ACCT 108 (W2-W6)
Judith wants to revoke a power of attorney that she previously executed and does not want to name a new representative. In order to do this, what is Judith’s most appropriate action?
Judith must send a copy of the previously executed power of attorney to the Internal Revenue Service (with an original signature) and write “REVOKE†across the top of the power of attorney.
Maria received a Notice of Tax Due and Demand for Payment in the amount of $30,000 as a result of an examination of her 2014 Form 1040. She is not able to pay the entire amount at this time and would like to set up an installment agreement. Which of the following statements are not true regarding setting up an installment agreement?
Maria must wait for a Notice of Federal Tax Lien to be filed before she can request an installment agreement.
Sarah Smith wants her business associate, Ned Nelson, to be informed about her personal tax accounts. To have this information disclosed to Ned, Sarah files a complete Tax Information Authorization (TIA, Form 8821) with the IRS. Which of the following statements is true regarding the authority given to Ned by this TIA?
Ned will have no power to represent Sarah before the IRS.
Receipt of a Centralized Authorization File (CAF) number indicates which, if any, of the following with respect to the recipient?
None of the answers are correct.
The IRS must enter into a guaranteed installment agreement with a taxpayer as long as, during the past 10 years, the taxpayer has not
None of the answers are correct.
A taxpayerâ s appeal to the Internal Revenue Service regarding the IRSâ s filing of a Notice of Federal Tax Lien may succeed if the IRS made a procedural error in making the assessment.
True
A taxpayer’s appeal to the Internal Revenue Service regarding the IRS’s filing of a Notice of Federal Tax Lien may succeed if the IRS made a procedural error in making the assessment.
True
A taxpayer’s representative is required to submit to the Internal Revenue Service a power of attorney properly executed by the taxpayer if the representative wishes to sign a waiver agreeing to a tax adjustment.
True
Advice on noncriminal tax matters from a federally authorized practitioner has the same confidentiality protection as communication with an attorney.
True
An administrative law judge presides at the hearing on a complaint for the disbarment or suspension of a practitioner. The practitioner may appear at this hearing in person or be represented by another who need not be a practitioner.
True
An enrolled agent may be suspended from practice for advertising that (s)he is an expert in certain areas of taxation when such a statement is not authorized by state or federal agencies having jurisdiction over the practitioners.
True
An individual shall be considered a preparer of a return if (s)he furnishes to a taxpayer or other preparer sufficient information and advice so that the completion of the return or claim for refund is simply a mechanical or clerical matter, even though that person does not actually place or review placement of information on the return or claim for refund.
True
An individual who prepares tax returns for compensation will not be treated as a tax return preparer under the Internal Revenue Code unless the individual is an enrolled agent, a lawyer, a CPA, or an enrolled actuary.
False
An unenrolled preparer can represent the taxpayer before any function of the IRS
False
Anthony is a partner in AC Partnership. He is responsible for the overall substantive accuracy of all income tax returns prepared by the employees. Anthony does not collect the necessary information nor does he prepare tax returns. Anthony should not sign the returns as the preparer.
False
Attorneys and accountants licensed to practice in a particular state who are in good standing in that state may practice before the IRS only in that state.
False
Which of the following is not a proper execution of a power of attorney or tax information authorization?
For a partnership, by any partner.
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?
For a period of 4 years following the date of renewal of enrollment.
Which of the following is true regarding a refund check?
Form 2848, Power of Attorney and Declaration of Representative, may be used to authorize receipt of a refund check.
Which of the following statements is false concerning the filing of Form 8821 (Taxpayer Information Authorization)?
Form 8821 revokes a power of attorney that is in effect.
Which of the following statements with respect to executing a power of attorney is false?
In the case of a corporation, a power of attorney may be executed only by the officer or employee who signs the return.
The IRS has documentation that an enrolled agent has violated the law or regulations governing practice before the IRS. It may
Institute proceedings for suspension.
Identify the correct statement regarding the calculation of interest on a tax liability.
Interest is figured from the return due date to the billing date, if paid within 21 days.
Before the initial in-person interview between the IRS and the taxpayer to determine or collect any taxes, the taxpayer should receive a publication from the IRS informing the taxpayer of his or her rights as a taxpayer.
True
Circular 230 never permits a practitioner to sign a return as a preparer if the return contains a frivolous position.
True
Entry on the Centralized Authorization File (CAF) system enables Internal Revenue Service employees who do not have access to the actual power of attorney or tax information authorization to do all of the following: (1) Determine whether a recognized representative or appointee is authorized to discuss specific confidential tax information; (2)Â determine the extent to which a recognized representative or appointee has been authorized to represent a taxpayer; and (3) send copies of notices and other Internal Revenue Service communications to the person (individual or other entity) designated on the form.
True
Federal law provides for a minimum weekly exemption from levy for wages, salaries, and other income based on the standard deduction plus the number of allowable exemptions, divided by 52.
True
Form 2848, Power of Attorney and Declaration of Representative, can authorize your representative to receive a refund check on your behalf. However, it cannot give your representative authorization to endorse or cash your refund check related to income taxes.
