Q47: I have a client who may be eligible to make a voluntary disclosure. What are my responsibilities to my client under Circular 230?
A47: The IRS anticipates that taxpayers will seek qualified tax and legal advice and representation in connection with considering and making a voluntary disclosure. If a taxpayer seeks the advice of a tax practitioner, the practitioner must exercise due diligence in determining the correctness of any oral or written representations made to the client about the program and the implications for that taxpayer of going forward. If the taxpayer decides to proceed with the disclosure, the practitioner must exercise due diligence in determining the correctness of any oral or written representations that the practitioner makes during the representation to the Department of the Treasury; and must avoid giving, or participating in giving, false or misleading information to the Department of the Treasury or giving a false or misleading opinion to the taxpayer.
If the taxpayer decides not to make the voluntary disclosure despite the taxpayer’s noncompliance with United States tax laws, Circular 230 requires the practitioner to advise the client of the fact of the client’s noncompliance and the consequences of the client’s noncompliance. A practitioner whose client declines to make full disclosure of the existence of, or any taxable income from, a foreign financial account, may not prepare a current or future income tax return for that taxpayer without being in violation of Circular 230.
Q48: Are there special considerations for completing Form 2848, Power of Attorney and Declaration of Representative?
A48: Yes. In addition to being authorized to represent the taxpayer for tax years 2003 through 2010, the power of attorney must specifically authorize you to represent the taxpayer for income tax, civil penalties and FBARs. A sample power of attorney can be found at www.irs.gov.