Ethics Jeopardy 2017 Kevin C. Huston, EA, USTCP

Game Board Categories: 6662 6664 The Circular File Find the “missteak” The good, the bad, and the ugly Potpourri

The Good, The Bad, and The Ugly 6662 6664 The Circular File Find The Missteak The Good, The Bad, and The Ugly Potpourri 100 200 300 400 500

Practitioner Ethics Score yourself as an individual Point levels from 100 to 500 + # Points for correct answers - # Points for incorrect answers Keep score on your game board (text cover) Keep a running total Participation in the discussion is encouraged

6662 for 100 Points This category focuses on the taxpayer accuracy related penalty under Internal Revenue Code section 6662.

6662 for 100 Points 46) The accuracy related penalty for disregarding the rules or regulations under IRC §6662 will not apply: A) If the taxpayer keeps adequate books and records, the position has a reasonable basis, and is adequately disclosed on the return. B) If it is a good faith challenge to the validity of a regulation and adequately disclosed. C) If there is reasonable cause and good faith. D) If there is substantial authority for the position. E) In any of the above.

6662 for 100 Points 46) The accuracy related penalty for disregarding the rules or regulations under IRC §6662 will not apply: A) If the taxpayer keeps adequate books and records, the position has a reasonable basis, and is adequately disclosed on the return. B) If it is a good faith challenge to the validity of a regulation and adequately disclosed. C) If there is reasonable cause and good faith. D) If there is substantial authority for the position. E) In any of the above.

Scoring: Add 100 points if you got the answer correct Subtract 100 points if you got the answer incorrect

6662 for 200 Points 49) For purposes of 6662, a disregard of the rules and regulations is careless if the taxpayer does not exercise reasonable diligence to determine the correctness of a return position that is contrary to the rule or regulation. A) True B) False

6662 for 200 Points 49) For purposes of 6662, a disregard of the rules and regulations is careless if the taxpayer does not exercise reasonable diligence to determine the correctness of a return position that is contrary to the rule or regulation. A) True B) False

Scoring: Add 200 points if you got the answer correct Subtract 200 points if you got the answer incorrect

6662 for 300 Points 3) Taxpayers are subject to a 20% accuracy related penalty under §6662 for a substantial understatement of income tax. What is a “substantial understatement of income tax”? A) Any amount over $1,000. B) The greater of 5% of the tax required to be shown on the return or $1,000. C) The greater of 10% of the tax required to be shown on the return or $5,000. D) $5,000 or more. E) $10,000 or more.

6662 for 300 Points 3) Taxpayers are subject to a 20% accuracy related penalty under §6662 for a substantial understatement of income tax. What is a “substantial understatement of income tax”? A) Any amount over $1,000. B) The greater of 5% of the tax required to be shown on the return or $1,000. C) The greater of 10% of the tax required to be shown on the return or $5,000. D) $5,000 or more. E) $10,000 or more.

Scoring: Add 300 points if you got the answer correct Subtract 300 points if you got the answer incorrect

6662 for 400 Points 45) For purposes of 6662, a disregard of the rules and regulations is reckless if the taxpayer makes little or no effort to determine whether a rule or regulation exists, under circumstances which demonstrate a substantial deviation from the standard of conduct that a reasonable person would observe. A) True B) False

6662 for 400 Points 45) For purposes of 6662, a disregard of the rules and regulations is reckless if the taxpayer makes little or no effort to determine whether a rule or regulation exists, under circumstances which demonstrate a substantial deviation from the standard of conduct that a reasonable person would observe. A) True B) False

Scoring: Add 400 points if you got the answer correct Subtract 400 points if you got the answer incorrect

6662 for 500 Points 48) For purposes of 6662, the term negligence A) Includes failure to make a reasonable attempt to comply with the Internal Revenue Code and Regulations. B) Includes failure to keep adequate books and records. C) Does not include taking a position that has a reasonable basis. D) Includes not exercising ordinary and reasonable care in the preparation of a tax return. E) All of the above.

