CTC Ethics & Professional Conduct 2

Question 1

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

Accepted Answer

Promptly advise the client of the noncompliance and its consequences

Answer

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

Question 2

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

Accepted Answer

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

Answer

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

Question 3

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

Accepted Answer

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

Answer

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

Question 4

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

Accepted Answer

30 days

Answer

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

Question 5

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

Accepted Answer

36 months from the end of the representation

Answer

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

CTC - Certified Tax Coach Practice Test