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Home » About NAEA » NAEA Governance » Code of Ethics and Rules of Professional Conduct

Code of Ethics and Rules of Professional Conduct

Code of Ethics

Members and Associates will, in personal and public life, strive to enhance the status of Enrolled Agents and promote their qualifications to serve the public.
Members and Associates will demonstrate honesty, integrity and objectivity in all of their professional actions and relationships.
Members and Associates will continually strive to improve upon their competence to practice by keeping informed and educated about tax practice and representation.
Members and Associates will maintain the confidentiality of professional relationships.
Members and Associates will support all efforts to advance the reputation and prestige of the EA license.
Members and Associates will so conduct themselves and their practices that they remain in compliance with the most current provisions of Treasury Department Circular 230 and the NAEA Rules of Professional Conduct.

Rules of Professional Conduct

Members and Associates will adhere to all laws and regulations that provide equal opportunity for all clients and employees regardless of race, color, religion, gender, national origin, age, handicap, sexual orientation, or any other legally protected class.
Members and Associates will maintain a confidential relationship between themselves and their clients, or former clients, disclosing confidential information only when authorized or legally obligated to do so. Members and Associates will instruct employees that information acquired in their duties is confidential and will ensure that confidentiality is maintained.
Members and associates will promptly submit requested information to the I.R.S. unless the member or associate believes, in good faith and on reasonable grounds, that the information is privileged. Similarly, members and associates must not interfere with lawful efforts by the I.R.S. to obtain any record of information unless the member or associate believes in good faith and on reasonable grounds that the information is privileged.
Only Members may designate themselves “Member(s) of the National Association of Enrolled Agents”; only Associates may designate themselves as “Associate(s) of the National Association of Enrolled Agents.”
Members and Associates will not represent conflicting interests without express written consent of all parties after full disclosure.
Members and Associates will not allow their related business interests to affect representation of a client. If the propriety of a Member’s or Associate’s own conduct in a transaction is in question, it may be difficult or impossible for the Member or Associate to offer detached advice. Members and Associates will advise all appropriate parties of potential conflicts. Members and Associates must immediately disclose their interests when referring a client to another firm or enterprise for services. Members and Associates will refuse any gift, favor or hospitality that would influence or appear to influence their actions.
Members and Associates will take a position on a tax return favorable to their clients only if there is a realistic possibility that the position will be sustained on its merits, unless the position is disclosed on the return. Members and Associates have the absolute duty to explain in writing the probable effects of various alternatives to their clients who must make the final decision as to the position to be taken when the applicable law is unsettled or the application of law to the facts in a given situation is uncertain.
Members and Associates will not knowingly, directly or indirectly, employ, form an association or partnership with, be employed by, accept assistance of, or share fees with, a person, associate, correspondent or subagent who has been disbarred or suspended.
Members and Associates will avoid any appearance of impropriety when paying or accepting a commission to obtain a client, or to refer products or services. It will not be inappropriate to purchase a tax practice, to make retirement payments to persons formerly engaged in a tax practice, or to make payments to their heirs or estates.
