Circular 230 & Avoiding Salespeople When You Have Tax Problems

Circular 230 is a government document that outlines the standards tax pros must meet to practice in front of the IRS. The document provides practice regulations for tax attorneys, certified public accountants (CPAs), and enrolled agents (EAs). Why should you care? If you work with a non-licensed person during the tax relief process, they aren't bound by these ethical guidelines, and that allows them to use unethical practices and pushy sales tactics that a licensed pro wouldn't use.

In this guide, we provide an overview of Circular 230 including its purpose, key provisions, and how it supports compliance from tax professionals. We also explain the risks of working with non-licensed tax professionals when you have a problem and look at the distinctions between tax pros and salespeople at tax relief firms. 

Want to get help now? Then, use TaxCure to find a licensed tax professional. All of the tax pros with listings on this site have been validated to be compliant with Circular 230 standards.

What Is Circular 230? 

Circular 230 is a Treasury Department document entitled "Regulations Governing Practice before the Internal Revenue Service". It includes the rules that licensed tax professionals must follow when they represent taxpayers in front of the IRS. Representation refers to preparing returns, helping clients with IRS examinations/audits, dealing with appeals, and representing clients with collection matters.

The circular's rules apply to attorneys, Certified Public Accountants (CPAs), enrolled agents, enrolled actuaries, appraisers, and enrolled retirement plan agents. As of 2011, the circular also addresses tax return preparers who have limited practice privileges under the IRS's Annual Filing Season Program (AFSP).

What Is the Purpose of Circular 230?

The purpose of Circular 230 is to explain who can represent taxpayers in front of the IRS and to outline the rules and standards those professionals must follow. The rules attempt to protect both the government and taxpayers from unethical practices from tax professionals. The 44-page circular addresses who can practice in front of the IRS, the duties they have when working with the IRS, and the rules they must follow when providing services to clients. 

In particular, Circular 230 says that tax professionals must provide competent services to their clients, and it outlines the disciplinary processes for tax professionals who don't follow these guidelines. The Office of Professional Responsibility (OPR) disciplines and sanctions tax professionals who don't follow the standards outlined in Circular 230. 

Risks of Working With Un-Regulated Sales Reps for Tax Services

Salespeople do not need to follow the guidelines of Circular 230, and many of the worst tax relief companies use this loophole to their advantage. They gave sales reps a crash course in IRS resolution methods and sales tactics, and then, when clients call their tax relief firms, they connect them with sales reps who sell them tax relief services using sales techniques that a pro would likely be barred from using. 

After the taxpayer has signed up for services and paid a deposit, the account will eventually make its way to a tax professional. To save money, big tax relief firms generally try to use the lowest cost tax professionals possible. For instance, they will commonly have someone with just an Annual Filing Season Program credential sign all their returns, and they'll only use attorneys, CPAs or EAs when absolutely necessary. 

However, what often happens in this situation is that once the tax professional gets the file, they will figure out that the client doesn't actually qualify for the program that the sales rep told them they could get. At this point, the tax pro may be able to recommend another option, or because they typically have staggering caseloads, they may just mark the case as unresolved and go to the next document in their list.

You can see the effects of these bait-and-switch sales tactics if you look at reviews of many of the so-called "best" tax relief firms on a site like the Better Business Bureau. Near the end of this post, we share some recent reviews that highlight these practices. You can also get a sense of how this happens if you look at our posts about how tax relief companies work and whether or not tax relief is legit. 

This Reddit post from a former employee of a large national firm also addresses how aggressive sales tactics are key to these company's business practices. Although the poster does not mention Circular 230, they touch on issues related to a lack of professional training and ethics with sales teams that work at tax relief firms. 

Provisions of Circular 230 That Protect Taxpayers

First, Circular 230 explains who can represent taxpayers in front of the IRS. Although this may sound potentially limiting, these rules are designed to ensure that professionals who charge clients for tax representation services have an adequate understanding of the tax law and the IRS's processes. 

The document also explains how you can represent yourself and which other people (such as relatives or directors in a corporation) can represent you, and it says that tax practitioners cannot accept help related to IRS representation cases from pros who were disbarred from practice or former IRS employees who were suspended. 

Then, the circular outlines rules directly related to representing a client. It says that practitioners should not represent clients if the practitioners have conflicting interests, but it also allows clients to waive the conflict of interest if desired. For example, if you hire a tax professional to help you apply for innocent spouse relief, they would not be able to work with your spouse on the opposite side of the table unless you waived that privilege. 

