R5 Professional Resp 2 (W)

Question 1

Negotiation of IRS Refund Check

Answer 1

Any tax return preparer who endorses or otherwise negotiates an IRS refund check issued to a taxpayer shall pay a penalty of $500 per check

Question 2

Due Diligence Requirements (CRER)

Answer 2

Computation worksheets
Reasonable inquiries to the taxpayer
Eligibility checklists
Record retention

Question 3

Aiding and Abetting Understatement of Tax Liability

Answer 3

The penalty for aiding and abetting understatement of tax liability applies to any person, not just to tax return preparers. The IRS has the burden of proof to establish that any person is liable for this civil penalty

Question 4

Wrongful Disclosure and/or Use of Tax Return Information

Answer 4

Disclosure to enable a third party to solicit business

Knowing or reckless disclosure of information

Question 5

Disclosure Exceptions (CAQ)

Answer 5

Court order
Allowable uses (estimated taxes)
Quality an peer reviews, computer processing, and administrative orders

Question 6

Treasury Department Circular 230

Answer 6

A publication that addresses the practice before the IRS of “practitioners” (attorneys, certified accountants, enrolled agents, enrolled actuaries, enrolled retirement plan agents, and appraisers) with regard to the rules governing the authority to practice before the IRS, the duties and restrictions relating to the practice before the IRS, the sanctions for violations of the regulations, and the rules applicable to disciplinary hearings

Question 7

Practice by Former Government Employees, Their Partners, and Their Associates

Answer 7

If an individual, while a government employee,
“personally and substantially participated” in a particular matter involving specific parties, that individual can never represent or assist those parties with respect to that particular matter
had “official responsibility within two years after leaving government employment cannot represent those parties in regards to the matter

Question 8

Fees Charged by Practitioner

Answer 8

A practitioner may never charge an unconscionable fee and may charge a contingent fee for
IRS examination or audit
Claim solely for refund of interest and/or penalties
A judicial proceeding arising for the IRC

Question 9

Advertising by Practitioner

Answer 9

No practitioner may use false or misleading advertising

Question 10

Best Practices for Tax Advisors

Answer 10

Communicating with the client regarding the terms of the engagement
Establishing facts and arriving at a conclusion supported by the law and the facts
Advising the client about the importance of the conclusions reached

Question 11

Referral Agreements

Answer 11

Any compensation agreement or referral agreement between the promoter, if any, and the practitioner must be disclosed

Question 12

Not Frivilous

Answer 12

A practitioner cannot advise a client to take a tax return position unless the position is not frivilous

Question 13

Practitioner’s Reliance Upon Client-Furnished Information

Answer 13

Generally, a practitioner who signs a tax return or other document may rely “in good faith without verification” upon client-furnished information. However, the practitioner cannot ignore the implications of such information. The practitioner must make reasonable inquiries if the client-furnished information appears to be questionable or incomplete

Question 14

Knowledge or Omission by a Client

Answer 14

The practitioner must advise the client promptly of any noncompliance, errors, or omissions in tax returns and other documents and must advise the client of the consequences under the law

Question 15

Diligence as to Accuracy

Answer 15

The practitioner must exercise due diligence regarding preparing returns and other documents

Question 16

Return of Client’s Records

Answer 16

Generally, at the request of the client, the practitioner must return all client records; except if state law allows the practitioner to retain the records