2015 Napa Williamsburg Special Topics Electronic

Table of Contentsincludes conduct that reflects gross indifference, § 10.53 Receipt of information concerningpreparation w h ich is g rossly inad eq uate und er th e practitioner.circumstances, and a consistent f ailure to perf ormob lig ations to th e client. ( a) Officer or employee of the Internal Revenue Service. If an officer or employee of the Internal ( 1 4 ) W illf ully f ailing to sig n a tax return R ev enue S erv ice h as reason to b eliev e a practitionerprepared by the practitioner when the practitioner’s has violated any provision of this part, the officersig nature is req uired b y F ed eral tax law s unless th e or employee w ill promptly mak e a w ritten reportf ailure is d ue to reasonab le cause and not d ue to of th e suspected v iolation. Th e report w ill ex plainw illf ul neg lect. the facts and reasons upon which the officer’s or employee’s belief rests and must be submitted ( 1 5 ) W illf ully d isclosing or oth erw ise using a to the office(s) of the Internal Revenue Servicetax return or tax return inf ormation in a manner not responsib le f or ad ministering or enf orcing th is part.auth oriz ed b y th e I nternal R ev enue Cod e, contraryto th e ord er of a court of competent j urisd iction, or ( b ) Other persons. A ny person oth er th an ancontrary to th e ord er of an ad ministrativ e law j ud g e officer or employee of the Internal Revenue Servicein a proceed ing instituted und er § 1 0.6 0. h av ing inf ormation of a v iolation of any prov ision of th is part may mak e an oral or w ritten report of (16) Willfully failing to file on magnetic or the alleged violation to the office(s) of the Internaloth er electronic med ia a tax return prepared b y th e R ev enue S erv ice responsib le f or ad ministering orpractitioner w h en th e practitioner is req uired to d o enforcing this part or any officer or employee ofso b y th e F ed eral tax law s unless th e f ailure is d ue th e I nternal R ev enue S erv ice. I f th e report is mad eto reasonab le cause and not d ue to w illf ul neg lect. to an officer or employee of the Internal Revenue Service, the officer or employee will make a ( 1 7 ) W illf ully preparing all or sub stantially w ritten report of th e suspected v iolation and sub mitall of , or sig ning , a tax return or claim f or ref und the report to the office(s) of the Internal Revenuew h en th e practitioner d oes not possess a current or S erv ice responsib le f or ad ministering or enf orcingotherwise valid preparer tax identification number th is part.or oth er prescrib ed id entif ying numb er. ( c) Destruction of report. No report mad e ( 1 8 ) W illf ully representing a tax payer b ef ore und er parag raph ( a) or ( b ) of th is section sh allan officer or employee of the Internal Revenue b e maintained unless retention of th e report isS erv ice unless th e practitioner is auth oriz ed to d o so permissib le und er th e applicab le record s controlpursuant to th is part. sch ed ule as approv ed b y th e National A rch iv es and R ecord s A d ministration and d esig nated ( b ) Effective/applicability date. Th is section is in th e I nternal R ev enue M anual. R eports mustapplicab le b eg inning A ug ust 2, 201 1 . b e d estroyed as soon as permissib le und er th e applicab le record s control sch ed ule.§ 10.52 Violations subject to sanction. ( d ) Effect on proceedings under subpart D. Th e( a) A practitioner may be sanctioned uned r § 01 .05 d estruction of any report w ill not b ar any proceed ing und er sub part D of th is part, b ut w ill preclud e th eif teh practitioner — use of a copy of th e report in a proceed ing und er sub part D of th is part.( 1) W illf ully vi olates any of teh regul ations ( oteh r ( e) Effective/applicability date. Thi s section istah n 01§ .33) contained i n tih s part; or applicabl e eb gi nning A ugus t 2, 201 1.( 2) R eclk essly or trh ough gr oss incompetence( w ithi n the meaning of 10§ .15( a) ( 31 ) ) iv olates §01 .3,4 10.35, 10.36 or 01 .37.( )b Effective/applicability date. Thi s section isapplicalb e to conduc t occurring on or af ter S eptembe r2,6 20 07.Page 30 — § 10.51 S-39 Treasury Department Circular No. 230

Table of ContentsSubpart D — Rules Applicable to Disciplinary ( )b Voluntary sanction —Proceedings ( 1) In general. I n lieu of a proceeid ng eb ing§ 10.60 Institution of proceeding. instituted or continued unde r §10.60( a) , a practitioner or appraiser (or employer, firm or other entity, if ( a) W h eneve r it is de termined tha t a practitioner ( or applicalb e) may of f er a consent to b e sanctionedemployer, firm or other entity, if applicable) violated uned r 0§1 .05 .any provi sion of teh law s og ev rning practice be f orethe I nternal R eve nue S ervi ce or the reug l ations in ( 2) Discretion; acceptance or declination. Thethi s part, the practitioner may be reprimaned d or, in Commissioner, or ed lega te, may accept or ed clineaccorad nce w ith 01§ .26 , subj ect to a proceeid ng f or the of f er de scribe d in pararg aph ( b) ( )1 of thi ssanctions de scribe d i n 0§1 .50. section. W eh n teh ed cision is to ed cline the of f er, teh w ritten notice of de clination may state tha t teh ( b ) W h enev er a penalty h as b een assessed ag ainst of f er d escribe d in pararg aph ( b) ( )1 of tih s sectionan appraiser und er th e I nternal R ev enue Cod e and an w ould eb accepted if it contained id f f erent terms.appropriate officer or employee in an office established Teh Commissioner, or ed lega te, ha s the id scretion toto enf orce th is part d etermines th at th e appraiser acted accept or rej ect a revi sed of f er sumb itted in responsew illf ully, reck lessly, or th roug h g ross incompetence to the ed clination or may counterof f er and act uponw ith respect to th e proscrib ed cond uct, th e appraiser any accepted c ounterof f er.may b e reprimand ed or, in accord ance w ith § 1 0.6 2,subject to a proceeding for disqualification. A ( c) Effective/applicability date. Thi s section isproceeding for disqualification of an appraiser is applicalb e be ig nning A uug s t 2, 201 1.instituted by the filing of a complaint, the contents ofw h ich are more f ully d escrib ed in § 1 0.6 2. § 10.62 Contents of complaint. ( c) E x cept as proiv de d in 10§ .28 , a proceedi ng ( a) Charges. A complaint must name th ew ill not eb instituted unde r thi s section unless the respond ent, prov id e a clear and concise d escriptionproposed responde nt preiv ously ah s be en avid sed of th e f acts and law th at constitute th e b asis f orin w riting of teh law , f acts and conud c t w arranting th e proceed ing , and b e sig ned b y an auth oriz edsuch action and ah s be en accored d an opportunity representativ e of th e I nternal R ev enue S erv iceto di spute f acts, assert aid tional f acts, and maek under §10.69(a)(1). A complaint is sufficient ifargum ents ( includi ng an epx l anation or de scription it f airly inf orms th e respond ent of th e ch arg esof mitiag ting c ircumstances) . b roug h t so th at th e respond ent is ab le to prepare a d ef ense. ( )d Effective/applicability date. Tih s section isapplicalb e be gi nning A uug s t 2, 201 .1 ( b ) Specification of sanction. Th e complaint must specif y th e sanction soug h t ag ainst th e practitioner§ 10.61 Conferences. or appraiser. I f th e sanction soug h t is a suspension, th e d uration of th e suspension soug h t must b e ( a) In general. Th e Commissioner, or d eleg ate, specified.may confer with a practitioner, employer, firm oroth er entity, or an appraiser concerning alleg ations of ( c) Demand for answer. Teh responde nt mustmiscond uct irrespectiv e of w h eth er a proceed ing h as be notified in the complaint or in a separate paperb een instituted . I f th e conf erence results in a stipulation attache d to the complaint of the time f or answ ering thein connection w ith an ong oing proceed ing in w h ich th e complaint, w h ich may not eb less tha n 30 ad ys f rompractitioner, employer, firm or other entity, or appraiser teh ad te of seriv ce of teh complaint, the name andis th e respond ent, th e stipulation may b e entered in th e ard ess of teh A dm inistratiev L aw J ugde w ith w homrecord b y eith er party to th e proceed ing . the answer must be filed, the name and address of the person representing the I nternal R ev enue S eriv ceTreasury Department Circular No. 230 to w hom a copy of the answ er must be serve d, and S-40 § 10.62 — Page 31

Table of Contentstha t a de cision by de f ault may eb rend ered aga inst as de termined uned r section 26 21 of the I nternalthe respondent in the event an answer is not filed as R eve nue Coed and t he reug l ations the reuned r.reuq i red. ( ii) S erv ice of th e complaint may b e mad e in ( )d Effective/applicability date. Tih s section is person on, or by leaving the complaint at the officeapplicalb e be gi nning A ugus t 2, 201 .1 or place of b usiness of , th e respond ent. S erv ice b y th is meth od w ill b e consid ered complete and proof§ 10.63 Service of complaint; service of other of serv ice w ill b e a w ritten statement, sw orn orpapers; service of evidence in support of affirmed by the person who served the complaint,complaint; filing of papers id entif ying th e manner of serv ice, includ ing th e recipient, relationsh ip of recipient to respond ent, ( a) Service of complaint. place, d ate and time of serv ice. ( 1) In general. The complaint or a copy of the ( iii) S ervi ce may be made yb any oteh r meanscomplaint must be serve d on teh responde nt yb any arg eed to by the responed nt. P roof of servi ce w ill ebmanner de scrieb d in paragr aphs ( a) ( 2) or ( 3) of thi s a written statement, sworn or affirmed by the personsection. w oh serve d the complaint, ide ntif ying teh manner of seriv ce, includi ng the recipient, relationshi p ( 2) Service by certified or first class mail. of recipient to responed nt, place, ad te and time of ( i) S ervi ce of teh complaint may be made on servi ce.the respondent by mailing the complaint by certified ( )4 F or purposes of thi s section, respondentmail to the last know n ard ess ( as ed termined unde r means the practitioner, employer, firm or other entity,section 6212 of the I nternal R eev nue Code and teh or appraiser named in the complaint or any othe rreug l ations the reunde r) of the respond ent. W he re person ha iv ng teh author ity to accept mail on eb ah lfservice is by certified mail, the returned post office of the practitioner, employer, firm or other entity orreceipt dul y signe d yb the responed nt w ill be proof appraiser.of seriv ce. ( )b Service of papers other than complaint. A ny (ii) If the certified mail is not claimed paper othe r tha n the complaint may eb serev d on tehor accepted b y th e respond ent, or is returned responde nt, or hi s or eh r author iz ed representatievund eliv ered , serv ice may b e mad e on th e respond ent, uned r 01§ .(96 a) ( 2) yb :by mailing the complaint to the respondent by firstclass mail. S erv ice b y th is meth od w ill b e consid ered (1) mailing the paper by first class mail to the lastcomplete upon mailing , prov id ed th e complaint is know n adr ess ( as ed termined unde r section 6221addressed to the respondent at the respondent’s last of teh I nternal R eev nue Code and teh reug l ationsk now n ad d ress as d etermined und er section 6 21 2 thereunder) of the respondent or the respondent’sof th e I nternal R ev enue Cod e and th e reg ulations autoh r iz ed r epresentatiev ,th ereund er. ( 2) de live ry by a priva te ed liv ery seriv ce ( 3) Service by other than certified or first class ed sing a ted pursuant to section 507 2( f ) of themail. I nternal R eve nue Code to the last know n adr ess ( as ed termined unde r section 6221 of teh I nternal ( i) S ervi ce of teh complaint may eb maed on R eve nue Code and the regul ations the reuned r)teh responed nt yb de live ry yb a priv ate de live ry of the respondent or the respondent’s authorizedseriv ce ed signa ted pursuant to section 507 2( f ) of the representatiev , orI nternal R eev nue Coed to the last nk ow n ard ess( as ed termined unde r section 26 12 of the I nternal ( 3) as provi ed d in paragr aphs ( a) ( 3) ( ii) and ( a) ( 3)R eev nue Coed and the regul ations the re uned r) of the ( iii) of tih s section.responed nt. S ervi ce by thi s method w ill b e conside redcomplete, provi de d the complaint is ad ressed to the ( c) Service of papers on the Internal Revenuerespondent at the respondent’s last known address Service. W he neev r a paper is requi red or permitted to eb serev d on teh I nternal R eve nue S eriv ce inPage 32 — § 10.62 S-41 Treasury Department Circular No. 230

