Enrolled Agent (EA) Exam Part 3: Representation, Practices &
Procedures Study Guide 2 versions
This comprehensive study resource is a premium test bank engineered for tax
professionals preparing for the Internal Revenue Service (IRS) Special Enrollment
Examination (SEE) Part 3. It delivers high-yield practice questions, verified answers,
and detailed step-by-step regulatory rationales fully updated for the 2026/2027
testing cycle and Treasury Department Circular 230 rules. Mastering these premium
materials ensures deep competence across taxpayer representation guidelines, IRS
audit practices, appeals procedures, and professional ethical standards to help you
secure your federal credentials on your very first attempt.
QUESTION 1
An enrolled agent is asked to represent a taxpayer in a Collection Due Process (CDP)
hearing. The taxpayer wants to challenge the underlying tax liability. Under what
circumstances may the taxpayer raise the underlying liability?
A. The taxpayer may always challenge the underlying liability in a CDP hearing.
B. The taxpayer may challenge the underlying liability only if they did not receive a
statutory notice of deficiency or did not otherwise have an opportunity to dispute the
liability.
C. The taxpayer may challenge the underlying liability only if they have new evidence.
D. The taxpayer may never challenge the underlying liability in a CDP hearing.
Correct Answer: B
Rationale: Under IRC §6330(c)(2)(B), a taxpayer may challenge the existence or amount of
the underlying tax liability in a CDP hearing only if they did not receive a statutory notice
of deficiency or did not otherwise have an opportunity to dispute the liability. If they had a
prior opportunity, the CDP hearing is limited to collection issues.
,QUESTION 2
An EA is representing a taxpayer before the IRS Appeals Office. The Appeals officer
proposes a settlement based on the hazards of litigation. The taxpayer refuses the
settlement. What happens next?
A. The Appeals officer must accept the taxpayer's position.
B. The case is returned to the examination function for further development.
C. The taxpayer must petition the Tax Court.
D. The Appeals officer will issue a notice of deficiency.
Correct Answer: D
Rationale: If the taxpayer refuses the Appeals officer's settlement, the Appeals Office will
typically issue a notice of deficiency (90-day letter) if the case originated from an
examination, allowing the taxpayer to petition the Tax Court. The case is not
automatically returned to examination (B), nor must the officer accept the taxpayer's
position (A).
QUESTION 3
An EA is preparing a return for a client who claims the Earned Income Tax Credit (EIC).
Which of the following is a required due diligence step?
A. Obtain a written statement from the client's employer verifying income.
B. Complete and retain Form 8867, Paid Preparer's EIC Checklist.
C. Verify the client's income with the IRS.
D. Obtain a copy of the client's credit report.
Correct Answer: B
Rationale: Due diligence for EIC claims requires the preparer to complete Form 8867 and
retain it for three years. The preparer must also interview the client and document the
information used. The preparer is not required to verify income with the IRS (C) or obtain a
credit report (D).
,QUESTION 4
An EA is asked to represent a taxpayer who has received a Notice of Federal Tax Lien.
The taxpayer wants to request a CDP hearing. What form must be filed?
A. Form 2848
B. Form 12153
C. Form 8821
D. Form 9423
Correct Answer: B
Rationale: Form 12153, Request for a Collection Due Process or Equivalent Hearing, is
used to request a CDP hearing after a Notice of Federal Tax Lien is filed or a Notice of
Intent to Levy is issued.
QUESTION 5
An EA is representing a taxpayer in an audit. The IRS issues a 30-day letter proposing
adjustments. The taxpayer disagrees. What is the taxpayer's next step?
A. Petition the Tax Court.
B. Request an Appeals conference.
C. File an amended return.
D. Pay the proposed deficiency.
Correct Answer: B
Rationale: The 30-day letter gives the taxpayer the right to request an Appeals conference
within 30 days. If the taxpayer does not request an Appeals conference or agree to the
adjustments, the IRS will issue a 90-day letter (statutory notice of deficiency), which allows
the taxpayer to petition the Tax Court.
, QUESTION 6
An EA is advising a client on the accuracy-related penalty. The client took a position on a
return that lacked substantial authority but had a reasonable basis. What must the client
do to avoid the penalty?
A. Disclose the position on Form 8275.
B. Obtain a second opinion.
C. File an amended return.
D. Notify the IRS in writing.
Correct Answer: A
Rationale: To avoid the accuracy-related penalty for a position that lacks substantial
authority but has a reasonable basis, the taxpayer must adequately disclose the position
on Form 8275, Disclosure Statement. A second opinion (B) is not required.
QUESTION 7
An EA is asked to prepare a return for a client who is a nonresident alien. The client has
U.S. source income. Which form must the client file?
A. Form 1040
B. Form 1040-NR
C. Form 1040-SS
D. Form 1040-PR
Correct Answer: B
Rationale: Nonresident aliens with U.S. source income must file Form 1040-NR, U.S.
