CAA CAA Agreement Terms and Fee Disclosure Requirements 2 — Questions and Answers
Question 1: Under the CAA agreement with the IRS, when must a CAA disclose service fees to clients?
- After the ITIN application is approved
- Before services are rendered (Correct answer)
- Within 30 days of filing the application
- Only if the client specifically requests fee information
Correct answer: Before services are rendered
CAAs are required to disclose all fees to clients before providing any services, ensuring full transparency and protecting applicants from unexpected charges.
Question 2: Which of the following actions constitutes a violation of the CAA agreement terms?
- Charging a fee for certifying ITIN application documents
- Submitting W-7 applications for non-resident aliens
- Implying IRS endorsement or employment in advertising materials (Correct answer)
- Retaining certified copies of reviewed documents for 3 years
Correct answer: Implying IRS endorsement or employment in advertising materials
CAAs are authorized agents, not IRS employees, and may not use language or advertising that implies an official IRS endorsement or employment relationship.
Question 3: Which category of individuals is a CAA authorized to assist with ITIN applications?
- Only U.S. citizens applying for replacement Social Security Numbers
- Only foreign nationals temporarily present in the U.S.
- Any individual who is ineligible for a Social Security Number and needs an ITIN for tax purposes (Correct answer)
- Only dependent children of U.S. citizens living abroad
Correct answer: Any individual who is ineligible for a Social Security Number and needs an ITIN for tax purposes
CAAs may assist any individual who cannot obtain an SSN and requires an ITIN for U.S. federal tax purposes, regardless of nationality or residency status.
Question 4: What action must a CAA take upon discovering an error in a previously submitted ITIN application?
- File an amended tax return on behalf of the applicant
- Contact the IRS ITIN office to report and correct the error (Correct answer)
- Wait for the IRS to independently identify and correct the error
- Ask the applicant to submit a new application without referencing the original
Correct answer: Contact the IRS ITIN office to report and correct the error
CAAs have a professional obligation to proactively contact the IRS ITIN office to disclose and correct errors found in previously submitted applications.
Question 5: A CAA who certifies documents without physically reviewing the originals in person is subject to which consequence?
- Additional continuing education requirements only
- Increased application fees for future submissions
- Termination of their CAA agreement and potential penalties (Correct answer)
- A temporary 90-day suspension of certification privileges
Correct answer: Termination of their CAA agreement and potential penalties
In-person review of original documents is a non-negotiable requirement; certifying without doing so is a material violation that can result in agreement termination and penalties.
Question 6: Which statement best describes the IRS's authority over existing CAA agreements?
- The IRS cannot terminate a CAA agreement once it has been formally approved
- The IRS may terminate a CAA agreement at any time for violations of program requirements (Correct answer)
- Only a federal court can terminate a CAA's authorization
- CAA agreements automatically terminate after exactly 5 years regardless of compliance
Correct answer: The IRS may terminate a CAA agreement at any time for violations of program requirements
The IRS retains the right to terminate a CAA agreement at any time if the agent violates program requirements, commits fraud, or otherwise fails to meet IRS standards.
Question 7: What must a CAA do if they permanently cease business operations?
- Automatically transfer their CAA status to another authorized agent
- Notify the IRS and properly close out their participation in the program (Correct answer)
- Complete a Form W-7 for each pending applicant before closing
- Transfer all pending client files directly to the IRS Austin Campus
Correct answer: Notify the IRS and properly close out their participation in the program
CAAs who cease operations must notify the IRS to formally end their participation in the program, ensuring compliance with agreement termination procedures.
CAA CAA Agreement Terms and Fee Disclosure Requirements 2
Under the CAA agreement with the IRS, when must a CAA disclose service fees to clients?