Table of Contentsconnection w ith a proceeid ng unde r tih s part, the respondent is without sufficient information tothe paper w ill be serev d on teh I nternal R eve nue admit or deny a specific allegation. The respondent,Service’s authorized representative under §10.69(a) neev rthe less, may not ed ny a material allega tion in( 1) at teh adr ess de sing a ted in teh complaint, or at teh complaint tah t teh responed nt know s to be true,an adr ess proiv ed d in a notice of appearance. I f no or state that the respondent is without sufficientard ess is de sing a ted in the complaint or provi ed d inf ormation to f orm a eb lief , w eh n th e responde ntin a notice of appearance, servi ce w ill eb maed on possesses the reuq i red inf ormation. Teh responed ntthe office(s) established to enforce this part under the also must state affirmatively any special matters ofautoh r ity of 01§ .,1 I nternal R eve nue S eriv ce, 1 1 1 1 ed f ense on w hi ch he or she relies.Constitution A ve nue, N W , W asih ntg on, D C 2022.4 ( c) Failure to deny or answer allegations in the ( )d Service of evidence in support of complaint. complaint. E ve ry alleag tion in teh complaint tah t isW itih n 10 ad ys of servi ng teh complaint, copies of not de nied in teh answ er is de emed amd itted and w illthe ev ide nce in support of teh complaint must eb eb consied red prove ;d no f urteh r evi de nce in respectserve d on teh responed nt in any manner ed scrieb d in of such a lleag tion need be aud c ed a t a eh arin.gparagr aphs ( a) ( 2) and ( 3) of thi s section. ( d) Default. Failure to file an answer within the time ( e) Filing of papers. Whenever the filing of a prescrieb d ( or w itih n teh time f or answ er as ext ened dpaper is req uired or permitted in connection w ith yb the A md inistrative L aw J ugde ) , constitutes ana proceed ing und er th is part, th e orig inal paper, adm ission of teh alleag tions of the complaint andplus one additional copy, must be filed with the a w aiev r of eh aring, and the A md inistratiev L awAdministrative Law Judge at the address specified J udge may maek th e ed cision by ed f ault w itoh ut ain the complaint or at an address otherwise specified he aring or f urthe r proceud r e. A de cision by ed f aultb y th e A d ministrativ e L aw J ud g e. A ll papers constitutes a ed cision uned r 0§1 .6.7filed in connection with a proceeding under thispart must b e serv ed on th e oth er party, unless th e ( e) Signature. Th e answ er must b e sig ned b yA d ministrativ e L aw J ud g e d irects oth erw ise. A the respondent or the respondent’s authorizedcertificate evidencing such must be attached to the representativ e und er § 1 0.6 9 ( a) ( 2) and mustoriginal paper filed with the Administrative Law includ e a statement d irectly ab ov e th e sig natureJ ud g e. ack now led g ing th at th e statements mad e in th e answ er are true and correct and th at k now ing and ( f ) Effective/applicability date. Tih s section is w illf ul f alse statements may b e punish ab le und er 1 8applicalb e be ig nning A ugus t 2, 201 .1 U .S .C. § 1 001 .§ 10.64 Answer; default. ( f ) E f f ective / applicaib lity ad te. Thi s section is applicabl e be gi nning A ugus t 2, 201 .1 ( a) Filing. The respondent’s answer must be filed § 10.65 Supplemental charges.w ith the A dm inistrative L aw J uged , and serev don teh I nternal R eve nue S ervi ce, w itih n teh time ( a) In general. Supplemental charges may be filedspecified in the complaint unless, on request or aga inst the responde nt yb amenid ng teh complaintapplication of teh responde nt, teh time is ext ened d w ith teh permission of teh A md inistrative L aw J ugdeby t eh A md inistrative L aw J udge . if , f or eax mple — ( b) Contents. Th e answ er must eb w ritten and ( )1 I t appears tha t teh responed nt, in the answ er,contain a statement of f acts tah t constitute teh f alsely and in ab d f aith, ed nies a material allega tionrespondent’s grounds of defense. General denials of f act in teh complaint or states tah t th e responed ntare not permitted. The respondent must specifically has insufficient knowledge to form a belief, when theadm it or ed ny each allega tion set f orth in teh responed nt possesses such i nf ormation; orcomplaint, ecx ept tah t teh responed nt may state tha t ( 2) I t appears tah t teh responde nt ha s know inlg yTreasury Department Circular No. 230 S-42 § 10.65 — Page 33

Table of Contentsintroud c ed f alse testimony dur ing the proceedi nsg ( 2) Summary adjudication. E iteh r party mayaga inst teh responed nt. moev f or a summary adj udi cation upon all or any part of the lega l issues in controev rsy. I f teh non- ( b) Hearing. Teh supplemental cah reg s may be moiv ng party opposes summary ajd udi cation in thehe ard w ith oteh r cha rge s in teh case, provi de d the moving party’s favor, the non-moving party mustresponed nt is ig ev n due notice of teh cha reg s and file a written response within 30 days unless orderedis af f ored d a reasonabl e opportunity to prepare a oteh rw ise yb t eh A md inistrative L aw J uegd .de f ense to teh supplemental cah rge s. ( 3) Good Faith. A party filing a motion for ( c) Effective/applicability date. Thi s section is ext ension of time, a motion f or postponement of aapplicalb e be gi nning A ugus t 2, 201 1. he aring, or any othe r non- di spositiev or procedur al motion must first contact the other party to determine§ 10.66 Reply to answer. w he teh r teh re is any ojb ection to teh motion, and must state in the motion w he the r teh oteh r party ha s (a) The Internal Revenue Service may file a reply an ojb ection.to the respondent’s answer, but unless otherwiseorde red by teh A dm inistrative L aw J ud eg , no reply ( b) Response. U nless oteh rw ise orde red yb tehto the respondent’s answer is required. If a reply is A dm inistrative L aw J ugde , teh nonmoiv ng partynot filed, new matter in the answer is deemed denied. is not required to file a response to a motion. If the A md inistrative L aw J udge doe s not ored r ( )b Effective/applicability date. Thi s section is the nonmoving party to file a response, and theapplicalb e be ig nning A ugus t 2, 201 .1 nonmoving party files no response, the nonmoving party is ed emed to oppose the motion. I f a nonmoiv ng§ 10.67 Proof; variance; amendment of pleadings. party does not respond within 30 days of the filing of a motion f or de cision yb de f ault f or f ailure toI n the case of a va riance be tw een the alleag tions in file a timely answer or for failure to prosecute, thepleaid nsg and the ev ied nce aduc ed in support of the nonmovi ng party is de emed not to oppose teh motion.pleaid nsg , teh A md inistrative L aw J udge , at any timebe f ore ed cision, may orde r or autoh r iz e amendm ent ( c) Oral motions; oral argument —of teh pleaid nsg to conf orm to teh eiv ed nce. Teh ( )1 Teh A d ministratiev L aw J udge may, f or goodparty w ho w ould othe rw ise eb prej ud iced yb tehamenmd ent must be ig ev n a reasonabl e opportunity cause and w ith notice to teh parties, permit oralto ad ress teh allega tions of the pleaid ngs as amende d motions and or al opposition to motions.and teh A md inistrative L aw J uegd must maekfindings on any issue presented by the pleadings as ( 2) Teh A dm inistrative L aw J udge may, w itih namende .d hi s or he r di scretion, permit oral arug m ent on any motion.§ 10.68 Motions and requests. ( d) Orders. Teh A dm inistratiev L aw J uedg soh ul d ( a) Motions — issue w ritten ored rs di sposing of any motion or ( )1 In general. At any time after the filing of reuq e st and a ny response the reto.the complaint, any party may file a motion with the ( e) Effective/applicability date. Tih s section isA dm inistrative L aw J ugde . U nless othe rw ise ored red applicalb e on S eptemeb r 26, 200.7by the A d ministrative L aw J uedg , motions must bein w riting and must be serev d on the opposing party § 10.69 Representation; ex parte communication.as provi ed d in 01§ .36 ( )b . A motion must conciselyspecif y its rg ounsd and the relief soutgh , an,d if ( a) Representation.appropriate, must contain a memoranud m of f acts ( 1) The I nternal R eev nue S eriv ce may eband l aw in support.Page 34 — § 10.65 represented in proceedi ng s uned r tih s part yb an attorney or oteh r employee of teh I nternal R eve nue S eriv ce. A n attorney or an employee of teh I nternal S-43 Treasury Department Circular No. 230

Table of ContentsR eev nue S eriv ce representing teh I nternal R eve nue he aring ecx ept in ex traordi nary circumstances and atS eriv ce in a proceedi ng unde r tih s part may sign teh the di scretion of teh A dm inistrative L aw J ugde ;complaint or any document required to be filed inteh proceedi ng on be ha lf of the I nternal R eev nue ( 3) Determine the time and place of eh aring andS eriv ce. regul ate its course and c onduc t; ( 2) A respond ent may appear in person, eb ( 4) A od pt rules of proceud r e and moid f y tehrepresented by a practitioner, or be represented by same f rom time to time as neeed d f or teh ored rlyan attorney who has not filed a declaration with id sposition of proceedi ngs ;the I nternal R eve nue S eriv ce pursuant to 01§ .3. Apractitioner or an attorney representing a responed nt ( )5 R ule on of f ers of proof , receive releva ntor proposed responde nt may sign teh answ er or any evi ed nce, a nd e xa mine w itnesses;document required to be filed in the proceeding oneb ha lf of the responde nt. ( )6 Take or autoh r iz e the taik ng of de positions or answ ers to reuq e sts f or adm ission; ( )b Ex parte communication. The I nternal R eev nueS ervi ce, the responde nt, and any representative s of ( )7 R eceiev and conside r oral or w ritten arug m enteiteh r party, may not attempt to initiate or participate on f acts or law ;in ex parte di scussions concerning a proceedi ng orpotential proceeid ng w ith teh A md inistratiev L aw ( 8) H old or provi de f or the oh l id ng of conf erencesJ uedg ( or any person w ho is like ly to adiv se teh for the settlement or simplification of the issues withA md inistratiev L aw J uedg on a ruling or ed cision) the consent of teh parties;in the proceedi ng be f ore or ud r ing the pende ncyof teh proceeid n.g A ny memorandum , letter or ( 9) P erf orm such acts and take such measures asoteh r communication concerning teh merits of teh are necessary or appropriate to the efficient conductproceedi n,g adr essed to the A md inistrative L aw of any proceeid n;g andJ udeg , yb or on be ah lf of any party sha ll be reag red das an arug m ent in teh proceeid ng and sah ll be serve d ( 01 ) M ake de cisions.on the oteh party. ( c) Effective/applicability date. Tih s section is applicalb e on S eptembe r 2,6 2007. ( c) Effective/applicability date. Tih s section isapplicalb e be ig nning A ugus t 2, 201 1. § 10.71 Discovery.§ 10.70 Administrative Law Judge. ( a) In general. Discove ry may be permitte,d at teh di scretion of teh A md inistrative L aw J ugde , only ( a) Appointment. P roceedi nsg on complaints f or the upon w ritten motion ed monstrating th e releav nce,sanction ( as ed scrib ed in 1§0.05 ) of a practitioner, materiality and reasonabl eness of teh reque stedemployer, firm or other entity, or appraiser will be di scoev ry and sujb ect to teh requi rements ofconud c ted yb an A md inistratiev L aw J ugd e appointed §10.27 ( d) ( 2) and ( 3) . W ithi n 10 ad ys of receipt ofas proiv ed d by 5 U.S.C. 3105. the answ er, the A md inistratiev L aw J udeg w ill notif y teh parties of the right to reque st id scoev ry and teh ( )b Powers of the Administrative Law Judge. Teh timeframe for filing a request. A request for discovery,A md inistratiev L aw J uged , among othe r pow ers, and objections, must be filed in accordance withah s th e autoh r ity, in connection w ith any proceedi ng §10.8.6 I n response to a reque st f or di scove ry, tehuned r 10§ .60 assing ed or ref erred to hi m or eh r, to od A md inistrative L aw J ugde may ored r —the f ollow in:g ( 1) Depositions upon oral eax mination; or (1) Administer oaths and affirmations; ( 2) A nsw ers to reque sts f or adm ission. ( 2) M aek ruling s on motions and reuq e sts, w hi ch ( )b Depositions upon oral examination —rulings may not be appealed prior to th e close of a (1) A deposition must be taken before an officer ud l y author iz ed to adm inister an oath f or eg neralTreasury Department Circular No. 230 purposes or before an officer or employee of the I nternal R eve nue S ervi ce w oh is autoh r iz ed to amd inister an oath i n F ede ral tax l aw matters. S-44 § 10.71 — Page 35

