Regulations Governing Practice

Question 1

What does Circular 230 contain?

Answer 1

IRS rules of practice governing CPAs and other who practice before the agency

Question 2

Who can practice before the IRS?

Answer 2

Attorneys
CPAs
Enrolled Agents
Enrolled Actuaries 
Enrolled Retirement plan agents related to IRS forms 5300 and 5500

Question 3

What does preparing before the IRS include?

Answer 3

Preparing documents
Filing documents
Corresponding and communicating with the IRS
Rendering advice with regards to transactions that may regard in tax avoidance or evasion
Representing Client at hearing

Question 4

What is required for an individual to represent before a taxpayer in front of the IRS?

Answer 4

Form 2848 (power of attorney)

Question 5

What is subpart B of Circular 230?

Answer 5

Substantive rules that govern tax practitioners

Question 6

What is subpart C ?

Answer 6

Sanctions for violations

Question 7

What is subpart d?

Answer 7

Disciplinary proceedings

Question 8

What are substantive provisions?

Answer 8

1. Furnishing information ( complying to give info to the IRS requests)
2. Client’s Omission (practioner needs to inform clients of any errors but do not need to notify the IRS without the clients
3. Due diligence
4. Delays ( cannot stall)
5. Assistance from disbarred = no indirect contact
6. Practice from former IRS agents (revolving door -2 year cooling period)
7. Cannot be part of public notatary
8. Fees - no unconscionable fee
   - no chargeable fee except 1. IRS examination or challenge
9. statutory interest or penalties
10. accountant is representing client

Question 9

What is return of Client records?

Answer 9

Dont give client record back until you are paid

Question 10

What is check negotiation

Answer 10

A practioner who prepares tax returns may not endorse or negotiate check issued to client by irs

Question 11

What are best practice proceeds?

Answer 11

1. Communicate effectively
2. establish the facts
3. advice clients on conclusions
4. Acting fairly
5. exercising supervisory powers

Question 12

What are tax return standards?

Answer 12

sign tax return only unless 1) lacks a reasonable basis

2) unreasonable position 3)willful attempt to understate tax

Question 13

What is the penalty imposed for violating practice rules?

Answer 13

1. Max penalty = 100% of gross income, may be added to 50% of gross income authorized by 6694 = up to 150%

Question 14

Pursuant to Treasury Circular 230, which of the following statements about the return of a client’s records is correct?

Answer 14

The practitioner may retain copies of the client’s records.