True
Form 8821, Tax Information Authorization, is strictly a disclosure form and cannot be used to name an individual to represent the taxpayer before the IRS.
True
If a position on a tax return has a more likely than not possibility of being sustained on its merits, then there is a reasonable belief of its being sustained on the merits.
True
If at any step of the collection process a taxpayer does not agree with the recommendations of an IRS collection employee, the taxpayer has the right to discuss the matter with the employeeâ s manager.
True
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?
Appear as a witness before the IRS.
Sam timely filed his U.S. individual income tax return for calendar year 2014 without any extensions. The return showed a balance of income taxes due in the amount of $75,000. Sam has not paid his IRS liability, nor has he entered into any installment agreement extending the statute of limitations or submitted any offer in compromise. The statute of limitations for collection of Sam’s tax liability expires on which of the following dates?
April 15, 2019.
A taxpayer must use a power of attorney to do which of the following?
Authorize an individual to represent a taxpayer at a conference with the IRS.
"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?"
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.
All of the following types of individuals may practice before the IRS except
Certified financial advisors.
Identify the individual below who is not eligible to practice before the IRS. None of the individuals are under suspension or disbarment.
Certified financial planner.
An advertisement by an enrolled agent depicting the official IRS insignia is proper as long as the enrolled agent is currently enrolled with the IRS.
False
An enrolled agent can accept the client’s statement in preparing a tax return without making any inquiries.
False
An enrolled agent is unqualifiedly permitted to represent the partnership and all of its individual partners involving an IRS examination of the partnership return.
False
Nonacquiescence by the Commissioner of Internal Revenue to an adverse decision in a regular Tax Court case means the Internal Revenue Service does not accept the decision but will follow it in cases involving similar facts.
False
P, a tax preparer, prepared for compensation an income tax return for individual T, a cash-basis taxpayer. P explained to T that he is required to amortize the expense of a 3-year performance bond that T had purchased. However, T insisted that they should expense it all in one year since insurance is deductible and this was a one-time fee. P relented and deducted the expense in full. T’s return was subsequently audited by the IRS, and the bond expense was amortized by the agent, which caused an understatement of income. Since P expensed this amount on the tax return because of T’s insistence, P is not subject to the return preparer penalty for negligently or intentionally disregarding rules or regulations under Sec. 6694(b).
False
Proposed regulations automatically replace the temporary regulations.
False
The Commissioner of Internal Revenue does not publicly announce acquiescence or nonacquiescence to regular decisions adverse to the IRSâ s position other than those of the United States Tax Court.
False
The Commissioner of Internal Revenue may subsequently revise a nonacquiescence but not an acquiescence.
False
The IRS must institute a formal proceeding as described in Sec. 10.60 of Circular 230 before it may issue a letter of reprimand.
False
The Tax Court and the Federal Circuit Courts of Appeals are the only courts that are bound by the Internal Revenue Code.
False
The definition of a tax return preparer includes a fiduciary who prepares a return for the trust.
False
The filing of Form 8821 will revoke any Form 2848 that is in effect.
False
The phrase “practice before the Internal Revenue Service†includes the representation of clients in the United States Tax Court for cases being handled under the “small tax case procedure.â€
False
The preparer must furnish the taxpayer with a completed copy of the prepared return no later than the time the original return is presented for signing. The preparer must sign both the original and the copy.
False
There is no right to appeal a decision of suspension or disbarment of practice before the IRS.
False
Trent’s Tax Service prepared the current year return of George Dell and was paid $100 by Mr. Dell. The return was audited and changes were made to both income and expenses on the return, but no additional tax was due. These changes were the direct result of negligent actions on the part of Trent’s Tax Service. Trent’s Tax Service may be liable for a penalty for understatement of the taxpayer’s liability due to an unreasonable position under Sec. 6694.
False
Wage replacement payments are not subject to continuous levy under current law.
False
With the taxpayer’s approval, a tax return preparer who is an attorney, certified public accountant, enrolled agent, or enrolled actuary may receive and endorse a taxpayer’s refund check and invest the proceeds in a mutual fund.
False
"With regard to continuing education (CE) for enrolled agents, which of the following statements is false?"
"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."
Janice has been enrolled to practice before the IRS since 1994. Her Social Security number ends in 2. When may she destroy records documenting her continuing education from January 2014?
"April 1, 2020."
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?
"John Bright, Certified Enrolled Agent."
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.
"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."
Under a guaranteed installment agreement between the IRS and a taxpayer, the taxpayer must agree to pay in full within how many years?
3 years
Concerning a matter related to a specific tax period, how many years after a power of attorney (POA) is received by the IRS are documents recorded on the Centralized Authorization File (CAF) system?
3 years.
A practitioner who is disbarred by the IRS may seek reinstatement after
5 years
Which one of the following changes requires permission from the Internal Revenue Service?
A change from the cash method to the accrual method.
Which of the following statements regarding accounting methods is false?
