Circular 230 for the EA exam: duties and examples
Circular 230 contains the Treasury rules governing practice before the IRS. For EA questions, connect the facts to a specific duty, then choose the required action. Start with errors and omissions, diligence, competence, conflicts and accurate advertising. The section numbers below let you verify the rule directly.
- Framework
- Circular 230Treasury rules for IRS practice.
- Study method
- Fact → duty → actionApply a rule to the exact situation.
- EA connection
- Part 3Professional duties and procedures.
Five duties you should be able to apply
| Rule | Trigger | Required response |
|---|---|---|
| §10.21 · Errors | You learn of a client error or omission. | Promptly advise the client of it and its consequences. |
| §10.22 · Diligence | Preparing or checking representations to the IRS. | Exercise due diligence as to accuracy. |
| §10.35 · Competence | A matter requires unfamiliar expertise. | Have or obtain the knowledge and preparation needed. |
| §10.29 · Conflicts | Representation creates a conflict of interest. | Check every consent and representation condition. |
| §10.30 · Advertising | A description of your status or services. | Avoid misleading claims or an implication of IRS employment. |
How to read a Circular 230 question
Start with what the practitioner knows and what the question asks them to do. A question about discovering an old omission is different from one about signing a new return with the same omission. The first may test the duty to advise the client; the second can also test the standards governing the new document. A correct statement of one rule can still be an incomplete answer to the facts.
Use four checks: the trigger, the person who owes the duty, the required action and any conditions on that action. For a conflict, “both clients agree” addresses only consent. It does not answer whether the practitioner can serve both competently and diligently. For an unfamiliar matter, “I am an EA” establishes professional status, not competence for every engagement.
Read words such as promptly, reasonably and knowingly carefully. Then identify the decisive fact in the question. An answer that changes who must be notified, assumes permission that was never given, or turns a conditional exception into a general rule is often answering a different problem.
- 01
Trigger
Identify the fact that activates a duty.
- 02
Rule
Name the section and its conditions.
- 03
Action
Choose the required next action.
- 04
Limit
Check authorization and exceptions.
Extend your duty map beyond the five starting rules
Circular 230 is organized around authority to practice, professional duties, sanctions and disciplinary proceedings. For exam preparation, group rules by the decision they control. Memorizing a section number is useful only when you can explain what changes in the practitioner’s conduct.
The map below adds common distinctions to the opening table. It is a study organizer, not an exhaustive substitute for the current regulation or the Part 3 outline. In particular, the best-practice recommendations in §10.33 should not be confused with every mandatory standard or sanction provision elsewhere in the regulation.
| Decision | Reference | Distinction to learn |
|---|---|---|
| Responding to an IRS information request | §10.20 | Identify the requested information and any good-faith privilege issue; do not assume every request can be ignored. |
| Returning a client’s records | §10.28 | A fee dispute generally does not remove the duty to return records needed for federal tax compliance. |
| Handling a taxpayer refund | §10.31 | Authority to represent a client does not permit endorsing or negotiating their federal tax refund check. |
| Preparing returns and other documents | §10.34 | Apply the standards for the document and address information that appears incorrect, inconsistent or incomplete. |
| Giving written federal tax advice | §10.37 | Use reasonable assumptions, relevant facts and a reasoned application of law. |
| Understanding consequences | §§10.50-10.52 | Distinguish the underlying conduct, the sanction standard and the disciplinary process. |
Case: discovering an error in a prior return
Distinguish the duty to advise from actions that require a separate authority or client decision. Read the question carefully before jumping from “there is an error” to an automatic reporting or amendment instruction.
Original worked example
An EA discovers that a client omitted income on a prior return. The client has not asked the EA to amend it. What is the first Circular 230 duty?
Promptly advise the client of the error and its consequences under the revenue laws and regulations.
Section 10.21 identifies that advice obligation. It does not, by itself, instruct the practitioner to disclose the error directly to the IRS without authorization. Other duties and the facts of the engagement still matter.
Case: consent is only one part of a conflict analysis
Under §10.29, a signed document alone does not cure every conflict. The practitioner must reasonably believe competent and diligent representation is possible, the representation must not be prohibited by law, and each affected client must give informed consent confirmed in writing. Keep the written consents for the required period.
Original worked example
Two clients have adverse interests in the same tax matter. Both offer to sign a waiver, but the EA cannot provide competent and diligent representation to each. May the EA proceed on consent alone?
No. The ability to represent each client competently and diligently is a separate condition.
Do not stop at a familiar phrase such as “written consent.” Test each condition against the facts. This is an original exam-study example, not advice on an actual engagement.
Two traps: withholding records and relying on a disclaimer
For client records, first identify what the client needs to meet a federal tax obligation. Section 10.28 generally requires prompt return on request and permits the practitioner to keep copies. A dispute about payment does not automatically justify withholding everything. The rule contains distinctions about records, work product and applicable state law, so avoid the opposite shortcut that every document in an office file must always be surrendered.
