Test 2 part 2

Jessica has completed a substantial number of tax returns for her clients without using her PTIN. What is the maximum penalty she can expect in one year for this violation of tax regulations? $10,000 $15,000 $20,000 $26,500

$26,500

A tax return preparer who fails to furnish copy of return or claim of refund to a client can face a penalty of: $25 per each failure not to exceed $26,500 per calendar year. $50 per each failure not to exceed $26,500 per calendar year. $100 per each failure not to exceed $26,500 per calendar year. $530 per each failure not to exceed $26,500 per calendar year.

$50 per each failure not to exceed $26,500 per calendar year.

Chad receives his enrollment in the last year of an enrollment cycle in the month of November. Which of the following satisfies Chad's continuing education requirement for his initial year of enrollment? 4 credits on any federal tax topic 2 credits of federal tax and 2 credits Ethics 2 credits Ethics or professional conduct 3 credits federal tax update

2 credits of federal tax and 2 credits Ethics

The Statutory Notice of Deficiency is also known as: A 30-day letter because the taxpayer generally has 30 days from the date of the letter to file a petition with the Tax Court. A 90-day letter because the taxpayer generally has 90 days from the date of the letter to file a petition with the Tax Court. An Information Document Request (IDR) because the taxpayer is asked for information to support its position regarding its liability for tax. A notice and demand because the taxpayer is put on notice that the tax liability is due and Owing.

A 90-day letter because the taxpayer generally has 90 days from the date of the letter to file a petition with the Tax Court.

To satisfy the earned income credit due diligence requirements, a preparer must retain all of the following EXCEPT: A copy of the completed Eligibility Checklist or Alternative Eligibility Record. A copy of the Computation Worksheet or Alternative Computation Record. A copy of the social security cards for the taxpayer and each qualifying child. A record of how and when the information used to complete the Eligibility Checklist or Alternative Eligibility Record and the Computation Worksheet or Alternative Computation Record was obtained by the preparer, including the identity of any person furnishing the information.

A copy of the social security cards for the taxpayer and each qualifying child.

Which of the following actions for solicitation would render a tax practitioner subject to disciplinary action? Utilizing the term "certified" to describe their professional designation Implying a relationship of employment with the IRS Claiming an ability to garner special consideration from the IRS for their client All of the above

All of the above

Which of the following is disallowed for a practitioner under disbarment or suspension from practice before the IRS? Performance of any action related to practice before the IRS Assisting a non-disciplined practitioner with matters related to practice before the IRS Receiving assistance from a non-disciplined practitioner with matters related to practice before the IRS All of the above

All of the above

What is an enrolled agent? An enrolled agent is a tax professional who has been certified by the IRS and can represent taxpayers before any division of the IRS. An enrolled agent is a tax professional, who has demonstrated special competence in tax matters, applied for enrollment, and has been issued an enrollment card. An enrolled agent is an attorney or CPA who represents taxpayers before the IRS. An enrolled agent is a tax professional who has passed all three parts of the Special Enrollment Examination (SEE).

An enrolled agent is a tax professional, who has demonstrated special competence in tax matters, applied for enrollment, and has been issued an enrollment card.

All of the following constitute practice before the IRS, EXCEPT: Preparing documents (other than tax returns) Appearing as a witness for a taxpayer Rendering written advice Filing documents

Appearing as a witness for a taxpayer

Which of the following is NOT practice before the IRS? Communicating or corresponding with the IRS for a taxpayer regarding the taxpayer's rights. Representing a taxpayer at conferences, hearings, or meetings with the IRS. Preparing and filing documents with the IRS for a taxpayer. Appearing as a witness for a taxpayer.

Appearing as a witness for a taxpayer.

Where are the proceedings for disbarment of an enrolled agent held? At a time and place set by a judge of the Tax Court. At a time and place set by a judge of the Federal District Court. At a time and place set by an Administrative Law Judge. At a time and place set by the Director of the Office of Professional Responsibility.

At a time and place set by an Administrative Law Judge.