Members and Associates who are engaged simultaneously in another occupation will conduct themselves in such a manner so as not to create a conflict of interest in rendering professional tax service or professional advice. No Member or Associate will accept or pay a commission for the sale or referral of products or services unless properly licensed, and those facts are fully disclosed in writing, to the client. No Member or Associate will pay a commission or referral fee to an employee for referring a client for products or services unless such employee is properly licensed.
Members and Associates will not solicit clients by advertising or other forms of solicitation in a manner that presents a false, misleading, or deceptive appearance. Members will not solicit clients in any manner prohibited by the most current provisions of Circular 230.
Members and Associates will undertake only those tax matters which the Member or Associate, or the Member’s or Associate’s firm, can reasonably expect to complete with professional competence. Members and Associates will obtain sufficient relevant data to afford a reasonable basis for conclusions or recommendations in relation to the task.
Members and Associates will be considerate and courteous in dealing with representatives of governmental agencies. In practice, the Member and Associate is under a duty to provide all information required by a statute or regulations, and formally requested by the authorized governmental agency. The defense of the client must be exercised within the bounds of the law and without resorting to deception.
Members and Associates will not suggest, state, promise, or give the impression that they are able to obtain special consideration from governmental agencies or their representatives, including making reference to previous I.R.S. employment.
Members and Associates will advise a client, preferably in writing, if they suspect the client may not have complied with the revenue laws or (may) have made an error in, or omission from a return, document, affidavit, or paper which the client is required by law to execute concerning the matter, and also advise the client of the consequences of the noncompliance, error or omission.
Members and Associates will not knowingly misrepresent or omit material facts in preparation of tax returns. Should a client insist, the Member and Associate will withdraw and refuse to prepare the return.
Members and Associates will not represent a client, or where representation has commenced, will withdraw from representation of the client if:
1. the representation will result in violation of the rules of professional conduct or the law,
2. the Member's or Associate’s physical or mental condition materially impairs his/her ability to represent the client,
3. the client persists in a course of action involving the Member’s or Associate’s services that the member or Associate believes is criminal or fraudulent,
4. the client has used the Member’s or Associate’s services to perpetrate a crime or fraud, or
5. the Member or Associate is discharged.
Members and Associates may withdraw from representing a client if:
1. the client insists on pursuing an objective that the Member or Associate considers imprudent,
2. the client fails substantially to fulfill an obligation to the Member or Associate regarding the Member’s or Associate’s services and has been given reasonable warning that the Member or Associate will withdraw unless the obligation is fulfilled,
3. the representation will result in an unreasonable financial burden on the Member or Associate or has been rendered unreasonably difficult by the client, or
4. other good cause for withdrawal exists.
Upon termination of representation, a Member or Associate will make reasonable steps to protect the client’s interests, providing reasonable notice, allowing time for employment of another practitioner, surrendering papers and property to which the client is entitled, and refunding advance fees that have not been earned. The Member or Associate must retain papers relating to the client to the extent required by law.
Members and Associates will furnish to clients or former clients, upon request and reasonable notice, any accounting or other records obtained from the client.
Tax preparation services will not be offered or rendered under any arrangement except as authorized by the most current provisions of Circular 230.

