 Practice before the Internal Revenue Service comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees related to a taxpayer's rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service. So such presentations include but are not limited to preparing documents, filing documents, corresponding, and communicating with the Internal Revenue Service, rendering written advice with respect to entity, transaction, plan, or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion and presenting a client at conferences, hearings, and meetings. So clearly this can be quite advantageous to a client if you're able to correspond basically with the IRS and especially if you're required to go to meetings and whatnot if you can do that on their behalf then that obviously is a good perk for a client oftentimes. So who may practice? You have attorneys, certified public accountants, enrolled agents, enrolled actuaries, and enrolled retirement plan agents. So obviously when you have a tax practice kind of situation or if you're practicing in tax then you want to think about where's your specialization going to be and are you going to be in a situation where you're going to be taking on representation and whatnot and can that be a beneficial thing basically to the practice? Usually again clients would like to have that capacity in the people that we're working with or that could be a valuable resource and give them at least a feeling of ease in case the IRS comes back with questions. So registered tax return preparers. So others, any individual qualified under section 10.5e or section 10.7 is eligible to practice before the IRS to the extent provided in those sections. Government officers and employees and state officers and employees. So these are the people that could practice, again there's a wide range of difference between these individuals and some of their specializations. So you're going to want to get into more detail depending on where you fall on the spectrum. So fees in general, a practitioner may not charge an unconscionable fee in connection with any matter before the Internal Revenue Service. Notice what we have here is basically an attempt to have some kind of like self-regulation within the industry because if you have a situation where just one or two people are dishonest within it, obviously what they are doing is they're actually profiting off of the good will of the industry in and of itself. So it's like having a doctor. If you had a doctor and there's all these good doctors out there, but you just have a few doctors out there that are really selling snake oil and ripping off people, then they're really making money off of the good will of the good doctors. And so that's kind of the problem. So the industry of the doctors have an incentive to not allow the snake oil salesmen to basically do that because then it hurts everybody. So the same kind of thing goes for any kind of profession where there's a big difference between you're selling something that's knowledge-based. That means there's going to be a difference between understanding between yourself and the client, and that's where there's always potential for scamming to take place and some kind of rules that hopefully can be somewhat self-input within the profession instead of outside rules from like a legal consequence kind of thing because there's an incentive for the industry itself to self-regulate because of the nature of the situation. So except as provided in paragraph B2, 3 and 4 of this section, a practitioner may not charge a contingent fee for services rendered in connection with any matter before the internal revenue service. So contingent fees are kind of an issue oftentimes because if you're saying that my fee is going to be contingent on an outcome, then that kind of changes the whole incentive structure. And with regards to taxation, oftentimes the idea, of course, is that you're there to try to provide the tax returns or create the tax returns as accurately within the law as possible. If you start to create incentive structures where you're going to charge them based on like how much money you get out of it, which is going to be dependent on like a tax refund or something like that, then the tax preparer has more incentive to basically be dishonest about their positions that they're taking. They may be more likely to make more extreme positions because it would benefit them possibly more than the client because the client could run into troubles with those positions along the road. You've got this agency issue where the agent's goals would be a little bit different than the client's goals, which leads them to have kind of different strategies and whatnot. So contingent fee is any fee that is based in whole or in part on whether or not a position taken on a tax return is or other filing avoids challenge by the Internal Revenue Service or is sustained either by the Internal Revenue Service or in litigation. A contingent fee includes a fifth fee that is based on the percentage of the refund reported on return that is based on percentage of the taxes saved or that otherwise depends on the specific result attained. Now note this differs a little bit than what you might expect from other kind of legal situations where you have attorneys that might say that they're going to do the work on contingent fees and you can see why that might be beneficial in certain attorney cases although it still leads to this agency issues where you have lawyers being highly aggressive in situations that are possibly detrimental to the client because they just want to win the case because their fee is contingent on the winning at any cost. But you can see a situation where someone can't afford a lawyer but and you say it's contingent well then you can kind of afford the lawyer because if you win they're taken on a risk if they win they get paid kind of thing but with taxes it's a little bit different because you can't really say I'm going to do your taxes but only contingent upon whether or not you get a refund because that invites scammers who are going to take very aggressive positions and the whole point is that you you're hiring someone that that's going to hopefully help you to be in compliance with the law not take aggressive positions because if you take an aggressive position preparing the taxes it's quite possible that you do get a refund in the short run but you could be audited in the next three years and if it was a very extreme position it could be the next five years so after the person got paid from the contingent fee doesn't mean the client is not on the hook the client could still be is on the hook and so in the case a contingent fee also includes many fee arrangement in which the practitioner will reimburse the client for all or a portion of the client's fee in the event that the position taken on a tax return or other filing is challenged by the internal revenue service or is not sustained whether pursuant to an indemnity agreement a guarantee a recession rights or any other arrangement with a similar effect so if you set up a situation you're like okay look it's an extreme position we're taking here but if they got if the iris audits you then we'll reimburse you for it notice again the problem here is because then there's an incentive to take these extreme positions and you can imagine a situation like the irs is set up so that they audit certain returns they audit a percentage of the returns it's kind of similar to a situation where if you're on the road you don't speed because you could speed you'll you won't get caught most of the time but when you do get caught the fees going to be high enough that it disincentivizes you to speed all of the time same kind of concept with the tax law now if you had a practitioner that's just going to play the odds if you're talking about someone that has hundreds of clients then and he just says okay whatever we'll just take really extreme positions and then I'll just pay back I'll just pay off the ones they get hurt well because he has hundreds of clients there's only going to be if they just audit randomly there's only going to be a few that actually get caught and and so you can see this is a scammy system right so now he's doing scammy stuff here and you can't that's the problem