Federal Register / Vol. 89, No. 247 / Thursday, December 26, 2024 / Proposed Rules 104915 

corrected to read ‘‘recognized built-in 

loss’’. 

129. On page 75218, in the second 

column, in paragraph (f)(5)(i); 

i. In the eighth line up from the 

bottom of the paragraph, the language 

‘‘an unrealized loss’’ is corrected to read 

‘‘a built-in loss’’. 

ii. In the sixth line up from the bottom 

of the paragraph, the language ‘‘an 

unrealized gain’’ is corrected to read ‘‘a 

built-in gain’’. 

§ 1.56A–26 [Corrected] 

130. On page 75221, in the third 

column, in paragraph (d)(1), the fourth 

and fifth lines up from the bottom of the 

paragraph are corrected to read, ‘‘CAMT 

entity must adjust its AFSI with respect 

to that transaction to reflect’’. 

§ 1.59–2 [Corrected] 

131. On page 75223, in the third 

column, in paragraph (c)(2)(ii)(B), in the 

sixth line down from the top of the 

paragraph, the language ‘‘(c)(2)(i)(C)’’ is 

corrected to read ‘‘(c)(2)(ii)(C)’’. 

132. On page 75226, in the first and 

second columns, paragraph (f)(2)(i) is 

corrected to read as follows: 

* * * * * 

(f) * * * 

(2) * * * 

(i) In general—(A) Corporation 

experiencing ownership change. For 

purposes of paragraph (f)(1) of this 

section, if a corporation experiences a 

change in ownership during a taxable 

year that results in the corporation and 

a person no longer being treated as 

related under the relevant relationship 

criteria, then following the change in 

ownership— 

(1) The corporation retains its AFSI 

for any relevant period prior to the 

change in ownership to determine 

whether the corporation meets the 

average annual AFSI test (as described 

in paragraph (c) of this section) for the 

taxable year in which the change in 

ownership occurs or for any subsequent 

taxable year; but 

(2) The corporation does not include 

that person’s AFSI in the corporation’s 

AFSI for any period prior to the change 

in ownership (notwithstanding that the 

corporation and the person were treated 

as related under the relevant 

relationship criteria during some, or all, 

of that period) to determine whether the 

corporation meets the average annual 

AFSI test for the taxable year in which 

the change in ownership occurs or for 

any subsequent taxable year in which 

the corporation and the person are not 

treated as related under the relevant 

relationship criteria. 

(B) Person related to corporation 

following ownership change. Following 

a corporation’s change in ownership, 

each person treated as related to the 

corporation under the relevant 

relationship criteria determines whether 

it meets the average annual AFSI test (if 

applicable) for the taxable year in which 

the change in ownership occurs or for 

any subsequent taxable year by 

separately applying the rules in this 

paragraph (f). For example, such person 

does not include the corporation’s AFSI 

in the person’s AFSI for any relevant 

period prior to the corporation’s change 

in ownership if the corporation and the 

person were never previously related 

under the relevant relationship criteria. 

For the avoidance of doubt, such person 

includes the corporation’s AFSI in its 

AFSI for any relevant period following 

the change in ownership during which 

the parties are related under the relevant 

relationship criteria, unless paragraph 

(f)(2)(i)(A) of this section applies. 

(C) Change in ownership. For 

purposes of paragraphs (f)(2)(i)(A) and 

(B) of this section, a corporation 

experiences a change in ownership 

during a taxable year of the corporation 

if— 

(1) The corporation is not a test group 

parent (as defined in paragraph (b)(7) of 

this section); 

(2) The corporation is treated as 

related to a test group parent under the 

relevant relationship criteria as of the 

first day of the taxable year; and 

(3) As a result of a transaction (or 

series of related transactions) the 

corporation and the test group parent no 

longer satisfy the relevant relationship 

criteria as of the last day of the taxable 

year. 

* * * * * 

133. On page 75227, in the first, 

second, and third columns, in 

paragraphs (f)(3)(i)(D) and (E) and 

(f)(3)(ii)(C), the reference ‘‘(b)(6)’’ is 

corrected to read, ‘‘(b)(7)’’, everywhere it 

appears. 

134. On page 75228, in the first 

column, in paragraph (g)(2)(iii)(B), the 

second and third lines down from the 

top of the paragraph are corrected to 

read, ‘‘than the AFSI adjustments in 

§§ 1.56A–8(b), 1.56A–14, and, solely for 

purposes of’’. 

§ 1.1502–56A [Corrected] 

135. On page 75238, in the second 

column, in paragraph (d)(3)(i): 

i. The fifth and sixth lines up from the 

bottom of the paragraph are corrected to 

read, ‘‘beginning after December 31, 

2019. For each share of stock of a’’. 

ii. The second line up from the 

bottom of the paragraph is corrected to 

read ‘‘(shareholder member) on the first 

day of the first taxable year beginning 

after December 31, 2019, the CAMT 

basis of such share equals the sum’’. 

136. On page 75238, in the second 

column, in paragraph (d)(3)(ii): 

i. In the fifth line up from the bottom 

of the paragraph, the language ‘‘The 

CAMT basis in a’’ is corrected to read 

‘‘For each’’. 

ii. The last line of the paragraph is 

corrected to read ‘‘consolidated group 

after the first day of the first taxable year 

beginning after December 31, 2019, the 

CAMT basis of such share equals the 

sum of:’’. 

137. On page 75238, in the second 

column, in paragraph (d)(3)(iii)(A), in 

the fourth line up from the bottom of the 

page, the word ‘‘including’’ is corrected 

to read ‘‘incorporating’’. 

138. On page 75239, in the first 

column, in paragraph (e)(4)(i)(B), the 

third line up from the bottom of the 

paragraph is corrected to read 

‘‘elimination)). Accordingly, the P 

Group’s’’. 

139. On page 75240, in the third 

column, in paragraph (f)(6)(ii), the sixth 

and fifth lines up from the bottom of the 

paragraph are corrected to read 

‘‘apportioned to M2 (($20x/($20x + $40x 

+ $5x)) × $55x = $16.9x). See’’. 

140. On page 75243, in the first 

column, in paragraph (j)(3)(ii), the 

second to last and last lines of the 

paragraph are corrected to read ‘‘is 

apportioned to T (($200x/($200x + 

$1,000x)) × $165x = $27.5x).’’. 

Kalle L. Wardlow, 

Federal Register Liaison, Publications & 

Regulations Section, Associate Chief Counsel, 

(Procedure and Administration). 

[FR Doc. 2024–29958 Filed 12–23–24; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Office of the Secretary 

31 CFR Part 10 

[REG–116610–20] 

RIN 1545–BQ12 

Regulations Governing Practice Before 

the Internal Revenue Service 

AGENCY: Office of the Secretary, 

Treasury. 

ACTION: Notice of proposed rulemaking, 

notice of public hearing, and 

withdrawal of notice of proposed 

rulemaking. 

SUMMARY: This document contains 

proposed amendments to the 

regulations governing practice before 

the IRS. These regulations propose to 

eliminate provisions related to 


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104916 Federal Register / Vol. 89, No. 247 / Thursday, December 26, 2024 / Proposed Rules 

registered tax return preparers, classify 

the use of certain contingent fee 

arrangements by practitioners as 

disreputable conduct, establish new 

standards for appraisals and the 

disqualification of appraisers, and 

update certain provisions as 

appropriate. This document also 

provides notice of a public hearing on 

the proposed regulations and withdraws 

the notice of proposed rulemaking 

published on July 28, 2009. The 

regulations would affect registered tax 

return preparers, enrolled agents (EAs), 

enrolled retirement plan agents, 

enrolled actuaries, Annual Filing 

Season Program (AFSP) participants, 

attorneys, certified public accountants 

(CPAs), appraisers, and other 

practitioners. 

DATES: Electronic or written comments 

must be received by February 24, 2025. 

The public hearing is being held on 

March 6, 2025, at 10 a.m. Eastern Time 

(ET). Requests to speak and outlines of 

topics to be discussed at the public 

hearing must be submitted as prescribed 

in the ‘‘Comments and Public Hearing’’ 

section. The IRS must receive speakers’ 

outlines of the topics to be discussed at 

the public hearing by February 24, 2025. 

If no outlines are received by February 

24, 2025, the public hearing will be 

cancelled. Requests to attend the public 

hearing must be received by 5 p.m. ET 

on March 4, 2025. As of December 26, 

2024, the notice of proposed rulemaking 

(REG–113289–08) published on July 28, 

2009 (74 FR 37183), is withdrawn. 

ADDRESSES: Commenters are strongly 

encouraged to submit public comments 

electronically. Submit electronic 

submissions via the Federal 

eRulemaking Portal at https://

www.regulations.gov (indicate IRS and 

REG–116610–20) by following the 

online instructions for submitting 

comments. Once submitted to the 

Federal eRulemaking Portal, comments 

cannot be edited or withdrawn. The 

Department of the Treasury (Treasury 

Department) and the IRS will publish 

for public availability any comment 

submitted electronically or on paper to 

the public docket. Send paper 

submissions to: CC:PA:01:PR (REG– 

116610–20), room 5203, Internal 

Revenue Service, P.O. Box 7604, Ben 

Franklin Station, Washington, DC 

20044. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

William J. Prater at (202) 317–6251; 

concerning submissions of comments or 

the public hearing, The Publications 

and Regulations Section at (202) 317– 

6901 (not toll-free numbers) or by 

sending an email to publichearings@

irs.gov (preferred). 

SUPPLEMENTARY INFORMATION: 

Authority 

This document contains proposed 

regulations that would amend the 

regulations under 31 U.S.C. 330 relating 

to the regulation of practice before the 

IRS, which are codified at 31 CFR part 

10 and reprinted as Treasury 

Department Circular No. 230 (Circular 

230). Since 1884, Federal law (now 

codified at 31 U.S.C. 330), has expressly 

authorized the Secretary of the Treasury 

(Secretary) to regulate practice before 

the Treasury Department. Specifically, 

31 U.S.C. 330(a) provides that subject to 

section 500 of title 5, the Secretary may 

‘‘regulate the practice of representatives 

of persons before the Department of the 

Treasury.’’ In addition, before admitting 

a representative to practice, the 

Secretary may require that the 

representative demonstrate ‘‘good 

character,’’ ‘‘good reputation,’’ the 

‘‘necessary qualifications to enable the 

representative to provide to persons 

valuable service,’’ and ‘‘competency to 

advise and assist persons in presenting 

their cases.’’ See 31 U.S.C. 330(a). The 

Secretary may delegate these duties and 

powers to another officer or employee of 

the Treasury Department under 31 

U.S.C. 321(b). 

Background 

The provisions of 31 CFR part 10 are 

currently designated as §§ 10.0 through 

10.93 and a section of the current 

regulations is referred to as, as an 

example, ‘‘current § 10.0’’ in this 

Background and the Explanation of 

Provisions. Circular 230, which contains 

current §§ 10.0 through 10.93 related to 

governing practice before the IRS, has 

been amended periodically since it was 

first published in 1921. 

A. Tax Return Preparation 

Prior to 2011, individual tax return 

preparers were generally not subject to 

Circular 230 unless the tax return 

preparer was an attorney, certified 

public accountant (CPA), enrolled agent 

(EA), or other type of practitioner 

identified in Circular 230. On June 3, 

2011, the Treasury Department and the 

IRS published final regulations (TD 

9527) in the Federal Register (76 FR 

32286) to establish qualifications for tax 

return preparers, which required them 

to become registered tax return 

preparers subject to the requirements 

under Circular 230 and describing the 

allowable scope of a registered tax 

return preparer’s practice before the IRS 

(2011 amendments). 

The 2011 amendments were 

challenged in Loving v. IRS, 917 

F.Supp.2d 67 (D.D.C. 2013), in which 

case the plaintiffs argued that the 

Treasury Department and the IRS did 

not have authority under 31 U.S.C. 330 

to regulate tax return preparation 

because return preparation was not 

practice before the IRS. The United 

States District Court for the District of 

Columbia (District Court for the District 

of Columbia or district court) concluded 

that under 31 U.S.C. 330(a), practice 

before the IRS is limited to representing 

taxpayers before the IRS by assisting 

them in presenting their cases. Because 

the district court considered preparing 

and filing tax returns as falling short of 

‘‘presenting a case,’’ it held that the 

Treasury Department and the IRS lacked 

statutory authority to regulate tax return 

preparation as practice before the IRS 

under 31 U.S.C. 330(a) and enjoined the 

Treasury Department and the IRS from 

enforcing the 2011 amendments to 

Circular 230 related to registered tax 

return preparers. The United States 

Court of Appeals for the District of 

Columbia Circuit (D.C. Circuit or court 

of appeals) affirmed the district court’s 

opinion and order for injunction. The 

court of appeals upheld the district 

court’s statutory construction, 

explaining that, while tax return 

preparers assist taxpayers, they do not 

represent taxpayers before the IRS or 

formally act as their agent. Loving v. 

IRS, 742 F.3d 1013 (D.C. Cir. 2014). 

B. Contingent Fees 

Final regulations (TD 9359) published 

in the Federal Register (72 FR 54540) on 

September 26, 2007, amended the rules 

under Circular 230 regarding charging 

contingent fees in current § 10.27 (2007 

amendments). The 2007 amendments 

amended the exceptions to the general 

prohibition on contingent fees, which 

prohibited practitioners from charging 

contingent fees for original returns, to 

permit practitioners to charge a 

contingent fee for services rendered in 

connection with the IRS’s examination 

of, or challenge to, (i) an original tax 

return or (ii) an amended return or 

claim for refund or credit where the 

amended return or claim for refund or 

credit was filed within 120 days of the 

taxpayer receiving a written notice of 

the examination or a written challenge 

to the original tax return. The Treasury 

Department and the IRS subsequently 

clarified the 2007 amendments in 

Notice 2008–43, 2008–1 C.B. 748 

(March 26, 2008) to provide that a 

practitioner may charge a contingent fee 

for services rendered in connection with 

the IRS’s examination of, or challenge 

to, an amended return or claim for 


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refund or credit filed (1) before the 

taxpayer received a written notice of 

examination of, or a written challenge 

to, the original tax return or (2) no later 

than 120 days after the receipt of such 

written notice or written challenge. 

Notice 2008–43 also provided an 

exception that allows practitioners to 

charge a contingent fee with respect to 

whistleblower claims under section 

7623 of the Internal Revenue Code 

(Code). Current § 10.27 also permits 

practitioners to charge contingent fees 

in connection with the determination of 

statutory interest and penalties and for 

services rendered in connection with 

judicial proceedings arising under the 

Code. Current § 10.27 prohibits 

contingent fee arrangements for services 

rendered in connection with any other 

matter before the IRS, including the 

preparation of original returns, amended 

returns, and claims for refund or credit. 

On July 28, 2009, the Treasury 

Department and the IRS published in 

the Federal Register (74 FR 37183) a 

notice of proposed rulemaking (REG– 

113289–08) proposing modifications to 

the rules relating to contingent fees 

under Circular 230 (2009 proposed 

regulations). The 2009 proposed 

regulations have not been finalized. 

In 2014, the District Court for the 

District of Columbia held that preparing 

and filing ordinary refund claims, like 

preparing original tax returns, did not 

involve representing taxpayers or 

practice before the IRS. Ridgely v. Lew, 

55 F. Supp.3d 89 (D.D.C. 2014). As a 

result, according to the district court, 

the IRS lacked authority to treat the 

preparation of ordinary refund claims as 

practice before the IRS as described 

under 31 U.S.C. 330(a). Id. Thus, the 

district court concluded that the IRS 

cannot prohibit charging contingent fees 

for ordinary refund claims based on its 

authority to regulate practice before the 

IRS under 31 U.S.C. 330(a). 

C. Written Tax Advice 

Circular 230 was most recently 

amended in TD 9668, which was 

published in the Federal Register (79 

FR 33685) on June 12, 2014, to, among 

other changes, revise rules relating to 

written tax advice and eliminate the 

covered opinion rules (in former 

§ 10.35) that previously governed 

written tax advice. 

