Comments Regarding Proposed Amendments to the Regulations
Governing Practice Before the Internal Revenue Service
(Title 31, Code of Federal Regulations, Subtitle A, Part 10)
April 23, 2001

Section 10.36  Procedures to ensure compliance.

Section 10.36 requires a practitioner who practices in a firm to take reasonable steps, consistent with his or her authority and responsibility for the firm’s practice, to make certain that the firm has adequate procedures for purposes of ensuring compliance with the sections on opinions and return preparation. The Section is concerned that the phrases "make certain" and "ensuring compliance" may imply a higher level of responsibility than is intended, in view of the limitations on the Director’s authority in subsections (a) and (b). This problem could be relieved by replacing "make certain" with "confirm" and "ensuring compliance" with "complying."

Further, this section does not provide necessary guidance as to what constitutes "adequate procedures in effect for purposes of ensuring compliance with section 10.33, 10.34 and 10.35". The Service might provide interim guidance by reference to Regs. 1.6694-2(d)(1) through (5) and Rev. Proc. 80-40, which provide comparable guidance applicable to imposition of the return preparer penalty, including exceptions involving good faith errors arising from complex and technical provisions of the Code, the frequency and materiality of errors, the establishment of normal office practices, systems and review procedures to avoid compliance errors, and reliance on third parties.