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Every formula is grouped by official syllabus topic, with the formula in math notation plus a one-line note on when to use it (or a watch-out from CAIA, CFA, or other prep-provider commentary). Coverage is calibrated to the 2026 syllabus and refreshed when the corpus changes.

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Free IRS Enrolled Agent SEE Part 3 (Representation, Practices and Procedures) Formula Sheet (2026)

Practices and Procedures 12 items

Section 10.50 monetary penalty cap on a practitioner

P_{max} = G

— P_max = maximum monetary penalty under §10.50, G = gross income the practitioner derived (or would have derived) from the prohibited conduct

Enrolled agent triennial continuing education requirement

CE_{cycle} = 72

hours with

CE_{year} \geq 16

and

Ethics_{year} \geq 2

— totals over a 3-year enrollment cycle

Maximum monetary penalty under Circular 230 section 10.50c

P_{max} = GI_{conduct}

— GI_conduct = gross income the practitioner derived from the sanctionable conduct

Prorated CE hours for mid-cycle EA enrollment

CE = 2m + 2y

— m = months enrolled in cycle (round up partial months), y = full calendar years of enrollment (ethics hours)

IRC §6702 frivolous return penalty (joint return)

P = \$5{,}000 \times s

— s = number of spouses signing (1 for single, 2 for joint); penalty stacks on tax owed and other penalties

Civil fraud penalty under IRC section 6663

P = 0.75 \times U_f

— U_f = portion of the underpayment attributable to fraud

Section 6662 gross valuation misstatement penalty

P = 0.40 \times U

when claimed value

\geq 2 \times

correct value — P = penalty, U = underpayment from the overstatement

Section 6694(a) unreasonable position preparer penalty

P = \max(\$1{,}000,\ 0.50 \times F)

— P = penalty, F = preparer fee for the return

Section 6694(b) willful or reckless preparer penalty

P = \max(\$5{,}000,\ 0.75 \times F)

— P = penalty, F = preparer fee for the return

Section 6662 accuracy-related penalty (negligence or substantial understatement)

P = 0.20 \times U

— P = penalty, U = underpayment attributable to the negligent or understated position

Section 6695(g) due diligence penalty per return

P = \$635 \times n

— n = covered items missed (EITC, CTC/ACTC/ODC, AOTC, HoH); 2025 indexed

Substantial understatement threshold under Section 6662

T = \max(0.10 \times C,\ \$5{,}000)

— T = threshold, C = correct tax; $10M floor for C-corps

Representation Before the IRS 12 items

Allowable out-of-pocket health care expense under IRS Collection Financial Standards

E = \max(\text{actual}, \text{national standard})

— E = allowable monthly health care expense

Reasonable collection potential for an Offer in Compromise

RCP = NRE + FI

— NRE = net realizable equity in assets, FI = future income component over the offer period

Future income component for a 24-month periodic-payment OIC offer

FI = 24 \times DI

— FI = future income component, DI = monthly disposable income

Allowable housing or transportation expense under IRS Collection Financial Standards

E = \min(\text{actual}, \text{local standard})

— E = allowable monthly expense category

Net realizable equity in an asset (quick-sale)

NRE = (FMV \times 0.80) - E

— FMV = fair market value, 0.80 = IRS quick-sale factor, E = encumbrances/liens on the asset

Section 6713 civil penalty for unauthorized disclosure of return information

P = \min(250 \times n, 10{,}000)

— P = annual penalty in dollars, n = number of unauthorized disclosures in the year

Monthly disposable income for IRS collection

DI = NMI - AE

— NMI = net monthly income, AE = allowable expenses (lesser of actual or standard, except out-of-pocket health care)

Future income component for a 5-month lump-sum OIC

FI = 12 \times DI

— DI = monthly disposable income (24 months instead of 12 for a periodic-payment offer)

Section 6511 refund claim filing deadline

\text{deadline} = \max(\text{filing date} + 3\text{ yr},\ \text{payment date} + 2\text{ yr})

— later of two windows controls

Section 6502 IRS collection statute expiration date

\text{CSED} = \text{assessment date} + 10 \text{ years}

— CSED = collection statute expiration date for assessed tax

Section 6213(a) Tax Court petition filing deadline

\text{deadline} = \text{CP3219A date} + 90 \text{ days}

(150 if addressed abroad) — only the statutory notice starts the clock

Section 6501(e) substantial omission of gross income threshold

\text{omission ratio} = \dfrac{\text{omitted gross income}}{\text{reported gross income}} \geq 25\%

