Rev. Proc. 59-3

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to prescribe, pursuant to section 10.7(a)(7) of Department Circular No. 230, approved January 29, 1959, effective March 15, 1959, ¹ the standards of conduct, the extent of authority, and the circumstances and conditions under which a preparer may appear as the taxpayer's representative.

SEC. 2. SCOPE OF AUTHORITY.

.01 Any non-enrolled person who signed a return as having prepared it for the taxpayer (hereinafter sometimes called the preparer), when duly authorized by the taxpayer, may appear as the taxpayer's representative, with or without the taxpayer, before a revenue agent or examining officer (field audit or office audit) in the Audit Division in an office of District Director (but not at the Informal Conference in a District Director's office) with respect to the tax liability of the taxpayer for the taxable year or period covered by that return, subject to the limitations herein prescribed.

.02 The scope of authority may include dealing with any return (for example, income, excise or employment) which he signed as having prepared it for the taxpayer, but not an estate or gift tax return or an income tax or excess profits tax return of a corporation; provided that any person who prepared the income tax return of a corporation and the individual returns of any of the corporate officers for the same taxable year or period, or any part thereof, covered by such corporate return, may also so appear as the corporation's representative.

.03 Any person who prepared a return which provides no space on the prescribed form for signature of the person (other than the taxpayer) who prepared the return for the taxpayer, or who prepared a return with respect to which the instructions or regulations do not require that it be signed by the person who prepared the return for the taxpayer, may likewise appear as the taxpayer's representative.

.04 Where net operating loss carry-backs and carry-forwards are involved, the preparer may not (otherwise than as a witness) deal with the prior or subsequent returns unless he prepared the returns and signed them as having prepared them for the taxpayer.

.05 Such permission to appear before a revenue agent or examining officer in an office of District Director shall not constitute enrollment nor a finding of eligibility for enrollment.

.06 Nothing herein shall be construed as authorizing persons not members of the Bar to practice law. (Note: An interpretation by the Secretary of the Treasury of Section 10.39 of Department Circular No. 230 (31 CFR, 1949 ed., 10.2(f)), among other sections, appeared at 21 F.R. 833, Feb. 7, 1956).

.07 The preparer of the return will be expected to remain steadily alert to questions, issues and factual situations of such difficulty as to require the assistance of an enrolled attorney or an enrolled agent and, when such assistance is required, to suggest to the taxpayer that he seek the advice or services of an enrolled person.

.08 Proper authorization will be filed with the revenue agent or examining officer in the office of District Director of Internal Revenue in which the case is under consideration at the time of the initiation of the examination or subsequent thereto.

.09 Unless the taxpayer is present, such a person must present identification satisfactory to the revenue agent or examining officer.

SEC. 3. LIMITATIONS UPON AUTHORITY DELEGATED.

The authority delegated to a preparer will be limited to appearances as the taxpayer's representative before the offices and officials above indicated. No preparer shall have authority to appear or to correspond as the taxpayer's representative at any other stage or level of proceedings or before any other Internal Revenue Service personnel, as for example, at the Informal Conference in the Audit Division in a District Director's office, the Appellate Division of a region, or in the National office. In addition, the following acts are beyond the scope of authority of a non-enrolled preparer:

(a) Executing claims for refund for the taxpayer.

(b) Receiving checks in payment of any refund of internal revenue taxes, penalties or interest for the taxpayer.

(c) Executing waivers or consents agreeing to a later assessment or collection of taxes than is provided by the applicable statute of limitations.

(d) Executing closing agreements with respect to a tax liability or specific matter for the taxpayer.

(e) In the event an agreement is reached at the conclusion of the examination--field audit or office audit--executing the Form 870 or other appropriate agreement form for the taxpayer.

