1. Kay has worked with Hunter as a tax preparer for several years. Ellen has been a client of

Hunter's for several years. Kay has always checked Ellen's return for accuracy after Hunter

prepares the return. Recently, Kay discovered proof that indicates that Ellen has omitted

information for use in her tax preparation. How should Kay handle this situation?

a) Kay is obligated to notify Hunter immediately of her discovery and Hunter is then obligated

to notify Ellen that amended returns should be submitted with correct information.

b) Since Ellen is Hunter's client, Kay has no obligation to do anything.

c) Kay should contact the IRS immediately.

d) Kay should call the police.

2. Frank, a veteran IRS employee, has imposed penalties on many taxpayers. Which of the

following is incorrectly listed as an act that would cause a frivolous penalty?

a) Filing a return that does not include enough information to figure the correct tax

b) Filing a return that contains information that clearly shows the tax reported is substantially

incorrect

c) The taxpayer forgetting to sign the return

d) Altering or striking out preprinted language above the space provided for the signature

3. John, an independent contractor, has not supplied his Social Security number to several

companies to whom he has been contracted. If the taxpayer fails to supply his Social Security

number (for income reporting purposes) to a payer of wages, interest, or other taxable income,

he will be subject to what amount of penalty?

a) $ 25 for each failure

b) $ 50 for each failure

c) $ 75 for each failure

d) $100 for each failure