Manage risk and client relationships with ethical tax practice - YouTube video text script

I see that it is the top of the hour, so for those of you just joining, welcome to today’s webinar, Building a Sustainable Practice: Managing Risk and Strengthening Client Relationships Through Ethical Tax Practice.

We’re glad you’re joining us today. My name is Anika Pompey, and I am a Senior Stakeholder Liaison with the Internal Revenue Service. I will be your moderator for today’s webinar, which is slated for approximately 120 minutes. This webinar offers two IRS continuing education credits.

Participants earn two IRS CE credits and related certificate of completion by attending the live broadcast of the webinar for at least 100 minutes after the official start time, and answering at least four polling questions during the live broadcast. Please note that the polling question example, which has your pop-up blocker does not count towards the polling question’s response requirement.

Now, before we begin, if there is anyone in the audience that is with the media, please send an email to the address on the slide. Be sure to include your contact information and the news publication you’re with. Our media relations and Stakeholder Liaison staff will assist you and answer any questions you may have. As a reminder, this webinar will be recorded for future postings.

Please note, continuing education credit or certificates of completion are not offered if any version of our webinars are viewed after the live broadcast. Again, we hope that you won’t experience any technology issues, but if you do, this slide shows helpful tips and reminders. We’ve posted a technical help document you can download from the materials section on the left-hand side of your screen. It provides the minimum system requirements for viewing this webinar, along with some best practices and quick solutions.

If you’ve completed and passed your system check and you’re still having problems, try one of the following. Close the screen where you’re viewing the webinar and relaunch it, or click on Settings on your browser viewing screen and select HLS.

Now, you should have received today’s PowerPoint in a reminder email, but if not, no worries, you can download it by clicking on the materials dropdown arrow on the left side of your screen as shown on this slide. To receive our survey at the end of the presentation, you need to have your pop-up blocker disabled. We’ve also included several technical documents that describe how you can allow pop-up blockers based on the browser you are using on the materials tab.

Closed captioning for today’s presentation is available for today’s presentation, and if you’re having trouble hearing the audio through your computer speakers, please click the Closed Captioning dropdown arrow located on the left side of your screen. This feature will be available throughout the webinar. If you have a topic specific question today, please submit it by clicking the Ask Question dropdown arrow to reveal the text box. Ask Question in the text box and click Send. This is very important. Please do not enter any sensitive or taxpayer-specific information.

Now, during the presentation, we’re going to take a few breaks to share knowledge-based questions with you. At those times, a polling question, a polling style feature will pop-up on your screen with a question and multiple choice answers.

Select a response that you believe is correct by clicking on the radio button next to your selection and then click Submit. If you did not get the polling question, this may be because you have your pop-up blocker on. So please take a moment to disable your pop-up blocker now, so you can answer the question. We’ve included several technical documents that describe how you can disable pop-up blockers based on the browser you are using.

We have documents for Chrome, Firefox, Microsoft Edge, and Safari for Mac. You can access them by clicking on the materials drop-down arrow on the left side of your screen.

Now, we’re going to take some time and test the polling feature. So here’s your opportunity to ensure that your pop-up blocker is not on, so you can receive the polling questions throughout today’s presentation. Audience, please remember that this is an example polling question and this does not count towards the polling questions requirement for earned CE credit.

Now, here’s your question. Do you know who your local stakeholder liaison is? Answer: A for yes; B for no; or C, what is the stakeholder liaison? Take a moment and click the radio button that corresponds to your answer and I’m going to just reread the question. Do you know who your local stakeholder liaison is? A for yes; B for no; or C, what is stakeholder liaison?

I’m going to give you a few more seconds to make your selection. All right, so we are going to stop the polling now, and let’s see how the majority of you responded. All right, it looks like 53% of you said no. You do not know who your stakeholder liaison is. All right, well, hopefully that changes soon, but we hope that you did receive the polling questions, and you were able to submit your answer.

If not, now is the time to check your pop-up blockers to make sure that you have turned it off. Again, we have included several technical documents that describe how you can disable pop-up blockers based on the browser you are using. Just click on the materials dropdown arrow on the left side of your screen to download your browser document.

Again, we welcome you, and we are glad you have joined us for today’s webinar. Before we move along with our session, let me make sure you’re in the right place. Today’s webinar is Building a Sustainable Practice: Managing Risk and Strengthening Client Relationships Through Ethical Tax Practice. This webinar is scheduled for approximately 120 minutes from the top of the hour.

Today, we are joined by Sharyn Fisk. Sharyn Fisk was named Director of the IRS Office of Professional Responsibility, OPR, in January 2020. As a Director, she is responsible for the IRS’s oversight of tax professionals who practiced before the IRS as set out in Treasury Circular 230. Sharyn’s extensive background in the tax community brought over 20 years of experience to the OPR position. Before coming to the IRS, Sharyn was Professor of Tax at Cal Poly Pomona and Director of the University’s VITA program.

Prior to teaching, Sharyn was in private practice specializing in tax controversies. Before becoming a private practitioner, Sharyn clerked for the Honorable Maurice Foley, Judge, U.S. Tax Court.

Sharyn has held leadership roles in several professional organizations. She served as a former Chair of the Tax Policy, Practice and Legislation Committee for the American Bar Association. She is a past Chair of the Taxation Section of the Los Angeles County Bar Association and the Taxation Section of the Beverly Hills Bar Association.

She is also a Fellow of the American College of Tax Council. Sharyn wrote and spoke extensively before national, state, and local tax professional organizations on all aspects of civil and criminal tax controversy issues and ethics in tax practice. Sharyn earned a Bachelor of Arts in Journalism from San Diego State University, a Juris Doctor from Rutgers University, and a Master of Laws in Taxation from the New York University School of Law.

Without further ado, Sharyn, the floor is yours.

Thank you so much, Anika. All right, welcome everyone to today’s presentation on Building a Sustainable Practice: Managing Risk and Strengthening Client Relationships Through Ethical Tax Practice. And this is about creating a sustainable, successful, and ethical tax practice. It’s beneficial for everyone involved. It serves the best interest of tax practitioners, clients, and the overall tax system.

Now, this presentation, we’re going to be focusing on how the ethical and professional standards outlined in Circular 230, as well as some other statutory authorities, contribute to a sustainable practice. The Circular 230 provisions we will cover are relevant to several phases of a tax practitioner’s practice. So, we have that pre-engagement phase, the client acceptance and onboarding phases, the active-engagement management phase, and the completion of engagement phase.

Effective tax administration of taxes is going to rely, it does rely on two key pillars. There is technical proficiency and then there is also ethical conduct through adherence to professional standards. Since this is an ethics course and then we all want to get our ethics credit, we will be focusing on emphasizing the importance of adhering to those ethical and professional standard applications outlined in Circular 230.

Throughout this presentation, I am going to be sharing some best practices to assist you in meeting these professional standards. Before we dive into applying specific sections of Circular 230 to these four phases of tax practice, I want to start with a broad overview of the statutory and regulatory professional standards that are applicable to someone who has a tax practice. As I said, tax professionals, we are under a lot of ethical requirements. In addition to technical expertise, success and tax practice requires adherence to ethics and professional standards.

Now, ethics in tax serves a number of key functions. It is going to foster trust and credibility among all of our stakeholders. That is our taxpayers, the IRS, and other third parties. It protects both taxpayers and tax professionals from legal repercussions. It ensures the confidentiality of sensitive taxpayer information.

And last, ethics in tax, as I keep mentioning, upholds the integrity of the tax system. Embracing ethics and professional standards lead to business success and tax practice in actually a number of ways. When it comes to client relationships, adhering to ethical and professional standards builds those long-term trust and loyalty, to protect sensitive client information, and it attracts quality clients who seek reliable service.

So, I’m emphasizing quality here because, as mentioned, I was a former practitioner myself and you all know what I mean because it’s about quality clients, right? There’s clients and then there’s those quality clients that we want to keep. So, there’s clients that maybe we don’t want to take on because dealing with them and their unreasonable expectations is not worth our time and our effort. So, we want those quality clients.

Following, ethical and professional standards also aids in risk management by reducing exposure to legal sanctions and penalties, we all like that, minimizing the risk of malpractice claims, and effectively managing conflicts of interest, which is going to promote transparency and integrity. And practitioners who uphold ethical standards and meet professional requirements enhance their overall professional value by elevating their market reputation and credibility, delivering accurate high-quality work, and distinguishing their practice in a competitive market.

A commitment to ethical practices is rather like a self-reinforcing cycle. Our strong client relationship leads with stable practice, which results in professional success and industry stability, and that ultimately enhances the reputation of the tax profession in general, which brings us back to having a strong client relationship, because taxpayers know in our industry, we adhere to professionalism. Now, we recognize the fundamental importance of ethics in tax practice, that broad overview lists address the oversight and professional responsibilities of tax practitioners, who are practicing before the IRS.

Tax practitioners or tax professionals, are guided by a number of professional standards set out in federal and state statutes. And in addition, there are relevant credentialing authorities, they set out professional standards expected of us to meet in order to keep our credentials. So a combination of all these regulatory and governing bodies establish a comprehensive standard that define the expected professional conduct, provide clear ethical guidelines, create measures for accountability and failures for adherence to those measures, and support the trustworthiness of the tax profession.

The regulatory authority with respect to those who practice before the IRS comes 31 USC Section 330. Now, this one’s an oldie. Authority traces back to 1884 when Congress first granted Treasury the power to regulate tax practitioners. This longstanding authority highlights the importance of maintaining high professional standards in tax practice. Now, of course, the statute’s undergone a number of updates over the decades. Under the statute, the IRS, specifically the Office of Professional Responsibility, makes determinations about a practitioner’s “fitness to practice”.

The statute authorizes the type of disciplinary actions that can be taken against practitioners who are incompetent, disreputable, or who violate the regulations prescribed under the statute. Additionally, the statute allows for monetary penalties to be imposed on practitioners for misconduct and in certain cases on the entity with which these practitioners are affiliated. The statute also authorizes the secretary to establish standards for giving specific written advice.

