The Treasury Department and the IRS issued proposed regulations, which were published in the Federal Register on Dec. 26, to update the rules for certain tax professionals who can practice before the IRS. These rules are found in Treasury Department Circular 230, according to an IRS release.

The IRS Office of Professional Responsibility has general responsibility for matters that are related to practitioner conduct, and exclusive responsibility for discipline such as disciplinary proceedings and sanctions. If finalized, the proposed regulations would be amending Circular 230 in different ways to take into account law and tax practice changes.

Aside from other changes, the proposed regulations would take out or update the parts of Circular 230 related to registered tax return preparers and tax return preparation, as well as contingent fees to reflect the law changes since the prior amendments to Circular 230 that happened in 2011 and 2014. The proposed regulations would also be revising or eliminating other out-of-date provisions.

Additionally, the proposed regulations would be incorporating new provisions that better align Circular 230 with the current practice environment, including requiring practitioners to maintain technological competency as part of their practice before the IRS. The proposed regulations would also be clarifying some provisions, including confirming that OPR retains jurisdiction over practitioners that were suspended or disbarred from practice.

Finally, the proposed regulations would be providing rules related to appraisers such as the disqualification standards.

Prior to 2011, individual tax return preparers were generally not subject to Circular 230 unless they were attorneys, CPAs, enrolled agents or other types of practitioners identified in Circular 230. On June 3, 2011, the Treasury Department and the IRS published final regulations (TD 9527) in the Federal Register that established 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 as stated in the 2011 amendments.