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EA Part 3 Exam with correct Answers
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EA Part 3 Exam with correct AnswersWhich iof ithe ifollowing ipractitioners ihas ithe imost ilimited iarea iof ipractice ibefore ithe
iIRS? i- iCorrect iAnswers i-Explanation: iA itax ipreparer iwho ihas ionly icompleted ithe
iAFSP ihas ithe imost ilimited iarea iof ipractice ibefore ithe iIRS. iEnrolled iagents, iCPAs,
iand iattorneys iall ihave ia iwider irange iof ipractice ibefore ithe iIRS.
Correct ianswer: iA itax ipreparer iwho ihas ionly icompleted ithe iAFSP.
With iregards ito isanctions imade iagainst itax iprofessionals, iwhat itype iof isanction iwill
iNOT ibe iimposed iby ithe iIRS's iOffice iof iProfessional iResponsibility i(OPR)?
disbarment
suspension
incarceration
censure i- iCorrect iAnswers i-Explanation: iOPR isanctions iinclude idisbarment,
isuspension, iand icensure. iAlthough ia itax ipreparer imay ibe isubject ito icriminal
iprosecution iin isome icases, ithe iOPR iwould inot ibe iresponsible ifor iapplying ithis
ipenalty.
Correct ianswer: iIncarceration.
An ienrolled iagent iis ieligible ito ipractice ibefore: i- iCorrect iAnswers i-Explanation: iAn
ienrolled iagent ican irepresent itaxpayers ibefore iall ilevels iof ithe iIRS iin iall i50 istates.
iEnrolled iagents, ilike iattorneys iand icertified ipublic iaccountants i(CPAs), iare
iunrestricted ias ito iwhich itaxpayers ithey ican irepresent, iwhat itypes iof itax imatters ithey
ican ihandle, iand iwhich iIRS ioffices ithey ican irepresent iclients ibefore. iHowever,
ienrolled iagents ido inot ihave ipractice irights ibefore ithe iU.S. iTax iCourt ior iany iother
iU.S. icourt.
Correct ianswer: iAll ilevels iof ithe iIRS.
Which iof ithe ifollowing iis icorrect iabout iForm i2848, iPower iof iAttorney iand iDeclaration
iof iRepresentative? i- iCorrect iAnswers i-Explanation: iIn isigning iForm i2848, ia
irepresentative imust ideclare ithat ihe iis inot icurrently isuspended ior idisbarred ifrom
ipractice ibefore ithe iIRS. iA irepresentative ialso imust ideclare ithat ihe iis isubject ito ithe
iregulations iin iCircular i230 ithat igovern ipractice ibefore ithe iIRS. iThe ideclaration iis
isigned iunder ipenalties iof iperjury.
Correct ianswer: iA irepresentative imust ideclare ithat ihe iis inot icurrently isuspended ior
idisbarred ifrom ipractice ibefore ithe iInternal iRevenue iService.
,The iOPR iserves ia iformal icomplaint iof idisreputable iconduct ion ian ienrolled iagent.
iHow ilong idoes ihe ihave ito irespond ito ithe icomplaint? i- iCorrect iAnswers i-Explanation:
iA isanctions' icomplaint iby ithe iOPR imust ispecify ia idate iby iwhich ithe ipractitioner iis
irequired ito irespond. iThe idate imust ibe iat ileast i30 idays iafter ithe icomplaint iis iserved.
Correct ianswer: iAt ileast i30 idays.
A itaxpayer imay iapply ifor ian iEIN ionline iif itheir iprincipal ibusiness iis ilocated iin: i-
iCorrect iAnswers i-Explanation: iA itaxpayer imay iapply ifor ian iEIN ionline iif itheir iprincipal
ibusiness iis ilocated iin ithe iUnited iStates ior iin iany iU.S. iTerritory. iThe iperson iapplying
ionline imust ihave ia ivalid iTaxpayer iIdentification iNumber.
Correct ianswer: iThe iUnited iStates ior iin iany iU.S. iTerritory.
Madison iis ian ienrolled iagent iwho iowns iher iown itax ipractice iand ihas iseveral itax
ipreparers iwho iwork ifor iher. iShe ispends ia iconsiderable iamount iof itime ihiring,
isupervising, itraining, iand ievaluating iher iemployees. iWhich iof ithe ifollowing istatements
iis icorrect, iper iCircular i230 i§10.22? i- iCorrect iAnswers i-Explanation: iUnder iCircular
i230 i§10.22, ia ipractitioner iwill ibe ipresumed ito ihave iexercised idue idiligence iif ishe
irelies ion ithe iwork iproduct iof ianother iperson, iassuming ithat ishe iused i"reasonable
icare" iin iengaging, isupervising, itraining, iand ievaluating ithat iperson.
Correct ianswer: iMadison ican ibe ipresumed ito ihave iexercised idue idiligence iif ishe
irelies ion ithe iwork iproduct iof iher ipreparers.
