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[size=18px]Examination Topics [/size]
[size=18px]PART 1- INDIVIDUALS[/size]
Preliminary work to prepare tax returns
Use of prior years' returns for comparison
Accuracy of prior year’s return
Taxpayer biographical information (e.g., date of birth, age, marital status, dependents)
Immigration status and/or citizenship (e.g., citizen, resident alien or non-resident alien)
Taxpayer filing status
Sources of all income (e.g., interest, wages, business, sales of property) Sources of applicable adjustments to gross income (e.g., retirement plans)
Sources of applicable deductions
Sources of applicable credits Tax payments (e.g. withholding, estimated payments)
Determine if individual and/or business entity involved
Items that will affect future returns
All required taxes filed (e.g., employment, gift, estimated)
Special filing requirements (e.g., gifts, foreign income)
Tax returns for individuals
Taxpayer data
Filing requirements for tax returns and extensions
Personal exemptions including dependents
Taxation of unearned income of certain minor children (Kiddie tax) Special requirements for Form 1040-NR
Income
Taxability of wages, salaries and other earnings
Interest Income
Dividends and other distributions from mutual funds, corporations, and other entities
Rental income and expenses
Gambling income and allowable deductions
Tax treatment of forgiveness of debt Tax treatment of a U.S. citizen/resident with foreign earned income
Other income (e.g., scholarships, fellowships, Social Security benefits, barter income, independent contractor income, hobby income, alimony) Constructive receipt of income
Retirement income
Basis in a traditional IRA (Form 8606)
Comparison of traditional IRA and Roth IRA
Distributions from qualified plans
Excess contributions and tax treatment Prohibited transactions and tax effects relating to IRAs
IRA conversions and recharacterizations
Excess accumulations and required minimum distributions
Loans from IRC section 401(k) plans and other qualified plans
Property, real and personal
Capital gains and losses
Basis of assets
Basis of stock after stock splits and/or stock dividends
Sale of property
Sale of a personal residence
Installment sales
Adjustments to income
Adjustments to income (e.g., retirement contributions, student loan interest, alimony)
Self-employment tax
Retirement deductions -- (relating to IRAs)
Contribution limits and deductibility of contributions
Earned compensation
Modified adjusted gross income
Itemized deductions
Medical and dental expenses
Deductibility of various types of taxes Interest expense (e.g., mortgage interest, investment interest)
Charitable contributions
Nonbusiness casualty and theft losses
Non-business bad debts
Miscellaneous itemized deductions
Employee travel, transportation and entertainment expenses Employee education expenses
AGI limitations on itemized deductions
Allowed itemized deductions for Form 1040-NR
Credits
Child and dependent care credit
Child tax credit
Education credits
Foreign tax credit
Earned income tax credit (EITC)
Taxation
Alternative minimum tax
Credit for prior year minimum tax
Premature distribution(s) from retirement plans
Household employees Estimated tax
Injured spouse
Conditions for filing a claim for refund
Minimization of taxes paid
Adjustments, deductions, and credits
Retirement plans
Earned income credit
Education credits and tuition deduction
Adoption credits
Use of capital gain rates versus ordinary income rates
Advising the individual taxpayer
Reporting obligations for individuals (e.g. sale of home)
Property sales (e.g., real and personal such as homes, stocks, and businesses)
Education planning (e.g., Hope credit, lifetime learning credit, IRC section 529 plans)
Estate planning (e.g., gift versus inheritance, trusts, family partnerships)
Retirement planning (e.g., annuities, IRAs, employer plans, early retirement rules, required minimum distribution)
Marriage and divorce (e.g., pre- and post-nuptial agreements, divorce settlement)
Specialized returns
Estate tax
Gross estate
Taxable estate
Unified credit
Jointly-held property
Life insurance and taxable estate
Marital deduction and other marital issues
IRAs and retirement plans .
Gift tax
Gift-splitting
Annual exclusion
Unified credit
Effect on estate tax
[size=18px]Part 2 - BUSINESSES [/size]
Business entities
Types of business entities and their filing requirements:
Sole proprietorships
Partnerships Corporations
S corporations
Farmers
LLCs Tax-exempt companies and associations
Elections for type of entity
Employer identification number
Accounting periods (tax year)
Accounting methods
Business income
Gross business income
Cost of goods sold (e.g., inventory practices, expenditures included, uniform capitalization rule)
Net income, net operating losses, and loss limitations including passive activity and at risk limitations
Gain or loss on disposition of depreciable property
Business expenses, deductions and credits Employees’ pay (e.g., deductibility of compensation, fringe benefits, rules of family employment, statutory employee)
Reporting requirements for company employees (W-2, W-4, Form 1099)
Business rental deduction
Depreciation, amortization, IRC section 179, and depletion
Business bad debts
Business travel, entertainment, and gift expenses
Interest expense
Insurance expense
Taxes (e.g., deductibility of taxes, assessments, and penalties; proper treatment of sales taxes paid)
Employment taxes
Federal excise tax
Casualties, thefts, and condemnations
IRC section 199 deduction (domestic production activities)
Eligibility and deductibility of general business credits (e.g., welfare-to-work credit, disabled access credit, investment credit)
Business assets
Basis of assets
Disposition of depreciable property
Like kind exchange
Retirement plans
Employer contributions
Employee contributions and reporting requirements
Plans for self-employed persons
Prohibited transactions
Qualified plans
SEP and SIMPLE
Partnerships
Partnership income, expenses, distributions, and flow-through
Family partnerships
Partner's dealings with partnership (e.g., exchange of property, guaranteed payment, contribution of property to partnership)
Basis of partner's interest
Disposition of partner's interest
Corporations in general
Filing requirements and due dates
Earnings and profits
Shareholder dividends (definition and reporting requirements)
Special deductions (e.g., dividends received deductions, charitable deduction).
