An EA gets a records summons on Tuesday, finds a $22,000 omitted 1099 on the same client's prior return Wednesday, hires a suspended preparer Thursday, and prints "IRS-Approved" business cards Friday with a 30% contingent-fee headline. Four Circular 230 sections fire at once, and each one is a favorite SEE Part 3 question.
A practitioner must promptly submit records or information lawfully requested by any IRS officer or employee. The duty has three pieces.
- Possession. If the records are in the practitioner's possession or control, hand them over promptly unless the practitioner believes in good faith and on reasonable grounds that the request is...
- No possession. If the records are not in the practitioner's possession, the practitioner must promptly notify the IRS and provide any information the practitioner has about the identity of any...
- Interference. A practitioner cannot interfere, or attempt to interfere, with any proper and lawful effort by the IRS to obtain records or information, unless the practitioner believes in good faith...
Common mistakes
- Treating §10.21 as a duty to notify the IRS. The duty runs to the client, never to the IRS without client consent.
- Verifying the client's response under §10.20 when there is no reason to doubt it. The rule requires reasonable inquiry, not independent verification.
- Thinking the §10.25 permanent bar can lapse after 2 years. Personal-and-substantial participation is permanent. Two years applies to official-responsibility matters only.
Bottom line
- §10.20 requires prompt submission of lawfully requested records. If you lack them, identify who holds them. No duty to verify the client absent reason to doubt.
- §10.21 requires you to promptly advise the client of any noncompliance, error, or omission and explain the consequences. The client, not you, decides whether to amend.
- §10.25 permanently bars former IRS employees from any matter of personal and substantial participation. 2-year bar on official-responsibility matters, 1-year bar on rulemaking participation.
- §10.24 bars knowingly accepting assistance from suspended, disbarred, or ineligible persons on IRS matters, and bars partnering with them for tax practice.
Exam shortcut
The four-bar map for former IRS employees: Personal-and-substantial equals forever. Official responsibility equals 2 years. Rulemaking equals 1 year. Firm-screening rescues the firm, not the individual. Contingent-fee triage: Original return equals no. Audit-triggered amended return inside 120 days equals yes. Interest or penalty refund claim equals yes. Court case equals yes. Anything else equals no.
The full lesson (about 2,958 words, 20 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- 1
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