Ethics, Standards & IRS Representation Flashcards

Which IRS notice initiates the formal Appeals process after an examination and gives the taxpayer 30 days to respond?

Answer: 30-Day Letter (Letter 525)

The 30-Day Letter (Letter 525) follows an examination and gives the taxpayer 30 days to request a conference with IRS Appeals before a statutory notice is issued.

Under Circular 230, which conduct subjects a practitioner to immediate suspension without a prior disciplinary hearing?

Answer: Being convicted of a felony involving dishonesty or breach of trust

Circular 230 §10.82 authorizes expedited suspension for practitioners convicted of crimes involving dishonesty, breach of trust, or certain tax offenses without a full prior hearing.

A taxpayer and the IRS reach a closing agreement under IRC §7121. What is the legal effect of this agreement?

Answer: It is final and conclusive, binding on both the taxpayer and the government

A closing agreement under IRC §7121 is final and conclusive for the tax years covered and cannot be reopened except upon a showing of fraud, malfeasance, or misrepresentation.

Which of the following statements about IRS installment agreements is CORRECT?

Answer: A taxpayer can request an installment agreement using Form 9465

Form 9465, Installment Agreement Request, is the standard form individuals use to request a payment plan for tax debts with the IRS.

When representing a client before the IRS, a CTC receives a subpoena for client documents. Under what circumstances may attorney-client privilege apply?

Answer: Tax advice privilege under IRC §7525 protects federally authorized tax practitioners in non-criminal matters

IRC §7525 extends a limited privilege (similar to attorney-client privilege) to federally authorized tax practitioners for tax advice in non-criminal proceedings.

A client asks a CTC to sign a return that includes a position the CTC believes lacks substantial authority and is not disclosed. The CTC should:

Answer: Refuse to sign and advise the client of the need for substantial authority or proper disclosure

Circular 230 §10.34 prohibits a practitioner from signing a return with an undisclosed position lacking substantial authority, regardless of the client's instruction.

What is the primary difference between an Offer in Compromise (OIC) based on 'doubt as to collectibility' and one based on 'doubt as to liability'?

Answer: Doubt as to liability requires submission of Form 656-L; doubt as to collectibility uses Form 656

Form 656-L is specifically for doubt as to liability OICs, while the standard Form 656 is used for doubt as to collectibility and effective tax administration.