Table of Contents ( 2) I n ored ring a de position, the A dm inistratiev ( g) Effective/applicability date. Thi s sectionL aw J udge w ill requi re reasonabl e notice to the is applicabl e to proceeid ngs initiated on or af teropposing party as to teh time and place of teh S eptembe r 2,6 2007.de position. The opposing party, if attendi n,g w ill beproiv de d teh opportunity f or f ull exa mination and § 10.72 Hearings.cross- eax mination of any w itness. ( a) In general — ( 3) E x penses in th e reporting of d epositions ( 1) Presiding officer. A n A md inistrative L awsh all b e b orne b y th e party at w h ose instanceth e d eposition is tak en. Trav el ex penses of th e J udge w ill preside at the he aring on a complaintd eponent sh all b e b orne b y th e party req uesting th e filed under §10.60 for the sanction of a practitioner,d eposition, unless oth erw ise auth oriz ed b y F ed eral employer, firm or other entity, or appraiser.law or reg ulation. ( 2) Time for hearing. A bs ent a ed termination yb ( c) Requests for admission. A ny party may serv e the A md inistratiev L aw J uged tha t, in the intereston any oth er party a w ritten req uest f or ad mission of of j ustice, a he aring must be eh ld at a later time,th e truth of any matters w h ich are not priv ileg ed and the A dm inistrative L aw J udge soh ul ,d on noticeare relev ant to th e sub j ect matter of th is proceed ing . sufficient to allow proper preparation, schedule theR eq uests f or ad mission sh all not ex ceed a total of 30 he aring to occur no later tah n 180 da ys af ter teh time(including any subparts within a specific request) for filing the answer.w ith out th e approv al f rom th e A d ministrativ e L awJ ud g e. ( 3) Procedural requirements. ( i) H earinsg w ill be stenorg aphi cally recorde d ( d ) Limitations. Discov ery sh all not b e auth oriz ed if — ( 1) Teh reque st f ails to meet any requi rement set and transcrieb d and teh testimony of w itnesses w ill be taken under oath or affirmation.f orth i n pararg aph ( a) of thi s section; ( 2) I t w ill undul y ed lay teh proceedi ng; ( ii) H earinsg w ill be conud c ted pursuant to ( 3) I t w ill place an unud e bur de n on the party 5 U.S.C. 556.requi red t o proud c e the id scove ry souhtg ; ( iii) A eh aring in a proceed ing reuq e sted unde r ( 4) I t is f riov l ous or aub s ive ; 10§ .82( g) w ill be conud c ted ed novo. ( 5) I t is cumulatiev or dupl icatiev ; ( 6) The material souhtg is privi leeg d or oteh rw ise ( iv) A n evi ed ntiary he aring must be he ld in all proceeid ngs prior to teh issuance of a de cision by tehprotected f rom id sclosure by l aw ; A md inistrative L aw J udge unless — ( 7) The material southg relates to mental ( A ) Th e I nternal R eve nue S ervi ce w itrhd aw simpressions, conclusions, of lega l teh ories of any the complaint;party, attorney, or othe r representatiev , or a partyprepared i n teh anticipation of a proceedi n;g or ( B ) A de cision is issued yb ed f ault pursuant to §10.64( d) ; ( 8) The material souhgt is ava ilabl e eg nerallyto teh publ ic, equa lly to teh parties, or to teh party ( C) A ed cision is issued uned r §1 0.82 ( e) ;seeik ng t eh id scove ry thr ough a nothe r source. ( D) Teh responed nt reuq e sts a ed cision on teh w ritten record w itoh ut a he arin;g or ( e) Failure to comply. W h ere a party f ails to comply ( E ) Teh A md inistrative L aw J udge issues aw ith an ord er of th e A d ministrativ e L aw J ud g e und er de cision unde r 0§1 .68( d) or rules on anoteh r motionth is section, th e A d ministrativ e L aw J ud g e may, among tha t di sposes of teh case prior to the eh arin.goth er th ing s, inf er th at th e inf ormation w ould b e ad v erse ( )b Cross-examination. A party is entitled to presentto th e party f ailing to prov id e it, ex clud e th e inf ormation hi s or he r case or de f ense yb oral or d ocumentaryf rom ev id ence or issue a d ecision b y d ef ault. evi de nce, to sumb it rebut tal eiv ed nce, and to conud c t cross- eax mination, in the presence of teh ( f ) Other discovery. No di scoev ry othe r tha n tah t A md inistrative L aw J udeg , as may be reuq i redspecifically provided for in this section is permitted. f or a f ull and true id sclosure of the f acts. Thi s S-45 Treasury Department Circular No. 230Page 36 — § 10.71

Table of Contentsparagr aph ( b) od e s not limit a party f rom presenting proceed ing and only to th e ex tent th at th e S ecretaryevi ed nce contained w ithi n a de position w eh n the of th e Treasury, or d eleg ate, d etermines th at th eA dm inistrative L aw J udge ed termines tha t teh returns or return inf ormation are or may b e relev antd eposition h as b een ob tained in compliance w ith th e and material to th e action or proceed ing .rules of th is sub part D. ( ii) Disclosure to officers and employees of ( c) Prehearing memorandum. U nless oteh rw ise the Department of the Treasury. P ursuant to sectionorde red yb teh A dm inistratiev L aw J uegd , each party 6103(l)(4)(B) of the Internal Revenue Code th eshall file, and serve on the opposing party or the S ecretary of th e Treasury, or d eleg ate, may d iscloseopposing party’s representative, prior to any hearing, returns and return information to officers anda preeh aring m emoranud m containing — employees of th e Department of th e Treasury f or use in any action or proceed ing und er th is sub part ( 1) A list ( toeg teh r w ith a copy) of all proposed D, to th e ex tent necessary to ad v ance or protect th eexhibits to be used in the party’s case in chief; interests of th e U nited S tates. ( 2) A list of proposed w itnesses, incluid ng a ( iii) Use of returns and return information.synopsis of the ir ex pected testimony, or a statement R ecipients of returns and return inf ormation und ertha t no w itnesses w ill eb called; th is parag raph ( d ) ( 3) may use th e returns or return inf ormation solely in th e action or proceed ing , or (3) Identification of any proposed expert in preparation f or th e action or proceed ing , w ithw itnesses, includi ng a synopsis of the ir epx e cted respect to w h ich th e d isclosure w as mad e.testimony and a copy of any report prepared yb theexpe rt or at ih s or eh r di rection; and ( iv ) Procedures for disclosure of returns and return information. W h en prov id ing returns or ( 4) A list of und isputed f acts. return inf ormation to th e practitioner or appraiser, ( )d Publicity — or auth oriz ed representativ e, th e S ecretary of th e Treasury, or d eleg ate, w ill — ( 1 ) In general. A ll reports and d ecisions of th eS ecretary of th e Treasury, or d eleg ate, includ ing ( A ) R ed act id entif ying inf ormation of anyany reports and d ecisions of th e A d ministrativ e th ird party tax payers and replace it w ith a cod e;L aw J ud g e, und er th is sub part D are, sub j ect toth e protectiv e measures in parag raph ( d ) ( 4 ) of th is ( B ) P rov id e a k ey to th e cod ed inf ormation;section, pub lic and open to inspection w ith in 30 anddays after the agency’s decision becomes final. ( C) Notif y th e practitioner or appraiser, or ( 2) Request for additional publicity. The auth oriz ed representativ e, of th e restrictions onA md inistrative L aw J uged may rg ant a requ est by th e use and d isclosure of th e returns and returna practitioner or appraiser tah t all teh pleadi nsg and inf ormation, th e applicab le d amag es remed yevi de nce of teh d isciplinary proceeid ng be made und er section 7431 of the Internal Revenue Code,ava ilabl e f or inspection w eh re teh parties stipulate and th at unauth oriz ed d isclosure of inf ormationin aavd nce to ado pt teh protectiev measures in prov id ed b y th e I nternal R ev enue S erv ice und erparagr aph ( )d ( 4) of thi s section. th is parag raph ( d ) ( 3) is also a v iolation of th is part. ( 3) Returns and return information — ( 4 ) Protective measures — ( i) Disclosure to practitioner or appraiser. ( i) Mandatory protection order. I f red action ofP ursuant to section 6103(l)(4) of the Internal names, ad d resses, and oth er id entif ying inf ormationRevenue Code, th e S ecretary of th e Treasury, of th ird party tax payers may still permit ind irector d eleg ate, may d isclose returns and return identification of any third party taxpayer, theinf ormation to any practitioner or appraiser, or to A d ministrativ e L aw J ud g e w ill issue a protectiv eth e auth oriz ed representativ e of th e practitioner ord er to ensure th at th e id entif ying inf ormation isor appraiser, w h ose rig h ts are or may b e af f ected av ailab le to th e parties and th e A d ministrativ e L awb y an ad ministrativ e action or proceed ing und er J ud g e f or purposes of th e proceed ing , b ut is notth is sub part D, b ut solely f or use in th e action or S-46 § 10.72 — Page 37Treasury Department Circular No. 230

Table of Contentsd isclosed to, or open to inspection b y, th e pub lic. § 10.73 Evidence. ( ii) Authorized orders. ( A ) U pon motion b y a party or any oth er ( a) In general. Th e rules of ev id ence prev ailing in courts of law and eq uity are not controlling inaf f ected person, and f or g ood cause sh ow n, th e h earing s or proceed ing s cond ucted und er th is part.A d ministrativ e L aw J ud g e may mak e any ord er Th e A d ministrativ e L aw J ud g e may, h ow ev er,w h ich j ustice req uires to protect any person in th e ex clud e ev id ence th at is irrelev ant, immaterial, orev ent d isclosure of inf ormation is proh ib ited b y law , und uly repetitious.privileged, confidential, or sensitive in some otherw ay, includ ing , b ut not limited to, one or more of ( b ) Depositions. Th e d eposition of any w itnessth e f ollow ing — tak en pursuant to § 1 0.7 1 may b e ad mitted into ev id ence in any proceed ing instituted und er § 1 0.6 0. ( 1 ) Th at d isclosure of inf ormation b e mad eonly on specified terms and conditions, including a ( c) Requests for admission. A ny matter ad mittedd esig nation of th e time or place; in response to a req uest f or ad mission und er § 1 0.7 1 is conclusiv ely estab lish ed unless th e ( 2) Th at a trad e secret or oth er inf ormation A d ministrativ e L aw J ud g e on motion permitsnot b e d isclosed , or b e d isclosed only in a d esig nated withdrawal or modification of the admission. Anyw ay. ad mission mad e b y a party is f or th e purposes of th e pend ing action only and is not an ad mission b y ( iii) Denials. I f a motion f or a protectiv e ord er a party f or any oth er purpose, nor may it b e usedis d enied in w h ole or in part, th e A d ministrativ e ag ainst a party in any oth er proceed ing .L aw J ud g e may, on such terms or cond itions asth e A d ministrativ e L aw J ud g e d eems j ust, ord er ( d ) Proof of documents. Official documents,any party or person to comply w ith , or respond in record s, and papers of th e I nternal R ev enue S erv iceaccord ance w ith , th e proced ure inv olv ed . and the Office of Professional Responsibility are ad missib le in ev id ence w ith out th e prod uction of ( iv ) Public inspection of documents. Th e an officer or employee to authenticate them. AnyS ecretary of th e Treasury, or d eleg ate, sh all ensure d ocuments, record s, and papers may b e ev id encedth at all names, ad d resses or oth er id entif ying d etails by a copy attested to or identified by an officer orof th ird party tax payers are red acted and replaced employee of th e I nternal R ev enue S erv ice or th ew ith th e cod e assig ned to th e correspond ing tax payer Treasury Department, as th e case may b e.in all d ocuments prior to pub lic inspection of suchd ocuments. ( e) Withdrawal of exhibits. I f any d ocument, record , or oth er paper is introd uced in ev id ence ( e) Location. Th e location of th e h earing w ill b e as an ex h ib it, th e A d ministrativ e L aw J ud g e mayd etermined b y th e ag reement of th e parties w ith th e auth oriz e th e w ith d raw al of th e ex h ib it sub j ect toapprov al of th e A d ministrativ e L aw J ud g e, b ut, in any cond itions th at h e or sh e d eems proper.th e ab sence of such ag reement and approv al, th eh earing w ill b e h eld in W ash ing ton, D.C. ( f ) Objections. O b j ections to ev id ence are to b e mad e in sh ort f orm, stating th e g round s f or th e ( f ) Failure to appear. I f eith er party to th e ob j ection. E x cept as ord ered b y th e A d ministrativ eproceed ing f ails to appear at th e h earing , af ter L aw J ud g e, arg ument on ob j ections w ill not b enotice of th e proceed ing h as b een sent to h im or h er, record ed or transcrib ed . R uling s on ob j ectionsth e party w ill b e d eemed to h av e w aiv ed th e rig h t are to b e a part of th e record , b ut no ex ception toto a h earing and th e A d ministrativ e L aw J ud g e may a ruling is necessary to preserv e th e rig h ts of th emak e h is or h er d ecision ag ainst th e ab sent party b y parties.d ef ault. ( g ) Effective/applicability date. Th is section is ( g ) Effective/applicability date. Th is section is applicab le on S eptemb er 26 , 2007 .applicab le b eg inning A ug ust 2, 201 1 .Page 38 — § 10.72 S-47 Treasury Department Circular No. 230

