card evidencing such renewal.

(4) A reasonable nonrefundable fee maybe charged for each application for renewalof enrollment filed with the Director ofPractice.

(5) Forms required for renewal may beobtained from the Director of Practice, In-ternal Revenue Service, Washington, DC20224.

(e) Condition for renewal: ContinuingProfessional Education. In order to qualifyfor renewal of enrollment, an individualenrolled to practice before the InternalRevenue Service must certify, on the appli-cation for renewal form prescribed by theDirector of Practice, that he/she has satis-

fied the following continuing professionaleducation requirements.

(1) For renewed enrollment effective April1, 1987. (i) A minimum of 24 hours ofcontinuing education credit must be com-pleted between January 1, 1986 and Janu-ary 31, 1987.(ii) An individual who receives initialenrollment between January 1, 1986 andJanuary 31, 1987. is exempt from the con-tinuing education requirement for the re-newal of enrollment effective April 1, 1987,but is required to file a timely applicationfor renewal of enrollment.

(2) For renewed enrollment effectiveApril 1, 1990 and every third year thereaf-ter. (i) A minimum of 72 hours of continu-ing education credit must be completed be-tween February 1, 1987 and January 31,1990, and during each three year periodsubsequent thereto. Each such three yearperiod is known as an enrollment cycle:

(ii) A minimum of 16 hours of continu-ing education credit must be completed ineach year of an enrollment cycle.

(iii) An individual who receives initialenrollment during an enrollment cycle mustcomplete two (2) hours of qualifying con-tinuing education credit for each month en-rolled during such enrollment cycle. En-rollment for any part of a month is consid-ered enrollment for the entire month.

(f) Qualifying continuing education— (1)In General. To qualify for continuing edu-cation credit, a course of learning must:

(i) Be a qualifying program designedtoenhance the professional knowledge of anindividual in Federal taxation or Federal taxrelated matters, i.e. programs comprised ofcurrent subject matter in Federal taxationor Federal tax related matters to includeaccounting, financial management, businesscomputer science and taxation; and

(ii) Be conducted by a qualifying spon-sor.

(2) Qualifying programs. (i) Formal pro-grams. Formal programs qualify as con-tinuing education programs if they:

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(A) Require attendance;(B) Require that the program be con-

ducted by a qualified instructor, discussionleader or speaker, i.e. a person whose back-ground, training, education and/or experi-ence is appropriate for instructing or lead-ing a discussion on the subject matter ofthe particular program; and

(C) Require a written outline and/or text-book and certificate of attendance providedby the sponsor, all of which must be re-tained by the attendee for a three year periodfollowing renewal of enrollment.

(ii) Correspondence or individual studyprograms (including taped programs).Qualifying continuing education programsinclude correspondence or individual studyprograms completed on an individual basisby the enrolled individual and conductedby qualifying sponsors. The allowable credithours for such programs will be measuredon a basis comparable to the measurementof a seminar or course for credit in an ac-credited educational institution. Such pro-grams qualify as continuing education pro-grams if they:

(A) Require registration of the partici-pants by the sponsor;

(B) Provide a means for measuringcompletion by the participants (e.g., writ-ten examination); and

(C) Require a written outline and/or text-book and certificate of completion providedby the sponsor which must be retained bythe participant for a three year period fol-lowing renewal of enrollment.

(iii) Serving as an instructor, discussionleader or speaker.

(A) One hour of continuing educationcredit will be awarded for each contact hourcompleted as an instructor, discussion leaderor speaker at an educational program whichmeets the continuing education requirementsof this part.

(B) Two hours of continuing educationcredit will be awarded for actual subjectpreparation time for each contact hourcompleted as an instructor, discussion leader

or speaker at such programs. It will be theresponsibility of the individual claimingsuch credit to maintain records to verifypreparation time.,

(C) The maximum credit forinstruction- and preparation may not exceed 50% ofthe continuing education requirement for anenrollment cycle.

(D) Presentation of the same subjectmatter in an instructor, discussion leader orspeaker capacity more than one time dur-ing an enrollment cycle will not qualify forcontinuing education credit.

(iv) Credit for published articles, books,e t c .

(A) Continuing education credit will beawarded for publications on Federal taxa-tion or Federal tax related matters to in-clude accounting, financial management,business computer science, and taxation,provided the content of such publicationsis current and designed for the enhance-ment of the professional knowledge of anindividual enrolled to practice before theInternal Revenue Service.

(B) The credit allowed will be on thebasis of one hour credit for each hour ofpreparation time for the material. It will bethe responsibility of the person claiming thecredit to maintain records to verify prepar-ation time.

(C) The maximum credit for publicationsmay not exceed 25% of the continuing edu-cation requirement of any enrollment cycle.

(3) Periodic examination. Individualsmay establish eligibility for renewal of en-rollment for any enrollment cycle by:

(i) Achieving a passing score on each partof the Special Enrollment Examination ad-ministered under this part during the threeyear period prior to renewal; and

(ii) Completing a minimum of 16 hoursof qualifying continuing education duringthe last year of an enrollment cycle.

(g) Sponsors. (1) Sponsors are those re-sponsible for presenting programs.

(2) To qualify as a sponsor, a programpresenter must:

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(i) Be an accredited educational institu-tion;

(ii) Be recognized for continuing educa-tion purposes by the licensing body of anyState, possession, territory, Commonwealth,or the District of Columbia responsible forthe issuance of a license in the field of ac-counting or law;

(iii) Be recognized by the Director ofPractice as a professional organization orsociety whose programs include offeringcontinuing professional education opportu-nities in subject matter within the scope ofthis part; or

(iv) File a sponsor agreement with theDirector of practice. to obtain approval ofthe program as a qualified continuing edu-cation program.

(3) A qualifying sponsor must ensure theprogram complies with the following re-q u i r e m e n t s :

tion in support of the request together withany further information deemed necessaryby the Director of Practice.

(5) Sponsor agreements and qualifiedprofessional organization or society spon-sors approved by the. Director of Practiceshall remain in effect for one enrollmentcycle. The names of such sponsors will bepublished on a periodic basis.

(h) Measurement of continuing educationcoursework. (1) All continuing educationprograms will be measured in terms ofcontact hours. The shortest recognized pro-gram will be one contact hour.

(2) A contact hour is 50 minutes of con-tinuous participation in a program. Creditis granted only for a full contact hour, i.e.50 minutes or, multiples thereof. For ex-ample, a program lasting more than 50minutes but less than 100 minutes will countas one contact hour.

(i) Programs must be developed byindividual(s) qualified in the subject mat-ter;

(ii) Program subject matter must be cur-rent;

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(iii) Instructors, discussion leaders, andspeakers must be qualified with respect toprogram content;

(iv) Programs must include some meansfor evaluation of technical content and pre-sentation; (v) Certificates of completion must beprovided those who have successfully com-pleted the program; and

(vi) Records must be maintained by the

(3) Individual segments. at continuousconferences, conventions and the like willbe considered one total program. For ex-ample, two 90-minute segments (180 min-utes) at a continuous conference will countas three contact hours.

(4) For university or college courses, eachsemester hour credit will equal 15 contacthours and a quarter hour credit will equal10 contact hours.

sponsor to verify completion of the pro-gram and attendance by each participant.Such records must be retained for a periodof three years following completion of theprogram. In the case of continuous confer-ences, conventions, and the like., recordsmust be maintained to verify completion ofthe program and attendance by each par-ticipant at each segment of the program.

(i) Recordkeeping requirements. (1) Eachindividual applying for renewal shall retainfor a period of three years following thedate of renewal of enrollment the informa-tion required with regard to qualifying con-tinuing professional education credit hours.Such information shall include:

(i) The name of the sponsoring organiza-tion;

(ii) The location of the program;(iii) The title of the program and descrip-

tion of its content, e.g., course syllabi and/or textbook;

(4) Professional organizations or socie-ties wishing to be considered as qualifiedsponsors shall request such status of theDirector of Practice and furnish informa-

(iv) The dates attended;(v) The credit hours claimed;(vi) The name(s) of the instructor(s), dis-

cussion leader(s), or speaker(s), if appro-priate; and

(vii) The certificate of completion and/orsigned statement of the hours of attendanceobtained from the sponsor.

(2) To receive continuing education creditfor service completed as an instructor, dis-cussion leader, or speaker, the followinginformation must be maintained for a pe-riod of three years following the date ofrenewal of enrollment:

(i) The name of the sponsoring organiza-tion;

(ii) The location of the program;(iii) The title of the program and descrip-

tion of its content;(iv) The dates of the program; and(v) The credit hours claimed.(3) To receive continuing education credit

for publications, the following informationmust be maintained for a period of threeyears following the date of renewal of en-rollment:

(i) The publisher;(ii) The title of the publication;(iii) A copy of the publication; and(iv) The date of publication.(j) Waivers. (1) Waiver from the continu-

ing education requirements for a given pe-riod may be granted by the Director ofPractice for the following reasons:

(i) Health, which prevented compliancewith the continuing education requirements;

(ii) Extended active military duty;(iii) Absence from the United States for

an extended period of time due to employ-ment or other reasons, provided the indi-vidual does not practice before the InternalRevenue Service during such absence; and

(iv) Other compelling reasons, which willbe considered on a case-by-case basis.

(2) A request for waiver must be accompa-nied by appropriate documentation. The in-dividual will be required to furnish any addi-tional documentation or explanation deemednecessary by the Director of Practice. Ex-amples of appropriate documentation couldbe a medical certificate, military orders, etc.

(3) A request for waiver must be filed nolater than the last day of the renewal appli-cation period.

(4) If a request for waiver is not approved,the individual will be so notified by theDirector of Practice and placed on a rosterof inactive enrolled individuals.

(5) If a request for waiver is approved, the individual will be so notified and is-sued a card evidencing such renewal.

(6) Those who are granted waivers arerequired to file timely applications for re-newal of enrollment.

(k) Failure to comply. (1) Compliance byan individual with the requirements of thispart shall be determined by the Director ofPractice. An individual who fails to meetthe requirements of eligibility for renewalof enrollment will be notified by the Direc-tor of Practice at his/her last known ad-dress by first class mail. The notice willstate the basis for the non-compliance andwill provide the individual an opportunityto furnish in writing information relating tothe matter within 60 days of the date of thenotice. Such information will be consideredby the Director of Practice in making a fi-nal determination as to eligibility for re-newal of enrollment.

(2) The Director of Practice may requireany individual, by first class mail to his/herlast known mailing address, to providecopies of any records required to be main-tained under this part. The Director ofPractice may disallow any continuing pro-fessional education hours claimed if the in-dividual concerned fails to comply withsuch requirement.

(3) An individual who has not filed atimely application for renewal of enroll-ment, who has not made a timely responseto the notice of non-compliance with therenewal requirements, or who has not sat-isfied the requirements of eligibility for re-newal will be placed on a roster of inactiveenrolled individuals for a period of threeyears. During this time, the individual willbe ineligible to practice before the InternalRevenue Service.

(4) During inactive enrollment status orat any other time an individual is ineligibleto practice before the Internal Revenue

11

Service, such individual shall not in anymanner, directly or indirectly, indicate heor she is enrolled to practice before the In-ternal Revenue Service, or use the term“enrolled agent,” the designation “E. A.,”or other form of reference to eligibility topractice before the Internal RevenueService.

