1.1 - Circular 230 Flashcards
Circular 230
Identify the 3 parties involved in Federal Taxation
- U.S. Congress
- U.S Treasury
- IRS
Circular 230
What part does the U.S. Congress play in Federal Taxation?
- Write the laws saying what is or isn’t taxable and how much tax should be paid
Circular 230
What part does the U.S Treasury play in federal taxation?
Collect taxes owed
Circular 230
What part does the IRS play in federal taxation?
- Write the laws saying what is or isn’t taxable and how much tax should be paid
Circular 230
What does “practicing before the IRS” entail?
- Communicating with the IRS
- Representing before IRS
- Document prep and filing for another person
- Rendering written tax advice
Circular 230
Identify the 3 exclusions that are not subject to Circular 230
- Preparing return, amended or claim for refund
- Furnishing info upon request
- Appearing as a witness
Circular 230
Identify the parties authorized to practice before the IRS
- Attorneys
- CPA’s
- Enrolled agents
- Other specifically permitted (limited authority)
- Immediate family
- Employees
- Enrolled retirement agents
- Enrolled actuaries
Circular 230
Define the “written declaration” that CPA’s must provide to the IRS
- CPA must file stating they are qualified, authorized to represent and not suspended or disbarred
Circular 230
Identify the rules of conduct under Circular 230 part # 10
- qualifications - must be qualified
- conflicts of interest
- competence
- diligence
- reliance on another practitioner’s work
- unreasonable delays
Circular 230
What steps must a CPA take when representing two parties that have a conflict of interest according to Rules of Conduct Circular 230 part # 10?
- Parties must consent
- CPA must acquire written consent within 30 days of informed consent
- Representation must not be prohibited by law
- Disclosure of conflict to the IRS not necessary
Circular 230
When are CPA’s allowed to negotiate client’s IRS checks?
NEVER
Circular 230
What actions must a CPA take when errors or omissions are found regarding a taxpayers information or returns?
- CPA must promptly advise client of noncompliance, including consequences
- Not required to notify IRS
Circular 230
According to Circular 230, how are fees for tax services mandated?
- No unconscionable fees
- No contingent fees, except in IRS examination
- Pay for performance is strictly prohibited
- Rate must be set or constant for each service
- Pay for performance is strictly prohibited
Circular 230
What are the requirements regarding CPA client record retention according to Circular 230?
- Must retain for 3 years after the close of the return period or make a list
- Name, tax ID, taxable years, type of return)
Circular 230
What are CPAs required to do with client records if there is a dispute over fees?
- CPA only has to return docs that must be attached to return
- Practitioner must provide reasonable access for client to copy retained records
Circular 230
Identify the “best practices” for tax services according to Circular 230
- Provide highest quality of representation
- Communicate clearly
- Determine relevant facts
- Evaluate assumptions
- Evaluate law
- Arrive at conclusion
- Advise client
- Act with integrity
Circular 230
Who is responsible for ensuring “best practices” are being followed in the firm?
- Tax advisor with responsibility for overseeing a firm’s tax practice and or assisting in the preparation of submissions to the IRS should ensure that best practices are being followed
Circular 230
Identify the 10 conducts that would cause a CPA to be suspended or disbarred?
- Breach of trust offense
- Providing false info
- Negotiating refund check
- Malicious publication
- Abusive language
- State board suspension
- Felony conviction
- Bribery
- Willfully not filing a tax return (note addendum)
- Misappropriation of funds received from a client for the purpose of payment of federal tax
Circular 230
When does “confidentiality” not exist between a CPA and a client?
in a criminal case or to prevent disclosure of information to any regulatory body other than the IRS
What parties does the IRS notify if a CPA is suspended or disbarred?
- IRS employees
- Interested departments and agencies of the federal government
- State authorities
What are the confidence levels of authority and their percentages?
HINT: 7 confidence levels
- Will - (90 - 95% probability)
- Should - (70 - 75% probability)
- More likely than not - (greater than 50% probability)
- Substantial authority - (34 - 40% probability)
- Realistic probability - (1 in 3 probability or 33%)
- Reasonable basis - (20 - 30% probability)
- Not frivolous - (lowest level of probability)
