1
Q
What is the primary document used to authorize an individual to represent a taxpayer before the IRS?
A
Form 2848 (Power of Attorney and Declaration of Representative).
2
Q
A power of attorney (POA) allows a representative to receive confidential tax information and perform actions on the taxpayer’s behalf, but it generally prohibits what action regarding checks?
A
Negotiating or endorsing a check issued by the government.
3
Q
(deleted)
A
(deleted)
4
Q
Under what condition may a practitioner sign an income tax return for a client due to the taxpayer’s location?
A
If the taxpayer has a continuous absence from the U.S. for at least 60 days prior to the filing date.
5
Q
In addition to a signature being permitted under the IRC, what else is required for a practitioner to sign a client’s income tax return?
A
The taxpayer must specifically authorize the practitioner to sign.
6
Q
Why is it unacceptable to list “all years” or “all returns” on Line 3 of Form 2848?
A
The acts authorized must be specific, such as naming the tax form and the specific years/periods.
7
Q
Can a tax preparation firm or company be named as a representative on Form 2848?
A
No, only individuals can be named as representatives.
8
Q
What type of signature is required for a Form 2848 that is filed via mail or fax?
A
A handwritten signature.
9
Q
What computer file system contains information regarding the authority of individuals appointed under powers of attorney?
A
The Centralized Authorization File (CAF).
10
Q
Does the CAF system maintain actual copies of the Power of Attorney documents?
A
No, it only contains information regarding the authority granted.
11
Q
If a taxpayer uses a non-IRS Power of Attorney form, what must be attached to it for IRS acceptance?
A
A signed statement from the taxpayer containing all the information required on Form 2848.
12
Q
What action must a taxpayer take to revoke a Power of Attorney if they have a copy of the original Form 2848?
A
Write “REVOKE” across the top of the first page with a current signature and date, then mail or fax it to the IRS.
13
Q
True or False: A newly filed Power of Attorney for the same matter automatically revokes a previously filed one unless otherwise stated.
A
True.
14
Q
What form is used to authorize a third party to receive tax information without granting them the power of representation?
A
Form 8821 (Tax Information Authorization).
15
Q
How does the authority of a Third Party Designee checked on a tax return differ from Form 8821?
A
It is limited to discussing and receiving information for that one specific tax return only.
16
Q
What is the legal consequence for a practitioner who knowingly discloses client tax return information without authorization?
A
It is a crime.
17
Q
Under what condition can a practitioner disclose one taxpayer’s information to a second taxpayer on the same return without specific written consent?
A
If the second taxpayer is related, their interests are not adverse, and the first taxpayer hasn’t prohibited it.
18
Q
Is taxpayer consent required to disclose tax information to the practitioner’s attorney regarding an IRS investigation of the preparer?
A
No, consent is not required in this circumstance.
19
Q
What document must a practitioner have in place and follow to ensure client electronic data is kept secure?
A
A Written Information Security Plan (WISP).
20
Q
According to $\S 7525$, the practitioner confidentiality privilege applies only to which type of IRS matters?
A
Noncriminal matters and proceedings.
21
Q
Does the $\S 7525$ confidentiality privilege apply to communications regarding tax shelters?
A
No.
22
Q
What is the first step a practitioner should take before beginning an engagement to represent a taxpayer?
A
Gather and review all facts and documents related to the case.
23
Q
What system allows Circular 230 practitioners to quickly view a client’s return and account information in an online session?
A
The Transcript Delivery System (TDS).
24
Q
What form is used to request an actual physical copy of a tax return for a fee?
A
Form 4506.
25
For how many years in the past can a taxpayer request a copy of a tax return using Form 4506?
The past 6 years.
26
Where must the IRS mail a transcript requested via Form 4506-T?
Only to the taxpayer’s address.
27
Which standard is used by the IRS to determine a taxpayer's ability to pay delinquent liabilities regarding food and clothing expenses?
National standards (allowed regardless of the amount actually spent).
28
Regarding housing and transportation expenses, what amount is the taxpayer allowed under IRS Collection Financial Standards?
The lesser of the local standard or the amount actually spent.
29
What is the immediate effect of filing for bankruptcy on tax assessment and collection efforts?
It stops all tax assessment and collection efforts.
30
To be discharged in bankruptcy, a tax must relate to a return that was due at least how many years before the filing?
3 years.
31
To be discharged in bankruptcy, an IRS tax assessment must be at least how many days old?