(5) An individual placed in an inactivestatus may satisfy the requirements for re-newal of enrollment during his/her periodof inactive enrollment. If such satisfactionincludes completing the continuing educa-tion requirement, a minimum of 16 hoursof qualifying continuing education hoursmust be completed in the 12 month periodpreceding the date on which the renewalapplication is filed. Continuing educationcredit under this subsection may not be usedto satisfy the requirements of the enroll-ment cycle in which the individual has beenplaced back on the active roster.

(6) An individual placed in an inactivestatus must file an application for renewalof enrollment and satisfy the requirementsfor renewal as set forth in this section withinthree years of being placed in an inactivestatus. The name of such individual other-wise will be removed from the inactive en-rollment roster and his/her enrollment willterminate. Eligibility for enrollment mustthen be reestablished by the individual asprovided in this part.

(7) Inactive enrollment status is notavailable to an individual who is the sub-ject of a discipline matter in the Office ofDirector of Practice.

(1) Inactive retirement status. An indi-vidual who no longer practices before theInternal Revenue Service may request be-ing placed in an inactive status at any timeand such individual will be placed in aninactive retirement status. The individualwill be ineligible to practice before theInternal Revenue Service. Such individualmust file a timely application for renewalof enrollment at each applicable renewalor enrollment as provided in this part. Anindividual who is placed in an inactive re-

tirement status may be reinstated to an ac-tive enrollment status upon filing an ap-plication for renewal of enrollment andproviding evidence of the completion ofthe required continuing professional edu- cation hours for the enrollment cycle. In-active retirement status is not available toan individual who is the subject to a dis-cipline matter in the Office of Director ofPractice.

(m) Renewal while under suspension ordisbarment. An individual who is ineligibleto practice before the Internal RevenueService by virtue of disciplinary action isrequired to meet the requirements for re-newal of enrollment during the period ofineligibility.

(n) Verification. The Director of Practicemay review the continuing educationrecords of an enrolled individual and/orqualified sponsor in a manner deemed ap-propriate to determine compliance with therequirements and standards for renewal ofenrollment as provided in this part.

(Approved by the Office of Management andBudget under control number 15450946)

[51 FR 2878, Jan. 22, 1986]

§10.7 Representing oneself; participat-ing in rulemaking; limited practice;special appearances; and returnpreparation.

(a) Representing oneself. Individuals mayappear on their own behalf before the In-ternal Revenue Service provided theypresent satisfactory identification.

(b) Participating in rulemaking, Indi-viduals may participate in rulemaking asprovided by the Administrative ProcedureAct. See 5 U.S.C. 553.

(c) Limited practice — (1) In general.Subject to the limitations in paragraph (c)(2)of this section, an individual who is not apractitioner may represent a taxpayer be-fore the Internal Revenue Service in thecircumstances described in this paragraph(c)(l), even if the taxpayer is not present,provided the individual presents satisfac-

12

tory identification and proof of his or herauthority to represent the taxpayer. The cir-cumstances described in this paragraph(c)( 1) are as follows:

(i) An individual may represent a mem- ber of his or her immediate family.

(ii) A regular full-time employee of anindividual employer may represent the em-ployer.

(iii) A general partner or a regular full-time employee of a partnership may repre-sent the partnership.

(iv) A bona fide officer or a regular full-time employee of a corporation (includinga parent, subsidiary, or other affiliated cor-poration), association, or organized. groupmay represent the corporation, association,or organized group.

(v) A trustee, receiver, guardian, personalrepresentative, administrator, executor, orregular full-time employee of a trust, re-ceivership, guardianship, or estate may rep-resent the trust, receivership, guardianship,or estate.

(vi) An officer or a regular employee ofa governmental unit, agency, or authoritymay represent the governmental unit,agency, or authority in the course of his orher official duties.

(vii) An individual may represent any in-dividual or entity before personnel of theInternal Revenue Service who are outsideof the United States.

(viii) An individual who prepares andsigns a taxpayer’s return as the preparer, orwho prepares a return but is not required(by the instructions to the return or regula-tions) to sign the return, may represent thetaxpayer before officers and employees ofthe Examination Division of the InternalRevenue Service with respect to the tax li-ability of the taxpayer for the taxable yearor period covered by that return.

(2) Limitations.(i) An individual who is under suspen-

sion or disbarment from practice before theInternal Revenue Service may not engagein limited practice before the Service under§10.7(c)( 1).

(ii) The Director, after notice and oppor-tunity for a conference, may deny eligibil-ity to engage in limited practice before theInternal Revenue Service-under §10.7(c)( 1)to any individual who has engaged in con- duct that would justify suspending or dis-barring a practitioner from practice beforethe Service.

(iii) An individual who represents a tax-payer under the authority of §10.7(c)( l)(viii)is subject to such rules of general applica-bility regarding standards of conduct, theextent of his or her authority, and othermatters as the Director prescribes.

(d) Special appearances. The Director,subject to such conditions as he or shedeems appropriate, may authorize an indi-vidual who is not otherwise eligible topractice before the Service to represent an-other person in a particular matter.

(e) Preparing tax returns and furnish-ing information. Any individual may pre-pare a tax return, appear as a witness forthe taxpayer before the Internal RevenueService, or furnish information at the re-quest of the Service or any of its officersor employees.

[59 FR 31526, June 20, 1994]

§10.8 Customhouse brokers.

Nothing contained in the regulations inthis part shall be deemed to affect or limitthe right of a customhouse broker, licensedas such by the Commissioner of Customsin accordance with the regulationsprescribed therefor, in any customs districtin which he is so licensed, at the office ofthe District Director of Internal Revenueor before the National Office of theInternal Revenue Service, to act as arepresentative in respect to any mattersrelating specifically to the importation orexportation of merchandise under thecustoms or internal revenue laws, for anyperson for whom he has acted as acustomhouse broker.

13

Subpart B — Duties and RestrictionsRelating to Practice Before theInternal Revenue Service

§10.20 Information to be furnished.

(a) To the Internal Revenue Service. Noattorney, certified public accountant,enrolled agent, or enrolled actuary shallneglect or refuse promptly to submit recordsor information in any matter before theInternal Revenue Service, upon proper andlawful request by a duly authorized officeror employee of the Internal RevenueService, or shall interfere, or attempt tointerfere, with any proper and lawful effortby the Internal Revenue Service or itsofficers or employees to obtain any suchrecord or information, unless he believes ingood faith and on reasonable grounds thatsuch record or information is privileged orthat the request for, or effort to obtain, suchrecord or information is of doubtful legality,

has not complied with the revenue laws ofthe United States or has made an error inor omission from any return, document, af-fidavit, or other paper. which the client isrequired by the revenue laws of the United States to execute, shall advise the clientpromptly of the fact of such noncompli-ance, error, or omission.

[42 FR 38352, July 28, 1977, as amended at 57FR 41095, Sept. 9, 1992]

§10.22 Diligence as to accuracy.

(b) To the Director of Practice. It shall bethe duty of an attorney or certified publicaccountant, who practices before theInternal Revenue Service, or enrolled agent,when requested by the Director of Practice,to provide the Director with any informationhe may, have concerning violation of theregulations in this part by any person, andto testify thereto in any proceeding institutedunder this part for the disbarment orsuspension of an attorney, certified publicaccountant, enrolled agent, or enrolledactuary, unless he believes in good faithand on reasonable grounds that suchinformation is privileged or that the requesttherefor is of doubtful legality.

Each attorney, certified public accoun-tant, enrolled agent, or enrolled actuary shallexercise due diligence:

(a) In preparing or assisting in the prepa-ration of, approving, and filing returns,documents, affidavits, and other papers re-lating to Internal Revenue Service matters;

(b) In determining the correctness of oralor written representations made by him tothe Department of the Treasury; and

(c) In determining the correctness of oralor written representations made by him toclients with reference to any matter admin-istered by the Internal Revenue Service.

[35 FR 13205, Aug. 19, 1970, as amended at 42FR 38352, July 28,1977; 57 FR 41095, Sept. 9,1992]

§10.23 Prompt disposition of pendingmatters.

No attorney, certified public accountant,enrolled agent, or enrolled actuary shallunreasonably delay the prompt dispositionof any matter before the Internal RevenueService.

[31 FR 10773, Aug. 13, 1966, as amended at 57FR 41095, Sept. 9, 1992]

§10.21 Knowledge of client’s omission.

Each attorney, certified public accoun-

§10.24 Assistance from disbarred orsuspended persons and former In-ternal Revenue Service employees.

tant, enrolled agent, or enrolled actuary who, No attorney, certified public accountant,having been retained by a client with re- enrolled agent, or enrolled actuary shall, inspect to a matter administered by the Inter- practice before the Internal Revenue Service,nal Revenue Service, knows that the client knowingly and directly or indirectly:

14

(a) Employ or accept assistance from anyperson who is under disbarment or suspen-sion from practice before the Internal Rev-enue Service.

(b) Accept employment as associate, cor-respondent, or subagent from, or share feeswith, any such person.

(c) Accept assistance from any formergovernment employee where the provisionsof §10.26 of these regulations or any Fed-eral law would be violated.

[44 FR 4943, Jan. 24, 1979, as amended at 57FR 41095, Sept. 9; 1992]

§10.25 Practice by partners of Govern-ment employees.

No partner of an officer or employee ofthe executive branch of the US. Govern-ment, of any independent agency of theUnited States,, or of the District of Colum-bia, shall represent anyone in any matteradministered by the Internal RevenueService in which such officer or employeeof the Government participates or has par-ticipated personally and substantially as aGovernment employee or which is the sub-ject of his official responsibility.

[31 FR 10773; Aug. 13, 1966, as amended at 35FR 13205, Aug. 19,1970]

§10.26 Practice by former Governmentemployees, their partners and theirassociates.

(a) Definitions. For purposes of §10.26:(1) Assist means to act in such a way as toadvise, furnish information to, or otherwiseaid another person, directly of indirectly.

(2) Government employee is an officer oremployee of the United States or any agencyof the United States,, including a specialgovernment employee as defined in 18U.S.C. 202(a), or of the District of Colum-bia, or of any State, or a member of Con-gress or of any State legislature.

(8) Transaction means any decision, de-termination, finding, letter ruling, technicaladvice, contract or approval or disapprovalthereof, relating to a particular factual situ-ation or situations involving a specific partyor parties whose rights, privileges, or li-abilities under laws or regulations adminis-tered by the Internal Revenue Service, orother legal rights, are determined or imme-diately affected therein and to which theUnited States is a party or in which it has adirect and substantial interest, whether ornot the same taxable periods are involved.Transaction does not include rule as de-fined in paragraph (a)(7) of this section.

(3) Member of a firm is a sole practitioneror an employee or associate thereof, or apartner, stockholder, associate, affiliate or

(b) General rules. (1) No former Gov-ernment employee shall, subsequent to hisGovernment employment, represent anyone

15

employee of a partnership, joint venture,corporation, professional association orother affiliation of two or more practi-tioners who represent non-Governmentparties.

(4) Practitioner includes any individualdescribed in §10.3(e).

(5) Official responsibility means the di-rect administrative or operating authority,whether intermediate or final, and eitherexercisable’ alone or with others, and eitherpersonally or through subordinates, to ap-prove, disapprove, or otherwise direct Gov-ernment action, with or without knowledgeof the action.

(6) Participate or participation meanssubstantial involvement as a Governmentemployee by making decisions, or prepar-ing or reviewing documents with or with-out the right to exercise a judgment of ap-proval or disapproval, or participating inconferences or investigations, or renderingadvice of a substantial nature.

