Ethics & Professional Responsibilities

Question 1

What is the penalty for “Willful or Reckless” conduct by a Tax Preparer under section 6694(b) of the IRC?

Answer 1

THE Greater of $5,000 or 75% of the income to be derived by the Preparer

Question 2

What is the penalty for making Fraud or False Statements by a Tax Preparer under IRC Sec. 7206?

Answer 2

A maximum fine of $100,000 for the fraudulent act

Question 3

What is the penalty for a Tax Return Preparer who discloses or uses any tax return information without the consent of the taxpayer?

Answer 3

A penalty of $250 PER Return

Question 4

What should a CPA do if they discover that there are unsupported claimed disbursements while performing client tax work?

Answer 4

Notify the client of the claimed disbursements that are unsupported and withdraw if the situation is not satisfactorily resolved

Question 5

By what date must a Tax Return Preparer furnish a copy of the original tax return to a taxpayer?

Answer 5

By the date the tax return is presented for the signature of the taxpayer

Question 6

What condition must a plantiff prove to recover damages under Section 10(b) Rule 10b-5 antifraud provisions of the Securities Exchange Act of 1934?

Answer 6

THAT the plaintiff relied on the accountant’s intentional misstatement of material facts

i.e. the plantiff must prove scienter (intent to defraud) and the other elements of fraud

Question 7

What information MUST a preparer maintain about every return prepared?

Answer 7

• Type of return or claim for refund prepared
• Taxpayer’s name and taxpayer identification number
• Taxable year of the taxpayer (or nontaxable entity) for whom the return was prepared