REG - Ethics Notes / Flashcards

Teo has a private company audit client. He also provides it with tax services. For which of the following services may he charge a contingent fee and still be in compliance with Circular 230 1) A claim for refund filed in connection with a determination of statutory interest or penalities     2) Representing the client in judicial proceedings

Components of IRS practitioner duties: 1) furnish requested information promptly 2) exercising due dilgence 3) not unreasonably delaying IRS matters

Not a TRP: (Tax Return Preparer) Furnishes typing of other mechanical assistance, Prepares form for regular employer, prepares form as a fiduciary

a TRP is someone who: 1) is paid to prepare or retain employees to prepare a substantial portion of any federal tax return or refund claim

Can't take "unreasonable positions" : 1)No "substantial authority (40% chance) for position 2) No "reasonable basis" (20% chance) for disclosed position 3) Not "more likely than not" (50% chance) for tax shelter position

CPA induced several rich tax clients to invest in a domesticated beaver tax shelter device. When the IRS sought to audit one of Monrew's clients, he realized that among other difficulties, he had not had the client sign a backdated document. When the gov discovered all this, Monrew was indicted for tax fraud in violation of section 7206. Which of the following is true.   Monrew is probably guilty. Monrew clearly willfully aided in the preparation of a tax related document which was fraudulently backdated.

When an auditor's recklessness is manifested in repeated defective audits, what might happen? Misconduct or incompetence by a CPA may invite punishment by all relevant regulatory agencies & professional societies.

A client suing a CPA for negligence must prove each of the following factors except: Reliance         The elements of a negligence cause of action are, Duty, breach of duty, suffered compensatable injuries, and break of proximity.

The intent, or sci-enter, element necessary to establish a cause of action for fraud will be met if the plaintiff can show that the: Defendant made a misrepresentation with a reckless disregard for the truth. Under the position taken by a majority of the courts, who which third parties will an accountant who negligently prepares a clients financial report be liable? Any foreseen or known third party who relied on the report

 Under the "Ultramares" rule, to which of the following parties will an accountant be liable for negligence? The "Ultramares" rule, established in a 1931 case, requires privity before an accountant is liable for negligence.