Category: EA Part 3 Prep

Who May Practice Before the IRS

This issue introduces one of the most important foundations of EA Part 3: who is legally permitted to represent taxpayers before the IRS and what “practice before the IRS” means.

Focus on the differences among attorneys, CPAs, enrolled agents, enrolled retirement plan agents, enrolled actuaries, unenrolled return preparers, family members, employees, and other individuals who may have limited representation rights. For exam purposes, remember that enrolled agents generally have unlimited practice rights before the IRS, meaning they may represent taxpayers before IRS personnel concerning examinations, collections, appeals, and other administrative matters.

Key Study Points

• Understand the meaning of practice before the IRS.
• Know which credentialed professionals have unlimited representation rights.
• Recognize situations in which a noncredentialed individual may have limited representation rights.
• Distinguish representation before the IRS from representation in federal court.

Exam Focus: Questions often test whether a particular person is permitted to represent a taxpayer in a specific IRS matter.

Official IRS Reference: IRS Publication 947 – Practice Before the IRS and Power of Attorney

https://www.irs.gov/publications/p947

Circular 230 Duties and Responsibilities

Circular 230 governs the conduct of practitioners who practice before the IRS. It is a core source for EA Part 3 and should be reviewed repeatedly during your preparation.

Study practitioner duties involving diligence, accuracy, prompt disposition of pending matters, returning client records, conflicts of interest, solicitation, fees, and reliance on information supplied by clients. The exam may present a fact pattern and ask whether a practitioner’s conduct is permitted.

Key Study Points

• Exercise due diligence in preparing, approving, and filing documents.
• Do not knowingly submit false or misleading information to the IRS.
• Promptly advise a client when you discover noncompliance, an error, or an omission.
• Understand when conflicts of interest may prevent representation.
• Know the basic rules governing practitioner fees and solicitation.

Exam Focus: Look for words such as “knowingly,” “willfully,” “due diligence,” and “conflict of interest.” These facts often determine the correct answer.

Official IRS Reference: Treasury Department Circular No. 230

https://www.irs.gov/pub/irs-pdf/pcir230.pdf

Sanctions and Disciplinary Proceedings

This issue covers the consequences of violating Circular 230. The Office of Professional Responsibility, commonly called OPR, administers and enforces standards of practitioner conduct.

Possible sanctions include censure, suspension, disbarment from practice before the IRS, and monetary penalties in appropriate cases. EA Part 3 questions frequently test whether a sanction is authorized and which conduct can trigger disciplinary action.

Key Study Points

• Know the difference among censure, suspension, and disbarment.
• Understand that monetary penalties may apply to practitioners and, in some circumstances, firms or employers.
• Recognize disreputable conduct and violations of Circular 230.
• Understand the general role of OPR in practitioner discipline.

Exam Focus: The IRS sample Part 3 questions specifically test Circular 230 sanctions, so this is a high-priority review area.

Official IRS Reference: IRS Office of Professional Responsibility FAQs

https://www.irs.gov/tax-professionals/frequently-asked-questions

Form 2848: Power of Attorney and Declaration of Representative

Form 2848 is one of the most heavily tested authorization forms in EA Part 3. It authorizes an eligible individual to represent a taxpayer before the IRS for specified tax matters and periods.

Study who may be named as a representative, how tax matters and periods are listed, the meaning of the representative declaration, and how prior powers of attorney may be affected by a new filing.

Key Study Points

• Form 2848 grants representation authority, not merely access to information.
• The representative must be eligible to practice before the IRS for the matter involved.
• The form should identify the type of tax, tax form, and applicable years or periods.
• Understand revocation by the taxpayer and withdrawal by the representative.

Exam Focus: Be prepared to distinguish actions that a representative may take under Form 2848 from actions requiring specific additional authority.

Official IRS Reference: IRS Form 2848 – Power of Attorney and Declaration of Representative

https://www.irs.gov/forms-pubs/about-form-2848

Form 8821: Tax Information Authorization

Form 8821 allows a taxpayer to authorize a person or organization to inspect and receive confidential tax information. Unlike Form 2848, it does not authorize representation before the IRS.

This distinction is a classic EA Part 3 test point. A person with Form 8821 may receive tax information for the matters and periods listed, but that authorization alone does not permit the person to advocate for or represent the taxpayer before IRS personnel.

Key Study Points

• Form 8821 is primarily for access to tax information.
• It may name an individual or certain entities.
• It does not create power of attorney representation rights.
• Know how prior tax information authorizations may be revoked or deleted.

Exam Focus: When a question asks whether someone may “receive information” versus “represent the taxpayer,” identify which authorization is required.

Official IRS Reference: IRS Form 8821 – Tax Information Authorization

https://www.irs.gov/forms-pubs/about-form-8821

CAF Numbers and IRS Authorizations

The Centralized Authorization File, or CAF, is the IRS system used to record many taxpayer authorizations. Practitioners frequently encounter CAF numbers when submitting Forms 2848 and 8821.

For EA Part 3, understand the practical difference between the taxpayer’s identifying information, the practitioner’s PTIN or enrollment information, and the practitioner’s CAF number. They serve different purposes.

Key Study Points

• A CAF number is associated with IRS authorization records.
• Forms 2848 and 8821 may be submitted through authorized IRS channels.
• Tax Pro Account can provide electronic authorization options for eligible individual matters.
• Carefully identify tax matters and periods to avoid an ineffective authorization.

Exam Focus: Do not assume that holding a CAF number by itself gives a person representation rights.

