H&R BLOCK CHAPTER 12 ETHICS REVIEW QUESTIONS WITH ANSWERS

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