P3-U04 · PART 3 · SOURCE CYCLE 2026-2027
Circular 230 and Best Practices
How to complete this unit
This unit uses 25 source-gated recall cards and 26 admissible practice questions. Complete the sequence in order; the unreleased wiki prose remains outside the learner path.
- 1 · LearnBuild the rule
Answer each recall prompt before opening it. Then learn the exact rule, test the controlling facts through four quick challenges, explore common questions, and finish with one own-words teach-back.
- 2 · ApplyUse it in context
Complete at least 20 mapped questions over two sessions. Review the explanation even when the answer is correct.
- 3 · ProveTest readiness
Use the Part 3 mock under time pressure. Return here for every flagged or missed concept before the next attempt.
Verified recall questions
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here. Stable unit ownership gathers this lesson across 1 textbook collection.
Q1.A practitioner discovers that two current clients have directly adverse positions. When may the practitioner continue both representations under Circular 230?
Both representations can be handled competently and diligently The representation is lawful Each client gives informed written consent
Q2.Two business partners ask one enrolled agent to represent both in an IRS dispute between them. What consent is required if the conflict can otherwise be competently and lawfully managed?
Informed consent confirmed in writing by each affected client. Each affected client must give informed consent confirmed in writing.
Q3.What is the exam-ready rule on information to be furnished to the IRS?
A practitioner must promptly provide properly requested records or information unless the practitioner reasonably believes the material is privileged.
Q4.What official rule governs omission or error on return, document, or affidavit?
On learning of a client's tax noncompliance, error, or omission, the practitioner must promptly advise the client and explain the consequences.
Q5.Summarize the correct treatment of rules for employing or accepting assistance from former IRS employees or disbarred/suspended persons.
A practitioner may not accept practice-related assistance from a suspended or disbarred person.
Q6.What threshold rule applies to rules regarding fees (e.g., contingent, unconscionable)?
Circular 230 prohibits an unconscionable fee and restricts contingent fees, subject to controlling law and stated exceptions.
Q7.State the controlling rule for rules for refund check negotiation.
A practitioner may not endorse or otherwise negotiate a taxpayer's federal refund check.
Q8.How should a practitioner handle rules for prompt disposition of matters before the IRS?
A practitioner may not unreasonably delay prompt disposition of a matter before the IRS.
Q9.State the controlling rule for competence, expertise, and time to handle issue.
A practitioner must possess or obtain the knowledge, skill, thoroughness, and preparation necessary for competent representation.
Q10.An enrolled agent can charge a contingent fee for services rendered in connection with which one of the following scenarios?
An IRS audit of an original tax return
Q11.Grace, an enrolled agent, represented Marley and his former business partner before the Internal Revenue Service with regard to a specific tax matter. Due to the potential conflict of interest, Grace obtained written consent from each client, waiving the conflict of interest and giving informed consent. Grace must keep those written consents for how long after the conclusion of representation?
36 Months.
Q12.Melanie is an EA and an ERO, who submits her clients' returns via IRS e-file. In order to save paper, she does not give a copy of the prepared tax return to her clients if they do not request it. Melanie allows her clients to have a copy of the return, as long as they pay a small fee. Which of the following statements is correct?
Melanie is in violation of IRC §6107.
Q13.Deangelo is an enrolled agent in the process of representing Arthur, his client, before the Internal Revenue Service for an old tax matter on a jointly-filed return. Arthur's ex-wife, Michelle, also asked Deangelo to represent her for the same matter. Which of the following is required for Deangelo to represent them both?
Both taxpayers must waive the conflict of interest with written informed consent.
Q14.Frank is an enrolled agent representing his client, who is under examination by the IRS. The IRS examiner requests certain documents from Frank about his client's business. All of the following statements regarding Frank's responsibility to provide information requested by the IRS examiner are correct except:
Frank must promptly turn over all records relating to the IRS request, no matter what the circumstances.
Q15.Maeve, an enrolled agent, buys a practice owned by Kellan, a tax preparer who is retiring. As she reviews the records from Kellan's practice, she learns Kellan has been incorrectly claiming dependents for certain clients. What should Maeve do?
Notify the clients of the error and the consequences of not correcting the error.
Q16.Constanza is an enrolled agent. Her client, Aaron, is a wealthy businessman who frequently travels on extended business trips. Aaron is planning to be outside of the United States on business for at least 9 months this year. Constanza has a properly signed power of attorney from Aaron. Which of the following actions is she permitted to do on Aaron's behalf?
Receive Aaron's refund check, but not endorse or cash the check.
Q17.Whitman is an EA who decides to advertise his fee schedule in the local newspaper. Which of the following fee arrangements is likely prohibited under the language contained in Circular 230?
Unconscionable fees for representing a taxpayer before the IRS.
Q18.Zoe is an enrolled agent who is also a notary public. Which of the following statements is correct?
Zoe cannot notarize documents for IRS matters for clients she represents before the IRS.
Q19.Circular 230 §10.35 states that a practitioner must be ____ to engage in practice before the IRS.
Competent
Q20.Keagan is a CPA and the owner of his own tax practice. Keagan has spent hours finishing the year-end bookkeeping for a client. The client has yet to pay Keagan for fees charged in connection with the bookkeeping, but the client demands a copy of the back-up file, because the client cannot prepare his tax return without it. Which of the following best describes Keagan's responsibility regarding the client's request for a copy of the spreadsheet?
The firm is under no obligation to hand over the bookkeeping file the client has not paid for, but must return the client's original records.
Q21.Which of the following is not listed as a "best practice" for practitioners in Circular 230?
Consulting other tax professionals when questions arise about a particular tax issue.
Q22.Oliver is an enrolled agent. He has a new client named Minnie, who asks him to prepare her business tax return. When he presents the return to Minnie for signature, she gets upset about the amount that she owes, and refuses to pay for the return or sign it. She demands her original records back. Which of the following statements is correct regarding Minnie's request for her original records?
Oliver must, at the request of his client, promptly return her records, regardless of fee disputes.
Q23.Which of the following statements is correct?
A practitioner may represent clients who have a conflict of interest under certain circumstances, but waivers to the conflict must be signed by both parties.
Q24.Arthur is an enrolled agent. He must, at all times, exercise due diligence when:
Preparing any document involving IRS matters.
Q25.Drake is an enrolled agent. He has a new client, Alexia, who has self-prepared her own returns in the past. Drake notices several errors on Alexia's prior-year return. What is Drake required to do?
Drake must advise Alexia about the errors and the consequences of not correcting the errors.
Ready to move on?
- ▸ Explain at least 80% of these 25 rules without opening the answer, twice on different days.
- ▸ Score 80% across 20 or more mapped questions over two sessions, not one memorized round.
- ▸ Complete a timed Part 3 mock and return to this unit if its concepts remain flagged or missed.
Use these checks to choose your next study action. They do not predict a PSI scaled score.