CTA Tax Ethics and Professional Standards

Question 1

Which Treasury Department circular governs the conduct of practitioners before the IRS?

Accepted Answer

Circular 230

Answer

Circular 170

Answer

Revenue Procedure 2014-5

Answer

Publication 946

Question 2

Under Circular 230, a tax practitioner must NOT knowingly:

Accepted Answer

Submit false or misleading documents or information to the IRS

Answer

Represent a client in an audit without written authorization

Answer

Charge a contingent fee for preparing an original tax return

Answer

Request an extension of time for a client

Question 3

The AICPA Statements on Standards for Tax Services (SSTS) provide guidance for CPAs on:

Accepted Answer

Professional standards for tax practice, including recommendations and return positions

Answer

Audit procedures for tax-exempt entities

Answer

How to calculate the alternative minimum tax

Answer

Filing requirements for information returns

Question 4

A tax preparer who takes an unreasonable position on a tax return that results in an understatement of tax may be subject to which penalty?

Accepted Answer

Section 6694 preparer penalty

Answer

Civil fraud penalty

Answer

Failure-to-file penalty

Answer

Accuracy-related penalty on the taxpayer only

Question 5

What is the standard for a 'more likely than not' tax position in tax practice?

Accepted Answer

The position has greater than a 50% chance of being sustained on the merits

Answer

The position has a 25% or greater chance of being sustained

Answer

The position has been pre-approved by the IRS in a PLR

Answer

The position has been upheld by at least one court

Question 6

Which action by a tax practitioner constitutes a conflict of interest under Circular 230?

Accepted Answer

Representing two clients whose tax interests are directly adverse without proper consent

Answer

Representing two clients in the same industry

Answer

Charging different fee rates to different clients

Answer

Declining to represent a client in an audit