240 days.
32
What is the foundation of all federal tax authority, codified in Title 26?
The Internal Revenue Code (IRC).
33
What type of Treasury regulations are issued to provide immediate guidance and remain in effect for up to 3 years?
Temporary regulations.
34
In the hierarchy of tax authority, what source is considered higher: the Internal Revenue Code or Treasury Regulations?
The Internal Revenue Code.
35
How does the IRS communicate its decision to follow or not follow a court's decision in future similar situations?
Through an "acquiescence" or "non-acquiescence."
36
What IRS issuance applies the law to a specific set of facts and can be relied upon by other taxpayers with similar facts?
Revenue Rulings.
37
How are Revenue Rulings and Revenue Procedures numbered?
By the year issued followed by the sequence number (e.g., 2026-1).
38
What is the difference between a Private Letter Ruling (PLR) and a Technical Advice Memorandum (TAM)?
A PLR is requested by a taxpayer, while a TAM is requested by an IRS director.
39
True or False: IRS notices and announcements can be relied on to the same extent as Revenue Rulings.
True.
40
What IRS document serves as the official compilation of policies and procedures used by IRS employees to guide their duties?
The Internal Revenue Manual (IRM).
41
Are IRS publications and form instructions considered authoritative sources of tax law?
No, they are non-authoritative.
42
What is the name of the weekly authoritative instrument used by the IRS to announce official rulings and practitioner disbarments?
The Internal Revenue Bulletin (IRB).
43
Generally, what is the statute of limitations for the IRS to assess tax after a return is filed?
3 years.
44
If a return is filed before its original due date, when does the 3-year assessment statute of limitations begin?
On the due date of the return.
45
What is the statute of limitations for assessment if a taxpayer omits more than 25% of their gross income?
6 years.
46
What is the statute of limitations for assessment if a taxpayer files a false or fraudulent return?
There is no statute of limitations (it remains open indefinitely).
47
How long does the IRS generally have to collect a tax after it has been assessed?
10 years.
48
What are the two general time limits for a taxpayer to claim a refund or credit?
The later of 3 years from the filing date or 2 years from the payment date.
49
What is the extended statute of limitations for claiming a refund related to bad debt or worthless securities?
7 years from the return due date.
50
If an amended return is filed 30 days before the assessment statute expires, how much time does the IRS have to assess tax?
60 days from the date the amended return was filed.
51
Which act gives individuals the right to access federal agency records, including those of the IRS?
The Freedom of Information Act (FOIA).
52
Why is the U.S. income tax system described as "voluntary"?
It relies on taxpayers to self-report income and determine tax, rather than the IRS doing it for them.
53
What is the legal term for taking lawful steps to lower a tax liability?
Tax avoidance.
54
What is the legal term for the criminal act of intentionally not paying taxes that are legally due?
Tax evasion.
55
Which independent organization within the IRS helps taxpayers resolve problems and protects taxpayer rights?
The Taxpayer Advocate Service (TAS).
56
How many fundamental rights are listed in the Taxpayer Bill of Rights?
Ten.
57
What form should a taxpayer submit if they believe their Social Security number has been used to file a fraudulent return?
Form 14039 (Identity Theft Affidavit).
58
If a taxpayer's electronic return is rejected because their SSN was already used, what should they do?
File a paper return and attach Form 14039.
59
What is the purpose of an Identity Protection PIN (IP PIN)?
It is a PIN sent to identity theft victims to use for electronic filing in future years.
60
What is a major limitation of a Third Party Designee regarding tax refunds?
The designee cannot receive a tax refund check on behalf of the client.
61
Which type of Treasury regulation is open to public comment before it is finalized?
Proposed regulations.
62
How long is the assessment statute suspended if the IRS issues a Notice of Deficiency (90-day letter)?
For the 90-day period (during which the taxpayer can petition the Tax Court).
63
What is the statute of limitations for a refund claim involving the foreign tax credit?
10 years from the original return due date.
64
In the context of IRS representation, what does 'Practice before the IRS' encompass?
All matters connected with presentations relating to a taxpayer’s rights, privileges, or liabilities under IRS laws.
65
Does providing written advice regarding a tax avoidance plan constitute 'Practice before the IRS'?
Yes.
66
Why is a translator for a taxpayer not considered to be 'practicing' before the IRS?
They are assisting with the exchange of information and are not advocating on the taxpayer's behalf.
67
What specific financial act is a representative under a power of attorney generally prohibited from performing?