When Congress enacted Section 330 of Title 31, it intended that only individuals who are professionally and ethically fit to represent taxpayers, claimants, and others would be eligible to practice before the Treasury Department, which we know includes the IRS. As such, the statute requires practitioners to possess good character and reputation to have those necessary qualifications to provide a valuable service to their clients and to demonstrate competency in advising and assisting clients and presenting their cases to the IRS.

I want to point here, we know there’s a difference between qualifications and competency. Someone that’s fresh out of an undergraduate program on accounting may have the qualifications to practice before the IRS, but not necessarily the competency to handle, let’s say, a complex corporate matter or a partnership return or any of those items. Our competency, which I’m going to address a little later on, is built through our experiences, our educating ourselves, our participating and continuing education, those kinds of items.

Now, the requirements are similar. These requirements that are set in Section 330 of Title 31 are similar to the requirements set out by state licensing authorities or under a state’s profession code. These requirements in general are what we expect of any professional, right, be it a doctor, a lawyer, or a tax professional. We want them all to have that good character, reputation, be qualified, and be competent.

Circular 230 contains the regulations that define a tax professional’s expected professional conduct. It shows duties and obligations expected of them when they are practicing before the IRS. It authorizes specific sanctions for practitioners who violate these duties and obligations, and it details the procedures that govern administrative proceedings for disciplinary action should a practitioner find themselves before OPR. The professional standards and ethical guidelines in Circular 230 serve as a foundation for ethical tax practice, protecting taxpayers, protecting tax practitioners, and protecting the tax system.

Now, Section 10.1 of Circular 230 is my favorite section in the circular. And that is, it provides for the commissioner of the IRS established the Office of Professional Responsibility, or as we all know it, OPR, and it delegates authority to OPR to administer the regulations in Circular 230. OPR has oversight of the professional standards required for practicing before the IRS, and we take this responsibility very seriously. Primary focus of OPR is reaching fair and consistent resolutions to allegations of practitioner misconduct.

The standards found in Circular 230 and overseen by OPR are categorized into like four broad categories. Those relating to advising taxpayers of filing positions or on a transaction, those relating to representing a taxpayer before the IRS, those relating to the practitioner’s own tax compliance, their tax filings and their payment responsibility, and those relating to external misconduct. Typically, these are matters in evolving issues of moral turpitude, and those are listed in Section 10.51 of Circular 230.

Now, as part of OPR’s oversight responsibilities, we investigate allegations of misconduct and ultimately discipline practitioners should it be warranted for those practitioners whose conduct falls below the standards outlined in the circular. He has authorized under Title 31, OPR can censor, suspend, or disbar a practitioner who violates the regulations and/or has demonstrated disreputable or incompetent conduct. Now, during the OPR disciplinary process, practitioners are afforded due process rights at every step.

When a referral is made to OPR, we not only look at the basis for the referral, but we also look at holistically at the issue. We look at, for example, the practitioner’s own tax compliance. That is their individual filing responsibilities as well as the compliance of any entities or others that the practitioner is responsible for filing for.

What I mean by tax compliance, I’m talking about both the tax return filing responsibilities and tax payment responsibility. Now, I want to be clear, OPR does not sanction a practitioner who filed a late return or who has an outstanding tax liability that they are working with the IRS on paying. We’re not looking for those footfalls, rather we’re looking what comes to our attention of those practitioners who have a pattern of filing late or only filing when they have been notified by the IRS that they have failed to file.

We look at practitioners who have a pattern of having tax liabilities year after year if they’re not appropriately adjusting their withholding and that they are not working with the IRS and resolving those payment responsibilities through installment plans or offers in compromise. OPR focuses on that significant conduct, it’s going to undermine the integrity of the tax system or the tax administration, not technical mistakes or minor infractions.

As I said, a practitioner’s pattern of non-compliance or a pattern of referrals for that matter if OPR has seen a number of referrals regarding that practitioner over a period of time or a number of referrals from multiple sources. That will get OPR’s attention.

The OPR, as I mentioned, is in contact with state bars and boards of accountancy. We regularly check these licensing authorities’ disciplinary actions to determine whether the underlying conduct for that state sanction also supports an OPR sanction.

And we also look to court disciplinary actions as well. OPR’s jurisdiction covers those credential professionals who practice before the IRS and specifically, those are our Attorneys, our Certified Public Accountants, and our Enrolled Agents as well as other credentialed enrolled practitioners, such as the Enrolled Retirement Plan Agents and Enrolled Actuaries. Our jurisdiction also covers those tax professionals who participate in the IRS’s annual filing season programs and cover appraisers who provide appraisals that support tax positions.

Section 10.2(a)(4) of the circular defines what it means to practice, and it’s a very broad definition. It encompasses all matters under the laws and regulations administered by the IRS that relate to a taxpayer’s rights, privileges, and responsibilities. Similarly, we see practice falling into kind of two categories of activities. Those activities that encompass client representation before the IRS, like representing the client during an audit, or a collect and matter, or an appeal for appearing before the IRS on behalf of the taxpayer at an IRS conference, hearing, or meeting, and corresponding with the IRS regarding a client’s tax matter.

Advisory service activities involve tax practitioners communicating to the IRS on behalf of the taxpayer, and this could be through preparing and filing documents with the IRS, issuing written tax opinions to support a client’s tax position that’s taken for return, and advising on their tax positions and tax transactions. And it’s important to note that the definition of practice does not encompass what’s called mere tax return preparation, and this is based on a court decision in Loving versus Commissioner.

Now, let me be clear, I’m not belittling tax return preparation by saying mere, that was actually the term used by the court, which is if you are merely preparing tax returns and will not be engaging by speaking, communicating with the IRS, you are not practicing before the IRS. If you are an unenrolled return preparer who only prepares tax returns, you are not covered by Circular 230. However, if you engage in representation authorized through the IRS’s annual filing season program, and that was established in the revenue procedure 2014-42, then you are subject to Circular 230.

The AFSP program, as it’s known, again, that’s the Annual Filing Season Program, grants limited representation rights to unenrolled return preparers who, after 2015, prepare and find federal tax returns, and there is a subsequent IRS examination of one of these returns prepared by that AFSP individual.

Now, any time a tax professional signs and submit to the IRS Form 2848, that is our Power of Attorney and Declaration of Representative, or they do an online POA and submit it to the IRS’s Tax Pro Account, which if you haven’t done it, give it a try, fantastic. T

hat practitioner is engaging in representation for the IRS. You’ll notice when I rattle off the title of Form 2848, it is called Power of Attorney and Declaration of Representative. This is because every time you sign a 2848 or an online POA in the Tax Pro Account, you declare under the penalty of perjury that you are subject to the regulations contained in Circular 230.

Tax practitioners have to navigate multiple professional standards besides those in Circular 230. Now, these professional standards can come from requirements and penalties that are outlined under the Internal Revenue Code or regulations from our state licensing authority or ethical rules from our professional associations or some sort of specific industry standard. Now, violations of these other authorities, as I mentioned, may constitute disreputable conduct under Circular 230. For example, a state licensing authority or judicial discipline may trigger OPR to take action.

Also, a practitioner’s violation of other authority state statutes may be considered sanctionable disreputable conduct under Section 1051 depending on the facts and circumstances of that violation. For example, if a practitioner has been convicted of a federal criminal offense, not just limited to a tax crime, of course, OPR would consider that to be disreputable conduct. So, understanding these overlapping obligations is going to be essential for effective risk management.

Now, all this regulatory framework is not just about checking the box on compliance. Adhering to professional standards can help you build a successful and sustainable practice. Meeting your professional standards matters to your tax practice, because they’re going to establish a framework that fosters client trust and confidence kind of set clear boundaries for professional conduct for yourself, for others in your firm, for your expectations from your client. It’s going to aid in managing risk through ethical compliance, support long-term practice sustainability of your practice, and protect practitioners, and their clients.

Adhering to professional standards is going to contribute to your practice’s success in a number of ways. A solid ethical foundation enhances client relationships. And I’ll get into this throughout this presentation. These professional standards can guide us in making effective decision making. Compliance is going to, as I mentioned, reduce the risk associated with practice. And a solid reputation is going to encourage sustainable business growth.

All right, I have said a lot. So let’s pause here for our first official polling question. Anika?

Sharyn, that sounds like a great idea. So audience, we’re going to make sure you’re still with us. We’re going to test your knowledge. Here is your first polling question. Which item is not a fitness to practice requirement? A, competency? B, good reputation? C, PTIN? or D, necessary qualification? Take a moment and click the radio button that best answers the question. If you did not receive the polling question, please enter only the letter A, B, C, or D that corresponds with your response in the Ask Question text box. Your response is timestamped. Audience, please remember that you need to answer at least four polling questions and participate in the live broadcast from the official start time for at least 100 minutes to earn two IRS CE credits. The polling question example we did at the beginning of this presentation does not count towards the requirement. I’ll give you a few more seconds to make your selection or submit your answer in the Ask Question feature.

All right. So we’re going to stop the polling now and let’s share the correct answer on the next slide. And the correct response is C, PTIN. All right, I see that only 53% of you responded correctly. Sharyn, can you clarify the answer to that question?

Sure. So the fitness to practice is outlined in section or in the statute itself. That’s that Title 31 Section 330. So it is our competency, good reputation, and character and the necessary qualifications. That’s just surely definition of fitness to practice. A PTIN is something we need and mindful, we will tell the IRS that we have these qualifications to handle something and manner the IRS will check to make sure that you have that good reputation and character through making sure there’s no referrals or other checks within the IRS’s data. But it’s not a requirement, the PTIN is not a requirement under the statute. It is just an administrative item that assists us in keeping track of tax professionals.

All right. Thank you for the explanation. Audience, I hope that helps you understand that question a bit better. So, Sharyn, I’ll go ahead and pass it back to you.