A combination (hybrid) method is not an acceptable method of accounting.
Jeopardy levies may occur when the IRS waives the 10-day notice and demand period and/or the 30-day Final Notice (Notice of Intent to Levy) period because
A delay would endanger the collection of tax.
With regard to the declaration of the representative on a power of attorney, all of the following statements are true except
A fiduciary is required to show his or her relationship.
Which of the following best describes a levy when it relates to a tax debt
A levy on salary or wages will end when the time expires for legally collecting the tax.
If a power of attorney specifically authorizes the substitution of a recognized representative, which document need not be submitted to the IRS?
A notarized letter from the taxpayer advising the IRS that the authorization to substitute remains valid.
With regard to the Centralized Authorization File (CAF) number on powers of attorney, which of the following is true?
A power of attorney that does not include a CAF number will not be rejected.
When dealing with IRS employees, taxpayers have certain rights. Which of the following most accurately reflects those rights?
A right of appeal is available for most collection actions.
Which of the following statements with respect to the Internal Revenue Service’s Centralized Authorization File (CAF) is false?
A tax information authorization or power of attorney will be rejected based on the absence of a CAF number.
Which of the following statements is false in respect to a Notice of Federal Tax Lien?
A taxpayer cannot sue the federal government for damages if the IRS knowingly or negligently fails to release a Notice of Federal Tax Lien when a release is warranted.
All of the following changes in method of accounting require the consent of the Commissioner of Internal Revenue except
Adoption of a 15-year amortization period for purchased intangible assets that have previously not been amortized.
"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?"
Advise Joe & Bill that he cannot represent them because there is a conflict of interest.
How long must each practitioner maintain records of his or her completed CE credits?
CE credit information must be retained for a period of 4Â years following the date of renewal of enrollment.
Mike is an enrolled agent. Widget, 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?
Advise Widget of the error and the consequences of the error.
Frank, a certified public accountant, has the right to make the following solicitations of employment involving IRS matters:
All of the answers are correct
A Centralized Authorization File (CAF) number may be issued to which of the following?
All of the answers are correct.
Which of the following individuals qualifies as a practitioner under Circular 230?
All of the answers are correct.
Which of the following is true with respect to an offer in compromise?
All of the answers are correct.
A power of attorney (POA) specifically allows for substitution of representatives. A substitution is made by filing which of the following with the IRS
All of these items must be submitted to the IRS.
A power of attorney (POA) specifically allows for substitution of representatives. A substitution is made by filing which of the following with the IRS?
All of these items must be submitted to the IRS.
Which of the following changes in the method of accounting does not require the consent of the Internal Revenue Service?
An adjustment in the useful life of a depreciable asset not subject to ACRS or MACRS property.
Which of the following items is not a change in the method of accounting requiring the consent of the IRS?
An adjustment in the useful life of a depreciable asset.
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?
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.
Which of the following practitioners with the responsibility of oversight of return preparation will be subject to disciplinary action?
An employee engages in a noncompliant practice due to the practitioner’s failure to take reasonable steps to ensure compliance with Circular 230.
All of the following persons may be responsible for the trust fund tax except
An employee in the payroll department.
Which of the following statements is true with respect to the limited practice of an unenrolled return preparer?
An unenrolled preparer cannot receive refund checks.
Which of the following statements is true with respect to the limited practice of an unenrolled return preparer?
An unenrolled return preparer may represent the taxpayer before certain types of Internal Revenue Service personnel with respect to an examination regarding the return that he or she prepared.
Which of the following statements may not be used when an enrolled agent advertises?
Claims of quality of service that cannot be verified.
Which of the following statements is incorrect with respect to changes in accounting methods requiring the consent of the IRS?
Consent is required to use different methods of accounting for each separate business that you operate.
Contains the rules regarding eligibility to become an enrolled agent and renewal of enrollment.
Contains the rules regarding eligibility to become an enrolled agent and renewal of enrollment.
Treasury Circular 230
Contains the rules regarding eligibility to become an enrolled agent and renewal of enrollment.
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
Establishing the facts, their relevancy, and arriving at a conclusion supported solely by the facts.
All of the following are considered examples of disreputable conduct for which an enrolled agent can be disbarred or suspended except
Failure to timely pay personal income taxes.
"A formal complaint as described in Sec. 10.62 of Circular 230 must be personally delivered to an attorney, a CPA, or an enrolled agent by an officer or employee of the IRS."
False
"All of the following statements are true: A petition to the U.S. Supreme Court to hear a case that it is not obliged to review is by writ of certiorari. The writ of certiorari is initially requested by an appellant in an appropriate case. The writ of certiorari is issued by the U.S. Supreme Court to the lower appellate court requesting the record of a case for review. Group of answer choices
False
"All regulations are written by the Office of Chief Counsel. Internal Revenue Service employees and all courts, except the U.S. Supreme Court, are bound by these regulations."
False
"Charlie, a certified public accountant, is required in all circumstances to submit records or information upon the lawful request of an IRS representative."
