Practice before the IRS

Question 1

Identify the item below that is NOT considered practice before the IRS.

A. Corresponding with the Internal Revenue Service on behalf of a client.

B. Appearing as a witness for the taxpayer.

C. Representing a client at an audit.

D. Calling the IRS to discuss a letter received by a client.

Answer 1

Appearing as a witness for the taxpayer.

Question 2

All of the following can practice before the Internal Revenue Service except

A. An individual family member representing members of his or her immediate family.

B. An individual convicted of any offense involving dishonesty or breach of trust.

C. A regular full-time employee representing his or her employer.

D. A bona fide officer of a corporation, Association, or organized group representing the corporation, Association, or group.

Answer 2

An individual convicted of any offense involving dishonesty or breach of trust.

Question 3

For taxpayers who want someone to represent them in their absence at an examination or an appeal within the IRS, all of the following statements are true except

A. The taxpayer must furnish that representative with written authorization on form 2848, power of attorney and Declaration of representation, or any other properly written authorization.

B. The representative can be in attorney, a certified public accountant, or an enrolled agent.

C. The representative can be anyone who helped the taxpayer prepare the return.

D. Even if the taxpayer appointed a representative, the taxpayer may attend the examination or appeals conference and may act on his or her own behalf.

Answer 3

The representative can be anyone who helped the taxpayer prepare the return.

Question 4

With respect to Annual Filing Season Program (AFSP) participants, which of the following is true?

A. AFSP participants have the same representation rights as attorneys, CPAs, and enrolled agents.

B. AFSP participants may represent taxpayers on any matter, including audits and appeals.

C. AFSP participants are only permitted to prepare tax returns.

D. AFSP participants may represent taxpayers whose returns they prepared and signed, but only be for a revenue agents, customer service representatives, and similar IRS employees.

Answer 4

AFSP participants may represent taxpayers whose returns they prepared and signed, but only be for a revenue agents, customer service representatives, and similar IRS employees.

Question 5

The following persons are authorized to represent a taxpayer before the IRS:

A. An individual representing a member of his or her immediate family.

B. A regular full-time employee of an individual employee representing the employer.

C. An officer or a full-time employee of a corporation representing the corporation.

D. All of the answers are correct.

Answer 5

All of the answers are correct.

Question 6

Which of the following statements is true with respect to the limited practice of an unenrolled return preparer who completed the IRS AFSP?

A. An unenrolled return preparer may represent the taxpayer for any year the taxpayer provides authorization, whether or not the unenrolled preparer prepared the return in question.

B. An unenrolled return preparer who completed the IRS AFSP is only permitted to represent the taxpayers before the examination and collection functions of the Internal Revenue Service.

C. If authorized by the taxpayer, an unenrolled return preparer who completed the IRS AFSP can sign consents to extend the statutory period for assessment or collection of tax.

D. An unenrolled preparer who completed the IRS AFSP cannot receive refund checks.

Answer 6

An unenrolled preparer who completed the IRS AFSP cannot receive refund checks.

Question 7

Which of the following acts performed by an attorney, a CPA, or an enrolled agent is not prohibited by Sec. 10.24 (Assistance from or to disbarred or suspended persons in former IRS employees) of Circular 230?

A. Assisting a person disbarred from practice before the IRS.

B. Preparing the tax return for an individual suspended or disbarred from practice before the IRS.

C. Accepting assistance from a former government employee when the provisions of Sec. 10.25 (Practice by former government employees, their partners, and their associates) of Circular 230 would be violated.

D. Accepting assistance from a person disbarred from practice before the IRS.

Answer 7

Preparing the tax return for an individual suspended or disbarred from practice before the IRS.

Question 8

Sandy is an enrolled agent. He is preparing a brochure to hand to prospective clients and would like to explain the designation “enrolled agent.” Which of the following language is Sandy not permitted to use?

A. “I am permitted to practice before the IRS.”

B. “I am enrolled to represent taxpayers before the IRS.”

C. “I am certified by the IRS.”

D. “I am admitted to practice before the IRS.”

Answer 8

“I am certified by the IRS.”

Question 9

Mike is an enrolled agent. Widgets, Inc., is an accrual-basis taxpayer. In Year 3, while preparing Widget’s Year 2 return, Mike discovered that Widget failed to include income on its Year 1 return that Widget received in Year 2 but which should have been included in income in Year 1 under the accrual method of accounting. What must Mike do?

A. Advise Widget of the error and the consequences of the error.

B. Include the income on the Year 2 return.

C. Refuse to prepare Widget’s Year 2 return until Widget agrees to amend Year 1 return to include the amount of income.

D. Change Widget to the cash method of accounting.

Answer 9

Advise Widget of the error and the consequences of the error.

Question 10

Frank Maple, CPA, represents his brother Joe Maple and Joe’s business partner Bill Smith. Joe Maple and Bill Smith are equal shareholders in the Joe & Bill Corporation. The Internal Revenue Service examined the corporation and determined that one of the shareholders committed fraud, but could not determine which shareholder it was. Frank has made an appointment with the Internal Revenue Service to determine which partner was guilty. Which of the following statements reflects what Frank should do in accordance with Circular 230?

A. Frank shouldn’t meet with the Internal Revenue Service and try to convince the examiner that each shareholder is equally guilty.

B. Advise Joe & Bill that they should dissolve the corporation, thereby making it difficult for the Internal Revenue Service to pursue the issue.

C. Advise Joe & Bill that he cannot represent them because there is a conflict of interest.

D. Advise Joe & Bill on creating documents that will convince the Internal Revenue Service that neither shareholder is guilty of fraud.

Answer 10

Advise Joe & Bill that he cannot represent them because there is a conflict of interest.

Question 11

Rich, an enrolled agent, is currently representing Dana before the Internal Revenue Service. Mike, Dana’s former business partner, asks Rich to represent him before the Internal Revenue Service. Notwithstanding the existence of a conflict of interest between Dana and Mike, Rich may still represent Mike before the Internal Revenue Service if certain requirements are met. Which of the following statements is not a requirement that Rich has to satisfy before he can represent Mike?

