P3-U07 · PART 3 · SOURCE CYCLE 2026-2027
Recordkeeping Requirements and Penalties
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here.
Q1.Give the practical federal-tax rule for assessment and appeal procedures for preparer penalties.
A preparer who believes an assessed preparer penalty is erroneous may use the IRS claim-for-refund procedure identified for that penalty.
Q2.What official rule governs tax avoidance vs tax evasion?
Tax avoidance uses lawful choices; tax evasion involves willful unlawful conduct to defeat tax.
Q3.What must an EA remember about trust fund recovery penalty?
The trust fund recovery penalty may be assessed against a responsible person who willfully fails to collect, account for, or pay trust fund taxes.
Q4.What is the exam-ready rule on basis for having penalties abated or refunded?
Reasonable cause, statutory exceptions, administrative waiver, or correction of IRS error can support penalty relief when their requirements are met.
Q5.What official rule governs basis for having interest abated or refunded?
Interest abatement is narrower than penalty relief and generally requires a statutory basis rather than ordinary inability to pay.
Q6.What common mistake should be avoided with procedures for requesting abatement?
A taxpayer requests abatement using the procedure and form appropriate to the penalty or interest at issue and preserves appeal or refund rights.