IRS Enrolled Agent Exam (SEE) — All Questions

Treasury Circular 230 governs:

• a.The calculation of the standard deduction
• b.The depreciation of business assets
• c.The rules of practice before the IRS by enrolled agents and other practitioners✓
• d.The interest rate on tax refunds

Circular 230 sets the ethical and professional standards for practitioners, including enrolled agents, attorneys, and CPAs, who practice before the IRS. It covers due diligence, fees, conflicts of interest, and grounds for sanctions.

Enrolled agents are distinguished by having:

• a.Unlimited rights to represent any taxpayer on any tax matter before any IRS office✓
• b.Authority to practice only before the Tax Court
• c.The ability to represent only individual, not business, taxpayers
• d.No authority to receive confidential taxpayer information

Enrolled agents, like attorneys and CPAs, hold unlimited representation rights before the IRS, meaning they may represent any taxpayer on any type of tax matter before any IRS office. This is broader than the limited rights of some other preparers.

Which form authorizes a practitioner to represent a taxpayer and act on the taxpayer's behalf before the IRS?

• a.Form 8821, Tax Information Authorization
• b.Form 2848, Power of Attorney and Declaration of Representative✓
• c.Form W-9, Request for Taxpayer Identification Number
• d.Form 941, Employer's Quarterly Federal Tax Return

Form 2848 grants a power of attorney, authorizing the practitioner to represent the taxpayer and act on their behalf. Form 8821 only allows a person to receive and inspect confidential tax information; it does not authorize representation.

A taxpayer who receives a statutory notice of deficiency and disagrees with it may generally challenge the tax without first paying it by petitioning:

• a.The U.S. District Court
• b.The U.S. Court of Federal Claims
• c.The Supreme Court directly
• d.The U.S. Tax Court✓

The U.S. Tax Court is the only forum where a taxpayer can litigate a deficiency without first paying the disputed tax, by filing a petition within the period stated in the statutory notice of deficiency. The District Court and Court of Federal Claims generally require paying the tax and suing for a refund.

Under Circular 230, when a practitioner discovers an error or omission on a client's return, the practitioner must:

• a.Promptly advise the client of the error and its consequences✓
• b.Immediately amend the return without telling the client
• c.Report the client to the IRS
• d.Ignore it unless the IRS asks

Circular 230 requires a practitioner who learns of an error or omission to promptly advise the client of it and of the consequences under the law. The practitioner cannot correct the return without the client's consent, but must inform the client.

A paid tax return preparer is required to:

• a.Guarantee the client a refund
• b.Sign the return and provide a valid Preparer Tax Identification Number (PTIN)✓
• c.Retain the taxpayer's original documents permanently
• d.Represent the client for free in any audit

Paid preparers must sign returns they prepare and include a valid PTIN, and they must meet due-diligence and recordkeeping duties. They may not guarantee refunds, and they return original documents to the client.

The IRS Independent Office of Appeals exists to:

• a.Prepare returns for taxpayers who cannot afford a preparer
• b.Collect unpaid taxes through liens and levies
• c.Provide an impartial review of disputes between taxpayers and the IRS✓
• d.Set the annual tax rates and brackets

The Independent Office of Appeals offers taxpayers an impartial, independent review of proposed adjustments, aiming to resolve disputes without litigation. Collection functions, not Appeals, handle liens and levies, and Congress sets tax rates.