Explanation of Provisions 

The proposed regulations contained 

in this notice of proposed rulemaking 

would amend Circular 230 by 

eliminating provisions related to 

registered tax return preparers or that 

imposed standards on tax return 

preparation that are unrelated to 

representation before the Treasury 

Department and the IRS. The proposed 

regulations would also amend Circular 

230 by eliminating current § 10.27, 

which, among other things, treats the 

preparation of tax returns and claims for 

refund or credit as matters before the 

IRS for which contingent fees may not 

be charged, and defining certain 

contingent fee arrangements as 

disreputable conduct. Specifically, the 

proposed regulations would establish 

that contingent fee arrangements for 

services in connection with preparing 

an original tax return, amended tax 

return, or claim for refund or credit 

constitute disreputable conduct subject 

to sanction. Because the proposed 

regulations would make substantial 

changes to the regulation of contingent 

fees under Circular 230, this document 

also proposes to withdraw the 2009 

proposed regulations. 

The proposed regulations would also 

revise or eliminate provisions that are 

out of date and incorporate new 

provisions to better align Circular 230 

with the modern practice environment. 

The scope of the proposed regulations is 

limited to practice before the IRS. 

Therefore, the proposed regulations 

would not alter or supplant other ethical 

standards applicable to practitioners. 

A section of the proposed regulations 

is referred to as, as an example, 

‘‘proposed § 10.0’’ in this Explanation of 

Provisions and the Special Analyses. 

A. Amendments Regarding Tax Return 

Preparation 

1. Elimination of Regulation of 

Registered Tax Return Preparers as 

Practitioners 

As a result of the decision and 

injunction order in Loving, the 2011 

amendments that relate to registered tax 

return preparers are no longer 

enforceable. Therefore, the proposed 

regulations would eliminate rules 

regarding registered tax return preparers 

under current §§ 10.3 through 10.6. The 

proposed regulations would also remove 

references to registered tax return 

preparers under current §§ 10.0, 10.2, 

10.30, 10.38, and 10.90 and redesignate 

current § 10.90 as § 10.110. 

2. Revision of Standards Relating to Tax 

Return Preparation 

Circular 230 contains provisions that 

are unrelated to the registered tax return 

preparer program but impose specific 

standards on tax return preparation. 

Consistent with the holding in Loving, 

the proposed regulations would 

eliminate or revise these provisions to 

impose standards related to tax returns 

prepared, approved, or submitted in 

connection with representing a client in 

a matter before the IRS. This distinction 

would be also incorporated under the 

amended definition of ‘‘practice before 

the IRS’’ under proposed § 10.2(a)(4), 

which would clarify that practice before 

the IRS includes the preparation and 

submission of tax returns in connection 

with representing a client in a matter 

before the IRS. 

Current § 10.8 provides rules related 

to tax return preparation, describes 

actions that individuals who did not 

prepare all, or substantially all, of a tax 

return can take before the IRS, and 

prohibits non-practitioners from 

preparing all, or substantially all, of a 

tax return. The proposed regulations 

would eliminate the current language 

under § 10.8 in its entirety. However, 

guidance regarding what actions nonpractitioners may take in response to 

IRS inquiries is still necessary and 

authorized under 31 U.S.C. 330. 

Therefore, the proposed regulations 

would retitle current § 10.8 as 

‘‘Participation in IRS proceedings by 

non-practitioners’’ and would provide 

that, except for appraisers who have 

been disqualified pursuant to proposed 

§ 10.61(a), any individual may appear as 

a witness before the IRS or furnish 

information at the request of the IRS. 

Current § 10.22 imposes standards 

related to diligence as to accuracy, 

including standards related to the 

preparation or approval of tax returns, 

documents, affidavits, and other papers. 

The proposed regulations would revise 

current § 10.22 to specify that the 

diligence as to the accuracy requirement 

for tax returns is limited to tax returns 

prepared, approved, or submitted in 

connection with representing a client in 

a matter before the IRS. The proposed 

regulations would not revise existing 

diligence standards related to 

documents, affidavits, and other papers 

that are not tax returns. The diligence 

requirements in the proposed 

regulations would also apply to a 

practitioner’s preparation of a tax return 

prior to representing a client in a matter 

before the IRS when the subsequent 

representation involves the tax return. 

When the representation involves a tax 

return prepared by a practitioner, the 

practitioner’s diligence with respect to 

preparing the tax return would be 

treated under the proposed regulations 

as related to the practitioner’s practice 

before the IRS under 31 U.S.C. 330(a). 

Current § 10.34 imposes standards 

with respect to a practitioner’s 

preparation of tax returns and other 

documents. The current regulations 

incorporate standards under the Code 

relating to tax return positions, describe 

standards for advising clients with 


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104918 Federal Register / Vol. 89, No. 247 / Thursday, December 26, 2024 / Proposed Rules 

respect to potential penalties, and 

address the ability of a practitioner to 

rely on information furnished by a 

client. The proposed regulations would 

maintain these standards but clarify that 

the standards only apply to a tax return 

either when the tax return is prepared 

while representing a client before the 

IRS or when the tax return prepared 

prior to representation is submitted 

while representing a client before the 

IRS, regardless of whether the tax return 

was filed with the IRS before the 

representation begins. With respect to 

tax returns prepared prior to 

representation, the current standards 

relate to a practitioner’s duty to not 

further an unreasonable return position 

taken on a previously prepared return 

while representing a client in a matter 

before the IRS. The proposed 

regulations would not impose the 

standards on the preparation of a tax 

return in the absence of a practitioner’s 

representation of a client. 

B. Amendments Regarding the 

Regulation of Contingent Fees 

Current § 10.27 prohibits practitioners 

from entering into contingent fee 

arrangements for services rendered in 

connection with a ‘‘matter before the 

IRS,’’ which § 10.27(c)(2) defines to 

include assisting with filing tax returns 

or claims for refund or credit and ‘‘all 

matters connected with a presentation 

to the [IRS] . . . relating to a taxpayer’s 

rights, privileges, or liabilities under the 

laws and regulations administered by 

the [IRS].’’ Current § 10.27 was intended 

to restrict contingent fee arrangements 

based on their potential to encourage 

practitioners and their clients to take 

aggressive positions with the hope that 

they will not be audited. 

As described in the Background, the 

District Court for the District of 

Columbia held in Ridgely that 

practitioners do not act in a 

representative capacity when they assist 

clients with ‘‘ordinary refund claims,’’ 

which are defined as refund claims, 

including amended returns, filed prior 

to the examination of a tax return for 

that taxable year or period. The district 

court also concluded that preparing an 

ordinary refund claim is not an activity 

that constitutes practice before the IRS 

under 31 U.S.C. 330(a). Thus, the court 

concluded that the IRS cannot prohibit 

charging contingent fees for ordinary 

refund claims based on its authority to 

regulate practice before the IRS under 

31 U.S.C. 330(a). The court did not 

otherwise address the propriety of 

contingent fees. 

The proposed regulations would 

remove current § 10.27 and, under 

subpart C, define disreputable conduct 

under proposed § 10.51 to include both 

charging contingent fees in connection 

with the preparation of an original or 

amended tax return or claim for refund 

or credit, and charging fees that, under 

the facts and circumstances, are 

unconscionable fees. 

Charging a contingent fee for the 

preparation of an original return, 

amended return, or claim for refund or 

credit prepared prior to the examination 

of a tax return is disreputable conduct 

because these circumstances encourage 

evasion or abuse of Federal tax laws by 

incentivizing practitioners to take 

unduly aggressive tax positions for their 

clients, which would increase their 

clients’ reported tax benefits, thus 

resulting in personal gain for the 

practitioner. A practitioner with a 

direct, financial interest in the tax 

benefits of a client may be incentivized 

to increase such tax benefits. Therefore, 

these contingent fee arrangements 

reflect conduct that is incompatible 

with ethical practice before the Treasury 

Department or the IRS under Circular 

230. 

Under 31 U.S.C. 330(c), the Treasury 

Department and the IRS have the 

authority to censure or suspend or 

disbar from practice before the Treasury 

Department or the IRS practitioners who 

engage in disreputable conduct whether 

or not the conduct constitutes 

representation of a client. Unlike the 

contingent fee standards under current 

§ 10.27, proposed § 10.51 is not 

dependent upon the preparation of a tax 

return or claim for refund or credit 

constituting practice before the IRS. 

Charging contingent fees for preparing 

tax returns, amended returns, and 

claims for refund or credit is prohibited 

under the rules of professional conduct 

applicable to many accountants. The 

American Institute for Certified Public 

Accountants (AICPA) Code of 

Professional Conduct, for example, 

acknowledges the disreputable nature of 

contingent fees and prohibits CPAs from 

charging contingent fees for the 

preparation of original returns, amended 

returns, and ordinary refund claims 

because of the risk that these contingent 

fee arrangements would allow a CPA to 

benefit improperly from an interest in, 

or relationship with, a client. See 

AICPA Code of Professional Conduct 

1.000.010.14(c); 1.510.001.01(b). Many 

state accountancy board rules also 

prohibit contingent fee arrangements for 

preparing an original or amended return 

or claim for refund or credit. See, e.g., 

N.J. Admin. Code section 13:29–3.8(e) 

(2019); Tenn. Code Ann. section 62–1– 

123(b)(1)(B) (2016) (prohibiting 

contingent fees for preparation of an 

original return); Cal. Code Regs. Tit. 16 

section 62(a)(2) & (3) (2021); cf. New 

York Society of Certified Public 

Accountants Code of Professional 

Conduct Rule 302 (March 2013). 

C. Enrolled Retirement Plan Agent and 

Enrolled Agent Procedures 

Current § 10.3(e)(1) provides that 

enrolled retirement plan agents (ERPAs) 

may practice before the IRS. Current 

§ 10.4(b) authorizes the IRS to grant 

status as ERPAs to individuals who 

demonstrate special competence in 

qualified retirement plan matters by 

passing a written examination and who 

have not engaged in any conduct that 

would justify suspension or disbarment 

under Circular 230. The IRS stopped 

offering the Enrolled Retirement Plan 

Agent Special Enrollment Examination 

(ERPA–SEE) on February 12, 2016, and 

no longer accepts applications for new 

enrollment as an ERPA. Because of a 

steady decline in ERPA–SEE test-takers, 

the cost to administer the ERPA–SEE no 

longer warranted offering the test. See 

83 FR 58202, published in the Federal 

Register on November 19, 2018. 

Individuals who had passed the ERPA– 

SEE before February 12, 2016, and are 

currently enrolled as ERPAs can 

maintain their status. Therefore, the 

proposed regulations would clarify that 

ERPAs who passed the ERPA–SEE prior 

to February 12, 2016, remain authorized 

to practice before the IRS if they 

continue to pay the annual user fee 

described under 26 CFR 300.10(b) and 

complete the continuing education 

described in § 10.6(e). The proposed 

regulations would also remove current 

§ 10.4(b), which describes the process to 

become an ERPA by special 

examination. 

Current § 10.4(d) provides that a 

former IRS employee, based on past 

service and technical experience in the 

IRS, may be granted enrollment as an 

EA or ERPA without testing if certain 

criteria are met. There is no statutory 

requirement that the IRS provide this 

exemption to former employees and 

administering requests for this waiver 

has consumed substantial IRS resources. 

Accordingly, the proposed regulations 

would eliminate the opportunity for 

former IRS employees to apply for a 

waiver of enrollment requirements as of 

30 days after the date these regulations 

are published in the Federal Register as 

final regulations. Applications from 

former IRS employees submitted on or 

before that date would be processed 

according to the procedures under 

current § 10.4(d). 

Current § 10.5 includes ERPAs in the 

description of application procedures to 

become a practitioner under Circular 

230. Because the IRS no longer offers 


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the special enrollment examination to 

become an ERPA and no longer accepts 

applications for new enrollment as an 

ERPA, these procedures are no longer 

relevant and references to ERPAs would 

be removed under proposed § 10.5. The 

renewal period and procedures for 

existing ERPAs remains unchanged 

under current § 10.6. 

Current § 10.6(b) states that the IRS 

will provide confirmation of enrollment 

to EAs and ERPAs by issuing a 

registration card or certificate. Instead of 

specifying the form of confirmation, 

proposed § 10.6(b) would provide that 

the IRS will issue a document, which 

may be an enrollment card or other 

document. This revision would give the 

IRS flexibility as to the form of 

enrollment confirmation provided to 

practitioners in the future without 

requiring an amendment to the 

regulations. 

Current § 10.6(d)(2) provides an 

explanation of the renewal period for 

EAs. Proposed § 10.6(d)(2) would make 

minor revisions to this description but 

makes no substantive changes to the 

renewal period or renewal process for 

EAs. 

D. Limited Practice and Annual Filing 

Season Program (AFSP) Participants 

Proposed § 10.7(c)(1)(viii) would 

provide that individuals who possess a 

current Annual Filing Season Program 

(AFSP) Record of Completion may 

engage in limited practice, by 

representing taxpayers before the IRS 

with respect to tax returns or claims for 

refund or credit the individuals 

prepared and signed during a calendar 

year for which a Record of Completion 

was issued. The individual must have a 

valid Record of Completion for the 

calendar year in which the tax return or 

claim for refund or credit was prepared 

and signed and a valid Record of 

Completion for the year or years in 

which the representation occurs. AFSP 

participants generally are otherwise 

unenrolled preparers who, pursuant to 

Rev. Proc. 2014–42, 2014–29 I.R.B. 192 

(July 14, 2014), voluntarily consent to be 

subject to Circular 230 duties and 

restrictions to participate in the AFSP, 

including prohibitions on incompetence 

or disreputable conduct, and must 

comply with the duties and restrictions 

to the extent they represent taxpayers 

before the IRS under the AFSP. The 

authority for the Treasury Department 

and the IRS to implement the AFSP was 

upheld by the D.C. Circuit, in AICPA v. 

IRS, 746 Fed. Appx. 1 (D.C. Cir. 2018). 

E. Continuing Education Provider Fees 

Under current § 10.9(a)(2), continuing 

education providers that provide 

education to practitioners on subject 

matters described under current § 10.6(f) 

must be approved by the IRS, obtain a 

continuing education number, and pay 

any applicable user fee. Continuing 

education providers must follow the 

procedures outlined under Rev. Proc. 

2012–12, 2012–2 I.R.B. 275 (January 9, 

2012) to become an accredited provider 

and obtain a continuing education 

provider number. Continuing education 

providers must renew their status 

annually by renewing their provider 

number and paying a user fee. Under 

current § 10.9(a)(4), continuing 

education providers must seek approval 

for individual continuing education 

programs and obtain a program number. 

The continuing education program is 

administered by a third-party vendor 

through a five-year contract with the 

IRS. The vendor will charge continuing 

education providers a $650 application 

and renewal fee through 2025. 

Continuing education providers must 

renew for the upcoming calendar year 

before midnight on December 31 or 

incur late fees ranging between $100 

and $200. Under the vendor’s contract 

with the IRS, the vendor’s fee is 

reviewed and approved by the IRS. 

Because the IRS does not incur any 

direct costs to administer the continuing 

education program, it does not currently 

charge a separate user fee to recover 

costs. In the future, however, the IRS 

may charge a user fee if circumstances 

change. Any future user fee will be 

calculated pursuant to the Independent 

Offices Appropriation Act of 1952 (31 

U.S.C. 9701) and OMB Circular A–25, 

User Charges. New proposed § 10.9(c) 

explains that a potential user fee may be 

charged in addition to the current 

vendor fee for approval of continuing 

education providers and their programs. 

F. Knowledge of Error or Omission 

Current § 10.21 requires practitioners 

to advise a client of any noncompliance 

with internal revenue laws or any error 

or omission on a tax return or other 

document submitted to the IRS and the 

consequences under the Code and 

regulations of the noncompliance, error, 

or omission. Proposed § 10.21 would 

clarify that the noncompliance, error, or 

omission may have been made by either 

the client or the practitioner or a prior 

practitioner, such as if the practitioner 

or prior practitioner made an 

inadvertent mistake on a tax return 

prepared and filed for the client that the 

practitioner later discovers. 

Proposed § 10.21 would expand the 

current guidance by requiring 

practitioners to explain actions the 

client should take to correct the 

noncompliance, error, or omission. 

Knowingly failing to inform a client of 

the noncompliance, error, or omission is 

disreputable conduct under 31 U.S.C. 

