Circular 230 Due Diligence Questionnaire

Professional Tax Preparation Compliance Made Simple

For tax practitioners, enrolled agents, and CPAs, maintaining IRS Circular 230 compliance isn't optional—it's the foundation of ethical practice. This Circular 230 Due Diligence Questionnaire template helps tax professionals systematically document their reasonable inquiry process, establish a reasonable basis for all positions taken, and maintain proper conflict of interest disclosures.

Why Circular 230 Compliance Matters

IRS Circular 230 establishes the standards of practice for tax professionals representing clients before the IRS. The regulations require practitioners to exercise due diligence in preparing returns, determining the correctness of representations, and ensuring compliance with tax laws. Failure to maintain proper documentation can result in penalties, censure, or loss of practice rights.

This template streamlines the compliance process by creating a clear record of your due diligence efforts, protecting both you and your clients while ensuring adherence to professional standards.

Built for Tax Professionals Who Value Thoroughness

Whether you're a solo practitioner, part of a regional accounting firm, or managing tax preparation for multiple clients, this questionnaire addresses the core Circular 230 requirements:

• Reasonable Inquiry Documentation: Systematically gather taxpayer information with documented questions and responses
• Reasonable Basis Support: Collect supporting documentation for all tax positions, deductions, and credits claimed
• Conflict of Interest Disclosure: Identify and document potential conflicts before engagement
• Engagement Terms: Establish clear understanding of scope, limitations, and professional responsibilities
• Taxpayer Certifications: Obtain necessary acknowledgments and representations from clients

How Tax Professionals Use This Template

Before Tax Season: Customize the questionnaire for your specific practice areas (individual, business, estate, etc.) and integrate it into your client onboarding process.

During Client Intake: Send the form to new and returning clients to gather comprehensive information before beginning preparation work. The conditional logic shows only relevant questions based on their tax situation.

Documentation & Audit Trail: All responses are automatically captured with timestamps, creating a defensible record of your due diligence process that satisfies IRS requirements and protects you in case of examination.

Conflict Screening: The built-in conflict check helps identify potential adverse positions, related party situations, or other ethical concerns before engagement.

Paperform Makes Compliance Effortless

Unlike static PDF forms or spreadsheet trackers, Paperform transforms compliance documentation into a smooth, professional experience:

• Conditional Logic: Show only relevant questions based on entity type, filing status, and positions taken—avoiding unnecessary complexity for straightforward returns
• Document Collection: Securely gather W-2s, 1099s, receipts, and supporting documentation directly through file upload fields
• Data Integration: Connect to your practice management software, CRM, or tax software via Stepper to automatically update client records and trigger workflow steps
• Professional Presentation: Brand the form to match your firm's identity, building client confidence in your systematic approach
• Automatic Calculations: Use built-in calculation fields to verify information and flag inconsistencies requiring additional inquiry

Streamline Your Practice with Workflow Automation

Connect this form to Stepper, Paperform's AI-native workflow builder, to create end-to-end automation for your tax practice:

1. Client submits questionnaire → Stepper creates client folder in your document management system
2. Form captures conflict information → Stepper checks against existing client list and flags potential issues
3. Supporting documents uploaded → Stepper organizes files by category and tax year
4. Questionnaire completed → Stepper sends engagement letter via Papersign for eSignature
5. All documents signed → Stepper updates practice management software and assigns preparer

This automation eliminates manual data entry, ensures nothing falls through the cracks, and gives you more time for high-value tax strategy work.

Designed for Multiple Practice Areas

This template serves tax professionals across practice types:

• Individual Tax Preparers: Document income sources, deduction support, and credits claimed
• Small Business Accountants: Gather entity information, shareholder/partner details, and business expense documentation
• Estate & Trust Practitioners: Collect beneficiary information, asset valuations, and distribution documentation
• Enrolled Agents: Maintain comprehensive records for IRS representation and audit defense
• CPA Firms: Standardize due diligence across all preparers and create consistent documentation quality

Security & Compliance Built In

Tax information requires the highest level of data protection. Paperform is SOC 2 Type II compliant with robust security controls including encryption at rest and in transit, role-based access controls, and audit logging. Store sensitive client data with confidence knowing your form platform meets the same security standards you expect from your tax software.

You can also take advantage of data residency controls to ensure client information stays within specific geographic regions, meeting additional regulatory requirements for international practices.

Getting Started

This questionnaire is ready to use immediately but easily customizes to your practice:

• Add practice-specific questions for your specialty areas (international tax, cryptocurrency, state nexus, etc.)
• Modify disclosure language to match your engagement letter terms
• Adjust conditional logic for the types of clients and returns you typically handle
• Integrate with your existing tech stack through native integrations or Stepper workflows

Circular 230 compliance doesn't have to mean mountains of paperwork and manual processes. With Paperform, you get a professional, efficient system that protects your practice while delivering a modern client experience.

Start using this template today and transform your due diligence process into a strategic advantage that sets your practice apart.