CTC Regulatory Framework & Compliance 2

Question 1

Under Circular 230, which standard governs whether a tax practitioner may rely on information provided by a client without further verification?

Accepted Answer

Practitioners may rely on client information unless it appears incorrect, inconsistent, or incomplete

Answer

Circular 230 §10.34 allows practitioners to rely on client-furnished information absent reason to believe it is inaccurate or incomplete.

Question 2

A CTC discovers a client made an error on a prior-year return that resulted in a $25,000 underpayment. The client refuses to amend the return. What is the CTC's primary obligation?

Accepted Answer

Advise the client of the consequences and potentially withdraw from the engagement

Answer

Under Circular 230, a practitioner who learns of an uncorrected error must promptly advise the client of the error and its consequences, and may need to withdraw if the client refuses to correct it.

Question 3

Which IRS form must a tax preparer complete to register as an Authorized IRS e-file Provider?

Accepted Answer

Form 8633

Answer

Form 8633 (Application to Participate in the IRS e-file Program) is used to register as an Authorized IRS e-file Provider.

Question 4

The penalty under IRC §6694(b) for a tax preparer who willfully or recklessly understates a taxpayer's liability is:

Accepted Answer

$5,000 or 75% of the income derived, whichever is greater

Answer

IRC §6694(b) imposes a penalty of the greater of $5,000 or 75% of income derived from the return for willful or reckless understatements.

Question 5

Under the Bank Secrecy Act, which threshold triggers a currency transaction report (CTR) filing requirement?

Accepted Answer

Transactions exceeding $10,000

Answer

Financial institutions must file a CTR for cash transactions exceeding $10,000 in a single business day.

(CTC) Chartered Tax Consultant Practice Test

(CTC) Chartered Tax Consultant Practice Test

CTC Regulatory Framework & Compliance 2