Part IV. Items — Internal Revenue Bulletin 2016-38

Announcement of Disciplinary Sanctions from the Office of Professional Responsibility

Announcement 2016–26

The Office of Professional Responsibility (OPR) announces recent disciplinary sanctions involving attorneys, certified public accountants, enrolled agents, enrolled actuaries, enrolled retirement plan agents, appraisers, and unenrolled/ unlicensed return preparers (individuals who are not enrolled to practice and are not licensed as attorneys or certified public accountants). Licensed or enrolled practitioners are subject to the regulations governing practice before the Internal Revenue Service (IRS), which are set out in Title 31, Code of Federal Regulations, Subtitle A, Part 10, and which are released as Treasury Department Circular No. 230. The regulations prescribe the duties and restrictions relating to such practice and prescribe the disciplinary sanctions for violating the regulations. Unenrolled/unlicensed return preparers are subject to Revenue Procedure 81–38 and superseding guidance in Revenue Procedure 2014–42, which govern a preparer’s eligibility to represent taxpayers before the IRS in examinations of tax returns the preparer both prepared for the taxpayer and signed as the preparer. Additionally, unenrolled/unlicensed return preparers who voluntarily participate in the Annual Filing Season Program under Revenue Procedure 2014–42 agree to be subject to the duties and restrictions in Circular 230, including the restrictions on incompetent or disreputable conduct.

The disciplinary sanctions to be imposed for violation of the applicable standards are:

Disbarred from practice before the IRS —An individual who is disbarred is not eligible to practice before the IRS as defined at 31 C.F.R. § 10.2(a)(4) for a minimum period of five (5) years.

Suspended from practice before the IRS —An individual who is suspended is not eligible to practice before the IRS as

defined at 31 C.F.R. § 10.2(a)(4) during the term of the suspension.

Censured in practice before the IRS —Censure is a public reprimand. Unlike disbarment or suspension, censure does not affect an individual’s eligibility to practice before the IRS, but OPR may subject the individual’s future practice rights to conditions designed to promote high standards of conduct.

Monetary penalty —A monetary penalty may be imposed on an individual who engages in conduct subject to sanction, or on an employer, firm, or entity if the individual was acting on its behalf and it knew, or reasonably should have known, of the individual’s conduct.

Disqualification of appraiser —An appraiser who is disqualified is barred from presenting evidence or testimony in any administrative proceeding before the Department of the Treasury or the IRS.

Ineligible for limited practice —An unenrolled/unlicensed return preparer who fails to comply with the requirements in Revenue Procedure 81–38 or to comply with Circular 230 as required by Revenue Procedure 2014–42 may be determined ineligible to engage in limited practice as a representative of any taxpayer. Under the regulations, individuals subject to Circular 230 may not assist, or accept assistance from, individuals who are suspended or disbarred with respect to matters constituting practice ( i.e ., representation) before the IRS, and they may not aid or abet suspended or disbarred individuals to practice before the IRS.

Disciplinary sanctions are described in these terms:

Disbarred by decision, Suspended by decision, Censured by decision, Mone- tary penalty imposed by decision, and Disqualified after hearing —An administrative law judge (ALJ) issued a decision imposing one of these sanctions after the ALJ either (1) granted the government’s summary judgment motion or (2) conducted an evidentiary hearing upon OPR’s complaint alleging violation of the regulations. After 30 days from the issuance of the decision, in the absence of an appeal, the ALJ’s decision becomes the final agency decision.

Disbarred by default decision, Sus- pended by default decision, Censured by default decision, Monetary penalty imposed by default decision, and Dis- qualified by default decision —An ALJ, after finding that no answer to OPR’s complaint was filed, granted OPR’s motion for a default judgment and issued a decision imposing one of these sanctions.

Disbarment by decision on appeal, Suspended by decision on appeal, Cen- sured by decision on appeal, Monetary penalty imposed by decision on appeal, and Disqualified by decision on ap- peal —The decision of the ALJ was appealed to the agency appeal authority, acting as the delegate of the Secretary of the Treasury, and the appeal authority issued a decision imposing one of these sanctions.

Disbarred by consent, Suspended by consent, Censured by consent, Mone- tary penalty imposed by consent, and Disqualified by consent —In lieu of a disciplinary proceeding being instituted or continued, an individual offered a consent to one of these sanctions and OPR accepted the offer. Typically, an offer of consent will provide for: suspension for an indefinite term; conditions that the individual must observe during the suspension; and the individual’s opportunity, after a stated number of months, to file with OPR a petition for reinstatement affirming compliance with the terms of the consent and affirming current fitness and eligibility to practice ( i.e ., an active professional license or active enrollment status, with no intervening violations of the regulations).

