Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has issued proposed regulations relating to contingent fees that may be charged by tax practitioners. The proposed regulations are identical to interim guidance provided in Notice 2008-43, I.R.B. 2008-15, 748. This notice will be declared obsolete when the proposed regulations are published as final regulations in the Federal Register.

  Final regulations currently permit a practitioner to charge a contingent fee for services rendered in connection with the IRS examination of, or challenge to, an amended return or claim for refund or credit when the amended return or claim for refund or credit was filed within 120 days of the taxpayer receiving a written notice of the examination of, or a written challenge to, the original tax return. The proposed regulations would also allow contingent fee arrangements with respect to an amended return or claim for refund or credit if the amended return or claim for refund or credit is filed before the taxpayer receives written notice of the examination or written challenge to the original return (or if the taxpayer never receives such notice or writing). In addition, contingent fees could be charged for services rendered in connection with a "whistle-blowers" claim under Code Sec. 7623.

  The proposed regulations also clarify the definition of a contingent fee to provide that a contingent fee includes a fee that is based on a percentage of the refund reported on a return, that is based on a percentage of the taxes saved, or that otherwise depends on the specific tax result attained. The current regulations state that a contingent fee depends on the specific result attained without directly providing that it is the specific tax result that is relevant. Thus, under the proposed regulations, a fee based on the closing of a transaction or other nontax contingency is permissible.

  A public hearing is scheduled for November 20, 2009, at 10 a.m. Written or electronically generated comments must be received by September 10, 2009. Outlines of topics to be discussed at the public hearing must be received by September 10, 2009.

Proposed Regulations, NPRM REG-113289-08, 2009FED ¶49,425

Proposed Regulations, NPRM REG-113289-08, FINH ¶41,141

Other References:

  Circular 230

  CCH Reference - 2009FED ¶43,566

 
Code Sec. 7852

  CCH Reference - FINH ¶23,122

  Tax Research Consultant

  CCH Reference - TRC IRS: 3,206.05