Ms$.$ Smith hired Tom, a CPA, to prepare her federal income tax return for Year $3.$ While gathering information to prepare the return, Tom discovered that Ms$.$ Smith failed to file federal income tax returns for the Year $1$ and Year $2$ tax years. Circular $230$ requires that Tom do the following:

Refuse to prepare Ms$.$ Smith$$s Year $3$ federal income tax return unless she files her Year $1$ and Year $2$ federal income tax returns.

Inform the IRS that Ms$.$ Smith did not file federal income tax returns for the Year $1$ and Year $2$ tax years.

Refuse to prepare Ms$.$ Smith$$s Year $3$ federal income tax return unless she files her Year $1$ and Year $2$ federal income tax returns and inform the IRS that Ms$.$ Smith did not file federal income tax returns for the Year $1$ and Year $2$ tax years.

Promptly advise Ms$.$ Smith that she did not comply with the Internal Revenue laws by failing to file federal income tax returns for the Year $1$ and the Year $2$ tax years and of the consequences she may face under the Code and regulations.