Tax Professionals Flashcards

A practitioner is approached to prepare a return and the client provides documents that appear to have inflated deductions. Under Circular 230 due diligence standards, the practitioner should:

Answer: Make reasonable inquiries if the information appears incorrect or incomplete

Circular 230 §10.22 requires practitioners to make reasonable inquiries when information provided by clients appears incorrect, inconsistent, or incomplete.

Under IRC §6713, a tax return preparer who discloses or uses tax return information for a purpose other than preparing the return may face a civil penalty of:

Answer: $250 per disclosure, up to $10,000 per calendar year

IRC §6713 imposes a civil penalty of $250 for each unauthorized disclosure or use of tax return information, with an annual cap of $10,000.

Which of the following practitioners is eligible to obtain unlimited representation rights before the IRS after passing the Annual Filing Season Program (AFSP)?

Answer: Non-credentialed return preparers who complete required CE and hold a valid PTIN

Non-credentialed return preparers who complete AFSP requirements and hold a valid PTIN receive limited representation rights (not unlimited) for returns they prepared.

A practitioner receives a subpoena demanding client records. The practitioner believes the records are protected by attorney-client privilege. Under Circular 230 and federal law, privileged tax advice communications with non-attorney practitioners are:

Answer: Protected only under the federally authorized tax practitioner privilege under IRC §7525

IRC §7525 extends a limited privilege to confidential tax advice communications between taxpayers and federally authorized tax practitioners in non-criminal proceedings.

Which of the following actions by a preparer constitutes an 'unreasonable position' under IRC §6694(a)?

Answer: A position with no substantial authority and no adequate disclosure on the return

Under IRC §6694(a), an unreasonable position is one lacking substantial authority unless the position is disclosed and there is a reasonable basis for it.

An enrolled agent's enrollment is automatically terminated under which of the following circumstances?

Answer: Conviction of a federal tax crime

Under Circular 230 §10.51, conviction of any federal tax crime is grounds for disbarment or suspension, and certain convictions result in automatic termination of enrollment.

Under the IRS e-file program, a paid preparer who files 11 or more individual federal income tax returns during a calendar year is required to:

Answer: File those returns electronically unless an exemption applies

Under IRC §6011(e), paid preparers who file 11 or more individual returns must e-file those returns unless an exemption applies.