Suspended indefinitely by decision in expedited proceeding, Suspended indef- initely by default decision in expedited proceeding, Suspended by consent in expedited proceeding —OPR instituted an expedited proceeding for suspension (based on certain limited grounds, including loss of a professional license for cause, and criminal convictions).

Determined ineligible for limited practice —There has been a final determination that an unenrolled/unlicensed return preparer is not eligible for limited representation of any taxpayer because the preparer violated standards of conduct or

September 19, 2016 376 Bulletin No. 2016–38

failed to comply with any of the requirements to act as a representative.

OPR has authority to disclose the grounds for disciplinary sanctions in these situations: (1) an ALJ or the Secretary’s delegate on appeal has issued a final decision; (2) the individual has settled a disciplinary case by signing OPR’s “consent to sanction” agreement admitting to one

City & State Name

California

or more violations of the regulations and consenting to the disclosure of the admitted violations (for example, failure to file Federal income tax returns, lack of due diligence, conflict of interest, etc.); (3) OPR has issued a decision in an expedited proceeding for indefinite suspension; or (4) OPR has made a final determination (including any decision on appeal) that an

Professional

unenrolled/unlicensed return preparer is ineligible to represent any taxpayer before the IRS.

Announcements of disciplinary sanctions appear in the Internal Revenue Bulletin at the earliest practicable date. The sanctions announced below are alphabetized first by state and second by the last names of the sanctioned individuals.

Designation Disciplinary Sanction Effective Date(s)

Lafayette Crawford, Scott M. CPA Suspended by default decision in expeditedproceeding under 31 C.F.R. § 10.82(b)

Gardner, Paul E., see Louisiana

Grodsky, Edward B., see New York

Fullerton McPeak, Rick L. CPA Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

La Habra McKinney, Gordon A. CPA Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Sacramento Richards, James S. Attorney Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Trabuco Canyon Rosenbaum, Keith A. Attorney Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Colorado

Parker Iley, Don R. CPA Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Florida

Jacksonville Keasler, Jr., Frank R. Attorney/ CPA

Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from May 3, 2016

Indefinite from April 28, 2016

Indefinite from June 15, 2016

Indefinite from May 25, 2016

Indefinite from May 10, 2016

Indefinite from April 21, 2016

Indefinite from May 25, 2016

Palm Beach Gardens

Konigsberg, Paul J. CPA Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Bulletin No. 2016–38 377 September 19, 2016

City & State Name

Boynton Beach Van De Warker, John N.

Kansas

Professional

Designation Disciplinary Sanction Effective Date(s)

CPA Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from May 12, 2016

Indefinite from June 21, 2016

Indefinite from April 15, 2016

Indefinite from June 21, 2016

Wichita Boisseau, Eldon L. Attorney Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Louisiana

Gretna Gardner, Paul E. CPA Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Maryland

Monkton Good, Tamara R. Attorney Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Missouri

Boisseau, Eldon L., see Kansas

New Jersey

Asbury Park Levin, Robert J. CPA Suspended by consent under Indefinite from 31 C.F.R. § 10.51(a)(6) April 12, 2016

New York

Oceanside Grodsky, Edward B. CPA Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Konigsberg, Paul J., see Florida

North Carolina

Lumberton Chavis, Ertle K. Attorney Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Texas

Ector Cox, Sharron L. Attorney Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Katy Hammond, III, Charles E.

Attorney Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from May 12, 2016

Indefinite from April 15, 2016

Indefinite from April 19, 2016

Indefinite from May 24, 2016

September 19, 2016 378 Bulletin No. 2016–38

City & State Name

Professional

Designation Disciplinary Sanction Effective Date(s)

Fair Oaks Mitchell, James L. Attorney Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

West Virginia

Charlestown Walsh, Edward J. CPA Suspended by decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Wisconsin

Madison Armstrong, Jenny R. Attorney Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Greendale Noggle, John C. CPA Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Sheboygan Sherman, Scott CPA Suspended by default decision in expedited proceeding under 31 C.F.R. § 10.82(b)

Indefinite from April 19, 2016

Indefinite from May 12, 2016

Indefinite from May 3, 2016

Indefinite from April 28, 2016

Indefinite from May 25, 2016

Deletions from Cumulative List of Organizations, Contributions to Which are Deductible Under Section 170 of the Code

Announcement 2016–31

Table of Contents

The Internal Revenue Service has revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Internal Revenue Code of 1986.

Generally, the IRS will not disallow deductions for contributions made to a listed organization on or before the date of announcement in the Internal Revenue Bulletin that an organization no longer qualifies. However, the IRS is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c)(2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation of the ruling or determination letter, (2) was aware that such revocation was imminent, or (3) was in part responsible for or was aware of the activities or omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on September 19, 2016 and would end on the date the court first determines the organization is not described in section 170(c)(2) as more particularly set for in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.