Receiving a check issued in connection with a tax liability.
68
Which form is used to authorize an individual to represent a taxpayer before the IRS?
Form 2848.
69
Under what condition may a representative sign an income tax return for a taxpayer due to absence?
The taxpayer must be continuously absent from the United States for at least 60 days prior to the filing deadline.
70
What happens to the original representative's authority if a 'delegation' of power is made to a second representative?
Both the original and the delegated representative will be recognized by the IRS.
71
How many future tax years can the IRS record on the Centralized Authorization File (CAF) system from the date of receipt?
Three years from December 31 of the year the power of attorney is received.
72
What is the standard effect of a taxpayer's incapacity on a standard power of attorney?
The power of attorney is generally terminated.
73
Who may represent a taxpayer if they work in a qualified Low-Income Taxpayer Clinic (LITC) under a special order?
A student attorney or CPA.
74
Which professional category of representative must be a member in good standing of the bar of the highest court of their jurisdiction?
Attorney.
75
What is the primary limitation of an Unenrolled Return Preparer's authority to practice?
They must have been eligible to sign and actually signed the return under examination.
76
Which form authorizes an appointee to receive confidential tax information but excludes advocacy and representation?
Form 8821.
77
What is the primary use of Form 4506-T?
Requesting a transcript of a tax return.
78
What must be attached to a non-IRS power of attorney for it to be entered into the CAF system?
A completed Form 2848.
79
What specific annotation must a taxpayer write on a power of attorney to terminate it without naming a new representative?
REVOKE.
80
What is the purpose of the Centralized Authorization File (CAF) number?
To facilitate the processing of power of attorney or tax information authorizations.
81
What is the definition of an IRS audit?
A review of accounts and financial information to ensure accurate reporting according to tax laws.
82
Which audit selection method involves returns being chosen based on transactions with previously audited business partners?
Related examinations.
83
Where does a 'field audit' typically take place?
At the taxpayer's home, place of business, or accountant's office.
84
How long is the general legal requirement for a taxpayer to retain records used to prepare a tax return?
Three years from the date the return was filed.
85
What term describes the taxpayer's responsibility to prove entries and deductions made on a tax return?
Burden of proof.
86
What is the outcome of an 'agreed' audit?
The IRS proposes changes that the taxpayer understands and accepts.
87
Within how many business days must a taxpayer pay a bill for additional tax to avoid further interest if the amount is $\ge$ $100,000?
10 business days.
88
Which transcript type shows adjustments made to a return by the IRS after it was originally filed?
Tax account transcript.
89
What is the legal definition of a 'Notice of Levy'?
The legal seizure of property to satisfy a tax debt.
90
What penalty might be assessed for certain unpaid employment taxes?
Trust Fund Recovery Penalty.
91
What does 'FPLP' stand for in the context of federal payment levies?
Federal Payment Levy Program.
92
What is the maximum percentage for a Failure to Deposit (FTD) penalty?
0.15
93
What is the maximum debt threshold for an individual to use the Online Payment Agreement (OPA) application?
50000
94
What is the maximum term length for a streamlined installment agreement?
72 months.
95
To qualify for a guaranteed installment agreement, the tax owed must not exceed _____.
10000
96
Under a guaranteed installment agreement, within how many years must the taxpayer agree to pay the full amount?
3 years.
97
Which form is used as a Collection Information Statement for debts exceeding $50,000?
Form 433-A.
98
For businesses, what balance amount triggers a requirement for installment agreement payments to be made by Direct Debit?
Over $10,000.
99
What is the setup fee for a Direct Debit Installment Agreement (DDIA) when applying online?
22
100
What is the setup fee for a standard long-term payment plan (non-Direct Debit) when applying by phone?
178
101
What is the purpose of Form 1040-V?
It is a payment voucher sent with a tax return that has a balance due.
102
By calling 1-800-829-1040, how many days can a taxpayer get to pay in full and avoid an installment agreement setup fee?
120 days.
103
What program allows a taxpayer to settle tax debt for less than the full amount owed?
Offer in Compromise (OIC).
104
Which legal status makes a taxpayer ineligible to submit an Offer in Compromise?
Being in an open bankruptcy proceeding.
105
What does the Bankruptcy Code's 'automatic stay' prohibit?
Certain actions of creditors against the debtor as of the petition date.
106
What is the 'necessary expense test' used by the IRS to determine allowable living expenses?
