- Which of the following is correct regarding a practitioner's obligation to furnish records or information to the IRS during representation?
Answer: A practitioner must promptly submit records or information in response to a proper and lawful IRS request unless the practitioner reasonably believes in good faith that the records or information are protected by a genuine privilege.
Circular 230 §10.20 requires a practitioner, on a proper and lawful request by a duly authorized IRS officer or employee, to promptly submit records or information in any matter before the IRS unless the practitioner believes in good faith and on reasonable grounds that the records or information are privileged. Choice C states that rule. Choice A overstates the duty: the obligation is limited to proper and lawful requests and is subject to the privilege exception. Choice B misstates the basis for withholding: a client's instruction not to disclose is not itself a privilege and does not override a proper IRS request. Choice D misstates the standard: a practitioner may not withhold records based solely on the practitioner's own view of relevance; a lawful IRS request fixes the scope, and objections must be raised through proper channels rather than self-help.
- Which of the following is correct regarding the CFO's execution of the corporation's Form 2848?
Answer: The CFO signs and enters her exact title, and in executing the form she certifies that she has authority to bind the corporation; no resolution or bylaws need be attached to the form.
26 C.F.R. § 601.503(c)(3); Instructions for Form 2848, line 7. A corporation's power of attorney must be executed by an officer having authority to legally bind the corporation, who must certify that he or she has that authority, and the Form 2848 instructions direct that officer to sign and enter his or her exact title. Neither source requires a corporate resolution or bylaws to be attached. Under § 601.503(c), IRS officials may require evidence of authority in a particular case, but that is a discretionary request, not a filing requirement. Choice B is correct. Choice A turns the IRS's discretionary power to request evidence into a mandatory attachment that neither the regulation nor the instructions impose. Choice C is wrong because the corporation itself is the taxpayer, and its power of attorney is executed by one authorized officer, not by every shareholder and director. Choice D is wrong because Form 56 notifies the IRS of a fiduciary relationship, such as an executor, administrator, or trustee, and does not establish a corporate officer's ordinary authority to act for the corporation.
- Which of the following correctly describes the authority created by the Form 8821?
Answer: It authorizes the EA to inspect and receive the client's confidential tax information from the IRS, but it does not allow the EA to represent her, sign documents, or make tax elections on her behalf.
Choice B is correct. The governing authority is the Form 8821 instructions and IRC §6103(c), which permits a taxpayer to authorize disclosure of return information to a designee in writing. Form 8821 is a tax information authorization: it allows the named designee to inspect and receive confidential tax information, but it does not create a power of attorney and does not authorize representation, signing documents, or making elections. Choice A is wrong because it grants representation authority before Appeals, which Form 8821 does not do. Choice C describes the third-party designee box on Form 1040, not Form 8821. Choice D is wrong because Form 8821 alone is sufficient to request and receive transcripts and other information; Form 2848 is needed only if the EA is to represent the taxpayer.
- Which IRS record should the EA request during intake?
Answer: Wage and income transcript for 2024.
Choice A is correct. The governing authority is the IRS Form 4506-T instructions. The wage and income transcript is a compilation of information returns such as Forms W-2, 1099-INT, 1099-DIV, and 1099-B filed under the taxpayer's identification number, so it is the best tool for identifying third-party income reported under the SSN. Choice B is wrong because a tax return transcript shows only what was reported on a filed return, not all third-party reporting. Choice C is wrong because a record of account transcript combines return data and account activity but does not centrally list all information returns. Choice D is wrong because a tax account transcript shows assessments, payments, and balance activity, not a comprehensive list of third-party income documents.
- Which of the following is correct regarding a practitioner's reliance on information furnished by a client?
Answer: A practitioner may rely in good faith on information furnished by a client without verifying it, but must make reasonable inquiries if the information appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete.
Circular 230 §10.34(d) permits a practitioner to rely in good faith, without verification, on information furnished by the client, but it also requires the practitioner to make reasonable inquiries when the information appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete. Choice A correctly states both parts of that rule. Choice B misstates the verification duty: independent verification of every item is not required before preparing or signing a return. Choice C misstates the standard: Circular 230 does not impose strict liability for inaccurate client records, and third-party verification is not generally required before claiming a deduction or credit. Choice D misstates the required response: the practitioner must first make reasonable inquiries, and the rule does not require automatic withdrawal merely because the client has not provided a written explanation.
- What must occur before the IRS will recognize the daughter's authority to engage the EA?
