Ethics, Professional & Legal

Question 1

Exceptions to tax client confidentiality

Answer 1

Government order
Quality control peer review
To permit efile submission
* Owes duty to client to inform if material errors in filed return

Question 2

What is the preparer penalty for tax services and how to avoid it?

Answer 2

Equal to greater of $1,000 OR 50% of income derived by the preparer w/ respect to refund/return claimed if any part of understatement of liab is due to undisclosed position on return for which there’s no reasonable belief that position backed by substantial authority.
* Avoided by adequate disclosure and showing reasonable basis (at least 20% prob of being sustained) and showing good faith

Question 3

Circular 230 and its subparts

Answer 3

A- authority to practice before the IRS
B- duties and restrictions of those authorized to practice
C- sanctions for violations
D- rules for disciplinary proceedings
E- availability of public records

Question 4

Which Subpart involves fees and what are contingent fees rules?

Answer 4

Subpart B, Section 10.27 - Fees: Contingent fee may be charged for…
1. An Admin exam or a challenge to an original return, an amended return, or a claim to refund (not for preparing original return(only for Services related to judicial proceeding under IRC)

Question 5

When can a practitioner represent a client despite conflict of interest?

Answer 5

1. Reasonable for practitioner to believe that representation will be competent
2. Representation is not prohibited by law
3. All clients affected waive conflict of interest, giving conformed consent