There is a section on solicitation that says practitioners cannot use false or coercive statements in their sales or marketing materials. It says that they must be upfront about their fees and which fees clients are responsible for. The circular also outlines that tax practitioners must be competent, and they should not take unreasonable positions on tax returns. 

To further protect taxpayers, Circular 230 outlines what happens if tax practitioners don't follow these guidelines. It outlines how the Office of Professional Responsibility (OPR) deals with complaints, reviews, and appeals through disbarment, suspension, censure, or disqualification. 

How Circular 230 Promotes Competence and Ethical Behavior

Circular 230 states that before being admitted to practice, representatives must demonstrate good character, good reputation, the necessary qualifications to provide valuable services, and the competency to advise and help people who need help dealing with the IRS. It also states that the Secretary of the Treasury may suspend, disbar, or censure representatives who are incompetent or disreputable, who violate the regulations of the circular, or who mislead or threaten the person being represented with intent to defraud. 

The rules ensure compliance and ethical behavior because the vast majority of tax professionals are not going to risk their careers by running afoul of the standards in this document. Of course, there are exceptions--for example in July 2024, a CPA from Indiana plead guilty to claiming millions of dollars in false deductions between 2013 and 2022. This particular professional was certainly not following the rules of Circular 230, and now, for their fraudulent actions, they are facing up to three years in prison and the permanent loss of representation rights in front of the IRS. 

However, this is rare. Only a small handful of people go to prison for tax fraud every year. If you're looking for tax relief services, you don't really have to worry about these types of tax professionals. Instead, you just need to be aware of how unregulated salespeople working for tax relief firms get around the guidelines in this circular, and you also need to understand the benefits of hiring a professional bound by this circular.

Benefits of Hiring a Tax Pro Bound by Circular 230 Standards

When you hire a tax pro who is bound by the guidelines of Circular 230, you get a professional who understands the connection between ethical standards, preparer penalties, and the consequences of violating tax laws and regulations. They understand the importance of being diligent about accuracy, and they know that they should only take positions that meet certain compliance standards. 

For example, they shouldn't file false returns or returns that disregard the law. They also shouldn't file documents to delay the IRS or impede collection actions. Ethical tax practitioners know that they must have a reasonable basis for the claims made on returns and that the position must be backed up by the Internal Revenue Code (IRC), Treasury regulations, Tax Court rulings, or other substantial authority.

Tax Pros Vs. Sales Reps

As noted above, tax pros must pass tests and complete continuing education requirements so that they can keep their professional designations. Enrolled agents must pass a three-part tax test or be a former IRS agent who meets certain credentials. CPAs generally need a master's degree in accounting, and they must pass a state licensure exam. Attorneys must complete a Juris Doctorate (JD) degree and pass their state's bar exam. On top of that, they must also follow the professional standards laid out in Circular 230.

Sales reps, in contrast, do not need any training. They aren't regulated by many standards, and they certainly aren't regulated by Circular 230. They also don't know tax laws, don't understand the intricacies of tax returns, and in most cases, don't have any formal education about tax or accounting matters.

Here's a quick example, if a sales rep says that you have to sign up within 48 hours, or you'll miss your chance to participate in a certain IRS program, they won't face any sanctions for lying. Tight deadlines are considered to be a really useful tool in sales because they encourage people to take action quickly. That's a good thing for businesses and a bad thing for consumers.

In contrast, if a Circular 230 tax pro made a similar claim, they may be sanctioned, and they may lose their rights to practice in front of the IRS. The only situation where a tax pro could ethically make this type of claim is if it were true. For instance, if the client was in a situation where the IRS was going to levy assets or assess a tax in two days, then, the tax pro can state that deadline. They can't use those types of tactics to get a taxpayer to sign up for a payment plan or decide whether or not they want to apply for an offer in compromise. 

Claims Often Made by Non-Regulated Sales Staff

Because sales reps aren't bound by Circular 230, they can make all kinds of ridiculous claims. You may see these claims in their advertising including radio ads, websites, TV ads, paper mailers, and even voicemails. If you contact one of these companies, you will undoubtedly talk to a sales rep who will make these types of claims over the phone. 