For written advice, inspect the reasoning rather than the footer. Section 10.37 applies to electronic communications as well as other written federal tax advice. The practitioner must consider relevant facts and use reasonable factual and legal assumptions. The chance that a return will escape audit is not a sound basis for the advice. A generic disclaimer does not repair an analysis built on facts the practitioner has not reasonably established.
A useful study exercise is to change one fact. If the client needs the original income records to file a return, the records issue is central. If the client requests an unpaid new memorandum prepared by the practitioner, the definition and exceptions need closer examination. Explain why the changed fact matters instead of repeating a slogan about ownership of documents.
Practice combining duties without skipping a condition
These original questions test the reasoning process. Read the choices before opening the explanation, then identify which fact rules out each alternative. They are teaching examples, not released SEE questions.
Original practice · Question 1
A client with an unpaid bill requests original income records needed to file a return and asks an EA for advice on an unfamiliar issue. Assume no applicable records-withholding exception. Which response addresses both duties?
- A.Withhold all records until the bill is paid.
- B.Return the records, then give an immediate opinion with a disclaimer.
- C.Promptly return the required records and obtain the competence needed before advising on the unfamiliar issue.
- D.Give the opinion because EA status establishes competence for every tax matter.
Show answer and reasoning
Answer: C. Promptly return the required records and obtain the competence needed before advising on the unfamiliar issue.
Section 10.28 addresses the return of records needed for federal tax compliance. Section 10.35 separately requires the competence needed for the engagement. Resolving the records request does not resolve the knowledge gap in the advice request.
- A · Why it does not fit
- Under the stated assumptions, the unpaid bill does not justify withholding the required records.
- B · Why it does not fit
- Returning the records addresses one duty, but a disclaimer does not supply missing competence.
- C · Correct
- This response handles the records and competence duties as separate requirements.
- D · Why it does not fit
- Enrollment does not establish the knowledge and preparation required for every engagement.
Original practice · Question 2
A draft tax-advice email ignores an inconsistent fact supplied by the client. Which revision best addresses the underlying problem?
- A.Add a longer Circular 230 disclaimer.
- B.Resolve the relevant inconsistency and reconsider the advice using reasonable facts and assumptions.
- C.Say the return is unlikely to be audited.
- D.Remove the practitioner’s name from the email.
Show answer and reasoning
Answer: B. Resolve the relevant inconsistency and reconsider the advice using reasonable facts and assumptions.
The defect is in the basis for the advice. Relevant inconsistent facts need attention; changing a label or emphasizing audit odds leaves that defect unresolved.
- A · Why it does not fit
- A footer is not a substitute for adequate analysis.
- B · Correct
- This addresses the factual foundation and the resulting conclusion.
- C · Why it does not fit
- The likelihood of escaping audit does not justify the advice.
- D · Why it does not fit
- An anonymous email does not cure inadequate factual or legal reasoning.
Build a rule card that helps with unfamiliar questions
For each duty, write the trigger on one side and the required response on the other. Include one fact that would change the answer. This tests whether you understand the rule rather than recognize a phrase.
| Card field | Example for competence |
|---|---|
| Trigger | A client asks for help with an unfamiliar tax issue. |
| Rule | The practitioner needs the appropriate knowledge, skill, thoroughness and preparation. |
| Possible repair | Research or consult with a competent expert where the rule permits. |
| Changed fact | The deadline leaves no realistic time to obtain the needed competence. |
Keep the rule, sanction and exam explanation separate
Circular 230 provides for measures including censure, suspension, disbarment and monetary penalties under its applicable provisions. Do not infer a particular sanction merely because an exam case describes poor judgment. First establish the duty and relevant conduct standard. The disciplinary process and sanction analysis are separate questions.
When reviewing a missed question, record the trigger you overlooked and the condition you omitted. “I confused consent with permission to proceed” gives you a repair task. “Study ethics more” does not. Return to a narrower Part 3 lesson when the problem is one rule; use this cross-rule guide when you can recall each rule but struggle to combine them.
Common questions
- Is Circular 230 the entire Part 3 syllabus?
- No. Part 3 also includes representation procedures, specific representation matters and the filing process. Use the complete SEE outline.
- Can I answer ethics questions using common sense?
- Common sense can miss a required condition. Identify the applicable section and check its actual obligations before choosing an answer.
- Are these cases official SEE questions?
- No. They are original teaching examples built around the cited rules.
- Does a Circular 230 disclaimer make written advice compliant?
- No. The quality of the factual and legal analysis still matters. A disclaimer does not replace the requirements for reasonable assumptions and consideration of relevant facts.
Sources and editorial notes
By MiloPrep editorial team. References checked 11 October 2026. Official references support the exam and administrative facts. Worked examples, schedules and study advice are original editorial material, not official SEE questions or guaranteed passing standards.
MiloPrep is an independent study resource, not affiliated with or endorsed by the IRS, PSI or the named course providers. Their names and marks belong to their owners.