EA Exam Test Bank

EA Study Topics: Crushing Part 3 on Your First Attempt

The third and final part of the IRS enrolled agent exam focuses on representation, practice, and procedures. It covers EA study topics such as tax law and research, client communication, representation before the IRS, and ethics.

Specifically, the exam tests EA study knowledge of tax law and research, including the ability to locate and interpret tax statutes, regulations, and rulings. It also covers the rules and procedures for representing clients before the IRS, including the preparation of tax returns and responses to IRS audits and collections. Additionally, the exam tests the ability to communicate with clients effectively and maintain ethical standards. Overall, the third part of the EA exam assesses an individual’s knowledge of tax practice and procedure, and their ability to represent clients before the IRS in a professional and ethical manner.

EA study topics

Part 3 EA Study Topics ‚ÄĒ Representation, Practices and Procedures

  1. Practices and Procedures ‚Äď 26 questions
  2. Representation before the IRS ‚Äď 25 questions
  3. Specific Areas of Representation ‚Äď 20 questions
  4. Filing Process ‚Äď 14 questions

Part 3 EA Study Categories

  1. Practices and Procedures: This topic covers the rules and procedures for representing clients before the IRS, including the preparation of tax returns and responses to IRS audits and collections.

  2. Tax Law and Research: This EA study topic covers the ability to locate and interpret tax statutes, regulations, and rulings. It also covers the use of tax research tools, such as tax software and electronic databases.

  3. Representation Before the IRS: This topic covers the rules and procedures for representing clients before the IRS, including the power of attorney and the requirements for practice before the IRS.

  4. Preparing for the Exam: This EA study topic covers the strategies and techniques for preparing for the enrolled agent exam, including the use of study materials and practice exams.

  5. Client Communication: This topic covers the ability to communicate effectively with clients, including the use of plain language, active listening, and conflict resolution.

  6. Ethical and Professional Responsibilities: This EA study topic covers the ethical and professional responsibilities of enrolled agents, including the ethical principles of integrity, objectivity, confidentiality, and professionalism.

  7. Practices and Procedures for Tax Returns: This topic covers the procedures for preparing and filing tax returns, including the requirements for electronic filing and the penalties for late or inaccurate returns.

  8. Examination and Appeal Procedures: This EA study topic covers the procedures for responding to IRS audits and examinations, including the appeals process and the rights of taxpayers.

  9. Collection Procedures: This topic covers the procedures for responding to IRS collections, including the payment of taxes, installment agreements, and offers in compromise.

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SEE: Part 3 ‚ÄĒ Representation, Practices and Procedures

EA Study Domain 1: Practices and Procedures | 26 Questions 

1.1. Practice before the IRS 
  • What constitutes practice before the IRS¬†
  • Categories of individuals who may practice and extent of practice privileges
1.2. Requirements for Enrolled Agents 
  • Information to be furnished to the IRS¬†
  • Omission or error on return, document, or affidavit¬†
  • Rules for employing or accepting assistance from former IRS employees or¬† disbarred/suspended persons¬†
  • Rules for restrictions on advertising, solicitation and fee information¬†
  • Rules regarding fees (e.g., contingent, unconscionable)¬†
  • Due diligence requirements¬†
  • Conflict of interest¬†
  • Rules for refund check negotiation¬†
  • Standards for written advice, covered opinions, tax return positions and preparing returns -Continuing education requirements¬†
  • Enrollment cycle and renewal¬†
  • Rules for prompt disposition of matters before the IRS¬†
  • Rules for returning a client’s records and documents¬†
  • PTIN requirements¬†
  • Practitioner supervisory responsibilities¬†¬†
1.3. Sanctionable acts 
  • Incompetence and disreputable conduct¬†¬†
  • Sanctions imposed by the Office of Professional Responsibility¬†
  • Frivolous submissions (returns and documents)¬†
  • Fraudulent transactions (e.g., badges of fraud)¬†
1.4. Rules and penalties 
  • Assessment and appeal procedures for preparer penalties¬†
  • Types of penalties (e.g., negligence, substantial understatement, overvaluation)
  • Furnishing a copy of a return to a taxpayer¬†
  • Signing returns and furnishing identifying numbers¬†
  • Keeping copies or lists of returns prepared¬†
  • Employees engaged or employed during a return period (e.g., IRC section 6060) -Preparer due diligence penalties¬†¬†