(7) Rule includes Treasury Regulations,whether issued or under preparation for is-suance as Notices of Proposed Rule Mak-ing or as Treasury Decisions, and revenuerulings and revenue procedures publishedin the Internal Revenue bulletin. Rule shallnot. include a transaction as defined inparagraph (a)(9) of this section.

in any matter administered by the InternalRevenue Service if the representation wouldviolate 18 U.S.C. 207 (a) or (b) or any otherlaws of the United States.

(2) No former Government employee whoparticipated in a transaction shall, subse-quent to his Government employment, rep-resent or knowingly assist, in that transac-tion, any person who is or was a specificparty to that transaction.

(3) No former Government employee whowithin a period of one year prior to the ter-mination of his Government employment hadofficial responsibility for a transaction shall,within one year after his Government em-ployment is ended, represent or knowinglyassist in that transaction any person who isor was a specific party to that transaction.

(4) No former Government employeeshall, within one year after his Governmentemployment, is ended, appear before anyemployee of the Treasury Department inconnection with the publication, withdrawal,amendment, modification, or interpretationof a rule in the development of which theformer Government employee participatedor for which, within a period of one yearprior to the termination of his Governmentemployment, he had official responsibility.However, this subparagraph does not pre-clude such former employee for appearingon his own behalf or from representing ataxpayer before the Internal RevenueService in connection with a transaction in-volving the application or interpretation ofsuch a rule with respect to that transaction:Provided, That such former employee shallnot utilize or disclose any confidential in-formation acquired by the former employeein the development of the rule, and shall

not contend that the rule is invalid or ille-gal. In. addition, this subparagraph does notpreclude such former employee from oth-erwise advising or acting for any person.

(c) Firm representation. ( 1) No memberof a firm of which a former Governmentemployee is a membermay represent orknowingly assist a person who was or is a

specific party in any. transaction. with re-spect to which the restrictions of paragraph(b)(l) (other than 18 U.S.C. 207 (b)) or(b)(2) of this section apply to the formerGovernment employee, in that transaction;unless:

(i) No member of the firm who hadknowledge of the participation by the Gov-ernment employee in the transaction initi-ated discussions with the Government em-ployee concerning his becoming a memberof the firm until. his Government employ-ment is ended or six months after the ter-mination of his participation in the transac-tion, whichever is earlier;

(ii) The former Government employee didnot initiate any discussions concerning be-coming a member of the firm while partici-pating in the transaction or, if such discus-sions were initiated, they conformed withthe requirements of 18 U.S.C. 208(b); and

(iii) The firm isolates the former. Gov-ernment employee in such a way that hedoes not assist in the representation.

(2) No member of a firm of which aformer Government employee is a membermay represent or knowingly assist a personwho was or is a specific party in any trans-action with respect to which the restrictionsof paragraph (b)(3) of this section apply tothe former employee, in that transaction,unless the firm isolates the former Govern-ment employee in such a way that he doesnot assist in the representation.

(3) When isolation of the former Gov-ernment employee is required under para-graphs (c)(l) or (c)(2) of this section, astatement affirming the fact of such isola-tion shall be executed under oath by theformer Government employee and by amember of the firm acting on behalf of thefirm, and shall be filed with the Director ofPractice and in such other place and in themanner prescribed by regulation. Thisstatement shall clearly identify the firm, theformer Government employee, and thetransaction or transactions requiring suchisolation.

16

(d) Pending representation. Practice byformer Government employees, their part-ners and associates with respect to repre-sentation in Specific matters where actualrepresentation commenced before publica-tion of this regulation is governed by theregulations set forth in the June 1972amendments to the regulations of this part(published at 37 FR 11676): Provided, Thatthe burden of showing that representationcommenced before publication is with theformer Government employees, their part-ners and. associates:

[42 FR 38352, July 28, 1977, as amended at 57FR 41095, Sept. 9,1992; 59 FR 31527, June 20,1994]

§10.27 Notaries.

No attorney, certified public accountant,enrolled agent, or enrolled actuary as no-tary public shall with respect to any matteradministered by the Internal RevenueService, take acknowledgments, administeroaths, certify papers, or perform any officialact in connection with matters in which heis employed as counsel, attorney, or agent,or in which he may be in any way inter-ested before the Internal Revenue Service(26 Op. Atty. Gen. 236).

[31 FR 10773, Aug. 13, 1966, as amended at 57FR 41095, Sept. 9, 1992]

§10.28 Fees.

(a) Generally. A practitioner may notcharge ah unconscionable fee for represent-ing a client in a matter before the InternalRevenue Service.( b ) C o n t i n g e n t f e e s f o r r e t u r n

preparation. A practitioner may not chargea contingent fee for preparing’ an originalreturn. A practitioner may charge a con-tingent fee for preparing an amended returnor a claim for refund (other than a claimfor refund made on an original return) ifthe practitioner reasonably anticipates at the

time the fee arrangement is entered into thatthe amended return or claim will receivesubstantive review by the Service. Acontingent fee includes a fee that is basedon a percentage of the refund on a return or a percentage of the taxes saved,or that otherwise depends on the specificresult attained.

[59 FR 31527, June 20, 1994]

§10.29 Conflicting interests.

No attorney, certified public accountant,enrolled agent, or enrolled actuary shallrepresent conflicting interests in his prac-tice before the Internal Revenue Service,except by express consent of all directlyinterested parties after full disclosure hasbeen made.

[31 FR 10773, Aug. 13, 1966, as amended at 57FR 41095, Sept. 9, 1992]

§10.30 Solicitation.

(a) Advertising and solicitation restric-tions. (1) No attorney, certified public ac-countant, enrolled agent, enrolled actuary,or other individual eligible to practice be-fore the Internal Revenue Service shall, withrespect to any Internal Revenue Servicematter, in any way use or participate in theuse of any form of public communicationcontaining (i) A false, fraudulent, undulyinfluencing, coercive, or unfair statementor claim; or (ii) a misleading or deceptivestatement or claim.

Enrolled agents, in describing their pro-fessional designation, may not utilize theterm of art “certified” or indicate an em-ployer/employee relationship with the In-ternal Revenue Service. Examples ofacceptable descriptions are “enrolled torepresent taxpayers before the InternalRevenue Service,” “enrolled to practice be-fore the Internal Revenue Service,” and“admitted to practice before the Internal

17

Revenue Service.” Enrolled agents and en-rolled actuaries may abbreviate such desig-nation to either EA or E.A.

(2) No attorney, certified public accoun-tant, enrolledagent, enrolled actuary, or otherindividual eligible to practice before the In-ternal Revenue Service shall make, directlyor indirectly, an uninvited solicitation of em-ployment in matters related to the InternalRevenue Service. Solicitation includes, butis not limited to, in-person contacts and tele-phone communications. This restriction doesnot apply to (i) Seeking new business froman existing or former client in a related matter;(ii) communications with family members;(iii) making the availability of professionalservices known to other practitioners, so longas the person or firm contacted is not a po-tential client; (iv) solicitation by mailings; or(v) non-coercive in-person solicitation bythose eligible to practice before the InternalRevenue Service while acting as an em-ployee, member, or officer of an exempt or-ganization‘ listed in sections 501(c)(3) or (4)of the Internal Revenue Code of 1954 (26U.S.C.).

Any targeted direct mail solicitation, i.e.a mailing to those whose unique circum-stances are the basis for the solicitation,distributed by or on behalf of an attorney,certified public accountant, enrolled agent,enrolled actuary, or other individual eligibleto practice, before the Internal RevenueService shall be clearly marked as such incapital letters on the envelope and at thetop of the first page of such mailing. Inaddition, all such solicitations must clearlyidentify the source of the information usedin choosing the recipient.

(b) Fee information. (1) Attorneys, certi-fied public accountants, enrolled agents, orenrolled actuaries and other individuals eli-gible to practice before the Internal Rev-enue Service may disseminate the followingfee information:

(i) Fixed fees for specific routine services.(ii) Hourly rates.(iii) Range of fees for particular services.

(iv) Fee charged for an initial consulta-tion;Any statement of fee information concern-ing matters in which costs may be incurred

shall include a statement disclosing whetherclients will be responsible for such costs.

(2) Attorneys, certified public accountants,enrolled agents, or enrolled actuaries andother individuals eligible to practice beforethe Internal Revenue Service may also pub-lish the availability of a written schedule off e e s .

(3) Attorneys, certified public accountants,enrolled agents, or enrolled actuaries andother individuals eligible to practice beforethe Internal Revenue Service shall be boundto charge the hourly rate, the fixed fee forspecific routine services, the range of feesfor particular services, or the fee for an ini-tial consultation published for a reasonableperiod of time, but no less than thirty daysfrom the last publication of such hourly rateor fees.

(c) Communications. Communication, in-cluding fee information, may include profes-sional lists, telephone directories, print me-dia, mailings, radio and television, and anyother method: Provided, that the methodchosen does not cause the communication tobecome untruthful, deceptive, unduly influ-encing or otherwise in violation of theseregulations. It shall be construed as a viola-tion of these regulations for a practitioner topersist in attempting to contact a prospectiveclient, if such client has made known to thepractitioner a desire not to be solicited. Inthe case of radio and television broadcasting,the broadcast shall be prerecorded and thepractitioner shall retain a recording of theactual audio transmission. In the case of di-rect mail communications, the practitionershall retain a copy of the actual mailing, alongwith a list or other description of persons towhom the communication was mailed orotherwise distributed. Such copy shall be re-tained by the practitioner for a period of atleast 36 months from the date of the lasttransmission or use.

18

(d) Improper associations. An attorney, fects of a tax shelter investment shall com-certified public-accountant, enrolled agent, ply with each of the following requirements:or enrolled actuary may, in matters related to (1) Factual matters. (i) The practitionerthe Internal Revenue Service, employ or ac- must make inquiry, as to all relevant facts,cept employment or assistance as an associ- be satisfied that the material facts are accu-ate, correspondent, or subagent from, or share rately and completely described in the of-fees, with; any- person or entity who, to the fering materials, and assure that any repre-knowledge of the practitioner, obtains cli- sentations as to future activities are clearlyents or otherwise practices in a manner for- identified, reasonable and complete.bidden under this section: Provided, That a (ii) A practitioner may not accept as truepractitioner does, not, directly or indirectly, asserted facts pertaining to the tax shelteract or hold himself out as an Internal Revenue which he/she should not, based on his/herService practitioner in connection, with that background and knowledge, reasonably be-relationship. Nothing herein shall prohibit an lieve to be true. However, a practitionerattorney, certified public accountant, or en- need not conduct an audit or independentrolled agent from practice before the Internal verification of the asserted facts, or assumeRevenue Service in a capacity other than that that a client’s statement of the facts cannotdescribed above. be relied upon, unless he/she has reason to

believe that any relevant facts asserted to[44 FR 4943, Jan. 24, 1979, as amended at 57 him/her are untrue.FR 41095, Sept. 9, 1992]. (iii) If the fair market value of property

or the expected financial performance of§10.31 Negotiation of taxpayer refund an investment is relevant to the tax shelter,

checks , a practitioner may not accept an appraisal

No attorney, certified public accountant,or financial projection as support for thematters claimed therein unless:

enrolled agent, or enrolled actuary who is (A) The appraisal or financial projectionan income tax return preparer shall endorse makes sense on its face;or otherwise negotiate any check made in (B) The practitioner reasonably believesrespect of income taxes which. is issued to that the person making the appraisal or fi-a taxpayer other than the attorney, certified nancial projection is competent to do sopublic accountant or enrolled agent. and is not of dubious reputation; and[42 FR 38353, July 28, 1977, as amended at 57 (C) The appraisal is based on the defini-FR 41095, Sept. 9, 1992] tion of fair market value prescribed under

the relevant Federal tax provisions.§10.32 Practice of law. (iv) If the fair market value of purchased

Nothing in the regulations in this partproperty is to be established by referenceto its stated purchase price, the practitioner

shall be construed as authorizing persons must examine the terms and conditions uponnot members of the bar to practice law. which the property was (or is to be) pur-

[31 FR 10773, Aug. 13, 1966. Redesignated at chased to determine whether the stated pur-

42 FR 38353, July 28, 1977] chase price reasonably may be consideredto be its fair market value.

§10.33 Tax shelter opinions. (2) Relate law to facts. The practitionermust relate the law to the actual facts and,

(a) Tax shelter opinions and offering ma- when addressing issues based on future ac-terials. A practitioner who provides a tax tivities, clearly identify what facts are as-shelter opinion analyzing the Federal tax ef- sumed.

