IRS - Internal Revenue Service Certified Representation Before the IRS Questions and Answers

Question 1

A taxpayer wants to authorize their Certified Public Accountant (CPA) to receive and inspect their confidential tax information from the IRS.
However, the taxpayer does not want the CPA to have the authority to represent them in meetings, sign agreements, or otherwise act on their behalf.
Which form should the taxpayer file?

Accepted Answer

Form 8821, Tax Information Authorization

Answer

Form 4506-T, Request for Transcript of Tax Return

Answer

Form 2848, Power of Attorney and Declaration of Representative

Answer

Form 9465, Installment Agreement Request

Question 2

According to Treasury Department Circular No. 230, which of the following is a primary component of a practitioner's due diligence responsibility when preparing a tax return?

Accepted Answer

Making reasonable inquiries if information provided by the client appears to be incorrect, inconsistent, or incomplete.

Answer

Personally auditing all of the client's financial records for the year.

Answer

Guaranteeing that the IRS will not select the return for an audit.

Answer

Requiring the client to sign a statement accepting all liability for potential penalties.

Question 3

An unenrolled return preparer, who holds a valid Annual Filing Season Program Record of Completion, has limited practice rights. This preparer may represent a taxpayer for a return they prepared and signed before which of the following?

Accepted Answer

A Revenue Agent during an examination of the return.

Answer

An Appeals Officer regarding a disputed liability.

Answer

A Revenue Officer concerning collection activities.

Answer

An attorney in the Office of Chief Counsel.

Question 4

Under which of the following circumstances is a practitioner, governed by Circular 230, generally prohibited from charging a contingent fee?

Accepted Answer

For services in connection with preparing an original tax return.

Answer

For services related to an IRS examination of an original return.

Answer

For services connected to a claim for a credit or refund filed in response to a formal notice of examination.

Answer

For services rendered in connection with a judicial proceeding under the Internal Revenue Code.

Question 5

An enrolled agent is asked to provide tax representation for a married couple who filed a joint return. During the initial consultation, the agent learns that the IRS is asserting a penalty against one spouse for an action the other spouse was unaware of, creating a potential conflict of interest. According to Circular 230, what must the agent do to proceed with the joint representation?

Accepted Answer

Reasonably believe they can provide competent representation to both, fully disclose the conflict, and obtain informed consent confirmed in writing from each spouse.

Answer

Inform the clients that joint representation is impossible and they must seek separate counsel.

Answer

Proceed with the representation but only discuss the penalty with the spouse to whom it applies.

Answer

File two separate Forms 2848 and let the IRS determine if the conflict is too significant.

Question 6

Which of the following is a mandatory requirement for a valid Form 2848, Power of Attorney and Declaration of Representative?

Accepted Answer

The form must specify the tax matters, form numbers, and years or periods for which representation is granted.

Answer

The taxpayer's signature must be notarized.

Answer

The representative must list their primary college degree.

Answer

The form automatically revokes any existing Form 8821, Tax Information Authorization.