330(c) because it causes practitioners to 

perpetuate false or misleading 

information to the IRS and potentially 

exposes the client to penalties and other 

adverse consequences. Proposed § 10.21 

would also instruct practitioners to 

consider whether they can continue to 

meet their obligation to exercise 

diligence under proposed § 10.22(a) as 

to the accuracy of tax returns and other 

documents if the client refuses to take 

corrective action during the course of 

the practitioner’s representation. A 

practitioner’s obligation under proposed 

§ 10.22(a) applies only to tax returns 

that are prepared, approved, or 

submitted in connection with 

representing a client in a matter before 

the IRS. Under those circumstances, the 

failure to correct inaccurate or 

unsupportable return positions would 

result in their perpetuation in 

submissions to the IRS during the 

course of the practitioner’s 

representation. These changes would 

align Circular 230 with similar 

professional standards relating to 

knowledge of a client’s error. See AICPA 

Statement on Standards for Tax Services 

No. 6 (Knowledge of Error: Return 

Preparation and Administrative 

Proceedings) (Rev. April 30, 2018); see 

also Schmitz v. Crotty, 528 NW 112 

(Iowa 1995) (holding that in a civil 

malpractice action, an attorney was 

negligent for, in part, failing to correct 

an error on tax returns that he was 

aware of). 

G. Negotiation of Payments to Clients 

Current § 10.31 provides that a 

practitioner may not endorse or 

otherwise negotiate any check issued to 

a client by the Government in respect of 

a Federal tax liability, including 

directing or accepting payment by any 

means, electronic or otherwise, into an 

account owned or controlled by the 

practitioner or any firm or other entity 

with which the practitioner is 

associated. When it was last amended in 

2014, this regulation was revised to 

clarify that the prohibition on 

practitioner negotiation of taxpayer tax 

refunds applied to the electronic 

environment in which both the IRS and 

practitioners operated. Proposed § 10.31 

would maintain this prohibition and 

broaden it to apply to all electronic 

payments to clients with respect to a 

Federal tax liability, including prepaid 

debit cards, phone or mobile payments, 

or other forms of electronic payments, 

even if that payment method is not 

currently used by the Treasury 

Department. These changes 


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acknowledge the evolving electronic 

environment in which tax refunds and 

other payments to taxpayers are 

processed through a variety of means. 

H. Best Practices for Tax Practitioners 

Current § 10.33 provides best 

practices for practitioners related to 

client representation. Proposed § 10.33 

would replace references to ‘‘tax 

advisors’’ with ‘‘tax practitioners’’ to 

better align § 10.33 with descriptions 

used elsewhere in Circular 230. 

Proposed § 10.33(a)(4) would provide 

that it is a best practice for practitioners 

to create a data security policy to 

maintain safeguards with respect to 

client information and establish a plan 

and procedures for responding to data 

breaches. Practitioners who also prepare 

returns have a legal obligation to 

comply with the Federal Trade 

Commission’s Safeguards Rule under 

the Gramm-Leach Bliley Act, which 

requires businesses to implement 

safeguards, including a written 

information security plan, to protect the 

security, confidentiality and integrity of 

customer information. 16 CFR part 314 

(2002). This proposed change 

acknowledges this duty and 

complements the newly proposed duty 

to maintain technological competence 

under proposed § 10.35 and better aligns 

Circular 230 with other professional 

standards. See American Bar 

Association Formal Ethics Opinion 18– 

483; IRS Publication 4557, Safeguarding 

Taxpayer Data; IRS Publication 5708, 

Creating a Written Information Security 

Plan for Your Tax & Accounting 

Practice. 

Proposed § 10.33(a)(5) would provide 

that it is a best practice for practitioners 

to identify, evaluate, and address a 

mental impairment arising out of, or 

related to, age, substance abuse, a 

physical or mental health condition, or 

some other circumstance that could 

adversely impact a practitioner’s ability 

to effectively represent a client before 

the IRS. An impairment, left untreated, 

can have adverse consequences on a 

client’s representation and to the health 

and well-being of a practitioner. The 

purpose of proposed § 10.33(a)(5) is to 

encourage practitioners who are 

suffering from a mental impairment to 

seek and obtain assistance or treatment. 

See, e.g., DC Legal Ethics Opinion 377. 

Proposed § 10.33(a)(6) would provide 

that it is a best practice for practitioners 

to establish a business continuity and 

succession plan that includes 

procedures and safeguards related to 

both the cessation of a practitioner’s 

practice or the occurrence of an outside 

event, such as a natural disaster or 

cyberattack. Business continuity and 

succession planning are essential 

because they proactively protect clients 

in the event of a practitioner’s death or 

disability or from the occurrence of an 

unforeseen event. 

Finally, proposed § 10.33 would 

eliminate current § 10.33(b), which 

provides steps to ensure that a firm’s 

procedures are consistent with best 

practices. Current § 10.33(b) would be 

duplicative of procedures under 

proposed § 10.36 to ensure compliance 

with subparts A, B, and C of part 10, 

which instructs practitioners to take 

reasonable steps to ensure that the 

firm’s procedures are consistent with 

the best practices under proposed 

§ 10.33(a). 

I. Duty To Maintain Technological 

Competence 

Current § 10.35 provides that a 

practitioner must be competent when 

engaged in practice before the IRS. 

Specifically, practitioners are required 

to have the appropriate level of 

knowledge, skill, thoroughness, and 

preparation necessary for the matter in 

which the practitioner is engaged. 

Increasingly, competence also includes 

maintaining familiarity with 

technological tools used to represent a 

client. A similar standard for 

technological competency is included in 

the American Bar Association (ABA) 

Model Rules of Professional Conduct. 

Proposed § 10.35 is based on Comment 

8 to ABA Model Rule 1.1 and would 

define competency to include 

understanding the benefits and risks 

associated with relevant technology 

used by the practitioner to provide 

services to clients or to store or transmit 

confidential information, including tax 

return information. 

J. Regulation of Written Tax Advice 

Current § 10.37 provides basic 

principles to which all practitioners 

must adhere when giving written tax 

advice. Circular 230 was amended in 

2014 to eliminate the covered opinion 

rules (in former § 10.35) and replace 

them with broad standards for written 

tax advice under a current § 10.37. See 

TD 9668. Proposed § 10.37 would 

maintain these principles-based 

standards and make minor wording 

changes. Current § 10.37(d) defines a 

‘‘Federal tax matter,’’ for purposes of 

that section, as the application or 

interpretation of a revenue provision 

defined under section 6110(i)(1)(B) of 

the Code, any provision of law 

impacting a person’s obligations under 

the internal revenue laws and 

regulations, and any other law or 

regulation administered by the IRS. 

Proposed § 10.37 would amend this 

definition of a Federal tax matter under 

proposed § 10.37(d) to clarify that it 

encompasses any transaction, plan, 

arrangement, or other matter (whether 

prospective or completed), which is of 

the type that the IRS determines has the 

potential for tax avoidance or evasion. 

This proposed change aligns 

standards for written tax advice under 

proposed § 10.37 more closely with the 

statutory language of 31 U.S.C. 330(e), 

which acknowledges that the Treasury 

Department may ‘‘impose standards 

applicable to the rendering of written 

advice with respect to any entity, 

transaction plan or arrangement, or 

other plan or arrangement, which is of 

a type which the Secretary determines 

as having a potential for tax avoidance 

or evasion.’’ 

Current § 10.37(c)(1) imposes a 

reasonable practitioner standard, 

considering all of the facts and 

circumstances, to determine whether a 

practitioner has complied with the 

written advice standards under this 

section. Current § 10.37(c)(2) imposes 

the same reasonable practitioner 

standard in the case of an opinion the 

practitioner knows or has reason to 

know will be used by another person to 

promote, market, or recommend to one 

or more taxpayers a partnership or other 

entity, investment plan, or arrangement 

a significant purpose of which is the 

avoidance or evasion of any tax 

(Significant Purpose Transactions). 

Current § 10.37(c)(2) adds that, under 

the facts-and-circumstances analysis for 

Significant Purpose Transactions, 

emphasis will be ‘‘given to the 

additional risk caused by the 

practitioner’s lack of knowledge of the 

taxpayer’s particular circumstances.’’ 

Considering a practitioner’s knowledge 

of the taxpayer’s circumstances is 

generally relevant to whether a 

practitioner has satisfied written tax 

advice standards. Therefore, the 

proposed regulations would remove 

paragraph (c)(2) in current § 10.37 and 

proposed § 10.37(c) would include 

consideration of the practitioner’s 

knowledge of the client’s particular 

circumstances under the reasonable 

practitioner standard. 

K. Incompetence or Disreputable 

Conduct 

Current § 10.51 defines disreputable 

conduct for which a practitioner may be 

sanctioned. Incompetence or 

disreputable conduct under current 

§ 10.51 is a basis for imposing sanctions 

against practitioners that is separate 

from a failure to meet the duties and 

abide by the restrictions relating to 

practice before the IRS under subpart B. 

Subpart C, retitled to relate to 


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incompetence and disreputable 

conduct, would redesignate current 

§ 10.51 as proposed § 10.50 and, as 

described in part B of this Explanation 

of Provisions, proposed § 10.51 would 

define certain fee arrangements that 

constitute disreputable conduct. 

Proposed § 10.50(a) would explain 

that a practitioner can be sanctioned for 

conduct that relates to the practitioner’s 

overall fitness to practice and is not 

limited to actions taken while 

representing clients in a matter before 

the IRS. Proposed § 10.50(a)(12) would 

clarify that contemptuous conduct 

subject to sanction includes conduct in 

connection with practice before the IRS, 

any proceeding pursuant to 

redesignated proposed § 10.80 or any 

investigation by the Treasury Inspector 

General for Tax Administration. New 

proposed § 10.50(a)(19) would provide 

that the willful failure to follow any 

Federal tax law is disreputable conduct 

because knowingly violating a Federal 

tax law reflects a lack of due regard for 

the tax laws. 

New proposed § 10.50(b) would 

provide that any assessment against a 

practitioner of penalties relating to a 

willful attempt to understate tax 

liabilities under section 6694(b); aiding 

or abetting in the understatement of tax 

liabilities under section 6701; careless, 

reckless, or intentional disregard for the 

rules or regulations (within the meaning 

of 26 CFR 1.6662–3(b)(2) and 1.6694– 

3(c)) under section 6662(b)(1); or 

promotion of abusive tax shelters under 

section 6700 will be considered a 

violation of proposed § 10.50(a)(7). The 

assessment of any of these penalties, 

however, would not be required to show 

a violation of proposed § 10.50(a)(7). 

L. Appraiser Standards 

The proposed regulations would 

incorporate new subpart D, which 

provides definitions related to 

appraisers and standards for the 

disqualification of appraisers. Current 

§ 10.50(b) references the authority of the 

Secretary, or her delegate, and the IRS 

to disqualify appraisers from presenting 

evidence or testimony in any 

administrative proceeding before the 

Treasury Department or the IRS. Current 

Circular 230, however, does not provide 

a separate definition of appraisers or 

what constitutes an administrative 

proceeding for purposes of 

disqualification. The proposed 

regulations would provide separate 

definitions for both appraisers and 

administrative proceedings and explain 

how they would relate to the new 

appraiser standards. Current § 10.60(b) 

provides that proceedings to disqualify 

appraisers can be instituted whenever a 

penalty has been assessed against an 

appraiser under the Code and the IRS 

determines that the appraiser acted 

willfully, recklessly, or through gross 

incompetence with respect to the 

conduct at issue. 

This penalty prerequisite limits the 

IRS’s ability to respond to misconduct 

under Circular 230 when the 

misconduct is not covered by a specific 

penalty, an applicable penalty is not 

imposed, or a proposed penalty 

assessment has not yet been made. 

There is no penalty prerequisite for 

appraiser disqualification under 31 

U.S.C. 330, and the only procedural 

requirement for the disqualification of 

appraisers under 31 U.S.C. 330(d) is 

notice and an opportunity for a hearing. 

An appraiser’s conduct may be 

disreputable or fail to conform to 

appraisal standards even when the IRS 

has not assessed a penalty or when no 

penalty under the Code is applicable. 

Therefore, the proposed regulations 

would eliminate the penalty 

prerequisite under current § 10.60(b) 

because it provides an unnecessary 

barrier to address misconduct. 

Proposed § 10.61, under new subpart 

D, would require appraisals submitted 

in an administrative proceeding before 

the IRS to conform to the substance and 

principles of the Uniform Standards of 

Professional Appraisal Practice (USPAP) 

promulgated by the Appraisal Standards 

Board of the Appraisal Foundation or 

the International Valuation Standards 

(IVS) promulgated by the International 

Valuation Standards Council. Proposed 

§ 10.61 would thus ensure that 

appraisals submitted in an 

administrative proceeding generally 

conform to broadly applicable standards 

without requiring strict compliance 

with such standards. Appraisers who 

willfully fail to meet these standards 

may be subject to disqualification under 

Circular 230. A failure to conform to the 

substance and principles of either 

USPAP or IVS standards that is not the 

result of willful, reckless, or grossly 

incompetent conduct is not 

sanctionable. In contrast, appraisers 

who recklessly or through gross 

incompetence engage in a pattern of 

submitting appraisals that do not 

conform to the substance and principles 

of USPAP or IVS standards may be 

subject to disqualification under the 

proposed regulations. The IRS’s Office 

of Professional Responsibility (OPR) 

would determine whether an appraisal 

conforms to the substance and 

principles of these general appraisal 

guidelines during the Circular 230 

investigatory and disciplinary process, 

prior to instituting any formal 

disciplinary proceeding under subpart F 

of 31 CFR part 10. An opinion by a 

court, such as the United States Tax 

Court (Tax Court), finding that an 

appraiser failed to comply with the 

substance and principles of USPAP (or 

otherwise violated the standards for 

appraisers) may be considered when 

making that determination. See, e.g., 

Oconee Landing Property, LLC v. 

Commissioner, T.C. Memo. 2024–25 

(finding that the appraisers had reached 

an advance agreement with the donors 

to appraise the subject property ‘‘in the 

neighborhood of’’ a pre-determined 

overvalued price). 

Using the substance and principles of 

the USPAP or IVS appraisal standards 

as a basis for disqualification would 

enable the IRS to proactively address 

inadequate appraisals submitted in 

administrative proceedings. Both 

USPAP and IVS provide broad 

standards for general appraisal 

methodology. USPAP and IVS appraisal 

standards also provide a generally 

accepted standard of care that is widely 

followed in U.S. and international 

valuation matters for real property, 

personal property, and businesses. As 

such, they form a ‘‘floor’’ for appraiser 

competency, similar to how the ABA’s 

Model Rules of Professional Conduct 

provide general standards for attorneys. 

Like state bars, other professional 

appraiser organizations and state 

licensing boards elaborate on and are 

free to impose stricter standards on 

appraisers. Further, USPAP is required 

for state-licensed and state-certified real 

property appraisers and has been widely 

adopted by professional appraisal 

societies. Internal Revenue Service 

Advisory Council Annual Report at 

118–28 (November 2017). Under Notice 

2006–96, 2006–46 I.R.B. 902 (November 

13, 2006), the IRS already recognizes 

USPAP as generally accepted appraisal 

standards relating to charitable 

contribution deductions under section 

170(f)(11)(E)(i) of the Code. The Tax 

Court has also looked to adherence to 

USPAP as a measure of the credibility 

of an appraisal. See, e.g., Estate of Cecil 

v. Commissioner, T.C. Memo. 2023–24 

(giving no weight to a valuation that was 

inconsistent with USPAP). Therefore, 

the proposed regulations would provide 

additional clarity to appraisers with 

respect to the standard for appraisals 

submitted in an IRS administrative 

proceeding. 

Proposed § 10.61(b)(2) would also 

provide that appraisers who know or 

reasonably should know that an 

appraisal will be used in an 

administrative proceeding by taxpayers 

to support a substantial valuation 

misstatement under section 6662(e), a 

substantial estate or gift tax valuation 


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understatement within the meaning of 

section 6662(g), or a gross valuation 

misstatement pursuant to section 

6662(h), would be subject to 

disqualification if they act willfully, 

recklessly, or through gross 

incompetence. This standard would 

allow the IRS to address common 

appraiser misconduct related to tax 

return positions. 