A. Dana and Mike must each give informed consent, confirmed in writing, to Rich.

B. Rich must reasonably believe that he will be able to provide complete and diligent representation to both Mike and Dana.

C. Rich must immediately notify the commissioner in writing that he is representing both Dana and Mike.

D. The representation of Dana must not be prohibited by law.

Answer 11

Rich must immediately notify the commissioner in writing that he is representing both Dana and Mike.

Question 12

With regard to continuing education (CE) for enrolled agents, which of the following statements is false?

A. An enrolled agent must complete a minimum of 16 hours of CE credit in each year of an enrollment cycle if enrolled for the entire cycle.

B. An individual who receives initial enrollment during an enrollment cycle must complete 2 hours of CE credit for each month enrolled during the cycle, beginning with the month the individual is enrolled.

C. An enrolled agent may obtain CE credits only from an organization that has filed a sponsor agreement with the IRS to obtain approval of its program as a qualified CE program.

D. An enrolled agent must complete a minimum of 72 hours of CE credit if enrolled for an entire enrollment cycle.

Answer 12

An enrolled agent may obtain CE credits only from an organization that has filed a sponsor agreement with the IRS to obtain approval of its program as a qualified CE program.

Question 13

Under Treasury Department Circular No. 230, all of the following are considered to be incompetence and disreputable conduct EXCEPT

A. Willfully disclosing tax return information with the consent of the taxpayer.

B. Conviction of any criminal offense involving dishonesty or breach of trust.

C. Conviction of any criminal offense under the federal tax laws.

D. Willfully failing to sign a tax return prepared by the tax practitioner as required by federal tax laws, unless the failure is due to reasonable cause and not due to willful neglect.

Answer 13

Willfully disclosing tax return information with the consent of the taxpayer.

Question 14

All of the following are considered examples of disreputable conduct for which an enrolled agent can be disbarred or suspended EXCEPT

A. Directly or indirectly attempting to influence the official action of any employee of the Internal Revenue Service by use of threats or false accusations or by bestowing any gift, favor, or thing of value.

B. Knowingly aiding and abetting another person to practice before the Internal Revenue Service during a period of suspension or disbarment.

C. Misappropriation or failure to remit funds received from a client for the purpose of payment of taxes or other obligations due the United States.

D. Failure to timely pay personal income taxes.

Answer 14

Failure to timely pay personal income taxes.

Question 15

Select the statement below that is true with respect to the contents of an answer that is filed in rebuttal to a complaint filed by the IRS.

A. The respondent does not have to admit or deny all of the allegations set forth in the complaint or state they are without sufficient information to admit or deny a specific allegation.

B. The respondent does not have to state affirmatively any special matters of defense on which he or she relies.

C. The answer must be written and general denials are permitted.

D. The respondent may not deny a material allegation in the complaint that the respondent knows to be true, or state that the respondent is without sufficient information to form a belief, when the respondent possesses the required information.

Answer 15

The respondent may not deny a material allegation in the complaint that the respondent knows to be true, or state that the respondent is without sufficient information to form a belief, when the respondent possesses the required information.

Question 16

Stuart Light, Enrolled Agent, received a complaint from the IRS for disreputable conduct. Which one of the following items was NOT required to be listed in the complaint?

A. The unit and employee of the Internal Revenue Service that recommended the action against Stuart.

B. The charges against Stuart.

C. A demand for an answer to the charges.

D. The specific sanctions that are recommended against Stuart.

Answer 16

The unit and employee of the Internal Revenue Service that recommended the action against Stuart.

Question 17

Lawson, a CPA, discovers material noncompliance with a specific Internal Revenue Code (IRC) requirement in the prior-year return of a new client. Which of the following actions should Lawson take?

A. Wait for the statute of limitations to expire.

B. Discuss the requirements of the IRC with the client and recommend that the client amend the return.

C. Contact the prior CPA and discuss the client’s exposure.

D. Contact the IRS and discuss courses of action.

Answer 17

Discuss the requirements of the IRC with the client and recommend that the client amend the return.

Question 18

All of the following types of individuals may practice before the IRS EXCEPT

A. Attorneys.

B. Enrolled agents.

C. Certified public accountants.

D. Certified financial advisors.

Answer 18

Certified financial advisors.

Question 19

When advertising their services, an Enrolled Agent may use all of the following phrases to describe their professional designation EXCEPT:

A. Enrolled to represent taxpayers before the Internal Revenue Service.

B. Admitted to practice before the Internal Revenue Service.

C. Certified to practice before the Internal Revenue Service.

D. Enrolled to practice before the Internal Revenue Service.

Answer 19

Certified to practice before the Internal Revenue Service.

Question 20

With regard to the categories of individuals who may practice before the Internal Revenue Service, all of the following statements are true, EXCEPT

A. An individual who is not an enrolled agent, a CPA, or an attorney, who is a regular full-time employee of a corporation, may represent that corporation before the IRS.

B. A practitioner who is not an enrolled agent, a CPA, or an attorney, who signs a return as having prepared it for the taxpayer, may, with proper authorization from the taxpayer, appear as the taxpayer’s representative before any office of the IRS with respect to the taxpayer’s tax liability for the period covered by that return.

C. Any person may appear as a witness for the taxpayer before the IRS or furnish information at the request of the IRS or any of its officers or employees.

D. Trusts, receiverships, guardianships, or estates may be represented before the IRS by their trustees, receivers, guardians, administrators, or executors even if they are not enrolled agents, CPAs, or attorneys.

Answer 20

A practitioner who is not an enrolled agent, a CPA, or an attorney, who signs a return as having prepared it for the taxpayer, may, with proper authorization from the taxpayer, appear as the taxpayer’s representative before any office of the IRS with respect to the taxpayer’s tax liability for the period covered by that return.

