Ethics and Practice Procedures Flashcards

Under Circular 230, a practitioner who is the subject of a disciplinary proceeding has the right to:

Answer: Receive a written complaint, respond in writing, and request a hearing

Due process in Circular 230 disciplinary proceedings requires written notice of charges, an opportunity to respond, and the right to a hearing before an administrative law judge.

Which of the following is a practitioner required to do when an IRS officer requests the identity of a client for whom the practitioner filed a return?

Answer: Provide the client's identity because tax return preparer information is not privileged

Under IRC §7525 the federally authorized tax practitioner privilege does not protect client identity, which must be disclosed when properly requested.

A client directs an enrolled agent to use an aggressive but non-frivolous tax position. The enrolled agent may:

Answer: Take the position as long as there is a reasonable basis for it and disclose if required

A practitioner may advance a non-frivolous position that has at least a reasonable basis, and must disclose the position on the return if required by the tax code.

The term 'practice before the IRS' as defined in Circular 230 includes all of the following EXCEPT:

Answer: Preparing a tax return without signing it as paid preparer

Merely preparing a tax return without representing the taxpayer before the IRS does not constitute 'practice before the IRS' under Circular 230 §10.2.

Under Circular 230, solicitation by a practitioner is prohibited if it is:

Answer: False, misleading, or deceptive

Circular 230 §10.30 prohibits solicitations that are false, misleading, or deceptive; truthful and non-deceptive advertising and solicitation is generally permitted.

An enrolled agent who has been convicted of a felony involving dishonesty will be subject to:

Answer: Automatic immediate suspension pending a final disciplinary proceeding

Circular 230 §10.82 authorizes the IRS to immediately suspend a practitioner upon conviction of a felony involving dishonesty, pending final resolution of the disciplinary matter.

Which standard applies when a practitioner advises a client on whether to disclose a tax position on a return?

Answer: The position must have at least a reasonable basis, and if not disclosed, a realistic possibility of being sustained

Circular 230 §10.34 requires that non-disclosed positions have at least a reasonable basis, while undisclosed positions should meet the realistic possibility (roughly 1-in-3) standard.