Fantastic. Thank you. All right. So, we’re going to move into our main discussion and the specific sections of the Circular 230. I first want to go over one section of the circular, and that is 10.33 best practices, because I’m going to be using that firm a lot today as we go through these sections. Section 10.33 states that tax advisors should adhere to best practices in providing advice on federal tax issues in preparing or assisting in the preparation of a submission to the IRS and providing the highest quality representation to their clients.

For example, a best practice would include clearly communicating with your client and exercising due diligence and meeting standards, and acting fairly with integrity when you are practicing before the IRS.

Section 10.33 is actually aspirational. That is a practitioner who fails to comply with Section 10.33 of a practitioner who does not adhere or implement best practices cannot be subject to discipline under Circular 230 by OPR, merely just for that one violation of that one Section 10.33. However, typically, OPR, when we determine that a practitioner has, there has been misconduct under other provisions of Circular 230.

That misconduct typically arises because that practitioner fails to adhere to best practices. Also, while only aspirational, it is important to note that this section was specifically included in Circular 230 as there is that expectation that tax professionals must observe best practices, preserve the public confidence in the tax system.

Now, after we go through each phase of the client engagement and the applicable Circular 230 provisions, I’m going to point out some best practices that can assist you in meeting your professional standards under the circular and building that sustainable practice. So, our first phase, building a strong ethical foundation starts with the pre-engagement phase.

Since the circular was last updated in 2014, there has been a proliferation of new and effective ways for tax professionals to solicit clients. These methods can include social media, emails, YouTube videos, and as we even know some TikTok videos as well. And these new ways offer attractive opportunities for client outreach and engagement. But regardless of the method used, it’s important to adhere to Circular 230 on solicitation for your services.

Now, 10.30 requires that all solicitation be free of false, fraudulent, or deceptive statements or claims. For example, a practitioner cannot advertise, they can get better results for clients based on their previous IRS employment or because that practitioner knows people in the IRS or that they know some secret way to get larger refunds. Also Section 330 requires that if a tax practitioner engages in unsolicited written or oral solicitation, that communication must clearly state that it is a solicitation and it also must identify the source of the information used to select the recipient.

For tax practitioners who publish their fee schedule and disseminate it to the public, a well-defined schedule can include fixed amounts for a specific routine service or your hourly rate or that range of fees tailored for a particular service and whether a fee is charged for an initial consultation. To maintain transparency, if there are any additional costs that may be passed on to the client, such as maybe you charge separately for phone charges or copy charges or filing fees, it’s essential that the published fee information include a very clear statement regarding the client’s responsibilities for these costs.

Tax practitioners can charge no more than their published rate for at least 30 days after the last release of the fee schedule. And hearing to this timeframe can be a bit tricky when we’re using social media. For example, you may have posted something on TikTok or Instagram over 30 days ago, but somebody may have reposted it so now it is back up at the top and now we have a new timeframe, sometimes the olden days were kind of easier, right? Adhering to these solicitation standards not only builds trust, but also ensures clients have the information they need when choosing a tax practitioner.

Some best practices that you should put into place regarding solicitation include avoid making those promises you cannot keep. Your solicitation is going to shape a client’s expectations. Avoid offering specific tax advice or endorsing products or services that you have an interest in without having those appropriate qualifications and disclosures. Clients need to know if you have a vested financial interest in the product or service that you’re promoting to them. This practice not only builds trust, but it’s going to ensure those clients have the information they need to make an informed decision.

Also in some situations, this could be a conflict of interest. So informing clients at the onset is going to avoid any misunderstanding that could result a malpractice claim or a disciplinary. Ensure your online activities comply with ethical and legal standards set by your professional organization and other regulatory authorities. There might be some state law as well, state authorities, in addition to 10.30 here. Firms should develop and implement clear social media policies and educate all of the employees about these policies, including the potential risk associated with social media and the importance of discretion.

For example, a tax practitioner who posts a client testimonial on social media without permission from the client is violating both confidentiality and the solicitation requirements. Now, that importance of discretion, that is especially true for our younger practitioners. Don’t mean to pick on the younger practitioners, but they have all been brought up with the regular use and routine sharing of information on social media, and sometimes they overshare, right? So, we don’t want to overshare about our clients, that’s for sure.

We’re going to establish clear rules against sharing client personal financial information, details, sensitive tax-related information on social media. You just got to be careful what you put out there, because you could say, I just resolved a very successful tax dispute with the IRS for the best car dealer in this town. It can be easy for somebody to back their way into figuring out who they are talking about, and you have now embarrassed your client by letting everyone know that they had a tax problem. So, we’re just going to be very careful about what we put on social media. So, be cautious what you put on social media even harmless information can be used against you or your client.

When considering accepting new clients, a tax practitioner must ensure they possess the competence to manage the client’s tax matter effectively. Practitioners have to understand the competency requirements in Section 10.35. These requirements require us to evaluate our knowledge, skill, thoroughness to handle the client’s matter. And I want to add, don’t forget the time factor as well. Conduct regular assessments of our current competency level or current competence level. Identify areas that require further development and be proactive in doing that. And recognize when it’s appropriate to decline representation.

Section 10.35 of the circular requires tax practitioners to possess the knowledge skill thoroughness and preparation. And as again, I’m going to mention the time needed for the matter for which they’ve been engaged. That is a definition of competency. So, this section emphasizes the importance of practitioners assessing their current competency when taking out a new client or a new matter for an existing client. It’s important to note that this competency assessment is not limited to substantive knowledge.

Taxpayers must also be competent in procedural matters, right, including procedures for meeting critical filing deadlines set by relevant tax statutes, conducting necessary research on a matter, including where to find the applicable authorities, and adhering to other ethical responsibilities like conflicts of interest issues. And additionally, tax practitioners need to demonstrate competency in administrative matters, such as maintaining client confidentiality, protecting client’s Personally Identifiable Information, that PII. I’m going to also use that term a lot throughout this presentation. Proper record keeping and communicating clearly and regularly with clients.

For practitioner areas requiring development, Section 10.35 allows the practitioner to develop their competency for the matter for which they’ve been retained. And they can do this by researching and educating themselves on an issue or consulting with another tax professional who has that established competence in that relevant field, or retaining or collaborating with another tax professional who is knowledgeable in the tax matter. But it is critical to remember that it’s your responsibility to decline and withdraw from the engagement if you cannot achieve that necessary competency. For example, if you’re handle international tax issue, and you don’t have the requisite expertise, it’s advisable to ban an expert who does have the expertise or decline the engagement.

Now, there are a number of common competency challenges that often arise involving these issues. There’s complex tax transactions that are outside that tax practitioner’s area of expertise. There’s the implementation of new tax laws with which the practitioner is not yet familiar. There are new technology requirements for protecting client’s PII, that Personally Identifiable Information, and then there could be issues that are specific to certain industries.

Best practices for a practitioner to maintain and enhance their competency would include taking that time to regularly evaluate your skills, factoring in the complexity of cases compared to your current capabilities, and this is also going to help you identify those areas that you may need improvements. Actively track your continuing education and focus on targeting training sessions designed to strengthen your skills in specific areas where you may need improvement.

Ensure you have access to a wide range of research materials, databases, and experts basically. Establish clear protocols for collaborating with specialists to enhance your practice, so make sure you’re adhering to certain relevant privileges that may be involved in bringing in someone into your client’s tax matter. And try to forge strong connections with specialized tax experts, engage in networking with fellow tax professionals, so it’s not only going to expand your knowledge, but it also improves your ability to serve your clients effectively.

Section 10.29 highlights potential risks associated with conflicts of interest, and we’re going to be stressing the importance of vigilant caution in practice in this area. Generally, we’ve got three categories of conflicts. We have direct adversity between clients, that is the interest of two or more of our clients, are directly opposed to each other. This could arise in our joint returns, right, our spouses that may be going through a divorce, or it could arise when we have business partners that are in a dispute, or it could arise with related entity representations.

Another category of conflicts is where there is a material limitation on your representation. An example of this is a practitioner who represents two shareholders, let’s say, of a closely held corporation during a sale, may face material limitations if one of those shareholders prefers a stock sale for the tax efficiency, while the other shareholder favors an asset sale due to personal financial goals. Now, we have two clients that want different goals, so this could hinder your ability to advocate effectively for both parties.

And then last, there is that personal interest conflict. An example of this is if a practitioner promotes syndicated conservation easement transactions, prepares the tax return that claims the deduction for that syndicated conservation easement and represents a client in an IRS audit. There are a number of conflicts that can arise here. First of all, we have bias, right? The practitioner’s financial or reputational interest as a promoter may conflict with the client’s best interest in resolving this tax matter with the IRS, and we have an issue of objectivity. The dual rules of promoter and representative can undermine impartial advocacy. Is that practitioner being objective? Are they doing what is best for the client, or are they doing what’s best for themselves?

And last, there’s that ethical risk. Circular 230, as we see mandates that practitioners maintain objectivity and integrity. By promoting, preparing, defending that transaction, promoters are directly involved or for the transaction they’re directly involved, the practitioner may risk failing to meet the standards under Circular 230. So it’s imperative for practitioners to recognize and address conflict to uphold our ethical standards, and be able to serve their clients effectively.

Now, if you identify a conflict of interest, you may still proceed with engagement as long as it’s not legally prohibited, and you reasonably believe that you can provide competent, diligent representation to each affected client. If you can assure competent, diligent representation, and you’re going to continue with that engagement, you must obtain a written waiver from each affected client within 30 days of that conflict arising. And the purpose of that 30-day time period is to ensure that clients are promptly informed of a potential conflict and that their informed consent is obtained before that representation progresses significantly and while the matter is still fresh in everyone’s mind. Obtaining that written conflict waiver after the taxpayer concludes when the IRS or client raises the issue of the conflict is not going to be timely.

Now, you do need to retain those written conflict with the receivers after the conclusion of the engagement and these waivers must be requested. Recognizing whether conflict of interest exists and whether you can provide that competent, diligent representation to each affected client, it can be complex. So don’t hesitate to get assistance from some various sources, such as your state licensing authority or your malpractice carrier or an objective knowledgeable third party.