Consistent with current § 10.60(b), 

new proposed § 10.61(c) would provide 

that an appraiser who has been assessed 

a penalty under section 6694, 6695A, 

6700, or 6701 of the Code, for which it 

is determined that the appraiser acted 

willfully, recklessly, or through gross 

incompetence with respect to the 

proscribed conduct may be disqualified 

for engaging in disreputable conduct, 

although this assessment is not a 

prerequisite to disqualification. 

Appraisers who have been assessed 

penalties as a result of their willful, 

reckless, or grossly incompetent 

conduct have engaged in disreputable 

conduct that should disqualify them 

from presenting evidence or testimony 

in an administrative proceeding before 

the Treasury Department or the IRS and 

should result in the appraiser’s 

appraisals having no probative effect in 

an administrative proceeding. If the 

penalty is later abated, an appraiser can 

petition for reinstatement under 

redesignated proposed § 10.101. 

The proposed regulations also provide 

that an appraiser may show adherence 

to USPAP standards when issuing the 

relevant appraisal, which will be taken 

into account as a defense in determining 

whether an appraiser acted willfully, 

recklessly, or through gross 

incompetence with respect to potential 

disqualification under proposed 

§ 10.61(b)(2) or (c). 

Because appraisers are not 

practitioners under Circular 230, it is 

appropriate to include standards 

relating to their disqualification under a 

separate subpart from standards relating 

to practitioners. However, because 

appraisers are subject to the same notice 

and opportunity for a hearing as 

practitioners under Circular 230, 

disqualification procedures for 

appraisers would remain the same as 

those for practitioners under new 

subpart F (Rules Applicable to 

Disciplinary Proceedings). 

M. Effect of Disbarment, Suspension, or 

Censure 

In 2017, the United States District 

Court for the District of Nevada held in 

Sexton v. Hawkins, 119 A.F.T.R. 2d 

2017–1187 (D. Nev. 2017), that the 

Treasury Department and the IRS did 

not have jurisdiction to investigate 

whether suspended practitioners have 

violated the terms of their suspension 

because suspended individuals were not 

considered practitioners under Circular 

230. The Treasury Department and the 

IRS disagree with this holding. The IRS 

has continuing jurisdiction to 

investigate suspended practitioners 

under 31 U.S.C. 330(c), which provides 

authority to suspend, disbar, or censure 

practitioners under Circular 230. The 

ability to investigate compliance by 

practitioners with the terms of their 

censure or suspension is critical to 

ensure compliance and maintain the 

integrity of practitioner discipline under 

Circular 230. Practitioners who do not 

comply with requests for information 

from OPR or who violate the terms of 

their suspension may face further 

sanctions, such as monetary penalties or 

disbarment. 

Proposed § 10.99(e) would clarify that 

suspended practitioners remain 

practitioners under Circular 230 for the 

purposes of investigating and acting on 

any violation of a suspension or any 

violation of the law or regulations 

governing practice before the IRS while 

suspended. It is also important to the 

enforcement of 31 U.S.C. 330 and the 

integrity of Circular 230 for the IRS to 

ensure that individuals who are not 

authorized to practice before the IRS, 

either because they have been disbarred 

or because they do not have the required 

credentials, do not claim authority to 

practice. Proposed § 10.99(f), therefore, 

would clarify that the IRS has 

jurisdiction to make inquiries to 

determine whether an individual has 

wrongly held themselves out as a 

practitioner. 

N. Expedited Suspension 

Current § 10.81 provides guidance on 

how practitioners can petition OPR for 

reinstatement, but it does not address 

practitioners or appraisers who have 

been suspended or disqualified through 

the expedited procedures under current 

§ 10.82. Moreover, while current § 10.82 

authorizes the immediate suspension of 

a practitioner who has engaged in 

certain conduct, it does not include 

expedited procedures for appraisers or 

address the voluntary forfeiture of a 

license or certification by practitioners 

or appraisers. Current § 10.81, which is 

proposed to be redesignated as § 10.101, 

would allow practitioners or appraisers 

who have received an expedited 

suspension or disqualification to 

petition for reinstatement at any time 

upon a showing of good cause. 

The proposed changes to current 

§ 10.82, which is proposed to be 

redesignated as § 10.102, explain that 

practitioners can establish good cause 

by showing that the conditions giving 

rise to their expedited suspension or 

disqualification no longer apply. For 

example, the restoration of a suspended 

license, the reversal of a conviction, or 

the removal of a sanction may be 

sufficient to show good cause. Proposed 

§ 10.102 would also extend expedited 

disciplinary proceedings to appraisers 

who have had a license or certification 

revoked or suspended by a state 

licensing or certification board or who 

have voluntarily forfeited their license 

or certification. Finally, proposed 

§ 10.102(e)(1)(iii) would clarify that, 

when a practitioner or appraiser 

responds to a show cause order but does 

not request a conference, the IRS will 

issue a written notice of expedited 

suspension immediately following 

consideration of a practitioner or 

appraiser’s response. 

Proposed § 10.102(a)(7)(i) and (ii), 

redesignated from § 10.82(b)(5)(i) and 

(ii), would only update the crossreferences in those provisions. They are 

otherwise not proposed to be revised, 

though they are set out in their entirety 

below for the convenience of the reader. 

The Treasury Department and IRS do 

not seek comments on the substance of 

these provisions, and any such 

comments would be outside the scope 

of the proposed regulations. 

O. Comments Requested 

The Treasury Department and the IRS 

request comments on all aspects of the 

proposed regulations. Comments are 

also specifically requested on whether, 

in a future regulation, the definition of 

practitioners eligible to practice before 

the IRS should be proposed to be 

expanded to include individuals 

admitted to practice law in a Tribal 

court. 

Proposed Applicability Date 

The proposed regulations are 

proposed to apply 30 days after date of 

publication of final regulations in the 

Federal Register. 

Special Analyses 

I. Regulatory Planning and Review 

The Office of Information and 

Regulatory Affairs has determined that 

this regulation is not significant and not 

subject to review under Executive Order 

12866 (June 9, 2023). Therefore, a 

regulatory impact assessment is not 

required. 

II. Initial Regulatory Flexibility 

Analysis 

When the IRS issues a general notice 

of proposed rulemaking, the Regulatory 

Flexibility Act (RFA) requires the 

agency to ‘‘prepare and make available 


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for public comment an initial regulatory 

flexibility analysis,’’ which will 

‘‘describe the impact of the proposed 

rule on small entities.’’ 5 U.S.C. 603(a). 

Unless an agency determines that a 

proposal is not likely to have a 

significant economic impact on a 

substantial number of small entities, 

section 603 of the RFA requires the 

agency to present an initial regulatory 

flexibility analysis (IRFA) of the 

proposed rule. The proposed regulations 

will affect a substantial number of small 

entities. Because the proposed 

regulations do not impose new 

requirements on practitioners or 

appraisers, the Treasury Department 

and the IRS do not anticipate that the 

proposed regulations, if promulgated, 

would have a significant economic 

impact on any of the regulated entities. 

The Treasury Department and the IRS, 

however, request comments on the 

potential economic impact of the 

proposed regulations and include an 

IRFA. 

Description of the reasons why action 

by the agency is being considered and 

succinct statement of the objectives of, 

and the legal basis for, the proposed 

rule. 

As discussed in this preamble, current 

Circular 230 has not been amended 

since 2014 and many of its provisions 

have been made obsolete by current law 

or need to be updated to reflect the 

current practice environment. 

Accordingly, the proposed regulations 

would eliminate provisions related to 

tax return preparation outside of 

practice before the IRS, revise 

contingent fee rules, and update various 

standards and procedures. In addition, 

the definition of appraiser and the 

procedures for disqualifying appraisers 

from submitting appraisals in an 

administrative proceeding before the 

Treasury Department or the IRS are 

being amended and updated. Thus, the 

general objective of the proposed 

regulations is to align Circular 230 with 

current law and to clarify or update its 

standards. None of the revisions, 

however, propose to impose new 

standards or burdens on practitioners or 

appraisers. The proposed regulations 

would either update long-standing 

Circular 230 standards or incorporate 

standards that practitioners or 

appraisers comply with outside of 

practice before the IRS. For example, the 

proposed contingent fee restrictions are 

also incorporated in other widely 

applicable rules of professional conduct. 

Likewise, appraisers are generally 

already required to meet the broad 

appraisal standards referenced by the 

proposed regulations. 

The legal basis for the proposed 

regulations is 31 U.S.C. 330. 

Description of and, where feasible, an 

estimate of the number of small entities 

to which the proposed rule will apply. 

The proposed regulations would 

affect EAs, ERPAs, attorneys, CPAs, and 

AFSP participants who practice before 

the IRS. The proposed regulations 

would also affect appraisers who submit 

appraisals in an administrative 

proceeding before the Treasury 

Department or the IRS. Circular 230 

affects both individual practitioners and 

firms. For example, the flush language 

of 31 U.S.C. 330(c) authorizes the 

Secretary, or her delegate, to impose a 

monetary penalty on a firm if the firm 

knew or should have known that a 

representative acting on its behalf 

intended to defraud a client. Further, 

proposed § 10.36(a) would require 

practitioners who oversee a firm’s 

practice to take reasonable steps to 

ensure that the firm has adequate 

procedures to comply with Circular 230. 

However, because the proposed 

regulations would only affect individual 

practitioners and appraisers, the 

economic impact of these regulations on 

any small entity generally will be the 

result of an individual practitioner or 

appraiser owning a small business, or a 

small business employing a practitioner 

or appraiser, and the business paying for 

the individual to maintain its status or 

to comply with other requirements in 

the Circular. Because an estimate of the 

number of small entities to which the 

proposed rule will apply is not 

available, the Treasury Department and 

the IRS considered the estimated 

number of practitioners and appraisers 

who will be affected by the proposed 

rule. Based on IRS records, the total 

number of impacted practitioners and 

appraisers is approximately 451,405. 

Specifically, Centralized Authorization 

File records, which reflect practitioners 

who filed third-party authorizations 

with the IRS, reflect approximately 

200,000 unique CPAs, 65,000 unique 

attorneys, and 40,000 unique 

practitioners who identify as both 

attorneys and CPAs as of May 17, 2024. 

Further, IRS Return Preparer Office 

(RPO) registration records show 

approximately 62,383 EAs, 608 ERPAs, 

3,402 enrolled actuaries, and 75,357 

AFSP participants. Finally, in 2022, the 

most recent year for which complete 

data are available, approximately 4,200 

unique appraisers signed the 

‘‘Declaration of Appraiser’’ on a Form 

8283, Noncash Charitable 

Contributions. Appraisers sign Forms 

8283 for appraisals that are used in 

connection with a tax return or claim of 

refund. Thus, the forms represent a 

reasonable approximation of appraisers 

who are likely to be covered by these 

proposed rules. 

A description of the projected 

recordkeeping, and other compliance 

requirements of the proposed rule, 

including an estimate of the classes of 

small entities that will be subject to 

such requirements that the type of 

professional skills necessary for 

preparation of the report or record. 

No reporting or recordkeeping 

requirements are projected to be 

associated with the proposed 

regulations. 

Identification, to the extent 

practicable, of all relevant Federal rules 

that may duplicate, overlap, or conflict 

with the proposed rule. 

The IRS is not aware of any Federal 

rules that duplicate, overlap, or conflict 

with the proposed rule. 

Description of any significant 

alternatives to the proposed rule that 

accomplish the stated objectives of 

applicable statutes and that minimize 

any significant economic impact of the 

proposed rule on small entities, 

including a discussion of significant 

alternatives. 

Section 330 of title 31, United States 

Code authorizes the Secretary, or her 

delegate, to impose standards on 

individuals who practice before the 

Treasury Department and the IRS; to 

suspend or disbar from practice certain 

individuals; and to bar certain 

appraisers from submitting evidence or 

testimony in any administrative 

proceeding before the Treasury 

Department or the IRS. The Treasury 

Department and the IRS have issued 

regulations under Circular 230 for these 

purposes since 1921 and have regularly 

updated them to reflect changing law 

and current standards of practice. These 

updates, including those found in the 

proposed regulations, are essential to 

ensure that practitioners and appraisers 

are competent, reputable and have the 

necessary requirements to provide 

taxpayers with valuable service. The 

proposed regulations could have created 

a new standard for appraisals submitted 

in an administrative proceeding before 

the IRS, but that would have been more 

burdensome to appraisers. Instead, 

requiring appraisals to conform in 

substance and principles to the USPAP 

or IVS is less costly and burdensome 

because appraisers are already required 

to abide by these standards. Further, the 

proposed regulations could have 

implemented case law to preclude 

regulating contingent fee arrangements 

for preparing original or amended 

returns and ordinary refund claims, but 

this position would not have met the 

objective to discourage unduly 


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aggressive tax positions that result in 

evasion or abuse of the Federal tax laws. 

Therefore, the proposed regulations 

would adopt a straightforward standard: 

charging a contingent fee for the 

preparation of an original return, 

amended return, or claim for refund or 

credit prepared prior to the examination 

of a tax return is disreputable conduct. 

III. Unfunded Mandates Reform Act

Section 202 of the Unfunded

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits and take certain other 

actions before issuing a final rule that 

includes any Federal mandate that may 

result in expenditures in any one year 

by a State, local, or Tribal government, 

in the aggregate, or by the private sector, 

of $100 million in 1995 dollars, updated 

annually for inflation. This proposed 

rule does not include any Federal 

mandate that may result in expenditures 

by State, local, or Tribal governments, or 

by the private sector in excess of that 

threshold. 

IV. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any 

rule that has federalism implications if 

the rule either imposes substantial, 

direct compliance costs on State and 

local governments, and is not required 

by statute, or preempts State law, unless 

the agency meets the consultation and 

funding requirements of section 6 of the 

Executive order. These proposed 

regulations do not have federalism 

implications and do not impose 

substantial direct compliance costs on 

State and local governments or preempt 

State law within the meaning of the 

Executive order. 

V. Executive Order 13175: Consultation

and Coordination With Indian Tribal

Governments

Executive Order 13175 (Consultation 

and Coordination With Indian Tribal 

Governments) prohibits an agency from 

publishing any rule that has Tribal 

implications if the rule either imposes 

substantial, direct compliance costs on 

Indian Tribal governments, and is not 

required by statute, or preempts Tribal 

law, unless the agency meets the 

consultation and funding requirements 

of section 5 of the Executive order. 

The Treasury Department and the IRS 

will hold a consultation with Tribal 

leaders to receive Tribal feedback on 

whether practitioners eligible to practice 

before the IRS should include 

individuals admitted to practice law in 

a Tribal court, which will inform the 

development of future regulations. 

Statement of Availability of IRS 

Documents 

IRS Revenue Procedures, Revenue 

Rulings, Notices, and other guidance 

cited in this preamble are published in 

the Internal Revenue Bulletin (or 

Cumulative Bulletin) and are available 

from the Superintendent of Documents, 

U.S. Government Publishing Office, 

Washington, DC 20402, or by visiting 

the IRS website at https://www.irs.gov. 

Comments and Public Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

comments that are timely submitted to 

the Treasury Department and the IRS as 

prescribed in this preamble under the 

ADDRESSES heading. The Treasury 

Department and the IRS request 

comments on all aspects of the proposed 

regulations. Any electronic and paper 

comments submitted will be available at 

https://www.regulations.gov or upon 

request. Once submitted to the Federal 

eRulemaking Portal, comments cannot 

be edited or withdrawn. 

A public hearing is being held on 

March 6, 2025, beginning at 10 a.m. ET, 

in the Auditorium at the Internal 

Revenue Building, 1111 Constitution 

Avenue NW, Washington, DC. Due to 

building security procedures, visitors 

must enter at the Constitution Avenue 

entrance. In addition, all visitors must 

present photo identification to enter the 

building. Because of access restrictions, 

visitors will not be admitted beyond the 

immediate entrance area more than 30 

minutes before the hearing starts. 

Participants may alternatively attend the 

public hearing by telephone. 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

must submit an outline of the topics to 

be discussed as well as the time to be 

devoted to each topic by February 24, 

2025. A period of ten minutes will be 

allocated to each person for making 

comments. After the deadline for 

receiving outlines has passed, the IRS 

will prepare an agenda containing the 

schedule of speakers. Copies of the 

agenda will be made available free of 

charge at the hearing. If no outlines of 

the topics to be discussed at the hearing 

are received by February 24, 2025, the 

public hearing will be cancelled. If the 

public hearing is cancelled, a 

notification of cancellation of the public 

hearing will be published in the Federal 

Register. 

