Tax Professionals Flashcards

A client wants their enrolled agent to represent them in U.S. Tax Court. The enrolled agent who is not an attorney may:

Answer: Represent the client only in small tax cases (S cases) under Tax Court Rule 501

Non-attorney enrolled agents may represent clients in Tax Court small tax cases (S cases, under $50,000) under Tax Court Rule 501, but general Tax Court practice requires admission.

When must a Power of Attorney (Form 2848) be filed with the IRS to authorize a representative?

Answer: Whenever a practitioner wants to represent a taxpayer before the IRS beyond simply preparing and signing a return

Form 2848 is required to authorize a practitioner to represent a taxpayer in any IRS matter beyond preparing and signing the return itself.

Under Circular 230 §10.35, a practitioner who provides a 'covered opinion' must ensure the opinion:

Answer: Considers all relevant facts, applies the law to those facts, and reaches a conclusion

A covered opinion under Circular 230 §10.35 must consider all relevant facts, correctly apply the law, and reach a reasoned conclusion as to the likely tax treatment.

A tax professional prepares a Schedule C for a client who is clearly operating a business. The client provides no receipts for claimed deductions. The professional's best course of action under due diligence standards is to:

Answer: Ask the client for substantiation and document the inquiry in the file

Due diligence requires the practitioner to ask for substantiation and document the request; the practitioner should not simply ignore the lack of records.

Which of the following is NOT a ground for sanctioning a practitioner under Circular 230 §10.51?

Answer: Charging fees that a client believes are too high

Fee disputes are not a basis for Circular 230 discipline; however, willful tax violations and disbarment by other authorities are specifically listed grounds.

An enrolled agent must complete how many hours of continuing education per three-year enrollment cycle, and how many of those must be in ethics?

Answer: 72 total hours, with 6 hours in ethics

Enrolled agents must complete 72 hours of CE per three-year cycle, including a minimum of 6 hours of ethics or professional conduct.

A practitioner who represents a client before the IRS receives documents from the IRS that were clearly meant for a different taxpayer. Under Circular 230 professional standards, the practitioner should:

Answer: Immediately notify the IRS of the error and return or destroy the misdirected documents

Professional standards and federal privacy rules require the practitioner to notify the IRS of the misdirected disclosure and return or destroy the materials without using them.