Enrolled Agent Examination Topics – Part 3 Representation, Practices and Procedures (100 Items)

Section 1: Practices and Procedures (33 items)
Section 2: Representation before the IRS (25 items)
Section 3: Specific Types of Representation (25 items)
Section 4: Completion of the Filing Process (17 items)

Section 1: Practices and Procedures (33 items)

Becoming an enrolled agent
What constitutes practice before the IRS
Categories of individuals who may practice
Enrollment cycle
Period of enrollment
Effective date of renewed enrollment
Enrollment card or other credentials
How to appeal a denial of an application for enrollment
Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled
Agents, Enrolled Actuaries, and Appraisers before the IRS (Treasury Department
Circular 230)

Requirements for Enrolled Agents
What information to be furnished to the IRS
When to advise a client about an omission or error on any return, document, or affidavit
Rules for employing or accepting assistance from disbarred or suspended persons and
former IRS employees
Rules for restriction on advertising and solicitation and fee information
Concept of due diligence for return accuracy
Concept of conflict of interest
Rules for refund check negotiation
Requirements for tax shelter opinions
Standards for tax return positions and preparing returns
CPE requirements
Scope of authority – Tax court petitions
Effective records
Covered opinions
Tax shelters
Tax avoidance vs. tax evasion
Conference and practice requirements

Sanctions against Enrolled Agents
What constitutes disreputable conduct, which can result in a disciplinary proceeding
Sanctions imposed by OPR against Enrolled Agents
Contents of a complaint filed against an individual, service of complaint and demand for
answer requirements
How a proceeding against an individual in violation of regulations governing practice
before the IRS is instituted
Procedural rules for conducting proceedings for disqualification
Disciplinary appeal process
Criteria for public disclosures for active and disqualified persons
Types of penalties (e.g., negligence, substantial understatement, overvaluation)
Frivolous submissions (returns and documents)
Fraudulent transactions
Badges of fraud

Penalties
Assessment and appeal procedures for preparer penalties
Penalties to be assessed by the IRS against a preparer for negligent or intentional
disregard of rules and regulations, and for a willful understatement of liability
Preparer’s due diligence
Rules for furnishing a copy of a return to a taxpayer
Rules for signing returns and furnishing identifying numbers
Rules for keeping copies or lists of returns prepared
Rules for filing an information return concerning employees engaged or employed during
a return period
Rules for the preparer penalty involving the earned income credit
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Section 2: Representation before the IRS (25 items)

Power of attorney
Acting in place of the taxpayer
Signature authority (e.g., extension of assessment period, closing agreement)
Limitations of authority granted to enrolled agent (e.g. acts authorized)
Prohibition for negotiating taxpayer refund check (e.g. cannot cash or deposit)
Prohibition for signing tax returns
Requirements for power of attorney (Form 2848)
Alternate forms of power of attorney (durable)
Rules for client privacy and consent to disclose
Purpose of filing a tax information authorization
Requirements to be met when changing or dropping representatives
When notices and refund checks may be delivered to recognized representatives
Purpose of a Centralized Authorization File number

Building the taxpayer’s case–Preliminary work
What the taxpayer’s issue is (e.g. type, details)
Potential for criminal aspects
Competence, expertise and time to handle issue
Taxpayer willingness to sign power of attorney
Conflict of interest

Taxpayer tax information
Income (taxable and non-taxable)
Expenses (deductible, allowable and personal)
Transcripts from IRS
Documentation requirements (e.g., pay stubs, bank statements)
Documentation required (e.g., receipts, invoices)

Taxpayer financial situation
Taxpayer’s ability to pay the tax (e.g., installment agreements, offer in compromise)
General financial health (e.g., filed for bankruptcy, lawsuits, and garnishments)
Form 433A/B/F
Lifestyle and life issues of taxpayer
Cash flow and assets (Cash-T, receipts and disbursements)
Asset fair market value and associated liabilities
Third-party research (e.g., property assessment for municipal taxes; asset values, state
and local tax information)

Supporting documentation
Financial documents (e.g., cancelled checks or equivalent, bank statements, credit card
statements, receipts)
Legal documents (e.g., birth certificate, divorce decrees, lawsuit settlements)
Prior and subsequent tax returns
Other substantive and contemporaneous documentation (e.g., mileage log, corporate
minutes)
Employment reimbursement policies
Business entity supporting documents (e.g., partnership agreement, corporate bylaws)
Brokerage records or individual stock transaction

Legal authority and references
Internal Revenue Code
Treasury regulations
Revenue rulings
Revenue procedures
IRS notices
Case law
IRS publications
Private letter rulings
Form instructions
Internal Revenue Manual
Authoritative source material versus non-authoritative source material

Related issues
Statute of limitations
Post-filing correspondence (e.g., math error notices, under reporting notices)
Deadlines and timeliness requirements
Third-party correspondence (e.g., witness communications, employment records)
Requests for information related to specific issues (e.g., clarification on a tax issue)
Freedom of Information Act requests
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Section 3: Specific Types of Representation (25 items)

Representing a taxpayer in the Collection process
Extension of time to pay
Installment capability
Offer in compromise (e.g., doubt as to liability, collectiblility or effective tax administration)
Miscellaneous options (e.g., collection statute end date, collection statute extension date,
trust fund recovery penalties, backup withholding)
Collection appeals program (e.g., denial of installment agreements, discharge
applications)
Collection due process (e.g., lien and levy)

Penalties and/or interest assessed
Penalties and interest
Basis for having penalties avoided, abated, or refunded
Reasonable cause
Interest abatement
Interest recalculation

Representing a taxpayer in audits/examinations
IRS authority to investigate
Verification and substantiation of entries on the return
IRS opportunity to disagree with filings
IRS authority to fix time and place of investigation
Steps in the process (e.g., initial meeting, submission of IRS requested information)
Innocent spouse
Interpretation of revenue agent report (RAR) (e.g., 30-day letter)
Explanations of taxpayer options (e.g. agree or appeal)
Special procedures for partnership audits (e.g., unified audit procedures for TEFRA)

Representing a taxpayer before Appeals
Protests
Right to appeal revenue agent findings
Request for appeals consideration (e.g., preparation, elements contained)
Enrolled Agent appearance at appeals conference
Settlement function of the appeals process
Issuance of 90-day letter

Higher levels of representation beyond the scope of EA representation
Tax Court
U.S. District Courts and U.S. Claims Court
U.S. Courts of Appeals and U.S. Supreme Court
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Section 4: Completion of the Filing Process (17 items)

Accuracy
Using tax software
Inconsistencies with the source data
Miscalculations
Recognition of duplicate entries
Alternative minimum tax issues
Need to read diagnostics
Matching inputs and outputs across forms

Information shared with taxpayer
Record-keeping requirements
Significance of signature (e.g., joint and several liability, penalty of perjury)
Non-taxable income (e.g., combat pay, inheritance)
Consequences of dishonesty

Concerning all tax preparers – regulations and sanctions
Definition of income tax return preparers

Record maintenance
Length of time
Length of time to keep income and employment tax records
The components of the list (name, social security number, and type of return)
EITC due diligence requirements
Rules for returning a client’s records and documents

Electronic filing
How to apply to be an e-file provider (e.g., e-services)
Electronic return requirements
Definition of a refund anticipation loan (RAL) indicator
Advertising standards
Definition of EFIN
Definition of ERO
Levels of infractions
Compliance requirements to continue in program (e.g. timely filing, timely payment, and
absence of infractions)
Appeal process
Forms 8879 and 8453
Rejected returns and resolution (e.g. client notification)

 

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