Client Communication & Advisory Skills Flashcards

Before using a client's tax return information to market a non-tax financial product, what does IRC §7216 generally require?

Answer: The client's prior written consent in the required form

Section 7216 and its regulations require specific prior written consent before return information is used or disclosed for most purposes beyond preparing the return.

A tax coach represents both spouses during a divorce and their interests become directly adverse. Under Circular 230 §10.29, representation may continue only if:

Answer: The practitioner reasonably believes they can represent each competently and diligently, it is not prohibited by law, and each client gives informed consent confirmed in writing

Section 10.29 allows representation despite a conflict only with a reasonable belief of competent representation and written informed consent from each affected client.

Which statement best describes the federally authorized tax practitioner privilege under IRC §7525?

Answer: It extends attorney-client-style confidentiality to tax advice in noncriminal matters before the IRS or in federal court proceedings brought by or against the U.S.

The §7525 privilege is limited to noncriminal tax matters and excludes written communications promoting tax shelters.

What is the best way to handle a client who keeps missing deadlines for documents needed to implement a strategy?

Answer: Set clear written deadlines, send reminders, and explain the tax cost of delay

Clear accountability and showing what delay costs in tax dollars keep implementation on track.

A prospect says, "My current CPA already handles my taxes." Which response best positions a tax coach's advisory service?

Answer: "Tax preparation records the past; proactive planning shapes the future. Has anyone shown you strategies to reduce next year's tax?"

Distinguishing historical compliance from forward-looking planning shows the coach's value without criticizing the CPA.

Under Circular 230 §10.22, when relying on information a client provides, a practitioner generally:

Answer: May rely in good faith without verification but must not ignore information that appears incorrect, inconsistent, or incomplete

Good-faith reliance is permitted, but reasonable inquiries are required when information appears questionable.

Which follow-up practice most strengthens client retention after a tax plan is delivered?

Answer: Scheduled check-ins to review implementation progress and law changes

Regular proactive check-ins reinforce value and keep strategies current and implemented.