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EA part 3 Exam 1 taxpayer Questions and Answers (Graded A)
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EA: part 3 Exam 1 taxpayer Questionsand Answers
1. iEthan iclaimed ithe iEarned iIncome iTax iCredit ifor ithe ipast iseveral iyears. iThe iIRS
iaudited ihis ireturns iand idisallowed ithe iEITC iin i2019. iThe iIRS ialso ifound ithat iEthan
iclaimed ithe iEITC idue ito ireckless idisregard iof ithe iEITC irules. iFor ihow imany itax
iyears iis iEthan ibarred ifrom iclaiming ithe iEITC? iEthan icannot iclaim ithe iEITC ifor:
i
A. i1 iyear. i
B. i2 iyears.
C. i3 iyears.
D. i4 iyears. i- iCorrect iAnswers i-1. iThe ianswer iis iB. iEthan iwill inot ibe iallowed ito iclaim
ithe icredit ifor iat ileast itwo itax iyears. iThere iare ispecial irestrictions ion iEITC iclaims iby
itaxpayers iwho ihave ihad iprevious iElTC iclaims idenied. iA itaxpayer iwho iclaimed ithe
iEITC idue ito ireckless ior iintentional idisregard iof ithe iElTC irules icannot iclaim ithe iElTC
ifor itwo itax iyears. iIf ithe ierror iwas idue ito ifraud, ithe itaxpayer icannot iclaim ithe iElTC ifor
iten itax iyears.
2. iFor ithe inon-refundable i$500 i"Other iDependent iCredit," iwhich iof ithe ifollowing
iwould inot ibe ia iqualifying iperson ifor ithe ipurposes iof ithe icredit?
i
A. iA iqualifying irelative iof ithe itaxpayer, i17 iyears iand iolder. i
B. iA iqualifying ichild iwith iITIN ior iATIN.
C. iA iqualifying irelative iincluding ia itaxpayer's iaging iparent.
D. iA iqualifying ichild ithat iis ithe idependent iof ianother itaxpayer. i- iCorrect iAnswers i-2.
iThe ianswer iis iD. iA ichild ithat iis ithe iqualifying ichild iof ianother itaxpayer iwould inot ibe
ia iqualifying iperson ifor ithe inon-refundable i"Other iDependent iCredit."
3. iFor ithe iIRS ito igrant ia i"guaranteed" iinstallment iagreement, ia itaxpayer imust ihave
inot ifailed ito ifile iany iincome itax ireturns ior ipay iany itax ishown ion isuch ireturns iduring
iany iof ithe ipreceding:
i
A. i3 itaxable iyears. i
B. i5 itaxable iyears. i
C. i6 itaxable iyears.
D. i10 itaxable iyears. i- iCorrect iAnswers i-3. iThe ianswer iis iB. iFor ithe iIRS ito igrant ia
i"guaranteed" iinstallment iagreement, ia itaxpayer imust ihave inot ifailed ito ifile iany
,iincome itax ireturns ior ipay iany itax ishown ion isuch ireturns iduring ithe ipreceding i5
iyears i(question ibased ion ia ireleased iEA iexam iquestion).
4. iCircular i230 ioutlines iexpectations ifor iwritten iadvice iprovided iby ia itax ipractitioner.
iWhich iof ithe ifollowing iis ia icorrect istatement?
i
A. iA ipractitioner ican iuse ithe ipossibility iof ian iIRS iaudit ias ia ifactor iin iproviding ithe
iwritten iadvice.
B. iA ipractitioner imust inot iuse ithe ipossibility iof ian iIRS iaudit ias ia ifactor iin iproviding
ithe iwritten iadvice.
C. iDepending ion ithe iclients iindividual isituation, ia ipractitioner ican iuse ithe ipossibility iof
ian iIRS iaudit ias ia ifactor iin iproviding ithe iwritten iadvice.
D. iA ipractitioner ican iuse ithe ipossibility iof ian iIRS iaudit ias ia ifactor iin iproviding ithe
iwritten iadvice ifor iindividual itaxpayers ibut inot ifor ibusiness itaxpayers. i- iCorrect
iAnswers i-4. iThe ianswer iis iB. iCircular i230 i510.37 idetails iexpectations ifor icertain
itypes iof iwritten iadvice ia ipractitioner igives ia iclient. iWhen iissuing iwritten iadvice, ia
ipractitioner icannot itake iinto iconsideration ithe ichances ithat ia itax ireturn imay ior imay
inot ibe iaudited ior ithat ia iparticular imatter imay ior imay inot ibe iraised ion iaudit.
5. iIf ia itaxpayer iand ithe iIRS ifail ito isettle ia inon-docketed iexamination icontroversy iin
ithe iIRS iAppeals iOffice, ithe inext ievent ito ioccur iis?
i
A. iIssuance iof ia inotice iof ideficiency.
B. iIssuance iof inotice iand idemand ifor ipayment.
C. iReturn iof ithe icase ito ithe iRevenue iAgent ifor ifurther ireview. i
D. iReferral iof ithe icase ito ithe iTaxpayer iAdvocate. i- iCorrect iAnswers i-5. iThe ianswer
iis iA. iIf ia itaxpayer iand ithe iIRS ifail ito isettle ia inon-docketed iexamination icontroversy iin
ithe iIRS iAppeals iOffice, ithe inext ievent ito ioccur iis ithe iissuance iof ia inotice iof
ideficiency.
