IRS - Internal Revenue Service Certified Individual Taxpayer Data Questions and Answers

Question 1

An IRS employee is working remotely and needs to access Federal Tax Information (FTI) to complete their duties.
According to IRS Publication 1075, which of the following is a required security measure for the remote work location?

Accepted Answer

Ensuring all computers and electronic media containing FTI are kept in a secured area under the employee's immediate control or locked up.

Answer

Using a personal, non-dedicated computer as long as it has antivirus software.

Answer

Storing paper documents containing FTI in a locked desk drawer in a shared home office.

Answer

Connecting to public Wi-Fi for convenience as long as a VPN is active.

Question 2

A tax preparer knowingly sells a client's name and income information to a marketing firm without the client's consent. Under the Internal Revenue Code, what is the most severe criminal penalty the preparer could face for this unauthorized disclosure?

Accepted Answer

A felony charge with a fine up to $5,000 and/or up to 5 years in prison.

Answer

A civil penalty of $250 per disclosure.

Answer

A misdemeanor charge with a fine up to $1,000 and/or up to 1 year in prison.

Answer

Revocation of the preparer's PTIN and EFIN only.

Question 3

A state agency receives Federal Tax Information (FTI) from the IRS to administer a specific social assistance program as authorized by IRC Section 6103. Which of the following actions by the state agency would be considered improper?

Accepted Answer

Sharing the FTI with a different state agency to verify eligibility for an unrelated program.

Answer

Requiring employees who handle FTI to complete annual security awareness training.

Answer

Storing paper documents containing FTI in a locked container clearly marked 'Federal Tax Information'.

Answer

Restricting system access to FTI to only those employees whose duties require it for the authorized program.

Question 4

What is the general rule regarding the confidentiality of tax returns and return information as established by Internal Revenue Code (IRC) Section 6103?

Accepted Answer

Returns and return information are confidential and cannot be disclosed by the IRS unless authorized by the taxpayer or a specific provision in the Code.

Answer

Tax information is public record and can be accessed by any government agency upon request.

Answer

The IRS can share taxpayer information with third parties if it helps in tax administration, without taxpayer consent.

Answer

Only income information is confidential; a taxpayer's identity and filing status are not protected.

Question 5

A junior accountant at a firm is curious about the financial details of a local celebrity whose tax return is being prepared by a senior partner. The junior accountant accesses the client's electronic file on the firm's server just to look, without disclosing the information to anyone. Which of the following is true?

Accepted Answer

This action constitutes an unauthorized inspection (UNAX) and is a punishable offense.

Answer

No violation occurred because the information was not disclosed to a third party.

Answer

It is permissible as long as the accountant is an employee of the same firm.

Answer

A violation only occurs if the accountant makes a copy of the tax return.

Question 6

According to the FTC Safeguards Rule, which of the following is a mandatory requirement for professional tax return preparers regarding client data?

Accepted Answer

Creating and implementing a written information security plan.

Answer

Subscribing to a specific brand of antivirus software.

Answer

Storing all client data exclusively on cloud-based servers.

Answer

Reporting all phishing emails to the IRS within 24 hours.