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Ethics and Practice Procedures Flashcards

7 cards from real IRS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Ethics and Practice Procedures flashcards as text

  1. A practitioner's employee assists in preparing a fraudulent return without the practitioner's knowledge. Under Circular 230, the practitioner:

    Answer: May be subject to discipline if the practitioner did not exercise proper supervision

    Circular 230 §10.36 holds practitioners responsible for ensuring adequate supervision; a practitioner can face discipline if inadequate oversight enabled the employee's misconduct.

  2. Under Circular 230, a practitioner who charges an 'unconscionable fee' is subject to:

    Answer: Discipline under §10.51 for disreputable conduct

    Charging an unconscionable fee is listed as disreputable conduct under Circular 230 §10.51(a)(18), exposing the practitioner to disciplinary action.

  3. Which of the following best describes the 'enrolled retirement plan agent' (ERPA) designation?

    Answer: A practitioner enrolled specifically to practice before the IRS regarding retirement plan matters

    ERPAs are practitioners who have passed the ERPA Special Enrollment Examination and are authorized to represent clients before the IRS on retirement-plan-related matters.

  4. A practitioner who receives money from a client to pay taxes must:

    Answer: Promptly remit the funds to the IRS or return them to the client; commingling is prohibited

    Circular 230 §10.28 prohibits practitioners from holding client funds beyond a reasonable time and from commingling client funds with their own.

  5. Which of the following actions would allow a previously disbarred practitioner to be reinstated under Circular 230?

    Answer: Filing a petition for reinstatement after at least five years and demonstrating fitness to practice

    Circular 230 §10.81 allows a disbarred practitioner to petition for reinstatement after five years by showing rehabilitation and fitness to practice before the IRS.

  6. Under Circular 230, a practitioner must return client records:

    Answer: Promptly upon request, even if a fee dispute exists, except where state law permits a retaining lien

    Circular 230 §10.28(b) requires prompt return of client records upon request; a practitioner may only retain records if state law permits a retaining lien over the disputed amount.

  7. Which of the following is the IRS's primary mechanism for ensuring that tax practitioners adhere to ethical standards?

    Answer: Treasury Circular 230 (31 C.F.R. Part 10) governs practice before the IRS and provides a disciplinary framework

    Treasury Circular 230, codified at 31 C.F.R. Part 10, is the primary federal regulatory framework that establishes standards and disciplinary procedures for all practitioners before the IRS.