Ethical Duties Under Circular 230 (§10.20–10.23) — Information Requests, Client Omissions & Professional Diligence (2025)
Every tax professional authorized to represent clients before the IRS—EA, CPA, or attorney—must comply with a set of core ethical duties under IRS Circular 230.
Sections 10.20 through 10.23 define how practitioners should handle official IRS requests, client errors, data accuracy, and case management speed.
This 2025 summary highlights the four foundational obligations every representative must uphold to avoid OPR sanctions and maintain client trust.
§10.20 — Furnishing Information Promptly
When the IRS makes a lawful and proper request, a practitioner must promptly provide all relevant records or information, unless there’s a legitimate privilege (e.g., attorney-client or work-product).
If the documents are not within your possession or control, you must notify the IRS and disclose—within reasonable effort—who might have them.
Practitioners are also obligated to cooperate with OPR inquiries into potential Circular 230 violations.
- Verify that the IRS request is signed by an authorized officer before releasing records.
- Document every step of your communication—date, method, and response timeline.
- If privilege applies, explain the basis for withholding and maintain a privilege log.
A practitioner receives an IRS letter requesting payroll records for 2022.
The client’s prior bookkeeper still holds them. The practitioner notifies the IRS within two days, provides the bookkeeper’s contact, and documents the response in the case file—meeting §10.20 compliance.
§10.21 — Knowledge of Client’s Omission
If you discover that your client omitted income, overstated deductions, or violated the tax law in any way, you must promptly advise the client of the issue and explain the potential consequences—including additional tax, penalties, or interest.
Circular 230 doesn’t require you to notify the IRS yourself, but it does require full disclosure to the client.
- Deliver the notice in writing (email or letter) and keep a copy in your records.
- Offer corrective options such as an amended return or voluntary disclosure.
- Never assist in perpetuating an uncorrected error.
During a review, an EA notices unreported cryptocurrency sales.
The practitioner advises the client immediately, explaining taxability, Form 8949 requirements, and the risks of ignoring prior-year reporting gaps.
§10.22 — Due Diligence and Accuracy
Practitioners must exercise due diligence when preparing returns, documents, or giving oral or written statements to the IRS or clients.
Circular 230 permits reliance on others’ work only when there’s reasonable assurance of their competence and proper supervision.
Suspected inconsistencies, incomplete data, or implausible figures must trigger a reasonable inquiry.
- Review unusual fluctuations—revenues, expenses, or inventory balances year-over-year.
- Use engagement questionnaires that flag missing information (e.g., foreign accounts, digital-asset trades).
- Maintain internal review notes and document staff supervision steps.
A CPA firm prepares a return showing zero depreciation after major equipment purchases.
The signing EA requests documentation from the bookkeeper and confirms fixed-asset entries before filing—demonstrating §10.22 diligence.
§10.23 — Prompt Disposition of Matters
Practitioners must avoid unreasonable delays in handling IRS matters.
Intentionally slowing a case for tactical or personal reasons—such as waiting for an auditor’s reassignment—can be grounds for discipline under §10.50.
An enrolled agent delays replying to an IRS IDR because the client hasn’t paid yet.
This constitutes an intentional delay unrelated to the case itself—violating §10.23.
Ethical compliance requires separating payment issues from case responsiveness.
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