19

(3) Identication of material issues. Thepractitioner must ascertain that all materialFederal tax issues have been considered,and that a11 of those issues which involvethe reasonable possibility of a challenge bythe Internal Revenue Service have beenfully and fairly addressed in the offeringm a t e r i a l s ,

(4) Opinion on each material issue.Where possible, the practitioner must pro-vide an opinion whether it is more likelythan not that an investor will prevail on themerits of each material tax issue presentedby the offering which involves a reason-able possibility of a challenge by the Inter-nal Revenue Service. Where such an opin-ion carnnot be given with respect to anymaterial tax issue, the opinion should fullydescribe the reasons for the practitioner’sinability to opine as to the likely outcome.

(5) Overall evaluation. (i) Where pos-sible, the practitioner must provide anoverall evaluation whether the material taxbenefits in the aggregate more likely thannot will be realized. Where such an overallevaluation cannot be given, the opinionshould fully describe the reasons for thepractitioner’s inability to make an overallevaluation. Opinions concluding that anoverall evaluation cannot be provided willbe given special scrutiny to determine ifthe stated reasons are adequate.

(ii) A favorable overall evaluation maynot be rendered unless it is based on a con-clusion that substantially more than half ofthe material tax benefits, in terms of theirfinancial impact on a typical investor, morelikely than not will be realized if challengedby the Internal Revenue Service.

(iii) If it is not possible to give an overallevaluation, or if the overall evaluation isthat the material tax benefits in the aggre-gate will not be realized, the fact that thepractitioner’s opinion does not constitute afavorable overall evaluation, or that it is anunfavorable overall evaluation, must beclearly and prominently disclosed in the of-fering materials.

(iv) The following examples illustrate theprinciples of this paragraph:

Example (1). A limited partnership ac-quires real property in a sale-lease backtransaction. The principal tax benefits of-.fered to investing partners consist of depre-ciation and interest deductions. Lesser taxbenefits are offered to investors by reasonof several deductions under Internal Rev-enue Code section 162 (ordinary and nec-essary business expenses). If a practitionerconcludes that it is more likely than notthat the partnership will not be treated asthe owner of the property for tax purposes(which is required to allow the interest anddepreciation deductions), then he/she maynot opine to the effect that it is more likelythan not that the material tax benefits in theaggregate will be realized, regardless ofwhether favorable opinions may be given with respect to the deductions claimed un-der Code section 162.

Example (2). A corporation electing un-der subchapter S of the Internal RevenueCode is formed to engage in research and development activities. The offering mate-rials forecast that deductions for researchand experimental expenditures equal to 75%of the total investment in the corporationwill be available during the first two yearsof the corporation’s operations, other ex-penses will account for another 15% of thetotal investment, and that little or no grossincome will be received by the corporationduring this period. The practitioner con-cludes that it is more likely than not thatdeductions for research and experimentalexpenditures will be allowable. The practi-tioner may render an opinion to the effectthat based on this conclusion, it is morelikely than not that the material tax ben-efits in the aggregate will be realized, re-gardless of whether he/she can opine that itis more likely than not that any of the othertax benefits will be achieved.

Example (3). An investment program isestablished to acquire offsetting positionsin commodities contracts. The objective of

the program is to close the loss positions inyear one and to close the profit positions inyear two, The principal tax benefit offeredby the program is a loss in the first year,coupled with the deferral of offsetting gainuntil the following year. The practitionerconcludes that the losses will not be de-

ductible in year one. Accordingly, he/shemay not render an opinion to the effect thatit is more likely than not that the materialtax benefits in the aggregate will be real-ized, regardless of the fact that he/she is ofthe opinion that losses not allowable in yearone will be allowable in year two, becausethe principal tax benefit offered is a one-year deferral of income.

Example (4). A limited partnership isformed to acquire, own and operate resi-dential rental real estate. The offering ma-terial forecasts gross income of $2,000,000and total deductions of $lO,OOO,OOO, result-ing in net losses of $8,000,000 over thefirst six taxable years. Of the total deduc-tions, depreciation and interest are projectedto be $7,000,000, and other deductions$3,000,000. The practitioner concludes thatit is more likely than not that all of thedepreciation and interest deductions will beallowable, and that it is more likely thannot that the other deductions will not beallowed. The practitioner may render anopinion to the effect that it is more likelythan not that the material tax benefits in theaggregate will be realized.

(6) Description of opinion. The practitio-ner must assure that the offering materialscorrectly and fairly represent the nature andextent of the tax shelter opinion.

(b) Reliance on other opinions — (1) Ingeneral. A practitioner may provide anopinion on less than all of the material taxissues only if:

(i) At least one other competent practi-tioner provides an opinion on the likelyoutcome with respect to all of the othermaterial tax issues which involve a rea-sonable possibility of challenge by the In-ternal Revenue Service, and an overall

evaluation whether the material tax ben-efits in the aggregate more likely than notwill be realized, which is disseminated inthe same manner as the practitioner’s opin-ion; and

(ii) The practitioner, upon reviewing suchother opinions and any offering materials,has no reason to believe that the standardsof paragraph (a) of this section have notbeen complied with.

Notwithstanding the foregoing, a practi-tioner who has not been retained to providean overall evaluation whether the materialtax benefits in the aggregate more likelythan not will be realized may issue an opin-ion on less than all the material tax issuesonly if he/she has no reason to believe,based on his/her knowledge and experience,that the overall evaluation given by thepractitioner who furnishes the overallevaluation is incorrect on its face.

(2) Forecasts and projections. A practition-er who is associated with forecasts or projec-tions relating to or based upon the tax conse-quences of the tax shelter offering that areincluded in the offering materials, or are dis-seminated to potential investors other thanthe practitioner’s clients, may rely on theopinion of another practitioner as to any orall material tax issues, provided that thepractitioner who desires to rely on the otheropinion has no reason to believe that thestandards of paragraph (a) of this section havenot been complied with by the practitionerrendering such other opinion, and the re-quirements of paragraph (b)( 1) of this sec-tion are satisfied. The practitioner’s reportshall disclose any material tax issue not cov-ered by, or incorrectly opined upon, by theother opinion, and shall set forth his/heropinion with respect to each such issue in amanner that satisfies the requirements ofparagraph (a) of this section.

(c) Definitions. For purposes of this sec-tion:

(1) Practitioner includes any individualdescribed in §10.3(e).

21

(2) A tax shelter, as the term is used inthis section, is an investment which has asa significant and intended feature for Fed-eral income or excise tax purposes eitherof the following attributes:

(i) Deductions in excess of income fromthe investment being available in any yearto reduce income from other sources in thatyear, or

(ii) Credits in excess of the tax attribut-able to the income from the investment be-ing available in any year to offset taxes onincome from other sources in that year.Excluded from the term are municipalbonds; annuities; family trusts (but not in-cluding schemes or arrangements that aremarketed to the public other than in a di-rect practitioner-client relationship); quali-fied retirement plans; individual retirementaccounts; stock option plans; securities is-sued in a corporate reorganization; mineraldevelopment ventures, if the only tax ben-efit would be percentage depletion; and realestate where it is anticipated that in no yearis it likely that deductions will exceed thetax attributable to the income from the in-vestment in that year. Whether an invest-ment is intended to have tax shelter featuresdepends on the objective facts and circum-stances of each case. Significant weight willbe given to the features described in theoffering materials to determine whether theinvestment is a tax shelter.

(3) A tax shelter opinion, as the term isused in this section, is advice by a practi-tioner concerning the Federal tax aspectsof a tax shelter either appearing or referredto in the offering materials, or used or re-ferred to in connection with sales promotionefforts, and directed to persons other thanthe client who engaged the practitioner, togive the advice. The term includes the taxaspects or tax risks portion of the offeringmaterials prepared by or at the direction ofa practitioner, whether or not a separateopinion letter is issued or whether or notthe practitioner’s name is referred to in theoffering materials or in connection with thesales promotion efforts. In addition, a fi-

nancial forecast or projection prepared by apractitioner is a tax shelter opinion if it ispredicated on assumptions regarding Fed-eral tax aspects of the investment, and itmeets the other requirements of the firstsentence of this paragraph. The term doesnot, however, include rendering advicesolely to the offeror or reviewing parts ofthe offering materials, so long as neitherthe name of the practitioner, nor the factthat a practitioner has rendered advice con-cerning the tax aspects, is referred to in theoffering materials or in connection with thesales promotion efforts.

(4) A material tax issue as the term isused in this section is

(i) Any Federal income or excise tax issuerelating to a tax shelter that would make asignificant contribution toward shelteringfrom Federal taxes income from other sourcesby providing deductions in excess of the in-come from the tax shelter investment in anyyear, or tax credits available to offset taxliabilities in excess of the tax attributable tothe tax shelter investment in any year;

(ii) Any other Federal income or excisetax issue relating to a tax shelter that couldhave a significant impact (either beneficialor adverse) on a tax shelter investor underany reasonably foreseeable circumstances(e.g., depreciation or investment tax creditrecapture, availability of long-term capitalgain treatment, or realization of taxable in-come in excess of cash flow, upon sale orother disposition of the tax shelter invest-ment); and

(iii) The potential applicability of penal-ties, additions to tax, or interest charges thatreasonably could be asserted against a taxshelter investor by the Internal RevenueService with respect to the tax shelter. Thedetermination of what is material is to bemade in good faith by the practitioner, basedon information available at the time the of-fering materials are circulated.

(d) For purposes of advising the Directorof Practice whether an individual may haveviolated §10.33, the Director of Practice isauthorized to establish an Advisory Com-

22

mittee, composed of at least five individu-als authorized to practice before the Inter-nal Revenue Service. Under procedures es-tablished by the Director of Practice, suchAdvisory Committee shall, at the requestof the Director of Practice, review and makerecommendations with regard to allegedviolations of §10.33.

(Sec. 3, 23 Stat. 258, secs. 2-12, 60 Stat. 237 etseq.; 5 U.S.C. 301; 31 U.S.C. 330; 31 U.S.C.321 (Reorg. Plan No. 26 of 1950, 15 FR 4935,64 Stat. 1280,3 CFR, 1949-53 Comp., p. 1017))

[49 FR 6722, Feb. 23, 1984; 49 FR 7116, Feb.27,1984; 59 FR 31527,31528, June 20,1994]

§10.34 Standards for advising with re-spect to tax return positions and forpreparing or signing returns.