What iis ithe irequired iprocess ifor ibecoming ian ienrolled iagent? i- iCorrect iAnswers i-
Explanation: iThere iare itwo iways ito ibecome ian ienrolled iagent. iThe icandidate imust
ihave ieither ipassed ia ispecial iIRS iexam ior ihave iworked ifor ithe iIRS ifor iat ileast i5
iyears.
Correct ianswer: iHave ieither ipassed ia ispecial iIRS iexam ior ihave iworked ifor ithe iIRS
ifor iat ileast i5 iyears.
Which iof ithe ifollowing istatements iis icorrect iregarding ia iclient's irequest ifor irecords? i-
iCorrect iAnswers i-Explanation: iUnder iCircular i230 i§10.28, ia ipractitioner iis irequired ito
ireturn ia iclient's ioriginal irecords iupon irequest, iwhether ior inot ihis ifees ihave ibeen ipaid.
iThe ipractitioner imust, iat ithe irequest iof ithe iclient, ipromptly ireturn iany iand iall irecords
ithat iare inecessary ifor ithe iclient ito icomply iwith ihis ifederal itax iobligations. iThe
ipractitioner imust ialso iallow ithe iclient ireasonable iaccess ito ireview iand icopy iany
iadditional irecords iretained iby ithe ipractitioner ithat iare inecessary ifor ithe iclient ito
icomply iwith ihis ifederal itax iobligations. iThe ipractitioner iis iallowed ito iretain icopies iof
ithe irecords ireturned ito ia iclient. iThis irequirement iwould igenerally inot iapply ito ithe itax
ipractitioner's iwork iproduct, isuch ias ia icompleted icopy iof ia itax ireturn, iunless ithe iclient
ihas ialready ipaid ifor iit.
Correct ianswer: iThe ipractitioner imust, iat ithe irequest iof ithe iclient, ipromptly ireturn ithe
irecords iof ithe iclient.
Frank iis ian ienrolled iagent. iHe ihas ia inew iclient ithis iyear, iDiana, iwho iis iself-employed
iand imay ireceive irefundable icredits. iWhat iis iFrank's iresponsibility ifor iverifying ithe
,iinformation ifurnished iby iDiana, iwhen ipreparing iher itax ireturn? i- iCorrect iAnswers i-
Explanation:
Under iCircular i230 i§10.34, ia ipractitioner iis igenerally inot irequired ito iverify ithe
iinformation ifurnished iby ihis iclients iwhen ipreparing itheir iincome itax ireturns. iA
ipractitioner:
Can irely iin igood ifaith iwithout iverification iof iinformation ithat ia iclient iprovides.
Should inot iignore ithe iimplications iof ithe iinformation.
Should imake ireasonable iinquiries iif ithe iinformation iappears ito ibe iincorrect,
iinconsistent, ior iincomplete.
Correct ianswer: iHe ican irely ion igood ifaith iwithout iverification iof iinformation ithat iDiana
iprovides, ibut ihe imust imake ireasonable iinquiries iif ithe iinformation iappears ito ibe
iincorrect, iinconsistent, ior iincomplete.
Salma iis ian ienrolled iagent iwho iwants ito iincrease iher ibusiness iby ilaunching ia inew
iadvertising icampaign. iShe iis iprohibited ifrom iusing ithe iterm i_____________ ito
idescribe iher iprofessional idesignation. i- iCorrect iAnswers i-Explanation: iIn idescribing
itheir iprofessional idesignation, ienrolled iagents icannot iuse ithe iterm i"certified" ior iimply
iany itype iof iemployment irelationship iwith ithe iIRS. iExamples iof iacceptable
idescriptions ifor iEAs iare i"enrolled ito irepresent itaxpayers ibefore ithe iInternal iRevenue
iService", i"enrolled ito ipractice ibefore ithe iInternal iRevenue iService", iand i"admitted ito
ipractice ibefore ithe iInternal iRevenue iService".
Correct ianswer: i"Certified iEnrolled iAgent"
Noah iis ian ienrolled iagent. iHis iclient, iTammy, iis ia ifarmer iwho iis iself-employed.
iTammy isubmits ia ispreadsheet iof iexpenses ito ibe iclaimed ion iSchedule iF iof iher
ireturn. iNoah iis irequired ito ido iwhich ione iof ithe ifollowing? i- iCorrect iAnswers i-
Explanation: iNoah imust imake iappropriate iinquiries ito idetermine iwhether ithe iclient
ihas isubstantiation ifor iher iSchedule iF iexpenses. iA ipractitioner iis inot irequired ito
iindependently iexamine ievidence iof ideductions. iHe imay irely iin igood ifaith, iwithout
iverification, iupon iinformation ifurnished iby ithe itaxpayer iif iit idoes inot iappear ito ibe
iincorrect ior iincomplete. iHowever, ithe ipractitioner imust imake ireasonable iinquiries
iabout ithe ivalidity iof ithe iinformation.
Correct ianswer: iNoah imust imake iappropriate iinquiries ito idetermine iwhether ithe iclient
ihas isubstantiation ifor iher iSchedule iF iexpenses.