Question 21

An enrolled agent may be disbarred or suspended from IRS practice for which of the following conduct?

A. Criminal conviction of an offense under the Internal Revenue Code.

B. Misappropriation of funds received from a client for the purpose of tax payments.

C. All of the answers are correct.

D. Disbarment or suspension from practice as an attorney, CPA, public accountant, or actuary.

Answer 21

All of the answers are correct.

Question 22

John Bright recently passed the Special Enrollment Examination and is advertising for his business. Which of the following presentations will violate the Circular 230 rules for advertising?

A. John Bright, enrolled to practice before the Internal Revenue Service.

B. John Bright, admitted to practice before the Internal Revenue Service.

C. John Bright, enrolled to represent taxpayers before the Internal Revenue Service.

D. John Bright, Certified Enrolled Agent.

Answer 22

John Bright, Certified Enrolled Agent.

Question 23

Identify the individual below from whom an enrolled agent, in practice before the Internal Revenue Service, may knowingly accept assistance.

A. An individual who has temporary recognition to practice before the IRS.

B. A former government employee where any federal law would be violated.

C. An individual who is under suspension from practice before the Internal Revenue Service.

D. An individual who is under disbarment from practice before the Internal Revenue Service.

Answer 23

An individual who has temporary recognition to practice before the IRS.

Question 24

Which of the following is NOT an example of disreputable conduct for which an enrolled agent may be disbarred or suspended from practice before the Internal Revenue Service?

A. Circulating or publishing malicious or libelous matter in connection with practice before the Internal Revenue Service.

B. Being convicted of any offense involving dishonesty or breach of trust.

C. Maintaining a partnership for the practice of tax law and accounting with a person who is under disbarment from practice before the Internal Revenue Service.

D. Soliciting new business in matters relating to the Internal Revenue Service through the publishing of a range of fees for particular services.

Answer 24

Soliciting new business in matters relating to the Internal Revenue Service through the publishing of a range of fees for particular services.

Question 25

A practitioner may seek reinstatement after

A. 5 years.

B. 4 years.

C. 1 year.

D. 2 years.

Answer 25

5 years.

Question 26

Which of the following individuals qualifies as a practitioner under Circular 230?

A. Certified public accountant.

B. Enrolled actuary.

C. Attorney.

D. All of the answers are correct.

Answer 26

All of the answers are correct.

Question 27

Who presides over a hearing on a complaint for disbarment based on a violation of the laws or regulations governing practice before the IRS?

A. A United States Tax Court judge.

B. The Secretary of the Treasury.

C. The Commissioner of the IRS.

D. An administrative law judge.

Answer 27

An administrative law judge.

Question 28

Janice has been enrolled to practice before the IRS since 1997. Her Social Security number ends in 2. When may she destroy records documenting her continuing education from January 2020?

A. April 1, 2025.

B. April 1, 2027.

C. April 1, 2024.

D. April 1, 2026.

Answer 28

April 1, 2026.

Question 29

The period of renewal for the next enrollment cycle for enrolled agents whose Social Security numbers end in 0, 1, 2, or 3 will be

A. February 1, 2022, through March 31, 2022.

B. November 1, 2021, through January 31, 2022.

C. November 1, 2022, through January 31, 2023.

D. February 1, 2021, through March 31, 2022.

Answer 29

November 1, 2021, through January 31, 2022.

Question 30

An Enrolled Agent (EA) is in the process of representing Taxpayer A before the Internal Revenue Service for a tax matter. Taxpayer A’s ex-husband also asked the EA to represent him for the same matter. Which of the following is NOT required for the EA to represent both?

A. Both taxpayers must waive the conflict of interest and give informed consent in writing to the EA.

B. The EA must notify the Office of Professional Responsibility that the EA will be representing both taxpayers.

C. The representation is not prohibited by law.

D. The EA must reasonably believe that the EA will be able to provide competent and diligent representation to both taxpayers.

Answer 30

The EA must notify the Office of Professional Responsibility that the EA will be representing both taxpayers.

Question 31

With regard to the categories of individuals who may practice before the Internal Revenue Service, which of the following statements is true?

A. Under the limited practice provisions in Treasury Department Circular 230, only general partners may represent a partnership.

B. Under the limited practice provisions in Circular 230, an individual who is under suspension or disbarment from practice before the IRS may not engage in limited practice before the IRS.

C. An individual who is not an enrolled agent, an attorney, or a CPA, who signs a return as having prepared it for the taxpayer, may, with proper authorization from the taxpayer, appear as the taxpayer’s representative, with or without the taxpayer, at a conference before an appeals officer with respect to the tax liability of the taxpayer for the taxable year or period covered by that return.

D. Only enrolled agents, attorneys, or CPAs may represent trusts and estates before any officer or employee of the IRS.

Answer 31

Under the limited practice provisions in Circular 230, an individual who is under suspension or disbarment from practice before the IRS may not engage in limited practice before the IRS.

Question 32

All of the following individuals are eligible to practice (on a limited basis) before the IRS EXCEPT

A. A trustee of a trust may represent the trust.

B. A regular full-time employee of an individual may represent the employer.

C. A limited partner in a partnership may represent the partnership.

D. A bona fide officer of a corporation may represent the corporation.

Answer 32

A limited partner in a partnership may represent the partnership.

Question 33

Under Treasury Circular 230, in which of the following situations is a CPA prohibited from giving written advice concerning one or more federal tax issues?

A. The CPA reasonably relies upon representations of the client.

B. The CPA takes into account the possibility that a
tax return will not be audited.

C. The CPA takes into consideration assumptions about future events related to the relevant facts.

D. The CPA considers all relevant facts that are known.

Answer 33

The CPA takes into account the possibility that a

tax return will not be audited.

Question 34

How long must each practitioner maintain records of his or her completed CE credits?