Official IRS Reference: IRS – Submit Forms 2848 and 8821 Online

https://www.irs.gov/tax-professionals/submit-forms-2848-and-8821-online

Practitioner Due Diligence and Client Errors

A practitioner has professional responsibilities when preparing returns, giving advice, and representing clients. Circular 230 requires due diligence and establishes duties when a practitioner becomes aware that a client has not complied with federal tax law or has made an error or omission.

The practitioner generally must advise the client promptly of the noncompliance, error, or omission and explain the potential consequences under the Internal Revenue Code and regulations.

Key Study Points

• Know the practitioner’s duty after discovering a client’s prior-year error.
• Understand due diligence when relying on information supplied by a client.
• Recognize circumstances that require further inquiry because information appears incorrect, inconsistent, or incomplete.
• Distinguish advising the client from independently correcting the client’s tax account without authorization.

Exam Focus: Many questions are framed as “What should the practitioner do first?” The safest answer often begins with properly advising the client.

Official IRS Reference: Treasury Department Circular No. 230

https://www.irs.gov/pub/irs-pdf/pcir230.pdf

Conflicts of Interest and Written Consent

Conflicts of interest are another commonly tested Circular 230 topic. A conflict may arise when representing one client is directly adverse to another client or when there is a significant risk that a practitioner’s responsibilities to another person or personal interests will materially limit the representation.

In certain situations, representation may continue if the practitioner reasonably believes competent and diligent representation can be provided, the representation is not prohibited by law, and each affected client gives informed written consent.

Key Study Points

• Identify direct adversity between clients.
• Identify material limitations caused by duties to others or the practitioner’s own interests.
• Know when written informed consent is necessary.
• Remember that some conflicts cannot be waived.

Exam Focus: Read fact patterns carefully. A conflict question may turn on whether the practitioner can reasonably provide competent and diligent representation to each affected client.

Official IRS Reference: Treasury Department Circular No. 230

https://www.irs.gov/pub/irs-pdf/pcir230.pdf

Fees, Solicitation, and Practitioner Conduct

This issue reviews restrictions affecting how practitioners charge for services and market their practices. Circular 230 contains rules designed to protect taxpayers and the integrity of practice before the IRS.

Study the rules governing unconscionable fees, contingent fees in permitted and prohibited situations, solicitation, advertising, and conduct that may be considered disreputable.

Key Study Points

• Understand the general prohibition on unconscionable fees.
• Know that contingent fee rules depend on the type and timing of the tax matter.
• Marketing and solicitation must not be false, fraudulent, coercive, or misleading.
• Improper conduct may lead to disciplinary action under Circular 230.

Exam Focus: Be careful with absolute statements such as “contingent fees are always prohibited.” EA questions often test exceptions.

Official IRS Reference: Treasury Department Circular No. 230

https://www.irs.gov/pub/irs-pdf/pcir230.pdf

Examination and Representation Procedures

Enrolled agents may represent taxpayers during IRS examinations. For EA Part 3, focus on the representative’s authority, communications with IRS personnel, taxpayer rights, and the importance of a properly completed power of attorney.

A practitioner should understand the scope of the taxpayer’s authorization and must act within that authority. Representation may include communicating with the IRS, presenting records and arguments, and assisting the taxpayer in responding to examination issues.

Key Study Points

• Confirm that the practitioner has valid authority for the tax matter and periods involved.
• Understand the taxpayer’s right to representation.
• Know the practitioner’s obligation to provide requested information lawfully and accurately.
• Recognize when an issue may move from examination to appeals.

Exam Focus: Questions may test whether an EA can act for the taxpayer at a particular administrative level of the IRS.

Official IRS Reference: IRS Publication 947 – Practice Before the IRS and Power of Attorney

https://www.irs.gov/publications/p947

Collections, Appeals, and Taxpayer Representation

EA Part 3 also tests a practitioner’s role when a taxpayer is dealing with IRS collection matters or administrative appeals. Enrolled agents generally have broad authority to represent taxpayers before IRS administrative functions when properly authorized.

Review the practical role of the representative: communicating with the IRS, helping the taxpayer understand notices, presenting relevant facts and documentation, and protecting procedural rights while complying with professional standards.

Key Study Points

• Know that enrolled agents can generally represent taxpayers before IRS examinations, collections, and appeals.
• Distinguish IRS administrative representation from representation in court.
• Understand that authorization must cover the relevant tax matter and period.
• Maintain professional conduct and truthful communications throughout the matter.

Exam Focus: When analyzing a representation question, first identify the forum, then the representative’s credential, and finally whether valid authorization exists.

Official IRS Reference: IRS Information for Tax Professionals

https://www.irs.gov/tax-professionals/information-for-tax-professionals

Final Review with IRS SEE Part 3 Sample Questions

Your final issue brings the four-week study plan together. Use official IRS sample questions to practice recognizing how Circular 230, representation rights, authorizations, and procedural rules are tested.

Do not simply memorize the correct answer. For every question, identify the governing rule and explain why each incorrect choice is wrong. This turns a short set of sample questions into a much more powerful review exercise.

Final Review Checklist

• Who may practice before the IRS?
• What is the difference between Form 2848 and Form 8821?
• What duties does Circular 230 impose on practitioners?
• What conduct can lead to censure, suspension, disbarment, or monetary penalties?
• How are conflicts of interest handled?
• What should a practitioner do after discovering a client’s tax error?
• What authority does an enrolled agent have during examinations, collections, and appeals?

Study Method: Complete the IRS sample questions without notes, review every missed question, then return to Circular 230 or Publication 947 for the underlying rule.

Official IRS Reference: IRS SEE Sample Test Questions – Part 3

https://www.irs.gov/tax-professionals/enrolled-agents/see-sample-test-questions-part-3