Individuals who want to testify in 

person at the public hearing must send 

an email to publichearings@irs.gov to 

have your name added to the building 

access list. The subject line of the email 

must contain the regulation number 

REG–116610–20 and, the language 

TESTIFY In Person. For example, the 

subject line may say: Request to 

TESTIFY In Person at Hearing for REG– 

116610–20. 

Individuals who want to testify by 

telephone at the public hearing must 

send an email to publichearings@irs.gov 

to receive the telephone number and 

access code for the hearing. The subject 

line of the email must contain the 

regulation number REG–116610–20 and 

the language TESTIFY Telephonically. 

For example, the subject line may say: 

Request to TESTIFY Telephonically at 

Hearing for REG–116610–20. 

Individuals who want to attend the 

public hearing in person without 

testifying must also send an email to 

publichearings@irs.gov to have your 

name added to the building access list. 

The subject line of the email must 

contain the regulation number (REG– 

116610–20) and the language ATTEND 

In Person. For example, the subject line 

may say: Request to ATTEND Hearing In 

Person for REG–116610–20. Requests to 

attend the public hearing must be 

received by 5 p.m. ET on March 4, 2025. 

Individuals who want to attend the 

public hearing telephonically without 

testifying must also send an email to 

publichearings@irs.gov to receive the 

telephone number and access code for 

the hearing. The subject line of the 

email must contain the regulation 

number (REG–116610–20) and the 

language ATTEND Hearing 

Telephonically. For example, the 

subject line may say: Request to 

ATTEND Hearing Telephonically for 

REG–116610–20. Requests to attend the 

public hearing must be received by 5 

p.m. ET on March 4, 2025.

Hearings will be made accessible to

people with disabilities. To request 

special assistance during the hearing, 

contact the Publications and 

Regulations Branch of the Office of 

Associate Chief Counsel (Procedure and 

Administration) by sending an email to 

publichearings@irs.gov (preferred) or by 

telephone at (202) 317–6901 (not a tollfree number) by at least March 3, 2025. 

Drafting Information 

The principal author of these 

regulations is William J. Prater of the 

Office of the Associate Chief Counsel 

(Procedure and Administration). 

However, other personnel from the 

Treasury Department and the IRS 

participated in the development of the 

regulations. 


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Federal Register / Vol. 89, No. 247 / Thursday, December 26, 2024 / Proposed Rules 104925 

Withdrawal of Notice of Proposed 

Rulemaking 

The Treasury Department and the IRS 

withdraw the notice of proposed 

rulemaking (REG–113289–08) that was 

published in the Federal Register on 

July 28, 2009 (74 FR 37183) under the 

authority of 31 U.S.C. 330. 

List of Subjects in 31 CFR Part 10 

Accountants, Administrative practice 

and procedure, Lawyers, Reporting and 

recordkeeping requirements, Taxes. 

Proposed Amendments to the 

Regulations 

Accordingly, the Treasury Department 

and the IRS propose to amend 31 CFR 

part 10 as follows: 

PART 10—PRACTICE BEFORE THE 

INTERNAL REVENUE SERVICE 

■ Paragraph 1. The authority for 31 CFR 

part 10 continues to read as follows: 

Authority: Sec. 3, 23 Stat. 258, secs. 2–12, 

60 Stat. 237 et seq.; 5 U.S.C. 301, 500, 551– 

559; 31 U.S.C. 321; 31 U.S.C. 330; Reorg. Plan 

No. 26 of 1950, 15 FR 4935, 64 Stat. 1280, 

3 CFR, 1949–1953 Comp., P. 1017. 

■ Par. 2. Part 10 is amended by 

removing the language ‘‘taxpayer’’, 

‘‘taxpayers’’, and ‘‘taxpayer’s’’ wherever 

they appear and adding the language 

‘‘client’’, ‘‘clients’’, and ‘‘client’s’’ in 

their places, respectively. 

■ Par. 3. Section 10.0 is revised to read 

as follows: 

§ 10.0 Scope of part. 

(a) In general. This part contains rules 

governing the recognition of attorneys, 

certified public accountants, enrolled 

agents, enrolled retirement plan agents, 

enrolled actuaries, and other persons 

representing clients before the Internal 

Revenue Service. This part also 

establishes standards for appraisers who 

submit appraisals or present evidence or 

testimony to the Department of the 

Treasury or the Internal Revenue 

Service (IRS). Subpart A of this part sets 

forth rules relating to the authority to 

practice before the IRS; subpart B of this 

part prescribes the duties and 

restrictions relating to subpart A; 

subpart C of this part prescribes 

incompetence and disreputable 

conduct; subpart D of this part sets forth 

standards relating to the disqualification 

of appraisers and prescribes sanctions 

for violating the standards; subpart E of 

this part prescribes the sanctions for 

violating the standards in subparts B 

through D; subpart F of this part 

contains the rules applicable to 

disciplinary proceedings and general 

provisions relating to the availability of 

official records. 

(b) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 4. Section 10.2 is amended by: 

■ 1. Revising paragraphs (a)(4) through 

(6). 

■ 2. Removing paragraphs (a)(7) and (8). 

■ 3. Revising paragraph (b). 

The revisions read as follows: 

§ 10.2 Definitions. 

(a) * * * 

(4) Practice before the Internal 

Revenue Service comprehends all 

matters connected with a presentation 

to the Internal Revenue Service or any 

of its officers or employees relating to a 

client’s rights, privileges, or liabilities 

under laws or regulations administered 

by the Internal Revenue Service. Such 

presentations include, but are not 

limited to, preparing documents; filing 

documents; corresponding and 

communicating with the Internal 

Revenue Service; rendering written 

advice with respect to any entity, 

transaction, plan or arrangement, or 

other plan or arrangement having a 

potential for tax avoidance or evasion; 

and representing a client at conferences, 

hearings, and meetings. Any action that 

supports a presentation to the Internal 

Revenue Service, including the 

preparation and submission of tax 

returns in connection with representing 

a client in a matter before the Internal 

Revenue Service, may constitute 

practice before the Internal Revenue 

Service. 

(5) Practitioner means any individual 

described in § 10.3(a), (b), (c), (d), or (e). 

(6) A tax return includes an amended 

tax return and a claim for refund or 

credit within the meaning of section 

6696(e)(2) of the Internal Revenue Code, 

such as a claim for refund or credit 

made on IRS Form 843, Claim for 

Refund and Request for Abatement. 

(b) This section is applicable 

beginning on [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

■ Par. 5. Section 10.3 is amended by: 

■ 1. Revising paragraphs (c), (d)(3), and 

(e)(1) and (3). 

■ 2. Removing paragraph (f). 

■ 3. Redesignating paragraphs (g) 

through (j) as paragraphs (f) through (i). 

■ 4. Revising newly redesignated 

paragraph (i). 

The revisions read as follows: 

§ 10.3 Who may practice. 

* * * * * 

(c) Enrolled agents. Any individual 

enrolled as an agent pursuant to this 

part who is not currently under 

suspension or disbarment from practice 

before the Internal Revenue Service, and 

whose valid enrollment is active and 

has not been terminated under § 10.6, 

may practice before the Internal 

Revenue Service. 

(d) * * * 

(3) An individual who practices 

before the Internal Revenue Service 

pursuant to paragraph (d)(1) of this 

section is subject to the provisions of 

this part in the same manner as 

attorneys, certified public accountants, 

enrolled agents, and enrolled retirement 

plan agents. 

(e) * * * 

(1) Any individual enrolled prior to 

February 12, 2016, as a retirement plan 

agent pursuant to this part who is not 

currently under suspension or 

disbarment from practice before the 

Internal Revenue Service, and whose 

enrollment is not in inactive status or 

has not been terminated under § 10.6, 

may practice before the Internal 

Revenue Service. 

* * * * * 

(3) An individual who practices 

before the Internal Revenue Service 

pursuant to paragraph (e)(1) of this 

section is subject to the provisions of 

this part in the same manner as 

attorneys, certified public accountants, 

enrolled agents, and enrolled actuaries. 

* * * * * 

(i) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 6. Section 10.4 is amended by: 

■ 1. Revising the section heading. 

■ 2. Removing paragraphs (b) through 

(d). 

■ 3. Redesignating paragraphs (e) and (f) 

as paragraphs (b) and (c). 

■ 4. Revising newly redesignated 

paragraph (c). 

The revisions read as follows: 

§ 10.4 Eligibility to become an enrolled 

agent. 

* * * * * 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

Former IRS employees must apply for 

special enrollment in accordance with 

31 CFR 10.4(d), revised as of July 1, 

[year to be determined], on or before 

[date 30 days after date of publication of 

final regulations in the Federal 

Register]. 

■ Par. 7. Section 10.5 is amended by 

revising the section heading and 

paragraphs (a), (b), (d)(2), (e), and (g) to 

read as follows: 


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§ 10.5 Application to become an enrolled 

agent. 

(a) Form; address. An applicant to 

become an enrolled agent must apply as 

required by forms or procedures 

established and published by the 

Internal Revenue Service, including 

proper execution of required forms 

under oath or affirmation. The address 

on the application will be the address 

under which a successful applicant is 

enrolled and is the address to which all 

correspondence concerning enrollment 

will be sent. 

(b) Fee. A reasonable nonrefundable 

fee may be charged for each application 

to become an enrolled agent. See 26 CFR 

part 300. 

* * * * * 

(d) * * * 

(2) If the applicant does not pass the 

tax compliance or suitability check, the 

applicant will not be issued a 

confirmation of enrollment pursuant to 

§ 10.6(b). An applicant who is initially 

denied enrollment for failure to pass a 

tax compliance check may reapply after 

the initial denial if the applicant 

becomes current with respect to the 

applicant’s tax liabilities. 

(e) Temporary recognition. On receipt 

of a properly executed application, the 

Commissioner, or delegate, may grant 

the applicant temporary recognition to 

practice pending a determination as to 

whether status as an enrolled agent 

should be granted. Temporary 

recognition will be granted only in 

unusual circumstances and it will not 

be granted, in any circumstance, if the 

application is not regular on its face, if 

the information stated in the 

application, if true, is not sufficient to 

warrant granting the application to 

practice, or if the Commissioner, or 

delegate, has information indicating that 

the statements in the application are 

untrue or that the applicant would not 

otherwise qualify to become an enrolled 

agent. Issuance of temporary recognition 

does not constitute either a designation 

or a finding of eligibility as an enrolled 

agent, and the temporary recognition 

may be withdrawn at any time. 

* * * * * 

(g) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 8. Section 10.6 is amended by: 

■ 1. Revising the section heading and 

paragraphs (a), (b), (c), and (d)(1) and 

(2). 

■ 2. Removing paragraph (d)(4). 

■ 3. Redesignating paragraphs (d)(5) 

through (7) as paragraphs (d)(4) through 

(6). 

■ 4. Revising newly redesignated 

paragraphs (d)(4) and (6) and paragraph 

(e) introductory text. 

■ 5. Removing paragraph (e)(1)(iii). 

■ 6. Redesignating paragraph (e)(1)(iv) 

as paragraph (e)(1)(iii). 

■ 7. Removing paragraphs (e)(3) and 

(f)(1)(iii). 

■ 8. Revising paragraphs (f)(2)(ii) 

heading, (f)(2)(iii)(C), (i)(4) and (5), and 

(j)(2). 

■ 9. In paragraph (j)(3), removing the 

language ‘‘or inactive registered 

individuals’’ from the end of the first 

sentence. 

■ 10. Revising paragraphs (j)(4) through 

(6), (k), (l), and (n). 

The revisions read as follows: 

§ 10.6 Term and renewal of status as an 

enrolled agent or enrolled retirement plan 

agent. 

(a) Term. Each individual authorized 

to practice before the Internal Revenue 

Service as an enrolled agent or enrolled 

retirement plan agent will be accorded 

active enrollment status subject to 

renewal of enrollment as provided in 

this part. 

(b) Confirmation of enrollment. The 

Internal Revenue Service will issue an 

enrollment document (such as an 

enrollment card or other document) to 

an individual who meets the enrollment 

requirements in this paragraph (b) and 

whose application to practice before the 

Internal Revenue Service is approved. 

This approval will be valid for the 

period stated on the enrollment 

document. An enrolled agent or 

enrolled retirement plan agent may not 

practice before the Internal Revenue 

Service without a valid approval. The 

enrollment document is in addition to 

any notification that may be provided to 

each individual who obtains a preparer 

tax identification number. 

(c) Change of address. An enrolled 

agent or enrolled retirement plan agent 

must send notification of any change of 

address to the address specified by the 

Internal Revenue Service within 60 days 

of the change of address. This 

notification must include the enrolled 

agent’s or enrolled retirement plan 

agent’s name, prior address, new 

address, tax identification number(s) 

(including preparer tax identification 

number), and the date the change of 

address is effective. Unless this 

notification is sent, the address for 

purposes of any correspondence from 

the appropriate Internal Revenue 

Service office responsible for 

administering this part will be the 

address reflected on the practitioner’s 

most recent application for enrollment, 

or application for renewal of 

enrollment. A practitioner’s change of 

address notification under this part will 

not constitute a change of the 

practitioner’s last known address for 

purposes of section 6212 of the Internal 

Revenue Code. 

(d) * * * 

(1) In general. Enrolled agents or 

enrolled retirement plan agents must 

renew their status with the Internal 

Revenue Service to maintain eligibility 

to practice before the Internal Revenue 

Service. Failure to receive notification 

from the Internal Revenue Service of the 

renewal requirement will not be 

justification for the individual’s failure 

to satisfy the requirement of this 

paragraph (d). 

(2) Renewal period for enrolled 

agents. (i) Applications for renewal of 

status as an enrolled agent will be 

required between November 1 and 

January 31 every three years according 

to the last digit of the individual’s 

Social Security number or tax 

identification number. Those 

individuals who receive initial 

enrollment as an enrolled agent after 

November 1 and before April 2 of the 

applicable renewal period will not be 

required to renew their enrollment 

before the first full renewal period 

following the receipt of their initial 

enrollment. 

(ii) Enrolled agents who have a Social 

Security number or tax identification 

number that ends with the numbers 0, 

1, 2, or 3, except for those individuals 

who received their initial enrollment 

after November 1, 2024, must apply for 

renewal between November 1, 2024, and 

January 31, 2025. The renewal will be 

effective April 1, 2025. 

(iii) Enrolled agents who have a Social 

Security number or tax identification 

number that ends with the numbers 4, 

5, or 6, except for those individuals who 

received their initial enrollment after 

November 1, 2025, must apply for 

renewal between November 1, 2025, and 

January 31, 2026. The renewal will be 

effective April 1, 2026. 

(iv) Enrolled agents who have a Social 

Security number or tax identification 

number that ends with the numbers 7, 

8, or 9, or who do not have a Social 

Security number, except for those 

individuals who received their initial 

enrollment after November 1, 2026, 

must apply for renewal between 

November 1, 2026, and January 31, 

2027. The renewal will be effective 

April 1, 2027. 

* * * * * 

(4) Notification of renewal. After 

review and approval, the Internal 

Revenue Service will notify the 

individual of the renewal and will issue 

the individual a document evidencing 


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current status as an enrolled agent or 

enrolled retirement plan agent. 

* * * * * 

(6) Forms. Forms required for renewal 

may be obtained by sending a written 

request to the address specified by the 

Internal Revenue Service or from such 

other source as the Internal Revenue 

Service will publish in the Internal 

Revenue Bulletin (see 26 CFR 

601.601(d)(2)(ii)(b)) and on the Internal 

Revenue Service website. 

(e) Condition for renewal: continuing 

education. To qualify for renewal as an 

enrolled agent or enrolled retirement 

plan agent an individual must certify in 

the manner prescribed by the Internal 

Revenue Service that the individual has 

satisfied the requisite number of 

continuing education hours. 

* * * * * 

(f) * * * 

(2) * * * 

(ii) Correspondence or individual 

study programs (including recorded 

programs). * * * 

(iii) * * * 

(C) The maximum continuing 

education credit for instruction and 

preparation may not exceed six hours 

annually for enrolled agents and 

enrolled retirement plan agents. 