A. CE credit information must be retained for a period of 4 years following the date of renewal of enrollment.

B. CE credit information must be maintained for a period of 4 years from the date they are completed.

C. CE credit information must be retained for a period of 1 year following the year they are completed.

D. CE credit information does not have to be retained by the enrolled agent since the qualifying organization provides the IRS a list of each participant that completed CE credits.

Answer 34

CE credit information must be retained for a period of 4 years following the date of renewal of enrollment.

Question 35

Which of the following practitioners with the responsibility of oversight of return preparation will be subject to disciplinary action?

A. A practitioner who does not know of an employee’s noncompliance with Circular 230.

B. A practitioner who fails to ensure adequate procedures; however, the firm’s members, associates, and employees all comply with Circular 230.

C. An employee engages in a noncompliant practice due to the practitioner’s failure to take reasonable steps to ensure compliance with Circular 230.

D. A practitioner who knows of an employee’s engagement in practices not in compliance with Circular 230, and the practitioner takes prompt action to correct the noncompliance.

Answer 35

An employee engages in a noncompliant practice due to the practitioner’s failure to take reasonable steps to ensure compliance with Circular 230.

Question 36

Which of the following statements in an IRS letter may alert a taxpayer to possible identity theft?

1. More than one tax return for the taxpayer was filed.
2. The taxpayer has a balance due, refund offset, or has had collection actions taken against the taxpayer for a year the taxpayer did not file a tax return.
3. IRS records indicate the taxpayer received wages from an employer unknown to the taxpayer.

A. III.

B. I.

C. I, II, and III.

D. II.

Answer 36

I, II, and III.

Question 37

Which of the following statements may NOT be used when an enrolled agent advertises?

A. Names of associates of the firm.

B. Claims of quality of service that cannot be verified.

C. Membership in professional organizations.

D. Name, address, and office hours.

Answer 37

Claims of quality of service that cannot be verified.

Question 38

The IRS can censure, suspend, or disbar a practitioner from practice before the Internal Revenue Service for incompetence and/or disreputable conduct. Which one of the following is considered disreputable conduct?

A. Being indicted of any felony under federal or state law for which the conduct involved renders the practitioner unfit to practice before the Internal Revenue Service.

B. Giving false or misleading information, or participating in any way in the giving of false or misleading information to the Department of the Treasury or any officer or employee thereof.

C. Being indicted for any criminal offense under the revenue laws of the United States.

D. Having your motor vehicle license suspended as a result of numerous traffic violations.

Answer 38

Giving false or misleading information, or participating in any way in the giving of false or misleading information to the Department of the Treasury or any officer or employee thereof.

Question 39

The IRS has documentation that an enrolled agent has violated the law or regulations governing practice before the IRS. It may

A. Institute proceedings for disbarment.

B. Reprimand such person.

C. All of the answers are correct.

D. Institute proceedings for suspension.

Answer 39

All of the answers are correct.

Question 40

Maude, an attorney, has been charged by the IRS with acts of misconduct. Which of the following forms of evidence is Maude NOT permitted to introduce at the hearing?

A. Letters.

B. Exhibits.

C. Depositions.

D. All of the answers are correct.

Answer 40

Letters.

Question 41

Which of the following is NOT practicing before the Internal Revenue Service?

A. Representing a taxpayer at conferences, hearings, or meetings with the IRS.

B. Communicating with the IRS for a taxpayer regarding the taxpayer’s rights, privileges, or liabilities under laws and regulations administered by the IRS.

C. Preparing necessary documents and filing them with the IRS for the taxpayer whose tax returns were prepared by a different practitioner.

D. Furnishing information at the request of the IRS or appearing as a witness for a taxpayer.

Answer 41

Furnishing information at the request of the IRS or appearing as a witness for a taxpayer.

Question 42

Which of the following statements concerning continuing education (CE) requirements for enrolled agents is false?

A. The current enrollment cycle, the period during which enrolled agents must meet their minimum continuing education requirements, is determined by the enrolled agent’s Social Security number.

B. An enrolled agent must complete a minimum of 72 hours of CE credits if enrolled for the entire enrollment cycle with the minimum being 16 hours per year.

C. An enrolled agent who does not meet the renewal requirements for one enrollment cycle will be required to take and pass all three parts of the Special Enrollment Examination in order to retain enrolled agent status.

D. An individual who becomes enrolled during an enrollment cycle must complete 2 hours of CE for each month enrolled during the cycle, beginning with the month enrolled.

Answer 42

An enrolled agent who does not meet the renewal requirements for one enrollment cycle will be required to take and pass all three parts of the Special Enrollment Examination in order to retain enrolled agent status.

Question 43

Generally, each individual who applies for renewal to practice before the Internal Revenue Service must retain the information required with regard to qualifying continuing education hours. How long must verification of CE taken be retained?

A. For a period of 1 year following the date of renewal of enrollment.

B. For a period of 4 years following the date of renewal of enrollment.

C. For a period of 5 years if it is an initial enrollment.

D. The individual is not required to retain the information if the continuing education sponsor has agreed to retain it.

Answer 43

For a period of 4 years following the date of renewal of enrollment.

Question 44

Which of the following claims regarding professional designation is specifically mentioned in the advertising and solicitation section of Circular 230 as being acceptable?

A. Licensed by the Treasury to represent taxpayers before the IRS.

B. Enrolled to practice before the IRS.

C. Approved by the Internal Revenue Service based on passing a rigid tax law examination and a background check.

D. Certified by the Treasury Department as an enrolled agent.

Answer 44

Enrolled to practice before the IRS.

Question 45

Sam is an enrolled agent and a partner in the firm of Taxes-R-Us, LLP. One of Sam’s former partners is under investigation by the IRS for disreputable conduct. Sam has been asked by the IRS to provide information regarding his former partner. Sam must provide all the information requested unless

A. The conduct in question relates to one of Sam’s clients.

B. The partnership agreement prohibits him from providing the information. The conduct in question relates to one of Sam’s clients.

