Question 1

Standards for Tax Services (SSTS) contain advisory guidelines for:

Accepted Answer

A)  CPAs 
B)  enrolled agents 
C)  attorneys 
D)  IRS authorities 
E)  All of the above

Question 2

Tax evasion is:

Accepted Answer

A)  a fraudulent act involving illegal nonpayment of taxes 
B)  one of the objectives of tax planning 
C)  an act of deferring tax payments to future periods 
D)  the same as tax avoidance as both of them result in nonpayment of taxes

Question 3

State Boards of Accountancy are the organizations with responsibility to license public accountants in each state.

Accepted Answer

A) True 
 B)False

Question 4

In which of the following situations would a CPA be engaged in the unauthorized practice of law?

Accepted Answer

A)  The CPA drafts a contract for his small business client. 
B)  The CPA files a client's state tax return. 
C)  The CPA answers estate tax questions for his client. 
D)  The CPA represents his client before the IRS.

Question 5

An EA must renew his or her enrollment card on a:

Accepted Answer

A)  5-year cycle 
B)  3-year cycle 
C)  2-year cycle 
D)  Renewal is not required once an EA gets a card

Question 6

Tax compliance is the process of:

Accepted Answer

A)  filing necessary tax returns 
B)  gathering the financial information necessary to report taxable income 
C)  representing a taxpayer at an IRS audit 
D)  all of the above

Question 7

An attorney, CPA, or enrolled agent may use advertising to obtain clients under Circular 230.

Accepted Answer

A) True 
 B)False

Question 8

Explain the standards for professional services that involve tax return positions under SSTS No.1. What is the level of authority for disclosed or undisclosed positions and what types of authority can be relied upon?

Accepted Answer

The answer of Explain the standards for professional services that...

Question 9

The three categories of modern tax practice include tax planning, tax compliance, and tax research.

Accepted Answer

A) True 
 B)False

Question 10

Tax research is only required for tax planning, not preparing returns.

Accepted Answer

A) True 
 B)False

Question 11

Enrolled actuaries are allowed to practice before the IRS.

Accepted Answer

A) True 
 B)False

Question 12

To become an enrolled agent, a person must either pass a special IRS examination or must work for the IRS for at least five years.

Accepted Answer

A) True 
 B)False

Question 13

According to Circular 230, the "best practices" rules are:

Accepted Answer

A)  mandatory for all tax practitioners 
B)  restricted only to attorneys and CPAs 
C)  aspirational, to act as goals for tax practitioners 
D)  enforced by disbarment from practice before the IRS

Question 14

Due diligence, in essence, means a tax practitioner:

Accepted Answer

A)  must be efficient in performing his duties 
B)  must give due respect to IRS officials 
C)  should use reasonable effort to comply with the tax laws 
D)  should charge reasonable fees for work performed for a client

Exam 1: Introduction to Tax Practice and Ethics

Standards for Tax Services (SSTS) contain advisory guidelines for:

Tax evasion is:

State Boards of Accountancy are the organizations with responsibility to license public accountants in each state.

In which of the following situations would a CPA be engaged in the unauthorized practice of law?

An EA must renew his or her enrollment card on a:

Tax compliance is the process of:

An attorney, CPA, or enrolled agent may use advertising to obtain clients under Circular 230.

Explain the standards for professional services that involve tax return positions under SSTS No.1. What is the level of authority for disclosed or undisclosed positions and what types of authority can be relied upon?

The three categories of modern tax practice include tax planning, tax compliance, and tax research.

Tax research is only required for tax planning, not preparing returns.

Enrolled actuaries are allowed to practice before the IRS.

To become an enrolled agent, a person must either pass a special IRS examination or must work for the IRS for at least five years.

According to Circular 230, the "best practices" rules are:

Due diligence, in essence, means a tax practitioner: