Question

ASSIGNMENT

10.31 Negotiation of taxpayer checks.

(a) A practitioner may not endorse or otherwise negotiate any check (including directing or accepting payment by any means, electronic or otherwise, into an account owned or controlled by the practitioner or any firm or other entity with whom the practitioner is associated) issued to a client by the government in respect of a Federal tax liability.

Why is the above Rule from IRS Circular 230 important?

Answer 1

The rule is very clear that the IRS prohibits any practitioner or preparer from endorsing or negotiating any check that is issued to the client by the government. The preparer can not endorses or negotiates the refund check even though is the preparer or practitioner is a delegated person by the taxpayer. However there are some exceptions to the above rule:

1. If he endorses the check a refund check for full deposit to the taxpayer's account. It can be only done by the written authorization of the taxpayer.

2. The practitioner will not be considered to have endorsed or negotiated a check as a result of having taxpayer's return on a refund check for the purpose of depositing the check into the bank account in the name of taxpayer or in joint names of the taxpayers or anyone else (Excluding practitioner).

Therefore, endorsement or negotiation can not be done by the practitioner to a check issued to the client by the government except in the above cases.