Table of Contents§ 10.74 Transcript. response, or if no written response is filed, within 9 0 d ays af ter th e motion f or summary ad j ud icationI n cases w h ere th e h earing is stenog raph ically is filed. A decision shall thereafter be rendered ifreported b y a G ov ernment contract reporter, copies th e plead ing s, d epositions, ad missions, and anyof th e transcript may b e ob tained f rom th e reporter oth er ad missib le ev id ence sh ow th at th ere is noat rates not to exceed the maximum rates fixed by g enuine issue of material f act and th at a d ecisioncontract b etw een th e G ov ernment and th e reporter. may b e rend ered as a matter of law . Th e d ecisionW h ere th e h earing is stenog raph ically reported b y a must includ e a statement of conclusions, as w ell asreg ular employee of th e I nternal R ev enue S erv ice, th e reasons or b asis f or mak ing such conclusions,a copy w ill b e supplied to th e respond ent eith er and an ord er of censure, suspension, d isb arment,w ith out ch arg e or upon th e payment of a reasonab le monetary penalty, disqualification, or dismissal off ee. Copies of ex h ib its introd uced at th e h earing or th e complaint.at th e tak ing of d epositions w ill b e supplied to th eparties upon th e payment of a reasonab le f ee ( S ec. ( 3) Returns and return information. I n th e5 01 , P ub lic L aw 8 2- 1 37 ) ( 6 5 S tat. 29 0) ( 31 U .S .C. d ecision, th e A d ministrativ e L aw J ud g e sh ould§ 4 8 3a) . use th e cod e assig ned to th ird party tax payers ( d escrib ed in § 1 0.7 2( d ) ) .§ 10.75 Proposed findings and conclusions ( b ) Standard of proof. I f th e sanction is censure orE xc ept in cases w eh re the responde nt ha s f ailed to a suspension of less than six months’ duration, theansw er teh complaint or w eh re a party ha s f ailed to Administrative Law Judge, in rendering findingsappear at the he arin,g teh parties must be af f orde d a and conclusions, w ill consid er an alleg ation of f actreasonable opportunity to submit proposed findings to b e prov en if it is estab lish ed b y th e party w h o isand conclusions and the ir supporting reasons to the alleg ing th e f act b y a prepond erance of th e ev id enceA md inistrative L aw J udge . in th e record . I f th e sanction is a monetary penalty, d isb arment or a suspension of six month s or long er§ 10.76 Decision of Administrative Law Judge. d uration, an alleg ation of f act th at is necessary f or a finding against the practitioner must be proven ( a) In general — b y clear and conv incing ev id ence in th e record . ( 1 ) Hearings. W ith in 1 8 0 d ays af ter th e An allegation of fact that is necessary for a finding of disqualification against an appraiser must beconclusion of a h earing and th e receipt of any prov ed b y clear and conv incing ev id ence in th eproposed findings and conclusions timely record .sub mitted b y th e parties, th e A d ministrativ e L awJ ud g e sh ould enter a d ecision in th e case. Th e ( c) Copy of decision. Th e A d ministrativ e L awdecision must include a statement of findings J ud g e w ill prov id e th e d ecision to th e I nternaland conclusions, as w ell as th e reasons or b asis Revenue Service’s authorized representative, andfor making such findings and conclusions, and a copy of th e d ecision to th e respond ent or th ean ord er of censure, suspension, d isb arment, respondent’s authorized representative.monetary penalty, disqualification, or dismissal ofth e complaint. ( d ) When final. I n th e ab sence of an appeal to th e S ecretary of th e Treasury or d eleg ate, th e d ecision ( 2) Summary adjudication. I n th e ev ent th at of th e A d ministrativ e L aw J ud g e w ill, w ith outa motion for summary adjudication is filed, the f urth er proceed ing s, b ecome th e d ecision of th eA d ministrativ e L aw J ud g e sh ould rule on th e ag ency 30 d ays af ter th e d ate of th e A d ministrativ emotion f or summary ad j ud ication w ith in 6 0 Law Judge’s decision.days after the party in opposition files a written ( e) Effective/applicability date. Th is section isTreasury Department Circular No. 230 applicab le b eg inning A ug ust 2, 201 1 . S-48 § 10.76 — Page 39

Table of Contents§ 10.77 Appeal of decision of Administrative Law th e S ecretary of th e Treasury, or d eleg ate d ecid ingJudge. appeals. ( a) Appeal. A ny party to th e proceed ing und er ( f ) Effective/applicability date. Th is section isth is sub part D may appeal th e d ecision of th e applicab le b eg inning A ug ust 2, 201 1 .Administrative Law Judge by filing a notice ofappeal w ith th e S ecretary of th e Treasury, or d eleg ate § 10.78 Decision on review.d ecid ing appeals. Th e notice of appeal must includ ea b rief th at states ex ceptions to th e d ecision of ( a) Decision on review. O n appeal f rom or revi ewA d ministrativ e L aw J ud g e and supporting reasons of teh ed cision of the A dm inistrative L aw J uedg , tehf or such ex ceptions. S ecretary of the Treasury, or de lega te, w ill make teh age ncy de cision. Th e S ecretary of teh Treasury, or ( b ) Time and place for filing of appeal. Th e notice ed lega te, shoul d maek teh aeg ncy ed cision w itih nof appeal and brief must be filed, in duplicate, with 180 ad ys af ter receipt of teh appealth e S ecretary of th e Treasury, or d eleg ate d ecid ingappeals, at an address for appeals that is identified ( b) Standard of review. Teh de cision of tehto th e parties w ith th e d ecision of th e A d ministrativ e A md inistratiev L aw J ugde w ill not eb reve rsed unlessL aw J ud g e. Th e notice of appeal and b rief must b e the appellant establ ishe s tah t the de cision is clearlyfiled within 30 days of the date that the decision erroneous in lithg of the evi ed nce in the record andof th e A d ministrativ e L aw J ud g e is serv ed on th e applicabl e law . I ssues tha t are exc lusiev ly matters ofparties. Th e appealing party must serv e a copy law w ill eb revi ew ed ed novo. I n teh eve nt tha t theof th e notice of appeal and th e b rief to any non S ecretary of teh Treasury, or de lega te, de terminesappealing party or, if th e party is represented , th e tha t teh re are unresolev d issues raised yb the record,non-appealing party’s representative. the case may be remaned d to teh A dm inistrative L aw J ugde to elicit adi tional testimony or eiv ed nce. ( c) Response. W ith in 30 d ays of receiv ing th ecopy of the appellant’s brief, the other party ( c) Copy of decision on review. The S ecretary ofmay file a response brief with the Secretary of the Treasury, or de lega te, w ill provi ed copies of tehth e Treasury, or d eleg ate d ecid ing appeals, using age ncy ed cision to teh author iz ed representatiev ofthe address identified for appeals. A copy of the teh I nternal R eve nue S ervi ce and teh responed nt orresponse b rief must b e serv ed at th e same time on the respondent’s authorized representative.th e opposing party or, if th e party is represented ,the opposing party’s representative. ( )d Effective/applicability date. Tih s section is applicalb e eb gi nning A uug s t 2, 201 .1 ( d ) No other briefs, responses or motions as ofright. O th er th an th e appeal b rief and response § 10.79 Effect of disbarment, suspension, or censure.b rief , th e parties are not permitted to file any otherb rief s, responses or motions, ex cept on a g rant of ( a) Disbarment. When the final decision in a caseleave to do so after a motion demonstrating sufficient is aga inst the responde nt ( or teh responed nt ha scause, or unless oth erw ise ord ered b y th e S ecretary of f ered hi s or eh r consent and s uch c onsent ha s be enof th e Treasury, or d eleg ate d ecid ing appeals. accepted yb the I nternal R eev nue S eriv ce) and such de cision is f or di sba rment, the responed nt w ill not ( e) Additional time for briefs and responses. be permitted to practice be f ore the I nternal R eev nueNotwithstanding the time for filing briefs and S ervi ce unless and until author iz ed to od so by tehresponses prov id ed in parag raph s ( b ) and ( c) of th is I nternal R eve nue S eriv ce pursuant to §01 .1.8section, th e S ecretary of th e Treasury, or d eleg ated ecid ing appeals, may, f or g ood cause, auth oriz e ( )b Suspension. When the final decision in a caseadditional time for filing briefs and responses is aag inst teh responed nt ( or teh responde nt ha supon a motion of a party or upon th e initiativ e of of f ered ih s or he r consent and such consent ha s eb en accepted yb teh I nternal R eve nue S eriv ce)Page 40 — § 10.77 S-49 Treasury Department Circular No. 230

