Question 1

What is title 26 U.S code section 7525?

Accepted Answer

Title 26 U.S code section 7525 is the code section for confidentiality privileges relating to taxpayer communications.

Question 2

Can you contact an CPA who prepared taxes for your client in a previous year if there you find an error?

Accepted Answer

no, you cannot contact any outside party (the previous CPA or the IRS) and cannot file an amended return without the consent of the taxpayer. You should discuss the issue with the taxpayer and provide clear advice as the appropriate action that should be taken to rectify the problem.

Question 3

When does a conflict of interest exist?

Accepted Answer

A conflict of interest exist if the representation of one client will adversely affect another.

Question 4

Should tax practitioners advise clients on possible penalties related to accuracy?

Accepted Answer

Yes, Practitioners should advise clients on possible penalties related to accuracy and opportunities to avoid such penalties.

Question 5

Can a practitioner use the word certified implying employment with the IRS?

Accepted Answer

No, A practitioner may not make any advertising statement that is in any way false, fraudulent, coercive, misleading, or deceptive or that violates any state, federal, or other applicable rule. A practitioner may not use the word "certified" or otherwise imply an employment relationship with the IRS.

Question 6

Do unenrolled representative have the authority to provide tax advice?

Accepted Answer

No, Unenrolled representative does not have the authority to provide tax advice.

Question 7

When is tax advice privileged communication?

Accepted Answer

Tax advice receives the same common law protections of confidentiality which apply to a communication between a taxpayer and an attorney shall also apply to a communication between a taxpayer and any federally authorized tax practitioner to the extent the communication would be considered a privileged communication if it were between a taxpayer and an attorney.

Question 8

Privileged communication between a tax practitioner and a client does not exist under what two circumstances?

Accepted Answer

Privileged communication between a tax practitioner and a client does not exist when the matter involves criminal matters or communication regarding tax shelters.

Question 9

When publishing a schedule of fees for your tax preparation services, how long must you honor the fees from the date of publication?

Accepted Answer

A practitioner may charge no more than the rates published in a schedule of fees for at least 30 calendar days following the last date of publication.

Question 10

Circular 230, section 10.21 provides that a practitioner must what?

Accepted Answer

Circular 230, §10.21 provides that a practitioner must promptly advise a client of an error and advise the client of the consequences of non-compliance, error, or omission.

Question 11

Circular 230, section 10.34 provides that a practitioner must what?

Accepted Answer

Circular 230, §10.34(d) provides that a practitioner is not permitted to ignore the implications of furnished information and must make reasonable inquiries if the furnished information appears to be inconsistent with another fact.

Question 12

If a client's ex-wife informs a tax preparer that a client has unreported cash income, the tax preparer must take what sort of action?

Accepted Answer

The tax preparer must make reasonable inquiries of the ex-wife and of the client regarding the allegation of unreported cash income.

Question 13

In regard to another tax preparer working on a client's return prior to you, due diligence requires that?

Accepted Answer

A tax preparer always use reasonable care in evaluating another preparer upon whose work product the first agent will rely.

Question 14

Circular 230, section 10.28 provides that a practitioner must what?

Accepted Answer

§10.28, Circular 230, which provides that a practitioner generally must, at the request of a client, promptly return any and all records that are necessary for the client to comply with his Federal tax obligations. But, if state law permits the practitioner to retain records in the event of a fee dispute, the practitioner must return only those records that must be attached to the taxpayer's return.

Question 15

What are the three matters that a tax practitioner may charge a contingent fee for services?

Accepted Answer

Tax practitioners may charge a contingent fee for 1. Services related to an IRS examination of an original tax return or amended tax return filed within 120 days of a notice of examination. 2. Services related to a claim for credit or refund filed in connection with the determination of statutory interest or penalties. 3. Services connected to judicial proceedings

Question 16

The practitioner will be presumed to have exercised due diligence when he or she engages in?

Accepted Answer

The practitioner will be presumed to have exercised due diligence when he or she engages in reasonable reliance on the work of others.

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P-2 Practice before the IRS (Duties and restrictions) Flashcards

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