6662 for 500 Points 48) For purposes of 6662, the term negligence A) Includes failure to make a reasonable attempt to comply with the Internal Revenue Code and Regulations. B) Includes failure to keep adequate books and records. C) Does not include taking a position that has a reasonable basis. D) Includes not exercising ordinary and reasonable care in the preparation of a tax return. E) All of the above.

Scoring: Add 500 points if you got the answer correct Subtract 500 points if you got the answer incorrect

The Circular File for 100 This category focuses on issues from Circular 230.

The Circular File for 100 17) An Annual Filing Season Program Certificate of Completion Holder may do all of the following EXCEPT: A) Represent a taxpayer for a return that the AFSP participant prepared and signed. B) Talk to a Customer Service Agent about a tax return the AFSP participant prepared and signed. C) Talk to the Taxpayer Advocate Service about a tax return the AFSP participant prepared and signed. D) Negotiate an installment agreement for a taxpayer whose tax return the AFSP participant prepared and signed.

The Circular File for 100 17) An Annual Filing Season Program Certificate of Completion Holder may do all of the following EXCEPT: A) Represent a taxpayer for a return that the AFSP participant prepared and signed. B) Talk to a Customer Service Agent about a tax return the AFSP participant prepared and signed. C) Talk to the Taxpayer Advocate Service about a tax return the AFSP participant prepared and signed. D) Negotiate an installment agreement for a taxpayer whose tax return the AFSP participant prepared and signed.

Scoring: Add 100 points if you got the answer correct Subtract 100 points if you got the answer incorrect

The good, the bad, and the ugly for 100 This category focuses on the ugly things under Circular 230 that can happen to good people when they commit bad acts.

The good, the bad, and the ugly for 100 9) All of the following conduct would NOT violate Circular 230 EXCEPT: A) Non-payment of taxes owed due to hardship. B) Late filing of tax return due to illness. C) Being wrong in a written opinion. D) Intentionally misrepresenting a taxpayer’s assets on a collection statement.

The good, the bad, and the ugly for 100 9) All of the following conduct would NOT violate Circular 230 EXCEPT: A) Non-payment of taxes owed due to hardship. B) Late filing of tax return due to illness. C) Being wrong in a written opinion. D) Intentionally misrepresenting a taxpayer’s assets on a collection statement.

Scoring: Add 100 points if you got the answer correct Subtract 100 points if you got the answer incorrect

Find the missteak for 100 This category focuses on mistakes: client mistakes as well as practitioner mistakes.

Find the missteak for 100 18) Circular 230 10.21 and the AICPA SSTS 6: Knowledge of omission or error on a return requires the tax professional to notify the taxpayer of the omission or error as well as the consequences. A) True B) False

Find the missteak for 100 18) Circular 230 10.21 and the AICPA SSTS 6: Knowledge of omission or error on a return requires the tax professional to notify the taxpayer of the omission or error as well as the consequences. A) True B) False

Scoring: Add 100 points if you got the answer correct Subtract 100 points if you got the answer incorrect

6664 for 200 This category focuses on the Preparer Penalties in Internal Revenue Code section 6664

6664 for 200 1) Tax return preparers are subject to preparer penalties under §6664 for taking an unreasonable position on a tax return. If a position is adequately disclosed on a tax return, it would not be subject to a §6664(a) penalty if it: A) Is more likely than not to be sustained on its merits. B) Has a reasonable basis C) Has a 1 in 3 chance of being sustained on its merits. D) Is not frivolous. E) Lacks substantial authority.

6664 for 200 1) Tax return preparers are subject to preparer penalties under §6664 for taking an unreasonable position on a tax return. If a position is adequately disclosed on a tax return, it would not be subject to a §6664(a) penalty if it: A) Is more likely than not to be sustained on its merits. B) Has a reasonable basis. C) Has a 1 in 3 chance of being sustained on its merits. D) Is not frivolous. E) Lacks substantial authority.

Scoring: Add 200 points if you got the answer correct Subtract 200 points if you got the answer incorrect

6664 for 100 5) A position is: A) Anything that affects the amount of tax liability. B) Anything on a tax return. C) Anything contrary to the Internal Revenue Code. D) Any offense or defense against the IRS. E) Prima Facie evidence of fraud.