Table of Contentsand such de cision is f or suspension, the responed nt de termine teh manner of gi vi ng notice to the properw ill not be permitted to practice be f ore teh I nternal autoh r ities of the S tate by w hi ch teh censured,R eev nue S eriv ce dur ing teh period of suspension. suspende ,d or di sab rred person w as licensed toFor periods after the suspension, the practitioner’s practice.f uture representations may be sujb ect to cond itionsas author iz ed yb pa ragr aph ( )d of thi s section. ( b) Effective/applicability date. Tih s section is applicalb e eb ig nning A ugus t 2, 201 .1 ( c) Censure. When the final decision in the caseis aag inst teh responed nt ( or teh I nternal R eev nue § 10.81 Petition for reinstatement.Service has accepted the respondent’s offer toconsent, if such of f er w as maed ) and such ed cision ( a) In general. A practitioner d isb arred oris f or censure, teh responde nt w ill be permitted topractice eb f ore the I nternal R eev nue S eriv ce, ub t teh suspend ed uned r 01§ .06 , or suspened d uned rrespondent’s future representations may be subjectto condi tions as autoh r iz ed yb paragr aph ( d) of thi s §10.82, or a disqualified appraiser may petitionsection. f or reinstatement eb f ore teh I nternal R eev nue ( d ) Conditions. A f ter b eing sub j ect to th esanction of eith er suspension or censure, th e f uture S eriv ce af ter teh expi ration of 5 years f ollow ingrepresentations of a practitioner so sanctionedshall be subject to specified conditions designed such disbarment, suspension, or disqualificationto promote h ig h stand ard s of cond uct. Th esecond itions can b e imposed f or a reasonab le ( or immeid ately f ollow ing the epx i ration of theperiod in light of the gravity of the practitioner’sv iolations. F or ex ample, w h ere a practitioner is suspension or disqualification period, if shorter thancensured b ecause th e practitioner f ailed to ad v isethe practitioner’s clients about a potential conflict 5 years) . R einstatement w ill not eb gr anted unlessof interest or failed to obtain the clients’ writtenconsents, th e practitioner may b e req uired to the Internal Revenue Service is satisfied that theprov id e th e I nternal R ev enue S erv ice w ith a copyof all consents ob tained b y th e practitioner f or an petitioner is not liek ly to enga eg the reaf ter in conduc tappropriate period f ollow ing censure, w h eth er ornot such consents are specifically requested. contrary to teh reug l ations in thi s part, and tha t ( e) Effective/applicability date. Tih s section is rg anting such reinstatement w ould not eb contrary toapplicalb e be ig nning A uug s t 2, 201 .1 the pulb ic interest.§ 10.80 Notice of disbarment, suspension, censure,or disqualification ( )b Effective/applicability date. Thi s section is ( a) In general. On the issuance of a final order applicalb e be ig nning J une 12, 2041.censurin,g suspenid ng, or id sba rring a practitioner ora final order disqualifying an appraiser, notification § 10.82 Expedited suspension.of teh censure, suspension, di sab rment ordisqualification will be given to appropriate officers ( a) When applicable. W eh neev r teh Commissioner,and employees of teh I nternal R eev nue S ervi ce and or d eleg ate, d etermines th at a practitioner isinterested ed partments and age ncies of the F ede ral d escrib ed in parag raph ( b ) of th is section, th egoev rnment. The I nternal R eve nue S eriv ce may ex ped ited proced ures d escrib ed in th is section may b e used to suspend th e practitioner f rom practiceTreasury Department Circular No. 230 b ef ore th e I nternal R ev enue S erv ice. ( b ) To whom applicable. Th is section applies to any practitioner w h o, w ith in 5 years prior to th e date that a show cause order under this section’s ex ped ited suspension proced ures is serv ed : ( 1 ) H as h ad a license to practice as an attorney, certified public accountant, or actuary suspended or rev ok ed f or cause ( not includ ing a f ailure to pay a prof essional licensing f ee) b y any auth ority or court, ag ency, b od y, or b oard d escrib ed in § 1 0.5 1 ( a) ( 1 0) . ( 2) H as, irrespectiv e of w h eth er an appeal h as b een tak en, b een conv icted of any crime und er title S-50 § 10.82 — Page 41

Table of Contents26 of th e U nited S tates Cod e, any crime inv olv ing (1) Of the place and due date for filing ad ish onesty or b reach of trust, or any f elony f or w h ich response;the conduct involved renders the practitioner unfitto practice b ef ore th e I nternal R ev enue S erv ice. ( 2) Th at an ex ped ited suspension d ecision b y d ef ault may b e rend ered if th e respond ent f ails to ( 3) H as v iolated cond itions imposed on th e file a response as required;practitioner pursuant to § 1 0.7 9 ( d ) . ( 3) Th at th e respond ent may req uest a conf erence ( 4 ) H as b een sanctioned b y a court of competent to ad d ress th e merits of th e sh ow cause ord er andj urisd iction, w h eth er in a civ il or criminal th at any such req uest must b e mad e in th e response;proceed ing ( includ ing suits f or inj unctiv e relief ) , andrelating to any taxpayer’s tax liability or relating tothe practitioner’s own tax liability, for — ( 4 ) Th at th e respond ent may b e suspend ed eith er immed iately f ollow ing th e ex piration of th e ( i) I nstituting or maintaining proceed ing s period within which a response must be filed or, if aprimarily f or d elay; conf erence is req uested , immed iately f ollow ing th e conf erence. ( ii) A d v ancing f riv olous or g round lessarg uments; or ( d ) Response. Th e response to th e sh ow cause ord er described in this section must be filed no later than ( iii) F ailing to pursue av ailab le ad ministrativ e 30 calend ar d ays f ollow ing th e d ate th e sh ow causeremed ies. order is served, unless the time for filing is extended. The response must be filed in accordance with the ( 5) H as ed monstrated a pattern of w illf ul rules set f orth f or answ ers to a complaint in § 1 0.6 4 ,id sreputabl e conud c t by — ex cept as oth erw ise prov id ed in th is section. Th e response must includ e a req uest f or a conf erence, if ( i) F ailing to maek an annual F ede ral tax return, a conf erence is d esired . Th e respond ent is entitledin iv olation of teh F ede ral tax law s, ud r ing 4 of teh to th e conf erence only if th e req uest is mad e in a5 tax years immedi ately precedi ng the institution of timely filed response.a proceeid ng unde r pararg aph ( c) of thi s section andremains noncompliant with any of the practitioner’s ( e) Conference. A n auth oriz ed representativ eFederal tax filing obligations at the time the notice of th e I nternal R ev enue S erv ice w ill presid eof suspension is issued unde r paragr aph ( f ) of tih s at a conf erence d escrib ed in th is section. Th esection; or conf erence w ill b e h eld at a place and time selected b y th e I nternal R ev enue S erv ice, b ut no sooner ( ii) F ailing to mak e a return req uired more th an 1 4 calend ar d ays af ter th e d ate b y w h ich th ef req uently th an annually, in v iolation of th e response must be filed with the Internal RevenueF ed eral tax law s, d uring 5 of th e 7 tax period s S erv ice, unless th e respond ent ag rees to an earlierimmed iately preced ing th e institution of a d ate. A n auth oriz ed representativ e may representproceed ing und er parag raph ( c) of th is section and th e respond ent at th e conf erence.remains noncompliant with any of the practitioner’sFederal tax filing obligations at the time the notice ( f ) Suspension—of suspension is issued und er parag raph ( f ) of th is ( 1) In general. The Commissioner, or de leag te,section. may suspend teh responed nt f rom practice eb f ore ( c) Expedited suspension procedures. A suspension the I nternal R eve nue S eriv ce yb a w ritten notice ofund er th is section w ill b e proposed b y a sh ow cause epx e di ted s uspension immeid ately f ollow in:gord er th at names th e respond ent, is sig ned b y anauth oriz ed representativ e of th e I nternal R ev enue ( i) Teh epx i ration of teh period w itih n w ih ch aS erv ice und er § 1 0.6 9 ( a) ( 1 ) , and serv ed accord ing response to a show cause order must be filed if theto th e rules set f orth in § 1 0.6 3( a) . Th e sh ow cause respondent does not file a response as required byord er must g iv e a plain and concise d escription paragr aph ( )d of tih s section;of th e alleg ations th at constitute th e b asis f or th eproposed suspension. Th e sh ow cause ord er mustnotif y th e respond ent —Page 42 — § 10.82 S-51 Treasury Department Circular No. 230

Table of Contents ( ii) The conf erence de scrieb d in pararg aph ( e) Subpart E — General Provisionsof this section if the Internal Revenue Service findstha t the responde nt is de scrieb d in pararg aph ( b) of § 10.90 Records.thi s section; or ( a) Roster. Th e I nternal R ev enue S erv ice w ill (iii) The respondent’s failure to appear, either maintain and mak e av ailab le f or pub lic inspectionpersonally or trh oug h an autoh r iz ed representatiev , in th e time and manner prescrib ed b y th e S ecretary,at a conf erence sch eud l ed yb teh I nternal R eve nue or d eleg ate, th e f ollow ing rosters —S eriv ce unde r pararg aph ( e) of thi s section. (1) Individuals (and employers, firms, or other ( 2) Duration of suspension. A suspension uned r entities, if applicab le) censured , suspend ed , orthi s section w ill commence on teh ad te tah t teh d isb arred f rom practice b ef ore th e I nternal R ev enuew ritten notice of epx e di ted suspension is serev d S erv ice or upon w h om a monetary penalty w ason th e practitioner, eiteh r personally or trh ouhg imposed .an autoh r iz ed representatiev . The suspension w illremain ef f ective until teh earlier of : ( 2) E nrolled ag ents, includ ing ind iv id uals — ( i) G ranted activ e enrollment to practice; ( i) Teh ad te th e I nternal R eve nue S ervi ce lif ts ( ii) W h ose enrollment h as b een placed inthe suspension af ter de termining tah t teh practitioneris no longe r de scribe d in paragr aph ( )b of tih s section inactiv e status f or f ailure to meet th e req uirementsor f or any othe r reason; or f or renew al of enrollment; ( ii) Teh ad te teh suspension is lif ted or ( iii) W h ose enrollment h as b een placed inotherwise modified by an Administrative Law Judge inactiv e retirement status; andor the S ecretary of teh Treasury, or de leg ate de cidi ngappeals, in a proceed ing ref erred to in pararg aph ( )g ( iv ) W h ose of f er of consent to resig n f romof tih s section and i nstituted unde r 01§ .06 . enrollment h as b een accepted b y th e I nternal R ev enue S erv ice und er § 1 0.6 1 . ( g ) Practitioner demand for §10.60 proceeding. I fth e I nternal R ev enue S erv ice suspend s a practitioner ( 3) E nrolled retirement plan ag ents, includ ingund er th e ex ped ited suspension proced ures d escrib ed ind iv id uals —in th is section, th e practitioner may d emand th atth e I nternal R ev enue S erv ice institute a proceed ing ( i) G ranted activ e enrollment to practice;und er § 1 0.6 0 and issue th e complaint d escrib ed in ( ii) W h ose enrollment h as b een placed in§10.62. The demand must be in writing, specifically inactiv e status f or f ailure to meet th e req uirementsref erence th e suspension action und er § 1 0.8 2, and f or renew al of enrollment;b e mad e w ith in 2 years f rom th e d ate on w h ich th e ( iii) W h ose enrollment h as b een placed inpractitioner’s suspension commenced. The Internal inactiv e retirement status; andR ev enue S erv ice must issue a complaint d emand ed ( iv ) W h ose of f er of consent to resig n f romund er th is parag raph ( g ) w ith in 6 0 calend ar d ays enrollment h as b een accepted und er § 1 0.6 1 .of receiv ing th e d emand . I f th e I nternal R ev enue ( 4 ) R eg istered tax return preparers, includ ingS erv ice d oes not issue such complaint w ith in 6 0 d ays ind iv id uals —of receiv ing th e d emand , th e suspension is lif ted ( i) A uth oriz ed to prepare all or sub stantially allautomatically. Th e preced ing sentence d oes not, of a tax return or claim f or ref und ;h ow ev er, preclud e th e Commissioner, or d eleg ate, ( ii) W h o h av e b een placed in inactiv e status f orf rom instituting a reg ular proceed ing und er § 1 0.6 0 f ailure to meet th e req uirements f or renew al;of th is part. ( iii) W h o h av e b een placed in inactiv e retirement status; and ( h ) Effective/applicability date. Th is section is ( iv ) W h ose of f er of consent to resig n f romg enerally applicab le b eg inning J une 1 2, 201 4 , th eir status as a reg istered tax return preparer h asex cept th at parag raph s ( b ) ( 1 ) th roug h ( 4 ) of th is b een accepted b y th e I nternal R ev enue S erv icesection are applicab le b eg inning A ug ust 2, 201 1 . und er § 1 0.6 1 . S-52 § 10.90 — Page 43Treasury Department Circular No. 230

