A Tax Preparer Is in Violation of Circular 230 If

question 51

Multiple Choice

A tax preparer is in violation of Circular 230 if he or she:

• A)Files a tax return that includes a math error.
• B)Does not sign the tax return that is prepared as a favor for a relative.
• C)Charges a fee to prepare an original Form 1120 equal to one-third of the taxpayer's refund due.
• D)Fails to inform the IRS of an error on the client's prior-year return.
• E)All of the above are Circular 230 violations.

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Definitions:

Variable Cost

Expenses that vary directly with the level of production or sales, such as materials and labor costs.

Pretax Income

Pretax income is the amount of income earned by a business before taxes have been deducted.

Fixed Costs

Costs that do not change with the level of production or sales volume, such as rent or salaries.

Variable Costs

Costs that vary in direct proportion to changes in the level of production or sales volume.