#1
What is the role of a tax representative?
To provide legal representation in tax-related matters
ExplanationLegal representation in tax matters.
#2
Which of the following professionals can represent a taxpayer before the IRS?
Certified Public Accountant (CPA)
ExplanationCPA representation before IRS.
#3
What is the primary purpose of tax planning?
To minimize tax liability within the boundaries of the law
ExplanationMinimizing tax within legal limits.
#4
Which of the following is NOT typically a responsibility of a tax professional?
Providing investment advice
ExplanationExclusion: Investment advice.
#5
What is the difference between tax avoidance and tax evasion?
Tax avoidance is legal, while tax evasion is illegal
ExplanationLegal vs illegal tax practices.
#6
What is Circular 230?
A tax regulation governing representation standards
ExplanationRegulation governing representation.
#7
What is the Enrolled Agent (EA) designation?
A designation for individuals who have passed a comprehensive IRS exam
ExplanationDesignation for IRS exam passers.
#8
What does the acronym 'IRS' stand for?
Internal Revenue Service
ExplanationInternal Revenue Service acronym.
#9
Which of the following penalties may be imposed for tax evasion?
Civil fines and imprisonment
ExplanationPenalties: Fines and jail.
#10
What does the acronym 'CPA' stand for in the context of tax representation?
Certified Public Accountant
ExplanationCPA definition.
#11
When might a taxpayer need to hire a tax attorney?
To represent them in a criminal tax investigation
ExplanationRepresentation in criminal tax cases.
#12
What is the statute of limitations for IRS to audit a tax return?
5 years
ExplanationAudit time limit: 5 years.
#13
What is the purpose of a tax treaty between two countries?
To prevent double taxation of income
ExplanationPrevent double taxation.
#14
What is the purpose of the Schedule C form in U.S. tax filings?
To report self-employment income and expenses
ExplanationSelf-employment income and expenses reporting.
#15
What is the purpose of IRS Form 8829?
To report rental income and expenses
ExplanationRental income and expenses reporting.