(f) Receiving the "Form L-19" letter for the taxpayer (informing the taxpayer of his right to an Informal Conference in the Audit Division of the District Director's office) or receiving the "30-day letter" for the taxpayer. (If the taxpayer desires to request an Informal Conference in the Audit Division of the District Director's office or if the taxpayer desires to file a protest against the proposed determination set forth in the "30-day letter" the request or protest should be executed by the taxpayer and presented by the taxpayer or through his enrolled representative. See section 601.105(c) and (d) of the Statement of Procedural Rules, C.B. 1955-2, pages 930-933 and the Conference and Practice Requirements, page 984 et seq.)

(g) Receiving copies of correspondence addressed to the taxpayer.

(Note: No preparer as such will be permitted to perform any of the acts specified in subparagraphs (a) through (g), above; enrollment is required for the performance of such acts.)

SEC. 4. FORM OF AUTHORIZATION AND FEE STATEMENT.

.01 The use of technical language in the preparation of the authorization is not necessary, but the instrument should clearly express the taxpayer's intention as to the scope of the authority granted to the person who prepared his return.

.02 The authorization should be signed by the taxpayer. (Instructions for execution of the authorization are the same as those for the execution of a power of attorney, see section 601.504(a) (2) and (3) of the Conference and Practice Requirements, C.B. 1955-2, page 987.)

.03 The authorization should be acknowledged before a notary public, or in lieu thereof, witnessed by two disinterested individuals.

.04 Authorization in either the form set forth in Appendix A hereto or the form set forth in Appendix B hereto (or any other form clearly evidencing requisite intent) may be accepted as evidence of authorization to a preparer to appear as the taxpayer's representative before internal revenue agents or examining officers in the Audit Division in an office of District Director of Internal Revenue (including local offices of the District Director). Such authorization may also be accepted by the International Operations Division as evidence of authorization to a preparer to appear as the taxpayer's representative before internal revenue agents or examining officers of the International Operations Division.

.05 The authorization may not include a power of substitution.

.06 A preparer shall not charge a manifestly unreasonable fee and shall not enter into a wholly contingent fee agreement with a taxpayer for representation in any matter before a revenue agent or examining officer unless the taxpayer is financially unable to pay a reasonable fee on any other terms. A preparer shall file with the authorization a signed fee statement in the form set forth in Appendix C hereto, or the form set forth in Appendix D hereto, whichever is applicable (or any other form clearly evidencing whether or not there is a contingent or partially contingent fee agreement for the representation of the taxpayer before revenue agents or examining officers and if there is such an agreement, the terms thereof relating to compensation).

.07 A taxpayer who authorizes the use of the services of a preparer may at any time change to an enrolled attorney or an enrolled agent or vice versa by giving written notice thereof to the Service and to the former preparer (or to the former enrolled attorney or agent) and filing a power of attorney. (See section 601.504(c) of the Conference and Practice Requirements, C.B. 1955-2, page 988.)

.08 In any case in which authorization to a preparer has been filed and thereafter a taxpayer desires to authorize, in addition, an enrolled attorney or enrolled agent to represent him before the Service with respect to the same matter, a separate power of attorney should be filed which should include the name of the enrolled attorney or enrolled agent (or the names of the enrolled attorneys or enrolled agents) authorized to act for the taxpayer. Such separate power of attorney should contain on the face thereof a recital to the effect that the intent and purpose thereof is not to revoke the existing authorization theretofore filed, but instead is intended to be in addition thereto.

.09 If the taxpayer desires to revoke the authority granted to a preparer previously filed and to authorize an enrolled attorney or agent to act with respect to the same matter, a revocation of authority of the former preparer shall in no case be effective so far as the Service is concerned prior to the giving of written notice to the Service and to the former preparer that the authority of such preparer has been revoked.

SEC. 5. ETHICS AND CONDUCT.

.01 All preparers representing taxpayers within the scope of this Revenue Procedure shall conduct themselves in accordance with recognized ethical standards. All such preparers shall conduct themselves in such manner as not to commit any act of disreputable conduct. (For examples of disreputable conduct, see section 10.51(b) of Department Circular No. 230, page 6, this bulletin.)