C. He has credible evidence that Sam is not guilty of the disreputable conduct.

D. He believes in good faith and on reasonable grounds that the information requested is privileged or that the request is of doubtful legality.

Answer 45

He believes in good faith and on reasonable grounds that the information requested is privileged or that the request is of doubtful legality.

Question 46

A tax advisor with what responsibility should take reasonable steps to ensure that the firm’s procedures for all members, associates, and employees are consistent with the best practices?

A. Neither overseeing a firm’s practice of providing advice concerning federal tax issues nor preparing or assisting in the preparation of submissions to the IRS.

B. Both overseeing a firm’s practice of providing advice concerning federal tax issues and preparing or assisting in the preparation of submissions to the IRS.

C. Overseeing a firm’s practice of providing advice concerning federal tax issues.

D. Preparing or assisting in the preparation of submissions to the IRS.

Answer 46

Both overseeing a firm’s practice of providing advice concerning federal tax issues and preparing or assisting in the preparation of submissions to the IRS.

Question 47

The IRS can censure, suspend, or disbar a practitioner from practice before the Internal Revenue Service for incompetence and/or disreputable conduct. Which one of the following is considered disreputable conduct?

A. Conviction of any criminal offense under the revenue laws of the United States.

B. Conviction of any criminal offense involving dishonesty or breach of trust.

C. Giving false or misleading information or participating in any way in the giving of false or misleading information to the Department of the Treasury or any officer or employee thereof.

D. All of the answers are correct.

Answer 47

All of the answers are correct.

Question 48

Frank, a certified public accountant, has the right to make the following solicitations of employment involving IRS matters:

A. Seeking new business from a former client.

B. Communicating with a family member.

C. Targeting mailings.

D. All of the answers are correct.

Answer 48

All of the answers are correct.

Question 49

Treasury Circular 230

A. Does not contain rules regarding disciplinary actions for tax return preparers who are not enrolled agents, CPAs, or attorneys.

B. Contains the rules regarding eligibility to become an enrolled agent and renewal of enrollment.

C. Contains rules of conduct applicable to enrolled agents, enrolled retirement plan agents, and enrolled actuaries, but not attorneys or certified public accountants.

D. All of the answers are correct.

Answer 49

Contains the rules regarding eligibility to become an enrolled agent and renewal of enrollment.

Question 50

Failure to file an answer to a complaint instituting a proceeding for disbarment by the original or extended deadline constitutes

A. An admission of the allegations in the complaint and a waiver of a hearing.

B. Equitable estoppel against the practitioner.

C. Grounds for criminal sanctions.

D. An error that can be corrected by filing the answer with the administrative law judge within one year of the original (or extended) deadline.

Answer 50

An admission of the allegations in the complaint and a waiver of a hearing.

Question 51

How is a proceeding for violation of the regulations in Circular 230 instituted against an attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary?

A. The Secretary of the Treasury files a complaint against the attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary in the United States District Court for the District of Columbia.

B. An aggrieved taxpayer files a petition with the United States Tax Court stating a claim against the attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary.

C. The Commissioner of the IRS files a complaint against the attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary with the United States Tax Court.

D. The IRS representative signs a complaint naming the attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary and files the complaint with the Administrative Law Judge.

Answer 51

The IRS representative signs a complaint naming the attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary and files the complaint with the Administrative Law Judge.

Question 52

Each individual applying for renewal as an enrolled agent must complete CE credits during each year of enrollment. How long must each practitioner maintain records of their completed CE credits?

A. The enrolled agent applying for renewal must retain the information required (as listed in Circular 230) which documents successful completion of qualified CE credits for a period of 4 years following the date of renewal.

B. The enrolled agent must retain, for a period of 1 year from the date (s)he completed the CE credit, information required (as listed in Circular 230) that documents successful completion of qualified CE credits.

C. CE credits do not have to be retained by the enrolled agent since the qualifying organization provides the IRS a list of each participant that completed CE credits.

D. The enrolled agent does not have to retain any proof of CE credits because they must be submitted to the IRS as they are completed.

Answer 52

The enrolled agent applying for renewal must retain the information required (as listed in Circular 230) which documents successful completion of qualified CE credits for a period of 4 years following the date of renewal.

Question 53

An Enrolled Agent (EA) represented both a taxpayer and a former business partner of the taxpayer before the Internal Revenue Service with regard to a specific tax matter. Due to the conflict of interest, the EA obtained a written consent from each of the clients waiving the conflict of interest and giving informed consent. The EA must keep those written consents for how long after the conclusion of representation?

A. 48 months.

B. 24 months.

C. 36 months.

D. 72 months.

Answer 53

36 months.

Question 54

Enrolled agents generally must complete continuing education credits for renewed enrollment. Which of the following describes the credit requirements?

A. A minimum of 16 hours must be completed in each year of the enrollment cycle.

B. A minimum of 80 hours must be completed, overall, for the entire enrollment cycle.

C. A minimum of 24 hours must be completed in each year of an enrollment cycle.

D. A minimum of 72 hours must be completed in each year of an enrollment cycle.

Answer 54

A minimum of 16 hours must be completed in each year of the enrollment cycle.

Question 55

Which of the following is NOT an example of disreputable conduct (as described in Sec. 10.51 of Circular 230) for which an enrolled agent may be suspended or disbarred from practice before the IRS?

A. Failure to respond to a request by the Commissioner of Internal Revenue to provide information.

B. Knowingly giving false or misleading information to the Treasury Department.

C. Misappropriation of funds received from a client for the purpose of payment of federal tax.

D. Willful failure to make a federal tax return in violation of federal revenue laws.

Answer 55

Failure to respond to a request by the Commissioner of Internal Revenue to provide information.

Question 56

When a practitioner, i.e., an attorney, a CPA, or an enrolled agent, knows that a client has backdated a document that the client wants the representative to submit to the IRS, the representative has a duty to do which of the following?

