ExpertHard1 markMultiple Choice
CPA · Question 66 · Area I: Ethics & Tax Procedures
Under Circular 230, which of the following fees is generally PROHIBITED for a tax practitioner preparing an original tax return?
Under Circular 230, which of the following fees is generally PROHIBITED for a tax practitioner preparing an original tax return?
Answer options:
A.
Contingent fee.
B.
Fixed fee.
C.
Hourly fee.
D.
Fee based on complexity.
How to approach this question
Contingent fees ('I get % of your refund') are banned for original returns to prevent aggressive positions.
Full Answer
A.Contingent fee.✓ Correct
Circular 230 prohibits contingent fees for preparing an original tax return. Exceptions exist for IRS examinations or claims for refund filed in connection with penalties/interest.
Common mistakes
Thinking contingent fees are never allowed (they are allowed for audits).
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