Conflicts of Interest and Written Consent
Conflicts of interest are another commonly tested Circular 230 topic. A conflict may arise when representing one client is directly adverse to another client or when there is a significant risk that a practitioner’s responsibilities to another person or personal interests will materially limit the representation.
In certain situations, representation may continue if the practitioner reasonably believes competent and diligent representation can be provided, the representation is not prohibited by law, and each affected client gives informed written consent.
Key Study Points
- Identify direct adversity between clients.
- Identify material limitations caused by duties to others or the practitioner’s own interests.
- Know when written informed consent is necessary.
- Remember that some conflicts cannot be waived.
Exam Focus: Read fact patterns carefully. A conflict question may turn on whether the practitioner can reasonably provide competent and diligent representation to each affected client.
Official IRS Reference: Treasury Department Circular No. 230
https://www.irs.gov/pub/irs-pdf/pcir230.pdf