CPAs, enrolled agents, and other practitioners would have to maintain technological competency under proposed regulations issued by the Treasury Department and the IRS on Dec. 20, which would update the rules for certain tax professionals who can practice before the IRS that are contained in Circular 230.
The IRS Office of Professional Responsibility (OPR) generally has responsibility for matters related to practitioner conduct and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. The proposed regulations, if finalized, would amend Circular 230 in several ways to account for changes in the law and the evolving nature of tax practice.
The regulations would affect registered tax return preparers, EAs, enrolled retirement plan agents, enrolled actuaries, Annual Filing Season Program participants, attorneys, CPAs, appraisers, and other practitioners.
Among other changes, the proposed regulations would remove or update the parts of Circular 230 related to registered tax return preparers and tax return preparation, as well as contingent fees to reflect changes in the law since the prior amendments to Circular 230 in 2011 and 2014. The proposed regulations would also revise or eliminate other provisions that are out of date.
In addition, the proposed regulations would incorporate new provisions that better align Circular 230 with the current practice environment, such as requiring that practitioners maintain technological competency as part of their practice before the IRS.
The proposal states:
Current §10.35 provides that a practitioner must be competent when engaged in practice before the IRS. Specifically, practitioners are required to have the appropriate level of knowledge, skill, thoroughness, and preparation necessary for the matter in which the practitioner is engaged. Increasingly, competence also includes maintaining familiarity with technological tools used to represent a client. A similar standard for technological competency is included in the American Bar Association (ABA) Model Rules of Professional Conduct. Proposed §10.35 is based on Comment 8 to ABA Model Rule 1.1 and would define competency to include understanding the benefits and risks associated with relevant technology used by the practitioner to provide services to clients or to store or transmit confidential information, including tax return information.
The proposed regulations would also clarify some provisions, such as confirming that OPR retains jurisdiction over practitioners who have been suspended or disbarred from practice.
Finally, the proposed regulations would provide rules related to appraisers, including the standards for disqualification.
The proposed regulations are expected to be published in the Federal Register on Dec. 26. A public hearing on the proposal will be held at 10 a.m. ET on March 6, 2025.
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