Area 1: Ethics & Procedures — CPA Practice Question 01

How to approach this question

Recall the general rule that contingent fees are prohibited, then identify the three specific exceptions: 1) IRS examination/audit, 2) Claim for refund of interest/penalties, 3) Judicial proceedings.

Full Answer

B.A fee based on the amount of a refund claimed on an amended return filed within 120 days of the taxpayer receiving a written notice of examination of the original return.✓ Correct

Circular 230 §10.27 generally prohibits contingent fees. However, exceptions exist for services rendered in connection with an IRS examination of an original tax return, or an amended return/claim for refund filed within 120 days of receiving a written notice of examination.

Common mistakes

Confusing amended returns generally (not allowed) with amended returns filed in response to an audit notice (allowed).

Under Circular 230, which of the following scenarios represents a permissible contingent fee arrangement for a practitioner representing a client before the IRS?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA REG Practice Exam

More questions from this exam