What should an enrolled agent do if a client asks them to take a fraudulent position?

Question

AcadiFi · Accepted Answer

An enrolled agent should refuse to prepare, sign, or submit a return position they know is fraudulent. The practitioner should explain th...

Unlock with Scholar — $19/month

Get full access to all Q&A answers, practice question explanations, and progress tracking.

Start 7-Day Free Trial Compare Plans

No credit card required for free trial

At fictional Harbor Tax Counselors, a client says cash receipts should be left off the return because there is no form. The enrolled agent cannot agree. Gross income is not limited to forms received. The agent should explain that cash receipts are taxable unless an exclusion applies and that intentionally omitting them can create penalties or worse.

```mermaid
flowchart TD
  A[Client requests false position] --> B[Explain legal requirement]
  B --> C[Request accurate records]
  C --> D{Client agrees?}
  D -->|Yes| E[Prepare accurate return]
  D -->|No| F[Decline or withdraw]
```

The practitioner should not threaten the client or disclose confidential information without authority, but they also cannot participate in fraud. If prior returns contain errors, the agent should advise the client of the consequences and recommend correction.

For exam questions, choose the answer that preserves integrity, due diligence, and compliance. Keeping a fee is never a reason to sign a false return. Practice more in our EA Part 3 question bank.

What should an enrolled agent do if a client asks them to take a fraudulent position?

Master Part 3 with our EA Course

Related Questions

Practice Questions