Got some red flags here. So when bringing in a new client, it’s crucial to watch for potential red flag that indicate the future challenges should you bring them on board, right? These are going back to what I call those quality clients. So if we have taxpayers with complicated financials situation involving specialized knowledge, if you don’t have that specialized knowledge, that could be a red flag on a go forward basis.

And we also have clients who have those unrealistic expectations that may hinder cooperation with us. And we may have a potential new client come in who has a history of tax issues, including problems with past tax preparers. Now, it could be that their tax past preparer was not competent or qualified, or it could be that the client themselves is difficult. There could be a reason the taxpayer’s looking for a new tax professional.

Now, before I point out the best practices on screening clients and risk management, I think it is a good time to – oh no, not yet. I think I want to wrap those up, then we are going to have a question. All right. So best practices for screening clients, we’re going to get this well-expression in your mind. Includes doing a thorough initial consultation with that new client, or potential new client, I should say, to understand their situation and identify potential issues they may have, especially issues that may go to your competency level to handle.

Have clear procedures for gathering information and assessing risks. For conflict management, some best practices include implementing a systemic screening process, right? Both at the intake time when we’re looking at bringing this client in, and having regular reviews about potential conflicts throughout the engagement. If there is a conflict, inform the client promptly and handle it properly.

This means getting those written waivers when appropriate and always considering confidentiality and privileges. And I say that because we have to get informed consent. You have to inform both the clients about what the conflict is. And one client may not want the other client to know this information. In which case you can’t give informed consent and therefore you can’t get a waiver. So it is tricky. And do remember those conflict waivers must be kept for 36 months after that representation ends and that the IRS can request copies of them, so while proper screening protects your practice.

The next phase we’re going to be talking about client’s acceptance and onboarding is going to build that foundation for a successful relationship.

But before we get there, I think it’s a good time to pause and have a polling question. Anika?

Yes, this is a great time for a break for a polling question. So audience, here is your next polling question. Which section of Circular 230 must practitioners adhere to when soliciting clients? A, 10.45; B, 10.21; C, 10.35; or D, 10.30. So just take a moment and click the radio button that best answers the question. If you do not receive the polling question, please enter only the letter A, B, C, or D that corresponds with your response in the Ask Question text box.

Your response is timestamped. Audience, please remember that you need to answer at least four polling questions and participate in the live broadcast from the official start time for at least 100 minutes to earn two IRS CE credits. The polling question example we did at the beginning of this presentation does not count towards the requirement. I’m going to give you guys a few more seconds to make your selection or submit your answer to the Ask Question feature.

All right. So we are going to stop polling now, and let’s share the correct answer on the next slide. And the correct response is D, 10.30. Okay, so I see that only 60% of you responded correctly, so Sharyn, can you help us out a bit and kind of clarify that answer?

Sure. It is Section 10.30. I think people are checking me. I think they know this. They just like to hear me talk. No, it is 10.30. That’s the one on solicitation, and it sets those rules out about how we advertise, setting those fee schedules, the timing that we have to adhere to those fee schedules if we publicly disseminate. And if we are doing that unsolicited communication to clients, we need to tell them that it is a solicitation and inform them of how they were selected to receive it.

Thank you for that clarification, Sharyn. Audience, I hope you made note, and that cleared some things up for you. So we’re going to pass it back to Sharyn to continue.

All right. Thank you, Anika. So now following our pre-engagement phase, we have the client acceptance and onboarding phase. They’ve made it past us, right? We’re going to let them in. And this is the next essential step in establishing a practice’s strong ethical foundation. We’re going to start off with talking about engagement terms. Key elements of the tax practitioner-client relationship should be documented in a very comprehensive engagement letter.

And the first thing I’m going to start with, and I know this sounds a little on the silly side, is making sure we know who our client is, right? It’s not as easy as you think. If it’s an individual, that’s great. But if you have spouses, if you have a partner in partnership, if you have the shareholder and the president of the company, it’s got to be, you have to know who you owe that fiduciary duty to, because if a conflict arises, you need to know who is your client. We also want to put in our engagement letter, clear to define a definition of the service to be provided, as well as responsibilities of the client, such as to give you the documents and promptly respond to you, as well as your obligations.

And, again, I was a former practitioner. I know it was like clients assume you are their tax professional for everything related to tax. And your relationship is going to extend long after they stop paying you for your services. So we’re going to be very defined in what our services are to our clients. The engagement letter is also an excellent opportunity to inform your client if you are going to be using offshore services that require sitting in their personal information, their PII outside of the United States. It’s also a great place to disclose if you will be using an intermediary service provider, you’re giving someone the taxpayer’s name and social security number, so that you can get transcripts for the client, or if you’ll be utilizing artificial intelligence tools. This is a new one coming up, so re-look at your engagement letter and make sure it’s up to date. Transparency at the onset, putting it in our engagement letter, is going to prevent misunderstandings later on.

You should discuss significant aspects of the representation, and that would be the scope, terms, objectives, and action to be taken during and after the engagement. The well-crafted engagement agreement is going to ensure both the client and you have a clear understanding of the scope of the services. And that clarity is vital for establishing client expectations and defining your duties. And tax practitioners should provide timely updates to the client, and if those updates require revising the engagement letter to reflect any material development.

All right. Moving on to 10.27, which has to do with fees and costs. That is an essential part of our engagement letter. When establishing your fee arrangement, you should understand the requirements outlined in 10.27. This includes a prohibition on unconscionable fees, limitations on contingency fees, and requirements for fee communication. Let’s go with those unconscionable fees, which some clients probably consider everything unconscionable, but we earn our fee, right? Practitioners cannot charge an unconscionable fee.

Now, in the cases that we see in OPR regarding Section 10.27, when an unconscionable fee was identified, was a fee, a large fee, charging a very significant fee for variable quality advice, or quoting a low fee at the onset of the engagement within a significantly increasing that fee based on the size of the client’s refund. Now, a fee schedule can take into account the complexity of a return, but it should not be based on a sliding scale related to the client’s refund amount.

Contingency fees can only be charged in limited situations, and if you’re unfamiliar, a contingency fee is a fee based entirely or partially on whether the IRS sustains the position taken by the IRS, or any fee arrangement requires a practitioner to reimburse the client for all or part of the fees if the IRS challenges a position on the return or if that position is not ultimately upheld during an IRS examination. And the reason contingency fees are in the circular is because they raise concerns regarding that conflict of interest and they could lead a practitioner to advise the client to take an overly aggressive position due to the practitioner’s self-interest in getting a larger fee.

Now, contingency fees can be charged but only in limited circumstances. They can be charged in connection with an IRS examination or a challenge related to original return or amended return or a refund claim. They can also be charged for services rendered in connection with the determination of statutory interest or penalties that have been assessed by the IRS or for services related to any judicial proceeding arising under the Internal Revenue Code.

And best practices for our engagement letter, as I mentioned before, we want to clearly define the scope of the services, specify any limitations on the services that we are going to provide. And right in there is that if something new comes up, it will require an updated or a new engagement agreement. It’s going to establish our communication protocols. Are we going to be communicating with the client via emails through a secure upload platform, through other methods? Disclose how client information will be shared with those intermediate service providers or any offshore tax services that you use, outline how conflicts of interest can be managed if they arise during the engagement. Put your engagement agreement that a conflict could arise if you are representing more than one person in that engagement. And what will happen if a conflict does arise? Which could include of the twmo clients, you’re going to be keeping one of them and the other one will need to go find new representation.

Define the basis for terminating services and include in that protocols for returning client records. For instance, you can state that upon the termination of service, you are going to return the client records and withdraw your authorization form. So if you set that policy about returning client records at the beginning of the engagement, it’s going to avoid those complications on logistics at the end of the engagement when we’re trying to get a hold of a former client and get their files back to them.

The best practices for fee structures is that the engagement letter has a clear outline of the arrangements, payment terms, responsibilities for expenses, and consider including it in that engagement agreement the potential cost for handling additional services. An example of this is imagine that you have a client or even a former client and you receive a summons or a subpoena for your records or testimony for your records during or after that engagement. Outline how you’re going to be compensated for your time and responding to that request or requests like that.

All right. Moving on to gathering information, so Section 10.22 states that when practicing before the IRS, a practitioner must exercise due diligence to ensure the accuracy of both written and oral representations made to the client and made to treasury personnel and we know that’s the IRS. This includes preparing or approving any submission to the IRS such as a tax return, a tax form, document, affidavit, protest, all of those items.

Due diligence refers to a level of care that a reasonable person is typically expected to exercise to comply with a legal requirement. For example, due diligence, a reasonable practitioner upon getting a new client would ask that client for the prior year’s return, ask the client for books and records to support, so that you can learn about your client’s tax situation. A reasonable practitioner would issue tax organizers to collect the information and even consider tailored tax organizers and meet with clients to ascertain relevant information and ensure proper substantiation procedures are followed.

When we’re managing tax matters for our clients, due diligence is going to require us to ask questions to ascertain the material facts. There’s a lot of facts, not all of it’s going to be material, and the client doesn’t know. Sometimes they’re not the tax professional that’s why they’ve hired you. So you know what material facts you need for a particular return or matter. Due diligence also includes knowing the applicable legal authority. Again, a lot of authorities out there. Not all of it applies to the particular client’s tax situation or matter, no matter what TikTok video the client has given you that makes them believe that it does apply.

If you’re not familiar with the relevant law, take the initiative to educate yourself or consult with an expert you can reasonably rely on or if necessary refer the case to someone who does have the expertise needed. So we’ve got our material facts, we’ve got our relevant legal authorities, we’re going to apply those legal authorities to those facts, and sometimes the result of that is a cultural conclusion that your client is not expecting or that your client does not desire. They don’t appreciate it. Such a determination, something your due diligence obligation is to present the client with a clear, honest assessment of their tax situation.