.02 No such preparer shall neglect or refuse to submit records or information in any matter before the Internal Revenue Service, upon proper and lawful request by a duly authorized officer or employee of the Service, unless the information or testimony is privileged, or such preparer has reasonable grounds to believe and does believe that the said demand is of doubtful legality; and no such preparer shall interfere, or attempt to interfere, with any proper and lawful efforts by the Internal Revenue Service or its officers or employees to obtain information relative to any matter before the Service.

.03 Each such preparer who knows that a client has not complied with the law, or has made an error in or omission from any return, document, affidavit, or other paper which the client is required by law to execute in connection with any matter administered by the Service, shall advise the client promptly of the fact of such noncompliance, error, or omission.

.04 Each such preparer shall exercise due diligence in preparing or assisting in the preparation of, approving, and filing returns, documents, affidavits, and other papers relating to Internal Revenue Service matters. Each such preparer shall exercise due diligence to determine the correctness of representations made by him to the Internal Revenue Service. Each such preparer shall exercise due diligence to determine the correctness of representations made by him to clients with reference to any matter administered by the Internal Revenue Service.

.05 No such preparer shall unreasonably delay the prompt disposition of any matter before the Revenue Service.

.06 No such preparer as notary public shall take acknowledgments, administer oaths, certify papers, or perform any official act in connection with matters related to his client's tax liabilities in which he is employed, or in which he may be in any way interested before the Internal Revenue Service. Under the provisions of this paragraph a preparer who is a notary public is prohibited from taking any acknowledgment, oath, or certification as a notary public in connection with any tax return, protest, or other document which he has prepared or in the preparation of which he has assisted. (26 Op. Atty. Gen. 236.)

.07 No such preparer shall procure, or attempt to procure, directly or indirectly, from Government records or other Government sources information of any kind which is not made available by proper authority.

SEC. 6. SOLICITATION AND ADVERTISING.

.01 No such preparer shall, in any manner whatsoever not warranted by personal relations, directly or indirectly solicit employment for the representation of taxpayers before the Internal Revenue Service.

.02 A preparer is prohibited from advertising that he is authorized to represent taxpayers before the Internal Revenue Service.

.03 No such preparer or agent shall use, directly or indirectly, signs, printing or other written matter indicating some past or present connection with, or relationship to the Treasury Department or the Internal Revenue Service, nor shall he represent in any manner that he possesses influence or a special relationship with officers or employees of the Revenue Service.

SEC. 7. PERSONS INELIGIBLE.

.01 Any person (a) who is under disbarment or suspension from practice before the Treasury Department or the Internal Revenue Service or from the practice of his profession by any other authority, (b) who has been convicted of any criminal offense prescribed by the internal revenue laws or convicted of any crime involving moral turpitude, (c) whose application for enrollment has been denied for failure to show good character or reputation or for conduct or practices, (d) who refuses to comply with this Revenue Procedure, or (e) whose conduct or practices have been or are such as to constitute a violation of Sections 5 or 6, above, or as to otherwise render him ineligible under section 10.7(a)(7) of Department Circular No. 230, is ineligible to appear as the taxpayer's representative under this Revenue Procedure.

.02 Any person who is an officer or employee of the United States or of the District of Columbia shall be ineligible to appear as the taxpayer's representative under this Revenue Procedure. Any person who is an officer or employee of any state, or any subdivision thereof, whose duties require him to pass upon, investigate, or deal with tax matters of such state or subdivision shall also be ineligible to so appear, provided such employment may disclose facts or information applicable to Federal tax matters.

.03 Any revenue agent or examining officer who has reason to believe that a preparer's conduct or practices have been or are such as would render him ineligible shall communicate such information through appropriate supervisory channels to the Director of Practice. Pending advice from supervisory officials or the Director of Practice, the revenue agent or examining officer may continue to deal with the preparer or, in the exercise of sound administrative discretion, may decline to deal with the preparer (other than as a witness).

.04 Any person claiming to be aggrieved may communicate with the Director of Practice, Internal Revenue Service, Washington 25, D.C.

SEC. 8. SPECIAL ORDERS.