Answer: She must obtain letters testamentary or other court appointment and file Form 56 with supporting evidence; she may then sign Form 2848 as the fiduciary.
Under the IRS Form 56 instructions and the Form 2848 instructions, Choice C is correct. A fiduciary must be appointed by the probate court—through letters testamentary, letters of administration, or other court order—and must notify the IRS of the fiduciary relationship on Form 56, with supporting evidence of the appointment. Once appointed, the fiduciary may sign Form 2848 on behalf of the estate. Choice A is wrong because a will naming an executor is not enough to authorize the named executor to act for IRS purposes before the court appoints her. Choice B is wrong because Form 8821 only authorizes a third party to receive tax information, and an interested party is not the taxpayer or fiduciary. Choice D is wrong because Form 1310 is used to claim a decedent's refund, not to establish fiduciary authority.
- Under Circular 230, what must the EA do?
Answer: Promptly return the W-2s, the bank statements, and a copy of the depreciation schedule even though the examination fee is unpaid; the EA may keep copies.
Circular 230 § 10.28. On the client's request, a practitioner must promptly return all records of the client that the client needs to comply with federal tax obligations, even in a fee dispute, and may keep copies. Records of the client include documents the client supplied (the W-2s and bank statements) and any return, schedule or other document the practitioner prepared that was presented to the client in a prior representation and is needed for current compliance. A practitioner-prepared document may be withheld only while the fee for that document is unpaid. The decisive facts are that the schedule was given to the client with the 2024 return and that the 2024 preparation fee was paid; the unpaid fee is for the examination work, not for the schedule. Choice C is correct. Choice A is wrong because state law gives no retention right here, and an engagement letter cannot override § 10.28. Choice B is wrong because it treats who prepared the schedule as decisive; a practitioner-prepared document presented to the client in a prior, paid representation is a record of the client. Choice D is wrong because § 10.28 does not allow the return of records to be conditioned on a release of the fee dispute.
- Which of the following is correct regarding the authorization the enrolled agent must obtain before continuing to represent the estate?
Answer: The taxpayer's death terminated the Form 2848, so the executor must file Form 56 with evidence of her appointment and execute a new Form 2848 naming the enrolled agent before the agent may continue the examination.
IRC § 6903 and the instructions to Forms 2848 and 56 govern the intake documents. A Form 2848 granted by an individual taxpayer terminates when the taxpayer dies; it does not survive merely because the examination had already begun. The executor alone has authority to act for the estate, and the IRS does not recognize that authority until the executor files Form 56, with evidence of appointment, notifying the IRS of the fiduciary relationship. The estate must then be covered by a new Form 2848, executed by the executor in her fiduciary capacity, before the enrolled agent is recognized as the representative. Choice D states all three requirements. Choice A misstates the effect of death—the Form 2848 does not remain in effect merely because the matter was pending. Choice C misstates the scope of Form 8821, which permits only the inspection or receipt of confidential return information and does not authorize representation before the IRS or substitute for a Form 2848. Choice B misstates the function of Form 56—the power of attorney does not notify the IRS of the fiduciary relationship, and Form 56 is still required even after a new Form 2848 is executed.
- Which of the following is correct regarding IRS transcripts used to obtain taxpayer records during case intake?
Answer: A Wage and Income Transcript itemizes income reported by payers, such as wages and 1099 income, and can help reconstruct a nonfiler's gross income, but it does not show deductions.
The instructions to Forms 4506-T and 4506 distinguish transcripts from copies of returns: Form 4506-T is used to request transcripts, and a Wage and Income Transcript reports payer-provided income items such as wages and 1099 income, which can reconstruct a nonfiler's gross income, but it does not show deductions. Choice B misstates the form and release rule: Form 4506 is used to request an actual copy of a filed return, and an authorized designee may receive a Wage and Income Transcript. Choice C misstates the available transcripts: a Return Transcript is one type of transcript—showing most line items of a filed return—and is not the only transcript the IRS will issue to an authorized designee; Account Transcripts and Wage and Income Transcripts are also available. Choice D misstates the request method: a Verification of Non-filing Letter may be requested with Form 4506-T and is not limited to an in-person request by the taxpayer.
- Which of the following is correct regarding the representation of a deceased taxpayer's estate before the IRS?
Answer: A practitioner who will represent the estate must obtain a Form 2848 signed by the appointed fiduciary, and the fiduciary must file Form 56 to notify the IRS of the fiduciary relationship.
