Instructions: For each scenario below, answer the question about whether the tax preparer should or should not do something for a (potential) client based only on the specific section(s) of the Treasury Circular 230 referenced in the problem. In addition, describe in your own words why you determined the action by the tax preparer was or was not appropriate based on your read of the Circular language referenced. Do not just quote the Circular. Instead, paraphrase what it says in your own words.

PLEASE TYPE YOUR ANSWERS IN A SEPARATE DOCUMENT AND SUBMIT VIA BLACKBOARD.

GRADING RUBRIC:

Full credit for each scenario: If the appropriate final determination is made for the tax preparer and the reasoning for why you came to that conclusion is consistent with the Treasury Circular language I reference.

Partial credit breakout for each problem:12.5 points related to ultimate conclusion

Is or is not appropriate behavior?

12.5 points related to the discussion of why you came to the ultimate conclusion

Did you paraphrase the Circular in a coherent way to support your answer rather than just quote the circular?

Jonah is the general partner of the partnership DTP. He is not an attorney, CPA, enrolled agent, enrolled actuary, enrolled retirement plan agent, or a registered tax return preparer. But, he does bookkeeping in general for the partnership and his own personal finances. Because Jonah does the bookkeeping for DTP, his business partners ask him to represent the company during a discussion with the IRS as part of a tax position the company claimed on its prior year return. Based on 10.3 and 10.7 in Treasury Circular 230, can Jonah represent DTP in the meeting (representing DTP in the meeting constitutes Practice before the IRS based on 10.2(a)(4))?

Lila is a CPA who has prepared a joint Form 1040, U.S. Individual Income Tax Return, for Mr. and Mrs. Shuffleton for over a decade. This year, Lila receives a call from Mr. Shuffleton, saying that he and his wife have started divorce proceedings. Mr. Shuffleton wants to meet with Lila to discuss preparing a joint return for him and Mrs. Shuffleton, and to discuss whether any tax positions could help him gain an advantage over Mrs. Shuffleton in what he expects will be a bitter battle over their marital assets.[1] Based on 10.29 in Treasury Circular 230, should Lila assist Mr. Shuffleton to take positions that will favor him over Mrs. Shuffleton in the divorce proceedings?

Sherry is a CPA and has performed general bookkeeping for Travis and his wife Amy for the past 7 years. However, this year, Travis and Amy failed to pay her fees for bookkeeping because they argued that Sherrys increase in fees this year was unreasonably high. At the end of the year, Travis and Amy request their accounting information to be able to prepare their tax return for the year on their own. Sherry tells them that she will not give them the information necessary to prepare their returns until they pay her fees. Based on 10.28(a) in Treasury Circular 230, is Sherry able to withhold the records of the client that are necessary for the clients to comply with Federal tax obligations if she fails to receive payment from them because of a dispute over fees?

Leah worked for the IRS for the past 5 years. Her primary expertise was examining tax returns from pharmaceutical companies. One of the companies she examined was DrugNBiz. Later that year, Leah decides to leave employment with the IRS and begin her own small tax practice. Two months after she leaves the IRS, DrugNBiz offers to hire Leah to represent them in discussions with the IRS for the same issue she had been working on with them in the prior year. They believe her past experience will better help them effectively communicate their positions to the IRS and better maintain previous tax positions claimed on their returns. Based on 10.25 in Treasury Circular 230, should Leah take the work offered from DrugNBiz?

[1] Based on Mathers, R. May 1, 2014. Practical Approaches to Common Conflicts of Interest. The Tax Adviser.