Apply Circular 230 Standards Practice Test

A tax preparer is asked to prepare a return claiming a refundable credit. The client provides inconsistent information about residency and dependents, and the preparer suspects the credit may be improper. Under Circular 230 due diligence principles, what is the most appropriate response?

A tax preparer is asked to sign a return that includes a large casualty loss deduction. The client provides no appraisal, no insurance documentation, and no evidence of the event date, but insists the deduction is correct. Under Circular 230, what is the most appropriate response?