Practice Before the IRS
State officers or employees are automatically qualified to practice before the IRS.
False
State officers and employees who deal with tax matters for the state may not practice before the IRS if such employment may disclose facts or information applicable to Federal tax matters.
ill McCoy completed the SEE and was enrolled in December. What month does his enrollment expire?
March 31
Expiration of practitioner enrollment occurs on March 31, and a practitioner must renew every three years. However, a practitioner who enrolls in the middle of an enrollment cycle may need to renew in a period shorter than three years, depending on the last digit of his or her social security number. The IRS only processes applications for renewal between November 1 and January 31. Renewed enrollments are effective as of April 1 following the period of application.
Is a tax preparer permitted to use the IRS insignia on his advertising material or on letterhead?
No, he may not use it on either.
A practitioner is not permitted to imply an employer-employee relationship with the IRS or that he is in any way affiliated or certified by the IRS. A practitioner's use of the IRS insignia would violate this prohibition.
A tax preparer may be disbarred or suspended from IRS practice for which of the following conduct:
All of the above.
The items listed in A, B and C are considered disreputable conduct. Suspension or disbarment from practice are among the allowable sanctions that can be imposed for such actions.
The Director of the Office of Professional Responsibility is _____________ to notify appropriate officers and employees of the IRS, interested departments and agencies of the Federal government and the State where a practitioner is licensed, that a practitioner has been disbarred or suspended from practice before the IRS.
Permitted.
The Director of the Office of Professional Responsibility may give notice of the censure, suspension, disbarment, or disqualification to appropriate officers and employees of the Internal Revenue Service and to interested departments and agencies of the Federal government.
The return for a child who cannot sign the return themselves should be signed by _________?
Either Parent
If a child cannot sign the return, either parent can sign the child's name in the space provided. The signature should be followed by the words By [parent's name], parent for minor child. Form 1040 Instructions
When must an enrolled agent apply for renewal of his enrollment?
Every third year that follows the initial enrollment term.
Applications for renewal are to be made every third year that follows an enrolled agent's first enrollment period.
A tax preparer has an obligation to advise her client of the consequences of failing to report cash income if she:
Is told by the client that he is occasionally paid under the table.
Circular 230, §10.21 provides that a practitioner must advise a client of the consequences of non-compliance, error, or omission only when the practitioner knows that the client has not complied with the revenue laws.
Identify the individual below from whom a tax preparer, in practice before the Internal Revenue Service, may knowingly accept assistance:
An individual who has temporary recognition to practice before the IRS.
An enrolled practitioner may accept assistance from an individual who has temporary recognition to practice before the IRS.
Bertrand has been found to have willfully misrepresented information to a client for the purpose of defrauding that client. He has received a sanction in which he is prohibited from practice before the IRS unless and until the IRS reauthorizes him to do so. Which of the following best describes his sanction?
Disbarment
Practitioners disbarred from practice before the IRS may not resume practice until reauthorized by the IRS. Suspended practitioners must wait until the end of a set period of suspension before resuming practice. A censured practitioner received a public reprimand and may have conditions imposed on his or her continued practice.
Who cannot sign a formal written protest on behalf of a MFJ filer to request an appeals conference?
The taxpayer's unenrolled tax preparer.
An unenrolled tax preparer is not admitted to practice before the Internal Revenue Service and cannot prepare or sign a formal written protest on behalf of a client to request an appeals conference. This is one of the benefits of becoming an enrolled agent.
What are the two paths an individual can take to become an enrolled agent?
Past service in the IRS or demonstration of special competence in tax matters.
A person is eligible to be an enrolled agent by demonstrating a special competence in tax matters by passing the IRS Special Enrollment Examination (SEE) which is more commonly called the "Enrolled Agent Examination" or by virtue of past service in the IRS. All individuals must not engage in any conduct that would justify suspension or disbarment.
Robert is preparing a tax return for a client. Because of the complicated nature of the return, he advises the client to represent information on the return in a way that disregards a certain tax regulation. Robert is not acting with incompetence or negligence if he believes in good faith that the regulation does not apply to his client's complex case, and also advises the submission of a document that evidences a challenge to that regulation.
True
A tax practitioner may advise a client to take a position on a document submitted to the IRS that demonstrates a willful disregard for a rule or regulation only if the practitioner also advised the client to submit a document demonstrating a good faith challenge to that rule or regulation.
All of the following are considered examples of disreputable conduct for which a tax preparer can be disbarred or suspended EXCEPT:
Failure to timely pay personal income taxes.
The simple act of failing to timely pay personal income taxes is not disreputable conduct under the terms of Circular 230.
What are grounds for censure, suspension, or disbarment and/or the imposition of a monetary penalty?
All of the above.
All of the examples provided are grounds for censure, suspension, disbarment, and/or the imposition of a monetary penalty by the Secretary of the Treasury, subsequent to fulfillment of due process requirements of notice and opportunity for a proceeding.
Which of the following is practice before the IRS?
Discussing a clients tax return with an IRS revenue officer.
Furnishing information at the request of the IRS, or appearing as a witness for the taxpayer is not practice before the IRS. These acts can be performed by anyone. An IRS revenue officer participates in the IRS collection process. Discussing a taxpayer's liabilities and rights with a revenue officer constitutes practice before the IRS. To do this, a practitioner must obtain power of attorney from the taxpayer.
Jill has 6 hours of ethics in the current year. How can Jill use these hours to satisfy her continuing education requirements.