6664 for 100 5) A position is: A) Anything that affects the amount of tax liability. B) Anything on a tax return. C) Anything contrary to the Internal Revenue Code. D) Any offense or defense against the IRS. E) Prima Facie evidence of fraud.

Scoring: Add 100 points if you got the answer correct Subtract 100 points if you got the answer incorrect

Potpourri for 200 Any question related to the topic of Ethics is fair game in this topic. Truly a mélange of concepts.

Potpourri for 200 27) Ethics for Tax Professionals deals with the subject of honesty and acting with integrity in dealing with taxpayers and with the taxing authorities. A) True B) False

Potpourri for 200 27) Ethics for Tax Professionals deals with the subject of honesty and acting with integrity in dealing with taxpayers and with the taxing authorities. A) True B) False

Scoring: Add 200 points if you got the answer correct Subtract 200 points if you got the answer incorrect

Potpourri for 100 29) Circular 230 10.35 states that competent practice requires the appropriate level of knowledge, skill, thoroughness,, and preparation necessary for the matter for which the practitioner is engaged. A practitioner may become competent through various methods including all BUT: A) Consulting with experts in the relevant area. B) Studying the relevant law. C) Working under the supervision of someone more experienced in the matter. D) Taking classes on the subject. E) All of the above are ways of gaining competence.

Potpourri for 100 29) Circular 230 10.35 states that competent practice requires the appropriate level of knowledge, skill, thoroughness,, and preparation necessary for the matter for which the practitioner is engaged. A practitioner may become competent through various methods including all BUT: A) Consulting with experts in the relevant area. B) Studying the relevant law. C) Working under the supervision of someone more experienced in the matter. D) Taking classes on the subject. E) All of the above are ways of gaining competence.

Scoring: Add 100 points if you got the answer correct Subtract 100 points if you got the answer incorrect

6664 for 300 51) Place these standards for positions in proper order, from lowest to highest: A) Frivolous, reasonable basis, more likely than not, substantial authority. B) Substantial authority, reasonable basis, more likely than not, frivolous. C) Frivolous, reasonable basis, substantial authority, more likely than not. D) Frivolous, reasonable basis ,more likely than not, , substantial authority.

6664 for 300 51) Place these standards for positions in proper order, from lowest to highest: A) Frivolous, reasonable basis, more likely than not, substantial authority. B) Substantial authority, reasonable basis, more likely than not, frivolous. C) Frivolous, reasonable basis, substantial authority, more likely than not. D) Frivolous, reasonable basis ,more likely than not, , substantial authority.

Scoring: Add 300 points if you got the answer correct Subtract 300 points if you got the answer incorrect

The Circular File for 200 37) According to Circular 230 10.22, A practitioner must exercise due diligence in which of the following: A) In preparing and filing tax returns. B) In preparing documents, affidavits, and other papers relating to Internal Revenue Service matters. C) In determining the correctness of oral or written representations made to the Department of the Treasury D) In determining the correctness of oral or written representations made to clients with reference to matters administered by the Internal Revenue Service. E) All of the above.

The Circular File for 200 37) According to Circular 230 10.22, A practitioner must exercise due diligence in which of the following: A) In preparing and filing tax returns. B) In preparing documents, affidavits, and other papers relating to Internal Revenue Service matters. C) In determining the correctness of oral or written representations made to the Department of the Treasury D) In determining the correctness of oral or written representations made to clients with reference to matters administered by the Internal Revenue Service. E) All of the above.

Scoring: Add 200 points if you got the answer correct Subtract 200 points if you got the answer incorrect

Find the missteak for 200 60) What is the IRS penalty for directing part of your client’s tax refund to your account as payment for your tax prep fees? A) Correct B) Incorrect

Find the missteak for 200 60) What is the IRS penalty for directing part of your client’s tax refund to your account as payment for your tax prep fees? A) Correct $500 adjusted for inflation, $510 in 2017 B) Incorrect

Scoring: Add 200 points if you got the answer correct Subtract 200 points if you got the answer incorrect

The Good, the bad, and the ugly for 200 15) Each of the following could lead to sanctions from the Office of Professional Responsibility EXCEPT: A) Knowingly and willfully misleading or threatening your client with the intent to defraud. B) Disreputable conduct in tax practice. C) A pattern of incompetence in tax practice. D) Accepting a large gift or tip from a client. E) Taking a position solely to delay the IRS.