There is a safe harbor in 10.34 for tax practitioners that’s relevant to this due diligence requirement. The safe harbor allows a tax practitioner to rely and good faith without verification on information received from clients and on the work product of other professionals. As I mentioned, as long as that practitioner relies on it in good faith and if it’s dealing with the work product of other professionals, that those professionals were selected with reasonable care. Now, this safe harbor is not a free path.

If a tax practitioner must make reasonable inquiries, if the information they get from that client or they get from the third party seems incorrect, inconsistent, or incomplete, and a tax practitioner must consider the implications of any other information they may have received or that they personally know. Basically, if you know something is not correct, you cannot just claim, I took that position or I relied on it, because my client told me that. If you know it’s incorrect, you know it’s incomplete, you have a due diligence responsibility to ask more questions. Willful blindness is a violation of Circular 230.

All right. Some best practices for our information gathering includes implementing a systemic collection, a systemic system for collection of information and follow-up procedures, right? You could advance the client for something and sometimes they ignore us, so we’re going to make sure we’re going to follow up on those items. We’re going to establish clear documentation requirements and verification protocols. What do we need and did we actually receive it? And those verification protocols are going to emphasize asking more questions if the information we receive seems incorrect, inconsistent, or incomplete.

With respect to our documentation, some best practices for document management include creating an organized system for documentation to ensure the document’s location should it be needed for your purposes, for someone else within your firm’s purposes, for a matter relating to the client, or for an IRS examination purpose. Maintain up-to-date inventory on all your open client matters. This will help you understand your responsibilities. It’s going to assist anyone who has to take over your case should there be an unexpected need. Make sure all your files are secured, either the physical ones by in-lock cabinets or the digital ones using passwords and encryption. Make sure that access to client documentation is limited to only those who actually need to access it. And make sure your policies and systems comply with federal and state record retention periods. So do look at your state requirements.

With these information gathering protocols in place, we are next going to look to how we apply this information in the active client management phase. Before we do that, it is a good time to take another polling question. Anika?

Absolutely, Sharyn. So audience, here’s our third polling question. True or false? Contingent fees can always be charged. Answer A for true or B for false. Now, take a moment and click the radio button that best answers the question. If you do not receive the polling question, please enter only the letter A or B that corresponds with your response in the Ask Question text box. Your response is timestamped. Audience, please remember that you need to answer at least four polling questions and participate in the live broadcast from the official start time for at least 100 minutes to earn two IRS CE credits. The polling question example we do at the beginning of this presentation do not count towards the requirement. And I’m going to give you guys a few more seconds to answer the question or submit your answer to the ask question feature.

All right. We are going to stop the polling now. So, let’s share the correct answer on the next slide. And the correct response is B, false. I see that 86% of you responded correctly. That is a great response, great. So let’s go ahead and pass it back over to Sharyn.

Oh, so excited. Great percentage. All right. It must mean I’m saying exciting stuff maybe. All right. Or at least I haven’t put you to sleep yet. All right. The next step in establishing the practice’s strong ethical foundation is going to take place here at this active engagement client management phase. Basically, this phase is a tax practitioner’s daily responsibilities involving preparing and submitting returns and documents, anything we need that we are going to be sending to the IRS. Additionally, it can be that tax practitioners providing written opinions or addressing various client tax issues.

We’re going to start this section off with 10.34, which is about standards. And this section outlines the following prohibitions for tax practitioners. So a tax practitioner must not willfully, recklessly, or through gross negligence, prepare or sign a tax return they know or reasonably should know, include the position that lacked a reasonable basis, is considered an unreasonable position, or an intentional attempt to understate a tax liability. Tax practitioners must not advise clients to take a position on a tax return or many other documents submitted to the IRS that lacks a reasonable basis that is unreasonable or represents a willful attempt to understate a tax liability.

And tax practitioners must avoid recommending submissions to the IRS that are frivolous, intended to delay or obstruct tax administration, or that contain or admit information demonstrating a blatant disregard of the rules or regulations. So, basically, what we’re saying here is any position taken by a taxpayer – or excuse me, well it’s also the taxpayer, but by the tax practitioner, that’s who we care about, must at the very least, the minimum, meet the reasonable basis standard. And the standard always requires the accompanying disclosure. As a best practice, however, I’m just going to throw in, it’s advisable to strive for a higher standard than reasonable basis whenever possible.

So, I’ve got a chart here on this slide that shows the various general standards that are used for various general standard percentages that are used. And so we do have, as we can see in our upper left hand corner, that reasonable basis. Basically meaning that if somebody well-informed, knowledgeable in tax looked at this position on a return, that person would conclude that there is at least a 25% chance the position would be upheld if it was challenged by the IRS or if it was brought before a court.

So that same rationale, that same reasonable person well-informed, knowledgeable about tax, believes that there’s a certain percentage if a position was challenged applies to each one of these standards. So we have our reasonable basis, which, do you remember, must be paired with disclosure. We have realistic possibility of success, and that percentage is basically a one in three chance that the position would be upheld on its merit. We have our substantial authority, which is somewhere between 40% to 50% likelihood the position would be upheld on its merit. Somebody with well-informed, knowledgeable at tax concluded that it would be upheld.

And then our last is our favorite one, the one we like to try to meet if we can, which is more likely than not, which basically is a standard that there is at least a 50% or greater than 50% likelihood the position would be upheld on its merits.

Now, the following slide summarizes the different types of authorities that help us meet that percentage. So you can see here we have our primary sources. Those are the code, the regulations, legislative history. We have our judicial authorities. These are court decisions from the tax court, district court, or appellate court, even the Supreme Court. And then, we have those administrative authorities that come out of the IRS, our revenue rulings and revenue procedures, letter rulings, similar other pronouncements.

If you imagine, think about those primary sources as having some weight to them. And the more primary sources we have for the position we took on the return, right? I did this on a return, because I am relying upon this tax court case, or I am relying upon this Supreme Court decision, or I am relying on a revenue ruling that the IRS issued. The more of these items we have, the more it’s going to tip the scale into those heavier percentages, right? I’m not a math major, so I don’t know if percentages are heavy or not, but visually I always think they are, right, 50% seems heavier than 25%. So, we’re going to look at these authorities that we’re relying on, and there are secondary sources as well. They, as you can see, visually don’t have as much weight as those primary sources.

So, now, we understand roughly how due diligence requirements and position standards work together, or we’ll see how they work together in actual practice. So, I’ve got my flowchart here, and it’s kind of showing how our due diligence responsibilities and meeting our standards work together in a practitioner’s regular daily practice. So, we’ll start at the very beginning here. You receive client information, and that triggers a series of professional obligations from you, and think of it as a two-step process that’s going to protect you and your client.

So first step is our due diligence under Section 10.22. You’ve received that information. You’re going to ask yourself, is the information complete? Is it consistent with what I already know about the situation or the client or the transaction? Does it make business sense? Do I need additional documentation or information? And this isn’t just checking a box. It’s about building that solid foundation for the client’s tax position.

Now, our next step has to do with the standards. So once you’ve satisfied that you have the information and it’s complete and accurate, you’re going to evaluate does that information support that tax position? Does it meet at least reasonable basis? Based on the information I have and the authorities that I am relying upon, I believe I have at least a reasonable basis, at least a 25% chance of success if somebody knowledgeable in tax did an analysis of my position and they believe it would be upheld if challenged by the IRS or if it was brought before a court.

Now, if you can’t get to reasonable basis, you’re going to need to have a frank discussion about what positions you can and cannot take with your client. Now throughout both of these steps, best practice here is document your analysis and your conclusion. It’s going to create a clear record of your decision making process. It’s going to demonstrate your compliance with both due diligence and meeting the standards. It’s going to assist in, if there is a challenge, showing why you made that decision and what you were relying upon in order for you to believe you had hit the appropriate standard.

And, again, this isn’t just about meeting regulatory requirements. This systemic approach is going to help you build that sustainable practice. It’s going to make sure you have quality work. It’s going to maintain client trust, because they’re going to know that you are making sure that what’s put in their return is accurate. And more importantly, it’s going to protect you from potential liability.

All right. Let’s hit on some best practices to ensure you’re meeting your standards, establish clear research procedures and policies, define documentation requirements what needs to be collected, how it is going to be retained, and create review protocols, especially when we’re dealing with some of our newer colleagues in the firm, whether they’re fresh out of school or whether they’re experienced, if they’re new to you. We just want to have a good review protocol in place until we feel comfortable that we understand their competency level. And while a tax practitioner must disclose, when only meeting the reasonable basis standard, so we do have to tell our client that those disclosures generally should be considered for other situations, that’s like a proactive measure.

As a practitioner myself, I would disclose situations on submissions that I made to the IRS. There is a specific form for it, it’s an 8275. I have it there in the resources at the back end. It’s an 8275, that’s the disclosure statement. And I would do it, we have to do it when we hit reasonable basis, but sometimes I would include disclosure statements as a protective measure. I want to make sure that when this submission went to the IRS, that the IRS understood the situation, and that they had no questions whatsoever, because we don’t want to elicit questions from the IRS, right? We want to make sure what we have given them is self-proving.

For quality control, employee best practices such as implementing systemic review procedures, setting those documentation standards, putting protocols in place for correcting errors, and using final review processes. All of these actions will help a practitioner effectively meet the requisite standard.

Now, speaking of errors, there is a Section 10.21 of the circular addresses that very sensitive topic, your duty regarding the client’s errors, emissions, or non-compliance. And in particular, this situation can present a number of ethical challenges for a number of reasons. For example, who made the error or who omitted the information? Was it the client, and if it was the client, did they do it accidentally or did they do it purposely? Was it a previous preparer? And, again, also, was it done accidentally or purposely or through, I’m going to say accidentally through a lack of competence, or was it your office? And, of course, it was never done purposely by your office, though it could only have been done accidentally.

So who made the error? What are the consequences of that error? Is it going to affect subsequent tax years? Is it something that the IRS is likely to notice quickly? And I’m adding that part, not to say, will the IRS not notice it at all? I’m saying will they notice it quickly meaning a decision needs to be made very quickly, in order to address that non-compliance error or omission before the IRS gets to it.

And then our last challenge has to do with what is the client willing to do about the non-compliance error or omission? Are they willing to amend a return or make a voluntary disclosure, or are they of the position that they don’t want to do anything at all and take a wait and see approach? So your responsibilities under 10.21 are quite clear.

If you discover that a client has not complied with the Internal Revenue Code or has made an error or omission in a return or a document, something that’s been submitted to the IRS, you are required to: one, promptly inform the client of the non-compliance error or omission; and two, advise the client about the consequences under the code and the regulations related to that non-compliance error or omission. Practice would be to advise the client on how to correct the non-compliance error or omission, and that is, basically, what does the client do? As I mentioned, do they file an amended return? Do they put in a voluntary disclosure?

And I want to make this important note here. Under the circular, you or anywhere in the circular, you are not required to file an amended return or other corrected document with the IRS. And if you did so without your client’s permission, you exposed yourself to a malpractice claim for violating your duty of confidentiality. Often, I hear practitioners come to me with saying that they want to tell the IRS about their client’s non-compliance for omissions, that they as upstanding members of the tax community, they feel it is important for the IRS to be aware of that. And while I appreciate that professionalism and that diligence and wanting to meet those standards, unfortunately, you cannot disclose that information to the IRS without your client’s permission.

So other thing I want to note that’s important, if that error, not omission or non-compliance is going to affect subsequent filed returns, you must ensure that the following returns are correct. That is under your due diligence responsibilities and your standard obligations. You cannot perpetuate the misinformation, even if your client wants you to.

All right. 10.37 is talking about written advice. And it states that when providing written advice, a practitioner must make reasonable efforts to determine the relevant facts, we’ve already talked about irrelevant facts, consider the applicable, and reasonably consider those relevant facts, and as well as the applicable authorities, and make reasonable factual and legal assumptions if specific facts are unknown. Again, we’re going to make reasonable factual and legal assumptions if specific facts are unknown. Additionally, you cannot rely on what is known as the audit lottery and your conclusions. This means you can’t give advice based on the assumption that a tax return will not be audited or that any issue will go unnoticed if it is audited.

All right. When applying the written advice requirements outlined in Section 10.37, it’s important to follow the reasonable practitioner standard, that is you should consider whether a reasonable practitioner, if they were sitting in your shoes, would they act the same way? Would they take the same actions you are taking? For example, it’s unreasonable to rely on information provided by a client or a third party if that tax practitioner knew or should have known that the information was based on incorrect, incomplete, or inconsistent representations or assumptions. Simply saying the client told me is not a valid justification for reliance on misrepresentations.

Determining a reasonable reliance, of course, is going to depend on the specific facts and circumstances in each case. I want to be clear. Reliance on the information provided by a client or advice of another professional is acceptable without verification provided that information is reasonable and your reliance is in good faith taking into account all the relevant facts and the circumstances.

Okay. Best practices. One essential best practice for all practitioners is to communicate clearly and regularly with clients. This approach is going to manage client expectations throughout your engagement. So when addressing issues like errors or missions or non-compliance, it’s important to do so in writing. This creates a record indicating that you inform the client about the issue and its potential consequences.

And, again, we want to do that so that should say that you’ve told the client in writing and the client has said that they don’t want to correct that non-compliance or error or omission, and then they ultimately get picked up for audit, and as a result of the audit, they now owe penalties and interest. We don’t want them coming back and saying, you should have told me about this, I would have fixed it earlier. You want that piece of paper to show, I did tell you, and so we’ve got no malpractice claim from our client.

Now, I do want to add as a best practice as well, in that written communication, I would also provide guidance to the client on how they can correct the matter, namely an amended return or a voluntary disclosure. So our effective communications can be crucial for maintaining and building that strong client relationship, so consider developing a communication plan to keep clients informed about their matters. I mean, there’s so much software out there, and if you belong to professional organizations, they can assist you with kind of those routine, monthly reach out to clients, a content for reach out for the client. Now, if the client has an ongoing issue, do make sure to monitor the situation closely, so that it can be addressed promptly, that’s going to prevent surprises later, or a more significant problem in the future.

And last, it is a best practice to document the information you relied on for your written advice. That written record is going to help you during an IRS examination. In cases if the client becomes incapacitated or passes away, it assists if there is a change in ownership of a business, it assists for employee matters, malpractice considerations, among a lot of other scenarios.

Maintaining client relationships involve managing risks effectively. So implementing strong risk management procedures is going cultivate a sustainable practice. These procedures include regular reviews, routine updates, and thorough documentation. We love our documentation. So let’s discuss the best practices for four critical areas of security that every practitioner is encountering and needs to make sure that they address. We have a number of items here in our best practice slide, but I kind of want to lump them into some of these categories.

So first, it has to do with system security. Think of this as like your practice’s first line of defense. You need a robust protection at every access point to your system. So keep your network secured with current firewall security patches. Ensure all your devices from office computers to mobile phones have up-to-date antivirus software. Set your security software to update automatically and do regular deep scans, secure your wireless networks with strong passwords and encryption.

Second, it has to do with our data protection. This focuses on how you handle that sensitive client information, that PII. Backup your data regularly to a secure offline source. If you’re going to dispose of old equipment, make sure it’s completely wiped those hard drives and storage devices, spread or securely destroy physical documents containing client sensitive information. Remember, throwing client documents that have sensitive information in the regular trash is never acceptable.

Our third has to do with communication security. This is talking about how we exchange information with our client and other third parties. Do use secure client portals if you can rather than email for document exchanges. If you do use emails to exchange documents, implement an encryption policy for email communication that contains sensitive data. We want to make sure that any copies of returns, anything that has those social security numbers on it, that attachment is encrypted. Do have clear policies in your office about what information can be shared and through which channels.

Again, throwing a pitch out here for the Tax Pro Account, consider using the Tax Pro Account for preparing and filing online Powers of Attorney and Tax Information Authorization. That is because you can prepare those authorizations, including the client’s name, address, social security number, all in a secure online format, and it also goes to the client’s design and the secure online format. So there’s no mailing of the paper forms or emailing of the paper forms or faxing of them.

All right. Last has to do with staff training. All of our systems are only as good as the people using them. So do make sure your staff is trained regularly on security protocols and updates. Make sure everyone understands phishing threats and email security and create clear procedures for handling client information and document your security policies for your employees to make sure everyone can easily access those security policies.

There is an IRS publication, it’s 4557 and 5293. I did reference those in the resources to this presentation. They provide an excellent guidance on implementing some of these procedures. And also OPR did issue an alert. It’s alert 2023-10 about the requirement you have a written information security plan, or WISP, which is not just a best practice. It’s actually becoming an essential part of professional responsibility. And do remember data security isn’t a one-time effort. This requires ongoing attention, regular updates to stay ahead of emerging threats.

All right. Anika, I believe we have another polling question.

Yeah, we sure do. So audience, this is our next polling question. So I’d like to answer that best completes the statement. Best practices for handling errors and omission include: A, written communication procedures; B, systematic collection and follow-up procedures; C, advise the client on how to correct the error or omission; D, A and C; or E, all of the above. Now, take a moment and click the radio button that best answers the question. If you do not receive the polling question, please enter only the letter A, B, C, D, or E that corresponds with your response in the Ask Question text box. Your response is timestamped. Audience, please remember that you need to answer at least four polling questions and participate in the live broadcast from the official start time for at least 100 minutes to earn two IRS CE credits. The polling question example we did at the beginning of this presentation does not count towards the requirements. I’ll give you a few more seconds to make your selection or submit your answer to the Ask Question feature.

All right. So we’re going to stop the polling now and let’s share the correct answer on the next slide. And the correct answer is D, A and C. So let’s see. Oh, okay, only 37% of you responded correctly. So Sharyn, I am going to ask if you can clarify that really quickly for the audience before we move on.

Sure. So best practices, the audience might be confused with what’s required under 10.21 regarding errors or omission, which again is to promptly inform your client about the non-compliance, error or omission, and to advise them of the consequences under the code and regulation of that non-compliance, error or omission. Those are our requirements under the circular. But when we’re also talking about some best practices in adhering to those professional standards, those best practices would include putting that in writing, so that we can show the clients that we put them on notice and met our requirements under the circular, and advise them on how to correct that error or omission. So that they can get on the correct foot with the IRS and avoid maybe negative consequences.

All right. So thank you for clarifying that for us. I hope the audience was able to understand that explanation. We’re going to go ahead and move on, so Sharyn, I’ll turn it back over to you.

Great. Thank you. All right. We’re on our last step in establishing our practice’s strong ethical foundation, and that is at the engagement completion phase. It doesn’t matter if you’re hired for a specific issue or for these ongoing services, right? You’re going to be preparing somebody’s return until they terminate. At some point, an engagement will ultimately come to an end. And when an engagement concludes, it’s important to follow the proper procedures to protect our clients and protect their information. And this includes deciding how we’re going to retain clients’ files, who will have access to those files, and the methods for returning or destroying this information when it is no longer needed.

So, we have a provision in the circular, of course we do, right? We have a provision for everything. And it is Section 10.28, and it outlines the procedures for returning the clients’ records. Now, under the section, clients must be provided reasonable access to review and make copies of any of the records they need that are necessary for fulfilling their federal tax obligations. We cannot provide the records to a client that would cause them to fail to file their tax return or file their tax return appropriately. This is important, even if there is a fee dispute, we cannot keep those records the client needs to meet their federal tax obligations from them. And we do have to provide those to them when they’ve requested it.

