IRS Enrolled Agent - SEE Part 3: Representation, Practices and Procedures (SEE-3) practice questions

Under Circular 230, which statement best describes what 'practice before the IRS' comprises?

• AIt comprises all matters connected with a presentation to the IRS relating to a taxpayer's rights, privileges, or liabilities under the laws or regulations administered by the Service, including corresponding and communicating with it.check_circle Correct
• BIt covers any service for which a person charges a fee in the field of federal taxation, so that bookkeeping, payroll processing, and tax planning advice each amount to practice before the agency.
• CIt comprises only formal appearances at an Appeals conference or an examination interview, so that written correspondence and telephone contact with the Service on a client's behalf fall outside the meaning of practice.
• DIt comprises any act of submitting a federal document to the IRS, so that lodging an information return or a payment voucher is by itself an instance of practising before the Service.

Why A is correct: Section 10.2 defines practice before the Service as all matters connected with a presentation relating to a taxpayer's rights, privileges, or liabilities, including communicating and corresponding with the IRS; this states the definition correctly.

Why B is wrong: Tying the definition to charging a fee feels intuitive, but Circular 230 defines practice by the nature of the dealing with the Service rather than by whether a fee was charged, so this sweeps in unrelated paid services and is wrong.

Why C is wrong: Limiting practice to in-person appearances seems orderly, but Section 10.2 expressly includes corresponding and communicating with the Service, so excluding written and telephone contact understates the definition and is incorrect.

Why D is wrong: Filing paperwork looks like dealing with the Service, but a presentation about a taxpayer's rights, privileges, or liabilities is what defines practice; merely transmitting a routine document is not itself practice, so this misstates the boundary.

Which statement correctly distinguishes the authority granted by Form 2848 from the authority granted by Form 8821?

• AForm 2848 lets the named person inspect and receive confidential information only, while Form 8821 lets that person argue the taxpayer's position and sign agreements before the IRS on the taxpayer's behalf.
• BForm 2848 appoints a recognised representative who may act for the taxpayer before the IRS, whereas Form 8821 only authorises the IRS to disclose confidential tax information to a designee who may not represent the taxpayer.check_circle Correct
• CBoth forms appoint a representative who may advocate for the taxpayer, but Form 2848 is used for individual taxpayers and Form 8821 is used for business entities filing employment or excise tax returns.
• DBoth forms authorise the designated person to receive the taxpayer's confidential information, and either form may then be used to represent the taxpayer at an examination or appeals conference.

Why A is wrong: This option reverses the two instruments, which is tempting because both grant third-party access; in fact Form 2848 confers representation and Form 8821 confers disclosure only, so the roles are swapped and the statement is wrong.

Why B is correct: Form 2848 is the Power of Attorney that names a representative authorised to act before the IRS, while Form 8821 is a Tax Information Authorization that merely permits disclosure to a designee with no representation; this correctly separates acting from receiving information.

Why C is wrong: An individual-versus-entity split sounds like a plausible filing rule, but the two forms are distinguished by the authority granted, not by taxpayer type, and only Form 2848 confers representation, so this misstates the distinction.

Why D is wrong: It is true that both forms allow a third party to receive information, which makes this attractive, but a Form 8821 designee cannot represent the taxpayer, so treating either form as a basis for representation is incorrect.

A taxpayer wants an accounting firm to receive copies of IRS notices and to inspect account transcripts, but does not want anyone authorised to argue the taxpayer's position or sign documents before the IRS. Which instrument fits this need?

• AForm 2848, Power of Attorney, because naming the firm as representative is the only way the IRS will release transcripts and copies of notices to a third party acting for the taxpayer.
• BForm 4506-T, Request for Transcript of Tax Return, because a standing transcript request is the established way to give an accounting firm ongoing access to a taxpayer's account information.
• CForm 8821, Tax Information Authorization, because it permits the IRS to disclose the specified confidential information to the named designee without granting any authority to represent or act for the taxpayer.check_circle Correct
• DForm 56, Notice Concerning Fiduciary Relationship, because notifying the IRS of the firm's fiduciary status lets it receive notices and inspect the taxpayer's account on a continuing basis.

Why A is wrong: Form 2848 would indeed allow the firm to receive information, but it also grants representation the taxpayer expressly does not want, and it is not the only route to disclosure, so it overshoots the stated need.

Why B is wrong: Form 4506-T does obtain transcripts and feels relevant, but it is a one-time transcript request rather than a standing authorisation for the IRS to disclose information to a designee, so it does not meet the ongoing-access need.

Why C is correct: Form 8821 authorises disclosure of confidential information to a designee and grants no representation rights, which matches a taxpayer who wants notices and transcripts shared but no advocacy; this is the right instrument.

Why D is wrong: Form 56 establishes a fiduciary such as an executor or trustee, which superficially resembles third-party access, but an accounting firm receiving information is not a fiduciary, so this form does not apply to the situation.