CTC Ethics, Standards & IRS Representation

Question 1

What is the primary purpose of Circular 230 issued by the IRS?

Accepted Answer

To govern ethical conduct and duties of tax practitioners

Answer

To define tax rates for individuals.

Answer

To regulate tax software providers.

Answer

To audit taxpayers annually.

Question 2

Which of the following may result in disbarment from practice before the IRS?

Accepted Answer

Committing fraud or engaging in unethical behavior

Answer

Using outdated tax forms.

Answer

Failing to respond to a client's call.

Answer

Overcharging for services.

Question 3

What is the role of a power of attorney (POA) in IRS representation?

Accepted Answer

To represent a taxpayer before the IRS with proper authorization

Answer

To file taxes on behalf of a client.

Answer

To grant legal ownership of assets.

Answer

To waive tax penalties.

Question 4

What ethical principle requires full disclosure of all relevant facts in tax filings?

Accepted Answer

Transparency

Answer

Confidentiality

Answer

Profitability

Answer

Punctuality

Question 5

How should a tax professional handle a conflict of interest?

Accepted Answer

Disclose the conflict and obtain informed consent

Answer

Ignore it and continue representation.

Answer

Transfer the case immediately.

Answer

Report it to the IRS immediately.

Question 6

Which of the following is considered a breach of ethical standards in IRS representation?

Accepted Answer

Misleading the IRS about material facts

Answer

Using electronic filing systems.

Answer

Filing an amended return.

Answer

Scheduling meetings with IRS agents.

Question 7

Why is continuing education important for tax professionals?

Accepted Answer

To remain competent and informed of tax law updates

Answer

To increase billing hours.

Answer

To switch industries.

Answer

To meet client quotas.

Question 8

When must a tax preparer refuse to file a return?

Accepted Answer

When the return contains information the preparer knows is false

Answer

When the client insists on using a PO Box.

Answer

When the client refuses to sign the return.

Answer

When the return is filed close to the deadline.

Question 9

What does due diligence mean for IRS representation?

Accepted Answer

Actively verifying facts and maintaining accurate records

Answer

Assuming the client is always correct.

Answer

Making decisions based on client opinions.

Answer

Ignoring small discrepancies.