(a) Standards of conduct — (1) Realisticpossibility standard. A practitioner may notsign a return as a preparer if the practi-tioner determines that the return contains aposition that does not have a realistic pos-sibility of being sustained on its merits (the

realistic possibility standard) unless the po-sition is not frivolous, and is adequatelydisclosed to the Service. A practitioner maynot advise a client to take a position on areturn, or prepare the portion of a return onwhich a position is taken, unless —

(i) The practitioner determines that theposition satisfies the realistic possibilitystandard; or

(ii) The position is not frivolous and thepractitioner advises the client of any op-portunity to avoid the accuracy-relatedpenalty in section 6662 of the Internal Rev-enue Code of 1986 by adequately disclosingthe position and of the requirements for ad-equate disclosure.

(2) Advising clients on potential penal-ties. A practitioner advising a client to take

practitioner also must inform the client‘ ofany opportunity to avoid any such penaltyby disclosure, if relevant, and of the re-quirements for adequate disclosure. Thisparagraph (a)(2) applies even if the practi-tioner is not subject to a penalty with re-spect to the position.

(3) Relying on information furnished byclients. A practitioner advising a client totake a position on-a return, or preparing orsigning a return as a preparer, generally mayrely in good faith without verification uponinformation furnished by the client. How-ever, the practitioner may not ignore theimplications of information furnished to, oractually known by, the practitioner, andmust make reasonable inquiries if the in-formation as furnished appears to be incor-rect, inconsistent, or incomplete.

(4) Definitions. For purposes of this sec-tion:

(i) Realistic possibility. A position isconsidered to have a realistic possibility ofbeing sustained on its merits if a reason-able and well-informed analysis by a personknowledgeable in the tax law would leadsuch a person to conclude that the positionhas approximately a one in three, or greater,likelihood of being sustained on its merits.The authorities described in 26 CFR 1.6662- 4(d)(3)(iii), or any successor provision, ofthe substantial understatement penaltyregulations may be taken into account forpurposes of this analysis. The possibilitythat a position will not be challenged bythe Service (e.g., because the taxpayer’s re-turn may not be audited or because the is-sue may not be raised on audit) may not betaken into account.

(ii) Frivolous. A position is frivolous if itis patently improper.

a position on a return, or preparing or sign-ing a return as a preparer, must inform theclient of the penalties reasonably likely toapply to the client with respect to the posi-tion advised, prepared, or reported. The

(b) Standard of discipline. As provided in§10.52, only violations of this section thatare willful, reckless, or a result of grossincompetence will subject a practitioner tosuspension or disbarment from practice be-fore the Service.

[59 FR 31527, June 20,1994]

2 3

Subpart C — Rules Applicable toDisciplinary Proceedings

§10.50 Authority to disbar or suspend.

Pursuant to 31 U.S.C. 330(b), the Secre-tary of the Treasury after notice and an op-portunity for a proceeding, may suspend ‘ordisbar any practitioner from practice beforethe Internal Revenue Service. The Secretarymay take such action against any practitionerwho is shown to be incompetent or disrepu-table, who refuses to comply with any regu-lation in this part, or who, with intent to de-fraud, willfully and knowingly misleads orthreatens a client or prospective client.

[59 FR 31528, June 20, 1994]

§10.51 Disreputable conduct.

Disreputable conduct for which an attorney,certified public accountant, enrolled agent, orenrolled actuary may be disbarred or sus-pended from practice before the Internal Rev-enue Service includes, but is not limited to:

(a) Conviction of any criminal offenseunder the revenue laws of the United States,or of any offense involving dishonesty, orbreach of trust.

(b) Giving false or misleading informa-tion, or participating in any way in the giv-ing of false or misleading information to theDepartment of the Treasury or any officeror employee thereof, or to any tribunal au-thorized to pass upon Federal tax matters, inconnection. with any matter pending or likelyto be pending before them, knowing suchinformation to be false or misleading. Factsor other matters contained in testimony,Federal tax returns, financial statements,applications for enrollment, affidavits, dec-larations, or any other document or state-ment, written. or oral, are included in theterm “information.”

(c) Solicitation of employment as pro-hibited under §10.30 of this part, the use offalse or misleading representations with in-tent to deceive a client or prospective client

in order to procure employment, or intimat-ing that the practitioner is able improperlyto obtain special consideration or actionfrom the Internal Revenue Service or offi-cer or employee thereof.

(d) Willfully failing: to make a Federaltax return in violation of the revenue lawsof the United States, or evading, attemptingto evade, or participating in any way inevading or attempting to evade any Federaltax or payment thereof, knowingly counsel-ing or suggesting to a client or prospectiveclient an illegal plan to evade Federal taxesor payment thereof, or concealing assets ofhimself or another to evade Federal taxesor payment thereof:

(e) Misappropriation of, or failure prop-erly and promptly, to remit funds receivedfrom a client for the purpose of payment oftaxes or other obligations due the UnitedStates.

(f) Directly or indirectly attempting toinfluence, or offering or agreeing to attemptto influence, the official action of any offi-cer or employee of the Internal RevenueService by the use of threats, false accusa-tions, duress or coercion, by the offer ofany special inducement or promise of ad-vantage or by the bestowing of any gift,favor or thing of value.

(g) Disbarment or suspension from prac-tice as an attorney, certified public accoun-tant, public accountant, or actuary by anyduly constituted authority of any State,possession, territory, Commonwealth, theDistrict of Columbia, any Federal court ofrecord or any Federal agency, body orboard.(h) Knowingly aiding and abetting an-other person to practice before the InternalRevenue Service during a period of sus-pension, disbarment, or ineligibility of suchother person. Maintaining a partnership forthe practice of law, accountancy, or otherrelated professional service with a personwho is under disbarment from practice be-fore the Service shall be presumed to be aviolation of this provision.

(i) Contemptuous conduct in connection §10.52 Violation of regulations.with practice before the Internal RevenueService, including the use of abusive lan- A practitioner may be disbarred or sus-guage, making false accusations and state- pended, from practice before the Internalments knowing them to be false, or circu- Revenue Service for any of the following;lating or publishing malicious or libelous (a) Willfully violating any of the regula-matter. tions contained in this part.

(j) Giving a false opinion, knowingly, (b) Recklessly or through gross incom-recklessly, or through gross incompetence, petence (within the meaning of §10.51(j))including an opinion which is intentionally violating §10.33 or §10.34 of this part.or recklessly misleading, or a pattern ofproviding incompetent opinions on ques-

[59 FR 31528, June 20, 1994]

§10.53 Receipt of information concern-tions arising under the Federal tax laws.False opinions described in this paragraph ing attorneys, certified public ac-

include those which reflect or result from a countants, enrolled agents, or en-knowing misstatement of fact or law; from rolled actuaries.an assertion of a position known to be un-warranted under existing law; from coun- If an officer or employee of the Internalseling or assisting in conduct known to be Revenue Service has reason to believe thatillegal or fraudulent; from concealment ofmatters required by law to be revealed; or

an attorney, certified public accountant, en-

from conscious disregard of informationrolled agent, or enrolled actuary has vio-

indicating that material facts expressed inlated any provision of this part, or if anysuch officer or employee receives informa-

the tax opinion or offering material are false tion to that effect,he shall promptly makeor misleading. For purposes of this para- a written report thereof, which report or agraph, reckless conduct is a highly unrea-sonable omission or misrepresentation in-

copy thereof shall be forwarded to the Di-rector of Practice. If any other person has

volving an extreme departure from the information of such violations, he may makestandards of ordinary care that a practitionershould observe under the circumstances. A

a report thereof to the Director of Practice

pattern of conduct is a factor that Will beor to any officer or employee of the InternalRevenue Service.

taken into account-in determining whethera practitioner acted knowingly, recklessly, [31 FR 10773, Aug. 13,1966, as amended at 57or through gross incompetence. Gross in- FR 41095, Sept. 9, 1992]

competence includes conduct that reflectsgross indifference, preparation which is §10.54 Institution of proceeding.

grossly inadequate under the circumstances,and a consistent failure to perform obliga- Whenever the Director of Practice has

tions to the client. reason to believe that any attorney, certi-fied public accountant, enrolled agent, or

(Sec. 3, 23 Stat. 258, secs. 2-12, 60 Stat. 237 et enrolled actuary has violated any provision

seq.; 5 U.S.C. 301; 31 U.S.C. 330; 31 U.S.C. of the laws or regulations governing prac-321 (Reorg; Han No. 26 of 1950, 15 FR 4935, tice before the Internal Revenue Service,64 Stat. 1280,3 CFR, 1949-53 Comp.,p. 1017)) he may reprimand such person or institute

[131 FR 10773, Aug. 13,1966., as amended at 35a proceeding for disbarment or suspension

FR 13205, Aug. 19, 1970; 42 .FR 38353, July of such person. The proceeding shall be

28, 1977; 44FR 4946, Jan. 24, 1979; 49 FR instituted by a complaint which names the6723, Feb. 23,1984; 57 FR 41095, Sept. 9,1992; respondent and is signed by the Director of59 FR 3 1528, June 2&1994] Practice and filed in his office. Except in

25

I

cases of willfulness, or where time, the na-ture of the proceeding, or the public inter-est does not permit, a proceeding will not beinstituted under this section until facts orconduct which may warrant such action havebeen called to the attention of the proposedrespondent in writing and he has been ac-corded opportunity to demonstrate or achievecompliance with all lawful requirements.

[31 FR 10773, Aug. 13, 1966, as amended at 57FR 41095, Sept. 9, 1992]

§10.55 Conferences.

(a) In general. The Director of Practicemay confer with an attorney, certified pub-lic accountant, enrolled agent, or enrolledactuary concerning allegations of miscon-duct irrespective of whether a proceedingfor disbarment or suspension has been in-stituted against him. If such conference re-sults in a stipulation in connection with aproceeding in which such person is the re-spondent, the stipulation may be entered inthe record at the instance of either party tot h e p r o c e e d i n g . (b) Resignation or voluntary suspension.An attorney, certified public accountant,enrolled agent, or enrolled actuary, in orderto avoid the institution or conclusion of adisbarment or suspension proceeding, mayoffer his consent to suspension from prac-tice before the Internal Revenue Service.An enrolled agent may also offer his resig-nation. The Director of Practice,in his dis-cretion, may accept the offered resignationof an enrolled agent and may suspend anattorney, certified public accountant, or en-rolled agent in accordance with the consentoffered.

[31 FR 10773, Aug. 13,1966, as amended at 35FR 13206, Aug. 19, 1970; 57 FR 41095, Sept.9, 1992]

§10.56 Contents of complaint.

(a) Charges. A complaint shall give aplain and concise description of the allega-

(a) Complaint. The complaint or a copythereof may be served upon the respondentby certified mail, or first-class mail ashereinafter provided; by delivering it to therespondent or his attorney or agent of recordeither in person or by leaving it at the of-fice or place of business of the respondent,attorney or agent; or in any other mannerwhich has been agreed to by the respon-dent. Where the service is by certified mail,the return post office receipt duly signedby or on behalf of the respondent shall beproof of service. If the certified matter isnot claimed or accepted by the respondentand is returned undelivered, completeservice may be made upon the respondentby mailing the complaint to him by first-class mail, addressed to him at the addressunder which he is enrolled or, at the lastaddress known to the Director of Practice.If service is made upon the respondent orhis attorney or agent of record in person orby leaving the complaint at the office. orplace of business of the respondent, attorneyor agent, the verified return by the personmaking service, setting forth the manner ofservice, shall be proof of such service.

26

tions which constitute the basis for the pro-ceeding. A complaint shall be deemed suf-ficient if it fairly informs the respondent ofthe charges against him so that he is able toprepare his defense.

