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Ethics & Conduct·12 citations·Brief · sample·Generated April 2026

Research Result

Question: Can a CPA accept a contingent fee for preparing an amended tax return — specifically an ERC refund claim on Form 941-X?

Practice Brief: Contingent Fees on Amended Returns — Know the Rules

Bottom line: A CPA generally cannot accept a contingent fee for preparing an amended tax return; the only permissible exception is when the fee is based on results already determined by a judicial proceeding or governmental agency finding.

🔴 Action Required

  • Review every active amended-return engagement now and confirm any contingent fee arrangement qualifies under the narrow exception (judicial/agency determination already made — not a CPA-identified opportunity); restructure non-compliant engagements to fixed or hourly fees immediately. — AICPA Code § 1.510.001

  • Audit any ERC amended-return (Form 941-X) fee arrangements — IRS treats ERC refunds as substantially certain, making contingent fees a direct violation exposing the firm to OPR sanctions and state board discipline. — IRS Notice 2023-56; 31 C.F.R. § 10.27

  • Confirm all amended-return fee structures comply with both AICPA ET § 1.510.001 and Circular 230 § 10.27 simultaneously; Circular 230 alone is insufficient — the more restrictive AICPA rule governs for CPAs. — 31 C.F.R. § 10.27; AICPA Code § 1.510.001

🟡 Monitor

  • Texas practitioners should monitor TSBPA guidance before relying on the AICPA "not substantially certain" exception, as TSBPA interprets the contingent fee prohibition strictly and may not recognize that carve-out without an independent ethics ruling. — TX Admin. Code § 501.75

🟢 FYI

  • Contingent fees for tax consulting or planning (not return preparation) are generally permissible when no attest services are performed for the same client — document engagement scope carefully to distinguish advice from preparation. — AICPA Code § 1.510.001

  • Contingent fees for penalty or interest abatement matters only are permissible under a specific Circular 230 exception — relevant only to practitioners handling standalone penalty abatement work. — 31 C.F.R. § 10.27(b)(3)

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