The Good, the bad, and the ugly for 200 15) Each of the following could lead to sanctions from the Office of Professional Responsibility EXCEPT: A) Knowingly and willfully misleading or threatening your client with the intent to defraud. B) Disreputable conduct in tax practice. C) A pattern of incompetence in tax practice. D) Accepting a large gift or tip from a client. E) Taking a position solely to delay the IRS.

Scoring: Add 200 points if you got the answer correct Subtract 200 points if you got the answer incorrect

Potpourri for 300 31) In the absence of a specified time period, taxpayer consents to disclose or use tax information expire after the following time period: A) One year B) Two years C) Three years D) Six months

Potpourri for 300 31) In the absence of a specified time period, taxpayer consents to disclose or use tax information expire after the following time period: A) One year B) Two years C) Three years D) Six months

Scoring: Add 300 points if you got the answer correct Subtract 300 points if you got the answer incorrect

Potpourri for 400 33) When should a Kovel Letter be used by a tax practitioner? Describe or explain its use. A) Correct B) Not Correct

Potpourri for 400 33) When should a Kovel Letter be used by a tax practitioner? Describe or explain its use. A) Correct B) Not Correct

Scoring: Add 400 points if you got the answer correct Subtract 400 points if you got the answer incorrect

Potpourri for 500 13) Which of the following constitutes disreputable conduct by the OPR? A) Involvement in civil litigation. B) Filing bankruptcy. C) Malpractice claim. D) Conviction of a crime involving dishonesty or breach of trust. E) Failing to file an extension for your own tax return.

Potpourri for 500 13) Which of the following constitutes disreputable conduct by the OPR? A) Involvement in civil litigation. B) Filing bankruptcy. C) Malpractice claim. D) Conviction of a crime involving dishonesty or breach of trust. E) Failing to file an extension for your own tax return.

Scoring: Add 500 points if you got the answer correct Subtract 500 points if you got the answer incorrect

The Good, the bad, and the ugly for 300 11) A tax practitioner failing to file his or her own tax returns for ___ years could face suspension by the OPR. Failing to file for ___ years could result in disbarment. A) 2, 3 B) 3, 5 C) 5, 6 D) 1, 2

The Good, the bad, and the ugly for 300 11) A tax practitioner failing to file his or her own tax returns for ___ years could face suspension by the OPR. Failing to file for ___ years could result in disbarment. A) 2, 3 B) 3, 5 C) 5, 6 D) 1, 2

Scoring: Add 300 points if you got the answer correct Subtract 300 points if you got the answer incorrect

The Circular File for 300 41) Circular 230 10.51: A practitioner may be censured, suspended from practice, or disbarred for incompetence or disreputable conduct. Which of the following actions would likely NOT result in a sanction from OPR? A) Giving false or misleading information to the Department of the Treasury, such as testimony, financial statements, affidavits, declarations, and tax returns. B) Use of false or misleading representations in advertising and solicitations of employment. C) Willfully failing to file a federal tax return for yourself for several years. D) Suggesting to a client that they engage in an illegal plan to evade federal taxes. E) All of the above are likely to result in a sanction.

The Circular File for 300 41) Circular 230 10.51: A practitioner may be censured, suspended from practice, or disbarred for incompetence or disreputable conduct. Which of the following actions would likely NOT result in a sanction from OPR? A) Giving false or misleading information to the Department of the Treasury, such as testimony, financial statements, affidavits, declarations, and tax returns. B) Use of false or misleading representations in advertising and solicitations of employment. C) Willfully failing to file a federal tax return for yourself for several years. D) Suggesting to a client that they engage in an illegal plan to evade federal taxes. E) All of the above are likely to result in a sanction.