And, now, subject to some state law restrictions, and it depends on what state you’re in, you do have the right to withhold any return, claims, refunds, schedules, affidavit, appraisals, or other documents that was prepared by you if they are withheld due to nonpayment of fees. So if it’s your work product, you can withhold it for nonpayment of fees. But, again, you do have to return to any records that are required to be attached to the taxpayer’s return. So if the client gave you all of their information, right, their W-2s and 1099s and all those other informational documents, and you’ve put that return together and the client’s saying, I don’t want to pay you for this return, you don’t have to give them the copy of the return or the return. But you do have to give them back all the W-2s, 1099s, et cetera.

You are allowed to retain copies of the records if they are returned to a client. And it is crucial to exercise due diligence regarding your client’s records, particularly if you are closing down your practice, or you are selling your practice, or in the unfortunate event that a tax practitioner has passed away. We cannot just hand out client records without the client’s consent. If you’ve sold your practice and the individual is taking on your clients, you can only pass those client records on if the client says it’s okay to do so. Same with if a practitioner has passed away or you are closing down, you can’t just dispose of client records without the client’s consent. It is absolutely unacceptable to discard client records containing personally identifiable information, that PII, in a regular trash can.

All right. To be clear what client records are, it is defined in Circular 230 under 10.28. And client records are documents or other records obtained by the practitioner from the client or another source that existed prior to the representation of the client. The stuff that existed before you were retained. Client records also include materials prepared by the client or a third-party at any time and provided to the tax practitioner which relate to the subject of the representation. So if your client prepared something, or they had an appraiser, or a lawyer, or their broker prepared something, that is a client record that must be returned to them.

And any return, claim for refund, schedule, affidavit, appraisal, or any other document prepared by the tax practitioner or their employer or their agent that was presented to the client in a previous engagement, one, where there is no fee dispute, right? If that information is necessary for the client to comply with their current federal tax obligations. We have some best practices here on our records management and one is to establish a clear policy and procedures for retaining client records as well as returning or destroying these records.

Now, this regular record retention policy is going to assist you in dealing with records, reduce the risk of exposing confidential client information, and if a practitioner retires, becomes incapacitated or passes away, having had a strong record retention policy in place is going to make managing the remaining records within that practitioner’s possession less of a burden period on themselves. So, as I mentioned before, consider incorporating record retention policies in your engagement agreement, so clients are on notice about how long you will keep their records, and if you are going to no longer your client, you’re going to return the records, we’re going to send a communication to the client saying, what would you like me to do with your records? Would you like them back, or would you like them to be destroyed?

Whatever the client chooses, we want them to sign that document and get it back to you, so you have a copy for your records. There are a few things we keep right after a client is no longer our client, especially if they state that you can destroy their records. We want to keep a written record of that for ourselves. If they say that they want their records returned to them, return those records in a safe manner, some federal express, some mechanism by which they have to sign a receipt that they receive the records.

We’re not going to leave these things on the client’s porch, or just have put them in the mail and hope that they don’t get stolen out of our client’s mailbox. And never are we going to have at the end of an engagement. We’re not going to say, your records will be returned to you in 30 days, and then just go ahead and return it. I mean, it could be on vacation, or moved away, or changed their address or something. So we do have this duty to keep their records safe until they are safely back in the client’s hands.

Another thing to consider as a best practice, when you’ve concluded services for a client, withdraw your authorization on file on the IRS’s Centralized File Authorization, that CAF unit. You don’t want to be on record with the IRS for receiving information regarding the client, who is no longer paying you for your services. Now, there are two ways to withdraw your authorization on the CAF. One is the paper mechanism, though it can be done through fax and in essence a form of uploading, emailing something to the IRS. For the Form 2848, that kind of paper process, there are instructions on how to withdraw and the instructions are Form 2848 or 8821.

The other, much more exciting, is to use the Tax Pro Account to withdraw these authorizations. I don’t know if you knew about that. That’s things in sliced bread. So, you get into your Tax Pro Account, now you have to have linked your CAF number to your Social Security and the Tax Pro Account. Once you’ve done that link, the IRS, we want to make sure that whoever’s in the Tax Pro Account is actually the tax professional. So, once you’ve done that link, just basically, once that link is complete, you’d be able to see all your authorizations on file in the CAF. Now, you can just check a little box and withdraw.

All right. I want to talk just a little bit more on the continuous duty of confidentiality. Practitioners are legally obligated to maintain client confidentiality, even after the engagement ends. Under the circular, specifically Section 10.51(a)(15), there’s a prohibition against the willful disclosure or use of a tax return or tax return information in a manner that the code does not authorize, or in a manner that’s contrary to a court order or an administrative law judge in an OPR proceeding.

So, basically, as long as you hold client information, you must protect it. Now, it’s not enforced by OPR, but the code also imposes sanctions for the unauthorized use or disclosure of taxpayer information. And those two code provisions are Internal Revenue Code Section 6713(a) prohibiting tax return preparers from knowingly or recklessly disclosing or using a taxpayer’s information for purposes other than tax preparation and violations of this code section is a monetary penalty. But worse is 7216(a) which makes the unauthorized disclosure of information a criminal offense and, just to be clear, disclosures made under court orders or from subpoenas by grand jury or the U.S. Attorney’s Office is not considered an unauthorized disclosure.

So our best practices for maintaining client confidentiality is going to start right at the beginning. Don’t collect more client personally identifiable information than is necessary for you to do the matter for which you’ve been retained. The more you collect, the more you have to protect. Restrict access to that PII only to individuals who have a business need to access that information, especially think about your stored client files, right, the ones that are in the banker’s boxes. Make sure those are secure.

Are they in the storage facility that no one can get into? We’re not going to have them in an unlocked stacked up in the storage unit down in the parking lot. Are there procedures in place for who can get into those old documents? Make somebody sign or get the key, we know who’s going in and looking at those or accessing them. Don’t retain that PII longer than necessary or legally required for business purposes. The best practice is to not retain it after the engagement ends, but to return it to the client preferably.

If we are returning a client app for the records back, but we want to keep only copies of the pertinent documents you need to retain. Think about a copy of the engagement letter, proof of returning the records, et cetera. Consider disposing of that PII appropriately such as using on-site shredding versus off-site. And the matter being, if it’s off-site, make sure that the contract for that shredding company includes that they are liable for the records while it is in transit.

Having your client’s records not secure, especially those old records, could be a violation of those two Internal Revenue Code provisions I just went over, because it could result in an unauthorized disclosure due to negligence basically, not that you’re willfully giving out this information, but that it is been an unauthorized disclosure period.

So, all right, with that, Anika, I believe it’s time for another polling question.

Yes, audience, it is time for our fifth polling question. So which procedure protects the client when an engagement ends? A, access to protocols; B, record retention obligations; C, record retention requirements; or D, all of the above? Just take a moment and click the radio button that best answers the question. If you don’t receive the polling question, just enter only the letter A, B, C, or D, that corresponds with your response in the Ask Question text box. Your response is going to be timestamped. And just remember that you need to answer at least four polling questions and participate in the live broadcast from the official start time for at least 100 minutes to earn the two IRS CE credits. The polling question example that we did at the beginning of the presentation is not going to count towards that requirement. I’ll give you a few more seconds to make your selection or submit your response to the Ask Question feature.

All right. So, we are going to stop the polling now, and let’s share the correct answer on the next slide. And the correct answer is D, all of the above. All right, it looks like we had a really great response rate, 90% of you responded correctly. So, Sharyn, I’m going to turn it back over to you.

Great. Well, I’m at the end of the substance stuff, I’ve got the following slides have OPR’s contact information, should you wish to make a referral to OPR, as well as some other resources. And as you can see, we’ve provided the contact information for the Office of Professional Responsibility and instructions on how to make referrals to OPR. And we receive referrals from a lot of sources, clients, former employees, competitors, other agencies, and IRS personnel. So, we also obtain information about convictions and civil injunctions from criminal investigators in the Department of Justice. And as I previously mentioned, we get information on disciplinary actions by the State Bar’s Board of Accountancy and the U.S. Tax Court. And as I mentioned, it is common for us to receive complaints about a practitioner from a former or current client, as well as from that practitioner’s peers.

All right. We have covered quite a bit of information today. I mentioned that I put the resources at the tail end here. So, the next three slides, we noted these resources relevant to today’s discussion. Please note that some of the OPR’s materials are also available in Spanish. These resources can be of assistance in reaffirming what we’ve covered today and OPR does maintain a webpage on IRS.gov, so our dedicated webpage we post alert articles and other relevant information for practitioners.

All right, that was quick. I’m going to turn it over to you, Anika, for our last poll question.

All right. So audience, this is just an attendance check. So, please select the radio button on the screen, and if you don’t receive the polling questions, enter the letter A as your response in the Ask Question text box. Your response is timestamped. Audience, please remember that you need to answer at least four polling questions and participate in the live broadcast from the official start time for at least 100 minutes to earn the two CE credits. And the polling question example that we did in the beginning of the presentation is not going to count with that requirement. So, hopefully you all have hit that radio button and we are going to go ahead and stop polling now. And thank you for responding and participating with the polling question.

All right. Audience, so we are running close to time and it is almost 4 p.m. But we are going to stick around so that we can ask some questions. So what I’m going to do now is moderate the Q&A session. But before we start the Q&A session, I do want to thank you all for attending today’s presentation, Building a Sustainable Practice: Managing Risk and Strengthening Client Relationships Through Ethical Tax Practices. Earlier I mentioned that we do want to know what questions that you have for our presenters, so we’re going to take this opportunity to review some of the questions that you all have submitted. So if you haven’t already, just go ahead and click on the dropdown arrow next to the Ask Question field into your question and then click Send. Sharyn is going to stay on with us to answer some of your questions.

One thing before we start though, we may not have time to answer all the questions, of course, but we’ll try to answer as many as possible.

So let’s go ahead and get started and see what questions we have in our Q&A session.

Okay. So first up, if OPR receives a complaint about someone, does OPR always contact the person to whom the complaint applies and let them know about the complaint?

Oh, that is an interesting question. One of the first things we do is, first, we’re going to figure out if we have jurisdiction over that individual. If we don’t have jurisdiction over the individual, if they’re not a practitioner, then we don’t proceed any further. If the individual is a practitioner and there has been a referral, then we do, and let’s just say that the basis of the referral could possibly be a violation under the circular, then yes, we do reach out to that practitioner and let them know about the referral and the allegations.

