Ethics & Professional Conduct Flashcards

The federally authorized tax practitioner privilege under IRC §7525 does NOT apply to:

Answer: Written communications promoting participation in a tax shelter

Section 7525 excludes written communications that promote tax shelters, and it never applies in criminal matters.

A tax coach advertises 'Guaranteed $20,000 tax savings or your money back' with no basis. Which Circular 230 provision is most directly violated?

Answer: §10.30 false or misleading solicitation

Section 10.30 prohibits false, fraudulent, or misleading solicitations and advertising.

A planning strategy has no meaningful non-tax purpose and does not change the client's economic position. Which doctrine allows the IRS to disallow it?

Answer: Economic substance doctrine, IRC §7701(o)

Section 7701(o) requires a meaningful change in economic position and a substantial non-tax purpose.

What accuracy-related penalty applies to an undisclosed transaction lacking economic substance?

Answer: 40%

The usual 20% §6662(b)(6) penalty rises to 40% when the relevant facts aren't adequately disclosed.

Under Circular 230 §10.24, a practitioner may NOT knowingly:

Answer: Accept assistance from a person disbarred or suspended from practice before the IRS

Section 10.24 bars knowingly accepting assistance from disbarred or suspended persons in matters before the IRS.

Under §10.22, a practitioner may rely on another person's work product if they:

Answer: Used reasonable care in engaging, supervising, training, and evaluating that person

Section 10.22(b) presumes due diligence when the practitioner used reasonable care in engaging, supervising, training, and evaluating the person.

The IRS lawfully requests records from a practitioner. Under §10.20, the practitioner must:

Answer: Promptly submit the records unless they believe in good faith and on reasonable grounds that they are privileged

Section 10.20 requires promptly submitting records unless the practitioner reasonably believes in good faith that they are privileged.