IRC §6036 and the instructions to Forms 56 and 2848 require a fiduciary to notify the IRS of the fiduciary relationship on Form 56, and a practitioner who will represent the estate must have a Form 2848 signed by the appointed fiduciary; a power of attorney executed by the decedent terminates when the taxpayer dies. Choice A misstates the authority: letters testamentary establish the fiduciary's authority to act for the estate, but they do not substitute for a Form 2848 when a practitioner represents the estate before the IRS. Choice B misstates the effect of death: the decedent's Form 2848 does not continue until the period of limitations expires; a new power of attorney from the fiduciary is required. Choice D misstates the filing requirement: Form 56 is not a condition to the IRS accepting the decedent's final return, and the executor signs the final return as the taxpayer.
- Which document request should the EA submit to the IRS?
Answer: IRS Form 4506 to obtain a copy of the 2021 return with its schedules and attachments.
Choice D is correct. The governing authority is the IRS Form 4506 instructions. Form 4506 is used to request an actual copy of a filed return, including schedules and attachments. Choice A is wrong because Form 4506-T-EZ only requests a tax return transcript, not a copy with attachments. Choice B is wrong because Form 8821 is an authorization to disclose information, not a document request. Choice C is wrong because Form 4506-T obtains transcripts, which do not include all attachments and supporting statements.
- Which of the following is correct regarding the requirements for a valid Form 2848, Power of Attorney?
Answer: A Form 2848 must be signed and dated by the taxpayer and the representative and must identify the type of tax, the tax form number, and the specific tax periods covered.
The Form 2848 instructions require a valid power of attorney to be signed and dated by the taxpayer and signed by the representative, and to identify the type of tax, the tax form number, and the specific tax years or periods covered. Choice A misstates the scope rule: the IRS does not accept a power of attorney expressed as 'all federal taxes, all periods'; the specific matters must be stated. Choice C misstates the signature requirement: each spouse must sign a Form 2848 to authorize representation on a jointly filed return matter. Choice D misstates the consequence of an omission: a Form 2848 that fails to state the tax periods is not effective merely because an examination is pending.
- Which set of items should the EA gather at intake to proceed?
Answer: A signed Form 2848, the CDP notice, a completed Form 12153, and documentation supporting any collection alternative the client wants discussed.
Choice D is correct. The governing authority is the Form 12153 instructions and the Form 2848 instructions. A CDP case requires the taxpayer or representative to file Form 12153, the underlying CDP notice must be available to establish the filing window and amounts involved, a valid Form 2848 is needed if the EA is representing the client, and financial or other evidence is needed to support any collection alternative. Choice A is wrong because the IRS does not prepare or file Form 12153 on the taxpayer's behalf. Choice B is wrong because Form 911 is a request for Taxpayer Advocate Service assistance, not a CDP request. Choice C is wrong because Form 433-B is for business taxpayers, Form 8821 does not authorize representation, and Form 12153 is required for a CDP hearing.
- Which IRS transcript should the EA request?
Answer: Record of account transcript for 2022.
Choice B is correct. The governing authority is the IRS Form 4506-T instructions. A record of account transcript combines the tax return transcript and the tax account transcript, showing the return line items as processed plus assessments, payments, penalties, and interest. Choice A is wrong because a tax account transcript shows account activity but not the line items from the return. Choice C is wrong because a tax return transcript shows the return as filed but not post-filing account activity. Choice D is wrong because a wage and income transcript lists amounts from third-party information returns and does not show the return or the account activity.
- Which of the following is correct regarding the third-party designee authorization on a federal income tax return?
Answer: The designee may discuss the return with the IRS until the due date (not counting extensions) of the taxpayer's return for the following year, but may not represent the taxpayer before the IRS.
Governing authority: 2025 Instructions for Form 1040, Third Party Designee. Checking the Third Party Designee box authorizes the IRS to discuss the 2025 return with the designee, and the designee may supply missing information, ask about the processing of the return or the refund, receive copies of related notices or transcripts on request, and respond to certain notices. The authorization ends automatically no later than the due date, not counting extensions, of the 2026 return (April 15, 2027, for most people). The designee may not receive a refund check, bind the taxpayer to anything, or otherwise represent the taxpayer. Choice B states the rule. Choice A misstates the designee's authority: representation in an examination requires a Form 2848, even for an attorney, CPA, or enrolled agent. Choice C misstates the designee's powers: the designee may not receive the refund check or sign an amended return. Choice D misstates the mechanics: the designation is made on the return itself and is not filed separately on Form 8821.