A. Submit the document (providing the client has provided the representative a document declaring him or her free from malpractice liability).

B. Submit another document that will offset the gain anticipated by the submission of the false document.

C. Advise the client promptly of such noncompliance, error, or omission, as well as the consequences under the revenue laws.

D. Notify the local district attorney of a possible crime.

Answer 56

Advise the client promptly of such noncompliance, error, or omission, as well as the consequences under the revenue laws.

Question 57

John Jones prepared a return for a client that contained a frivolous position that could not be defended under any circumstances. The examiner who conducted the examination referred Mr. Jones to the IRS. After all procedural requirements had been met, the IRS filed a complaint against John Jones. Which statement below is true with respect to the hearing that will take place for the complaint filed against Mr. Jones?

A. A request by a practitioner or appraiser that a hearing in a disciplinary proceeding concerning him or her be public and that the record of such disciplinary proceeding be made available for inspection by interested persons may be granted by a United States District Court judge.

B. An administrative law judge will preside at the hearing on a complaint filed for the censure, suspension, or disbarment of a practitioner or disqualification of an appraiser.

C. The United States District Court judge assigned to the case will determine the location of the hearing.

D. If either party to the proceeding fails to appear at the hearing after notice of the proceeding has been sent to the party, the party will be deemed to have waived the right to a hearing, and the United States District Court judge may make his or her decision against the absent party by default.

Answer 57

An administrative law judge will preside at the hearing on a complaint filed for the censure, suspension, or disbarment of a practitioner or disqualification of an appraiser.

Question 58

Ray was suspended from practice for 4 months by the IRS. Which of the following is Ray permitted to do during the period of suspension?

A. Sign closing agreements regarding tax liabilities.

B. Appear as a witness before the IRS.

C. Sign a consent to extend the statute of limitations for the assessment and collection of tax.

D. Represent taxpayers before the IRS with respect to returns Ray did not prepare.

Answer 58

Appear as a witness before the IRS.

Question 59

A tax preparer has advised a company to take a position on its tax return. The tax preparer believes that there is a 75% possibility that the position will be sustained if audited by the IRS. If the position is not sustained, an accuracy-related penalty and a late-payment penalty would apply. What is the tax preparer’s responsibility regarding disclosure of the penalty to the company?

A. The tax preparer is responsible for disclosing both penalties to the company.

B. The tax preparer is responsible for disclosing only the accuracy-related penalty to the company.

C. The tax preparer has no responsibility for disclosing any potential penalties to the company because the position will probably be sustained on audit.

D. The tax preparer is responsible for disclosing only the late-payment penalty to the company.

Answer 59

The tax preparer is responsible for disclosing both penalties to the company.

Question 60

With regard to continuing education (CE) for enrolled agents, which of the following statements is false?

A. An individual who receives initial enrollment during an enrollment cycle must complete 1 hour of CE credit for each month enrolled during the cycle, beginning with the month the individual is enrolled.

B. All continuing education programs will be measured in terms of contact hours. A contact hour is 50 minutes of continuous participation in a program.

C. CE credit may be awarded for publications on federal taxation or federal tax-related matters.

D. An enrolled agent must complete a minimum of 72 hours of CE credit if enrolled for an entire enrollment cycle.

Answer 60

An individual who receives initial enrollment during an enrollment cycle must complete 1 hour of CE credit for each month enrolled during the cycle, beginning with the month the individual is enrolled.

Question 61

Which of the following statements concerning identity theft and the IRS is true?

A. Taxpayers must always respond promptly to an IRS email initiating contact.

B. Taxpayers subject to identity theft need to fill out Form 1040.

C. Initial contact by the IRS may occur via a text message or social media channels.

D. Victims of identity theft need to complete the IRS Identity Theft Affidavit.

Answer 61

Victims of identity theft need to complete the IRS Identity Theft Affidavit.

Question 62

After a decision has been made on a complaint filed by the IRS, the practitioner or IRS may appeal the decision. Which statement is true with respect to filing an appeal of the decision?

A. Within 45 days from the date of the administrative law judge’s decision, either party may appeal to the
Secretary of the Treasury or his or her delegate.

B. Within 30 days from the date of the administrative law judge’s decision, either party may appeal to the Secretary of the Treasury or his or her delegate.

C. Within 30 days from the date of the District Court judge’s decision, either party may appeal to the Supreme Court.

D. Within 30 days from the date of the District Court judge’s decision, either party may appeal to the Secretary of the Treasury or his or her delegate.

Answer 62

Within 30 days from the date of the administrative law judge’s decision, either party may appeal to the Secretary of the Treasury or his or her delegate.

Question 63

A notice of disbarment or suspension of a certified public accountant from practice before the Internal Revenue Service is issued to which of the following?

A. Interested departments and agencies of the federal government.

B. State authorities.

C. All of the answers are correct.

D. IRS employees.

Answer 63

All of the answers are correct.

Question 64

Identify the appropriate action that a practitioner should take when (s)he becomes aware of an error or omission on a client’s return.

A. Amend the return and provide it to the client.

B. Promptly advise the client of such noncompliance, error, or omission and the consequences thereof.

C. Do nothing.

D. Inform the IRS of the noncompliance, error, or omission.

Answer 64

Promptly advise the client of such noncompliance, error, or omission and the consequences thereof.

Question 65

Under Treasury Circular 230, which of the following actions of a CPA tax advisor is characteristic of a best practice in rendering tax advice?

A. Establishing relevant facts, evaluating the reasonableness of assumptions and representations, and arriving at a conclusion supported by the law and facts in a tax memorandum.

B. Recommending to the client that the advisor’s tax advice be made orally instead of in a written memorandum.

C. Requiring the client to supply a written representation, signed under penalties of perjury, concerning the facts and statements provided to the CPA for preparing a tax memorandum.

D. Requesting written evidence from a client that the fee proposal for tax advice has been approved by the board of directors.