(5) Disqualified appraisers. Table of Contents (6) Qualified continuing education providers,includ ing prov id ers — § 10.92 Special orders. ( i) W h o h av e ob tained a q ualif ying continuing Th e S ecretary of th e Treasury reserv es th e pow er toed ucation prov id er numb er; and issue such special ord ers as h e or sh e d eems proper in any cases w ith in th e purv iew of th is part. ( ii) W h ose q ualif ying continuing ed ucationnumb er h as b een rev ok ed f or f ailure to comply w ith § 10.93 Effective date.th e req uirements of th is part. E x cept as oth erw ise prov id ed in each section and ( b ) Other records. O th er record s of th e Director S ub j ect to § 1 0.9 1 , P art 1 0 is applicab le on J uly 26 ,of the Office of Professional Responsibility may be 2002.disclosed upon specific request, in accordance withth e applicab le law . J onh D alrymple, Deputy Commissioner f or S ervi ces and E nf orcement ( c) Effective/applicability date. Th is section isapplicab le b eg inning A ug ust 2, 201 1 . A pproev :d J une 3, 2014 Crh istopeh r J . M eaed ,§ 10.91 Saving provision. G eneral CounselA ny proceed ing instituted und er th is part prior to [ F R Doc. 2041- 31 739 F iled 0/6 09/ 2041 at :4 15 pm;June 12, 2014, for which a final decision has not been P ulb ication Date: 0/6 12/ 2014]reach ed or f or w h ich j ud icial rev iew is still av ailab leis not af f ected b y th ese rev isions. A ny proceed ingund er th is part b ased on cond uct eng ag ed in prior toJ une 1 2, 201 4 , w h ich is instituted af ter th at d ate, w illapply sub part D and E of th is part as rev ised , b utth e cond uct eng ag ed in prior to th e ef f ectiv e d ate ofth ese rev isions w ill b e j ud g ed b y th e reg ulations inef f ect at th e time th e cond uct occurred .Page 44 — § 10.90 S-53 Treasury Department Circular No. 230

Subchapter S-Corporationfrom Start-Up to Operation to Liquidation NATIONAL SOCIETY OF TAX PROFESSIONALS Service to the Tax Profession Since 1985

26 CFR 601.105: Examination of returns and claims for refund, credit or abatement;determination of correct tax liability.(Also: Part I, §§ 1361, 1362; 1.1361-1, 1.1361-3, 1.1362-4, 1.1362-6, 301.7701-3,301.9100-1, 301.9100-3.)Rev. Proc. 2013-30SECTION 1. PURPOSE This revenue procedure facilitates the grant of relief to taxpayers that requestrelief previously provided in numerous other revenue procedures by consolidating theprovisions of those revenue procedures into one revenue procedure and extendingrelief in certain circumstances. This revenue procedure modifies and supersedes Rev.Proc. 2003-43, 2003-1 C.B. 998; Rev. Proc. 2004-48, 2004-2 C.B. 172; and Rev. Proc.2007-62, 2007-2 C.B. 786 for taxpayers to make late S corporation elections, ElectingSmall Business Trust (ESBT) elections, Qualified Subchapter S Trust (QSST) elections,Qualified Subchapter S Subsidiary (QSub) elections, and late corporate classificationelections which the taxpayer intended to take effect on the same date that the taxpayerintended that an S corporation election for the entity should take effect. This revenueprocedure also incorporates certain relief provisions included in Rev. Proc. 97-48, 1997-2 C.B. 521, and supersedes the relief provided in Situation 1 of Rev. Proc. 97-48. Thisrevenue procedure obsoletes the relief provided in Situation 2 of Rev. Proc. 97-48

2because such relief is no longer available. Furthermore, this revenue procedureincorporates certain relief provisions included in Rev. Proc. 2004-49, 2004-2 C.B. 210,and modifies and supersedes the relief provided in sections 4.01 and 4.02 of Rev. Proc.2004-49. This revenue procedure obsoletes the relief provided in section 4.03 of Rev.Proc. 2004-49 because the time period for its narrow scope of relief has expired. This revenue procedure provides the exclusive simplified methods for taxpayersto request relief for late S corporation elections, ESBT elections, QSST elections, QSubelections, and late corporate classification elections which the taxpayer intended to takeeffect on the same date that the taxpayer intended that an S corporation election for theentity should take effect. This revenue procedure provides relief if the taxpayer satisfiesthe general requirements of Section 4 and the specific requirements applicable to thattaxpayer under Sections 5 through 7 of this revenue procedure. Accompanying thisdocument is a flowchart designed to aid taxpayers in applying this revenue procedure.SECTION 2. BACKGROUND .01 S Corporation Elections. (1) In General. Section 1361(a)(1) of the Internal Revenue Code (Code) providesthat the term \"S corporation\" means, with respect to any taxable year, a small businesscorporation for which an election under § 1362(a) is in effect for that year. Section 1362(b)(1) provides that a small business corporation may make anelection to be an S corporation for any taxable year (A) at any time during the precedingtaxable year, or (B) at any time during the taxable year and on or before the 15th day ofthe 3rd month of the taxable year. Section 1.1362-6(a)(2) of the Income Tax

3Regulations provides that a small business corporation makes an election to be an Scorporation by filing a completed Form 2553, Election by a Small Business Corporation. Under § 1362(b)(3), if an S corporation election is made after the 15th day of the3rd month of the taxable year and on or before the 15th day of the 3rd month of thefollowing taxable year, then the S corporation election is treated as made for thatfollowing taxable year. (2) Late S Corporation Elections. Section 1362(b)(5) provides that if (A) anelection under § 1362(a) is made for any taxable year (determined without regard to§ 1362(b)(3)) after the date prescribed by § 1362(b) for making the election for thetaxable year, or no election is made for any taxable year, and (B) the Secretarydetermines that there was reasonable cause for the failure to timely make the election,the Secretary may treat the election as timely made for the taxable year (and§ 1362(b)(3) shall not apply). Rev. Proc. 97-48 and Rev. Proc. 2003-43 provide simplified methods fortaxpayers to request relief for a late S corporation election in certain circumstances. .02 ESBT and QSST Elections. (1) In General. Section 1361(b)(1)(B) limits the permitted shareholders of an Scorporation to domestic individuals, estates, certain trusts, and certain exemptorganizations. Section 1361(d)(1)(A) provides that a QSST is a permitted S corporationshareholder if the beneficiary of the QSST makes an election under § 1361(d)(2). AQSST is defined in § 1361(d)(3) as a trust that (1) distributes or is required to distribute

4all of its income to a citizen or resident of the United States, (2) has certain trust terms,including the requirement that there be only one income beneficiary, (3) does notdistribute any portion of the trust corpus to anyone other than the current incomebeneficiary during the income beneficiary's lifetime, including the time at which the trustterminates, and (4) the income interest of the current income beneficiary ceases on theearlier of such beneficiary's death or the termination of the trust. Section 1361(d)(1)provides, in pertinent part, that in the case of a QSST with respect to which abeneficiary makes an election under § 1361(d)(2): (A) the trust is treated as owned by acitizen or resident of the United States, and (B) for purposes of § 678(a), the beneficiaryof the trust is treated as the owner of that portion of the trust that consists of stock in anS corporation with respect to which the election under § 1361(d)(2) is made. A QSSTelection is made by signing and filing an election statement with the applicable InternalRevenue Service (IRS) Service Center. Section 1.1361-1(j)(6)(iii)(A) provides that theQSST election must be made within the 16-day-and-2-month period beginning on theday that the S corporation stock is transferred to the trust. Section 1361(c)(2)(A)(v) provides that an ESBT (as defined in § 1361(e)) is apermitted S corporation shareholder. Section 1361(e)(1) defines an Electing SmallBusiness Trust (ESBT) as any trust if: (1) the trust does not have as a beneficiary anyperson other than an individual, an estate, or an organization described in § 170(c)(2)through (5); (2) no interest in the trust was acquired by purchase; and (3) an electionhas been made with respect to the trust. To qualify as an ESBT, the trustee of the trustmust make an ESBT election by signing and filing an election statement with the

5applicable IRS Service Center. Section 1.1361-1(m)(2)(iii) provides that the ESBTelection must be filed within the time requirements prescribed in § 1.1361-1(j)(6)(iii) forfiling a QSST election (described above). (2) Late ESBT and QSST Elections. Failure to properly make an election to betreated as an ESBT or a QSST may result in a shareholder who is not an eligible Scorporation shareholder under § 1361(b)(1)(B) holding stock of the corporation. As aresult, the failure to properly file an ESBT or QSST election may result in aninadvertently invalid S corporation election, or in an inadvertent termination of an Scorporation election. Section 1362(f) grants the Secretary authority to provide relief if a corporation's Scorporation election was not effective for the taxable year for which it was made byreason of a failure to meet the requirements of § 1361(b) or to acquire the requiredshareholder consents. Under § 1362(f), the Secretary may also grant relief if thecorporation's S corporation election terminated under § 1362(d)(2) or (3). A corporationis eligible for relief under this provision if (1) the Secretary determines that thecircumstances resulting in the ineffectiveness or termination were inadvertent, (2) nolater than a reasonable period of time after discovery of the circumstances resulting inthe ineffectiveness or termination, steps were taken (i) so that the S corporation is asmall business corporation, or (ii) to acquire the required shareholder consents, and (3)the corporation, and each person who was a shareholder of the corporation at any timeduring the period specified pursuant to § 1362(f), agrees to make any adjustments(consistent with the treatment of the corporation as an S corporation) as may be

6required by the Secretary with respect to the period. If a corporation is eligible for reliefunder this provision, then, notwithstanding the circumstances resulting in theineffectiveness or termination, the corporation will be treated as an S corporation duringthe period specified by the Secretary. Section 1.1362-4 sets forth additional guidance regarding inadvertent terminationrelief. Section 1.1362-4(b) provides that the corporation has the burden of establishingthat, under the relevant facts and circumstances, the Commissioner should determinethat the termination was inadvertent. The fact that the terminating event was notreasonably within the control of the corporation and was not part of a plan to terminatethe election, or the fact that the event took place without the knowledge of thecorporation, notwithstanding its due diligence to safeguard against such an event, tendsto establish that the termination was inadvertent. Section 1.1362-4(c) provides that a corporation may request inadvertenttermination relief by submitting a request for a letter ruling. Section 1.1362-4(d)provides that the Commissioner may condition the granting of a ruling request on anyadjustments that are appropriate. Section 1.1362-4(e) requires that the corporation andall persons who were shareholders of the corporation at any time during the timespecified by the Commissioner consent to any adjustments that the Commissioner mayrequire. The IRS will grant relief for both the late ESBT and QSST elections and theinadvertently invalid S corporation election or inadvertent termination of the Scorporation election if the standard described in § 1362(f) for an inadvertently invalid S

7corporation election or an inadvertent termination of an S corporation election issatisfied. Rev. Proc. 2003-43 provides a simplified method for taxpayers to request relieffor late ESBT and QSST elections if the request for relief is filed within 24 months of thedue date of the election. .03 Qualified Subchapter S Subsidiary (QSub) Elections. (1) In General. Section 1361 generally provides that an S corporation may electto treat certain wholly owned subsidiaries as QSubs (as defined in § 1361(b)(3)(B)).Section 1361(b)(3)(B) defines a QSub as a domestic corporation that is not an ineligiblecorporation if (1) an S corporation holds 100 percent of the stock of the corporation, and(2) that S corporation elects to treat the subsidiary as a QSub. Section 1361(b)(3)(A)provides that a corporation that is a QSub is not treated as a separate corporation, andall assets, liabilities, and items of income, deduction, and credit of the QSub are treatedas assets, liabilities, and items of income, deduction, and credit of the parent Scorporation. Section 1.1361-3 describes the time and manner for a corporation to makea QSub election. Section 1.1361-3(a)(2) provides that an S corporation may make aQSub election by filing the election form with the applicable IRS Service Center. Form8869, Qualified Subchapter S Subsidiary Election, is used to make a QSub election.Under § 1.1361-3(a)(3), the election to treat a subsidiary as a QSub may be filed at anytime during the taxable year. Section 1.1361-3(a)(4) provides that the effective date isthe date specified on the form (provided the date specified is not earlier than 2 monthsand 15 days before the date of the filing and the date specified is not more than 12