NAME OF ORGANIZATION Effective Date of Revocation LOCATION

Mount Carmel Youth Ranch January 1, 2008 Powell, WY

Bulletin No. 2016–38 379 September 19, 2016

Notice of Proposed Rulemaking by Cross- reference to Temporary RegulationsElection into the Partnership Audit Regime Under the Bipartisan Budget Act of 2015

REG–105005–16

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY: This document contains proposed regulations pursuant to section 1101(g)(4) of the Bipartisan Budget Act of 2015 regarding an election to apply the new partnership audit regime enacted by that act to certain returns of a partnership. The regulations provide the time, form, and manner for making this election. The regulations affect any partnership that wishes to elect to have the new partnership audit regime apply to its returns filed for certain taxable years beginning before January 1, 2018.

DATES: Written or electronic comments and requests for a public hearing must be received by October 4, 2016.

ADDRESSES: Send submissions to: CC: PA:LPD:PR (REG-105005–16), room 5207, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA: LPD:PR (REG–105005–16), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224, or sentelectronically via the Federal eRulemaking Portal at http:// www.regulations.gov (IRS REG–105005– 16). The public hearing will be held in the Auditorium, Internal Revenue Service Building, 1111 Constitution Avenue, NW, Washington, DC 20224. FOR FURTHER INFORMATION CONTACT:Jenni M. Black at (202) 317-6834 (not a toll-free number).

Background and Explanation of Provisions

This notice of proposed rulemaking cross-references to temporary regulations published in the Rules and Regulations section of this issue of the Bulletin . The temporary regulations amend the Procedure and Administration Regulations (26 CFR part 301) to provide rules for the time, form, and manner of making the election under section 1101(g)(4) of the Bipartisan Budget Act of 2015, Public Law 114–74 (BBA) for taxable years beginning after November 2, 2015 and before January 1, 2018. The BBA was enacted on November 2, 2015, and was amended by the Protecting Americans from Tax Hikes Act of 2015, Public Law 114–113, div. Q (PATH Act) on December 18, 2015.

The text of the temporary regulations also serves as the text of these proposed regulations. The Background and Explanation of Provisions contained in the preamble to the temporary regulations explains these proposed regulations.

Special Analyses

Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required.

Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that the collection of information contained in this regulation will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the collection of information contained in this regulation is voluntary and will only occur if a partnership elects into the new partnership audit regime enacted by the BBA for taxable years beginning after November 2, 2015 and before January 1, 2018. In addition, the new partnership audit regime is new, and the IRS has yet to provide guidance on the application of the new partnership audit regime generally. As a result, the IRS estimates that there will not be a substantial number of small entities that elect into the regime for an eligible taxable year. However, even if a substantial number of small entities elect into the

new BBA regime for an eligible taxable year, the election under this regulation requires only a short statement containing limited and readily available information. Therefore, the IRS estimates that the economic impact on electing small entities will not be significant. Accordingly, a regulatory flexibility analysis is not required.

Pursuant to section 7805(f) of the Code, these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Request for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any electronic and written comments (a signed original and eight (8) copies) that are submitted timely to the IRS. The IRS and Treasury request comments on all aspects of the proposed rules. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by a person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place of the hearing will be published in the Fed- eral Register .

Drafting Information

The principal author of these proposed regulations is Jenni M. Black of the Office of the Associate Chief Counsel (Procedure and Administration). However, other personnel from the Treasury Department and the IRS participated in their development.

- - - Income taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 301 is amended as follows:

PART 301—PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 is amended by adding an entry in numerical order to read as follows:

Authority: 26 U.S.C. 7805 ***

September 19, 2016 380 Bulletin No. 2016–38

- - ** Section 301.9100–22 also issued under section 1101(g)(4) of Pub. L. 114–74.
- - ** Par 2. Section 301.9100–22 is added to read as follows:

§301.9100–22 Time, form, and manner of making the election under section

1101(g)(4) of the Bipartisan Budget Act of 2015 for taxable years beginning after November 2, 2015 and before January 1, 2018.

[The text of this proposed section is the same as the text of §301.9100–22T published elsewhere in this issue of the Bul- letin ].

Mark E. Matthews, Deputy Commissioner for Services and

Enforcement.

(Filed by the Office of the Federal Register on August 4, 2016, 8:45 a.m., and published in the issue of the Federal Register for August 5, 2016, 81 F.R. 51853)

Bulletin No. 2016–38 381 September 19, 2016