H&R BLOCK CHAPTER 12 ETHICS LATEST UPDATE GRADED A+

H&R BLOCK CHAPTER 12 ETHICS LATEST UPDATE GRADED A+ An IRS examination and verification of a taxpayer's return or other transactions with tax consequences. A correspondence audit is a tax audit that the IRS performs by mail. An office audit is an audit by the IRS which is conducted in the agent's office. A field audit is conducted by the IRS on the business premises of the taxpayer or in the office of the tax practitioner representing the taxpayer. AUDIT Regulations governing the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and appraisers before the IRS. CIRCULAR 230 A monetary penalty that can be assessed by the IRS or state or local taxing authority. Civil penalties are generally based on the amount of the understated tax, unpaid tax, or tax due. CIVIL PENALTY IRS penalty assessed in cases where the taxpayer has willfully engaged in criminal conduct. Penalties may be monetary or incarceration. CRIMINAL PENALTY The release of tax information by an IRS employee. DISCLOSURE Reasonable steps taken by a tax preparer in order to satisfy compliance with the tax law and ensure that a tax return is correct. DUE DILIGENCE Failure or refusal to comply with the Tax Code. NONCOMPLIANCE Any tax return preparer who is not a signing tax return preparer, but who prepares all or a substantial portion of a return or claim for refund with respect to events that have occurred at the time the advice is rendered. NON SIGNING RETURN PREPARER Protection from being required to disclose confidential communications between two parties, such as attorney and client. PRIVILEGE Official interpretations of the Tax Code by the IRS Commissioner. They do not have the force and effect of law, except in those cases in which the law on a particular subject calls for rules on that subject to be expounded through regulations. REGULATIONS The individual tax return preparer that has the primary responsibility for the overall substantive accuracy of the preparation of the return or claim for refund. Signing Return Preparer An objective standard involving an analysis of the law and application of the law to the relevant facts. Substantial Authority Standard A tax preparer who is not an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary authorized to practice before the IRS. Unenrolled Tax Preparer The IRS is under the immediate direction of the Commissioner of Internal Revenue who is appointed for a five-year term by the President of the United States. Paid tax preparers should make notes to include any explanation or additional information. Most tax preparation software provides the ability for tax preparers to include such notes TRUE The contemporaneous records requirement pertains to information that the IRS may need to understand the taxpayer's circumstances. In the words of an IRS speaker at a recent IRS forum, "If it isn't documented, it didn't happen!" TRUE Tax preparers may want to use this form to educate clients about eligibility for EIC, as it clearly shows the documents a taxpayer will be required to produce during such an audit. Form 886- H-EIC Tax preparers may not ignore the implications of information furnished to, or known by, them and must make reasonable inquiries if the information they gather or know appears to be incorrect, inconsistent, and/or incomplete. TRUE The IRS requires that you document the questions and answers asked about the significant issues on the return, especially on a return that includes a significant benefit from EITC, CTC/ODC/ACTC, AOTC, and the use of the head of household filing status. TRUE Tax preparers are expected to know the law pertaining to any position taken on a tax return, including rulings from various authorities about that law. The TRUE It is not the tax preparer's responsibility to "audit" taxpayer records. Applying due diligence is not auditing — it is the process through which a thorough interview culminates in an accurate and complete return. TRUE If a taxpayer intentionally gives information to deceive the IRS, this behavior is . . . FRAUD If a taxpayer does not have receipts or documentation for business expenses and refuses to reconstruct them or obtain substitute records, can you sign the return? NO may the taxpayer instruct their tax preparer to refuse to share specific communications and information with the government. YES In specific circumstances, tax preparers may disclose confidential tax return information. The taxpayers are related parties and: The first taxpayer's interest in the information is not adverse to the second taxpayer. TRUE A tax preparer must release a joint return to either or both spouses named as the taxpayers, because the return belongs to each spouse. TRUE A tax return preparer must: Not neglect or refuse to submit available records and information upon a lawful and proper request by the IRS. TRUE A tax return preparer can refuse to submit available records and information upon a lawful and proper request by the IRS. FALSE Generally, requests from the IRS are sent directly to the taxpayer rather than to the tax preparer. Thus, the tax preparer will not know of the request unless the taxpayer brings it to their attention. TRUE IS A RELATIONSHIP WITH A CUSTOMER A CONFLICT OF INTEREST YES IS IT A GOOD IDEA TO REPRESENT BOTH PARTIES OF A DIVORCED COUPLE NO The tax practitioner should not voluntarily inform