8months after the date of the filing), or on the date the election form is filed if no date isspecified. If an election form specifies an effective date more than 2 months and 15days prior to the date on which the election form is filed, it will be effective 2 months and15 days prior to the date it is filed. If an election form specifies an effective date morethan 12 months after the date on which the election is filed, it will be effective 12 monthsafter the date it is filed. (2) Late QSub Elections. Under § 301.9100-1(c), the Commissioner may grant areasonable extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3to make a regulatory election, or a statutory election, under all subtitles of the Code,except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term \"regulatory election\" as an electionwhose due date is prescribed by a regulation published in the Federal Register, or arevenue ruling, revenue procedure, notice, or announcement published in the InternalRevenue Bulletin. Because a QSub election is a regulatory election, the Commissionermay permit a late QSub election under the rules set forth in section 301.9100-3. Sections 301.9100-1 through 301.9100-3 provide the standards that theCommissioner will use to determine whether to grant an extension of time to make anelection. Section 301.9100-2 provides automatic extensions of time for making certainelections. Section 301.9100-3 provides extensions of time for making elections that donot meet the requirements of § 301.9100-2. Requests for relief under § 301.9100-3 will be granted when the taxpayerprovides the evidence to establish to the satisfaction of the Commissioner that the

9taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice theinterests of the Government. Section 301.9100-3(b)(1) provides that subject toparagraphs (b)(3)(i) through (b)(3)(iii) of § 301.9100-3, a taxpayer is deemed to haveacted reasonably and in good faith if the taxpayer meets one of the requirements in§ 301.9100-3(b)(1)(i)-(v). Section 301.9100-3(b)(1)(v) includes situations in which thetaxpayer reasonably relied on a qualified tax professional (including a tax professionalemployed by the taxpayer), and the tax professional failed to make, or advise thetaxpayer to make, the election. Rev. Proc. 2003-43 provides a simplified method for taxpayers to request relieffor a late QSub election if the request for relief is filed within 24 months of the due dateof the election. Rev. Proc. 2004-49 provides alternative relief when the QSub electionterminated as a result of a transfer (whether by sale or as part of a reorganization under§ 368(a)(1)(A), (C), or (D) (but not as part of a reorganization under § 368(a)(1)(F)) bythe S corporation of 100 percent of the QSub stock to another S corporation. Section4.01 of Rev. Proc. 2004-49 allows the acquiring S corporation to request prospectiverelief by attaching a completed Form 8869 to its timely filed return (including extensions)for the taxable year during which the transfer occurred, and section 4.02 of Rev. Proc.2004-49 provides alternative relief as provided by Rev. Proc. 2003-43. Section 4.03 ofRev. Proc 2004-49 also provides retroactive relief for such transactions if they occurredprior to August 16, 2004, provided that the relief requests were filed before August 16,2005.

10 .04 Entity Classification Elections. (1) In General. Section 301.7701-2(a) of the Procedure and AdministrationRegulations defines a \"business entity\" as any entity recognized for federal taxpurposes that is not properly classified as a trust under § 301.7701-4 or otherwisesubject to special treatment under the Code. Section 301.7701-3(a) provides that a business entity that is not classified as acorporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an \"eligible entity\")can elect its classification for federal tax purposes. Section 301.7701-3(b)(1) provides that, except as otherwise provided in§ 301.7701-3(b)(3), unless the entity elects otherwise, a domestic eligible entity is (i) apartnership if it has two or more members, or (ii) disregarded as an entity separate fromits owner if it has a single owner. Section 301.7701-3(c)(1)(i) provides that, except as provided in § 301.7701-3(c)(1)(iv) and (v), an eligible entity may elect to be classified other than as provided in§ 301.7701-3(b) by filing Form 8832, Entity Classification Election, with the applicableIRS Service Center designated on Form 8832. Section 301.7701-3(c)(1)(iii) provides that the entity classification election will beeffective on the date specified by the entity on the Form 8832 or on the date filed if nodate is specified on the election form. The effective date specified on Form 8832cannot be more than 75 days prior to the date on which the election is filed and cannotbe more than 12 months after the date on which the election is filed. If an electionspecifies an effective date more than 75 days prior to the date on which the election is

11filed, the election will be effective 75 days prior to the date it was filed. If an electionspecifies an effective date more than 12 months from the date on which the election isfiled, the election will be effective 12 months after the date the election was filed. (2) Late Entity Classification Elections. Under § 301.9100-1(c), the Commissionermay grant a reasonable extension of time under the rules set forth in §§ 301.9100-2 and301.9100-3 to make a regulatory election, or a statutory election, under all subtitles ofthe Code, except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term \"regulatory election\" as an electionwhose due date is prescribed by a regulation published in the Federal Register, or arevenue ruling, revenue procedure, notice, or announcement published in the InternalRevenue Bulletin. Because an entity classification election is a regulatory election, theCommissioner may permit a late entity classification election under the rules set forth insection 301.9100-3. Sections 301.9100-1 through 301.9100-3 provide the standards that theCommissioner will use to determine whether to grant an extension of time to make anelection. Section 301.9100-2 provides automatic extensions of time for making certainelections. Section 301.9100-3 provides extensions of time for making elections that donot meet the requirements of § 301.9100-2. Requests for relief under § 301.9100-3 willbe granted when the taxpayer provides the evidence to establish to the satisfaction ofthe Commissioner that the taxpayer acted reasonably and in good faith, and the grant ofrelief will not prejudice the interests of the Government.

12 Rev. Proc. 2009-41, 2009-2 C.B. 439, provides relief with respect to late entityclassification elections for an eligible entity’s initial classification election or change inclassification election. Eligible entities meeting the requirements under Section 4 of thatrevenue procedure must request relief within 3 years and 75 days of the requestedeffective date of the eligible entity’s classification election. Under § 301.7701-3(c)(1)(v)(C), an eligible entity that timely elects to be an Scorporation under § 1362(a)(1) is treated as having made an election to be classified asan association, provided that (as of the effective date of the election under § 1362(a)(1))the entity meets all other requirements to qualify as a small business corporation under§ 1361(b). Section 301.7701-3(c)(1)(v)(C) further provides that, subject to § 301.7701-3(c)(1)(iv), the deemed election to be classified as an association generally will apply asof the effective date of the S corporation election and will remain in effect until the entitymakes a valid election under § 301.7701-3(c)(1)(i) to be classified as other than anassociation. Rev. Proc. 2004-48 and Rev. Proc 2007-62 provide simplified methods fortaxpayers to request relief for a late S corporation election and a late corporateclassification election intended to be effective on the same date as the S corporationelection.SECTION 3. SCOPE .01 In General. This revenue procedure expands and consolidates relief provisionsincluded in prior revenue procedures that provide a simplified method for taxpayers torequest relief for late S corporation elections, ESBT elections, QSST elections, QSub

13elections, and corporate classification elections intended to be effective on the samedate as the S corporation election for the entity. This revenue procedure provides procedures for situations within its scope thatare in lieu of the letter ruling process ordinarily used to obtain relief for a late ElectionUnder Subchapter S (as defined in Section 4.01(5)) pursuant to § 1362(b)(5), § 1362(f),or § 301.9100-1 and § 301.9100-3. Accordingly, user fees do not apply to correctiveactions under this revenue procedure. Section 4.01 of this revenue procedure provides a glossary of certain terms usedin this revenue procedure. Section 4.02 of this revenue procedure provides the generalrequirements for relief for all late Elections Under Subchapter S. Section 4.03 of thisrevenue procedure provides procedural requirements for relief for all late ElectionsUnder Subchapter S. Section 4.04 of this revenue procedure provides additionalprocedural requirements for relief when one or more Requesting Entities (as defined inSection 4.01(6)) request relief for multiple late elections with respect to a single Scorporation. Section 5 of this revenue procedure provides a simplified method fortaxpayers to request relief for late S corporation elections (which may or may notinclude a Deemed Entity Classification Election (as defined in Section 4.01(1) of thisrevenue procedure)). Section 6 of this revenue procedure provides a simplified methodfor taxpayers to request relief for late ESBT and QSST elections. Section 7 of thisrevenue procedure provides a simplified method for taxpayers to request relief for lateQSub elections.

14 .02 Relief if this Revenue Procedure is not Applicable. An entity that does not meetthe requirements for relief or is denied relief under this revenue procedure may seekrelief by requesting a letter ruling. The procedural requirements for requesting a letterruling are described in Rev. Proc. 2013-1, 2013-1 I.R.B. 1, or its successors.SECTION 4. DEFINITIONS AND REQUIREMENTS FOR RELIEF UNDER THISREVENUE PROCEDURE. .01 Definitions. (1) Deemed Entity Classification Election. For purposes of this revenueprocedure, a Deemed Entity Classification Election occurs when an eligible entity thattimely elects to be an S corporation under § 1362(a)(1) is treated as having made anelection to be classified as an association under § 301.7701-3(c)(1)(v)(C), provided that(as of the Effective Date of the election under § 1362(a)(1)) the entity meets all otherrequirements to qualify as a small business corporation under § 1361(b). (2) Due Date of the Election Under Subchapter S. For purposes of this revenueprocedure, the Due Date of the Election Under Subchapter S will vary depending on thetype of election sought. For a corporation (or an eligible entity to which a DeemedEntity Classification Election under § 301.7701-3(c)(1)(v)(C) applies) that requests to betreated as an S corporation, the Due Date of the Election Under Subchapter S isspecified by § 1362(b). For ESBT or QSST elections, the Due Date of the ElectionUnder Subchapter S is specified by § 1.1361-1(m)(2)(iii) or § 1.1361-1(j)(6)(iii),respectively. The Due Date of the Election Under Subchapter S for a parent Scorporation to make an election to treat a subsidiary as a QSub on a given date is

15specified by § 1.1361-3(a)(3). (3) Effective Date. For purposes of this revenue procedure, the Effective Date isthe date on which the S corporation election, ESBT election(s), QSST election(s), QSubelection(s), or corporate classification election is intended to be effective. (4) Election Form. For purposes of this revenue procedure, the Election Formrefers to Form 2553 for S corporation elections (including a Deemed EntityClassification Election under § 301.7701-3(c)(1)(v)(C)), separate statements made byelecting ESBTs under § 1.1361-1(m)(2), Form 2553 and separate statements made byelecting QSSTs under § 1.1361-1(j)(6), and Form 8869 for QSub Elections. (5) Election Under Subchapter S. For purposes of this revenue procedure,Election Under Subchapter S refers to an election by a corporation (or an eligible entityto which a Deemed Entity Classification Election under § 301.7701-3(c)(1)(v)(C) willapply), an election by a trustee to treat a trust as an ESBT under § 1361(e), an electionby a trust beneficiary to treat a trust as a QSST under § 1361(d), or an election by aparent S corporation to treat a subsidiary as a QSub under § 1361(b)(3). (6) Requesting Entity. For purposes of this revenue procedure, the RequestingEntity is a corporation (or an eligible entity to which a Deemed Entity ClassificationElection under § 301.7701-3(c)(1)(v)(C) will apply) seeking to be treated as an Scorporation under § 1362, a trustee seeking to treat a trust as an ESBT under§ 1361(e), a trust beneficiary seeking to treat a trust as a QSST under § 1361(d), or aparent S corporation seeking to treat a subsidiary as a QSub under § 1361(b)(3).