False
"Duane, an enrolled agent, has been properly notified to appear at a hearing regarding a complaint that could result in his suspension from practice before the Internal Revenue Service. If Duane fails to appear for the hearing, he must personally appear before the appropriate Internal Revenue Service office within 5Â days to prevent further action from being taken against him."
False
"If an enrolled agent has knowledge that a client has filed an erroneous tax return, the client must be advised to correct the error."
False
"In the event an applicant for enrolled agent status is denied enrollment, (s)he may file an appeal of that decision with the Deputy Commissioner of the Internal Revenue Service."
False
"Tony, an enrolled agent, advises prospective clients that he is able to obtain approval of qualified retirement plans with unique vesting provisions because of his close relationship with the IRS territory manager of the Tax Exempt Government Entities operating unit in his locality. This type of employment solicitation does not constitute disreputable conduct subjecting Tony to potential disbarment or suspension from IRS practice."
False
"Virginia became enrolled to practice before the Internal Revenue Service on June 1, 2004. She has a Social Security number ending in 5. Virginia has to meet certain continuing education requirements and apply for renewal of enrollment by September 1, 2014, in order to maintain active enrollment status."
False
A Chapter 7 bankruptcy discharges all of the unpaid tax liability of a sole proprietor.
False
A Notice of Federal Tax Lien does not attach to property acquired after the lien filing date.
False
A levy is a legal claim against a taxpayer’s property used as a security for the tax debt, whereas a lien is a legal seizure of property to satisfy a tax debt.
False
A person possessing a tax information authorization can inspect or receive confidential information and advocate a taxpayer’s position with respect to the federal tax laws.
False
A practitioner who holds a power of attorney may cash a taxpayer’s federal income tax refund check.
False
A preparer depreciated furniture that the taxpayer purchased in the current year by using the wrong class life because the preparer did not understand the MACRS method. This position was not disclosed on the tax return, and it resulted in an understatement of tax. The preparer would not be subject to the penalty for negligent or intentional disregard of rules and regulations.
False
A preparer who is paid to review a tax return does not have to sign and fill in the other blanks in the paid preparer’s area of the return.
False
A representative may be added to an existing power of attorney by telephoning the IRS service center where the related return or the original power of attorney was filed.
False
A taxpayer can submit an offer in compromise only if it is submitted based on doubt as to the liability owed and doubt as to the ability of the taxpayer to fully pay the amount owed.
False
All courts except the Tax Court are bound by legislative regulations.
False
Allyn is an enrolled agent and a notary public. He is representing Ms. Scott before the IRS. The revenue agent involved in the case requests certified copies of the contracts relating to the sale of a building. Allyn can secure copies of the contracts and then certify them himself using his notary public stamp.
False
Audreyâ s 2013 income tax return is under examination by the Internal Revenue Service. She agrees with several proposed changes by the examiner. Audrey thinks she will owe additional tax of $3,000 (excluding interest) and deposits a cash bond in that amount with the IRS. This deposit will stop the further accrual of interest on both the tax and the interest accrued to that point.
False
Bankruptcy proceedings will always result in the discharge of federal tax liabilities.
False
Cameron, a tax return preparer, prepared at different times during the tax season both Mr. Murphy’s individual income tax return and his S corporation’s income tax return. Cameron was compensated for the preparation of both returns. Cameron is only required to furnish a copy of his client’s original income tax return at the time the second return is presented for signature.
False
Circular 230 permits an enrolled agent to cash a taxpayer’s refund check if the amount of the check is less than the amount of the total fee outstanding on the date the check is cashed.
False
Donna is a secretary who prepares income tax returns during the tax filing season. Donna does not keep a copy of the returns she prepares but she does keep a record of her clients’ names, identification numbers, tax year and type of return prepared. Donna is subject to a civil penalty in the amount of $50 for each copy of a tax return she does not retain up to a maximum of $25,000 for each year.
False
Dorian owed income taxes, penalties, and interest on his federal income tax return for 2002. Since Dorian had no assets, he was not required to enter into any IRS installment agreement. However, during 2007, the IRS requested that Dorian enter into a waiver of the collection statute of limitations by extending it to December 31, 2027. Dorian signed the waiver. Dorian will be relieved of any remaining balance of tax obligation on December 31, 2014.
False
Each new power of attorney (Form 2848) revokes all prior powers of attorney regardless of the matter it pertains to.
False
Filing bankruptcy under Title 11 of the U.S. Code relieves the taxpayer of paying federal taxes for all years on which tax, interest, and/or penalties are assessed.
False
Form 2848, Power of Attorney and Declaration of Representative, has a provision that will allow the taxpayer to authorize an attorney, CPA, and enrolled agent to receive and endorse a refund check on behalf of the taxpayer.
False
Generally, a newly filed power of attorney concerning the same matter does not revoke the previous power of attorney. The new representative is automatically added to the list of authorized representatives.
False
Generally, the Internal Revenue Service has the authority to collect outstanding federal taxes for not more than 3 years from the date of assessment.