Answer 65

Establishing relevant facts, evaluating the reasonableness of assumptions and representations, and arriving at a conclusion supported by the law and facts in a tax memorandum.

Question 66

Ms. Smith hired Tom, an enrolled agent, to prepare her federal income tax return for Year 3. While gathering information to prepare the return, Tom discovered that Ms. Smith failed to file federal income tax returns for the Year 1 and Year 2 tax years. Circular 230 requires that Tom do the following:

A. Inform the IRS that Ms. Smith did not file federal income tax returns for the Year 1 and Year 2 tax years.

B. Promptly advise Ms. Smith that she did not comply with the Internal Revenue laws by failing to file federal income tax returns for the Year 1 and the Year 2 tax years and the consequences she may face under the Code and regulations.

C. Refuse to prepare Ms. Smith’s Year 3 federal income tax return unless she files her Year 1 and Year 2 federal income tax returns.

D. Refuse to prepare Ms. Smith’s Year 3 federal income tax return unless she files her Year 1 and Year 2 federal income tax returns, and inform the IRS that Ms. Smith did not file federal income tax returns for the Year 1 and Year 2 tax years.

Answer 66

Promptly advise Ms. Smith that she did not comply with the Internal Revenue laws by failing to file federal income tax returns for the Year 1 and the Year 2 tax years and the consequences she may face under the Code and regulations.

Question 67

Which of the following statements is true with respect to the limited practice of an unenrolled return preparer?

A. An unenrolled return preparer may not represent the taxpayer before certain types of Internal Revenue Service personnel with respect to an examination regarding the return that he or she prepared unless they satisfy the Annual Filing Season Program requirements.

B. If authorized by the taxpayer, an unenrolled return preparer who completed the IRS AFSP can sign consents to extend the statutory period for assessment or collection of tax.

C. An unenrolled preparer who completed the IRS AFSP may negotiate a refund check on behalf of the taxpayer if permission has been granted to the unenrolled preparer with a Form 8821.

D. An unenrolled return preparer who completed the IRS AFSP is permitted to appear as a taxpayer’s representative before any function of the Internal Revenue Service as long as he or she prepared the return.

Answer 67

An unenrolled return preparer may not represent the taxpayer before certain types of Internal Revenue Service personnel with respect to an examination regarding the return that he or she prepared unless they satisfy the Annual Filing Season Program requirements.

Question 68

Which of the following statements is true with respect to a client’s request for records of the client that are necessary for the client to comply with his or her federal tax obligations?

A. The practitioner must, at the request of the client, return the records of the client to the client within three months of receiving the request.

B. The existence of a dispute over fees always relieves the practitioner of his or her responsibility to return records of the client to the client.

C. The practitioner must, at the request of the client, promptly return the records of the client to the client unless applicable state law provides otherwise.

D. The practitioner may never return records of the client to the client even if the client requests prompt return of the records.

Answer 68

The practitioner must, at the request of the client, promptly return the records of the client to the client unless applicable state law provides otherwise.

Question 69

An appeal from the initial decision ordering disbarment is made to which of the following?

A. The Secretary of the Treasury.

B. The administrative law judge.

C. The United States Tax Court.

D. The United States District Court for the District of Columbia.

Answer 69

The Secretary of the Treasury.

Question 70

Which of the following defines how a person can practice before the Internal Revenue Service?

A. Prepare and file the necessary documents with the IRS for the taxpayer.

B. Appear as a witness for the taxpayer before the IRS.

C. Prepare less than substantially all of the tax return.

D. Furnish information at the request of the IRS.

Answer 70

Prepare and file the necessary documents with the IRS for the taxpayer.

Question 71

Tax advisors should adhere to “best practices” in providing advice and in preparing a submission to the IRS. Best practices include all of the following EXCEPT

A. Establishing the facts, their relevancy, and arriving at a conclusion supported solely by the facts.

B. Advising the client regarding the importance of the conclusions reached.

C. Acting fairly with integrity in practice before the IRS.

D. Clearly communicating the terms of the engagement with the client.

Answer 71

Establishing the facts, their relevancy, and arriving at a conclusion supported solely by the facts.

Question 72

Larry Smith passed all parts of the Special Enrollment Examination in October of Year 1. Larry submitted the required forms to become an enrolled agent. Larry failed the suitability test performed by the Internal Revenue Service, and the IRS informed Larry that he was denied participation and provided him with the reasons for the denial. Larry received the notice on January 20, Year 2. What action should Larry take to appeal the denial received from the IRS?

A. Larry must file a written appeal no later than the 30th of January with the Secretary of the Treasury or his designee.

B. Larry must file a petition no later than the 30th of January with the District Court.

C. Larry must file a written appeal no later than the 19th of February with the Commissioner of Internal Revenue Service or his designee.

D. Larry must file a written appeal no later than the 19th of February with the Secretary of the Treasury or his designee.

Answer 72

Larry must file a written appeal no later than the 19th of February with the Secretary of the Treasury or his designee.

Question 73

Which of the following statements regarding proceedings for disbarment or suspension of an attorney, a certified public accountant, or an enrolled agent from practice before the Internal Revenue Service is false?

A. The respondent to the complaint must file his or her answer with the IRS within 30 days from the date the complaint is served.

B. Every allegation in the complaint that is not denied will be deemed to be admitted by the respondent and may be considered as proved.

C. A complaint shall contain a clear and concise description of the allegations that constitute the basis for the proceedings.

D. Failure to answer the complaint as required will render a decision by default against the respondent.

Answer 73

The respondent to the complaint must file his or her answer with the IRS within 30 days from the date the complaint is served.

Question 74

Which of the following acts constitutes representation before the IRS?

A. Furnishing information at the request of the IRS or any of its officers or employees.

B. Preparing less than substantially all of a tax return.

C. Appearing as a witness for a taxpayer before the IRS.

D. Executing a closing agreement on behalf of a corporate taxpayer.

Answer 74

Executing a closing agreement on behalf of a corporate taxpayer.