EAs iwho ido inot icomply iwith ithe icontinuing ieducation irequirements ifor irenewal iof
ienrollment iwill ibe icontacted iby ithe iReturn iPreparer iOffice. iHow imuch itime idoes ithe
iEA ihave ito irespond ito ithe iRPO? i- iCorrect iAnswers i-Explanation: iEnrolled iagents
iwho ifail ito icomply iwith ithe irequirements ifor ieligibility ifor irenewal iof ienrollment iwill ibe
inotified iby ithe iReturn iPreparer iOffice iby ifirst iclass imail. iThe inotice iwill iexplain ithe
ireason ifor inoncompliance. iThe ienrolled iagent ihas i60 idays ifrom ithe idate iof ithe inotice
ito irespond.
Correct ianswer: i60 idays ifrom ithe idate iof ithe inotice.
, Under iCircular i230 i§10.51, ithe iOffice iof iProfessional iResponsibility ispecifies imany
iinstances iin iwhich ia ipractitioner imight ibe isanctioned ifor iincompetence ior
idisreputable iconduct. iAll iof ithe ifollowing iare ilisted iexcept: i- iCorrect iAnswers i-
Explanation: iAlthough ihiring ia isuspended ior idisbarred ipractitioner iis igrounds ifor
idiscipline, ihiring ian iindividual iwho ihas ibeen icensured iby ithe iIRS iis inot ia
isanctionable ioffense.
Correct ianswer: iHiring ian iemployee iwho ihas ibeen icensured iby ithe iIRS.
Some itax icredits iinclude iextra idue idiligence irequirements ifor itax ipreparers. iWhich iof
ithe ifollowing icredits irequire iadditional idue idiligence irequirements? i- iCorrect iAnswers
i-Explanation: iThe iAmerican iOpportunity iTax iCredit iincludes iadditional idue idiligence
irequirements. iA itax ipreparer ihas ifour idue idiligence irequirements irelated ito iEITC,
iAOTC, iand iACTC iclaims. iThe iTax iCuts iand iJobs iAct iamended iIRC isection i6695 ito
iadd idue idiligence irequirements ifor ithe ihead iof ihousehold i(HOH) ifiling. iA ipreparer
imust icomplete iand isubmit ito ithe iIRS iForm i8867, iPaid iPreparer's iDue iDiligence
iChecklist.
Correct ianswer: iAmerican iOpportunity iTax iCredit.
A itaxpayer iwho ihas ia ispecific iquestion iregarding itax ilaw imay irequest iwhich iof ithe
ifollowing? i- iCorrect iAnswers i-Explanation: iA itaxpayer iwho ihas ia ispecific iquestion
iregarding itax ilaw imay irequest ia iprivate iletter iruling i(PLR) ifrom ithe iIRS. iA iPLR iis ia
iwritten istatement iissued ito ia itaxpayer ithat iinterprets iand iapplies itax ilaws ito ithe
itaxpayer's ispecific icase. iIt iis iissued ito icommunicate ithe itax iconsequences iof ia
iparticular itransaction ibefore ithe itransaction iis iconsummated ior ibefore ithe itaxpayer's
ireturn iis ifiled.
Correct ianswer: iA iPrivate iLetter iRuling.
Jarvis ihas isubstantial itax idebt ifrom iprior itax iyears. iThe iIRS iplaces ia itax ilein ion ihis
ihome. iJarvis iis icurrently iunemployed ibecause iof ia isevere iinjury, iso ihe ifiles ian iOffer
iin iCompromise iunder i"doubt iof icollectibity". iThe iIRS iaccepts ihis iOIC. iCan iJarvis
ihave ithe itax ilein ion ihis ihome iremoved? i- iCorrect iAnswers i-Explanation: iYes, iJarvis
ican ihave ithe itax ilien iremoved, ibecause ihis ioffer iwas iaccepted iby ithe iIRS. iAn iIRS
ilien iwill ibe ireleased iif ia itaxpayer's ioffer i(OIC) iis iaccepted iand ithe iagreed ioffer
iamount ihas ibeen ipaid iin ifull. i(Question imodified ifrom ithe iIRS' iofficial iwebpage ion
iOffer iin iCompromise iFAQ).
Correct ianswer: iYes, iJarvis ican ihave ithe itax ilien iremoved iafter ithe iOIC iis iaccepted
iby ithe iIRS.
Among ithe ifollowing itypes iof iTreasury iregulations, iwhich ihas ithe ihighest idegree iof
iauthority? i- iCorrect iAnswers i-Explanation: iTreasury iregulations iare ithe iU.S. iTreasury
iDepartment's iofficial iinterpretations iof ithe iInternal iRevenue iCode. iThere iare ithree
itypes iof iTreasury iregulations: ilegislative, iinterpretive, iand iprocedural. iLegislative
iregulations iare icreated iwhen iCongress iexpressly idelegates ithe iauthority ito ithe
iTreasury isecretary ior ithe icommissioner iof ithe iIRS ito iprovide ithe irequirements ifor ia
ispecific iprovision iof ithe iIRC. iA ilegislative iregulation ihas ia ihigher idegree iof iauthority
ithan ian iinterpretive iregulation ior ia iprocedural iregulation.
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