* * * * * 

(i) * * * 

(4) If a request for waiver is not 

approved, the individual will be placed 

in inactive status. The individual will 

be notified that the waiver was not 

approved and that the individual has 

been placed on a roster of inactive 

enrolled agents or enrolled retirement 

plan agents. 

(5) If the request for waiver is not 

approved, the individual may file a 

protest as prescribed by the Internal 

Revenue Service in forms, instructions, 

or other appropriate guidance. A protest 

filed under this section is not governed 

by subpart F of this part. 

* * * * * 

(j) * * * 

(2) The continuing education records 

of an enrolled agent or enrolled 

retirement plan agent may be reviewed 

to determine compliance with the 

requirements and standards for renewal 

as provided in paragraph (f) of this 

section. As part of this review, the 

enrolled agent or enrolled retirement 

plan agent may be required to provide 

the Internal Revenue Service with 

copies of any continuing education 

records required to be maintained under 

this part. If the enrolled agent or 

enrolled retirement plan agent fails to 

comply with the requirement in this 

paragraph (j)(2), any continuing 

education hours claimed may be 

disallowed. 

* * * * * 

(4) Individuals in inactive status and 

individuals who are ineligible to 

practice before the Internal Revenue 

Service may not state or imply that they 

are eligible to practice before the 

Internal Revenue Service, or use the 

terms enrolled agent or enrolled 

retirement plan agent, the designations 

EA or ERPA, or other form of reference 

to eligibility to practice before the 

Internal Revenue Service. 

(5) An individual placed in inactive 

status may be reinstated to an active 

status by filing an application for 

renewal and providing evidence of the 

completion of all required continuing 

education hours for the enrollment 

cycle. Continuing education credit 

under this paragraph (j)(5) may not be 

used to satisfy the requirements of the 

enrollment cycle in which the 

individual has been placed back on the 

active roster. 

(6) An individual placed in inactive 

status must file an application for 

renewal and satisfy the requirements for 

renewal as set forth in this section 

within three years of being placed in 

inactive status. Otherwise, the name of 

such individual will be removed from 

the inactive status roster and the 

individual’s status as an enrolled agent 

or enrolled retirement plan agent will 

terminate. Future eligibility for active 

status must then be reestablished by the 

individual as provided in this section. 

* * * * * 

(k) Inactive retirement status. An 

individual who no longer practices 

before the Internal Revenue Service may 

request to be placed in an inactive 

retirement status at any time and such 

individual will be placed in an inactive 

retirement status. The individual will be 

ineligible to practice before the Internal 

Revenue Service. An individual who is 

placed in an inactive retirement status 

may be reinstated to an active status by 

filing an application for renewal and 

providing evidence of the completion of 

the required continuing education hours 

for the enrollment cycle. Inactive 

retirement status is not available to an 

individual who is ineligible to practice 

before the Internal Revenue Service or 

an individual who is the subject of a 

pending disciplinary matter under this 

part. 

(l) Renewal while under suspension or 

disbarment. An individual who is 

ineligible to practice before the Internal 

Revenue Service by virtue of 

disciplinary action under this part is 

required to conform to the requirements 

for renewal of enrollment before the 

individual’s eligibility is restored. 

* * * * * 

(n) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 9. Section 10.7 is amended by 

adding paragraph (c)(1)(viii) and 

revising paragraph (f) to read as follows: 

§ 10.7 Representing oneself; participating 

in rulemaking; limited practice; and special 

appearances. 

* * * * * 

(c) * * * 

(1) * * * 

(viii) An individual who possesses a 

current Annual Filing Season Program 

(AFSP) Record of Completion may 

represent a client before revenue agents, 

customer service representatives, or 

similar officers and employees of the 

Internal Revenue Service, including the 

Taxpayer Advocate Service, during an 

examination of a tax return or claim for 

refund or credit that the individual 

prepared and signed. The individual 

must have: a valid Record of 

Completion for the calendar year in 

which the tax return or claim for refund 

or credit was prepared and signed and 

a valid Record of Completion for the 

year or years in which the 

representation occurs. 

* * * * * 

(f) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 10. Section 10.8 is revised to read 

as follows: 

§ 10.8 Participation in IRS proceedings by 

non-practitioners. 

(a) Furnishing Information. Any 

individual, except appraisers who have 

been disqualified pursuant to § 10.61(a), 

including non-practitioners, may appear 

as a witness before the Internal Revenue 

Service, or furnish information at the 

request of the Internal Revenue Service 

or any of its officers or employees. 

(b) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 11. Section 10.9 is amended by: 

■ 1. In paragraph (a)(2)(i), removing the 

language ‘‘and pay any applicable user 

fee’’ from the end of the paragraph. 

■ 2. In paragraph (a)(2)(ii), removing the 

language ‘‘and paying any applicable 

user fee’’ from the end of the paragraph. 

■ 3. In paragraph (a)(4)(i), removing the 

language ‘‘and pay any applicable user 

fee’’ from the first sentence in the 

paragraph. 

■ 4. Revising paragraph (c). 


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■ 5. Adding paragraph (d). 

The revision and addition read as 

follows: 

§ 10.9 Continuing education providers and 

continuing education programs. 

* * * * * 

(c) Fee. In addition to any vendor fees 

that are charged, a continuing education 

provider may be required to pay a user 

fee to obtain or renew a continuing 

education provider number or 

continuing education provider program 

number. 

(d) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 12. Section 10.21 is revised to 

read as follows: 

§ 10.21 Knowledge of error or omission. 

(a) In general. A practitioner who, 

while representing a client in a matter 

before the Internal Revenue Service, 

knows that either the client, the 

practitioner, or a prior practitioner has 

not complied with the revenue laws of 

the United States and regulations, or has 

made an error in or omission from any 

return, document, affidavit, or other 

paper that the client submitted or 

executed under the revenue laws of the 

United States and regulations, must 

advise the client promptly of the fact of 

such noncompliance, error, or omission. 

The practitioner must advise the client 

of the consequences of the 

noncompliance, error, or omission, as 

provided under the internal revenue 

laws of the United States and 

regulations, and recommend the 

corrective actions, such as disclosure, to 

be taken. 

(b) Disclosure and continued 

representation. If a practitioner is 

representing a client in a matter before 

the Internal Revenue Service, the 

practitioner should request the client’s 

agreement to disclose the 

noncompliance, error, or omission to 

the Internal Revenue Service. The 

practitioner must also take reasonable 

steps to ensure that the noncompliance, 

error, or omission is not repeated in 

subsequent submissions to the Internal 

Revenue Service. If the client does not 

agree to disclose the noncompliance, 

error, or omission, the practitioner 

should consider whether the 

practitioner can continue to represent 

the client before the Internal Revenue 

Service and meet the obligation to 

ensure diligence as to accuracy under 

§ 10.22. 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 13. Section 10.22 is amended by 

revising paragraphs (a)(1) through (3) 

and (c) to read as follows: 

§ 10.22 Diligence as to accuracy. 

(a) * * * 

(1) In preparing or assisting in the 

preparation of, approving, or submitting 

documents, affidavits, and other papers, 

including tax returns prepared, 

approved or submitted in connection 

with representing a client in a matter 

before the Internal Revenue Service; 

(2) In determining the correctness of 

oral or written representations made by 

the practitioner when representing a 

client in a matter before the Internal 

Revenue Service; and 

(3) In determining the correctness of 

oral or written representations made by 

the practitioner to clients when 

representing clients in a matter before 

the Internal Revenue Service. 

* * * * * 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

§ 10.27 [Removed] 

■ Par. 14. Section 10.27 is removed. 

■ Par. 15. Section 10.30 is amended by 

revising paragraphs (a)(1) and (e) to read 

as follows: 

§ 10.30 Solicitation. 

(a) * * * 

(1) A practitioner may not, with 

respect to any Internal Revenue Service 

matter, in any way use or participate in 

the use of any form of public 

communication or private solicitation 

containing a false, fraudulent, or 

coercive statement or claim; or a 

misleading or deceptive statement or 

claim. Enrolled agents and enrolled 

retirement plan agents, in describing 

their professional designation, may not 

utilize the term certified or imply an 

employer-employee relationship with 

the Internal Revenue Service. Examples 

of acceptable descriptions for enrolled 

agents are ‘‘enrolled to represent clients 

before the Internal Revenue Service,’’ 

‘‘enrolled to practice before the Internal 

Revenue Service,’’ ‘‘admitted to practice 

before the Internal Revenue Service,’’ 

EA, or E.A. Similarly, examples of 

acceptable descriptions for enrolled 

retirement plan agents are ‘‘enrolled to 

represent clients before the Internal 

Revenue Service as a retirement plan 

agent’’ and ‘‘enrolled to practice before 

the Internal Revenue Service as a 

retirement plan agent,’’ ERPA, or 

E.R.P.A. 

* * * * * 

(e) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

* * * * * 

■ Par. 16. Section 10.31 is revised to 

read as follows: 

§ 10.31 Negotiation of payments to clients. 

(a) In general. A practitioner may not 

endorse or otherwise negotiate or 

transfer any paper or electronic check, 

prepaid or debit card, phone or mobile 

payment, or other form of payment 

issued to a client by the government in 

respect of a Federal tax liability. 

Negotiate or transfer includes directing 

or accepting payment by any means, 

electronic or otherwise, into an account 

owned, controlled by, or held for the 

benefit of the practitioner or any firm or 

other entity with which the practitioner 

is associated. 

(b) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 17. Section 10.33 is amended by: 

■ 1. Revising the section heading and 

paragraphs (a) introductory text and 

(a)(1). 

■ 2. Redesignating paragraph (a)(4) as 

paragraph (a)(7). 

■ 3. Adding new paragraph (a)(4) and 

paragraphs (a)(5) and (6). 

■ 4. Revising paragraph (b). 

■ 5. Removing paragraph (c). 

The revisions and additions read as 

follows: 

§ 10.33 Best practices for tax practitioners. 

(a) Best practices. Tax practitioners 

should provide clients with the highest 

quality representation concerning 

Federal tax issues by adhering to best 

practices in providing advice and in 

preparing or assisting in the preparation 

of a submission to the Internal Revenue 

Service. In addition to compliance with 

the standards of practice provided 

elsewhere in this part, best practices 

include the following: 

(1) Communicating clearly with the 

client regarding the terms of the 

engagement, including those relating to 

fees, expenses, and payment. For 

example, the practitioner should 

determine the client’s expected purpose 

for and use of the advice and should 

have a clear understanding with the 

client regarding the form and scope of 

the advice or assistance to be rendered. 

* * * * * 

(4) Maintaining a policy related to 

data security safeguards with respect to 

a client’s tax return or other confidential 

information. Practitioners should also 

consider developing an incident 

response plan with specific procedures 

for responding to a data breach and for 

disclosure of data breaches to clients. 


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(5) Identifying, evaluating, and 

addressing a mental impairment, 

whether chronic or temporary, arising 

out of or related to age, substance abuse, 

a physical or mental health condition, 

or other circumstance that may have an 

adverse impact on a tax practitioner’s 

ability to provide the highest quality 

representation of a client before the 

Internal Revenue Service. 

(6) Establishing a business continuity 

and succession plan that addresses 

procedures and safeguards in the event 

of the sale or cessation of the 

practitioner’s practice, the practitioner’s 

death or disability, or the occurrence of 

extraordinary events such as a natural 

disaster, cyberattack, or pandemic. 

* * * * * 

(b) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 18. Section 10.34 is amended by 

revising the section heading and 

paragraphs (a) heading, (a)(1)(i) 

introductory text, (c)(1)(i) and (ii), and 

(d) and (e) to read as follows: 

§ 10.34 Standards with respect to tax 

returns, documents, affidavits, and other 

papers prepared or submitted while 

representing a client before the Internal 

Revenue Service. 

(a) Tax returns prepared or submitted 

while representing a client in a matter 

before the IRS. (1) * * * 

(i) Prepare, while representing a client 

in a matter before the Internal Revenue 

Service or, for tax returns prepared by 

the practitioner prior to the 

representation, including returns 

already filed with the Internal Revenue 

Service, submit a tax return or claim for 

refund or a claim for a credit that the 

practitioner knows or reasonably should 

know contains a position that— 

* * * * * 

(c) * * * 

(1) * * * 

(i) A position taken on a tax return 

that is relevant to the representation of 

a client in a matter before the Internal 

Revenue Service if— 

(A) The practitioner provided written 

advice, as defined under § 10.37, to the 

client with respect to the position; or 

(B) The practitioner prepared and 

submitted the tax return while 

representing the client in a matter before 

the IRS. 

(ii) Any document, affidavit or other 

paper submitted in a matter before the 

Internal Revenue Service. 

* * * * * 

(d) Relying on information furnished 

by clients. A practitioner advising a 

client to take a position on a tax return, 

document, affidavit or other paper 

submitted in a matter before the Internal 

Revenue Service, generally may rely in 

good faith without verification upon 

information furnished by the client. 

However, the practitioner may not 

ignore the implications of information 

furnished to, or actually known by, the 

practitioner, and must make reasonable 

inquiries if the information as furnished 

appears to be incorrect, inconsistent 

with an important fact or another factual 

assumption, or incomplete. 

(e) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 19. Section 10.35 is amended by 

adding a sentence at the end of 

paragraph (a) and revising paragraph (b) 

to read as follows: 

§ 10.35 Competence. 

(a) * * * Competency includes 

understanding the benefits and risks 

associated with relevant technology that 

is used by the practitioner to provide 

services to clients or to store and 

transmit tax return and other 

confidential information. 

(b) This section is applicable 

beginning on [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

■ Par. 20. Section 10.36 is amended by 

revising paragraphs (a) and (c) to read as 

follows: 

§ 10.36 Procedures to ensure compliance. 

(a) Any individual subject to the 

provisions of this part who has (or 

individuals who have or share) 

principal authority and responsibility 

for overseeing a firm’s practice governed 

by this part, including, while 

representing a client, the provision of 

advice concerning Federal tax matters or 

the preparation or submission of 

documents in a matter before the 

Internal Revenue Service, must take 

reasonable steps to ensure that the firm 

has adequate procedures in effect for all 

members, associates, and employees 

(whether or not those individuals are 

otherwise subject to this part) for 

purposes of complying with subparts A 

through C of this part, as applicable 

(including the best practices described 

in § 10.33(a)). In the absence of a person 

or persons identified by the firm as 

having the principal authority and 

responsibility described in this 

paragraph (a), the Internal Revenue 

Service may identify one or more 

individuals subject to the provisions of 

this part responsible for compliance 

with the requirements of this section. 

* * * * * 

(c) This section is applicable 

beginning on [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

■ Par. 21. Section 10.37 is amended by 

revising the section heading and 

paragraphs (b)(2), (c), (d) introductory 

text, (d)(2), and (e) to read as follows: 

§ 10.37 Requirements for written tax 

advice. 

* * * * * 

(b) * * * 

(2) The practitioner knows or 

reasonably should know that the other 

person is not competent or lacks the 

necessary qualifications to provide the 

advice, or is unaware of all relevant 

facts and circumstances; or 

* * * * * 

(c) Standard of review. In evaluating 

whether a practitioner giving written 

advice concerning one or more Federal 

tax matters complied with the 

requirements of this section, the 

Commissioner, or delegate, will apply a 

reasonable practitioner standard, 

considering all facts and circumstances, 

including, but not limited to, the scope 

of the engagement, the practitioner’s 

knowledge of the client’s particular 

circumstances, and the type and 

specificity of the advice sought by the 

client. 

(d) Federal tax matter. A Federal tax 

matter, as used in this section, is any 

transaction, plan, arrangement, or other 

matter (whether prospective or 

completed), which is of a type that the 

Internal Revenue Service determines as 

having a potential for tax avoidance or 

evasion, concerning the application or 

interpretation of— 

* * * * * 

(2) Any provision of law impacting a 

person’s obligations under the internal 

revenue laws and regulations, including 

but not limited to the person’s liability 

to pay tax, ability to take a specific 

return position (whether prospective or 

completed), or obligation to file returns; 

or 

* * * * * 

(e) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

§§ 10.38, 10.91, and 10.93 [Removed] 

■ Par. 22. Sections 10.38, 10.91, and 

10.93 are removed. 