She can only use 2 hours of ethics for the current year. Excess hours in ethics cannot count towards other categories.
Excess hours in ethics and federal tax law cannot be counted toward other categories.
A minimum of 16 hours of continuing education credit, including two hours of ethics or professional conduct, must be completed during each enrollment year of an enrollment cycle.
Sara Birch became an Enrolled Agent this year. Sara is ordering business cards and advertising for her accounting and tax practice. Of the following presentations listed below, which one will violate the Circular 230 rules for advertising?
Sara Birch, Enrolled Agent, Certified to practice before the Internal Revenue Service.
The use of the word certified is expressly forbidden in Circular 230
Molly is a practitioner who willfully failed to sign a tax return even though federal tax law requires the signature. The IRS may sanction Molly under:
Incompetence and Disreputable Conduct
Incompetence and disreputable conduct for which the IRS may sanction a practitioner includes, but is not limited to, criminal offenses, giving false or misleading information, misappropriation of funds, and willfully failing to sign a tax return unless the failure is due to reasonable cause and not due to willful neglect.
Larry Smith passed all parts of the Special Enrollment Examination in October of 20X5. Larry submitted the required forms to become an Enrolled Agent. Larry failed the suitability test performed by the Internal Revenue Service and the Office of Professional Responsibility informed Larry that he was denied participation and provided him with the reasons for the denial. Larry received the notice dated January 20, 20X6. What action should Larry take to appeal the denial received from the Office of Professional Responsibility?
Larry must file a written appeal no later than the 19th of February with the Secretary of the Treasury or his delegate.
After RPO Suitability issues a Notice of Denial (NOD) for a new enrollment, the applicant has 30 days from the date of the notice to submit an appeal. Appeals are decided by OPR.
January has 31 days, so 30 days from January 20th would be February 19th.
A written appeal should adequately address all relevant issues; it should include reasons and/or documentation to support the applicant’s claim that the denial should be reversed.
With respect to unenrolled tax return preparers, which of the following statements is correct?
An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return.
An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return.
Limited representation rights authorize the tax professional to represent a taxpayer if, and only if, they prepared and signed the return. They can do this only before IRS revenue agents, customer service representatives and similar IRS employees, including the Taxpayer Advocate Service. At present, an unenrolled return preparer must sign the return and possess an Annual Filing Season Program Record of Completion for the year in question in order to have limited representation rights.
An unenrolled preparer cannot represent clients whose returns they did not prepare and they cannot represent clients regarding appeals or collection issues even if they did prepare the return in question.
Form 8821 does not authorize anyone to receive a refund, and the law prohibits unenrolled preparers from receiving refund checks.
Each individual applying for renewal as an Enrolled Agent must complete CPE credits during each year of enrollment. How long must each practitioner maintain records of their completed CPE credits?
The Enrolled Agent applying for renewal must retain the information required (as listed in Circular 230) which documents successful completion of qualified CPE credits, for a period of 4 years following the date of renewal of enrollment.
An individual admitted to practice before the IRS must keep proof of CPE for a period of four years following the date of renewal of enrollment. Qualifying CPE providers are now required to report CPE hours; but a practitioner is required to submit proof to OPR upon request. During the renewal process, each individual must indicate compliance with the continuing education requirements.
Alan Huffman prepares a lot of individual tax returns. A new client came to his office on March 4, 20X3 asking Huffman to do the 20X2 tax return. Huffman gathers the necessary information and several days later begins to work on the tax return. At that time, Huffman discovers that the client had taken a very large charitable contribution on his 20X1 return but the gift was not deductible because the charity did not qualify. What is the appropriate action for Huffman to take?
Notify the new client that the deduction was not appropriate and that an amended return for 20X1 needs to be filed.
The preparer is hired to complete the 20X2 tax return. The 20X1 tax return is the property of the client. The problem may well have been an innocent mistake. Huffman should advise the client that the deduction was not appropriate and an amended return needs to be filed as quickly as possible. If the client does not file the amended return to correct the problem, Huffman should consider resigning from the 20X2 engagement to avoid association with a party who files erroneous tax returns and refuses to correct them. The preparer is not required to inform the IRS nor should he do so without permission by the client.
Under Treasury Department Circular No. 230, all of the following are considered to be incompetence and disreputable conduct EXCEPT:
willfully disclosing tax return information with the consent of the taxpayer.
Willfully disclosing or otherwise using a tax return or tax return information in a manner not authorized by the Internal Revenue Code is considered disreputable conduct; however, §7216 provides that a tax return preparer may disclose or use tax return information as the taxpayer directs as long as the preparer obtains a written consent from the taxpayer.
Incompetence and disreputable conduct for which the IRS may sanction a practitioner includes, but is not limited, to the following:
Section 10.50 and 10.51 of Circular 230, 26 CFR 301.7216-3
Annie Holt, an enrolled agent, was issued findings of fact, conclusions of law, and a decision ruling that she committed acts of misconduct, which were violations pursuant to Circular 230, and, therefore, a decision was entered ruling that she should be disbarred. What's next?
Annie Holt has a right to appeal the decision to the Secretary of the Treasury.
Any party to such a proceeding may file an appeal of the decision of the Administrative Law Judge with the Secretary of the Treasury, or delegate.
The practitioner must file the appeal and brief, in duplicate, with the Director of the OPR within 30 days of the date that the decision of the Administrative Law Judge is served on the parties. The Director of the OPR will immediately furnish a copy of the appeal to the Secretary of the Treasury or delegate who decides appeals.