Reconciling books to return (e.g., Schedule M series)
Distributions and recognition requirements
Liquidations and stock redemptions
Forming a corporation
Services rendered to a corporation in return for stock
IRC section 351 exchange
Transfer of money or property; receipt of money or property in addition to the stock of that corporation
Mortgaged property transferred
Exchange of property other than a IRC section 351 exchange
Controlled groups
Closely held corporations
Personal service corporations
S corporations
Requirements to qualify including election procedure
Tax law related to S corporation
Treatment of distributions
Shareholder’s basis Status (e.g., terminated and reinstated)
Debt discharge
Non-cash distributions
Farmers
Farm inventory
Depreciation for farmers
Various disaster-area provisions
Disposition of farm real estate
Analysis of financial records
What type of business (e.g., service, retail, manufacturer, or farm)
Income statement
Balance sheet
Method of accounting (e.g., accrual vs. cash)
Depreciation and amortization
Depreciation recovery (recapture)
Determination of basis of assets
Shareholder/partner basis
Pass-through activity (e.g., K-1)
Proofing beginning and ending balances
Reconciliation of tax versus books (e.g., M-1, M-2)
Related party activity
Advising the business taxpayer
Estimated tax
Filing obligations
Depositing obligations (e.g., employment tax, excise tax)
Reporting obligations for businesses (e.g. IRC sections 1099 and 1031 exchanges)
Record-keeping requirements (mileage log, cell phone usage)
Related party transactions
Definitions of business entities
Client habits (e.g., personal usage of business accounts)
Benefits and detriments of choosing each type of business entity
Advice on accounting methods and procedures
Transfer elections in or out of the business (e.g., contributed property, distributions)
Life cycle of the business (e.g., startup, decline)
Type of industry (e.g., personal service corporation)
Specialized returns
Trust and estate income tax Trust types (e.g., grantor, irrevocable, tax shelters)
Distributable net income
Exclusions and deductions
Fraudulent trusts
Income in respect of a decedent
Exempt organizations
Filing requirements
Qualifications for tax-exempt status
PART 3 - REPRESENTATION, PRACTICE AND PROCEDURES
Becoming an enrolled agent
What constitutes practice before the IRS
Categories of individuals who may practice
Enrollment cycle Period of enrollment
Effective date of renewed enrollment
Enrollment card or other credentials
How to appeal a denial of an application for enrollment
Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the IRS (Treasury Department Circular 230)
Requirements for enrolled agents
What information to be furnished to the IRS
When to advise a client about an omission or error on any return, document, or affidavit
Rules for employing or accepting assistance from disbarred or suspended persons and former IRS employees
Rules for restriction on advertising and solicitation and fee information
Concept of due diligence for return accuracy
Concept of conflict of interest
Rules for refund check negotiation
Requirements for tax shelter opinions
Standards for tax return positions and preparing returns
CPE requirements
Scope of authority - Tax court petitions
Effective records
Covered opinions
Tax shelters
Tax avoidance vs. tax evasion
Conference and practice requirements
Sanctions against enrolled agents
What constitutes disreputable conduct, which can result in a disciplinary proceeding
Sanctions imposed by OPR against Enrolled Agents
Contents of a complaint filed against an individual, service of complaint and demand for answer requirements
How a proceeding against an individual in violation of regulations governing practice before the IRS is instituted
Procedural rules for conducting proceedings for disqualification
Disciplinary appeal process
Criteria for public disclosures for active and disqualified persons
Types of penalties (e.g., negligence, substantial understatement, overvaluation)
Frivolous submissions (returns and documents)
Fraudulent transactions
Badges of fraud
Representation before the IRS
Power of attorney
Acting in place of the taxpayer
Signature authority (e.g., extension of assessment period, closing agreement)
Limitations of authority granted to enrolled agent (e.g. acts authorized)
Prohibition for negotiating taxpayer refund check (e.g. cannot cash or deposit)
Prohibition for signing tax returns
Requirements for power of attorney (Form 2848)
Alternate forms of power of attorney (durable)
Rules for client privacy and consent to disclose
Purpose of filing a tax information authorization
Requirements to be met when changing or dropping representatives
When notices and refund checks may be delivered to recognized representatives
Purpose of a Centralized Authorization File number
Building the taxpayer's case
Preliminary work
What the taxpayer's issue is (e.g. type, details)
Potential for criminal aspects
Competence, expertise and time to handle issue
Taxpayer willingness to sign power of attorney
Conflict of interest
Taxpayer tax information
Income (taxable and non-taxable)
Expenses (deductible, allowable and personal)