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§§ 10.50, 10.51, 10.52, 10.53, 10.60, 10.61, 

10.62, 10.63, 10.64, 10.65, 10.66, 10.67, 

10.68, 10.69, 10.70, 10.71, 10.72, 10.73, 

10.74, 10.75, 10.76, 10.77, 10.78, 10.79, 

10.80, 10.81, 10.82, 10.90, and 10.92 

[Redesignated as §§ 10.70, 10.50, 10.71, 

10.72, 10.80, 10.81, 10.82, 10.83, 10.84, 

10.85, 10.86, 10.87, 10.88, 10.89, 10.90, 

10.91, 10.92, 10.93, 10.94, 10.95, 10.96, 

10.97, 10.98, 10.99, 10.100, 10.101, 10.102, 

10.100, and 10.113] 

■ Par. 23. Redesignate the sections in 

the first column as the sections in the 

second column: 

Current section: New section: 

10.50 ..................................... 10.70 

10.51 ..................................... 10.50 

10.52 ..................................... 10.71 

10.53 ..................................... 10.72 

10.60 ..................................... 10.80 

10.61 ..................................... 10.81 

10.62 ..................................... 10.82 

10.63 ..................................... 10.83 

10.64 ..................................... 10.84 

10.65 ..................................... 10.85 

10.66 ..................................... 10.86 

10.67 ..................................... 10.87 

10.68 ..................................... 10.88 

10.69 ..................................... 10.89 

10.70 ..................................... 10.90 

10.71 ..................................... 10.91 

10.72 ..................................... 10.92 

10.73 ..................................... 10.93 

10.74 ..................................... 10.94 

10.75 ..................................... 10.95 

10.76 ..................................... 10.96 

10.77 ..................................... 10.97 

10.78 ..................................... 10.98 

10.79 ..................................... 10.99 

10.80 ..................................... 10.100 

10.81 ..................................... 10.101 

10.82 ..................................... 10.102 

10.90 ..................................... 10.110 

10.92 ..................................... 10.113 

■ Par. 24. Revise the heading for 

subpart C to read as follows: 

Subpart C—Incompetence or 

Disreputable Conduct 

■ Par. 25. Newly redesignated § 10.50 is 

amended by: 

■ 1. Revising paragraphs (a) 

introductory text and (a)(12). 

■ 2. Adding paragraph (a)(19). 

■ 3. Revising paragraph (b). 

■ 4. Adding paragraph (c). 

The revisions and additions read as 

follows: 

§ 10.50 Incompetence or disreputable 

conduct. 

(a) Incompetence or disreputable 

conduct. Incompetence or disreputable 

conduct for which a practitioner may be 

sanctioned under § 10.70 includes 

actions that relate to a practitioner’s 

fitness to practice before the Internal 

Revenue Service, regardless of whether 

those actions are connected to a 

presentation to the Internal Revenue 

Service as defined under § 10.2(a)(4). 

Incompetence or disreputable conduct 

includes, but is not limited to— 

* * * * * 

(12) Contemptuous conduct in 

connection with practice before the 

Internal Revenue Service (or during any 

proceeding pursuant to § 10.80 or an 

investigation by the Treasury Inspector 

General for Tax Administration), 

including the use of abusive or 

otherwise contemptuous acts or 

language, making false accusations or 

statements, knowing them to be false, or 

circulating or publishing malicious or 

libelous matter. 

* * * * * 

(19) Willfully failing to follow any 

Federal tax law. 

(b) Assessment of certain penalties. 

Assessment against a practitioner of a 

penalty related to a willful attempt to 

understate tax liabilities under section 

6694(b) of the Internal Revenue Code 

(Code); aiding or abetting in the 

understatement of tax liabilities under 

section 6701 of the Code; careless, 

reckless, or intentional disregard for 

applicable rules or regulations (within 

the meaning of 26 CFR 1.6662–3(b)(2) 

and 1.6694–3(c)) under section 

6662(b)(1) of the Code; or promotion of 

abusive tax shelters under section 6700 

of the Code will be considered a 

violation of paragraph (a)(7) of this 

section. The assessment of any of these 

penalties, however, is not required to 

show a violation of paragraph (a)(7) of 

this section. 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 26. New § 10.51 is added to 

subpart C to read as follows: 

§ 10.51 Fees that constitute disreputable 

conduct. 

(a) Unconscionable fees. Charging an 

unconscionable fee is disreputable 

conduct. 

(b) Contingent fees. Charging a 

contingent fee in connection with the 

preparation of an original or amended 

tax return or claim for refund or credit 

prepared prior to the examination of the 

tax return is disreputable conduct. 

(1) Preparation of an original or 

amended tax return or claim for refund 

or credit includes providing advice that 

is directly relevant to determining the 

existence, character, or amount of an 

item, entry, or another portion of a tax 

return or claim for refund, including 

any schedules that are part of the tax 

return or claim for refund or credit. 

(2) Contingent fee is any fee that is 

based in whole or in part on whether or 

not a position taken on a tax return or 

other filing avoids challenge by the 

Internal Revenue Service or is sustained 

either by the Internal Revenue Service 

or in litigation. A contingent fee 

includes a fee that is based on a 

percentage of the refund reported on a 

tax return, that is based on a percentage 

of the taxes saved, or that otherwise 

depends on the specific tax result 

attained. A contingent fee also includes 

any fee arrangement in which the 

practitioner will reimburse the client for 

all or a portion of the client’s fee in the 

event that a position on a tax return or 

other filing is challenged by the Internal 

Revenue Service or is not sustained, 

whether pursuant to an indemnity 

agreement, a guarantee, rescission 

rights, or any other arrangement with a 

similar effect. 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 27. Revise the heading for 

subpart D to read as follows: 

Subpart D—Appraisers 

■ Par. 28. Add new §§ 10.60 through 

10.62 to subpart D to read as follows: 

* * * * * 

Sec. 

10.60 Definitions. 

10.61 Disqualification of appraisers. 

10.62 Receipt of information concerning 

appraisers. 

* * * * * 

§ 10.60 Definitions. 

(a) Appraiser. The term appraiser 

means any individual who determines 

the market value of any asset to support 

a position taken on a tax return or in an 

administrative proceeding. Appraisers 

include, but are not limited to, 

individuals who meet the definition of 

a ‘‘qualified appraiser’’ under section 

170(f)(11)(E) of the Internal Revenue 

Code. 

(b) Administrative proceeding. An 

administrative proceeding for purposes 

of this subpart, includes any matter or 

other action before the Department of 

the Treasury or the Internal Revenue 

Service that involves the presentation of 

documents, testimony, or other 

evidence. Administrative proceedings 

include, but are not limited to, 

investigations, examinations, appeals, 

and collection actions. 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

§ 10.61 Disqualification of appraisers. 

(a) Authority to disqualify appraisers. 

The Commissioner, or delegate, after 

due notice and an opportunity for a 


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hearing, may disqualify an appraiser for 

violations of any of the standards under 

paragraph (b) of this section or for the 

disreputable conduct described under 

paragraph (c) of this section. 

Disqualification may include a finding 

that appraisals by such appraiser will 

have no probative effect in an 

administrative proceeding or barring an 

appraiser from presenting evidence or 

testimony in any administrative 

proceeding before the Department of the 

Treasury or the Internal Revenue 

Service. 

(1) The disqualification of an 

appraiser will remain in effect until the 

appraiser is authorized to present 

evidence or testimony pursuant to 

§ 10.101. The prohibition applies to 

appraisals, evidence, and testimony 

submitted or presented by the appraiser 

and is not limited to a specific appraisal 

or client. The prohibition also applies to 

appraisals made before the effective date 

of disqualification. 

(2) Any appraisal made by a 

disqualified appraiser after the effective 

date of disqualification will not have 

probative effect in any administrative 

proceeding before the Department of the 

Treasury or the Internal Revenue 

Service. An appraisal otherwise barred 

from admission into evidence pursuant 

to this section may be admitted into 

evidence solely for the purpose of 

determining the client’s reliance in good 

faith on such appraisal. 

(b) Appraisal standards and 

prohibited conduct. (1) All appraisals 

submitted in an administrative 

proceeding should conform to the 

substance and principles of generally 

accepted appraisal standards as 

evidenced by the Uniform Standards of 

Professional Appraisal Practice (USPAP) 

promulgated by the Appraisal Standards 

Board of the Appraisal Foundation or 

the International Valuation Standards 

(IVS) promulgated by the International 

Valuation Standards Council (IVSC). 

(2) An appraiser may not prepare an 

appraisal, where the appraiser knew or 

reasonably should have known that it 

would be submitted during an 

administrative proceeding and used to 

support a substantial valuation 

misstatement as defined in section 

6662(e) of the Internal Revenue Code 

(Code), a substantial estate or gift tax 

valuation understatement as defined in 

section 6662(g), or a gross valuation 

misstatement as defined in section 

6662(h). 

(c) Disreputable conduct. An 

appraiser who has been assessed a 

penalty under section 6694, 6695A, 

6700, or 6701 of the Code, for which it 

is determined that the appraiser acted 

willfully, recklessly, or through gross 

incompetence with respect to the 

proscribed conduct may be disqualified 

for engaging in disreputable conduct. 

(d) Misconduct triggering 

disqualification. An appraiser may be 

disqualified under § 10.61(a) if the 

appraiser: 

(1) Willfully violates any of the 

standards described in paragraphs (b)(1) 

and (2) of this section. 

(2) Recklessly or through gross 

incompetence engages in a pattern of 

submitting appraisals that violate the 

standards described in paragraph (b)(1) 

of this section. 

(3) Recklessly or through gross 

incompetence violates the standard 

described in paragraph (b)(2) of this 

section. 

(4) Engages in the disreputable 

conduct described in paragraph (c) of 

this section. 

(e) Defenses to disqualification. If an 

appraiser shows compliance with the 

substance and principles of USPAP 

standards or IVS with all relevant 

appraisals, the showing will be taken 

into account as a defense in determining 

whether the appraiser acted willfully, 

recklessly, or though gross 

incompetence with respect to a 

violation of paragraph (b)(2) or (c) of 

this section. 

(f) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

§ 10.62 Receipt of information concerning 

appraisers. 

(a) Officer or employee of the Internal 

Revenue Service. If an officer or 

employee of the Internal Revenue 

Service has reason to believe an 

appraiser has violated § 10.61(b)(1) or 

(2) or has been assessed a penalty under 

section 6694, 6695A, 6700, or 6701 of 

the Internal Revenue Code, the officer or 

employee will promptly make a written 

report of the suspected violation. The 

report will explain the facts and reasons 

upon which the officer’s or employee’s 

belief rests and must be submitted to the 

office(s) of the Internal Revenue Service 

responsible for administering or 

enforcing this part. 

(b) Other persons. Any person other 

than an officer or employee of the 

Internal Revenue Service having 

information of misconduct described in 

§ 10.61(d) may make an oral or written 

report of the alleged misconduct to the 

office(s) of the Internal Revenue Service 

responsible for administering or 

enforcing this part or any officer or 

employee of the Internal Revenue 

Service. If the report is made to an 

officer or employee of the Internal 

Revenue Service, the officer or 

employee will make a written report of 

the suspected misconduct and submit 

the report to the office(s) of the Internal 

Revenue Service responsible for 

administering and enforcing this part. 

(c) Destruction of report. No report 

made under paragraph (a) or (b) of this 

section will be maintained unless 

retention of the report is permissible 

under the applicable records control 

schedule as approved by the National 

Archives and Records Administration 

and designated in the Internal Revenue 

Manual. Reports must be destroyed as 

soon as permissible under the 

applicable records control schedule. 

(d) Effect on proceedings under 

subpart E of this part. The destruction 

of any report will not bar any 

proceeding under subpart E but will 

preclude the use of a copy of the report 

in a proceeding under subpart E. 

(e) Applicability date. This section is 

applicable to conduct occurring on or 

after [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

■ Par. 29. Revise the heading for 

subpart E to read as follows: 

Subpart E—Sanctions for Violation of 

the Regulations 

§§ 10.70, 10.71, and 10.72 [Transferred to 

Subpart E] 

■ Par. 30. Newly redesignated §§ 10.70, 

10.71, and 10.72 are transferred to 

subpart E. 

■ Par. 31. Newly redesignated § 10.70 is 

amended by: 

■ 1. Removing paragraph (b). 

■ 2. Redesignating paragraphs (c) 

through (f) as paragraphs (b) through (e). 

■ 3. Revising newly redesignated 

paragraph (e). 

The revision reads as follows: 

§ 10.70 Sanctions. 

* * * * * 

(e) Applicability date. This section is 

applicable to conduct occurring on or 

after [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

■ Par. 32. Newly redesignated § 10.71 is 

revised to read as follows: 

§ 10.71 Violations subject to sanction. 

(a) A practitioner may be sanctioned 

under § 10.70 if the practitioner— 

(1) Willfully violates any of the 

regulations (other than § 10.33) 

contained in this part; or 

(2) Recklessly or through gross 

incompetence (within the meaning of 

§ 10.50(a)(13)) violates § 10.34, § 10.35, 

§ 10.36, or § 10.37. 

(b) This section is applicable to 

conduct occurring on or after [date 30 


ddrumheller on DSK120RN23PROD with PROPOSALS1
104932 Federal Register / Vol. 89, No. 247 / Thursday, December 26, 2024 / Proposed Rules 

days after date of publication of final 

regulations in the Federal Register]. 

■ Par. 33. Newly redesignated § 10.72 is 

amended by revising paragraphs (d) and 

(e) to read as follows: 

§ 10.72 Receipt of information concerning 

practitioner. 

* * * * * 

(d) Effect on proceedings under 

subpart F of this part. The destruction 

of any report will not bar any 

proceeding under subpart F but will 

preclude the use of a copy of the report 

in a proceeding under subpart F. 

(e) Applicability date. This section is 

applicable to conduct occurring on or 

after [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

■ Par. 34. Add subpart F to read as 

follows: 

Subpart F—Rules Applicable to 

Disciplinary Proceedings and General 

Provisions 

§§ 10.80 through 10.102, 10.110, and 10.113 

[Transferred to Subpart F] 

■ Par. 35. Newly redesignated §§ 10.80 

through 10.102, 10.110, and 10.113 are 

transferred to subpart F. 

■ Par. 36. Newly redesignated § 10.80 is 

amended by revising paragraphs (b) and 

(d) to read as follows: 

§ 10.80 Institution of proceeding. 

* * * * * 

(b) Whenever the Secretary of the 

Treasury, or delegate, determines that 

the appraiser acted willfully, recklessly, 

or through gross incompetence, or 

engaged in disreputable conduct, as 

defined under § 10.61(d)(1) through (4), 

with respect to the proscribed conduct, 

the appraiser may, in accordance with 

this section, be subject to a proceeding 

for disqualification. A proceeding for 

disqualification of an appraiser is 

instituted by the filing of a complaint, 

the contents of which are more fully 

described in § 10.82. 

* * * * * 

(d) This section is applicable 

beginning on [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

■ Par. 37. Newly redesignated § 10.85 is 

amended by: 

■ 1. Revising paragraph (a)(2). 

■ 2. Adding paragraph (a)(3). 

■ 3. Revising paragraph (c). 

The revisions and addition read as 

follows: 

§ 10.85 Supplemental charges. 

(a) * * * 

(2) It appears that the respondent has 

knowingly introduced false testimony 

during the proceedings against the 

respondent; or 

(3) It appears that the respondent has 

engaged in contemptuous conduct 

within the meaning of § 10.50(a)(12) 

during the proceedings against the 

respondent. 

* * * * * 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 38. Newly redesignated § 10.99 is 

amended by revising paragraph (e) and 

adding paragraphs (f) and (g) to read as 

follows: 

§ 10.99 Effect of disbarment, suspension, 

or censure. 

* * * * * 

(e) Jurisdiction to investigate 

compliance with censure, suspension, or 

disqualification. A practitioner or 

appraiser who is censured, suspended, 

or disqualified under § 10.61(a), § 10.70, 

or § 10.102 will be considered a 

practitioner or appraiser for the purpose 

of investigating whether the practitioner 

or appraiser is in compliance with the 

terms of their censure, suspension, or 

disqualification. Censured, suspended, 

or disqualified practitioners or 

appraisers may face additional sanctions 

or disbarment for any violation. 

(f) Jurisdiction to investigate disbarred 

practitioners and non-practitioners. The 

IRS may investigate a practitioner 

disbarred under § 10.70 or a nonpractitioner to determine whether they 

are wrongly holding themselves out as 

practitioners. 