Nonresident Alien Income Tax Return.
Procedures Study Guide 2 versions
This comprehensive study resource is a premium test bank engineered for tax
professionals preparing for the Internal Revenue Service (IRS) Special Enrollment
Examination (SEE) Part 3. It delivers high-yield practice questions, verified answers,
and detailed step-by-step regulatory rationales fully updated for the 2026/2027
testing cycle and Treasury Department Circular 230 rules. Mastering these premium
materials ensures deep competence across taxpayer representation guidelines, IRS
audit practices, appeals procedures, and professional ethical standards to help you
secure your federal credentials on your very first attempt.
QUESTION 1
An enrolled agent is asked to represent a taxpayer in a Collection Due Process (CDP)
hearing. The taxpayer wants to challenge the underlying tax liability. Under what
circumstances may the taxpayer raise the underlying liability?
A. The taxpayer may always challenge the underlying liability in a CDP hearing.
B. The taxpayer may challenge the underlying liability only if they did not receive a
statutory notice of deficiency or did not otherwise have an opportunity to dispute the
liability.
C. The taxpayer may challenge the underlying liability only if they have new evidence.
D. The taxpayer may never challenge the underlying liability in a CDP hearing.
Correct Answer: B
Rationale: Under IRC §6330(c)(2)(B), a taxpayer may challenge the existence or amount of
the underlying tax liability in a CDP hearing only if they did not receive a statutory notice
of deficiency or did not otherwise have an opportunity to dispute the liability. If they had a
prior opportunity, the CDP hearing is limited to collection issues.
,QUESTION 2
An EA is representing a taxpayer before the IRS Appeals Office. The Appeals officer
proposes a settlement based on the hazards of litigation. The taxpayer refuses the
settlement. What happens next?
A. The Appeals officer must accept the taxpayer's position.
B. The case is returned to the examination function for further development.
C. The taxpayer must petition the Tax Court.
D. The Appeals officer will issue a notice of deficiency.
Correct Answer: D
Rationale: If the taxpayer refuses the Appeals officer's settlement, the Appeals Office will
typically issue a notice of deficiency (90-day letter) if the case originated from an
examination, allowing the taxpayer to petition the Tax Court. The case is not
automatically returned to examination (B), nor must the officer accept the taxpayer's
position (A).
QUESTION 3
An EA is preparing a return for a client who claims the Earned Income Tax Credit (EIC).
Which of the following is a required due diligence step?
A. Obtain a written statement from the client's employer verifying income.
B. Complete and retain Form 8867, Paid Preparer's EIC Checklist.
C. Verify the client's income with the IRS.
D. Obtain a copy of the client's credit report.
Correct Answer: B
Rationale: Due diligence for EIC claims requires the preparer to complete Form 8867 and
retain it for three years. The preparer must also interview the client and document the
information used. The preparer is not required to verify income with the IRS (C) or obtain a
credit report (D).
,QUESTION 4
An EA is asked to represent a taxpayer who has received a Notice of Federal Tax Lien.
The taxpayer wants to request a CDP hearing. What form must be filed?
A. Form 2848
B. Form 12153
C. Form 8821
D. Form 9423
Correct Answer: B
Rationale: Form 12153, Request for a Collection Due Process or Equivalent Hearing, is
used to request a CDP hearing after a Notice of Federal Tax Lien is filed or a Notice of
Intent to Levy is issued.
QUESTION 5
An EA is representing a taxpayer in an audit. The IRS issues a 30-day letter proposing
adjustments. The taxpayer disagrees. What is the taxpayer's next step?
A. Petition the Tax Court.
B. Request an Appeals conference.
C. File an amended return.
D. Pay the proposed deficiency.
Correct Answer: B
Rationale: The 30-day letter gives the taxpayer the right to request an Appeals conference
within 30 days. If the taxpayer does not request an Appeals conference or agree to the
adjustments, the IRS will issue a 90-day letter (statutory notice of deficiency), which allows
the taxpayer to petition the Tax Court.
, QUESTION 6
An EA is advising a client on the accuracy-related penalty. The client took a position on a
return that lacked substantial authority but had a reasonable basis. What must the client
do to avoid the penalty?
A. Disclose the position on Form 8275.
B. Obtain a second opinion.
C. File an amended return.
D. Notify the IRS in writing.
Correct Answer: A
Rationale: To avoid the accuracy-related penalty for a position that lacks substantial
authority but has a reasonable basis, the taxpayer must adequately disclose the position
on Form 8275, Disclosure Statement. A second opinion (B) is not required.
QUESTION 7
An EA is asked to prepare a return for a client who is a nonresident alien. The client has
U.S. source income. Which form must the client file?
A. Form 1040
B. Form 1040-NR
C. Form 1040-SS
D. Form 1040-PR
Correct Answer: B
Rationale: Nonresident aliens with U.S. source income must file Form 1040-NR, U.S.
Nonresident Alien Income Tax Return.
