Practice, ethics, and professional duties
The Practitioner Rules
Match the conduct to its rulebook: Circular 230 for practice before the IRS, the SSTS for AICPA members, and sections 6694 and 6695 for preparer dollars.
How the exam words it
- -The stem describes a fee arrangement (contingent, referral) and asks whether Circular 230 permits it.
- -It gives a return position at a stated confidence level and asks whether the preparer may sign or must disclose.
- -A practitioner faces a conflict of interest, a discovered error, or a diligence lapse and it asks the required action.
- -It asks which OPR sanction applies, or computes a section 6694 or 6695 preparer penalty.
The playbook
- 1Name the rulebook: Circular 230 (Treasury and OPR) governs practice before the IRS, the SSTS binds AICPA members, and sections 6694 and 6695 set the preparer penalty dollars.
- 2For a fee, run the contingent-fee exceptions: allowed for an examination, a refund claim within 120 days of an examination notice, an interest or penalty claim, and judicial proceedings, but never for an original return.
- 3For a position, match the confidence level to disclosure: substantial authority signs with no disclosure, reasonable basis needs adequate disclosure, and an unreasonable position draws the greater of $1,000 or 50 percent of the fee.
- 4For conduct, require informed written consent kept 36 months for a conflict, and on a discovered error inform the client but never the IRS without consent.
The trap
Treating a reasonable-basis position as penalty-proof without disclosure, or allowing a contingent fee on an original return. Reasonable basis needs disclosure; substantial authority does not.
How the exam varies it
The same pattern, re-skinned along these axes:
Which rulebook: Circular 230, the SSTS, or the sections 6694 and 6695 penaltiesFee arrangement versus return position versus conflict or error handlingName the required action versus compute the preparer penalty
Drill this pattern
8 questions of The Practitioner Rules from across the AUD topics. Clear it by getting 5 right with a streak of 3.