R4.2 - Professional Responsibilities & Tax-Preparer Penalties Questions and
Correct Answers
1. what is the general rule for monetary fines? ANSWERS they are always limited ’if the answer
choice says "unlimited monetary fines" then it is WRONG
2. 2 reasons we would punish a tax preparer ANSWERS 1) they did not comply with tax
laws/regulations
2) they were unethical ’we're trying to protect the taxpayers
3. who is a *tax return preparer*?
who is authorized to prepare federal tax returns?
is a CPA license required to be a tax return preparer? ANSWERS any person who prepare
or employs others to prepare (for compensation):
’any required federal tax return; or
’any claim for federal tax refund
could be ’anyone with a PTIN ’attorneys, CPAs, EAs, annual filing season program participants
*CPA license is not required to be a tax return preparer*
4. who is NOT a *tax return preparer*? (4) ANSWERS anyone who ...
’INTERNS = merely furnishes typing, reproducing, or other mechanical assistance (data entry, solicit client information,
copies, mailing)
’prepares a return or claim for refund for an EMPLOYER
(ex ANSWERS preparing your company's payroll tax
returns)
’prepares a return or claim for refund as a FIDUCIARY (trustee, estate)
’volunteers to prepare tax returns under a Volunteer Income Tax Assistance (VITA) program ’they aren't getting
compensated for it
5. are these ppl tax return preparers or not?
A) Bob works in the accounting department for a retail company and does
the payroll, including preparing, signing, and filing the company's payroll tax
,R4.2 - Professional Responsibilities & Tax-Preparer Penalties Questions and
Correct Answers
returns.
, R4.2 - Professional Responsibilities & Tax-Preparer Penalties Questions and
Correct Answers
B) Christina is employed as a staff accountant at a CPA firm and prepares
business income tax returns. Her manager reviews and signs the returns
C) Evan works in the accounting department for a construction company and
prepares, signs, and files Form 1099s for the independent contractors who
work for the company.
D) Frank is a tax manager for a CPA firm. A staff accountant at the firm prepared
amended returns for Frank's client. Frank reviewed and signed the amended
return.
E) Howard prepared a spreadsheet for his friend's small business, calculat-
ing the business taxable income and explain to his friend how to prepare a
partnership return. His friend filed and signed the return, and compensated
Howard. ANSWERS A) NO since he's preparing a return for his employer
B) YES since she prepares a substantial portion of the return (even tho she doesn't sign it)
C) NO since he's preparing a return for his employer
D) YES since he is signing them and has the primary responsibility for that client
B) YES since she prepares a substantial portion of the return (even tho she doesn't sign it)
6. what is the advantage of having a license as a tax preparer? ANSWERS enrolled
agents, CPAs, and attorneys have *unlimited representation rights* before the IRS
*can represent clients on ANY matters, including audits, payment/collection issues, and appeals*
PTIN holders with no license ’can only prepare tax returns (generally cannot represent clients before the IRS)
7. who is required to register with the IRS and obtain a PTIN?
what does the PTIN allow you to do?
Correct Answers
1. what is the general rule for monetary fines? ANSWERS they are always limited ’if the answer
choice says "unlimited monetary fines" then it is WRONG
2. 2 reasons we would punish a tax preparer ANSWERS 1) they did not comply with tax
laws/regulations
2) they were unethical ’we're trying to protect the taxpayers
3. who is a *tax return preparer*?
who is authorized to prepare federal tax returns?
is a CPA license required to be a tax return preparer? ANSWERS any person who prepare
or employs others to prepare (for compensation):
’any required federal tax return; or
’any claim for federal tax refund
could be ’anyone with a PTIN ’attorneys, CPAs, EAs, annual filing season program participants
*CPA license is not required to be a tax return preparer*
4. who is NOT a *tax return preparer*? (4) ANSWERS anyone who ...
’INTERNS = merely furnishes typing, reproducing, or other mechanical assistance (data entry, solicit client information,
copies, mailing)
’prepares a return or claim for refund for an EMPLOYER
(ex ANSWERS preparing your company's payroll tax
returns)
’prepares a return or claim for refund as a FIDUCIARY (trustee, estate)
’volunteers to prepare tax returns under a Volunteer Income Tax Assistance (VITA) program ’they aren't getting
compensated for it
5. are these ppl tax return preparers or not?
A) Bob works in the accounting department for a retail company and does
the payroll, including preparing, signing, and filing the company's payroll tax
,R4.2 - Professional Responsibilities & Tax-Preparer Penalties Questions and
Correct Answers
returns.
, R4.2 - Professional Responsibilities & Tax-Preparer Penalties Questions and
Correct Answers
B) Christina is employed as a staff accountant at a CPA firm and prepares
business income tax returns. Her manager reviews and signs the returns
C) Evan works in the accounting department for a construction company and
prepares, signs, and files Form 1099s for the independent contractors who
work for the company.
D) Frank is a tax manager for a CPA firm. A staff accountant at the firm prepared
amended returns for Frank's client. Frank reviewed and signed the amended
return.
E) Howard prepared a spreadsheet for his friend's small business, calculat-
ing the business taxable income and explain to his friend how to prepare a
partnership return. His friend filed and signed the return, and compensated
Howard. ANSWERS A) NO since he's preparing a return for his employer
B) YES since she prepares a substantial portion of the return (even tho she doesn't sign it)
C) NO since he's preparing a return for his employer
D) YES since he is signing them and has the primary responsibility for that client
B) YES since she prepares a substantial portion of the return (even tho she doesn't sign it)
6. what is the advantage of having a license as a tax preparer? ANSWERS enrolled
agents, CPAs, and attorneys have *unlimited representation rights* before the IRS
*can represent clients on ANY matters, including audits, payment/collection issues, and appeals*
PTIN holders with no license ’can only prepare tax returns (generally cannot represent clients before the IRS)
7. who is required to register with the IRS and obtain a PTIN?
what does the PTIN allow you to do?