6. iWhich iof ithe ifollowing istatements iis inot icorrect iabout ibecoming ian ienrolled iagent?
i
A. iAll iapplicants imust ipass ithe ithree iparts iof ithe iSpecial iEnrollment iExamination.
B. iAll iapplicants imust ipass ia isuitability icheck. i
C. iAll iapplicants imust ibe iat ileast i18 iyears iold.
D. iAll iapplicants imust iapply ifor ienrollment iby isubmitting iForm i23. i- iCorrect iAnswers i-
6. iThe ianswer iis iA. iNot iall ienrolled iagents iare irequired ito ipass ithe iEA iexam. iThere
iare itwo ipaths ito ibecoming ian ienrolled iagent. iAn iindividual imay ireceive ithe
idesignation iby ivirtue iof ipast iemployment iwith ithe iIRS, irather ithan iby ipassing ithe
ithree-part iSpecial iEnrollment iExamination. iAn iEA icandidate imust ipossess ia iminimum
iof ifive iyears iof ipast iservice iwith ithe iIRS iand itechnical iexperience ias ioutlined iin
iCircular i230. iA icandidate imust iapply iwithin ithree iyears iof ileaving ithe iIRS.
7. iJudy iis ian ienrolled iagent. iIn i2019, ishe ifires ia iclient ifor inonpayment. iShe ihad ibeen
irepresenting ithe iclient iin ian iIRS iaudit iof itheir ibusiness. iWhat iaction ishould iJudy itake
iwith ithe iIRS iif ishe ichooses ito ipermanently iend iher irepresentation iof ithis iparticular
iclient?
i
,A. iNothing. iIt iis ithe itaxpayer's iresponsibility ito inotify ithe iIRS.
B. iShe imust icall ithe iIRS ito irevoke ithe iPOA.
C. iShe ishould iformally iwithdraw ifrom ithe iengagement iand iwrite i"WITHDRAW" iacross
ithe itop iof iForm i2848 iand isend iit ito ithe iIRS ivia imail ior ifax.
D. iShe icannot iwithdraw ifrom ian iaudit iengagement ionce ithe iaudit ihas ialready ibegun.
i- iCorrect iAnswers i-7. iThe ianswer iis iC. iJudy imust iwrite i"WITHDRAW" iacross ithe itop
iof iForm i2848 iand isend iit ito ithe iIRS ivia imail ior ifax. iIf ian ienrolled iagent ior iother
ipractitioner iwishes ito iwithdraw ifrom irepresentation iof ia iclient, ishe imust iwrite
i"WITHDRAW" iacross ithe itop iof ithe ifirst ipage iof iForm i2848, iPower iof iAttorney iand
iDeclaration iof iRepresentative, iwith ihis isignature iand ithe idate ibelow iit. iIt imust ibe
ieither imailed ior ifaxed ito ithe iIRS. iThe iform imust iclearly iindicate ithe iapplicable itax
imatters iand iperiods. iIf ia itaxpayer idecides ito irevoke ia ipower iof iattorney, ihe ior ishe
imust iwrite i"REVOKE" iacross ithe itop iof ithe iform iwith ia isignature iand ithe idate ibelow
iit. iIf ineither ithe itaxpayer inor ithe irepresentative ihas ia icopy iof ithe ipower iof iattorney, ia
istatement iof irevocation ior iwithdrawal imay ibe isent ito ithe iIRS.
8. iRory iis ia ilicensed inotary ipublic ias iwell ias ian ienrolled iagent. iRegarding iRory's
inotary icommission, iwhich iof ithe ifollowing istatements iis icorrect?
i
A. iA ifederally-authorized itax ipractitioner iis inot iallowed ito ibe ia inotary ipublic.
B. iA ifederally-authorized itax ipractitioner iis irequired ito ibe ia inotary ipublic.
C. iA ifederally-authorized itax ipractitioner icannot inotarize iany idocuments iin iwhich ihe
ihas ia imaterial iinterest iin imatters ibefore ithe iIRS.
D. iA ifederally-authorized itax ipractitioner ican ionly inotarize idocuments ifor iclients iif
ithey isign ia iwritten iconsent. i- iCorrect iAnswers i-8. ianswer iC. iUnder i510.26 iof iCircular
i230, ian ienrolled ipractitioner iis iallowed ito ibe ia inotary ipublic. iHowever, ia inotary ipublic
iwho iis iemployed ias icounsel, iattorney, ior iagent iin ia imatter ibefore ithe iIRS ior iwho ihas
ia imaterial iinterest iin ithe imatter icannot iengage iin iany inotary iactivities irelated ito ithat
imatter. iThis iincludes iall ienrolled iagents iand iother ifederally-authorized itax
ipractitioners. iIn iother iwords, iit iis ifine ithat iRory iis ia inotary, ibut ihe icannot inotarize
idocuments ifor iany iaudit iengagement iin iwhich ihe iis ialso irepresenting ithe itaxpayer.
