Yet Another Boring Circular 230 Ethics Review

IRS-approved CE in 3 simple steps...

IRS CE Program Number: CBBHU-E-00025-23-S

Step 1: Drink some caffeine. Watch the video. Take notes.

Step 2: Review the review material that is meant to be reviewed. Click here for review PDF.

Step 3: Take the final quiz...

Answer the following questions about the CE class and submit them to be graded to get credit. Try to select the correct answers.

1. If a tax firm does not designate an individual with principal authority for Circular 230 oversight in the firm, the IRS Office of Professional Responsiblity may:

Hold all staff equally responsible for Circular 230 oversight.

Designate such an individual on behalf of the firm.

Default such responsibility only to the Enrolled Agents on staff.

Default such responsibility to the firm owner only.

2. A client refuses to pay you for work you've done and demands to have their original documents back. You should:

Shred them, burn them, and throw the ashes into the sea.

Store them in a locked filing cabinet until the client pays you.

Make copies for your own records and return the originals to the client.

Contact the IRS Criminal Investigation Division to report the client.

3. Which of the following is a reasonable step to ensure staff compliance with Circular 230?

Let all staff figure it out for themselves.

Place a printout of Circular 230 in every desk drawer

Provide all staff with annual tax law update courses.

Conduct quarterly staff training on Circular 230 issues.

4. You prepare a CP-2000 response that requires a two sentence explanation and a copy of a brokerage statement. Which of the following might be considered an unconscionable fee?

No fee, since they're a good, long-term client.

Charging a flat $250.

Billing the client for a full 8-hour workday.

Billing $350 per hour with a half hour minimum.

5. Which of the following is NOT a prohibited action when advising a client on a tax return position?

Willfully understating the client's tax liability.

Reminding the taxpayer to deduct their eligible home mortgage interest.

Advising the taxpayer to file a zero return since the 16th amendment was never ratified.

Telling a client that's it's OK to omit a 1099 because it's too small.

6. A client has legitimate Schedule C deductions. They ask you what the odds are they'll get audited for claiming them. Which of the following is the best response?

Advise the client that they should deduct all legitimate expenses, as the law allows.

Advise the client that it doesn't matter, since the odds of being audited are incredibly low.

Tell the client that you've got their back if a Revenue Agent shows up, at no extra charge.

Tell the client that it's fine, because all their friends are doing it, too.

7. A client asks you to write and sign a letter stating that an obviously fraudulent conservation easement scheme is legitimate. Doing so would be an example of:

Good customer service.

Business growth best practices.

Incompetence and disreputable conduct.

Building valuable goodwill with clients.

8. You prepare a tax return for a person that is currently homeless. They ask for their refund check to be mailed to your office. In this situation, you should:

Deposit the check to your personal account when it arrives.

Deposit the check to your business account when it arrives.

Return the check to the U.S. Treasury Department, unopened.

Call the client on their cell phone to come pick up the check.

9. In which situation would it be acceptable to charge a contingent fee to a client?

Representing the client in the examination of a tax return.

Representing the client in an appeal of an Offer in Compromise rejection.

Negotiating an Installment Agreement for the client with a Revenue Officer.

Filing a Collection Appeal for the client after a bank account levy.

10. A client provides you forms W-2 from three jobs, but then reaches over and takes one away and says to forget you saw it. You should:

Prepare the tax return with the remaining documents.

Inform the client that you cannot prepare the return without all forms W-2.

Enter the W-2 information from what you memorized from your quick glance.

Call the police and have the client arrested.

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