[startupcfo]

MCQ #2 states that “Accepting a contingent fee for representing a client in an examination of the client’s federal tax return by an IRS agent” is okay.

I thought Circular 230 explicitly forbids CPAs from charging contingent fees when it comes to tax work. Has there been a recent change in law or is there an exception I’m missing?

AUD - 93
BEC - 87
FAR - 77
REG - 77

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Corporate finance leader

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[Tncincy]

The contingent fee can't be based upon a refund or a certain amount of refund. it's an if then type thing,,,if you get 6,000, then pay me 1,000……hope this helps.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Anonymous]

A practitioner may charge a contingent fee in the following three situations before the IRS:
a. IRS examination or audit;
b. Claim solely for a refund of interest and/or penalties; or
c. A judicial proceeding arising under the Internal Revenue Code.

So, it is allowable for a fee to be based off a % of the refund if it relates to one of the three situations listed above.

FYI: Don't confuse this this with the AUDITING rules (you can't charge a contingent fee in a financial statement audit).

[nadroj]

There are exceptions. See § 10.27 Fees in Circular 230.

[startupcfo]

bfulcher, so you're saying that you CAN charge contingent fees, but only in response to an IRS challenge?

AUD - 93
BEC - 87
FAR - 77
REG - 77

------------
Corporate finance leader

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[Anonymous]

Yes, a practitioner may charge a contingent fee for any of the 3 situations listed above. If you have Becker it talks about it in R5 Pg. 10.

[Author]

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