The Director of Practice may issue such special orders as he may deem proper in any matter within the purview of this Revenue Procedure.

SEC. 9. APPLICABILITY.

This Revenue Procedure is not applicable to enrolled attorneys or agents nor to unenrolled preparers of returns who do not seek to represent taxpayers before revenue agents or examining officers in the Audit Division of an office of District Director under the provisions of section 10.7(a)(7) of Department Circular No. 230, as revised.

SEC. 10. INQUIRIES.

Inquiries from Service personnel regarding this Revenue Procedure should be addressed to the Audit Division (O:A). Other inquiries should be addressed to the Director of Practice (C:DP).

SEC. 11. EFFECTIVE DATE.

This Revenue Procedure shall be effective March 15, 1959.

                                   GEORGE C. LEA,

AUTHORIZATION

     The undersigned,

U.S. Federal ________ tax return Form ________ for the taxable year 19__,

and request and authorize the above-named preparer to represent me within the limitations of Revenue Procedure 59-3.

I hereby make, constitute and appoint the above-named preparer of my return as my attorney in fact to inspect my return for the year or period referred to above.

No other power of attorney or authorization has been executed by me with respect to this matter.

     Witness: _____________________________

APPENDIX B (Form for Use with Notary)

AUTHORIZATION

     The undersigned,

U.S. Federal ________ tax return Form ________ for the taxable year 19__,

and request and authorize the above-named preparer to represent me within the limitations of Revenue Procedure 59-3.

I hereby make, constitute and appoint the above-named preparer of my return as my attorney in fact to inspect my return for the year or period referred to above.

No other power of attorney or authorization has been executed by me with respect to this matter.

                                   _____________________________

NOTE.--Original executed authorization must be filed with the office of the District Director of Internal Revenue in which the case is under consideration or furnished to the revenue agent or examining officer at the time of the conference. An original executed authorization must be submitted for each year under consideration.

APPENDIX C

FEE STATEMENT

                                   _____________________________

                                   _____________________________

Preparers of returns appearing before revenue agents or examining officers of the Audit Division in the offices of District Directors are subject to the standards of conduct and the circumstances and conditions prescribed in Revenue Procedure 59-3.

APPENDIX D

FEE STATEMENT

                                   _____________________________

Preparers of returns appearing before revenue agents or examining officers of the Audit Division in the offices of District Directors are subject to the standards of conduct and the circumstances and conditions prescribed in Revenue Procedure 59-3.

¹ Section 10.7(a)(7) of the Department Circular No. 230 states:

"Section 10.7 PRACTICE WITHOUT ENROLLMENT--(a) In general.--Individuals may appear on their own behalf, and individuals who are qualified, of good character and reputation, and are not under disbarment or suspension from practice before the Internal Revenue Service or from practice of their profession by any other authority, may be permitted to appeal without enrollment, provided they present satisfactory identification, in the following classes of cases:

* * * * * * *

"(7) Any person who signs a return, other than an estate or gift tax return or an income tax or excess profits tax return of a corporation, as having prepared it for the taxpayer may appear, without enrollment, as the taxpayer's representative, with or without the taxpayer, before revenue agents and examining officers of the Audit Division in the offices of District Directors (but not at the Informal Conference in a District Director's office) with respect to the tax liability of the taxpayer for the taxable year or period covered by that return; provided that any person who prepared the income tax return of a corporation and the individual returns of any of the corporate officers for the same taxable year or period, or any part thereof, covered by such corporate return, may also so appear as the corporation's representative. Proper authorization from the taxpayer will be required. Any person who prepared a return with respect to which the instructions or regulations do not require that it be signed by the person who prepared the return for the taxpayer may likewise appear as the taxpayer's representative when properly authorized. Unless the taxpayer is present, such persons must present satisfactory identification. All such persons will be subject to such rules regarding standards of conduct, the extent of their authority, and other matters as the Director of Practice, with approval of the Commissioner of Internal Revenue, shall prescribe. Such persons will be permitted to represent taxpayers within those limits without enrollment."