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EA PART 3 > Exam 1 review > Flashcards

Exam 1 review Flashcards

1
Q

An understatement is considered “substantial” if it is more than the larger of 10% of the correct tax or __________.

A

$10,000

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2
Q

In order to qualify for the Child Tax Credit, what is needed?

A

Both the child and parent must have a valid Social Security number

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3
Q

What happens when the IRS files a “substitute return” for a taxpayer?

A

A substitute return may not give the taxpayer credit for all exemptions, credits, and deductions he is entitled to receive. The taxpayer may still file his own tax return to take advantage of any exemptions, credits, and deductions he is entitled to receive. The IRS will generally adjust the account to reflect the correct figures.

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4
Q

Do Revenue Rulings meet the “substantial authority” standard for taking a position on a tax return?

A

Yes

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5
Q

Where can refunds be deposited?

A

Only in U.S bank accounts and prepaid debit cards

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6
Q

Can a tax refund be used to purchase U.S. savings bonds?

A

Yes

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7
Q

Can a taxpayer-payer request an audit reconsideration of a prior year’s audit if the tax assessment has already been paid in full?

A

No

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8
Q

Can a taxpayer request an installment agreement if they are not in filing compliance?

A

No, in order for the IRS to grant a guaranteed installment agreement, a taxpayer must have not failed to file any income tax returns or pay any tax shown on such returns during any of the preceding five taxable years.

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9
Q

Does the IRS charge a “user fee” when setting up an installment agreement?

A

Yes

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10
Q

A case in the U.S. Tax Court is commenced by _________.

A

The filing of a petition

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11
Q

Enrolled agents who do not comply with the requirements for renewal of enrollment will be contacted by the Return Preparer Office. How much time does the EA have to respond to the RPO?

A

60 days from the date of the notice

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12
Q

The statute of limitations for the criminal offense of willfully attempting to evade or defeat any tax is:

A

Six years

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13
Q

How does a taxpayer submit additional documentation to the IRS on an e-filed tax return?

A

The taxpayer should use Form 8453 and mail in supporting documentation.

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14
Q

With regards to the IRS e-file program, what is a “Responsible Official?”

A

A Responsible Official is an individual with primary authority over the Provider’s IRS e-file operation at a location.

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15
Q

If the taxpayer requests a CDP hearing and provides frivolous arguments, in whole or in part, those arguments will not be heard. If the appeal is deemed frivolous, a taxpayer will be given:

A

30 days to withdraw or amend the CDP appeal

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16
Q

In case of a data breach, a tax preparer has _______to contact the IRS.

A

One day

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17
Q

Which IRS office administers the Annual Filing Season Program for tax return preparers?

A

The Return Preparer Office

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18
Q

To claim a refund of federal taxes withheld on income from a U.S. source, a nonresident alien must report the appropriate income and withholding amounts on:

A

Form 1040-NR, U.S. Nonresident Alien Income Tax Return

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19
Q

A notice of deficiency also called:

A

“statutory notice of deficiency” or “90-day letter

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20
Q

In order to determine if an individual taxpayer has a filing requirement, what information is required?

A

The taxpayer’s income, filing status, and age.

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21
Q

Is an EA required to file an FBAR for a client?

A

No, but they must advise the client of their filing obligation.

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22
Q

Three types of relief from “joint and several liability”?

A
  1. Innocent spouse
  2. Separation of liability
  3. Equitable
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23
Q

A Circular 230 practitioner must, when requested by the Office of Professional Responsibility, provide OPR with any information he or she may have regarding a violation of Circular 230 regulations by any person. An exception to this duty is made if:

A
  1. The practitioner believes in good faith and on reasonable grounds that such information is privileged
  2. That the request is of doubtful legality.
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24
Q

Which governmental organization administers and enforces the regulations governing practice before the IRS?

A

The Office of Professional Responsibility

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25
Q

In order for this monthly allowance to be non-taxable to a taxpayer, they must adequately account for the expenses within______ after they were paid or incurred. This is an example of an accountable plan.