Question 75

Which of the following statements concerning continuing education (CE) requirements for enrolled agents is NOT true?

A. The IRS may grant a waiver from the CE requirements for a given period if there is a compelling reason and the request for waiver is appropriately documented.

B. An individual who receives initial enrollment during an enrollment cycle must complete 2 hours of CE credit for each month enrolled.

C. The enrolled agent must complete a minimum of 24 hours of CE credit in each year of an enrollment cycle if enrolled for the entire cycle.

D. The enrolled agent must complete a minimum of 72 hours of CE credit if enrolled for the entire enrollment cycle.

Answer 75

The enrolled agent must complete a minimum of 24 hours of CE credit in each year of an enrollment cycle if enrolled for the entire cycle.

Question 76

Josephine Jones, an enrolled agent, received a complaint from the IRS. Select the statement below that is true with respect to the contents of the answer that Josephine will file in rebuttal to the complaint.

A. Josephine may only state a general denial of the allegations.

B. Josephine may deny a material allegation in the complaint even though she knows it to be true.

C. Josephine must specifically admit or deny each allegation set forth in the complaint and may not state that she is without sufficient information to admit or deny a specific allegation.

D. Josephine must specifically admit or deny each allegation set forth in the complaint, except that she may state that she is without sufficient information to admit or deny a specific allegation.

Answer 76

Josephine must specifically admit or deny each allegation set forth in the complaint, except that she may state that she is without sufficient information to admit or deny a specific allegation.

Question 77

Identify the individual below who is NOT eligible to practice before the IRS. None of the individuals are under suspension or disbarment.

A. Certified financial planner.

B. Attorney.

C. Enrolled actuary, with respect to specified statutory issues.

D. Certified public accountant.

Answer 77

Certified financial planner.

Question 78

To maintain active enrollment to practice before the Internal Revenue Service, each individual enrolled is required to have his or her enrollment renewed. The IRS will notify the individual of his or her renewal of enrollment and will issue the individual a card to evidence enrollment. Which of the following statements about renewal of enrollment is true?

A. A reasonable refundable fee may be charged for each application for renewal of enrollment filed with the IRS.

B. Forms required for renewal may only be obtained from the National Association of Enrolled Agents.

C. Failure by an individual to receive notification from the IRS of the renewal requirement will not be justification for the failure to timely renew enrollment.

D. The enrollment cycle is a 3-year period and all enrolled agents must renew at the same time, no matter when they first became enrolled agents.

Answer 78

Failure by an individual to receive notification from the IRS of the renewal requirement will not be justification for the failure to timely renew enrollment.

Question 79

An Enrolled Agent (EA) represents a married couple in an ongoing examination. One afternoon, the taxpayer-wife shows up early to a meeting at the EA’s office. Off the record, the taxpayer-wife confides to the EA that the examination is causing marital strife, and that the taxpayer-wife is not sure but now suspects that her spouse may have taken erroneous business deductions. All of the following activities would address the conflict of interest EXCEPT

A. Informing both spouses of the potential ability to seek an innocent spouse determination as part of this examination as it moves forward.

B. Politely advising the client that this meeting was not appropriate, and make sure that no further meetings occur unless both spouses are present.

C. Advising both spouses that there could be a conflict of interest going forward in representing both of them and they may wish to retain their own counsel in the matter.

D. If the taxpayer-wife does not consent to the EA sharing her concerns with her husband, the EA cannot obtain informed consent from the husband to continue to represent both spouses without violating her confidences. To continue to represent the taxpayer-wife alone would also pit the EA against the taxpayer-husband, his former client. Thus, the EA should withdraw from representation of either spouse.

Answer 79

Politely advising the client that this meeting was not appropriate, and make sure that no further meetings occur unless both spouses are present.

Question 80

All of the following are examples of disreputable conduct for which an enrolled agent may be disbarred or suspended from practice before the Internal Revenue Service EXCEPT

A. Soliciting by mailings, the contents of which are designed for the general public.

B. Suggesting that (s)he is improperly able to obtain special consideration from an Internal Revenue Service employee.

C. Maintaining a partnership for the practice of tax law and accounting with a person who is under disbarment from practice before the Internal Revenue Service.

D. Failing to properly and promptly remit funds received from a client for the purpose of payment of taxes.

Answer 80

Soliciting by mailings, the contents of which are designed for the general public.

Question 81

An Enrolled Agent (EA) can be sanctioned under Circular 230 in each of the following ways EXCEPT

A. Monetary penalty.

B. Disbarment.

C. Imprisonment.

D. Censure.

Answer 81

Imprisonment.

Question 82

Janet is not an enrolled agent, CPA, attorney, or enrolled actuary but has obtained an AFSP Record of Completion each year it has been available. In 2016, the president of Widgets-R-Us engaged Janet to prepare the company’s 2015 Form 1120-S. The company is a calendar-year S corporation. Janet prepared the 2015 income tax return for Widgets-R-Us and signed it as the preparer. This is the only return Janet prepared for Widgets-R-Us. In December of 2017, the IRS began an examination of Widgets-R-Us’s 2014 and 2015 federal income tax returns. Janet has a power of attorney to represent Widgets-R-Us for 2014 and 2015. Under Circular 230, Janet is permitted to represent Widgets-R-Us during the examination with regard to its

A. None of the answers are correct.

B. 2014 and 2015 Forms 1120-S.

C. 2014 Form 1120-S only.

D. 2015 Form 1120-S only.

Answer 82

2015 Form 1120-S only.

Question 83

Which of the following statements regarding Circular 230 is true?

A. A practitioner may never charge an unconscionable fee in any practice before the IRS.

B. All of the answers are correct.

C. A practitioner may never charge a contingent fee for any tax related service.

D. A practitioner may charge a contingent fee for providing tax planning services.

Answer 83

A practitioner may never charge an unconscionable fee in any practice before the IRS.