Ethical and Professional Responsibilities Flashcards

A CTRS practitioner files a tax return taking an aggressive position without disclosing it. Under Circular 230, when is disclosure of a return position required?

Answer: When the position does not have at least substantial authority supporting it

When a tax return position lacks substantial authority, the practitioner must either disclose the position or ensure it has a reasonable basis to avoid preparer penalties.

A practitioner is soliciting clients via direct mail advertising tax resolution services. Under Circular 230, solicitations must:

Answer: Be truthful and not misleading, and clearly identify the practitioner's credentials

Circular 230 requires that practitioner solicitations be truthful, not misleading, and clearly identify the practitioner's credentials and qualifications.

Which of the following is an example of a practitioner exercising proper supervisory responsibility under Circular 230?

Answer: Reviewing the work of subordinates to ensure compliance with Circular 230 standards

Supervisors must take reasonable steps to ensure that subordinates' work complies with Circular 230, which includes reviewing their submissions.

A CTRS practitioner who is not an attorney provides written tax advice to a client. Under Circular 230, this advice must:

Answer: Be based on reasonable factual and legal assumptions and not mislead the client

All written tax advice from practitioners must be based on reasonable factual and legal assumptions and must not be misleading, regardless of whether it constitutes a formal opinion.

A potential client tells a CTRS practitioner that another firm offered to resolve their $200,000 tax debt for 'pennies on the dollar' through a guaranteed OIC. The CTRS practitioner should:

Answer: Explain that OIC acceptance depends on the IRS's evaluation of specific financial facts and cannot be guaranteed

OIC acceptance is based on the individual taxpayer's financial circumstances and IRS evaluation, and no practitioner can ethically guarantee a specific outcome.

Under Circular 230, if a practitioner is the subject of a disciplinary proceeding by the IRS OPR, the practitioner has the right to:

Answer: A conference with the OPR and the opportunity to present evidence and arguments

Practitioners subject to OPR disciplinary proceedings have the right to a conference and the opportunity to present evidence before sanctions are imposed.

A CTRS practitioner who is suspended from practice before the IRS attempts to assist a client by preparing a Power of Attorney form and having another practitioner sign it. This arrangement is:

Answer: A violation of Circular 230 because suspended practitioners may not assist in IRS practice matters

A suspended practitioner may not circumvent their suspension by assisting another practitioner in IRS matters; such arrangements violate Circular 230.