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

Treasury Circular 230 sets forth the rules and ethical standards governing attorneys, CPAs, enrolled agents, and other practitioners before the IRS.

Question 2

Under Circular 230, a tax practitioner must NOT knowingly:

Accepted Answer

Submit false or misleading documents or information to the IRS

Answer

Circular 230 explicitly prohibits practitioners from knowingly submitting false or misleading documents or information to the IRS.

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

The SSTS provide ethical and professional guidance for CPAs in tax practice, covering areas such as return positions, estimates, and departure from prior-year positions.

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

IRC Section 6694 imposes penalties on tax return preparers who take unreasonable positions resulting in understatements of tax.

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

'More likely than not' means the position has a greater than 50% probability of being sustained upon examination.

CTA - Certified Tax Advisor Practice Test

CTA - Certified Tax Advisor Practice Test

CTA Tax Ethics and Professional Standards