(b) Demand for answer. In the complaint,Or in a separate paper attached to the com-plaint, notification shall be given of theplace and time within which the respon-d&t shall file his answer, which time shallnot be less than 15 days from the date ofservice of the complaint, and notice shallbe given that a decision by default may berendered against the respondent in the eventhe fails to file his answer as required.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38353, July 28, 1977]

§10.57 Service of complaint and otherpapers.

(b) Service of papers other than com-plaint. Any paper other than the complaintmay be served upon an attorney, certifiedpublic accountant, or enrolled agent as pro-vided in paragraph (a) of this section or bymailing the paper by first-class mail to therespondent at the last address known to theDirector of Practice, or by mailing the pa-per by first-class mail to the respondent’sattorney or agent of record. Such mailingshall constitute complete service. Noticesmay be served upon the respondent or hisattorney or agent of record by telegraph.

(c) Filing of papers. Whenever the filingof a paper is required or permitted in con-nection with a disbarment or suspensionproceeding, and the place of filing is notspecified by this subpart or by rule or orderof the Administrative Law Judge, the papershall be filed with the Director of Practice,Treasury Department, Washington, D.C.20220. All papers shall be filed in duplicate.

[31 FR 10773, Aug. 13, 1966, as amended at 31FR 13992, Nov. 2,1966; 42 FR 38354, July 28,1977]

§10.58 Answer.

(a) Filing. The respondent’s answer shallbe filed in writing within the time specifiedin the complaint or notice of institution ofthe proceeding, unless on application thetime is extended by the Director of Prac-tice or the Administrative Law Judge. Theanswer shall be filed in duplicate with theDirector of Practice.

(b) Contents. The answer shall contain astatement of facts which constitute thegrounds of defense, and it shall specificallyadmit or deny each allegation set forth inthe complaint, except that the respondentshall not deny a material allegation in thecomplaint which he knows to be true, orstate that he is without sufficient informa-tion to form a belief when in fact he pos-sesses such information. The respondentmay also state affirmatively special mattersof defense.

(c) Failure to deny or answer allegationsin the complaint. Every allegation in thecomplaint which is not denied in the answershall be deemed to be admitted and may beconsidered as proved, and no further evidence in respect of such allegation need be adducedat a hearing. Failure to file an answer withinthe time prescribed in the notice to the re-spondent, except as the time for answer isextended by the Director of Practice or theAdministrative Law Judge, shall constitutean admission of the allegations of the com-plaint and a waiver of hearing, and the Ad-ministrative Law Judge may make his deci-sion by default without a hearing or furtherp r o c e d u r e .

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977]

§10.59 Supplemental charges.

If it appears that the respondent in his an-swer, falsely and in bad faith, denies a mate-rial allegation of fact in the complaint or statesthat the respondent has no knowledge suffi-cient to form a belief, when he in fact pos-sesses such information, or if it appears thatthe respondent has knowingly introducedfalse testimony during proceedings for hisdisbarment or suspension, the Director ofPractice may thereupon file supplementalcharges against the respondent. Such supple-mental charges may be tried with othercharges in the case, provided the respondentis given due notice thereof and is affordedan opportunity to prepare a defense thereto.

§10.60 Reply to answer.

No reply to the respondent’s answer shallbe required, and new matter in the answershall be deemed to be denied, but the Di-rector of Practice may file a reply in hisdiscretion or at the request of the Adminis-trative Law Judge.

[31 FR 10773, Aug. 13, 1966 as amended at 42FR 38354, July 28, 1977]

27

§10.61 Proof; variance; amendment ofpleadings.

In the case of a variance between the al-legations in a pleading and the evidenceadduced in support of the pleading, the Ad-ministrative Law Judge may order or autho-rize amendment of the pleading to conformto the evidence: Provided, That the partywho would otherwise be prejudiced by the,amendment is given reasonable opportunityto meet the allegations of the pleading asamended, and the Administrative Law Judgeshall make findings on any issue presentedby the pleadings as so amended.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977]

§10.62 Motions and requests.

Motions and requests may be filed withthe Director of Practice or with the Admin-istrative Law Judge.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977]

§10.63 Representation.

A respondent or proposed respondent mayappear in person or he may be representedby counsel or’ other representative who neednot be enrolled to practice before the Inter-nal Revenue Service. The Director may berepresented by an attorney or other em-ployee of the Internal Revenue Service.

§10.64 Administrative Law Judge.

(a) Appointment. An Administrative LawJudge appointed as provided by 5 U.S.C.3105 (1966), shall conduct proceedingsupon complaints for the disbarment or sus-pension of attorneys, certified public ac-countants, or enrolled agents.

(b) Powers of Administrative Law Judge.Among other powers, the Administrative LawJudge shall have authority, in connection withany disbarment or suspension proceeding as-signed or referred to him, to do the following:

(1) Administer oaths and affirmations;(2) Make rulings upon motions and re-

quests, which rulings may not be appealedfrom prior to the close of a hearing except,at the discretion of the Administrative Law-Judge, in extraordinary circumstances;

(3) Determine the time and place of hear-ing and regulate its course and conduct;

(4) Adopt rules of procedure and modifythe same from time to time as occasion re-quires for the orderly disposition of pro-ceedings;

(5) Rule upon offers of proof, receiverelevant evidence, and examine witnesses; (6) Take or authorize the taking of depo-

sitions;(7) Receive and consider oral or written

argument on facts or law;(8) Hold or provide for the holding of

conferences for the settlement or simplifi-cation of the issues by consent of the par-ties;

(9) Perform such acts and take such mea-sures as are necessary or appropriate to theefficient conduct of any proceeding; and

(10) Make initial decisions.

28

[31 FR 10773, Aug. 13,1966, as amended at 42FR 38353,38354, July 28,1977]

§10.65 Hearings.

(a) In general. An Administrative LawJudge will preside at the hearing on a com-plaint furnished under §10.54 for the dis-barment or suspension of a practitioner.Hearings will be stenographically recordedand transcribed and the testimony of wit-nesses will be taken under oath oraffirmation. Hearings will be conductedpursuant to 5 U.S.C. 556. A hearing in aproceeding requested under §10.76(g) willbe conducted de novo.

(b) Failure to appear. If either party tothe proceeding fails to appear at the hear-ing, after due notice thereof has been sentto him, he shall be deemed to have waivedthe right to a hearing and the Administra-tive Law Judge may make his decisionagainst the absent party by default.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977; 59 FR 31528, June20,1994]

§ 1 0 . 6 6 E v i d e n c e .

(a) In general. The rules of evidence pre-vailing in courts of law and equity are notcontrolling in hearings on complaints forthe disbarment or suspension of attorneys,certified public accountants, and enrolledagents. However, the Administrative LawJudge shall exclude evidence which is ir-relevant, immaterial, or unduly repetitious.

(b) Depositions. The deposition of anywitness taken pursuant to §10.67 may beadmitted.

(c) Proof of documents. Official docu-ments, records, and papers of the InternalRevenue Service and the Office of Directorof Practice shall be admissible in evidencewithout the production of an officer or em-ployee to authenticate them. Any suchdocuments, records, and papers may beevidenced by a copy attested or identifiedby an officer or employee of the InternalRevenue Service or the Treasury Depart-ment, as the case may be.

(d) Exhibits. If any document, record, orother paper is introduced in evidence as anexhibit, the Administrative Law Judge mayauthorize the withdrawal of the exhibitsubject to any conditions which he deemsproper.

(e) Objections. Objections to evidence shallbe in short form, stating the grounds of ob-jection relied upon, and the record shall notinclude argument thereon, except as orderedby the Administrative Law Judge. Rulingson such objections shall be a part of therecord. No exception to the ruling is neces-sary to preserve the rights of the parties.

[31 FR 10773, Aug. 13, 1966, as amended at 35FR 13206, Aug. 19, 1970; 42 FR 38354, July28, 1977]

§10.67 Depositions.

Depositions for use at a hearing may, withthe written approval of the Administrative

Law Judge be taken by either the Director ofPractice or the respondent or their duly autho-rized representatives. Depositions may betaken upon oral or written interrogatories, uponnot less than 10 days’ written notice to the other party before any officer duly authorizedto administer an oath for general purposes orbefore an officer or employee of the InternalRevenue Service who is authorized to admin-ister an oath in internal revenue matters. Suchnotice shall state the names of the witnessesand the time and place where the depositionsare to be taken. The requirement of 10 days’notice may be waived by the parties in writ-ing, and depositions may then be taken fromthe persons and at the times and places mutu-ally agreed to by the parties. When a deposi-tion is taken upon written interrogatories, anycross-examination shall be upon written in-terrogatories. Copies of such written inter-rogatories shall be served upon the other partywith the notice, and copies of any writtencross-interrogatories shall be mailed or deliv-ered to the opposing party at least 5 daysbefore the date of taking the depositions, un-less the parties mutually agree otherwise. Aparty upon whose behalf a deposition is takenmust file it with the Administrative Law Judgeand serve one copy upon the opposing party.Expenses in the reporting of depositions shallbe borne by the party at whose instance thedeposition is taken.

[31 FR 10773, Aug.l3, 1966, as amended at 42FR 38354, July 28, 1977]

§10.68 Transcript.

In cases where the hearing is steno-graphically reported by a Government con-tract reporter, copies of the transcript maybe obtained from the reporter at rates not toexceed the maximum rates fixed by con-tract between the Government and the re-porter. Where the hearing is stenographi-cally reported by a regular employee of theInternal Revenue Service, a copy thereofwill be supplied to the respondent eitherwithout charge or upon the payment of areasonable fee. Copies of exhibits intro-

29

duced at the hearing or at the taking ordepositions will be supplied to the partiesupon the payment of a reasonable fee (Sec.501, Pub. L. 82 - 137, 65 Stat. 290 (31U.S.C. 483a)).

[31 FR 10773, Aug. 13, 1966, as amended atFR 38354, July 28, 1977]

§10.69 Proposed findings and conclu-sions.

Except in cases where the respondent hasfailed to answer the complaint or where aparty has failed to appear at the hearing,the Administrative Law Judge prior tomaking his decision,, shall afford the par-ties a reasonable opportunity to submit pro-posed findings and conclusions and sup-porting reasons therefor.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977]

§10.70 Decision of the AdministrativeLaw Judge.

As soon as practicable after the conclu-sion of a hearing and the receipt of anyproposed findings and conclusions timelysubmitted by the parties, the Administra-tive Law Judge shall make the initial deci-sion in the case. The decision shall include.(a) a statement of findings and conclusions,as well as the reasons or bases therefor,upon all the material issues of fact, law, ordiscretion presented on the record, and (b)an order of disbarment, suspension, or rep-rimand or an order of dismissal of the com-plaint. The Administrative Law Judge shallfile the decision with the Director of Prac-tice and shall transmit a copy thereof to therespondent or his attorney of record. In theabsence of an appeal to the Secretary of theTreasury, or review of the decision uponmotion of the Secretary, the decision of theAdministrative Law Judge shall withoutfurther proceedings become the decisionsof the Secretary of the Treasury 30 daysfrom the date of the Administrative LawJudge’s decision.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977]

§10.71 Appeal to the Secretary.

