P3-U05 · PART 3 · SOURCE CYCLE 2026-2027
Practitioner Standards and Tax Advice
How to complete this unit
This unit uses 15 source-gated recall cards and 17 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 17 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.When giving written federal tax advice, what must a practitioner do with factual assumptions?
Base the advice on reasonable factual and legal assumptions. Circular 230 requires written advice to rest on reasonable factual and legal assumptions.
Q2.A client supplies an implausible forecast for a written tax opinion. What is the practitioner's Circular 230 responsibility?
Do not rely on it if that reliance would be unreasonable. Circular 230 prohibits unreasonable reliance on taxpayer representations used in written advice.
Q3.Summarize the correct treatment of practitioner supervisory responsibilities.
A practitioner with principal authority over a firm's tax practice must take reasonable steps to ensure adequate Circular 230 compliance procedures.
Q4.What should a representative verify about frivolous submissions (returns and documents)?
A practitioner may not advise a frivolous position or a submission intended to delay or impede tax administration.
Q5.Summarize the correct treatment of tax return disclosure statements.
A disclosure statement may affect a position's penalty treatment only when the governing disclosure and reasonable-basis requirements are met.
Q6.What should a representative verify about limited practitioner privilege (e.g., IRC section 7525)?
Section 7525 is a limited privilege for qualifying communications in noncriminal federal tax matters and excludes tax-shelter promotion communications.
Q7.Do Annual Filing Season Program participants have unlimited IRS practice rights?
No, unless they are also an attorney, CPA, or enrolled agent. AFSP rights are limited and exclude Appeals and collection representation.
Q8.May an unenrolled return preparer represent a client before IRS Appeals?
No. Unenrolled preparers may not represent taxpayers before appeals officers (their limited authority is confined to the examination setting described in Pub. 947).
Q9.May enrolled agents represent taxpayers before the IRS?
Yes. Enrolled agents may represent taxpayers before the IRS.
Q10.When should a practitioner not rely on the advice of another person?
When the person has a conflict of interest in the tax matter.
Q11.Joshua, an enrolled agent, is required to inform Nancy, his client, of any potential penalties that may apply to a position taken on her tax return if:
Joshua gave Nancy advice on the position.
Q12.In the “standard of review” section of Circular 230, the IRS will evaluate whether a practitioner has complied with the written advice rules of §10.37 by applying a ____ standard.
"Reasonable practitioner"
Q13.Under Circular 230, what is the responsibility of a practitioner who oversees a firm's tax practice?
To ensure the firm has adequate procedures in place to ensure compliance with all provisions of Circular 230.
Q14.Violeta is an EA with a client, Maximo, who wishes to claim a deduction for a large business expense. However, there is a question about whether the expense is "ordinary and necessary" for his business. If the deduction were later disallowed, there would be a substantial understatement of tax. Violeta believes the position has a reasonable basis, but not substantial authority. Maximo does not want to disclose the position on the return, because he is afraid that the IRS will disallow it. What are the repercussions for Violeta if the position is not disclosed and she signs the tax return?
Violeta may be liable for IRC §6694 preparer penalties.
Q15.Jonathan is an enrolled agent, and Janice is his client. What type of written advice would not be permitted under Circular 230?
Advice from Jonathan about the likelihood of getting audited by the IRS for a particular deduction.
Ready to move on?
- ▸ Explain at least 80% of these 15 rules without opening the answer, twice on different days.
- ▸ Score 80% across 17 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.