Circular 230:
A)Establishes penalties for failure to comply with its provisions.
B)Applies only to preparation of tax returns by paid preparers.
C)Applies to all individuals who do not use the services of a paid tax preparer.
D)States that paid preparers can be paid for tax services by cashing a client's IRS refund check.

Question

Quizplus · Accepted Answer

Circular 230 establishes penalties for any individual who fails to comply with its provisions, regardless of whether they are a paid preparer or not.

Answer: B 
 Circular 230 applies specifically to paid preparers who are responsible for preparing and filing tax returns for their clients.

Answer: C 
 This statement is incorrect. Circular 230 applies to all paid preparers who prepare and file tax returns on behalf of their clients, regardless of whether individuals choose to prepare their own taxes.

Answer: D 
 This statement is incorrect. Circular 230 prohibits paid preparers from charging a fee based on a percentage of their client's refund or from taking possession of a client's refund check.