If a preparer penalty is likely to be assessed pursuant to 26 U.S.C. Sec. 6694 (Understatement of taxpayer's liability by tax return preparer), the tax preparer: Can appeal the penalty before it is imposed. Cannot appeal the penalty. Can only resolve the penalty by pursuing the post-assessment procedure. Can file a claim for refund within thirty days of his receipt of the notice and demand.

Can appeal the penalty before it is imposed.

Who reports completed continuing education to the IRS? The preparer sends certificates of completion to the IRS. The preparer uploads completed course ID's using the IRS website. Courses taken through an IRS-approved CE Provider are reported to the IRS by the Provider. Courses are not reported to the IRS. Keep your certificates for 4 years.

Courses taken through an IRS-approved CE Provider are reported to the IRS by the Provider.

How many years in the future can an authorization on a Form 2848 be recorded to the Centralized Authentication File (CAF)? Current year + 1 Current year + 2 Current year + 3 Current year + 4

Current year + 3

Donald, a tax preparer, has knowledge that a client has not complied with the revenue law of the United States. What is Donald required to do? Donald must advise his client about the non-compliance and the consequences of failing to correct the error. Donald must inform the IRS. Donald must inform the state attorney. Donald does not have to do anything if he was not involved in the act or omission.

Donald must advise his client about the non-compliance and the consequences of failing to correct the error.

Once the client has provided records to a tax practitioner, the records become the property of the practitioner. True False

False

Pierre and Leo are very close friends, but Pierre is still paying Leo to prepare his tax return. Because they're so close, Leo doesn't have to sign the tax return to claim primary responsibility for the preparation. True False

False

Tax returns using ANY foreign or overseas address cannot be filed electronically. True False

False

The official income tax return due date is April 15. Claudia started preparing an electronic tax return for a client on April 13, two days before the due date. She officially submitted the return on April 17, two days late, but since she started preparing it on April 13, it is still considered by the IRS to be on time. True False

False

What must a paid preparer do with Form 8867, Paid Preparer's Due Diligence Checklist? File it electronically or attached to a paper return Maintain a copy for 3 years following the later of the due date of the return or the date the return was filed File it electronically or attached to a paper return, and maintain a copy for 3 years following the later of the due date of the return or the date the return was filed None of these are requirements

File it electronically or attached to a paper return, and maintain a copy for 3 years following the later of the due date of the return or the date the return was filed

Generally, each individual who applies for renewal to practice before the Internal Revenue Service must retain the information required with regard to qualifying Continuing Professional Education hours: How long must verification of CPE taken be retained? For a period of one year following the date of renewal of enrollment For a period of four years following the date of renewal of enrollment For a period of five years if it is an initial enrollment The individual is not required to retain the information if the Continuing Professional Education sponsor has agreed to retain it

For a period of four years following the date of renewal of enrollment

What form must a taxpayer appropriately sign if they use a Practitioner PIN? Form 2848 Form 8453 Form 8821 Form 8879

Form 8879

When a taxpayer e-files his 1040, and the ERO enters the taxpayer PIN, what documents must the ERO sign? The original return, the copy provided to the taxpayer, and Form 8879. The original return only. The original return and Form 8879. Form 8879 only.

Form 8879 only.

A tax preparer is generally prohibited from submitting electronic returns to the IRS prior to receipt of which of the following forms? Form W-2 Form 1099-DIV Form 1099-MISC Form I-9

Form W-2

You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support items shown on your return until the period of limitations for that return runs out. The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the Internal Revenue Service can assess additional tax. Which statement listed below is incorrect? If no other provisions apply, the statute of limitations is 3 years after the return was filed. If more than 25% of gross income has been omitted from the tax return, the statute of limitations is 6 years after the return was filed, unless the omitted amount was disclosed in the return or in a statement attached to the return, in a manner adequate to apprise the Internal Revenue Service of the nature and amount of the omission. If a fraudulent return is filed, the statute of limitations is 7 years. If a tax return is not filed at all, there is no statute of limitations.

