IRS Circular 230 – Tax Practitioner Fees

10.27 Fees

(a) A tax practitioner may not charge an unconscionable fee in connection with any matter before the IRS.

(b)(2) A tax practitioner may charge a contingent fee for services regarding IRS examination or challenge to:

1. Original Tax Return;

2. Amended Tax Return, or Claim for Refund (where the amended return or claim for refund was filed within 120 days of taxpayer receiving a written notice of the examination of, or a written challenge to the original tax return).

3. Claim for refund filed solely in connection with the determination of statutory interest or penalties assessed by the Internal Revenue Service.

4. In connection with any judicial proceeding arising under the IRC.

(c)(1) A contingent fee is defined as any fee, based in whole or in part, on whether or not a position taken on a tax return, either avoids challenge by the IRS, or is sustained either by the IRS or in litigation.

A contingent fee includes a fee that is based on a percentage of a refund reported on a return, that is based on a percentage of the taxes saved, or that otherwise depends on the specific 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 taken on a tax return or other filing is challenged by the IRS or is not sustained, whether pursuant to an indemnity arrangement, a guarantee, or rescission rights.

(c)(2) A client “matter before the IRS” (Sec. 1022(a) includes: tax planning and advice, preparing or filing tax returns (refund claims), and “all matters” connected with a presentation to the IRS, which includes but is not limited to:

1) Preparing and filing documents;

2) Corresponding and communicating with the IRS;

3) Rendering written advice with respect to any entity, transaction, plan or arrangement;

4) Representing a client at conferences, hearings and meetings.

d) Effective applicability date: For fee agreements entered after March 26, 2008.

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