Circular 230 and AI for Tax Professionals Quiz

Answers and explanations appear as you take the quiz.

1. How does Circular 230 address artificial intelligence specifically?
   • It bans AI use by enrolled agents
   • It has no AI-specific rules, but its existing duties apply to AI-assisted work
   • It requires registering AI tools with the IRS
   • It exempts AI-drafted advice from review
2. Under section 10.22, when may a practitioner rely on the work product of another source?
   • Always, if the source is software
   • Only when they used reasonable care in engaging, supervising, training and evaluating that source
   • Never under any circumstances
   • Only if the client signs a waiver
3. Section 10.35 imposes which duty?
   • Competence
   • Advertising disclosure
   • Fee limits
   • Continuing education hours
4. An AI draft of written advice assumes facts the client never provided. Under section 10.37, what is the problem?
   • Written advice may not exceed two pages
   • Advice must rest on reasonable factual assumptions and consider relevant facts
   • AI drafts must be signed by the IRS
   • Section 10.37 only covers marketing
5. Which provisions outside Circular 230 penalize preparers for unauthorized disclosure of tax return information?
   • Internal Revenue Code sections 7216 and 6713
   • Section 10.34 only
   • The Loving v. IRS decision
   • The Sarbanes-Oxley Act
6. What did Loving v. IRS (2014) mean for Circular 230?
   • It extended Circular 230 to all software vendors
   • It limited the IRS's authority over unenrolled preparers' return-preparation work
   • It abolished the Office of Professional Responsibility
   • It required AI disclosures on every return
7. Which practice best satisfies the diligence duty when AI output cites authority?
   • Accepting the citation if it is formatted correctly
   • Asking the same AI tool whether its citation is correct
   • Verifying each cited authority in primary sources such as the Code, regulations or court opinions
   • Removing all citations from client memos
8. A practitioner says the AI tool, not she, is responsible for an error in client advice. How does the guide treat this?
   • Correct, responsibility shifts to the vendor
   • Correct, if the tool is enterprise-grade
   • Incorrect, citing an AI tool does not shift professional responsibility
   • Incorrect, but only for attorneys