Ethics & Circular 230
Part 3 · 11 study cards · Active recall format
Q1.What is Circular 230?
Treasury Department Circular No. 230 governing practice before the IRS. Applies to attorneys, CPAs, Enrolled Agents, Enrolled Actuaries, and others representing taxpayers before the IRS.
0Q2.What is the due diligence penalty per failure under Section 6695 for 2025?
$650 per failure
0Q3.What are key tested duties and restrictions for an EA under Circular 230?
Due diligence (Section 10.22) No unreasonable delay (Section 10.23) Conflicts of interest require informed written consent when waivable (Section 10.29) Best practices (Section 10.33) Standards for returns and submissions (Section 10.34) Competence (Section 10.35) Written advice standards (Section 10.37) No unconscionable fees (Section 10.27)
0Q4.In which three matters must a practitioner exercise due diligence under Circular 230 §10.22?
preparing or assisting with IRS returns and documents correctness of representations made to IRS correctness of representations made to clients
Q5.What must a practitioner do after learning that a client omitted income or otherwise failed to comply with federal tax law?
promptly advise the client of the noncompliance error or omission advise the client of the consequences under the Code and regulations no Circular 230 duty to disclose the error directly to IRS
Q6.When may a practitioner represent clients despite a conflict of interest?
reasonable belief that competent and diligent representation is possible representation is not prohibited by law each affected client gives informed consent confirmed in writing written confirmation obtained within 30 days consent retained for at least 36 months after representation ends
Q7.What factual and legal standards apply when a practitioner gives written federal tax advice?
reasonable factual assumptions reasonable legal assumptions consider all relevant known or reasonably knowable facts make reasonable efforts to ascertain relevant facts relate applicable law and authorities to the facts no unreasonable reliance on client or third-party representations
Q8.What may a practitioner not consider when evaluating a federal tax position in written advice?
likelihood the return will be audited likelihood the issue will be raised on audit
Q9.What four requirements must a paid preparer satisfy for EITC, CTC/ACTC/ODC, AOTC, or head-of-household due diligence?
complete and submit Form 8867 complete the applicable credit computation worksheet meet the knowledge requirement retain required records for 3 years
Q10.What sanctions may Treasury impose for incompetence or disreputable conduct under Circular 230?
censure suspension disbarment monetary penalty disqualification from appraising property for federal tax purposes
Q11.Which practitioner conduct may trigger discipline under Circular 230 §10.51?
conviction of a federal tax crime crime involving dishonesty or breach of trust willful failure to file a federal tax return willful tax evasion misappropriation of client funds false or misleading information to Treasury attempting to influence an IRS employee by threats coercion or bribery aiding unauthorized practice
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