Asked by Bianca Benincasa on Jul 07, 2024
Verified
Which of the following statements is correct?
A) Individuals who prepare their own tax returns are subject to Circular 230.
B) Under Circular 230,contingent fees are permitted if disclosed in writing.
C) Paid preparers must inform the client if the client has made an error in a document submitted to the IRS.
D) All of the statements are correct.
Circular 230
A set of regulations governing tax professionals who represent taxpayers before the IRS, ensuring practitioners meet ethical and practice standards.
Tax Returns
Documents filed with the IRS that report income, expenses, and other pertinent tax information. Tax returns determine tax liability or refund eligibility for an individual or company.
Contingent Fees
Fees for services, such as legal representation, that are payable only if a particular outcome is achieved.
- Identify and explain different aspects of tax regulations and their implications.
Verified Answer
CV
Christopher ValadezJul 10, 2024
Final Answer :
C
Explanation :
According to Circular 230, paid preparers are required to inform the client if the client has made an error in a document submitted to the IRS. Option A is incorrect because individuals who prepare their own tax returns are not subject to Circular 230. Option B is incorrect because under Circular 230, contingent fees are prohibited except in certain cases and only if disclosed in writing. Therefore, option C is the only statement that is correct.
Learning Objectives
- Identify and explain different aspects of tax regulations and their implications.