16 .02 General Requirements for Relief. In addition to the specific requirements forrelief described in Sections 5, 6, or 7 of this revenue procedure, the followingrequirements must be met: (1) The Requesting Entity intended to be classified as an S corporation, intendedthe trust to be an ESBT, intended the trust to be a QSST, or intended to treat asubsidiary corporation as a QSub as of the Effective Date; (2) The Requesting Entity requests relief under this revenue procedure within 3years and 75 days after the Effective Date (except in the case of corporationsrequesting relief under Section 5.04 of this revenue procedure); (3) The failure to qualify as an S corporation, ESBT, QSST, or QSub as of theEffective Date was solely because the Election Under Subchapter S was not timely filedby the Due Date of the Election Under Subchapter S; and (4) In the case of a request for relief for a late S corporation or QSub election, theRequesting Entity has reasonable cause for its failure to make the timely Election UnderSubchapter S and has acted diligently to correct the mistake upon its discovery. In thecase of a request for relief for an inadvertently invalid S corporation election or aninadvertent termination of an S corporation election due to the failure to make the timelyESBT or QSST election, the failure to file the timely Election Under Subchapter S wasinadvertent and the S corporation and the person or entity seeking relief acted diligentlyto correct the mistake upon its discovery. .03 General Procedural Requirements for Relief. (1) In general. The Requesting Entity may request relief for a late Election Under

17Subchapter S by properly completing the Election Form(s) and attaching the supportingdocuments as described in Sections 5, 6, and 7, as applicable. In addition to anysupporting documents described in Sections 5, 6, and 7, as applicable, a properlycompleted Election Form must include a statement (the “ReasonableCause/Inadvertence Statement”) from the Requesting Entity that complies with Section4.03(3) of this revenue procedure and that describes (i) its reasonable cause for failureto timely file the Election Under Subchapter S (in the case of late S corporation or QSubelections) or that the failure to timely file the Election Under Subchapter S wasinadvertent (in the case of late QSST or ESBT elections), and (ii) its diligent actions tocorrect the mistake upon its discovery. The applicable Election Form must state at thetop of the document \"FILED PURSUANT TO REV. PROC. 2013-30.\" (2) Filing the Election Form with the IRS Service Center. The Requesting Entitymust file the applicable Election Form with the applicable IRS Service Center by either: (a) Attaching the Election Form to the S corporation’s current year Form 1120S.In the case of an S corporation that has filed all Forms 1120S for tax years between theEffective Date and the current year, the Election Form(s) can be attached to the currentyear Form 1120S as long as the current year Form 1120S is filed within 3 years and 75days after the Effective Date. An extension of time to file the current year Form 1120Swill not extend the due date for relief under this revenue procedure beyond 3 years and75 days following the Effective Date. For example, if the extended due date of tax year2016 Form 1120S is September 15, 2017, an Election Form for a late QSST Electionwith an Effective Date of June 1, 2014 can be attached to the 2016 Form 1120S only if

18the 2016 Form 1120S is filed before August 15, 2017 (which is 3 years and 75 daysfollowing the June 1, 2014 Effective Date). The Form 1120S must state at the top\"INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30\" orcomply with specific instructions included with the Form 1120S instructions; (b) Attaching the Election Form to one of the S corporation’s late filed prior yearForms 1120S. In the case of an S corporation that has not filed Form 1120S (or anyother income tax return or information return (within the meaning of Subpart A of Part IIIof Subchapter A of Chapter 61)) for the tax year including the Effective Date or any yearfollowing the Effective Date, an Election Form may be attached to the Form 1120S forthe year including the Effective Date as long as (i) the Form 1120S for the yearincluding the Effective Date is filed within 3 years and 75 days after the Effective Date,and (ii) all other delinquent Forms 1120S are filed simultaneously and consistently withthe requested relief. For example, if an S corporation intended to make a QSubElection with an Effective Date of June 1, 2012, but it failed to file any income taxreturns, it can attach an Election Form to a late filed 2010 Form 1120S only if the latefiled 2010 Form 1120S is filed before August 15, 2015 (which is 3 years and 75 daysfollowing the June 1, 2012 Effective Date) and all other delinquent Forms 1120S arefiled simultaneously and consistently with the requested relief. The Form 1120S muststate at the top \"INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC.2013-30\" or comply with specific instructions included with the Form 1120S instructions;or (c) Filing Election Form independent of Form 1120S. The Requesting Entity can

19submit the Election Form directly to the applicable IRS Service Center within 3 yearsand 75 days after the Effective Date. (3) Supporting statements must be signed under Penalties of Perjury. TheReasonable Cause/Inadvertence Statement (required by Section 4.03(1)) and otherstatements required by Sections 5, 6, and 7, as applicable, must each contain a dateddeclaration that states: \"Under penalties of perjury, I (we) declare that I (we) haveexamined this election, including accompanying documents, and, to the best of my (our)knowledge and belief, the election contains all the relevant facts relating to the election,and such facts are true, correct, and complete.\" An officer of the S corporationauthorized to sign, the trustee of the ESBT, the current income beneficiary of the QSST,or a shareholder, as applicable, must sign the declaration. .04 Supplemental procedural requirements when seeking relief for multiple lateelections. If one or more Requesting Entities are seeking relief under this revenueprocedure with respect to a single S corporation, all of the Election Forms can be filed atthe same time using one of the methods described in Section 4.03(2). When multiplerequests for relief are submitted simultaneously, each application for relief mustindependently comply with the procedural requirements in Section 4.03(1). However,there is no requirement that all Requesting Entities must file requests for relief underthis revenue procedure with respect to a single S corporation simultaneously. Anapplication for relief under this revenue procedure by a Requesting Entity will notprejudice subsequent relief requests by the same Requesting Entity, or otherRequesting Entities, with respect to a single S corporation.

20 .05 Relief for Late Election Under Subchapter S. Upon receipt of a completedrequest for relief under this revenue procedure, the IRS will determine whether therequirements for granting additional time to file the Election Under Subchapter S havebeen satisfied and will notify the Requesting Entity(s) of the result of this determination.SECTION 5. RELIEF FOR LATE S CORPORATION ELECTIONS. .01 Form 2553. A Requesting Entity seeking relief for a late S corporation electionmust file a completed Form 2553, signed by (1) an officer of the corporation authorizedto sign, and (2) all persons who were shareholders at any time during the period thatbegan on the first day of the taxable year for which the election is to be effective andends on the day the completed Election Form is filed. .02 Supplemental materials. The completed Election Form must include statementsfrom all shareholders during the period between the date the S corporation election wasto have become effective and the date the completed Election Form is filed that theyhave reported their income on all affected returns consistent with the S corporationelection for the year the election should have been filed and for all subsequent years.Such statements must comply with the requirement in Section 4.03(3) of this revenueprocedure. .03 Additional materials for a late corporate classification election intended to beeffective on the same date that the S corporation election was intended to be effective.In addition to the materials required under Section 5.02 of this revenue procedure, in thecase of a late corporate classification election intended to be effective on the same datethat the S corporation election was intended to be effective, the completed Election

21Form must also include the following representations, which must comply with therequirement in Section 4.03(3) of this revenue procedure: (1) The Requesting Entity is an eligible entity as defined in § 301.7701-3(a); (2) The Requesting Entity intended to be classified as a corporation as of theEffective Date of the S corporation status; (3) The Requesting Entity fails to qualify as a corporation solely because Form8832 was not timely filed under § 301.7701-3(c)(1)(i), or Form 8832 was not deemed tohave been filed under § 301.7701-3(c)(1)(v)(C); (4) The Requesting Entity fails to qualify as an S corporation on the EffectiveDate of the S corporation status solely because the S corporation election was nottimely filed pursuant to § 1362(b); and (5)(i) The Requesting Entity timely filed all required federal tax returns andinformation returns consistent with its requested classification as an S corporation for allof the years the entity intended to be an S corporation and no inconsistent tax orinformation returns have been filed by or with respect to the entity during any of thetaxable years, or (ii) The Requesting Entity has not filed a federal tax or information return for thefirst year in which the election was intended to be effective because the due date hasnot passed for that year’s federal tax or information return. .04 Relief where all returns filed as an S corporation. The requirement for reliefimposed by Section 4.02(2) (providing that relief must be sought within three years and75 days of the Effective Date) is not applicable in the case of corporations if the

22following conditions are met: (1) The corporation is not seeking late corporate classification election reliefconcurrently with a late S corporation election under this revenue procedure; (2) The corporation fails to qualify as an S corporation solely because the Form2553 was not timely filed; (3) The corporation and all of its shareholders reported their income consistentwith S corporation status for the year the S corporation election should have beenmade, and for every subsequent taxable year (if any); (4) At least 6 months have elapsed since the date on which the corporation filedits tax return for the first year the corporation intended to be an S corporation; and (5) Neither the corporation nor any of its shareholders was notified by the IRS ofany problem regarding the S corporation status within 6 months of the date on which theForm 1120S for the first year was timely filed, and (6) The completed Election Form includes the statement(s) described in Section5.02 of this revenue procedure.SECTION 6. RELIEF FOR LATE ESBT AND QSST ELECTIONS. .01 ESBT or QSST Election. The trustee of an ESBT or the current incomebeneficiary of a QSST must sign and file the appropriate Election Form. The completedElection Form must include the following statements (each of which must comply withthe requirement in Section 4.03(3) of this revenue procedure): (1) A statement from the trustee of the ESBT or the current income beneficiary ofthe QSST that includes the information required by § 1.1361-1(m)(2)(ii) (in the case of

23ESBT elections) or § 1.1361-1(j)(6)(ii) (in the case of QSST elections); (2) In the case of a QSST, a statement from the trustee that the trust satisfies theQSST requirements of § 1361(d)(3) and that the income distribution requirements havebeen and will continue to be met; (3) In the case of an ESBT, a statement from the trustee that all potential currentbeneficiaries meet the shareholder requirements of § 1361(b)(1) and that the trustsatisfies the requirements of an ESBT under § 1361(e)(1) other than the requirement tomake an ESBT election; and (4) Statements from all shareholders during the period between the date the Scorporation election was to have become effective or was terminated and the date thecompleted Election Form is filed that they have reported their income on all affectedreturns consistent with the S corporation election for the year the election should havebeen made and for all subsequent years.SECTION 7. RELIEF FOR LATE QSUB ELECTIONS. .01 Form 8869. An S corporation seeking relief for a late QSub election for asubsidiary must file a completed Form 8869. .02 Supplemental materials. The completed Election Form must include a statementsigned by an officer of the S corporation, which complies with the requirement inSection 4.03(3) of this revenue procedure, that the subsidiary corporation satisfies theQSub requirements of § 1361(b)(3)(B), and that all assets, liabilities, and items ofincome, deduction, and credit of the QSub have been treated as assets, liabilities, anditems of income, deduction, and credit of the S corporation on all affected returns

24consistent with the QSub election for the year the election was intended to be effectiveand for all subsequent years.SECTION 8. EFFECTIVE DATE .01 In general. Except as provided in Section 8.02, this revenue procedure iseffective September 3, 2013, the date of publication of this revenue procedure in theInternal Revenue Bulletin. This revenue procedure applies to requests pending with theIRS Service Center pursuant to Rev. Procs. 97-48, 2003-43, 2004-48, and 2007-62 onSeptember 3, 2013, and to requests received thereafter. It also applies to all rulingrequests pending in the IRS national office on September 3, 2013, and to requests forrelief received thereafter. .02 Transition rule for pending letter ruling requests. If an entity has filed a requestfor a letter ruling seeking relief for a late Election Under Subchapter S covered by thisrevenue procedure that is pending in the national office on September 3, 2013, theentity may rely on this revenue procedure, withdraw that letter ruling request, andreceive a refund of its user fee. However, the national office will process letter rulingrequests pending on September 3, 2013, unless, prior to the earlier of October 18,2013, or the issuance of the letter ruling, the entity notifies the national office that it willrely on this revenue procedure and withdraw its letter ruling request.SECTION 9. EFFECT ON OTHER DOCUMENTS This revenue procedure modifies and supersedes Rev. Procs. 2003-43, 2004-48,and 2007-62. This revenue procedure supersedes Situation 1 and obsoletes Situation 2of Rev. Proc. 97-48. This revenue procedure modifies and supersedes sections 4.01

25and 4.02 and obsoletes section 4.03 of Rev. Proc. 2004-49.SECTION 10. PAPERWORK REDUCTION ACT The collection of information contained in this revenue procedure has beenreviewed and approved by the Office of Management and Budget (OMB) in accordancewith the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number1545-1548. The collection of information in this revenue procedure is in Section 4.03 andSections 5 through 7. The information will help the IRS to determine whether ataxpayer has met the requirements of Sections 4 through 7 of this revenue procedureand whether a taxpayer has reasonable cause for failing to make a timely election. Thecollection of information is required to make a late election pursuant to this revenueprocedure. This information will be used to determine whether the eligibilityrequirements for obtaining relief have been met. The collection of information isrequired to obtain a benefit. The likely respondents are business or other for-profitinstitutions. The estimated total annual reporting burden is 50,000 hours. The estimated annual burden per respondent varies from .5 hours to 1 hour,depending on individual circumstances, with an estimated average burden of 1 hour tocomplete the statement. The estimated number of respondents is 50,000. The estimated annual frequency of responses is on occasion.Books or records relating to a collection of information must be retained as long as their