A

60 days

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26
Q

For OPR to prevail in a disciplinary proceeding, OPR must prove by:

A

“clear and convincing evidence” that a taxpayer willfully violated one or more provisions of Circular 230.

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27
Q

Who is allowed to determine the time and place for an audit of a taxpayer?

A

The IRS

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28
Q

Circular 230 prohibits a practitioner from charging an ___________ fee in the preparation of a tax return or other engagement

A

Unconscionable

29
Q

A third-party designee may:

A
  • Exchange information concerning the return with the IRS,
  • Call the IRS for information about the processing of the return or the status of refund or payments; and
  • Respond to certain IRS notices about math errors, offsets, and return preparation.
30
Q

Currently-not-collectible” (or CNC) status means:

A

the IRS has determined that a taxpayer has no ability to pay his tax debts and that other options, such as an installment agreement or offer in compromise, are not feasible. While a taxpayer is in this status, generally all collection activities will be halted for at least one year, or until his income increases. Penalties and interest will continue to be added to the tax debt during this period.

31
Q

In the case regarding complaints for the sanctioning of a practitioner, discovery may be permitted at the discretion of:

A

an Administrative Law Judge

32
Q

An IRS power of attorney must contain:

A
  • The type of tax and the tax years covered.
  • The name and address of the representative.
  • The name and taxpayer identification (number of the taxpayer).
  • The signatures of the representative and the taxpayer.
33
Q

Following an administrative law judge that upholds an OPR’s decision to disbar a practitioner. A practitioner may appeal the decision to the ______________________ within 30 days after the decision.

A

Treasury Appellate Authority

34
Q

Are congressional committee reports constitute a “reasonable basis” for a position taken on a tax return?

A

Yes

35
Q

Under regulations pertaining to IRC section 6662, sources of “substantial authority” of federal tax law include the following:

A
  • provisions of the Internal Revenue Code
  • temporary and final regulations
  • court cases
    -administrative pronouncements
  • tax treaties
  • Congressional intent as reflected in official congressional committee reports.
36
Q

Betty is an enrolled agent who is cleaning up her office files and purging old records. When is the earliest she may shred the records related to her continuing education (CE)?

A

Four years following the date of the EA renewal for which the CE is credited

37
Q

The IRS may accept an offer in compromise based on three grounds:

A

doubt as to collectibility, effective tax administration, or doubt as to liability.

38
Q

A rejected electronic individual income tax return can be corrected and retransmitted without new signatures if changes do not differ from the amounts on the original electronic return by more than:

A

$50 of total income or AGI

39
Q

Is the preparation of an income tax return considered privileged information?

A

No

40
Q

Are taxpayers required to allow an extension period for the statute of limitations of a return if requested by the IRS?

A

No

41
Q

ITINs automatically expire after _____ years of nonuse.

A

3 years

42
Q

Can a regular full-time employee of a business represent their employer before the IRS without being an enrolled practitioner?

A

Yes

43
Q

What information should a tax preparer review to deter the possibility of identity theft?

A

Photo identification

44
Q

Can a taxpayer use an IP PIN in place of their signature on a signed tax return?

A

No, The IP PIN is a 6-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security number on fraudulent federal income tax returns. The IP PIN helps the IRS verify a taxpayer’s identity and accept their electronic or paper tax return.

45
Q

The statute of limitations on assessment increases to six years if there is an omission of more than ________ of the gross income stated on the return.

A

25%

46
Q

In most cases, tax returns are audited for up to three years after filing. However, the IRS may audit for up to six years if there is:

A

substantial unreported income.

47
Q

Can immediate family members represent you in even if they are not an enrolled agent, attorney, or CPA?

A

Yes, as long as they file a 2848

48
Q

When does Form 8821, Tax Information Authorization, expire?

A

Upon the taxpayer’s revocation or the appointee’s withdrawal.correct

49
Q

What are the FIRST steps in the IRS’s process to collect a tax debt?

A

Assess a taxpayer’s liability; send a notice and demand for payment; file a Notice of Federal Tax Lien after the taxpayer fails to pay the debt.

