Ethics & Professional Conduct Flashcards

Under Circular 230 §10.21, what must a practitioner do upon learning a client failed to report income on a prior-year return?

Answer: Promptly advise the client of the noncompliance and its consequences

Section 10.21 requires advising the client of the error and its consequences, not reporting the client to the IRS.

Which situation permits a contingent fee under Circular 230 §10.27?

Answer: Preparing an amended return filed within 120 days of receiving a written IRS examination notice

A contingent fee is allowed for an amended return or claim filed within 120 days after the client receives written notice of an examination.

A client disputes your fee and asks for their records back. Under §10.28, what must you do?

Answer: Return the client records needed for the client's federal tax compliance, even during the dispute

Client records needed for tax compliance must be returned on request whether or not the fee dispute is settled.

Within how many days must a client's informed consent to a conflict of interest be confirmed in writing under §10.29?

Answer: 30 days

Written confirmation must be obtained within a reasonable time, no later than 30 days after consent.

How long must a practitioner keep written conflict-of-interest consents under §10.29?

Answer: 36 months from the end of the representation

Consents must be kept for at least 36 months after the representation ends and be available to the IRS on request.

Which of these is prohibited for a tax return preparer under IRC §6695(f) and §10.31?

Answer: Endorsing or negotiating a client's federal refund check

Preparers may not endorse or otherwise negotiate a taxpayer's refund check.

What is the IRC §6694(a) penalty for a preparer's understatement caused by an unreasonable position?

Answer: The greater of $1,000 or 50% of the income derived from the return

Section 6694(a) imposes the greater of $1,000 or 50% of the income derived; the $5,000/75% amount is for willful or reckless conduct.