P3-U05 · PART 3 · SOURCE CYCLE 2026-2027
Practitioner Standards and Tax Advice
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here.
Q1.When giving written federal tax advice, what must a practitioner do with factual assumptions?
Base the advice on reasonable factual and legal assumptions. Circular 230 requires written advice to rest on reasonable factual and legal assumptions.
Q2.A client supplies an implausible forecast for a written tax opinion. What is the practitioner's Circular 230 responsibility?
Do not rely on it if that reliance would be unreasonable. Circular 230 prohibits unreasonable reliance on taxpayer representations used in written advice.
Q3.Summarize the correct treatment of practitioner supervisory responsibilities.
A practitioner with principal authority over a firm's tax practice must take reasonable steps to ensure adequate Circular 230 compliance procedures.
Q4.What should a representative verify about frivolous submissions (returns and documents)?
A practitioner may not advise a frivolous position or a submission intended to delay or impede tax administration.
Q5.What should a representative verify about limited practitioner privilege (e.g., IRC section 7525)?
Section 7525 is a limited privilege for qualifying communications in noncriminal federal tax matters and excludes tax-shelter promotion communications.