Preparer Restrictions and Other New Taxpayer Privacy Issues (Second Edition) (00090337)

The course focuses on the obligation of tax return preparers to keep return information confidential. Because tax return preparers have obligations not only to their clients but also to the system of tax administration, the course includes a discussion of expanded preparer obligations arising under current and proposed revisions of Circular No. 230 (Rules of Practice Before the IRS), as well as the expanded oversight of such obligations by the Office of Professional Responsibility. The course also outlines the boundaries of a return preparer’s obligations not to take unjustified reporting positions, nor facilitate understatement of a tax liability, and expanded Cir. 230 Preparer Due Diligence, Professional Responsibility with Report of Foreign Bank and Financial Accounts (FBAR). Topics covered in this course include:   • Confidentiality of Tax Return Information • Definition of a Tax Return Preparer • Disclosure Rules • Preparer Penalties

Final Exam > Results Page

final exam score:

final exam status:

100%

Question 1

Correct

Under Code Sec. 7216 regulations, a preparer who knowingly or recklessly uses or discloses a client’s tax return information can be fined up to _____ and up to _____ of imprisonment.

$500; six months

(You Answered) (Correct Answer) $1,000; one year

$10,000; three years

$1,500: two years

Question 2

Correct

The act of making tax return information known to any person in any manner is:

Preparation

(You Answered) (Correct Answer) Disclosure

Use

Transmission

Question 3

Correct

When a tax return preparer uses a contractor to operate return preparation software:

(You Answered) (Correct Answer) The contractor is a deemed preparer subject to the requirements and penalties of Code Secs. 6713 and 7216

The preparer must obtain written prior consent from the taxpayer before obtaining the service

The contractor must be an enrolled agent or certified practitioner

The Contractor must be an attorney or CPA

Question 4

Correct

Any part of a client contact list:

May never be transferred to another preparer or firm

(You Answered) (Correct Answer) May be transferred only upon disposition of the return preparation business

May be transferred only to collection agencies if the clients fail to remit their return preparation fees

May be transferred to the IRS without client written consent

Question 5

Correct

Tax return preparers in the United States who disclose Social Security number information to preparers located outside of the United States must employ data security measures such as the European Commission’s Directive on Data Protection, U.S. Department of Commerce safe harbor framework for data protection, or other program known as:

The SSN protection protocol

Administrative information redaction system

(You Answered) (Correct Answer) An adequate data protection safeguard

SSN redaction program

Question 6

Correct

Duties for preparers to exercise due diligence in preparing, approving, and filing tax returns are codified in the Code of Federal Regulations as:

(You Answered) (Correct Answer) Circular 230

45 CFR best practices

Private cause damages subsection rules

Civil cause of action

Question 7

Correct

A practitioner disbarred under Office of Professional Responsibility authority may seek reinstatement upon proof of good behavior only after:

(You Answered) (Correct Answer) Five years

Four years

Two years

Three years

Question 8

Correct

The attorney-client privilege applies to information from the taxpayer:

Provided for inclusion on the tax return only

(You Answered) (Correct Answer) Communicated to an accountant engaged by the attorney to assist in representing the client

Disclosed to third parties unconnected with representing the client in matters associated with the return

Provided to the IRS on a tax return

Question 9

Correct

Circular 230 Section 10.60 Disciplinary proceedings may apply to the following:

CPAs

EAs and attorneys

Preparers who prepare federal returns for compensation

(You Answered) (Correct Answer) All of the above statements are correct

Question 10

Correct

What is not a purpose of IRS in-person visits to return preparers?

Verifying compliance with record retention requirements

(You Answered) (Correct Answer) Distributing compact disks containing IRS Publication 1437 procedures for the e-file program

Assessing preparer penalties when violations are found

Verifying compliance with preparer signing and furnishing identifying number on returns that they prepare