Section 10.27(b)(l) of Circular 230 prohibits, with certain exceptions, charging a contingent fee for services rendered in connection with any matter before the Internal Revenue Service (the "Service"). The "audit exception," in Section 10.27(b )(2), allows a practitioner to charge a contingent fee for services rendered in connection with the Service's examination of, or challenge to, either an original tax return or an amended return (or claim for refund or credit) filed within 120 days of the taxpayer receiving a written notice of the examination of, or a written challenge to, the original tax return.

We understand the Service's concerns with respect to the use of contingent fees in representing a taxpayer before the Service. We appreciate the exceptions included in Section 10.27(b), allowing the use of contingent fees for situations less likely to involve the Service's concerns. We believe, however, that it would be appropriate to expand the scope of Section 10.27(b)(2) slightly