False
Holly filed a suit against her brother in a probate matter. Holly’s attorney has issued a subpoena to the IRS to produce her brother’s most recently-filed federal income tax return. The IRS must comply with the summons by producing the tax return of Holly’s brother.
False
If a person liable for tax neglects or refuses to pay the tax after demand has been made, a lien in favor of the government attaches to the taxpayer’s property. The lien is automatically valid against all the taxpayer’s creditors.
False
If a taxpayer agrees with the results of an IRS examination that (s)he owes additional tax and signs an agreement form, the taxpayer will not be billed for additional interest for more than 30 days from the date the agreement was signed if the taxpayer pays the total amount due within 30 days of the billing date.
False
Interpretative regulations are issued pursuant to specific authorization from Congress in particular Code sections.
False
Jake, an attorney, is charged by the IRS with acts of misconduct and a complaint is served upon him. Jake has 10 days from the date of service to file an answer.
False
Jim and Tammy, husband and wife, were both employed and filed a joint return that showed they were entitled to a refund of $1,000. Rather than receiving the refund of $1,000, they received a notice advising them that the entire refund was applied to an amount due that Jim owed from a prior year, which was before they were married. Tammy could be considered an innocent spouse and should file Form 8857 to obtain her portion of the refund.
False
John Bitter wants his associate, Bill Sweet, to be informed about his business tax account. John wants to disclose only this information, and grant no other authority. Form 8821, Tax Information Authorization, should not be used in this situation because it would allow Bill to represent John.
False
Late payments by a taxpayer on an installment agreement to pay a tax liability will automatically terminate the agreement, and the total tax bill will be due by the time of the next payment.
False
Lorie owed the IRS $150,000. Lorie owned a money market account with a major stock brokerage firm that had a value of $200,000. The IRS can force the brokerage firm to pay $150,000 from the account by serving a notice of lien on it.
False
Which of the following is not practicing before the Internal Revenue Service?
Furnishing information at the request of the IRS or appearing as a witness for a taxpayer.
Late payments by a taxpayer on an installment agreement to pay a tax liability will
Generate a 30-day notice as to the cessation of the agreement.
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?
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.
"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"
He believes in good faith and on reasonable grounds that the information requested is privileged or that the request is of doubtful legality.
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?
I am certified by the IRS.
A declaration of representative, which accompanies a power of attorney, includes all of the following statements except
I have never been sanctioned (e.g., reprimand, suspension, or disbarment) by the IRS.
A power of attorney must contain all of the following information except the
Identification number of the representative (i.e., Social Security number and/or employer identification number).
Mr. Alomar’s income tax return was examined by the IRS, and he agreed with the proposed changes. He has several ways by which he may settle his account and pay any additional tax that is due. Which of the following statements with respect to this situation is false?
If the bill is delayed, he will not be billed for additional interest for more than 60 days from the date he signed the agreement.
With regard to accounting methods, which of the following statements is false?
If you operate several businesses, you must use the same accounting method for each of the businesses.
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
November 1, 2019, through January 31, 2022.
Which of the following defines how a person can practice before the Internal Revenue Service?
Prepare and file the necessary documents with the IRS for the taxpayer.
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 and former IRS employees) of Circular 230?
Preparing the tax return for an individual suspended or disbarred from practice before the IRS.
Identify the appropriate action that a practitioner should take when (s)he becomes aware of an error or omission on a client’s return.
Promptly advise the client of such noncompliance, error, or omission and the consequences thereof.
A Tax Information Authorization (TIA, Form 8821) authorizes an appointee to
Receive disclosures of tax return information on behalf of the taxpayer.
Tax return information is typically confidential; disclosure of return information is permitted to all of the following parties except
Relatives of the taxpayer.
A tax information authorization (TIA) or power of attorney (POA) is not required of a representative who
Represents an administrator at a conference on an estate tax case and is the administrator’s attorney of record before the court where the estate is administered.
A properly executed Form 2848, Power of Attorney and Declaration of Representative, is required to allow a representative to perform all of the following except
Request the disclosure of confidential tax return information.
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?
Soliciting new business in matters relating to the Internal Revenue Service through the publishing of a range of fees for particular services.
Which of the following properties is not exempt from levy?
State income tax refunds.
With regard to Centralized Authorization File (CAF) numbers, which of the following statements is true?
The CAF number is entered into the IRS database, which allows the IRS to send copies of notices to the representative.
A power of attorney (POA) does not have to include
The CAF number.
With regard to the IRS filing a Notice of Federal Tax Lien, which of the following statements is not a requirement?
The IRS must give individual notices to all of the taxpayer’s creditors.
Which of the following statements with respect to IRS seizure and sale of a taxpayer’s property to satisfy the taxpayer’s tax bill is false?
The IRS must wait 30 days after seizure before conducting a sale.
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?
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 ALJ.
Select the true statement regarding issues concerning the representation of taxpayers before the IRS.
The IRS will accept a properly completed power of attorney (POA) or tax information authorization (TIA) other than one on Form 2848 or 8821, respectively.
