Due Diligence and Penalties Exam

Practice before the Internal Revenue Service comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer's rights, privileges, or liabilities under laws or regulations administered by the Internal Revenue Service. Such presentations include all the following, except which?

Corresponding and communicating with the Internal Revenue service.

Preparing and filing documents.

Representing a client at conferences, hearings, and meetings.

Rendering advice and tax recommendations at national conferences and seminars.

Joseph is a tax preparer with limited representation rights. All the following statements are correct except for which one?

Joseph can represent his client in an appeals conference if he prepared and signed his client's tax return.

Joseph can represent his client before the iRS Taxpayer Advocate Service (TAM if he prepared and signed his clients tax return.

Joseph can represent his client before an IRS Customer Service Representative if he prepared and signed his MenCs tax return.

Joseph can represent his client before a revenue agent if he prepared antl signed his client's tax return.

Taylor is an unenrolled preparer and wants to open her own tax preparation office. Where would she find ethical guidelines and standards for her business?

From her friend Jennifer who has actual experience on doing things correctly since she has been recently sanctioned by the IRS.

Circular 230

From her best friend who has a successful tax preparation business.

None of them

What is the penalty amount for failure to include a Social Security number (SSN) on a tax return?

$25 for each failure.

$150 for each failure.

$100 for each failure.

$50 for each failure

Lacy did not file her return by the due date (including extensions). She did not do it for fraud reasons. What could be the maximum failure to file penalty on the unpaid balance for each month or part of a month for a late return?

15% of the tax owed

10% of the tax owed

5% of the tax owed

2% of the tax owed

Liz is a tax professional and is I nterviewing a new client, Stephanie. Liz asked Stephanie questions about her Schedule C income from house cleaning, with no expenses. When choosing how the tax return is prepared, which of the following standard should Liz comply with?

Choose a solution that the client is not able to support.

Examine only one possible solution.

Determine the nature of the issue in question.

Get as little information and documentation from the client as possible.

Which of the following would not subject the taxpayer to criminal penalties?

Fraud and making false statements.

Preparing and filing an accurate tax return.

Tax evasion.

Willful failure to file a return.

Which action could result in criminal prosecution?

Preparing and filing a fraudulent return.

Nonfraud and truthful statements.

Willfully filing a return

Tax compliance.

Andres is paid to prepare, assist in preparing, or review tax returns. Under which of the following scenarios would Andres be assessed a penalty by the IRS?

Andres made sure that all information on the tax return was correct

Andres did not sign the tax return(s) he prepared.

Andres entered his PTIN on the correct line.

Andres asked his client knowledgeable questions to complete the tax returns he prepared.

Due Diligence and Penalties Exam

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