P3-U04 · PART 3 · SOURCE CYCLE 2026-2027
Circular 230 and Best Practices
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here.
Q1.A practitioner discovers that two current clients have directly adverse positions. When may the practitioner continue both representations under Circular 230?
When the practitioner reasonably believes both can be represented competently and diligently, the representation is lawful, and each client gives informed written consent. Circular 230 permits conflicted representation only when all three stated safeguards are met.
Q2.Two business partners ask one enrolled agent to represent both in an IRS dispute between them. What consent is required if the conflict can otherwise be competently and lawfully managed?
Informed consent confirmed in writing by each affected client. Each affected client must give informed consent confirmed in writing.
Q3.What is the exam-ready rule on information to be furnished to the IRS?
A practitioner must promptly provide properly requested records or information unless the practitioner reasonably believes the material is privileged.
Q4.What official rule governs omission or error on return, document, or affidavit?
On learning of a client's tax noncompliance, error, or omission, the practitioner must promptly advise the client and explain the consequences.
Q5.Summarize the correct treatment of rules for employing or accepting assistance from former IRS employees or disbarred/suspended persons.
A practitioner may not accept practice-related assistance from a suspended or disbarred person.
Q6.What threshold rule applies to rules regarding fees (e.g., contingent, unconscionable)?
Circular 230 prohibits an unconscionable fee and restricts contingent fees, subject to controlling law and stated exceptions.
Q7.State the controlling rule for rules for refund check negotiation.
A practitioner may not endorse or otherwise negotiate a taxpayer's federal refund check.
Q8.How should a practitioner handle rules for prompt disposition of matters before the IRS?
A practitioner may not unreasonably delay prompt disposition of a matter before the IRS.
Q9.State the controlling rule for competence, expertise, and time to handle issue.
A practitioner must possess or obtain the knowledge, skill, thoroughness, and preparation necessary for competent representation.