Ethics & Responsibilities

Question 1

What is the penalty for taking an undisclosed position without a reasonable belief that substantial authority exists that it will be sustained on its merits?

Answer 1

Penalty of an amount equal to the greater of $1,000 or 50% of the income to be derived

Question 2

What is the penalty for an understatement of tax liability caused by the tax preparer’s willful or reckless conduct?

Answer 2

Penalty of the greater of $5,000 or 75% of the income to be derived

Question 3

What is the penalty for filing fraudulent or false statements with the intent of obtaining an unauthorized benefit?

Answer 3

Penalty of a fine not greater than $100,000, imprisonment of not more than three years, or both

Question 4

What is the penalty for disclosing taxpayer’s information without consent of the taxpayer?

Answer 4

Penalty of $250 per disclosure with a maximum of $10,000 per year. If convicted of knowingly or recklessly disclosing the information, a preparer is guilty of a misdemeanor and subject to up to $1,000 in fines and up to a year in prison

Question 5

Which persons are authorized to practice before the IRS?

Answer 5

Attorneys,

CPAs,

enrolled agents,

and enrolled actuaries, enrolled retirement plan agents, and annual filing season program (AFSP) participants

Question 6

A conflict of interest exists if ______________

Answer 6

A. The practitioner’s representation of a client will be directly adverse to another client, or

B. There is a significant risk that that representation of one or more clients will be materially limited by the practitioner’s responsibility to another or former client or by the practitioner’s personal interests.