Within 30 days from the date of the Ad-ministrative Law Judge’s decision, eitherparty may appeal to the Secretary of theTreasury. The appeal shall be filed with theDirector, of Practice in duplicate and shallinclude exceptions to the decision of theAdministrative Law Judge and supportingreasons for such exceptions. If an appeal isfiled by the Director of Practice, he shall

transmit a copy thereof to the respondent.Within 30 days after receipt of an appeal orcopy thereof, the other party may file a re-ply brief in duplicate with the Director ofPractice. If the reply brief is filed by theDirector, he shall transmit a copy of it tothe respondent. Upon the filing of an ap-peal and a reply brief, if any, the Directorof Practice shall transmit the entire recordto the Secretary of the Treasury.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977]

§10.72 Decision of the Secretary.

On appeal from or review of the initialdecision of the Administrative Law Judge,the Secretary of the Treasury will make theagency decision. In making his decision theSecretary of the Treasury will review therecord or such portions thereof as may becited by the parties to permit limiting ofthe issues. A copy of the Secretary’s deci-sion shall be transmitted to the respondentby the Director of Practice.

[31 FR 10773, Aug. 13, 1966, as amended at 42FR 38354, July 28, 1977]

§10.73 Effect of disbarment or suspen-sion; surrender of card.

In case the final order against the respon-dent is for disbarment, the respondent shallnot thereafter be permitted to practice be-

fore the Internal Revenue Service unlessand until authorized to do so by the Direc-tor of Practice pursuant to §10.75. In casethe final order against the respondent is for suspension, the respondent shall not there-after be permitted to practice before the In-ternal Revenue Service during the periodof suspension. If an enrolled agent is dis-barred or suspended, he shall surrender hisenrollment card to the Director of Practicefor cancellation, in the case of disbarment,or for retention during the period of sus-p e n s i o n .

§10.76 Expedited suspension uponcriminal conviction or loss of licensefor cause.

(a) When applicable. Whenever the Di-rector has reason to believe that a practi-tioner is described in paragraph (b) of thissection, the Director may institute a pro-ceeding under this section to suspend thepractitioner from practice before theService.

(b) To whom applicable. This section ap-plies to any practitioner who, within 5 yearsof the date a complaint instituting a pro-ceeding under this section is served —

§10.74 Notice of disbarment or suspen-sion.

Upon the issuance of a final order dis-barring or suspending an attorney, certifiedpublic accountant, or enrolled agent, theDirector of Practice shall give notice thereofto appropriate officers and employees ofthe Internal Revenue Service and to inter-ested departments and agencies of the Fed-eral Government. Notice in such manner asthe Director of Practice may determine maybe given to the proper authorities of theState by which the disbarred or suspendedperson was licensed to practice as an attor-ney or accountant.

(1) Has had his or her license to practiceas an attorney, certified public accountant,or actuary suspended or revoked for cause(not including a failure to pay a profes-sional licensing fee) by any authority orcourt, agency, body, or board described in§10.51(g); or

(2) Has been convicted of any crime un-der title 26 of the United States Code, or afelony under title 18 of the United StatesCode involving dishonesty or breach oftrust.

§10.75 Petition for reinstatement.

The Director of Practice may entertain apetition for reinstatement from any persondisbarred from practice before the InternalRevenue Service after the expiration of 5years following such disbarment. Reinstate-ment may not be granted unless the Directorof Practice is satisfied that the petitioner,thereafter, is not likely to conduct himselfcontrary to the regulations in this part, andthat granting such reinstatement would notbe contrary to the public interest.

(c) Instituting a proceeding. A proceed-ing under this section will be instituted bya complaint that names the respondent, issigned by the Director, is filed in theDirector’s office, and is served accordingto the rules set forth in §10.57(a). Thecomplaint must give a plain and concisedescription of the allegations that consti-tute the basis for the proceeding. The com-plaint, or a separate paper attached to thecomplaint, must notify the respondent —

(1) Of the place and due date for filingan answer;

(2) That a decision by default may berendered if the respondent fails to file ananswer as required;

[31 FR 10773, Aug. 13, 1966, as amendedat 35 FR 13206, Aug. 19,1970]

(3) That the respondent may request aconference with the Director to address themerits of the complaint and that any suchrequest must be made in the answer; and

(4) That the respondent may be suspendedeither immediately following the expiration

31

of the period by which an answer must befiled or, if a conference is requested, im-mediately following the conference.

(d) Answer. The answer to a complaintdescribed in this section must be filed nolater than 30 calendar days following thedate the complaint is served, unless the Di-rector extends the time for filing. The an-swer must be filed in accordance with therules set forth in §10.58, except as other-wise provided in this section. A respondentis entitled to a conference with the Directoronly if the conference is requested in atimely filed answer. If a request for a con-ference is not made in the answer or theanswer is not timely filed, the respondentwill be deemed to have waived his or herright to a conference and the Director maysuspend such respondent at any time fol-lowing the date on which the answer wasdue.

(e) Conference. The Director or his or herdesignee will preside at a conference de-scribed in this section. The conference willbe held at a place and time selected by theDirector, but no sooner than 14 calendardays after the date by which the answermust be filed with the Director, unless therespondent agrees to an earlier date. An au-thorized representative may represent therespondent at the conference. Following theconference, upon a finding that the respon-dent is described in paragraph (b) of thissection, or upon the respondent’s failure toappear at the conference either personallyor through an authorized representative, theDirector may immediately suspend the re-spondent from practice before the Service.

(f) Duration of suspension. A suspensionunder this section will commence on the datethat written notice of the suspension is is-sued. A practitioner’s suspension will remaineffective until the earlier of the following —

(1) The Director lifts the suspension af-ter determining that the practitioner is nolonger described in paragraph (b) of thissection or for any other reason; or

(2) The suspension is lifted by an Ad-ministrative Law Judge or the Secretary of

the Treasury in a proceeding referred to inparagraph (g) of this section and institutedunder §10.54.

(g) Proceeding instituted under §10.54.If the Director suspends a practitioner un- der this §10.76, the practitioner may askthe Director to issue a complaint under§10.54. The request must be made in writ-ing within 2 years from the date on whichthe practitioner’s suspension commences.The Director must issue a complaint re-quested under this paragraph within 30 cal-endar days of receiving the request.

[59 FR 31528, June 20, 1994]

Subpart D — Rules Applicable toDisqualification of Appraisers

Source: 50 FR 42016, Oct. 17, 1985, un-less otherwise noted.

§10.77 Authority to disqualify; effect ofdisqualification.

(a) Authority to disqualify. Pursuant tosection 156 of the Deficit Reduction Act of1984, 98 Stat. 695, amending 31 U.S.C.330, the Secretary of the Treasury, afterdue notice and opportunity for hearing maydisqualify any appraiser with respect towhom a penalty has been assessed after July18, 1984, under section 6701(a) of the In-ternal Revenue Code of 1954, as amended(26 U.S.C. 6701(a)).

(b) Effect of disqualification. If any ap-praiser is disqualified pursuant to 31 U.S.C.330 and this subpart:

(1) Appraisals by such appraiser shall nothave any probative effect in any adminis-trative proceeding before the Departmentof the Treasury or the Internal RevenueService; and

(2) Such appraiser shall be barred frompresenting evidence or testimony in anysuch administrative proceeding. Paragraph(b)(l) of this section shall apply to apprais-als made by such appraiser after the effec-tive date of disqualification, but shall not

apply to appraisals made by the appraiseron or before such date. Notwithstanding theforegoing sentence, an appraisal otherwisebarred from admission into evidence pur-suant to paragraph (b)( 1) of this section maybe admitted into evidence solely for thepurpose of determining the taxpayer’s reli-ance in good faith on such appraisal. Para-graph (b)(2) of this section shall apply tothe presentation of testimony or evidencein any administrative proceeding after thedate of such disqualification, regardless ofwhether such testimony or evidence wouldpertain to any appraisal made prior to suchdate.

der section 6701 (a) of the Internal RevenueCode of 1954, as amended (26 U.S.C.6701(a)), and advises him/her of the insti-tution of the proceeding.

(b) Demand for answer. In the complaint, or in a separate paper attached to the com-plaint, notification shall be given of theplace and time within which the respon-dent shall file his/her answer, which timeshall not be less than 15 days from the dateof service of the complaint, and notice shallbe given that a decision by default may berendered against the respondent in the eventthere is failure to file an answer.

§10.78. Institution of proceeding.§10.80 Service of complaint and other

papers.

(a) In general. Whenever the Director ofPractice is advised or becomes aware that apenalty has been assessed against an ap-praiser under 26 U.S.C. 6701(a), he/she mayreprimand such person or institute a pro-ceeding for disqualification of such ap-praiser through the filing of a complaint.Irrespective of whether a proceeding fordisqualification has been instituted againstan appraiser, the Director of Practice mayconfer with an appraiser against whom sucha penalty has been assessed concerning suchp e n a l t y .

(b) Voluntary disqualification. In order toavoid the initiation or conclusion of a dis-qualification proceeding, an appraiser mayoffer his/her consent to disqualification. TheDirector of Practice, in his/her discretion,may disqualify an appraiser in accordancewith the consent offered.

§10.79 Contents of complaint.

(a) Charges. A proceeding for disqualifi-cation of an appraiser shall be institutedthrough the filing of a complaint, whichshall give a plain and concise descriptionof the allegations that constitute the basisfor the proceeding. A complaint shall bedeemed sufficient if it refers to the penaltypreviously, imposed on the respondent un-

(a) Complaint. The complaint or a copythereof may be served upon the respondentby certified mail, or first-class mail ashereinafter provided, by delivering it to therespondent or his/her attorney or agent ofrecord either in person or by leaving it atthe office or place of business of the re-spondent, attorney or agent, or in any othermanner that has been agreed to by the re-spondent, Where the service is by certifiedmail, the return post office receipt dulysigned by or on behalf of the respondentshall be proof of service. If the certifiedmail is not claimed or accepted by the re-spondent and is returned undelivered, com-plete service may be made by mailing thecomplaint to the respondent by first-classmail, addressed to the respondent at the lastaddress known to the Director of Practice.If service is made upon the respondent inperson or by leaving the complaint at theoffice or place of business of the respon-dent, the verified return by the person mak-ing service, setting forth the manner ofservice, shall be proof of such service,

(b) Service of papers other than com-plaint. Any paper other than the complaintmay be served as provided in paragraph (a)of this section or by mailing the paper byfirst-class mail to the respondent at the lastaddress known to the Director of Practice,

33

or by mailing. the paper by first-class mailto the respondent’s attorney or agent ofrecord. Such mailing shall constitute com-plete service. Notices may be served uponthe respondent, or his/her attorney or agentof record by telegraph.

(c) Filing of papers. Whenever the filingof a paper is required or permitted in con-nection with a disqualification proceedingunder this subpart or by rule or order of theAdministrative Law Judge, the paper shallbe filed with the Director of Practice, Trea-sury Department, Internal Revenue Service,Washington; D.C. 20224. All papers shallbe filed in duplicate.

§ 1 0 . 8 1 A n s w e r .

(a) Filing. The respondent’s answer shallbe tiled in writing within the time. specifiedin the complaint or notice of institution ofthe proceeding, unless on application thetime is. extended by the Director of Prac-tice or the Administrative Law Judge; Theanswer shall be filed in duplicate with theDirector of Practice.

If it appears that the respondent in his/her answer, falsely and in bad faith, deniesa material allegation of fact in the com-plaint or states that the respondent has noknowledge sufficient, to form a belief, whenhe/she in fact possesses such information,or if it appears that the respondent hasknowingly introduced false testimony dur-ing proceedings for his/her disqualification,the Director of Practice may thereupon filesupplemental charges against the respon-dent. Such supplemental charges may betried with other charges in the case, pro-vided the respondent is given due noticethereof and is afforded an opportunity. toprepare a defense thereto.