APPENDIX A

GENERAL
The Association has the obligation to prescribe and enforce standards for its Members and Associates. Investigations and hearings described herein establish the Association’s procedures for judging individuals’ adherence to these standards. At any stage of proceedings discussed below, the Respondent may choose to resign; NAEA has no obligation to suggest or accept such resignation.
II. DEFINITIONS
1. Censure. A disciplinary action taking the form of a warning or reprimand. This is the mildest form of discipline.
2. Clear and Convincing Evidence. Evidence that is more than a mere preponderance [i.e., it is more likely than not that A is true (there is a 51% probability that A is true)], but that need not be beyond a reasonable doubt. Evidence sufficient to create in the mind of the decision maker a firm belief that the thing it is offered to prove is established.
3. Complaint. A statement in writing containing a clear and concise statement of facts that a Member or Associate (herein called Respondent) has violated the ethical standards set forth by this Association. The statement will include pertinent dates of the alleged unethical practice and be signed by the Complainant(s). A Complainant may or may not be a Member or Associate of the Association.
4. Conflict of Interest. A conflict of interest arises when any person involved in a disciplinary proceeding (other than the Complainant or Respondent) has a personal, professional, or financial interest in, or stake in, the outcome of the proceedings or stands to benefit or suffer personally, professionally or financially in the outcome. A hearing officer, for example, who happens to be a partner, employee of, or otherwise has substantial business relationships with; vendor to; customer of; or competitor of the Respondent has a conflict of interest. A person serving in more than one capacity in the same proceeding has a conflict of interest (e.g., a person who initially investigated the charge may not serve as the hearing officer). A conflict of interest may arise from appearances, as well as reality. For example, even though the hearing officer and the Respondent personally are not acquainted, if the companies employing them have a relationship, the appearance of conflict may be created. No party or witness will be deprived of the opportunity to be heard merely because of a conflict of interest, but such conflict, if any, may be considered as going to the weight or credibility of the evidence offered.
5. Expulsion. Loss of NAEA Member or Associate rights and privileges. Should proceedings result in expulsion, NAEA has the right to disclose only that a person is no longer a Member or Associate.
6. Fraud. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he/she will act upon it to his/her legal injury. More generally, any means resorted to by one individual to gain advantage over another by false suggestions or by suppression of truth, including surprise, trick, cunning, dissembling, and any unfair way by which another is cheated.
7. Suspension. An intermediate form of discipline, between censure and expulsion. A person who is suspended loses the right to use any NAEA trade name, trademark, service mark or collection mark, to vote, to receive Member or Associate-only mailings and discounted program rates, to serve as committee person, director or officer of NAEA or its Affiliates for the period of suspension.
COMPLAINT PROCEDURES
1. Initial Handling and Review
  1. The Association’s Executive Vice President will initially receive all complaints. If the President of the state Affiliate or the state Affiliate E&PC Committee is the first to receive a complaint, the complaint will be forwarded within ten (10) days to the Executive Vice President of the Association. The complaints will be reviewed for required information as set forth in II. C. above. The Executive Vice President will send written acknowledgement of receipt of the complaint within thirty (30) days to the complainant. A complete log or diary should be kept for inspection by any member of the E&PC Committee will be maintained by the chair; but only open for inspection to members of the committee and the NAEA Executive Vice President or NAEA’s President upon written request.
  2. Every complaint will be reviewed and evaluated by the NAEA Chair of the Ethics and Professional Conduct (E&PC) Committee. Neither the Chair nor the E&PC Committee will be obligated to act on every complaint received. The chair will report to the NAEA Executive Vice President as to the disposition of all complaints.
  3. The Chair of the NAEA E&PC Committee will refer the complaint to the President of the state Affiliate of the jurisdiction in which the Respondent is a Member. Upon request by the state Affiliate, at any time in the process, the NAEA E&PC Committee will process the complaint.
  4. Where the respondent is an officer or director of the National Association, the NAEA E&PC Committee alone will process the complaint. Where the respondent is an Associate with no state affiliation, the NAEA E&PC alone will process the complaint.
2. Investigation
  1. The state Affiliate President or the NAEA E&PC Committee Chair will notify the Respondent within thirty (30) days of receiving the complaint. The notice will be in writing, setting forth the nature of the charge and the allegations supporting the charge, advising the Respondent of his/her rights under the disciplinary procedure, and requesting a response within thirty (30) days.
  2. The state Affiliate President or NAEA E&PC Committee Chair will appoint two NAEA Members to investigate the charge and report back within sixty (60) days to the President or Chair with a recommendation.
3. Hearing
