Treasury Department Flashcards
What is circular 230?
The department of treasury’s rules of practice that cover cpas and other who practice before the IRS
What are the components of best practices of the IRS outlined in circular 230?
Communicate clearly with the client, establish facts, relate applicable law, advise client regarding consequences
what are the components of the IRS best practices outlined in circular 230?
communicate clearly with the client, establish facts, relate applicable law, advise client regarding consequences.
what are the elements of an impermissible fee per circular 230
unconscionable, with some exceptions contingent
What are the types of cover opinions outlined in circular 230?
Tax avoidance transactions, transactions with principal purpose of avoiding tax, four categories of transactions with significant purpose of avoiding tax
when is a position considered to be unreasonable if it relates to a tax shelter?
if the position relates to a tax shelter, it is unreasonable unless it is more likely than not
who is a tax return preparer?
Any person who preparers for compensation, all or a substantial portion of any tax return or any claim for refund of tax under the IRS
People are TRPs if?
they are paid to prep or retain employees to prep a substantial portion of any federal tax return or refund claim
Name two types of TRPs
Signing TRPs and non-signing TRPs
Who are signing TRPs?
Signing TRPs are individuals who bear “primary responsibility” for the overall accuracy of the return or claim for refund
Who are non-signing TRPs?
Non-signing TRPs are those other than than the signing TRP who prep all or substantial portion of a return or claim for a refund.
what does Section 6694(a) impose?
Section 6694(a) imposes a penalty against a TRP when an unreasonable position causes an understatement of tax liability
When is a position unreasonable if there is no substantial authority?
when is a position unreasonable if it is disclosed yet there is no reasonable basis for it?
when is a position unreasonable if it relates to a tax sheller?
it is unreasonable unless it is more likely than not (MLTN)
