According to Circular 230, what should a CPA do upon discovery of an error in a client's prior- year return?

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According to Circular 230, a CPA should inform the client of the error and its tax consequences upon discovery of an error in a client's prior-year return. The CPA can then work with the client to file an amended return or take any necessary corrective actions. Filing an amended return or notifying the IRS may also be necessary in certain cases, but the first step should always be to inform the client. Simply doing nothing is not an option under Circular 230.

According to Circular 230, What Should a CPA Do Upon