(g) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 39. Newly redesignated § 10.101 

is revised to read as follows: 

§ 10.101 Petition for reinstatement. 

(a) In general. A practitioner disbarred 

or suspended under § 10.70, or an 

appraiser disqualified under § 10.61, 

may petition for reinstatement before 

the Internal Revenue Service after the 

expiration of 5 years following such 

disbarment, suspension, or 

disqualification (or immediately 

following the expiration of the 

suspension or disqualification period, if 

shorter than 5 years). A practitioner or 

appraiser suspended or disqualified 

under § 10.102 may petition for 

reinstatement at any time upon a 

showing of good cause as described in 

§ 10.102(f)(2). Reinstatement will not be 

granted unless the Internal Revenue 

Service determines that the petitioner is 

not likely to engage thereafter in 

conduct contrary to the regulations in 

this part, and that granting such 

reinstatement would not be contrary to 

the public interest. 

(b) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 40. Newly redesignated § 10.102 

is amended by: 

■ 1. Revising the section heading. 

■ 2. Removing paragraph (a). 

■ 3. Redesignating paragraphs (b) 

through (h) as paragraphs (a) through 

(g). 

■ 4. Revising newly redesignated 

paragraphs (a), (b) introductory text, 

(b)(2) and (4), and (e) through (g). 

The revisions and additions read as 

follows: 

§ 10.102 Expedited suspension or 

disqualification. 

(a) When applicable. The expedited 

suspension procedures in this section 

are initiated by issuing the show cause 

order described under paragraph (d) of 

this section. A show cause order will be 

issued to any practitioner or appraiser 

for whom paragraph (a)(1), (2), (3), (4), 

(5), (6), or (7) of this section is true 

within the 5 years prior to the date that 

the show cause order was issued. The 

expedited procedures described in this 

section may be used to suspend the 

practitioner from practice before the 

Internal Revenue Service, disqualify an 

appraiser from presenting evidence or 

testimony in any administrative 

proceeding before the Department of the 

Treasury or the Internal Revenue 

Service, or find that any appraisal made 

by a disqualified appraiser after the 

effective date of disqualification will not 

have probative effect in any 

administrative proceeding before the 

Department of the Treasury or the 

Internal Revenue Service. 

(1) A practitioner has a license to 

practice as an attorney, certified public 

accountant, or actuary suspended or 

revoked for cause (not including failure 

to pay a professional licensing fee) by 

any authority or court, agency, body, or 

board described in § 10.50(a)(10). 

(2) An appraiser has a license or 

certification to conduct appraisals 

revoked or suspended by any state 

licensing or certification board. 

(3) A practitioner or appraiser has 

voluntarily forfeited a practitioner’s or 

appraiser’s license or certification after 

any authority described in paragraph 

(a)(1) or (2) of this section initiated an 

investigation of, or proceeding against, 

the practitioner or appraiser for alleged 

violations of applicable standards or 

rules of conduct for which the 

practitioner’s or appraiser’s license or 

certification could be suspended or 


ddrumheller on DSK120RN23PROD with PROPOSALS1
Federal Register / Vol. 89, No. 247 / Thursday, December 26, 2024 / Proposed Rules 104933 

revoked for cause, if proven. Voluntary 

forfeiture includes retirement, 

resignation, consensual permanent 

inactivation, or similar action. 

(4) A practitioner has, irrespective of 

whether an appeal has been taken, been 

convicted of any crime under title 26, 

United States Code, any crime involving 

dishonesty or breach of trust, or any 

felony for which the conduct involved 

renders the practitioner unfit to practice 

before the Internal Revenue Service. 

(5) A practitioner has violated 

conditions imposed on the practitioner 

pursuant to § 10.99(d). 

(6) A practitioner has been sanctioned 

by a court of competent jurisdiction, 

whether in a civil or criminal 

proceeding (including suits for 

injunctive relief), relating to any client’s 

tax liability or relating to the 

practitioner’s own tax liability, for— 

(i) Instituting or maintaining 

proceedings primarily for delay; 

(ii) Advancing frivolous or groundless 

arguments; or 

(iii) Failing to pursue available 

administrative remedies. 

(7) A practitioner has demonstrated a 

pattern of willful disreputable conduct 

by— 

(i) Failing to make an annual Federal 

tax return, in violation of the Federal tax 

laws, during 4 of the 5 tax years 

immediately preceding the institution of 

a proceeding under paragraph (b) of this 

section and remains noncompliant with 

any of the practitioner’s Federal tax 

filing obligations at the time the notice 

of suspension is issued under paragraph 

(e) of this section; or 

(ii) Failing to make a return required 

more frequently than annually, in 

violation of the Federal tax laws, during 

5 of the 7 tax periods immediately 

preceding the institution of a 

proceeding under paragraph (b) of this 

section and remains noncompliant with 

any of the practitioner’s Federal tax 

filing obligations at the time the notice 

of suspension is issued under paragraph 

(e) of this section. 

(b) Expedited suspension or 

disqualification procedures. A 

suspension or disqualification under 

this section will be proposed by a show 

cause order that names the respondent, 

is signed by an authorized 

representative of the Internal Revenue 

Service under § 10.89(a)(1), and is 

served according to the rules set forth in 

§ 10.83(a). The show cause order must 

give a plain and concise description of 

the allegations that constitute the basis 

for the proposed suspension or 

disqualification. The show cause order 

must notify the respondent— 

* * * * * 

(2) That an expedited suspension or 

disqualification decision by default may 

be rendered if the respondent fails to 

file a response as required; 

* * * * * 

(4) That the respondent may be 

suspended or disqualified either 

immediately following the expiration of 

the period within which a response 

must be filed or, if a conference is 

requested, immediately following the 

conference. 

* * * * * 

(e) Suspension or disqualification— 

(1) In general. The Commissioner, or 

delegate, may suspend the respondent 

from practice before the Internal 

Revenue Service or disqualify an 

appraiser from presenting evidence or 

testimony in any administrative 

proceeding before the Department of the 

Treasury or Internal Revenue Service by 

a written notice of expedited suspension 

or disqualification immediately 

following: 

(i) The expiration of the period within 

which a response to a show cause order 

must be filed if the respondent does not 

file a response as required by paragraph 

(c) of this section; 

(ii) The conference described in 

paragraph (d) of this section if the 

Internal Revenue Service finds that the 

respondent is described in paragraph (a) 

of this section; 

(iii) If the respondent has not 

requested a conference, upon 

consideration of any response described 

in paragraph (c) of this section; or 

(iv) The respondent’s failure to 

appear, either personally or through an 

authorized representative, at a 

conference scheduled by the Internal 

Revenue Service under paragraph (d) of 

this section. 

(2) Duration of suspension or 

disqualification. A suspension or 

disqualification under this section will 

commence on the date that the written 

notice of expedited suspension or 

disqualification is served on the 

practitioner or appraiser, either 

personally or through an authorized 

representative. The suspension or 

disqualification will remain effective 

until the earlier of: 

(i) The date the Internal Revenue 

Service lifts the suspension or 

disqualification upon receipt of a 

petition for reinstatement under 

§ 10.101 and after determining that the 

practitioner or appraiser has shown 

good cause based on all the relevant 

facts and circumstances why the 

suspension or disqualification should be 

lifted and the individual reinstated to 

practice; or 

(ii) The date the suspension or 

disqualification is lifted or otherwise 

modified by an Administrative Law 

Judge or the Secretary of the Treasury, 

or delegate deciding appeals, in a 

proceeding referred to in paragraph (f) 

of this section and instituted under 

§ 10.80. 

(3) Good cause. For purposes of this 

paragraph (e), a suspended practitioner 

or disqualified appraiser may show 

good cause when, for example, the 

individual was suspended or 

disqualified: 

(i) Under paragraphs (a)(1) through (3) 

of this section, and the individual’s 

license or certificate to practice as an 

attorney, certified public accountant, 

actuary, or appraiser has been restored; 

(ii) Under paragraph (a)(4) of this 

section, and the conviction was reversed 

on appeal, with no retrial underway or 

pending; 

(iii) Under paragraph (a)(5) of this 

section, and the individual is no longer 

in violation of the conditions imposed 

on the individual under § 10.99(d) and 

the individual either fully satisfied the 

conditions or is compliant with them if 

they are still in effect; 

(iv) Under paragraph (a)(6) of this 

section, and the individual has satisfied 

any terms of the court-imposed 

sanction, such as payment of a monetary 

sanction or completion of mandated 

hours of pro bono work; has not been 

sanctioned again for the same or 

substantially similar conduct by a court 

or any other authority described in 

§ 10.50(a)(10); and has ceased the 

conduct that resulted in the sanction 

(for example, ceased advancing 

frivolous or groundless arguments in 

matters before the Internal Revenue 

Service and courts or other tribunals); or 

(v) Under paragraph (a)(7) of this 

section, and the individual is fully 

compliant with the individual’s tax 

filing and payment obligations, 

including any installment agreement or 

other payment arrangement entered into 

with the Internal Revenue Service. 

(f) Demand for § 10.80 proceeding. If 

the Internal Revenue Service suspends a 

practitioner or disqualifies an appraiser 

under the expedited suspension 

procedures described in this section, the 

practitioner or appraiser may demand 

that the Internal Revenue Service 

institute a proceeding under § 10.80 and 

issue the complaint described in 

§ 10.82. The demand must be in writing, 

specifically reference the suspension or 

disqualification action under § 10.82, 

and be made within 2 years from the 

date on which the practitioner’s 

suspension or appraiser’s 

disqualification commenced. The 

Internal Revenue Service must issue a 

complaint demanded under this 

paragraph (f) within 60 calendar days of 


ddrumheller on DSK120RN23PROD with PROPOSALS1
104934 Federal Register / Vol. 89, No. 247 / Thursday, December 26, 2024 / Proposed Rules 

1As the Department noted in the NPRM, these 

proposed regulations related to hardship are 

separate from the proposals for student debt relief 

specified in the Notice of Proposed Rulemaking 

issued on April 17, 2024 (April 2024 NPRM) (89 FR 

27564), which is the subject of a separate Notice of 

Withdrawal. These proposed regulations differ from 

the waivers in the April 2024 NPRM along various 

dimensions, including that the provisions in this 

receiving the demand. If the Internal 

Revenue Service does not issue such 

complaint within 60 days of receiving 

the demand, the suspension or 

disqualification is lifted automatically. 

The preceding sentence does not, 

however, preclude the Commissioner, or 

delegate, from instituting a regular 

proceeding under § 10.80. 

(g) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 41. Newly redesignated § 10.110 

is amended by: 

■ 1. Removing paragraph (a)(4). 

■ 2. Redesignating paragraphs (a)(5) and 

(6) as paragraphs (a)(4) and (5). 

■ 3. Revising paragraph (c). 

The revision reads as follows: 

§ 10.110 Records. 

* * * * * 

(c) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

■ Par. 42. Sections 10.111 and 10.112 

are added to read as follows: 

§ 10.111 Establishment of advisory 

committees. 

(a) Advisory committees. To promote 

and maintain the public’s confidence in 

tax advisors, the Internal Revenue 

Service is authorized to establish one or 

more advisory committees composed of 

at least six individuals authorized to 

practice before the Internal Revenue 

Service. Membership of an advisory 

committee must be balanced among 

those who practice as attorneys, 

accountants, enrolled agents, enrolled 

actuaries, and enrolled retirement plan 

agents. Under procedures prescribed by 

the Internal Revenue Service, an 

advisory committee may review and 

make general recommendations 

regarding the practices, procedures, and 

policies of the offices described in 

§ 10.1. 

(b) Applicability date. This section is 

applicable beginning on [date 30 days 

after date of publication of final 

regulations in the Federal Register]. 

§ 10.112 Saving provision. 

Any proceeding instituted under this 

part prior to [date 30 days after date of 

publication of final regulations in the 

Federal Register], for which a final 

decision has not been reached or for 

which judicial review is still available is 

not affected by the revisions to this part 

effective [effective date of final 

regulations]. Any proceeding under this 

part based on conduct engaged in prior 

to [date 30 days after date of publication 

of final regulations in the Federal 

Register], which is instituted after that 

date, will apply this subpart, but the 

conduct engaged in prior to [effective 

date of final regulations], will be judged 

by the regulations in effect at the time 

the conduct occurred. 

■ Par. 43. Section 10.114 is added to 

read as follows: 

§ 10.114 Applicability date. 

Except as otherwise provided in any 

section of this part and subject to 

§ 10.112, the provisions of this part are 

applicable on [date 30 days after date of 

publication of final regulations in the 

Federal Register]. 

Douglas W. O’Donnell, 

Deputy Commissioner. 

Aviva R. Aron-Dine, 

Deputy Assistant Secretary of the Treasury 

(Tax Policy). 

[FR Doc. 2024–29371 Filed 12–20–24; 4:15 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF EDUCATION 

34 CFR Part 30 

[Docket ID ED–2023–OPE–0123] 

RIN 1840–AD95 

Student Debt Relief Based on Hardship 

for the William D. Ford Federal Direct 

Loan Program (Direct Loans), the 

Federal Family Education Loan (FFEL) 

Program, the Federal Perkins Loan 

(Perkins) Program, and the Health 

Education Assistance Loan (HEAL) 

Program; Withdrawal 

AGENCY: Office of Postsecondary 

Education, Department of Education. 

ACTION: Withdrawal of notice of 

proposed rulemaking and termination of 

rulemaking proceeding. 

SUMMARY: The U.S. Department of 

Education (Department) is withdrawing 

a notice of proposed rulemaking 

(NPRM) that, under the Secretary’s 

authority to waive repayment of a loan 

provided by the Higher Education Act of 

1965, as amended (HEA), proposed to 

specify the Secretary’s authority to 

waive all or part of any student loan 

debts owed to the Department based on 

the Secretary’s determination that a 

borrower has experienced or is 

experiencing hardship related to such a 

loan. 

DATES: The notice of proposed 

rulemaking published in the Federal 

Register at 89 FR 87130 on October 31, 

2024, is withdrawn as of December 20, 

2024. 

FOR FURTHER INFORMATION CONTACT: 

Tamy Abernathy, U.S. Department of 

Education, Office of Postsecondary 

Education, 400 Maryland Avenue SW, 

5th floor, Washington, DC 20202. 

Telephone: (202) 245–4595. Email: 

NegRegNPRMHelp@ed.gov. 

If you are deaf, hard of hearing, or 

have a speech disability and wish to 

access telecommunications relay 

services, please dial 7–1–1. 

SUPPLEMENTARY INFORMATION: 

Background 

On October 31, 2024, the Department 

published an NPRM in the Federal 

Register that, in accordance with the 

Secretary’s authority to waive 

repayment of a loan provided by 

sections 432(a)(6) and 468(2) of the 

HEA, would specify the Secretary’s 

discretion to provide debt relief to 

borrowers who are experiencing or have 

experienced hardship related to their 

loans. See 89 FR 87130. The proposed 

regulations would modify the 

Department’s existing debt collection 

regulations to provide greater specificity 

regarding the Secretary’s discretion to 

waive Federal student loan debt. The 

proposed rule outlines two pathways for 

discretionary relief: (i) a predictive 

assessment offering individualized, 

automatic waivers based on the 

borrower’s likelihood of default to 

provide immediate relief as soon as 

practicable; and (ii) a holistic 

assessment of the borrower’s 

circumstances based on an application 

or information within the Department’s 

possession to address persistent 

hardships not sufficiently addressed by 

other Department programs. 

The Department accepted public 

comments on the NPRM from October 

31, 2024 through December 2, 2024. In 

response to the NPRM, the Department 

received 14,735 written comments, and 

the Department reviewed such 

comments. 

Withdrawal of the Notice of Proposed 

Rulemaking and Termination of the 

Rulemaking Proceeding 

In accordance with the Secretary’s 

authority under sections 432(a)(6) and 

468(2) of the HEA to waive repayment 

of a loan, the Department issued the 

NPRM to specify the Secretary’s 

discretion to provide targeted debt relief 

to borrowers who have experienced or 

are experiencing hardship repaying 

their student loans based on the criteria 

specified in the NPRM.1


ddrumheller on DSK120RN23PROD with PROPOSALS1