A power of attorney or tax information authorization should contain all of the following information except
The divisions of the IRS that are involved in the matter covered by the power of attorney.
Which of the following statements concerning continuing education (CE) requirements for enrolled agents is not true?
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.
Regarding partnership audits, a group of partners may request that notice be mailed to a designated partner. Which of the following is the requirement that this group of partners must meet?
The group has an aggregate profits interest of 5% or more.
Identify the true statement regarding when innocent spouse relief can be requested.
The innocent spouse did not know or have reason to know of the understatement of tax.
Which of the following is false with respect to the Internal Revenue Service’s Centralized Authorization File (CAF)?
The issuance of a CAF number indicates that a person is either recognized or authorized to practice before the Internal Revenue Service under the provisions of Treasury Department Circular 230.
Identify the true statement regarding partnership audits.
The partnership audit provisions apply only to partnership items.
Which statement is false concerning any practitioner overseeing a firm as practice of providing advice being subject to discipline for failing to comply with requirements?
The practitioner is not responsible for the failure of members, associates, or employees of the firm to comply with the covered opinion rules if the practitioner does not take reasonable steps to ensure adequate procedures.
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?
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.
A representative who signs a Form 2848, Power of Attorney and Declaration of Representative, declares under penalty of perjury that (s)he is aware of which of the following?
The regulations in Treasury Department Circular No. 230.
"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?
The respondent to the complaint must file his or her answer with the IRS within 30 days from the date the complaint is served.
Identify the true statement regarding the scope of authority of a power of attorney (POA).
The scope of authority should specifically state the type of tax and years involved.
A power of attorney is required in all of the following circumstances except
To furnish information at the request of the IRS.
The following methods of accounting for inventory are considered acceptable except
Trade discount method.
"All regulations are written by the Office of the Chief Counsel, IRS, and approved by the Secretary of the Treasury."
True
"Although IRS employees are bound by Treasury Regulations, the courts are not."
True
"An enrolled agent may make the availability of his or her professional services known to other practitioners, provided the person or firm contacted is not a potential client."
True
"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 under Circular 230. Therefore, a decision was entered ruling that she should be disbarred. Annie Holt has a right to appeal the decision to the Secretary of the Treasury."
True
"By filing a Notice of Federal Tax Lien against a taxpayer, the government is providing a public notice to the taxpayerâ s creditors that the government has a claim against all of the taxpayerâ s property, including property that the taxpayer acquired after the lien was filed."
True
"By filing a Notice of Federal Tax Lien against a taxpayer, the government is providing a public notice to the taxpayer’s creditors that the government has a claim against all of the taxpayer’s property, including property that the taxpayer acquired after the lien was filed."
True
"Decisions of the courts, other than the Supreme Court, are binding on the Commissioner of Internal Revenue only for the particular taxpayer and for the years litigated."
True
"If the Supreme Court determines that various lower courts are deciding a tax issue in an inconsistent manner, it may review a decision and resolve the contradiction."
True
"Interpretative and legislative regulations provide explanations, definitions, examples, and rules that explain the language of the Code. Accordingly, your research of a particular Code section cannot be considered complete until you have read the regulations that interpret it"
True
"On December 17 of last year, Stan, an enrolled agent, placed an ad in local newspaper and a trade magazine that he would prepare a complex Form 1040 for $200. On January 2 of this year, the owner of Stan’s office building unexpectedly increased his rent by a large amount. Stan determined he would have to charge $230 to make a profit. Stan is bound to the $200 rate for at least 30 days from the last publication of the $200 rate."
True
"Revenue rulings, revenue procedures, and all U.S. Supreme Court decisions on federal tax matters are published in the Internal Revenue Bulletin (IRB)."
True
"The IRS will make available for public inspection the roster of all persons enrolled to practice. However, the roster of all persons censured, suspended, or disbarred from practice before the Internal Revenue Service and the roster of all disqualified appraisers will be kept confidential."
True
"The courts give great importance to the literal language of the Internal Revenue Code, but they also consider, among other things, the history of a particular section of the Code, its relationship to other Code sections, and the reports of Congressional committees."
True
"The current enrollment cycle, the period during which enrolled agents must meet their minimum continuing education requirements, began April 1, 2014, and ends April 1, 2017, for an enrolled agent with a Social Security number ending in 5."
True
"The purpose of revenue rulings is to promote a uniform application of the tax law to an entire set of facts. Therefore, IRS employees must follow the rulings, while taxpayers may contest in court adverse return examination decisions based on these findings."
True
"Whether or not the Commissioner of Internal Revenue decides to appeal an adverse Tax Court decision, (s)he may nonacquiesce in the case, which means that the IRS does not accept the adverse decision and will not follow it in cases on the same issue."
True
"With regard to offers in compromise, the IRS, under certain conditions, will settle unpaid accounts for less than the full balance due (including any interest, penalty, or additional amount) arising under the Internal Revenue laws."
