EA Exam Part 3 Questions And Answers

Form 8867 - ANS Paid Preparer's Due Diligence Checklist. Includes new questions for both the Head of Household filing status and the new Credit for Other Dependents. Retroactive! (for HoH anyways) Penalty for failure to meet due diligence requirements - ANS $520 per failure New Requirements for Child Tax Credit/Additional Child Tax Credit - ANS Child must have SSN (ITIN or ATIN works for ODC) Time to file claim for wrongful levy or seizure - ANS two years Passport Revocation - ANS The IRS has to notify the US dept. of state of taxpayers who owe a seriously delinquent tax debt. They can then revoke or deny passport. The threshold for 2018 is $52,000 Centralized Audit Regime - ANS Mandatory for partnerships above 100 partners. (100 or fewer can elect out of this new regime). If anything is adjusted, it is assessed and collected at the partnership level (instead of going after individual partners) Title 26 - ANS Internal Revenue Code - main body of tax law of the United States Title 31 - ANS FinCEN and FBAR - International financial reporting laws Primary Authority - ANS the law itself, Internal Revenue Code Substantial Authority - ANS Can serve as basis for interpretation of current tax law and to establish precedents for the future. 1. Treasury Regulations 2. Revenue Rulings 3. Revenue Procedures 4. Private Letter Rulings 5. Technical Advice Memoranda (TAMS) 6. IRS Notices Treasury Regulations - ANS The official interpretation of a statutory tax rule written and published by the U.S. Treasury. Published in the Federal Register. Types of Treasury Regulations - ANS 1. Legislative Regulations 2. Interpretive Regulations 3. Procedural Regulations Who is bound by IRS regulations? - ANS The IRS (the courts are not) Classification of Treasury Regulations - ANS Proposed Temporary Final Revenue Rulings and Revenue Procedures - ANS Can be used by taxpayers as guidance to avoid certain accuracy related penalties Technical Advice Memoranda (TAMs) - ANS TAMs are issued by the IRS in response to questions raised by IRS field personnel during audits. They deal with completed rather than proposed transactions and are often requested for questions related to exempt organizations and employee plans. Private Letter Ruling (PLR) - ANS The IRS's written response to a taxpayer's inquiry as to how the tax law applies to a proposed transaction. $$$$ Internal Revenue Manual (IRM) - ANS Policies, procedures and guidelines governing the operations and organization of the IRS. Used by IRS employees IRS publications and forms.... - ANS are not considered substantial authority! IRS Divisions - ANS 1. Large Business & International Division 2. Small Business and Self-Employed Division 3. Wage and Investment Division 4. Tax Exempt and Government Entities Division Taxpayer Advocate Service - ANS Independent organization within IRS who can help resolve problems. Can call or use Form 911. Taxpayer has to be in immediate threat, experiencing economic harm, has had long delay, etc. BIG DEAL Practice before the IRS includes: - ANS 1. Corresponding and communicating with the IRS 2. Representing a taxpayer at conference, hearing, meetings 3. Preparing and filing DOCUMENTS with IRS 4. Providing written advice that has potential for tax avoidance or evasion NOT FILE TAX RETURNS Enrolled Practioners who represent and practice by virtue of their licensing - ANS Attorneys, CPAs, EAs (unlimited rights). Enrolled retirement plan agents, enrolled actuaries IRS office of Professional Responsibility (OPR) - ANS For matters related to practitioner conduct, discipline, disciplinary proceedings, and sanctions IRS Return Preparer Office (RPO) - ANS Responsible for issuing PTINS, acting on applications for enrollment and administering AFSP testing and continuing education Annual Filling Season Program (AFSP) - ANS Voluntary for non credentialed tax preparers. 18 hours of CE, test, PTIN, agree to be regulated by the IRS Exempt individuals from the AFSP test - ANS State based return preparer program participants, SEE Part 1 test passers, VITA/TCPE, and other accredited tax focused credential holders AFSP certificate holders can represent - ANS Before the IRS examination division only. And only for returns they themselves prepared and signed People who represent by virtue of their relationship - ANS 1. An Individual 2. A family member 3. An officer of corporation 4. A GENERAL partner 5. An employee (like a bookkeeper) 6. A fiduciary 7. Authorization for special appearance (rare, maybe military) Reasons for losing eligibility to practice - ANS Suspension or disbarment, being placed in inactive retirement status, not meeting requirements for renewal of enrollment (PTIN enrollment, CE)