Expenses required for a taxpayer's health, welfare, or the production of income.
107
How are National Standards for food and apparel applied to a taxpayer's monthly allowance?
They are allowed based on family size without questioning actual spending.
108
What is the 2024 National Standard monthly total for a household of four people (Food, Housekeeping, Apparel, Personal Care, Misc)?
2027
109
What items are included in the National Standards for out-of-pocket health care?
Medical services, prescription drugs, and medical supplies like eyeglasses.
110
What is the monthly out-of-pocket health care standard for a person 65 or older?
158
111
What categories of expenses are included in the 'Housing and Utilities' local standards?
Mortgage/rent, property taxes, insurance, utilities, and communication services (phone/internet/cable).
112
Why should a taxpayer avoid giving original documents to an IRS agent during an audit?
To ensure they retain their primary evidence if records are lost; the agent should make copies instead.
113
Name three examples of documents used to verify 'gross receipts' for a business.
Cash register tapes, bank deposit slips, and Forms 1099-MISC.
114
What information must business asset records verify for tax purposes?
Acquisition date, purchase price, improvements, depreciation taken, and disposal details.
115
Which legal document is the primary source of Federal tax law?
The Internal Revenue Code (IRC) of 1986.
116
What are Treasury Regulations?
The IRS's official interpretation of the Internal Revenue Code.
117
Which level of Treasury Regulation is issued when guidance is urgently needed before public comment?
Temporary Regulations.
118
How do Revenue Rulings differ from Treasury Regulations?
They interpret law in specific factual situations and do not have the same force of law as Regulations.
119
Which court should a taxpayer use to resolve a dispute if the tax has not yet been paid?
United States Tax Court.
120
What is the purpose of the Internal Revenue Bulletin (IRB)?
It is the authoritative instrument for announcing official IRS rulings, procedures, and Treasury Decisions.
121
What is a Revenue Procedure?
An official statement of procedure affecting taxpayer rights or providing instructions for an IRS position.
122
Under 26 USC Section 6532, what is the deadline to file a suit after the IRS mails a notice of disallowance of a refund claim?
2 years from the date of mailing by certified or registered mail.
123
What is contained in the Internal Revenue Manual (IRM)?
The policies, procedures, and instructions directing the operation and administration of the IRS.
124
What is the function of a 'saving clause' in most tax treaties?
It prevents U.S. citizens/residents from using treaty provisions to avoid U.S. taxation of U.S. source income.
125
If a taxpayer uses an alternative non-IRS power of attorney, who must sign the 'Declaration of Representative'?
The representative.
126
What is the penalty for failure to deposit (FTD) if the payment is more than 15 days late but before 10 days after the first delinquency notice?
10% (Note: Source states 'up to 15%' total).
127
When a representative withdraws from representation, what annotation must they write on the power of attorney?
WITHDRAW.
128
A tax return transcript is generally available for the current year and the past _____ years.
3
129
What is the setup fee for a low-income taxpayer to establish a standard installment agreement online?
$43 (which may be reimbursed).
130
In bankruptcy, what does 'Setoff' allow the IRS to do?
Credit a prepetition refund against a prepetition tax liability.
131
Under National Standards, what is the monthly 'Miscellaneous' allowance for one person?
171
132
For each additional person beyond four in a household, how much is added to the National Standard allowance?
386
133
What must a representative do to 'perfect' a non-IRS power of attorney that is missing required information?
Submit a completed Form 2848 or a new non-IRS POA containing all requirements.
134
Which IRS system allows personnel to verify a representative's authority without having a physical copy of the POA?
The CAF system.
135
True or False: The IRS will reject a Form 2848 if it does not include a CAF number.
False.
136
What should a taxpayer do if the IRS attempts to audit items that were audited with 'no change' in the previous two years?
Contact the IRS immediately to determine if the examination should be discontinued.
137
What is the difference between 'substitution' and 'delegation' of authority by a representative?
Substitution replaces the original representative; delegation allows both to represent the taxpayer.
138
What must be included on a power of attorney for estate tax matters that is not required for income tax matters?
The decedent's date of death.
139
What does a 'Final' Treasury Regulation provide?
Interpretations of IRC sections and guidance for tax compliance and planning.
140
How can an employer avoid Failure to Deposit penalties and stay up to date with payment requirements?
By making current tax deposits through the Electronic Federal Tax Payment System (EFTPS).
EA Part 3
flashcards
Decks in class (4)
# Cards