True
A Centralized Authorization File (CAF) is an automated file containing information regarding the authority of an individual appointed under a power of attorney or person designated under a tax information authorization.
True
A Notice of Federal Tax Lien is considered ineffective if the IRS assessed the tax and filed the lien when the taxpayer was in bankruptcy under Title 11 of the U.S. Code.
True
A cash-basis, calendar-year taxpayer paid a preparer $2,000 in accounting fees during Year 1 and another $2,000 on January 2, Year 2, for services provided in Year 1. The preparer deducted $4,000 on the taxpayer’s Year 1 tax return. This position was not disclosed on the tax return. The preparer is subject to the willful understatement penalty.
True
A dictum is a court statement of opinion on a legal point that is not necessary for the decision of the case.
True
A disbarment or suspension proceeding against an individual requires a complaint signed by an authorized representative of the IRS and delivered or mailed to the individual.
True
A levy may no longer be in effect if it becomes unenforceable due to lapse of time.
True
A memorandum decision is a report of a Tax Court decision thought to be of little value as a precedent because the issue has been decided many times.
True
A power of attorney is given for representation in tax matters. For acts to be performed, it lists “in all tax matters,†which is not a valid authorization.
True
A power of attorney is not required to be submitted by an attorney of record in a case that is docketed in the Tax Court. However, a power of attorney is required to be submitted by an individual other than the attorney of record in any matter before the Internal Revenue Service concerning a docketed case.
True
A power of attorney is required when you want to authorize another to represent you at a conference with the IRS, or prepare and file a written response to the IRS.
True
A power of attorney may be filed with the IRS via fax.
True
A practitioner is subject to sanction under Circular 230 if (s)he does not receive proper consent to represent conflicting interests before the IRS.
True
A preparer is considered to have recklessly or intentionally disregarded a rule or regulation if a position contrary to a rule or regulation is taken on a return or claim for refund and if the preparer knows of, or is reckless in not knowing of, the rule or regulation in question.
True
A return preparer can, within 30 days after notice and demand for payment were made, appeal an assessment of Sec. 6694(a) and Sec. 6694(b) penalties by paying an amount that is not less than 15% of the entire amount assessed with respect to each return or claim for refund and then file a claim for refund.
True
A revenue ruling holds that certain expenses incurred in the purchase of a business must be capitalized. The Code is silent as to whether these expenses must be capitalized or may be deducted currently, but several cases from different courts hold that these particular expenses may be deducted currently. There is no other authority. Under these circumstances, a return preparer taking a position contrary to the revenue ruling is not subject to the penalty for understatement due to willful or reckless conduct [Sec. 6694(b)].
True
In the case of taxes assessed, if the IRS has assessed the tax within the statutory period of limitation, the tax may be collected by levy or a proceeding in court commenced within 10Â years after the assessment or within any period for collection agreed upon in writing between the IRS and the taxpayer before the expiration of the 10-year period.
True
Information recorded on the Centralized Authorization File (CAF) system enables IRS personnel who do not have access to the actual power of attorney or tax information authorization to send copies of computer-generated notices and communications to a recognized representative or a designee so authorized by the taxpayer.
True
Jim, a tax return preparer, has several clients who travel extensively. They have requested that all returns and correspondence with the IRS bear their preparer’s address so that he can handle their tax matters timely. Several have given Jim power of attorney. From time to time, a refund check will be received for one of these clients, and Jim will deposit it to that client’s account. Jim has not violated the prohibition against endorsing or otherwise negotiating a refund check of a return he prepared.
True
John prepares tax returns. John is not an enrolled agent, enrolled actuary, CPA, or attorney. In Year 3, new clients, Mr. and Mrs. Black, engage John to prepare their Year 2 joint income tax return. John prepares the Blacks’ Year 2 joint income tax return and signs it as the preparer. This is the only return John has prepared for the Blacks. In March of Year 4, Mr. and Mrs. Black received a notice from the IRS with regard to their Year 1 joint income tax return. Mr. and Mrs. Black ask John to contact the IRS to resolve the matter with regard to their Year 1 joint income tax return, but they do not provide John with a power of attorney. John is not permitted to represent or advocate a position before the IRS on behalf of Mr. and Mrs. Black concerning their Year 1 return.
True
Joni is a tax return preparer. She is not a preparer bank. Joni prepared Judy’s income tax return and then cashed Judy’s refund check. Joni is subject to a penalty of $500.
True
Kinney Corporation is in the business of preparing tax returns as well as lending money to the public. Kinney can disclose tax return information to solicit business to lend money, provided that a written consent is obtained at the time a completed tax return is given to Kinney’s client.
True
Late payments by a taxpayer on an installment agreement to pay a tax liability will generate a letter 30 days in advance of any change the IRS would make to the installment agreement plan.
True
More than one preparer may be subject to the penalty for willful understatement of tax liability on the same tax return.