EA Study Domain 2: Representation before the IRS | 25 Questions 

2.1. Power of attorney 
  • Purpose of power of attorney¬†
  • Signature authority (e.g., extension of assessment period, closing agreement) -Authority granted by taxpayer¬†
  • Limitations on signing tax returns on behalf of taxpayer¬†
  • Proper completion of power of attorney (Form 2848)¬†
  • Alternate forms of power of attorney (durable)¬†
  • Rules for client privacy and consent to disclose¬†
  • Distinctions between power of attorney (Form 2848) and tax information authorization (Form¬† 8821)¬†
  • Requirements to be met when changing or dropping representatives or withdrawal of¬† representative¬†
  • Purpose of a Centralized Authorization File (CAF) number¬†
  • Conference and practice requirements (Publication 216)¬†
2.2. Building the taxpayer’s case-Preliminary work 
  • Identification of tax issue(s) with supporting details¬†
  • Potential for criminal aspects¬†
  • Competence, expertise, and time to handle issue¬†
  • Conflict of interest in regards to representation¬†
  • Transcripts from IRS (e.g., access to and use of e-services)¬†
2.3. Taxpayer financial situation 
  • Taxpayer’s ability to pay the tax (e.g., installment agreements, offer in compromise, currently¬† not collectible)
  • General financial health (e.g., bankruptcy, lawsuits, garnishments, cash flow, assets, and¬† insolvency)¬†
  • Third-party research (e.g., property assessment for taxes, asset values, state and local tax¬† information)¬†
  • Discharge of the tax liability in bankruptcy¬†
  • IRS Collection Financial Standards¬†
2.4. Supporting documentation 
  • Financial documents and expense records (e.g., cancelled checks or equivalent, bank¬† statements, credit card statements, receipts, brokerage records)¬†
  • Legal documents (e.g., birth certificate, divorce decrees, lawsuit settlements) -Prior and subsequent tax returns¬†
  • Other substantive and contemporaneous documentation (e.g., corporate minutes) -Business entity supporting documents (e.g., partnership agreement, corporate bylaws)
2.5. Legal authority and references 
  • Internal Revenue Code and income tax regulations¬†
  • Revenue rulings and revenue procedures¬†
  • Case law¬†
  • IRS forms, instructions, and publications¬†
  • Private letter ruling¬†
  • Internal Revenue Manual¬†
  • Authoritative versus non-authoritative source material¬†
  • Tax treaties¬†
2.6. 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) -Freedom of Information Act (FOIA) requests¬†
  • Tax avoidance vs tax evasion¬†
  • Tax return disclosure statements
  • Taxpayer Advocate Service (e.g., criteria for requesting assistance)¬†
  • Taxpayer identity Theft¬†
  • Judicial levels of representation beyond the scope of EA representation¬†

EA Study Domain 3: Specific Areas of Representation | 20 Questions 

3.1.Representing a taxpayer in the collection process 
  • Extension of time to pay (e.g., Form 1127)¬†
  • Installment agreements¬†
  • Offer in compromise¬†
  • Collection appeals program (e.g., denial of installment agreements, discharge applications) -Collection appeals and due process (e.g., lien, levy, and Form 12153)¬†
  • Adjustments to the taxpayer‚Äôs account (e.g., abatements and refund offsets) -Requesting an audit reconsideration (e.g., documents and forms)¬†
  • Representing a decedent¬†¬†
  • Collection notice and Notice of Federal Tax Lien¬†
  • Levy and seizure of taxpayer’s property¬†
  • Currently Not Collectible (e.g., reasons and reactivation)¬†
  • IRS Collection Summons (e.g., purposes)¬†
  • Collections statute of limitations¬†
  • Trust fund recovery penalty¬†
  • Amended returns and claims for refund (e.g., Form 1040X, Form 843, effect on statute of¬† limitations)¬†
  • Passport revocation¬†
3.2. Penalties and/or interest abatement 
  • Penalties subject to abatement¬†
  • Basis for having penalties abated or refunded¬†
  • Basis for having interest abated or refunded¬†
  • Interest recalculation¬†
  • Procedures for requesting abatement¬†
3.3. Representing a taxpayer in audits/examinations
  • IRS authority to investigate¬†
  • Limited practitioner privilege (e.g., IRC section 7525)¬†
  • Verification and substantiation of entries on the return¬†
  • IRS authority to fix time and place of investigation¬†
  • Steps in the process (e.g., initial meeting, submission of IRS requested information) -Interpretation and analysis of revenue agent report (RAR) (e.g., 30-day letter) -Interpretation and analysis of CP-2000 notice and correspondence audits -Explanations of taxpayer options (e.g., agree or appeal)¬†
  • Taxpayer‚Äôs burden of proof¬†¬†
3.4. Representing a taxpayer before appeals 
  • 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¬†

EA Study Domain 4: Filing Process | 14 Questions 

4.1. Accuracy 
  • Reliance on software (e.g., review of results)¬†
  • Miscalculations and recognition of duplicate entries¬†
4.2. Record maintenance 
  • Length of time to retain returns and records¬†
  • Data security (e.g., electronic, systems, paper)¬†
4.3. Electronic filing 
  • Application process to be an e-file provider (e.g., e-services, EFIN)¬†
  • E-file mandate and exceptions (Form 8948)¬†
  • Advertising standards¬†
  • Definition and responsibilities of an ERO¬†
  • Levels of infractions¬†
  • Compliance requirements to continue in program
  • EFIN revocation appeal process¬†
  • E-file authorization and supporting documentation (e.g., Form 8879 and Form 8453) -Rejected returns and resolution (e.g., client notification, IP PIN)

Overall, the third part of the IRS enrolled agent exam requires a thorough understanding of EA study domains covering tax law and practice, and the ability to communicate effectively with clients and represent them before the IRS in a professional and ethical manner.