  1. Upon receipt of the investigative file, the state Affiliate E&PC Committee or NAEA E&PC Committee will notify the Respondent that the investigation is complete and inquire as to whether the Respondent wishes to have a hearing before the Committee. If a hearing is requested by the Respondent, the Respondent will be notified of the date, time and place of the hearing at least thirty (30) days prior to the date of the hearing. If the Respondent declines the opportunity to have a hearing or if the Respondent fails to reply within ten (10) days, the Committee will issue findings of fact and a recommended decision as described in Section III.
  2. If the Respondent requests a hearing, only members of the state Affiliate E&PC Committee or the NAEA E&PC Committee will hear the matter. The hearing committee will consist of no fewer than three members. The hearing committee will select a Chair to preside at the hearing. If, for any reason, the state Affiliate E&PC Committee is unable or unwilling to conduct the hearing, the only requirement to transfer the hearing is a written request from the Chair of the state Affiliate E&PC Committee to the Chair of the NAEA E&PC Committee for the NAEA E&PC Committee to conduct the hearing. This request will be made within fifteen (15) days of receipt of the Respondent’s request for hearing.
  3. Hearing attendance is restricted to committee members, the Respondent, the Respondent’s counsel (if applicable), the state Affiliate or National counsel (if applicable), and a transcriber. Additional persons may be allowed to attend by the Committee with the agreement of the Respondent. Witnesses, including the Complainant, will not be allowed to attend any part of the hearing in which they are not directly involved. Evidence will be considered informally, hearsay evidence will be admissible, but the Chair will exclude irrelevant or unduly repetitive testimony. Speakers’ time restrictions may be imposed by the chair and stated in advance of the hearing opening.
  4. The Respondent will have the right to appear before the hearing committee in person, to be represented by counsel, to present witnesses, to make an opening statement, to examine and rebut unfavorable evidence and to make a closing argument. The hearing will be recorded and transcribed verbatim. The use of a tape recorder is authorized for this purpose. The transcriber will not be a Member or Associate of the Association. All documents accepted by the Chair will be made an official part of the hearing record.
  5. Deliberations of the Committee will be held in executive session with no non-committee member present. The transcriber and all parties to the hearing are to be excused.
  6. The rulings and decisions of the hearing Chair, concerning the proceedings, will be final and binding.
FINDINGS AND RECOMMENDATIONS
1. Findings
  1. Disciplinary action recommendations are limited to dismissal, censure, suspension, or expulsion.
  2. In determining a recommendation, the Committee should take into account all of the facts and circumstances it deems relevant, including, but not limited to the following (where applicable):
    1. The extent of the seriousness of the offense (e.g., intentional fraud, negligent misrepresentation or innocent mistake).
    2. Whether this is the first offense or complaint; and if not, the date of the last offense and the nature of that offense (e.g., similar to or same as a previous offense, so that the Respondent should have known better, or a new one).
    3. The extent of seriousness of the harm done to others (e.g., purely monetary loss or some sort of physical injury or harm to reputation, loss of income, etc.).
    4. Whether the Respondent has been, will be, or is likely to be subject to other liability or punishment.
    5. The extent to which the Respondent has been forthcoming, cooperative, and responsive in the investigation and the proceedings.
    6. Whether the Respondent made restitution to Complainant(s).
    7. Whether the Respondent has been subject to discipline by NAEA (or a state Affiliate) before. If so, what are the details?
    8. Whether the organization has handled a similar case in the past and, if so, what was done?
    9. Whether there are any mitigating circumstances.
2. Dismissal
  1. After initial review of the complaint as set forth in III.A.2 above, the Chair of the NAEA E&PC Committee, after consultation with legal counsel or whoever is deemed appropriate, may, in the exercise of sound discretion, dismiss a complaint.
  2. For purposes of illustration only and not intended to be a complete or exhaustive list, a complaint may be dismissed for the following reasons:
    1. Failure to state a claim on which relief can be granted (e.g., accusing someone of being rude).
    2. Basing a complaint on matters which are already covered by another authority, jurisdiction or regulated by law (e.g., accusing a superior of sexual harassment at work; accusing someone of anti-competitive practices).
    3. Knowledge that the same acts or omissions complained of are already the subject of investigation, discipline or prosecution (e.g., accusing someone of a crime for which he/she is already under indictment or on trial) by another body.
    4. Failure to allege a violation with specificity and/or with sufficient facts, evidence or detail to support the charge.
    5. Failure to comply with the requirements for a proper complaint (e.g., failing to disclose the complainant’s identity or failing to sign the complaint).
    6. On the advice of legal counsel, that no further action should be taken on the complaint.
  3. At any time during the investigative process, the state Affiliate President or NAEA E&PC Committee Chair may decide to dismiss the complaint if or when he/she becomes persuaded it is appropriate to do so under the same reasons given in IV.B.2. above.
  4. In the event the Chair of the NAEA E&PC Committee or the state Affiliate President dismisses the complaint, the NAEA E&PC Committee Chair will notify the Complainant of such decision. If the decision to dismiss the complaint is for reasons other than the written advice of legal counsel recommending such action, the Complainant will be notified that the decision to dismiss may be appealed to the President of the Association, who, in consultation with the Chair, may sustain or overrule the decision.