9. iThe iIRS iOffice iof iAppeals:
i
A. iProvides ian iindependent iforum ifor itaxpayers ito iresolve itheir idisagreements iwith
ithe iIRS.
B. iActs ias ia imediator ibetween ithe iIRS iand ithe iU.S. iTax iCourt.
C. iActs ias ian iadvocate ifor ithe itaxpayer iagainst ithe icollection idivision iof ithe iIRS.
D. iAll iof ithe iabove istatements iare icorrect. i- iCorrect iAnswers i-9. iThe ianswer iis iA.
iThe iIRS iOffice iof iAppeals iprovides itaxpayers ian iindependent iforum ifor itaxpayers ito
iresolve itheir idisagreements iwith ithe iIRS. iThe iIRS iAppeals ioffice iis ian ialternative ito
igoing ito icourt. iThe irole iof iAppeals iis ito iresolve idisputes ion ia ifair iand iimpartial ibasis
ithat idoes inot ifavor ieither ithe igovernment ior ithe itaxpayer. iAppeals iofficers iare
idirected ito igive iserious iconsideration ito isettlement ioffers iby itaxpayers ior itheir
irepresentatives.
, 10. iAida iis ian ienrolled iagent iwho ie-files ian iindividual ireturn ifor iher iclient, iRolando.
iHowever, iher iclient's ie-filed ireturn iis irejected iby ithe iIRS ijust ione iday ibefore ithe
ideadline. iAida icannot iresolve ithe irejection iissue iand ithe ireturn imust ibe ifiled ion
ipaper. iIn iorder ito itimely ifile ithe itax ireturn, iwhat iis ithe ideadline ifor ifiling ia ipaper
ireturn?
i
A. iThe ioriginal idue idate iof ithe ireturn.
B. iFive icalendar idays iafter ithe idate ithe iIRS ifirst irejects ithe ie-filed ireturn.
C. iOne icalendar iday iafter ithe idate ithat ithe iIRS ifirst irejects ithe ireturn. i
D. i30 icalendar idays iafter ithe idate ithe iIRS ifirst irejected ithe ireturn. i- iCorrect iAnswers
i-10. iThe ianswer iis iB. iThe iIRS iprovides ia i"transmission iperfection iperiod" ifor irejected
ireturns. iIndividual ireturns iare igiven ia i5-day iperfection iperiod, iwhile imost ibusiness
ireturns iare igiven ia i10-day iperfection iperiod. iThe ifollowing itransmission i"perfection"
idates ipertain ito iindividual ireturns:
iApril i20, i2020 i— iLast iday ifor iretransmitting irejected itimely ifiled iForm i1040 ireturns
i(or iForm i1040-NR iwith ieffectively iconnected iincome).
iOctober i20, i2020 i— iLast iday ifor iretransmitting irejected itimely ifiled iForm i1040
ireturns i(or iForm i1040-NR iwith ieffectively iconnected iincome) ion iextension ifrom iForm
i4868.
Note: iThe i"transmission iperfection iperiod" iis inot ian iextension iof itime ito ifile; iit iis
imerely ian iallowed iperiod ito icorrect ierrors iin ia ipreviously isubmitted ie-file. iSee iIRS
iPublication i4164, iModernized ie-File iGuide, ifor imore iinformation.
11. iEnrolled iagents iare iallowed ito iassert ia ilimited ipractitioner iconfidentiality iprivilege
irelating ito:
i
A. iNoncriminal itax imatters ibrought ibefore ithe iIRS, ior inoncriminal itax iproceedings
ibrought iin ifederal icourt.
B. iNoncriminal itax imatters, iincluding icommunications iregarding itax ishelters.
C. iThe ipreparation iof itax ireturns.
D. iCriminal iand inoncriminal itax imatters ibrought ibefore ithe iIRS. i- iCorrect iAnswers i-
11. iThe ianswer iis iA. iUnder iIRC isection i7525, icommunications irelating ito itax iadvice
ibetween ian ienrolled iagent iand ia itaxpayer iare iconfidential ito ithe isame iextent ithat ithe
icommunications iwould ibe iprivileged iif ithey iwere ibetween ia itaxpayer iand ian iattorney,
iand ithe iadvice irelates ito:
iNoncriminal itax imatters ibefore ithe iIRS, ior
iNoncriminal itax iproceedings ibrought iin ifederal icourt iby ior iagainst ithe iUnited iStates.
iThis iconfidentiality iprivilege idoes inot iextend ito:
iCommunications iregarding itax ishelters.
iCommunications iin ifurtherance iof ia icrime ior ifraud. iAny icriminal imatter ibefore ithe
iIRS. io iThe ipreparation iof itax ireturns.
12. iWhich iof ithe ifollowing ienrolled itax ipractitioners ihave ithe imost ilimited iarea iof
ipractice ibefore ithe iIRS?
i
A. iEnrolled iagent.
B. iCertified ipublic iaccountant.
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