Scoring: Add 300 points if you got the answer correct Subtract 300 points if you got the answer incorrect

Find the missteak for 300 23) Circular 230 10.21 and the AICPA SSTS 6: Knowledge of omission or error on a return and Reg. 1.461-1(a)(3) requires the taxpayer to file an amended return correcting the omission or error or suffer the consequences. A) True B) False

Find the missteak for 300 23) Circular 230 10.21 and the AICPA SSTS 6: Knowledge of omission or error on a return and Reg. 1.461-1(a)(3) requires the taxpayer to file an amended return correcting the omission or error or suffer the consequences. A) True B) False

Scoring: Add 300 points if you got the answer correct Subtract 300 points if you got the answer incorrect

The Circular File for 400 41) Circular 230 10.51: A practitioner may be censured, suspended from practice, or disbarred for incompetence or disreputable conduct. Which of the following actions would likely NOT result in a sanction from OPR? A) Giving false or misleading information to the Department of the Treasury, such as testimony, financial statements, affidavits, declarations, and tax returns. B) Use of false or misleading representations in advertising and solicitations of employment. C) Willfully failing to file a federal tax return for yourself for several years. D) Suggesting to a client that they engage in an illegal plan to evade federal taxes. E) All of the above are likely to result in a sanction.

The Circular File for 400 41) Circular 230 10.51: A practitioner may be censured, suspended from practice, or disbarred for incompetence or disreputable conduct. Which of the following actions would likely NOT result in a sanction from OPR? A) Giving false or misleading information to the Department of the Treasury, such as testimony, financial statements, affidavits, declarations, and tax returns. B) Use of false or misleading representations in advertising and solicitations of employment. C) Willfully failing to file a federal tax return for yourself for several years. D) Suggesting to a client that they engage in an illegal plan to evade federal taxes. E) All of the above are likely to result in a sanction.

Scoring: Add 400 points if you got the answer correct Subtract 400 points if you got the answer incorrect

6664 for 400 ?) The best defense against an “unreasonable position” preparer penalty under §6664(a) is: A) Willful or reckless conduct. B) The taxpayer was never audited for the position in the past. C) My software allowed it. D) Reasonable cause and acting in good faith. E) Relied on taxpayer’s information and answers to your “organizer” questionnaire.

6664 for 400 ?) The best defense against an “unreasonable position” preparer penalty under §6664(a) is: A) Willful or reckless conduct. B) The taxpayer was never audited for the position in the past. C) My software allowed it. D) Reasonable cause and acting in good faith. E) Relied on taxpayer’s information and answers to your “organizer” questionnaire.

Scoring: Add 400 points if you got the answer correct Subtract 400 points if you got the answer incorrect

6664 for 500 ?) Case study: You are representing a taxpayer at an examination of a tax return you prepared. The RA believes you took an undisclosed unreasonable position without substantial authority on the return, and that you should be assessed a preparer penalty under §6664(a). Discuss your ethical responsibilities and any potential issues with regard to your representation of the taxpayer. A) Great job – hit the major points B) Not so great – missed several points.

6664 for 500 ?) Case study: You are representing a taxpayer at an examination of a tax return you prepared. The RA believes you took an undisclosed unreasonable position without substantial authority on the return, and that you should be assessed a preparer penalty under §6664(a). Discuss your ethical responsibilities and any potential issues with regard to your representation of the taxpayer. A) Great job – hit the major points B) Not so great – missed several points.

Scoring: Add 500 points if you got the answer correct Subtract 500 points if you got the answer incorrect

The Circular File for 500 39) In general, a practitioner may not charge a contingent fee for services rendered in connection with any matter before the IRS. A practitioner MAY charge a contingent fee for all of the following EXCEPT: A) An IRS examination or challenge to an original return. B) An amended return or claim for refund without written notice of examination of the return. C) An amended return or claim for refund filed within 120 days of written notice of examination of the return. D) Penalty or interest abatement. E) A practitioner may charge a contingent fee in all of the above instances.