Transcripts from IRS Documentation requirements (e.g., pay stubs, bank statements)
Documentation required (e.g., receipts, invoices)
Taxpayer financial situation
Taxpayer's ability to pay the tax (e.g., installment agreements, offer in compromise)
General financial health (e.g., filed for bankruptcy, lawsuits, and garnishments)
Form 433A/B/F
Lifestyle and life issues of taxpayer
Cash flow and assets (Cash-T, receipts and disbursements)
Asset fair market value and associated liabilities
Third-party research (e.g., property assessment for municipal taxes; asset values, state and local tax information)
Supporting documentation
Financial documents (e.g., cancelled checks or equivalent, bank statements, credit card statements, receipts)
Legal documents (e.g., birth certificate, divorce decrees, lawsuit settlements)
Prior and subsequent tax returns
Other substantive and contemporaneous documentation (e.g., mileage log, corporate minutes)
Employment reimbursement policies
Business entity supporting documents (e.g., partnership agreement, corporate bylaws)
Brokerage records or individual stock transaction
Legal authority and references
Internal Revenue Code
Treasury regulations
Revenue rulings
Revenue procedures
IRS notices
Case law
IRS publications
Private letter rulings
Form instructions
Internal Revenue
Manual Authoritative source material versus non-authoritative source material
Related issues
Statute of limitations
Post-filing correspondence (e.g., math error notices, under reporting notices)
Deadlines and timeliness requirements
Third-party correspondence (e.g., witness communications, employment records)
Requests for information related to specific issues (e.g., clarification on a tax issue)
Freedom of Information Act requests
Representing a taxpayer in the Collection process
Extension of time to pay
Installment capability
Offer in compromise (e.g., doubt as to liability, collectiblility or effective tax administration)
Miscellaneous options (e.g., collection statute end date, collection statute extension date, trust fund recovery penalties, backup withholding)
Collection appeals program (e.g., denial of installment agreements, discharge applications)
Collection due process (e.g., lien and levy)
Penalties and/or interest assessed
Penalties and interest
Basis for having penalties avoided, abated, or refunded
Reasonable cause
Interest abatement
Interest recalculation
Representing a taxpayer in audits/examinations
IRS authority to investigate
Verification and substantiation of entries on the return
IRS opportunity to disagree with filings
IRS authority to fix time and place of investigation
Steps in the process (e.g., initial meeting, submission of IRS requested information)
Innocent spouse
Interpretation of revenue agent report (RAR) (e.g., 30-day letter)
Explanations of taxpayer options (e.g. agree or appeal)
Special procedures for partnership audits (e.g., unified audit procedures for TEFRA)
Representing a taxpayer before Appeals
Protests
Right to appeal revenue agent findings
Request for appeals consideration (e.g., preparation, elements contained)
Enrolled Agent appearance at appeals conference
Settlement function of the appeals process
Issuance of 90-day letter
Higher levels of representation beyond the scope of EA representation
Tax Court
U.S. District Courts and U.S. Claims Court
U.S. Courts of Appeals and U.S. Supreme Court
Completion of the filing process
Accuracy
Using tax software
Inconsistencies with the source data
Miscalculations
Recognition of duplicate entries
Alternative minimum tax issues
Need to read diagnostics
Matching inputs and outputs across forms
Information shared with taxpayer
Record-keeping requirements
Significance of signature (e.g., joint and several liability, penalty of perjury)
Non-taxable income (e.g., combat pay, inheritance)
Consequences of dishonesty
Concerning all tax preparers - regulations and sanctions
Definition of income tax return preparers
Penalties
Assessment and appeal procedures for preparer penalties
Penalties to be assessed by the IRS against a preparer for negligent or intentional disregard of rules and regulations, and for a willful understatement of liability
Preparer's due diligence
Rules for furnishing a copy of a return to a taxpayer
Rules for signing returns and furnishing identifying numbers
Rules for keeping copies or lists of returns prepared
Rules for filing an information return concerning employees engaged or employed during a return period
Rules for the preparer penalty involving the earned income credit
Record maintenance Length of time Length of time to keep income and employment tax records
The components of the list (name, social security number, and type of return)
EITC due diligence requirements
Rules for returning a client's records and documents
Electronic filing
How to apply to be an e-file provider
Electronic return requirements
Definition of a refund anticipation loan (RAL) indicator
Advertising standards
Definition of EFIN
Definition of ERO
Levels of infractions
Compliance requirements to continue in program (e.g. timely filing, timely payment, and absence of infractions)
Appeal process
Forms 8879 and 8453
Rejected returns and resolution (e.g. client notification)
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