  5. During the executive session of the hearing, after careful deliberation, the committee may by vote or written consent of the majority of the members present, make written findings of fact and recommend upon the clear and convincing evidence contained in the investigative file and revealed at the hearing (if held) to dismiss the complaint. If the Committee decision is to dismiss the complaint, this decision is final. Notification of dismissal of the complaint will be mailed to the state Affiliate President, the Respondent, the Complainant and the NAEA Executive Vice President within ten (10) days.
3. Censure
  1. Should the committee recommend censure, a copy of the finding of fact and recommendation will be mailed to the Respondent within fifteen (15) days.
  2. A censure must be in writing and clearly outline the consequences in the event of a repetition of the conduct.
4. Suspension or Expulsion
  1. Should the committee recommend suspension or expulsion, a copy of its finding of fact and recommendation will be mailed to the Respondent at least fifteen (15) days prior to the effective date of suspension or expulsion.
  2. Upon receipt of a state Affiliate’s or NAEA E&PC Committee’s findings and recommendation for suspension or expulsion of a Member or Associate, the President of the National Association will call a meeting of the NAEA Board of Directors, unless a regularly scheduled meeting is to be held within 90 days, to review the state Affiliate’s or NAEA E&PC Committee findings and recommendation. Excluded from this review will be all Officers and Directors from the state Affiliate who participated in processing the case at the state level. The Respondent may be heard at this session, if so desired. All disciplinary action hearings will be held in closed Executive Session.
  3. The NAEA Board of Directors, upon reviewing the investigative file and recommendation will confirm, modify or dismiss the recommendation of the state Affiliate or NAEA E&PC Committee. In reviewing the findings and recommendation, the NAEA Board of Directors will consider the facts and circumstances as identified in Section III. A. 2. above. This procedure is a final automatic appeal on the record of a decision to suspend or expel a Member or Associate.
  4. NAEA was incorporated in California and the California Corporation Code requires that suspension or expulsion be done in good faith and in a fair and reasonable manner. A procedure is deemed fair and reasonable when:
    1. It is set forth in the bylaws or copies of provisions are sent annually to all Members or Associates.
    2. Fifteen (15) days prior notice of suspension or expulsion and reason(s) therefor are given to the Respondent.
    3. An opportunity is provided for the Member or Associate to be heard orally or in writing, not less than five days before the effective date of suspension or expulsion by a body (or person) authorized to decide that the proposed suspension or expulsion not take place.
ADMINISTRATIVE DEMANDS
1. All mailings to Complainant or Respondent referred to herein will be by registered or certified mail, return receipt requested.
2. No postponements or delays will be granted in the processing of a case unless unusual circumstances arise.
3. Any inspection or receipt of tax return information as a part of these procedures will be in accordance with existing laws, rules, and regulations.
4. No reviewing authority will increase the severity of disciplinary action.
5. Confidentiality will be established and maintained throughout the processing of a complaint.
6. The investigative file, hearing record, findings of fact and recommendation will be mailed to the state Affiliate President and the National Association Executive Vice President within fifteen (15) days of the hearing, or if no hearing is held, within thirty (30) days of completion of the investigation. All duplicate records will be destroyed.
7. Records of all proceedings of the action, including transcripts, will be sealed and retained at the NAEA National Office and state Affiliate headquarters (if no headquarters exist, the NAEA National Office will serve as custodian) for a period of five (5) years from the final decision of the highest Board to which referred or appealed and, if no legal action has been instituted for reinstatement within that time, destroyed by the President of the body with custody of these records. The records will be fully retained while any legal action is pending on the matter.
8. In the event of a conflict of interest or bias among any person serving in any capacity in a proceeding, that person will excuse him/herself from participation.
9. No E&PC committee member or state affiliate E&PC committee member will be compensated for their service (time). The respective convening authority will be responsible for charges incurred during conduct of its business. NAEA will reimburse NAEA E&PC committee members for travel, lodging and mailing in accordance with NAEA standing rules and procedures. The state affiliate will reimburse its E&PC committee members in accordance with its own standing rules and procedures.
10. Any state Affiliate Board of Directors that wishes to have a standing committee for Ethics and Professional Conduct must adopt the NAEA Code of Ethics and Rules of Professional Conduct at least as comprehensive as NAEA’s and “fair and reasonable” Procedures. This “fair and reasonable” criterion requires the Code, Rules and Procedures to be either set forth in the state Affiliate Bylaws, adopted by reference in the state Affiliate Bylaws, or sent annually to all Members or Associates within the state Affiliate.

November 2007

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