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Circular 230 § 10.34

Standards with respect to tax returns and documents, affidavits and other papers.
CFR 2001 annual edition (revised as of 2001-07-01) · superseded Jul 1, 2003 · last amended by 59 FR 31527, June 20, 1994
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(a) Standards of conduct
(1) Realistic possibility standard. A practitioner may not sign a return as a preparer if the practitioner determines that the return contains a position that does not have a realistic possibility of being sustained on its merits (the realistic possibility standard) unless the position is not frivolous and is adequately disclosed to the Service. A practitioner may not advise a client to take a position on a return, or prepare the portion of a return on which a position is taken, unless—
(i) The practitioner determines that the position satisfies the realistic possibility standard; or
(ii) The position is not frivolous and the practitioner advises the client of any opportunity to avoid the accuracy-related penalty in section 6662 of the Internal Revenue Code of 1986 by adequately disclosing the position and of the requirements for adequate disclosure.
(2) Advising clients on potential penalties. A practitioner advising a client to take a position on a return, or preparing or signing a return as a preparer, must inform the client of the penalties reasonably likely to apply to the client with respect to the position advised, prepared, or reported. The practitioner also must inform the client of any opportunity to avoid any such penalty by disclosure, if relevant, and of the requirements for adequate disclosure. This paragraph (a)(2) applies even if the practitioner is not subject to a penalty with respect to the position.
(3) Relying on information furnished by clients. A practitioner advising a client to take a position on a return, or preparing or signing a return as a preparer, generally may rely in good faith without verification upon information furnished by the client. However, the practitioner may not ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent, or incomplete.
(4) Definitions. For purposes of this section:
(i) Realistic possibility. A position is considered to have a realistic possibility of being sustained on its merits if a reasonable and well-informed analysis by a person knowledgeable in the tax law would lead such a person to conclude that the position has approximately a one in three, or greater, likelihood of being sustained on its merits. The authorities described in 26 CFR 1.6662-4(d)(3)(iii), or any successor provision, of the substantial understatement penalty regulations may be taken into account for purposes of this analysis. The possibility that a position will not be challenged by the Service (e.g., because the taxpayer's return may not be audited or because the issue may not be raised on audit) may not be taken into account.
(ii) Frivolous. A position is frivolous if it is patently improper.
(b) Standard of discipline. As provided in § 10.52, only violations of this section that are willful, reckless, or a result of gross incompetence will subject a practitioner to suspension or disbarment from practice before the Service.
Source credit, amendments & notes

[59 FR 31527, June 20, 1994]

Circular 230 § 10.34 — Standards with respect to tax returns and documents, affidavits and other papers. · CFR 2001 annual edition (revised as of 2001-07-01) · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr31-10.34&asof=1997-07-01 · printed Oct 16, 2026
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  • (a) Standards of conduct
  • (b) Standard of discipline.
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Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

EffectiveThroughSourceAmended by
Jul 1, 1997Jun 30, 2003CFR 2001 annual edition (revised as of 2001-07-01) run 12759 FR 31527, June 20, 1994View
Jul 1, 2003Jun 30, 2008CFR 2007 annual edition (revised as of 2007-07-01) run 127View · Redline (sign in)
Jul 1, 2008Jun 30, 2011CFR 2010 annual edition (revised as of 2010-07-01) run 127T.D. 9359, 72 FR 54549, Sept. 26, 2007View · Redline (sign in)
Jul 1, 2011Jun 30, 2013CFR 2011 annual edition (revised as of 2011-07-01) run 127T.D. 9359, 72 FR 54549, Sept. 26, 2007View · Redline (sign in)
Jul 1, 2013Dec 29, 2016CFR 2016 annual edition (revised as of 2016-07-01) run 127T.D. 9527, 76 FR 32307, June 3, 2011View · Redline (sign in)
Dec 30, 2016Nov 14, 2019eCFR amendment effective 2016-12-30 run 26T.D. 9527, 76 FR 32307, June 3, 2011View · Redline (sign in)
Nov 15, 2019currenteCFR editorial change effective 2019-11-15T.D. 9527, 76 FR 32307, June 3, 2011View · Redline (sign in)
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