Tax Research, Ethics, and Professional Practice
Research skills
Candidates must know how to locate authority: statutes, regulations, administrative guidance, and case law. Understand the hierarchy of authority, and how to distinguish primary from secondary sources. Know the role of the FTB's published guidance and the Board of Equalization annotations.
Ethics and practice
Understand Circular 230 obligations, California's rules on practice before the FTB, and the standards for tax return positions. Know the rules on confidentiality, conflicts of interest, and the penalties for preparer misconduct. Familiarize yourself with the requirements for signing returns and the rules on contingent fees.
Traps
Frequently tested: the difference between a position that has substantial authority and one that is merely arguable, and the requirement to disclose certain positions. Questions may test whether a preparer may rely on client information without verification.
Rule of thumb
If a position lacks substantial authority, disclosure is generally required.
Worked example
A preparer takes a position with a reasonable basis but not substantial authority. The preparer must disclose the position on the return to avoid preparer penalties.