1. In cases where any part of the understatement of the tax liability is due to a willful attempt by the return preparer to understate the liability, or if the understatement is due to reckless or intentional disregard of the rules or regulations by the tax preparer, the prepare is subject to a

A. $5,000 penalty.
B. Penalty of 50% of income derived or to be derived.
C. $1,000 penalty.
D. Greater or A or B above.

2. A penalty will not be imposed on any part of an underpayment if there was reasonable cause for your position and you acted in good faith in taking that position. However, if you failed to keep proper books and records or failed to substantiate items properly, you

A. Can avoid the penalty by disclosure.
B. Cannot avoid the penalty by disclosure.
C. Cannot file Form 8275-R.
D. Should just pay the preparer penalty.

3. The penalty for reckless or intentional disregard of a regulation may be avoided by disclosure only if the position represents a good faith challenge to the validity of the regulation and has a reasonable basis. Generally, the accurate-related penalty of any portion of a tax underpayment attributable to negligence or disregard of rules or regulations is

A. 10%.
B. 20%.
C. 40%.
D. 50%.

4. An understatement is the excess of the amount of tax required to be shown on the return over the amount of tax shown on the return for the tax year, reduced by any rebates. There is an substantial understatement if the amount of the understatement for any year exceeds

A. 10% of the tax required to be shown on the return for the tax year.
B. $5,000 ($10,000 for a corporation).
C. $10,000,000.
D. The greater of A or B above.

5. Any individual engaged in limited practice before the IRS who is involved in disreputable conduct may be

A. Disbarred or suspended, or censured.
B. Dismissed.
C. Jailed.
D. Forced to meet with the IRS.

6. The following un-enrolled individual can represent the specified taxpayers before the IRS, provided this individual presents satisfactory identification.

A. A family member.
B. An Officer of a Corporation.
C. An employee representing employer.
D. Any of the Above.

7. In general, individuals who are not eligible or who have lost the privilege as a result of certain actions cannot practice before the IRS. If an individual loses eligibility to practice, his or her power of attorney will be

A. Discarded.
B. Return to him by certified mail.
C. Will not be recognized by the IRS.
D. (As long as he files one) recognized by the IRS.

8. As for negotiation of taxpayer refund checks, Practitioners who are income tax return preparers (un-enrolled) 

A. Can endorse any refund check issued to the taxpayer.
B. Must not endorse or otherwise negotiate (cash) any refund check issued to the taxpayer.
C. Can negotiate (cash) any refund check issued to the taxpayer.
D. Both A and C above.

9. Being convicted of any criminal offense under the revenue laws or of any offense involving dishonesty or breach of trust is

A. Acceptable conduct if offense was committed in a state other than the one you practice in.
B. Alright as long as it does not directly involve your client.
C. Not considered disreputable conduct.
D. Considered disreputable conduct.

10. Who presides over a hearing on a complaint for disbarment based on a violation of the laws or regulations governing practice before the IRS?

A. The Commissioner of the IRS.
B. Office of Professional Responsibility.
C. A United States Tax Court Judge.
D. The Secretary of the Treasury.

11. An appeal from the initial decision ordering disbarment is made to which of the following:

A. The Secretary of the Treasury.
B. The Administrative Law Judge.
C. Office of Professional Responsibility.
D. The United States Tax Court.

12. Individuals can lose their eligibility to practice before the IRS by

A. Not meeting the requirements for renewal of enrollment (such as continuing professional education).
B. Requesting to be placed in an inactive retirement status.
C. Being suspended or disbarred by state authorities to practice as an attorney or certified public accountant.
D. Any of the above.

13. A practitioner who knows that his or her client has not complied with the revenue laws or has made an error or omission in any return,

A. Has the responsibility to advise the client promptly of the noncompliance.
B. Has the responsibility to advise the client of the consequences of the noncompliance.
C. Has to do what the client tells him to do even if it is against the law.
D. Both A and B above.

14.  An un-enrolled return preparer is permitted to appear as your representative only before customer service representatives, revenue agents, and examination officers, with respect to an examination regarding the return he or she prepared. An un-enrolled tax return preparer can

A. Represent a taxpayer before other offices of the IRS, such as collection or appeals including the Automated Collection System (ACS) unit.
B. Execute closing agreements or waivers.
C. Extend the statutory period for tax assessments or collection of tax.
D. None of the above.

15. If the un-enrolled tax return preparer does not meet the requirements for limited representation he or she will be limited to receiving or inspecting your taxpayer information. 

True False

16. Preparing a tax return, furnishing information at the request of the IRS, or appearing as a witness for the taxpayers is considered practice before the IRS.

True False

17. The following is considered practice before the IRS

A. Communicating with the IRS for a taxpayer regarding the taxpayer's rights, privileges, or liabilities under laws and regulations administered by the IRS.
B. Representing a taxpayer at conferences, hearings, or meetings with the IRS.
C. Preparing and filing documents with the IRS for a taxpayer or corresponding and communicating with the IRS.
D. All of the above.

18. A power of attorney is not required in some situations when dealing with the IRS. The following situation does require a power of attorney. 

A. Authorizing the disclosure of tax return information through Form 8821.
B. Allowing the IRS to discuss return information with a third party designee.
C. Representing a taxpayer through a non written consent.
D. None of the above.

19. After a valid power of attorney is filed, the IRS will recognize your representative. However, if it appears the representative is responsible for unreasonably delaying or hindering the prompt disposition of an IRS matter by failing to furnish, after repeated requests, non-privileged information, the IRS can contact the taxpayer directly. If the representative engages in such conduct, the matter can be referred to the Office of Professional Responsibility for consideration of possible disciplinary action.                       

True False

20. The one responsible for administering and enforcing the regulations governing practice before the IRS is

A. The Centralized Authorization File (CAF) System.
B. The enrolled agent.
C. The Office of Professional Responsibility.
D. The Society of Enrolled Agents.