If a fraudulent return is filed, the statute of limitations is 7 years.

Which of the following is NOT true regarding the preparing of information returns concerning employees who prepare tax returns? Annual listings of preparers, identification numbers, and place of work are required for preparers who employ others to prepare returns. The period for which the information return is required is a 12-month period beginning July 1 of each year. No information return is actually required to be submitted; a list is made and kept by the employing preparer. Information returns of income tax return preparers must be maintained by the preparer for two years.

Information returns of income tax return preparers must be maintained by the preparer for two years.

Rodney is an enrolled agent who wants to receive the IRS Annual Filing Season Program Record of Completion. He takes an Annual Federal Tax Refresher (AFTR) course from an approved IRS Continuing Education Provider. How does this impact his continuing education requirements? It has no impact for AFSP or his EA continuing education requirements. It counts as 6 hours of EA continuing education It counts as 6 hours AFTR credit towards his AFSP Record of Completion It will not show in his PTIN account.

It has no impact for AFSP or his EA continuing education requirements.

Ted prepared an Earned Income Tax Credit (EITC) for a client and verified information by asking all of the questions on Form 8867. He also verified his client's identity and prepared an EIC computational checklist. What else does he need to do? Pay the $100 charge for filing an EITC. Pay the $500 charge for filing an EITC. Meet a recordkeeping requirement. Nothing. Ted is doing everything he needs to follow regulations.

Meet a recordkeeping requirement.

When should you submit your application to become an Authorized IRS E-File Provider? When you file your initial return electronically No later than 45 days prior to the date you intend to begin filing returns electronically. By April 15 You must submit an application each year before January 31.

No later than 45 days prior to the date you intend to begin filing returns electronically.

What method does the IRS use to initiate contact with taxpayers to request personal or financial information? Email Text message Social media None of the above.

None of the above.

Which fee arrangement described below is permissible for an electronic return originator (ERO)? Fees based on AGI from the tax return. Fees based on % of refund. Separate fees for direct deposits. None of the above.

None of the above.

As a tax preparer, which of the following is required on the Third Party Designee (Other than paid preparer) portion of the return? Date of birth Personal Identification Number (PIN) Country of origin Official job title

Personal Identification Number (PIN)

Which of the following examples indicate practice before the IRS? John, who provides his opinion about a tax shelter transaction to Circa Corporation during a conference call with the board. Samantha, who attends an IRS examination where she represents her father Laurel, who furnishes information to the IRS at the request of the IRS Gerald, a tax preparer who appears as a witness for his client before a revenue officer.

Samantha, who attends an IRS examination where she represents her father

The following enrolled individuals are subject to sanction for disreputable conduct, EXCEPT: Joseph, convicted of tax evasion on his personal return. Sarah, who provides a written opinion in favor of a partnership whose principal purpose is the avoidance of tax. Bernie, providing false information to the Department of the Treasury. Michael, who offers a job to an IRS employee handling his tax case

Sarah, who provides a written opinion in favor of a partnership whose principal purpose is the avoidance of tax.

An e-file return is considered on time based on: The date it is received. The electronic postmark date is on or before the due date. When it is sent. All e-files are considered on time.

The electronic postmark date is on or before the due date.

What is the limit of a monetary penalty issued for incompetence or disreputable conduct? 10% of the annual income of the individual or firm under sanction 75% of the income derived or expected to be derived from the action resulting in the penalty The full amount of the income derived or expected from the action resulting in the penalty No limit is placed on monetary penalties

The full amount of the income derived or expected from the action resulting in the penalty

A representative who signs a Form 2848, Power of Attorney, declares under penalty of perjury that he or she is aware of which of the following: The federal income tax regulations. The regulations in Treasury Department Circular No. 230. Recent tax law developments that relate to the tax matter(s) listed on line 3 of the Form 2848. Recent tax law developments that relate to the tax matter(s) listed on line 3 of the Form 2848. All of the above.

