Audits, Examinations, Appeals and Reports
This topic covers representing taxpayers in audits, IRS authority to investigate, limited practitioner privilege, substantiation, IRS authority to set time and place, initial meetings, requested information, revenue agent reports, 30-day letters, CP2000 notices, correspondence audits, taxpayer options, burden of proof, appeal rights, appeals requests, appeals conferences, settlement function, and 90-day letters.
How to study for EA Part 3
Build every answer around practitioner authority, Circular 230 duties, taxpayer authorization, deadlines, documentation, appeal rights, e-file controls, and representation limits.
Core concepts
Concept 1
Audits, Examinations, Appeals and Reports questions test whether an enrolled agent candidate can apply representation, practice, procedure, and filing-process rules to client matters before the IRS.
Exam cue: Identify the taxpayer, representative, authorization form, IRS matter, deadline, record source, and whether the issue involves practice, representation, collection, audit, appeal, refund, or e-file.
Concept 2
The best answer usually identifies the practitioner's authority, duty, deadline, documentation, disclosure rule, conflict issue, appeal right, or sanction exposure before choosing an action.
Exam cue: Check authority, consent, confidentiality, conflict rules, due diligence, record retention, documentation, legal support, penalty relief, and appeal route.
Concept 3
Eliminate answers that exceed the representative's authority, ignore Circular 230 duties, skip authorization forms, miss statutory deadlines, or treat e-file compliance as optional.
Exam cue: Tie the result to Form 2848, Form 8821, CAF, transcript use, collection or exam procedure, appeal response, amended return, e-file requirement, or practitioner discipline rule.
Risk pitfalls and guardrails
Acting for a taxpayer without verifying the scope of authorization and whether the person may practice before the IRS.
Guardrail: Use a 15-second safety pause before finalizing your action.
Treating tax return preparation duties, written advice, advertising, fees, and client records as informal business choices instead of practice rules.
Guardrail: Use a 15-second safety pause before finalizing your action.
Missing collection, audit, appeal, refund, penalty abatement, e-file, data security, and record-retention deadlines.
Guardrail: Use a 15-second safety pause before finalizing your action.
Memory anchors
IRS Examination
An IRS examination reviews a taxpayer's return, records, and positions for correctness.
Substantiation
Substantiation verifies entries on a return with records and credible support.
Limited Privilege
Limited practitioner privilege can protect certain tax advice communications but has important limits.
Initial Meeting
An initial exam meeting frames issues, records, timelines, and representative role.
RAR
A revenue agent report explains proposed examination adjustments.
Thirty Day Letter
A 30-day letter generally gives a taxpayer a chance to request Appeals review before deficiency procedures.
CP2000
A CP2000 notice proposes changes based on information return matching and is not itself a bill.
Burden of Proof
Taxpayers generally bear burden of proof unless statutory conditions shift it.
Appeals Conference
An appeals conference reviews disputed issues in an independent administrative forum.
Ninety Day Letter
A 90-day letter is a statutory notice of deficiency that starts the Tax Court petition period.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
An enrolled agent is reviewing an IRS practice file before taking action. The requirement is: An IRS examination reviews a taxpayer's return, records, and positions for correctness. Which choice fits best?
A taxpayer representation matter requires the correct rule, authorization, record, or procedure. The requirement is: Substantiation verifies entries on a return with records and credible support. What should the practitioner use?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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