Thank you for that response, Sharyn.

I am going to move on to the next question. So, does OPR publish ruling redacted or otherwise, applying to the various sections of Curricular 230?

Not so much rulings, but we do put on our webpage, the final agency decisions where there have been, those are issued by administrative law judges where someone has, there’s been a determination that a practitioner has violated the circular and what the appropriate sanction is for that violation. The ones that we have up are redacted, protecting some clients, if it’s made a referral by a client or someone else, other client, taxpayer information. Those parts are redacted out, but they are there on our webpage.

Awesome, thank you for that response.

So our next question is, as a non-credential tax professional, who has participated in the AFSP? How do I obtain a CAF ID?

So, if you want to get a CAF number, there is one of two ways you can go about doing it. One is, or actually maybe even three ways going about doing it. If you submit a 2848, the actual Form 2848 or 8821, there is a line there that says, ask for your CAF number, leave it blank, and a CAF number will be assigned to you. Or if you want, you could actually write on that line, please assign a CAF number. But once you have a CAF number, make sure you put it everywhere, otherwise you’re going to get assigned more CAF numbers. And that is not going to be helpful for you.

The other way you could go about doing it is going into the Tax Pro Account, and you don’t need to register for a Tax Pro Account. The login you use to get to – e-services to get transcripts for your client, or even the login you use to look at your own personal online account at the IRS, is the same login you would use for the Tax Pro Account. You just go to the Tax Pro Account link, and you put in that your identification and your password. And boom, you are inside your Tax Pro Account. Within that account, you can request a CAF number. You can also request a CAF number from the CAF unit in writing. And you could find how to do that on IRS.gov.

All right. Awesome. Thank you for that response.

So our next question is, can Annual Filing Season Program Record of Completion Holders represent clients whose returns they have prepared in any context other than an examination? For example, applying for an installment agreement online.

No, unfortunately under the AFSP program, an individual who has that Record of Completion Holder can only represent the client with respect to an IRS examination. They cannot represent the client with respect to a collection matter or with respect to an appeals matter or something like an innocent spouse claim, something like that. And with respect to the examination, that individual can only represent the individual for the return the AFSP holder has prepared.

Thanks, Sharyn.

All right. So our next question is, if we use artificial intelligence for proofreading emails or other correspondence to clients but not full preparing return, do we need to notify the client?

I would say no. Our emails, our texts, are already using that generative AI assistance response for us. So we can’t even stop it. But what I was talking more about AI is, we’re seeing some services that are popping up for tax professionals that allow them to do upload client information, and the AI will assist in doing a research, or drafting opinions, or drafting communication to the clients or communications to the IRS based on specific client information that was uploaded and the subscriber system resources that this AI program has.

Our concern there is we don’t know who else is seeing your client’s information. Is that your client information being used by every other subscriber in this program to have this AI learn more? So in that sense, you are disclosing your client’s information possibly to more individuals. Of course, we would never use the open source AI, or ChatGPT, or Anthropic’s Claude, and what else we have, Genesis, and a couple of others. We would never do those public source ones, uploading client information, trying to get an answer out of those AI systems. That would definitely be a disclosure of our client’s information.

And I am aware that there are a number of firms that have their own closed AI system where none of the information gets out, but it is a learning source for just that firm and their employees, which is much more secure with respect to client information. But we are seeing a lot of courts and a lot of the licensing authorities such as the ABA and the AICPA, addressing the use of the AI. And most often when it does come up, it’s because something bad has happened where someone has solely relied on an AI output for taking a position on a return or writing a protest, et cetera. And that AI output is incorrect or actually hypothetical and non-existent. So that is causing problems for those.

And this one gets back to that due diligence. Whatever you use AI for, whatever it gives you back, you have to have the due diligence, you have to do the due diligence, you have to have the competence to understand what it gave back to you, whether it’s correct or not. Long story.

Thank you for that response, Sharyn.

So, we’ll move on to our next question. So what do we do in terms of a client who moves to a state whose tax laws are relatively unfamiliar to us and our competency will never equal with respect to our own state law?

So in that particular case, you may want to talk to your client about bringing in someone within that state that has that expertise so that they can either review, have a review protocol of the state return that you’ve prepared to make sure that it adheres to everything or that other individual who has expertise in that state taxing law does the return.

The other thing I want to be careful of is if you are licensed, make sure you’re not violating your licensing requirements by practicing either accounting or practicing law in a state where you’re not licensed. So, there’s a problem there too.

Okay. Thanks for that response.

So our next question is, do you have an example of a conflict of interest?

Yeah, all kinds of conflicts of interest. Many of them I’ve experienced in some of my own practice, but generally a conflict of interest. I gave the example of the practitioner themselves having a conflict that could materially affect their representation of clients. But if we’re talking about between clients, a conflict can arise if you are representing a partnership as well as all of the partners. And now we have one of the partners is suing one of the other partners requesting an accounting of the partnership to see where all the funds and the deductions, the expenses have gone and the managing partner has told you that they don’t want you to provide the accounting or provide information to the partner.

If you have an engagement agreement with that partner and they are your client and they are asking you for this information and they are entitled to it, you have a conflict. How do you provide that without doing something that another client specifically asked you not to do? We often also see things with spouses where one spouse has withheld money, overstated deductions, but they don’t want the other spouse to know about it. And that other spouse could have the ability to go for innocent spouse or injured spouse claim and being denied this information affects their ability to get the relief they are entitled to. So, yeah, conflicts can arise in a lot of different situations.

Thanks for that detailed response, Sharyn. So, audience, that is going to be all the time we have for questions. I do want to thank Sharyn for answering your questions and also sharing her knowledge and expertise today. She was amazing today with her presentation. Now, before we close today’s session, Sharyn, what key points do you want the attendees to remember from today’s webinar?

Sure. So, our foundation of effective tax administration is going to rest on those two pillars, our technical proficiency and our ethical conduct, which includes that adherence to professional standards and Circular 230 outlines the duties and obligations of tax professionals practicing before the IRS and what those professional standards are. Do you remember 10.34 outlines the standards we have to meet for taking a position on a return or any document that we file with the service, and we cannot take an unreasonable position, meaning we have to hit the standard of reasonable basis, that is a 25% likelihood of success. And if we are hitting the 25% that we include disclosure with that one.

And Section 10.29 regarding the conflict, do check for conflicts of interest when accepting new clients as well as throughout the engagement. And if that conflict arises, you can only continue that engagement if you reasonably believe that you can provide competent, diligent representation to the affected clients and be sure to get that written consent timely from both affected clients.

And then on 10.22, remember, we must exercise due diligence when we prepare and file documents, determine the accuracy of information provided to clients, as well as information we provide to Treasury personnel. And willful blindness to potential issues is going to violate our due diligence responsibilities.

And then last, upon a client’s request, Section 10.28 mandates that we must return all client records necessary for our client to be able to comply with their tax filing obligations. This is required even if there is a fee dispute, and then you can retain copies of the records that you return. All right, I’m all set.

Thank you so much, Sharyn. So, audience, we are planning additional webinars throughout the year to register for upcoming webinars. Please visit IRS.gov, and do a keyword search for Webinars, and select the Webinars for Tax Practitioners or Webinars for Small Businesses. When appropriate, we’ll offer certificates and CE credit for upcoming webinars. Now, we invite you to visit the IRS YouTube page at www.youtube.com/IRSvideos. There, you can view available recorded versions of our webinars and other key video messaging once posted. Again, continuing education credits or certificates of completion are not offered if you viewed an archived version of any of our webinars.

Another big thank you to our presenter for a great webinar. I also want to thank you our attendees for attending today’s webinar, Building a Sustainable Practice: Managing Risk and Strengthening Client Relationships Through Ethical Tax Practice. Now, if you’ve attended today’s webinar for at least 100 minutes after the official start time and answered at least four polling questions during the live broadcast, you will receive a certificate of completion for two IRS CE credits. Again, the time we spent chatting before the webinar doesn’t count for mostly 100 minutes, and the polling question example does not count for the full or minimum question response requirement.

Now, audience, it is important for you to know that certificates of completion will be emailed to the registration email address of the qualifying participant as a PDF attachment. The email will come from the email address seen on this slide, CL.SL.Web.Conference.Team@IRS.gov. Please add this email address to your contact to ensure you receive the email with the certificate attached.

Now, if you’ve qualified for IRS continuing education credit for this webinar and registered with your valid first name, last name, institution as it appears in your IRS PTIN account, your CE credits will be posted in your IRS PTIN account. And if you’re eligible for continuing education from the California Tax Education Council, your credit will be posted to your CTEC account as well. And if you qualify and have not received your certificate or a credit by January 8th, please email us at CL.SL.Web.Conference.Team@IRS.gov, the email address which is shown on the screen. Now, if you are interested in finding out who your local stakeholder liaison is, you may send an email using the address shown on the slide, and we’ll send you that information.

And we appreciate it if you would take a few minutes to complete a short evaluation before you exit. If you’d like to have more sessions like this one, let us know. If you have thoughts on how to make them better, please let us know that as well. If you have any requests for future webinar topics or pertinent information, you’d like to see in an IRS Fact Sheet, Tax Tip, or FAQ on IRS.gov, then please include any suggestions in the comments section of the survey. Click the survey button on the right side of your screen to begin. If it doesn’t come up, check to make sure you’ve disabled your pop-up blocker.

It has been a pleasure to be here with you, and on behalf of the Internal Revenue Service and our presenters, we would like you to thank you for attending today’s webinar. It’s important for the IRS to stay connected with the tax professional community, individual taxpayers, industry associations, along with federal, state, and local government organizations. You make our job a lot easier by sharing the information that allows for proper tax reporting.

Thanks again for your time and attendance, and we hope you found the information helpful. You may now exit the webinar at this time.