In particular, the big tax relief firms and their sales reps like to push the idea of IRS tax forgiveness, and they often promise that clients can qualify for an offer in compromise before learning enough about their financial situation. 

Another tactic is talking about the Fresh Start Program as if it's a limited-time offer that taxpayers can only get if they call right now—in actuality, it's a set of reforms that the IRS made to collection processes and relief programs over a decade ago. Although the changes still help taxpayers, it's not something you apply for that has a deadline. 

Recently, a lot of firms have been advertising that if you have a credit score above a certain number, you will be able to qualify for IRS debt relief. This is incredibly misleading because the IRS doesn't have any programs that are based on your credit score, and unless the firm is going to help you get a loan, they aren't really going to deal with your credit score either. 

Sales reps make these claims to get taxpayers to sign up for their services. Often, they say whatever they need to say to get a potential client to pay the upfront fee, and they'll even tell clients that they can qualify for a program that they can't. You see this theme over and over again in the following reviews.

BBB Complaints: Bait-and-Switch Tactics From Tax Relief Firms

The widespread nature of these practices is clear if you look at recent complaints on the Better Business Bureau website. In the following sections, we share complaints that were posted within the last six weeks about the practices of various tax debt relief companies. Note that the BBB removes the names of people and businesses from its complaints so you may see asterisks when the complaint mentions the IRS, the company, and/or any employees at the company.

Below are some links to some of the larger tax resolution companies that use unlicensed sales reps to sell tax resolution services to consumers. These links are to the BBB complaints for each of the companies, you can read through the reviews yourself and see a common theme in many of them about overstated promises made when they initially paid for the services.

• Optima Tax Relief BBB Complaints - Known as one of the larger tax resolution companies in the country. Note that Optima has an A+ rating, but that's because the BBB doesn't really take complaints into account in its rating system. Instead, it looks at whether or not the company has resolved the complaint, and often, just posting a response is a positive factor for the BBB. We also have a full analysis on reviewing Optima Tax Relief reviews online and what to look for when making a hiring decision.
• Tax Relief Advocates BBB Complaints - This company has been accredited by the BBB since 2018. The company does respond to complaints. Look closely here for a commonality of the complaints. 
• Anthem Tax Services - This company has been accredited by the BBB since 2017. This company does respond to complaints. They are listed on many of the sites around the web where they pay to be promoted on pages that list things like, “The Best Tax Relief Companies”. 

You can see similar complaints from other clients of big tax relief firms around the internet. When doing a search for a tax relief company or professional, be sure to check out their BBB complaints section. Be sure to read our guide on how to analyze tax relief company reviews before making a hiring decision. This guide will help you know what red flags to look out for and it will become easy to find the legitimate companies and pros that can help you.

Why You Should Only Hire Circular 230 Compliant Pros

You deserve to have your case handled by a competent and ethical professional. You don't want to waste time or money dealing with sales reps who make empty promises. Unfortunately, that's how the big tax relief firms work. They have an unregulated sales rep sell you on their servies. Then, an overworked tax pro tries to carry through with the promises, but often, they have to just close the case and give up.

When you use TaxCure to find a tax professional, you don't go through a sales team. Instead, you can read reviews and look at tax pro's experience. Then, you can contact them directly to set up a consultation and get help for your tax problem.

How to Verify Credentials of Tax Pros

The IRS has a searchable directory of federal tax return preparers and their credentials. You can search by zip code, distance, and last name, and you can filter your search by the pros credentials such as attorney, CPA, enrolled agent, enrolled actuary, enrolled retirement plan agent, and annual filing season program participant. 

All enrolled agents and many CPAs and tax attorneys will have listings in this directory, but it's important to note that CPAs and tax attorneys will not be listed if they don't have a Tax Preparer Identification Number (PTIN). In that case, you can check their credentials through your state. 

You may need to use a unique database for attorneys and CPAs. 

For example, the New York State Unified Court System has a searchable database for attorneys licensed to practice in that state, but if you want to check a CPA's credentials, you will need to look at the New York State Education Department Office of the Professions website. Every state will have a similar type of database that you can search.

Get Help Now

If you have a tax problem, use TaxCure to find a professional to help you today. With our search feature, you can look for high-quality, ethical tax pros, and you can narrow down your results to find people who have experience with your particular problem. Each tax professional on TaxCure has been verified that they are licensed and in good standing. You can use our search to find professionals in your area that can assist with a wide variety of tax problems.