§10.83 Reply to answer.

(b) Contents. The answer shall contain astatement of facts that constitute the groundsof defense, and it shall specifically admitor deny each allegation set forth in thecomplaint, except that. therespondent. shallnot deny a material allegation in the com-plaint that he/she knows to be true, or statethat he/she is without sufficient informa-tion to form a belief when in fact he/shepossesses such information.

No reply to the respondent’s answer shallbe required, and any new matter in the an-swer shall be deemed to be denied, but theDirector of Practice may file a reply in his/her discretion or at the request of the Ad-ministrative Law Judge.

§10.84 Proof, variance, amendment ofpleadings.

(c) Failure to deny or answer allegations In the case of a variance between the alle-in the complaint. Every allegation in the gations in a pleading and the evidence ad-complaint which is not denied in the an- duced in support of the pleading, the Admin-swer shall be deemed to be admitted and istrative Law Judge may order or authorizemay, be considered as proved, and no further amendment of the pleading toconform to theevidence in respect of such allegation need evidence; provided, that the party who wouldbe adduced at a hearing. Failure to file an otherwise be prejudiced by the amendmentanswer within the time prescribed in the is given reasonable opportunity to meet thenotice to the respondent, except as the time allegations of the pleading as amended, andfor answer is extended by the Director of the Administrative Law Judge shall makePractice or the Administrative Law Judge, findings on any issue presented by the plead-shall constitute an admission of the allega- i n g s a s s o a m e n d e d .

tions of the complaint and a waiver, ofhearing, and the Administrative Law Judgemay make his/her decision by default with-out a hearing or further procedure.

§10.82 Supplemental charges.

§10.85 Motions and requests.

Motions and requests may be filed withthe Director of Practice or with the Admin-istrative Law Judge.

§10.86 Representation.

A respondent may appear in person ormay be represented by counsel or otherrepresentative. The Director of Practice maybe represented by an attorney or other em-ployee of the Department of the Treasury.

§10.87 Administrative Law Judge.

(a) Appointment. An Administrative LawJudge appointed as provided by 5 U.S.C.3105, shall conduct proceedings upon com-plaints for the disqualification of apprais-ers.

(b) Powers of Administrative Law Judge.Among other powers, the AdministrativeLaw Judge shall have authority, in connec-tion with any disqualification proceedingassigned or referred to him/her, to do thefollowing:

(1) Administer oaths and affirmations;(2) Make rulings upon motions and re-

quests, which rulings may not be appealedfrom prior to the close of a hearing exceptat the discretion of the Administrative LawJudge, in extraordinary circumstances;

(3) Determine the time and place of hear-ing and regulate its course and conduct;

(4) Adopt rules of procedure and modifythe same from time to time as occasion re-quires for the orderly disposition of pro-ceedings;

(5) Rule upon offers of proof, receiverelevant evidence, and examine witnesses;

(6) Take or authorize the taking of depo-sitions;

(7) Receive and consider oral or writtenargument on facts or law;

(8) Hold or provide for the holding ofconferences for the settlement or simplifi-cation of the issues by consent of the par-ties;

(9) Perform such acts and take such mea-sures as are necessary or appropriate to theefficient conduct of any proceeding; and

(10) Make initial decisions.

§10.88 Hearings.

(a) In general. The Administrative LawJudge shall preside at the hearing on acomplaint for the disqualification of an ap-praiser. Hearings shall be stenographicallyrecorded and transcribed and the testimonyof witnesses shall be taken under oath oraffirmation. Hearings will be conductedpursuant to 5 U.S.C. 556.

(b) Failure to appear. If either party tothe proceeding fails to appear at the hear-ing after due-notice thereof has been sentto him/her, the, right to a hearing shall bedeemed to have been waived and the Ad-ministrative Law Judge may make a deci-sion by default against the absent party.

§10.89 Evidence.

(a) In general. The rules of evidence pre-vailing in courts of law and equity are notcontrolling in hearings on complaints forthe disqualification of appraisers. However,the Administrative Law Judge shall excludeevidence which is irrelevant, immaterial, orunduly repetitious;

(b) Depositions. The deposition of anywitness taken pursuant to §10.90 may beadmitted.

(c) Proof of documents. Official docu-ments, records, and papers of the InternalRevenue Service or the Department of theTreasury shall be admissible in evidencewithout the production of an officer or em-ployee to authenticate them. Any suchdocuments, records, and papers may beevidenced by a copy attested or identifiedby an officer or employee of the InternalRevenue Service or the Department of theTreasury, as the case may be.

(d) Exhibits. If any document, record, orother paper is introduced in evidence as anexhibit, the Administrative Law Judge may

35

authorize the withdrawal of the exhibitsubject to any conditions which he/shedeems proper.

by the party at whose instance the deposi-tion is taken.

(e) Objections. Objections to evidence shallbe in short form, stating the grounds of ob-jection relied upon, and the record shall notinclude argument thereon, except as orderedby the Administrative Law Judge. Rulingson such objections shall be a part of therecord. No exception to the ruling is neces-sary to preserve the rights of the parties.

§10.91 Transcript.

In cases where the hearing is steno-

§10.90 Depositions.

Depositions for use at a hearing may, withthe written approval of the AdministrativeLaw Judge, be taken either by the Directorof Practice or the respondent or their dulyauthorized representatives. Depositions maybe taken upon oral or written interrogato-ries, upon not less than 10 days’ writtennotice to the other party before any officerduly authorized to administer an oath forgeneral purposes or before an officer oremployee of the Internal Revenue Servicewho is authorized to administer an oath ininternal revenue matters. Such notice shallstate the names of the witnesses and thetime and place where the depositions are tobe taken. The requirement of 10 days’ noticemay be waived by the parties in writing,and depositions may then be taken fromthe persons and at the times and places mu-tually agreed to by the parties. When adeposition is taken upon written interroga-tories, any cross-examination shall be uponwritten interrogatories. Copies of suchwritten interrogatories shall be served uponthe other party with the notice, and copiesof any written cross-interrogatories shall bemailed or delivered to the opposing partyat least 5 days before the date of taking thedepositions, unless the parties mutuallyagree otherwise. A party upon whose behalfa deposition is taken must file it with theAdministrative Law Judge and serve onecopy upon the opposing party. Expenses inthe reporting of depositions shall be borne

graphically reported by a Government con-tract reporter, copies of the transcript maybe obtained from the reporter at rates notto exceed the maximum rates fixed bycontract between the Government and thereporter. Where a hearing is stenographi-cally reported by a regular employee of theInternal Revenue Service, a copy thereofwill be supplied to the respondent eitherwithout charge or upon the payment of areasonable fee. Copies of exhibits intro-duced at the hearing or at the taking ofdepositions will be supplied to the partiesupon the payment of a reasonable fee (Sec.501, Pub. L. 82 - 137, 65 Stat. 290 (31U.S.C. 483a)).

§10.92 Proposed findings and conclu-sions.

Except in cases where the respondent hasfailed to answer the complaint or where aparty has failed to appear at the hearing,the Administrative Law Judge, prior, tomaking a decision, shall afford the partiesa reasonable opportunity to submit proposedfindings and conclusions and supportingreasons therefor.

§10.93 Decision of the AdministrativeLaw Judge.

As soon as practicable after the conclu-sion of a hearing and the receipt of anyproposed findings and conclusions timelysubmitted by the parties, the Administra-tive Law Judge shall make the initial deci-sion in the case. The decision shall include(a) a statement of findings and conclusions,as well as the reasons or bases therefor,upon all the material issues of fact, law, ordiscretion presented on the record, and (b)

36

an order of disqualification or an order ofdismissal of the complaint. The Administra-tive Law Judge shall file the decision withthe Director of Practice and shall transmit acopy thereof to the respondent or his attor-ney of record. In the absence of an appeal tothe Secretary of the Treasury, or review ofthe decision upon motion of the Secretary,the decision of the Administrative Law Judgeshall without further proceedings become thedecision of the Secretary of the Treasury 30days from the date of the Administrative LawJudge’s decision.

§10.94 Appeal to the Secretary.

Within 30 days from the date of the Ad-ministrative Law Judge’s decision, eitherparty may appeal such decision to the Sec-retary of the Treasury. If an appeal is bythe respondent, the appeal shall be filed withthe Director of Practice in duplicate andshall include exceptions to the decision ofthe Administrative Law Judge and support-ing reasons for such exceptions. If an ap-peal is filed by the Director of Practice, acopy thereof shall be transmitted to the re-spondent. Within 30 days after receipt ofan appeal or copy thereof, the other partymay file a reply brief in duplicate with theDirector of Practice. If the reply brief isfiled by the Director, a copy shall be trans-mitted to the respondent. Upon the filing ofan appeal and a reply brief, if any, the Di-rector of Practice shall transmit the entirerecord to the Secretary of the Treasury.

§10.95 Decision of the Secretary.

On appeal from or review of the initialdecision of the Administrative Law Judge,the Secretary of the Treasury shall makethe agency decision. In making such deci-sion, the Secretary of the Treasury will re-view the record or such portions thereof asmay be cited by the parties. A copy of theSecretary’s decision shall be transmitted tothe respondent by the Director of Practice.

§10.96 Final order.

Upon the issuance of a final order dis-qualifying an appraiser, the Director ofPractice shall give notice thereof to appro-.priate officers and employees of the Inter-nal Revenue Service and to interested de-.partments and agencies of the Federal Gov-ernment.

§10.97 Petition for reinstatement.

The Director of Practice may entertain apetition for reinstatement from any dis-qualified appraiser after the expiration of 5years following such disqualification. Re-instatement may not be granted unless theDirector of Practice is satisfied that the pe-titioner, thereafter, is not likely to conducthimself/herself contrary to 26 U.S.C.6701(a), and that granting such reinstate-ment would not be contrary to the publicinterest.

Subpart E — General Provisions

§10.98 Records.

(a) Availability. There are made availableto public inspection at the Office of Direc-tor of Practice the roster of all persons en-rolled to practice, the roster of all personsdisbarred or suspended from practice, andthe roster of all disqualified appraisers.Other records may be disclosed upon spe-cific request, in accordance with the dis-closure regulations of the Internal RevenueService and the Treasury Department.

(b) Disciplinary procedures. A request bya practitioner that a hearing in a disciplin-ary proceeding concerning him be public,and that the record thereof be made avail-able for inspection by interested persons,may be granted if agreement is reached bystipulation in advance to protect from dis-closure tax information which is confiden-tial, in accordance with the applicable stat-utes and regulations.

37

may be instituted subsequent to such effec-tive date.

[50 FR 42019, Oct. 17, 1985]

§10.101 Special orders.

[31 FR 10773, Aug. 13, 1966. Redesignated at50 FR 42016, Oct. 17, 1985, and amended at 50FR 42018, Oct. 17, 1985)

§10.100 Saving clause.

Any proceeding for the disbarment orsuspension of an attorney, certified publicaccountant, or enrolled agent, instituted butnot closed prior to the effective date of these may deem proper in any cases within therevised regulations, shall not be affected purview of this part.by such regulations. Any proceeding underthis part based on conduct engaged in prior [31 FR 10773, Aug.l3, 1966. Redesignated atto the effective date of these regulations 50 FR 42016; Oct. 17, 1985]

The Secretary of the Treasury reservesthe power to issue such special orders as he

* U.S. GOVERNMENT PRINTING OFFICE:1996-717-418/82587

38