Enrolled Agent Part 3 True or False Exam Questions with Verified Answers
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Course
EA - Enrolled Agent
Institution
EA - Enrolled Agent
Preparing a tax return, furnishing information at the request
of the Internal Revenue Service, or appearing as a witness
for the taxpayer is considered practice before the Internal
Revenue Service - Answer-False
Michael Smith is an Enrolled Agent with an office that
employees 4 other Enrolle...
Enrolled Agent Part 3 True or False
Exam Questions with Verified Answers
Preparing a tax return, furnishing information at the request
of the Internal Revenue Service, or appearing as a witness
for the taxpayer is considered practice before the Internal
Revenue Service - Answer-False
Michael Smith is an Enrolled Agent with an office that
employees 4 other Enrolled Agents. Kimberly Wilson is a
CPA who was suspended from practice for 1 year by the
Office of Professional Responsibility. Kimberly knows Michael
and asks him for employment for the one-year period
of suspension. Michael employs Kimberly for the sole purpose
of corresponding and communicating with the Internal
Revenue Service on issues arising for Michael's clients.
Michael is allowed to employ Kimberly because the suspension
is for less than 2 years, Kimberly is limited to corresponding
and communicating with the Internal Revenue
Service and the clients are really Michael's not Kimberly's. - Answer-False
Only under very limited circumstances, as described in
the instructions to Form 2848, may a taxpayer authorize an
Attorney, CPA or Enrolled Agent to receive and endorse a
refund check on behalf of the taxpayer. - Answer-False
Mary Pecan, a CPA, prepared a tax return for a client. The
return contained a frivolous position that could not be defended
under any circumstances. The examiner who conducted
the examination made a referral to the Office of
Professional Responsibility. After all procedural requirements
have been met; the Office of Professional Responsibility
will make a final, binding decision as to the appropriate
sanction for Mary. - Answer-False
Dave operates a retail business as a sole proprietorship
with stores in several locations in the Toledo, Ohio area.
The books and records for all of the stores are maintained
at the main store near his residence. Dave's tax returns
have always been prepared by his long time accountant in
Toledo. Dave has been notified that his 2004 1040 has
been selected for an examination. Dave's brother-in-law in
Detroit, Michigan, a district away, has just passed the Enrolled
Agent's examination and Dave's wife would like him
, to handle the examination. The Internal Revenue Service
will likely approve a transfer to the Detroit office, provided a
properly executed form 2848 is submitted with the request. - Answer-False
Ruth's 2002 and 2003 returns were examined for investment
expenses. Both examinations resulted in no change
to the return as filed. Ruth was notified that her 2004 return
was selected for examination for investment expenses.
Since Ruth has two prior no change audits, she should
notify the Internal Revenue Service, to see if the examination
should be discontinued. - Answer-True
A representative qualified to practice before the Internal
Revenue Service cannot prepare or sign a formal written
protest on behalf of a client to request an appeals conference. - Answer-False
Joseph received a bill from the Internal Revenue Service
for additional tax due of $2,000 plus accrued interest of
$300. If Joseph pays the $2,000 tax in full, this will stop
the accrual of any additional interest. - Answer-False
Brittany's 2003 return was selected for an examination.
Information was requested to support claimed business
expenses. Brittany failed to provide the Internal Revenue
Service with any of the requested information because
she felt the examination was an unwarranted invasion of
her privacy. The Internal Revenue Service issued a Notice
of Deficiency and Brittany filed a petition with the Tax
Court. Since the examination was started after July 22,
1998, the Internal Revenue Service will have the burden
of proof in the Tax Court Proceedings. - Answer-False
In the process of examining or collecting your tax liability
the Internal Revenue Service may contact third parties.
The Internal Revenue Service must give the taxpayer reasonable
notice before making any inquiries of third parties
such as neighbors, banks, employers, and other employees.
This notification must include the specific names
of those it intends to contact. - Answer-False
An accuracy related penalty of 20% of the underpayment
of tax can be asserted if you understate your income tax
because of negligent acts or a disregard of the rules or
regulations. Negligent acts include the failure to keep adequate
books and records. - Answer-True
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