50
Q

David’s return was selected for an IRS examination. Many of his Schedule C business expenses were disallowed by the auditor, and he believes they are legitimate business expenses. He disagrees with the auditor’s assessment and wants to take the next step. What are his options?

A

Appeal within the IRS appeals system; petition the U.S. Tax Court; or take his case directly to the Court of Federal Claims or a U.S. district court.`

51
Q

If a taxpayer requests innocent spouse relief, the IRS cannot

A

enforce collection action while the taxpayer’s request is pending. However, interest and penalties continue to accrue.

52
Q

Qualified taxpayers who owe $25,000 or less may have their Notice of Federal Tax Lien:

A

withdrawn after entering into a direct debit installment agreement.

53
Q

Kristin is an enrolled agent who has been disbarred from practice before the IRS. She would like to petition for reinstatement of her license. How many years must she wait before petitioning for reinstatement?

A

5 years

54
Q

The trust fund recovery penalty is equal to _________ of the amount of unpaid trust fund taxes.

A

100%

55
Q

Under §10.24 of Circular 230, a tax practitioner cannot knowingly employ a person or accept assistance from a person who has been:

A

disbarred or suspended from practice. This restriction applies even if the duties of the disbarred or suspended person would not include the actual preparation of tax returns.

56
Q

IRC §7525 confidentiality privilege is ONLY extended to:

A

federally authorized practitioners, including enrolled agents, CPAs, and attorneys. It does not apply to any services provided by unenrolled tax return preparers, including AFSP certificate holders.

57
Q

___________________ are the highest administrative authority issued by the Treasury Department.

A

Treasury Regulations

58
Q

Is a social security number required to obtain a PTIN?

A

A social security number is usually required to obtain a PTIN, unless the preparer is a foreign person with a permanent non-U.S. address, and can provide documentation to support that status.

59
Q

The IRS provides __________calendar days (not business days) after the return is first rejected, for the rejected return to be filed again.

A

5, If it is filed within this window, no late fees will apply, and the return will be considered filed on time.

60
Q

During a field audit, if an IRS examiner determines a preparer penalty applies, a detailed report is prepared and the preparer is provided with a copy of the report. The preparer then has ___days to request an appeal before the preparer penalty is assessed.

A

30

61
Q

three types of Treasury regulations:

A

legislative, interpretive, and procedural

62
Q

An authorized IRS e-file provider is a business authorized by the IRS to participate in IRS e-file. The business may be a sole proprietorship, partnership, or corporation. The provider applicant must:

A
  • Be a United States citizen or a legal U.S. alien lawfully admitted for permanent residence,
  • Be at least 18 years old as of the date of application, and
  • Meet applicable state and local licensing and/or bonding requirements for the preparation and collection of tax returns.
63
Q

Paid preparers are now required to submit for 8867 with every electronic of paper return claiming:

A

EITC
CTC
AOTC
ODC
HOH filing status

64
Q

In any case in which the IRS asserts fraud, what party has the “burden of proof” with respect to the fraud?

A

The government

65
Q

For cash donations of $250 or more, the taxpayer must:

A

Have written acknowledgment from that charitable organization that includes:

  • The amount of cash the taxpayer contributed
  • The date of the contribution
  • Whether the qualified organization gave any goods or services as a result of the contribution
  • If applicable, a descri[ption and a good faith estimate of the value of goods or services provided by the organization as a result of the contribution
66
Q

What is a “Notice of Federal Tax Lien”?

A

A document filed with the local recording office that identifies tax liabilities owed by the taxpayer.

67
Q

If an enrolled agent finds out that one of their clients is being investigated by the IRS for criminal tax evasion or fraud, what should they do?

A

End representation immediately and refer the client to a licensed attorney

68
Q

Examples of people responsible for a trust fund recovery penalty

A
  • An officer or an employee of a corporation
  • A member or employee of a partnership
  • A corporate director or shareholder
  • A member of a board of trustees of a nonprofit organization
  • Another person with authority and control over funds to direct their disbursement
  • Another corporation or third-party payer
69
Q
A

EA PART 3 (7 decks)

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