The regulations in Treasury Department Circular No. 230

What must a tax preparer do if he knows that his client has filed an erroneous tax return? The tax preparer must amend the return to correct the mistake. The tax preparer must instruct his client to amend the return. The tax preparer must advise his client about the consequences of failing to correct the error. The tax preparer must inform the IRS.

The tax preparer must advise his client about the consequences of failing to correct the error.

If a position is a tax shelter, what must a preparer do to assist his client to avoid understatement penalties? The tax preparer must not prepare the return. The tax preparer must disclose the tax shelter. The tax preparer must be aware of substantial authority for the position. The tax preparer must both be aware of substantial authority for the position and must hold a reasonable belief that the tax treatment is more likely than not proper.

The tax preparer must both be aware of substantial authority for the position and must hold a reasonable belief that the tax treatment is more likely than not proper.

Agatha is an unenrolled tax return preparer. She has prepared a tax return for a client and filed it with the IRS. Each phase of this process, from advising the completion of the return to filing falls under her responsibility for due diligence. True False

True

An electronically filed return is not considered filed until the IRS acknowledges acceptance of the electronic portion of the tax return for processing. True False

True

If a taxpayer uses Form 2848, Power of Attorney and Declaration of Representative, a representative of the taxpayer can sign a return for that taxpayer, if permitted. True False

True

Phil, an enrolled practitioner, 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: Use William's check as collateral for a $100 loan to tide him over until William pays him. Refuse to give William the check until William pays him the $500. Get William's written authorization to endorse the check, cash the check, and reduce the amount William owes him to $400. Turn the check directly over to William.

Turn the check directly over to William.

Shawanda is admitted to practice as an enrolled agent after passing her exams in November 2019. Her initial enrollment occurs in the middle of an enrollment cycle. How many hours of continuing education must she complete for each month of her initial year. One hour. Two hours. Three hours. Four hours.

Two hours.

John Green, who resides in Manhattan, disagrees with the IRS examiner and her supervisor regarding his income tax case. His appeal rights were explained to him and he decided to go to Tax Court. When can he file his petition in Tax Court? Immediately. When he receives the examiner's written report. Within ninety days of the date he receives a Notice of Deficiency from the IRS. Within ninety days of the date the IRS mails a Notice of Deficiency to him.

Within ninety days of the date the IRS mails a Notice of Deficiency to him.

Is an ERO representative permitted to sign an 8879 by using a rubber stamp? Yes, because an ERO is not required to sign an 8879 so if the ERO representative uses a rubber stamp, it's allowed. Yes, because a taxpayer is not required to sign an 8879 so if the ERO representative uses a rubber stamp, it's allowed. Yes. No.

Yes

May an enrolled practitioner publish and distribute a schedule of the fees he charges for representation of the taxpayer before the IRS? No, he must determine each client's fees on a case-by-case basis and so advance publishing is not possible. He can publish but not distribute. Yes, he can do both. Yes, but the IRS must approve the schedule before he distributes it.

Yes, he can do both.

Must an ERO keep a copy of a client's Form 8453? No, this form is kept by the client; the ERO's file should indicate that the form was provided to the client. No, this form is filed electronically; the ERO is required only to keep an electronic file that contains the information from the 8453. Yes, the ERO must keep a copy of each 8453 for one year from the date the return was filed or due, whichever is later. Yes, the ERO must keep a copy of each 8453 until the end of the calendar year in which the associated return was filed.

Yes, the ERO must keep a copy of each 8453 until the end of the calendar year in which the associated return was filed.

A refund check arrives at your office for Jose, a friend and long-time client. The check is for $150, and the cost to prepare his return is $200. Jose instructs you to cash the check and agrees to pay you the difference next week. Which of the following statements is correct? You cannot cash the check. You can deposit the check in your bank account with his permission. If you endorse the check you are subject to a $100 penalty You can cash the check with no restrictions.

You cannot cash the check.

Once enrolled, practitioners must renew enrollment according to their enrollment cycle. How often must a practitioner renew enrollment? every 5 years every 7 years every 3 years every 10 years

every 3 years