1.Vee Corp. retained Walter, CPA, to prepare its Year 6 income tax return. During the engagement, Walter discovered that Vee had failed to file its Year 2 income tax return. What is Walter's professional responsibility regarding Vee's unfiled Year 2 income tax return?
a. Consider withdrawing from preparation of Vee's Year 6 income tax return until the error is corrected.
b. Advise the IRS that Vee's Year 2 income tax return has not been filed.
c. Advise Vee that the Year 2 income tax return has not been filed and recommend that Vee ignore filing its Year 2 return since the statute of limitations has passed.
d. Prepare Vee's Year 2 income tax return and submit it to the IRS.
答案：A
Explanation
Choice "a" is correct. The CPA should consider withdrawing from the preparation of Vee's Year 6 income tax return until the error (i.e., the non-filing of the Year 2 tax return) has been corrected.
Rule: Upon discovery of an error in a previously filed return or the client's failure to file a required return, the CPA should promptly notify the client (either orally or in writing) of the error, noncompliance, or omission and advise the client of the appropriate measures to be taken (e.g., advise the client to file the tax return). If the client does not rectify the error, the CPA should consider withdrawing from the engagement.
Choice "d" is incorrect, as the CPA has no responsibility (without a formal client engagement) or the authority to prepare and file a client's tax return.
Choice "c" is incorrect, as a CPA cannot advise a client to disobey the law because it violates a CPA's ethical responsibilities.
Choice "b" is incorrect, as a CPA has no responsibility to advise the IRS of any client wrongdoing.
2.A tax return preparer is subject to a penalty for knowingly or recklessly disclosing corporate return information, if the disclosure is made:
a. To enable the tax processor to electronically compute the taxpayer's liability.
b. To enable a third party to solicit business from the taxpayer.
c. Under an administrative order by a state agency that registers tax return preparers.
d. For peer review.
答案：B
Explanation
3.Choice "b" is correct. Use of a taxpayer's return information to assist a third party to solicit business subjects a return preparer to penalty.
Choice "a" is incorrect. Disclosure can properly be made in this case by a return preparer without penalty.
Choice "d" is incorrect. Disclosure can properly be made in this case by a return preparer without penalty.
Choice "c" is incorrect. Disclosure can properly be made in this case by a return preparer without penalty.
A tax return preparer may disclose or use tax return information without the taxpayer's consent to:
a. Be evaluated by a quality or peer review.
b. Accommodate the request of a financial institution that needs to determine the amount of taxpayer's debt to it, to be forgiven.
c. Solicit additional nontax business.
d. Facilitate a supplier's or lender's credit evaluation of the taxpayer.
答案：A
Explanation
Choice "a" is correct. A tax return preparer may disclose or use tax return information without the taxpayer's consent to be evaluated by a quality or peer review.
Choices "d", "b", and "c" are incorrect. They would all require the taxpayer's consent.
4.A tax return preparer may disclose or use tax return information without the taxpayer's consent to:
a. Be evaluated by a quality or peer review.
b. Accommodate the request of a financial institution that needs to determine the amount of taxpayer's debt to it, to be forgiven.
c. Solicit additional nontax business.
d. Facilitate a supplier's or lender's credit evaluation of the taxpayer.
答案：A
Explanation
Choice "a" is correct. A tax return preparer may disclose or use tax return information without the taxpayer's consent to be evaluated by a quality or peer review.
Choices "d", "b", and "c" are incorrect. They would all require the taxpayer's consent.
5.Which of the following acts by a CPA will not result in a CPA incurring an IRS penalty?
a. Understating a client's tax liability as a result of an error in calculation.
b. Failing, without reasonable cause, to provide the client with a copy of an income tax return.
c. Failing, without reasonable cause, to sign a client's tax return as preparer.
d. Negotiating a client's tax refund check when the CPA prepared the tax return.
答案：A
Explanation
Choice "a" is correct. The IRS does not impose a penalty on a CPA for making an error in calculating a tax return.
Choice "b" is incorrect. A CPA must give his or her client a copy of the client's tax return or face imposition of a penalty.
Choice "c" is incorrect. A CPA must sign tax returns that the CPA prepares. Willful violation of this rule can result in imposition of a penalty.
Choice "d" is incorrect. A CPA is prohibited from negotiating a client's refund check.
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