True
Mr. X, a taxpayer, engaged in a transaction that was adversely affected by a new statutory provision (the transaction occurred before the new law was enacted). Prior law supported a position favorable to Mr. X. Mr. Y, the tax return preparer, took a position that the new statute was inequitable as applied to the taxpayer’s situation. The language of the new statute is unambiguous as it applies to the transaction engaged in by Mr. X. Mr. Y is subject to the penalty for understatement due to an unreasonable position.
True
Nonacquiescence by the Commissioner of Internal Revenue to an adverse decision in a regular Tax Court case means the Internal Revenue Service will not accept the decision and will not follow it in cases involving similar facts.
True
Proposed regulations do not replace the temporary regulations unless the proposed regulations specifically say they replace them.
True
Public hearings are not held on temporary regulations unless written requests are made.
True
Revenue procedures are official IRS statements of procedure that either affect the rights or duties of taxpayers or other members of the public or concern matters that are considered to be matters of public knowledge.
True
Revenue rulings are the published conclusions of the IRS concerning the application of tax law to a specific set of facts.
True
Tax Is, Inc., employs Iris, Retta, and Sally to prepare income tax returns. After Iris and Retta have collected the information from the taxpayers and applied the income tax laws to the information, the tax return is completed by a computer service. On the day the returns prepared by Iris and Retta are ready for their signatures, Iris is out of town for 1 week on another assignment and Retta is working at another office location for the day. Sally may sign the returns prepared by Iris and Retta provided that she reviews (1) the information obtained by Iris and Retta relative to the taxpayers and (2) the preparation of each return prepared by Iris and Retta.
True
The Commissioner of Internal Revenue will announce acquiescence or nonacquiescence only when the Tax Courtâ s decision is adverse to the IRSâ s position.
True
The Commissioner of the Internal Revenue Service has the authority to compromise all taxes (including any interest, penalty, or addition to the tax) arising under the Internal Revenue laws except those relating to alcohol, tobacco, and firearms.
True
The IRS will make available for public inspection the roster of all persons enrolled to practice
True
The filing of bankruptcy may not eliminate tax debt; it may temporarily stop IRS enforcement action from collecting a debt related to the bankruptcy.
True
The issuance of a CAF number does not indicate that a person is either recognized or authorized to practice before the IRS.
True
The maximum penalty that can be imposed on a tax return preparer for failure to provide copies of tax returns as required under Sec. 6107(a) is $25,000.
True
The purpose of a CAF number is to give IRS personnel quicker access to authorization information.
True
The recording of a Notice of Federal Tax Lien may restrict the taxpayer’s ability to sell or transfer property during the existence of the lien.
True
The regulations in Circular 230 governing the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and appraisers before the Internal Revenue Service can be found in the Code of Federal Regulations.
True
The trust fund penalty may be imposed against any person who is responsible for collecting or paying withheld income and employment taxes and who willfully fails to collect or pay them.
True
To authorize the IRS to disclose information concerning the taxpayer’s tax account(s) to an individual, whether or not the individual is authorized to practice before the IRS, or other party (such as a partnership or corporation), you may use Form 8821, Tax Information Authorization.
True
Trusts, receiverships, guardianships, or estates may be represented before any office of the Internal Revenue Service by their trustees, receivers, guardians, administrators, or executors
True
Under the provisions of Sec. 6060 and Reg. 1.6060-1, each person who is an employer of return preparers must retain a record that contains certain information on these preparers and must have the record available for inspection at the request of the commissioner for 3 years following the close of the return period to which the record relates.
True
Unless a tax return preparer can show reasonable cause, (s)he is subject to a penalty for failure to retain and keep available for a 3-year period a copy of any return prepared, or a record of the name, taxpayer identification number, and taxable year of the taxpayer for whom the return was prepared, including the type of return prepared.
True
Unless the taxpayer specifies on the form, a newly filed power of attorney will revoke a prior power of attorney with respect to the same matter, but it will not revoke a previously filed tax information authorization.
True
Usually the period for filing an application for renewal of enrollment runs from November 1 through January 31 during the last year of the enrollment cycle.
True
You are not required to file a power of attorney to authorize the IRS to disclose information concerning your tax account(s) to an individual (whether or not the individual is authorized to practice before the IRS) or other party (such as a corporation, a partnership, or an association).
True
Phil, an enrolled agent, prepares William’s income tax return. William gives Phil power of attorney, including the authorization to receive his federal income tax refund check. Accordingly, the IRS sends William’s $100 refund check to Phil’s office. William is very slow in paying his bills and owes Phil $500 for tax services. Phil should
Turn the check directly over to William.
Select the correct statement concerning a taxpayer’s appeal of the filing of a Notice of Federal Tax Lien.
Upon the conclusion of the CDP hearing, the IRS will issue a determination.
Which of the following statements concerning identity theft and the IRS is true?
Victims of identity theft need to complete the IRS Identity Theft Affidavit.
If the IRS seizes property that is not perishable, the IRS will
Wait at least 10 days after seizure before conducting the sale
Which of the following statements with respect to resolving tax problems involving the collection process is false?
While a taxpayer is making installment payments, interest will continue to accrue only on the tax liability due.
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?
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.