The Circular File for 500 39) In general, a practitioner may not charge a contingent fee for services rendered in connection with any matter before the IRS. A practitioner MAY charge a contingent fee for all of the following EXCEPT: A) An IRS examination or challenge to an original return. B) An amended return or claim for refund without written notice of examination of the return. RIDGELY C) An amended return or claim for refund filed within 120 days of written notice of examination of the return. D) Penalty or interest abatement. E) A practitioner may charge a contingent fee in all of the above instances.

Scoring: Add 500 points if you got the answer correct Subtract 500 points if you got the answer incorrect

The Good, the bad, and the ugly for 400 7) The OPR is permitted to administer all of the following sanctions EXCEPT: A) Censure B) Suspension C) Disbarment D) Monetary Penalties E) Imprisonment

The Good, the bad, and the ugly for 400 7) The OPR is permitted to administer all of the following sanctions EXCEPT: A) Censure B) Suspension C) Disbarment D) Monetary Penalties E) Imprisonment

Scoring: Add 400 points if you got the answer correct Subtract 400 points if you got the answer incorrect

The Good, the bad, and the ugly for 500 42) Which of the following carries a $500 preparer penalty per return under §6695? A) Failure to sign the return. B) Direct deposit of a portion of the taxpayer’s refund into your account for tax prep fees. C) Failure to retain copy or list of returns. D) Failure to furnish preparer ID number. E) Failure to substantially prevail at an examination.

The Good, the bad, and the ugly for 500 42) Which of the following carries a $500 preparer penalty per return under §6695? A) Failure to sign the return. B) Direct deposit of a portion of the taxpayer’s refund into your account for tax prep fees. (The penalty is $510 for 2017) C) Failure to retain copy or list of returns. D) Failure to furnish preparer ID number. E) Failure to substantially prevail at an examination.

Scoring: Add 500 points if you got the answer correct Subtract 500 points if you got the answer incorrect

Find the missteak for 400 34) When aware of an error or omission on a taxpayer’s tax return, a tax preparer should do all of the following EXCEPT: A) Inform the IRS of the error or omission B) Inform the taxpayer of the error or omission C) Inform the taxpayer of the consequences of the error or omission D) Try to determine how the error occurred or who made the error

Find the missteak for 400 34) When aware of an error or omission on a taxpayer’s tax return, a tax preparer should do all of the following EXCEPT: A) Inform the IRS of the error or omission B) Inform the taxpayer of the error or omission C) Inform the taxpayer of the consequences of the error or omission D) Try to determine how the error occurred or who made the error

Scoring: Add 400 points if you got the answer correct Subtract 400 points if you got the answer incorrect

Find the missteak for 500 ?) Taxpayer makes outlandish and unreasonable claims to avoid paying taxes they owe. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their liabilities in court, no one has the right to disobey the law or disobey their responsibility to pay taxes. This is: A) Frivolous tax arguments. B) Abusive tax shelters. C) Excessive claims for fuel tax credits. D) Hiding income with fake documents. E) Offshore tax avoidance.

Find the missteak for 500 ?) Taxpayer makes outlandish and unreasonable claims to avoid paying taxes they owe. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their liabilities in court, no one has the right to disobey the law or disobey their responsibility to pay taxes. This is: A) Frivolous tax arguments. B) Abusive tax shelters. C) Excessive claims for fuel tax credits. D) Hiding income with fake documents. E) Offshore tax avoidance.

Scoring: Add 500 points if you got the answer correct Subtract 500 points if you got the answer incorrect

What is your score? Everyone with more than 1,000 points, please stand up.

What is your score? Remain standing if you have more than 2,000 points, sit down if you have less.

What is your score? Remain standing if you have more than 3,000 points, sit down if you have less.

What is your score? Remain standing if you have more than 4,000 points, sit down if you have less.

What is your score? Remain standing if you have more than 5,000 points, sit down if you have less.

What is your score? Remain standing if you have more than 6,000 points, sit down if you have less.

What is your score? Remain standing if you have more than 7,000 points, sit down if you have less.

What is your score? Remain standing if you have more than 8,000 points, sit down if you have less.