Unit 2: Practice Before the IRS

Question 1

What activities are included in ‘Practice before the IRS’?

Answer 1

• Corresponding and communicating with the IRS.
• Representing a taxpayer at conferences, hearings, or meetings with the IRS.
• Preparing and filing documents with the IRS on behalf of a taxpayer (excluding tax return preparation).
• Rendering written advice related to tax avoidance or evasion.

Question 2

Who is allowed to practice before the IRS?

Answer 2

• Attorneys
• Certified Public Accountants (CPAs)
• Enrolled Agents (EAs)
• Enrolled actuaries for specific matters and
• Enrolled Retirement Plan Agents (ERPAs) for specific matters
• Annual Filing Season Program (AFSP) praticipants have limited rights to practice before the IRS

Question 3

Is U.S. citizenship required to practice before the IRS?

Answer 3

No

Question 4

What did the U.S. Court of Appeals rule regarding the IRS’ jurisdiction over tax return preparers?

Answer 4

The IRS does not have jurisdiction to regulate tax return preparers, because preparing tax returns is not considered “practice before the IRS”.

Question 5

Who may represent taxpayers and practice before the IRS by virtue of their professional licensing?

Answer 5

• Attorneys
• Certified Public Accountants (CPAs)
• Enrolled Agents (EAs)
• Enrolled Retirement Plan Agents
• Enrolled Actuaries

Only attorneys, CPAs and EAs have unlimited rights to represent taxpayers before the IRS.

Question 6

What are the requirements for the Annual Filing Season Program?

(AFSP)

Answer 6

• 18 hours of continuing education from an IRS-approved provider
• Passing a knowledge-based comprehension test
• A current Preparer Tax Identification Number (PTIN)
• Consent to be regulated under Circular 230

Question 7

Who is exempt from the AFSP ‘annual refresher’ course?

Answer 7

• State-based return preparer program participants
• Special Enrollment Exam Part I test-passers
• Registered Tax Return Preparer exam passers
• VITA/TCE volunteers
• Accredited tax-focused credential-holders

Question 8

What representation rights do AFSP certificate holders have?

Answer 8

Limited practice rights to represent clients whose returns they prepared and signed, only before revenue agents, customer service representatives, and similar IRS employees.

Question 9

When can an unenrolled preparer represent a taxpayer before the IRS?

Answer 9

Only if they participate in the Annual Filing Season Program (AFSP) and prepared the tax return in question. Otherwise, they cannot represent taxpayers before any level of the IRS.

Question 10

Who can represent taxpayers before the IRS due to a ‘special relationship’?

Answer 10

• The individual themselves
• A family member
• A company officer
• A partner
• An employee
• A fiduciary
• A qualifying student or law graduate in a LITC or STCP

Question 11

What is the role of the IRS Office of Professional Responsibility?

(OPR)

Answer 11

Responsible for matters related to practitioner conduct, discipline, disciplinary proceedings, and sanctions.

Question 12

What must a fiduciary file to represent an estate before the IRS?

Answer 12

Form 56, Notice Concerning Fiduciary Relationship.

This form notifies the IRS that the fiduciary is authorized to represent the estate.

Question 13

Who is ineligible to practice before the IRS?

Answer 13

Corporations, associations, partnerships, and other entities.

Individuals who have lost eligibility due to suspension, disbarment, or failure to meet renewal requirements are also ineligible.

Question 14

What are the consequences of not meeting continuing education (CE) requirements for enrolled agents?

Answer 14

The agent may be placed in inactive status, losing eligibility to practice before the IRS.

This can result in clients needing to seek other representatives.

Question 15

Does preparing a tax return constitute ‘practice’ before the IRS?

Answer 15

No

Practice involves representing a taxpayer before the IRS, which preparers do not do by simply preparing returns.

Question 16

What is required for someone to be considered a ‘tax return preparer’ by the IRS?

Answer 16

They must prepare tax returns for compensation.

This includes both business and casual part-time preparers who receive fees.

Question 17

What is a PTIN and who must obtain it?

Answer 17

A Preparer Tax Identification Number required for all paid tax return preparers.

The PTIN helps the IRS track tax returns prepared by each individual.

Question 18

Are attorneys and CPAs required to obtain a PTIN?

Answer 18

No, not if they do not prepare federal tax returns, even if they represent clients in federal tax matters.

Enrolled Agents are required to have a PTIN.Only CPAs and Attorneys involved in tax return preparation for compensation need a PTIN.

Question 19

What is the ‘Substantial Portion’ rule for tax return preparers?

Answer 19

Only the person who prepares all or a substantial portion of a tax return is considered the preparer.

A portion is not substantial if it involves amounts less than $10,000 or less than $400,000 and less than 20% of adjusted gross income.

Question 20

What are the two tracks to become an Enrolled Agent (EA) according to Circular 230?

Answer 20

• Passing a three-part exam
• Past employment with the IRS

The exam track involves passing the Special Enrollment Examination (SEE). The previous experience track requires a minimum of five years of technical service with the IRS. Both tracks require filing Form 23, and passing a background check

Question 21

What must a candidate do after passing the Special Enrollment Examination (SEE) to become an EA?

Answer 21

• File Form 23
• Pass a background check

Form 23 must be filed within one year from the date of passing the exam, and the IRS performs a tax compliance check and a suitability check during the background check.

Question 22

What are the consequences of failing to file tax returns or pay taxes for EA candidates?

Answer 22

Grounds for denial of enrollment.

The Return Preparer Office may deny an application for enrollment if the candidate has not filed tax returns or has unpaid taxes.

Question 23

How often must an Enrolled Agent renew their enrollment status?

Answer 23

Every three years.

An EA must file Form 8554 and submit the required fee during the renewal application period specific to their SSN.

Question 24

What is the minimum continuing education (CE) requirement for an EA during each enrollment year?

Answer 24

• 16 hours of CE
• 2 hours of ethics or professional conduct

Over the three-year enrollment cycle, an EA must complete a total of 72 hours of CE.

Question 25

# Fill in the blank: The initial CE requirements for newly enrolled EAs are \_\_ hours of CE for each month enrolled and \_\_ hours of ethics annually.

Answer 25

2; 2

Question 26

What is the role of the **Return Preparer Office** concerning EAs? | (RPO)

Answer 26

* Oversees competency testing * Manages enrollment and renewal * Monitors continuing education compliance ## Footnote The RPO also handles applications and issues enrollment cards once an individual’s application is approved.

Question 27

# True or False: An Enrolled Agent can receive CE credit for serving as an instructor in approved educational programs.

Answer 27

True ## Footnote An EA can earn one hour of CE credit per contact hour of instruction and two hours for preparation time, with a maximum of six hours annually for instruction and preparation.

Question 28

What happens if an EA **does not renew their enrollment** or fails to meet CE requirements?

Answer 28

They may be placed on **inactive** status. ## Footnote The RPO notifies the EA of noncompliance and the EA has 60 days from the date of the notice to repond. Failure to comply results in inactive status.

Question 29

What are qualifying circumstances that allow an EA to request a **full or partial waiver** of continuing education (CE) requirements?

Answer 29

* Health issues * Extended active military duty * Abscence from the U.S. for employment of other reasons * Other reasons on a case-by-case basis

Question 30

What must an EA do if they **change their address**?

Answer 30

Inform the **Return Preparer Office** within **60** days. ## Footnote This requirement ensures that the IRS has current contact information for the practitioner.

Question 31

What is the **minimum length** of a CE program to qualify for **credit**?

Answer 31

**50 minutes** of continuous participation. ## Footnote Continuing education programs are measured in contact hours, and the shortest recognized program is one hour.