— triggers 6-year assessment SOL under §6501(e)

Specific Areas of Representation 12 items

Section 6511 refund claim statute of limitations

\text{Deadline} = \text{later of}(\text{filing date} + 3\text{ yr},\ \text{payment date} + 2\text{ yr})

— filing date = date original return filed or due date, payment date = date tax was paid

Section 6651(a)(1) failure-to-file penalty

P_{FTF} = 0.05 \times T \times n,\ \text{cap } 25\%

— T = net unpaid tax, n = months (or fraction) the return is late

Form 12153 CDP request deadline

\text{Deadline} = \text{notice date} + 30 \text{ days}

— notice date = date of LT11/Letter 1058 or NFTL notice, 30 days = statutory CDP filing window

Letter 1153 TFRP Appeals protest deadline

\text{Deadline} = \text{letter date} + 60 \text{ days}

— letter date = date of Letter 1153 with Form 2751, 60 days = statutory protest window to Appeals

Section 6672 Trust Fund Recovery Penalty

TFRP = 1.00 \times TF

— TF = unpaid trust-fund portion of Form 941 (employee income-tax withholding + employee share of FICA)

Offer in Compromise deemed-acceptance window

\text{Deemed accepted} = \text{submission date} + 24 \text{ months}

with no IRS ruling — submission date = date Form 656 filed, 24 months = §7122 evaluation period

Section 6651(a)(2) failure-to-pay penalty

P_{FTP} = 0.005 \times T \times n,\ \text{cap } 25\%

— T = unpaid tax shown on return, n = months (or fraction) tax remains unpaid

Section 7491 burden-shift entity size eligibility

NW \le \$7{,}000{,}000

and

E \le 500

— NW = entity net worth, E = number of employees; both conditions must hold to qualify for the shift

Section 7609 third-party summons petition-to-quash deadline

D = N + 23\ \text{days}

— D = last day to file petition to quash, N = date IRS mails notice of third-party summons to the taxpayer

Section 469(c)(7) real estate professional qualification test

H_{RE} > 750

and

H_{RE} > 0.5 \times H_{total}

— H_RE = hours in real property trades, H_total = total personal-service hours; both must hold

Section 469 active-participation rental loss allowance (MFJ phaseout)

A = \max(0,\ \$25{,}000 - 0.5 \times \max(0,\ MAGI - \$100{,}000))

— A = allowable loss, MAGI = modified AGI; fully phased out at $150,000

Section 7463 small tax case eligibility threshold

D \leq \$50{,}000

per tax period — D = disputed deficiency amount; election makes the Tax Court decision final and non-appealable

Filing Process 8 items

Records retention for a claim of loss from worthless securities

Retention = 7\ years

from later of return due date or filing date — applies under §6511 to records supporting worthless securities or bad debt deduction

E-file mandate threshold for a tax preparation firm under IRC §6011(e)(3)

N_{covered} \geq 11

per calendar year — N_covered = firm-wide count of Forms 1040, 1040-NR, 1040-SR, 1041, and 990-series returns expected to be filed

Form 8453 mailing deadline after IRS e-file acceptance

\text{mail by} = \text{acceptance date} + 3 \text{ business days}

— Form 8453 transmits paper-only attachments to an e-filed Form 1040

FTC Safeguards Rule large-breach notification trigger

N_{affected} \geq 500

consumers triggers FTC notice within 30 days — N_affected = consumers whose unencrypted customer information was acquired without authorization

EFIN proposed-sanction administrative appeal deadline

Appeal\ deadline = Notice\ date + 30\ days

— Notice date = date IRS issues the proposed-sanction notice; written appeal filed with the issuing IRS office

Paper-filing fallback deadline after an e-file rejection

\text{paper deadline} = \text{reject date} + 10 \text{ calendar days}

— preserves timely filing if the original e-file was attempted by the due date

Default tax preparer record retention end date

\text{end} = \max(\text{due date w/ extensions}, \text{filing date}) + 3 \text{ yrs}

— matches §6501(a) general assessment statute

Form 8879 ERO retention end date

\text{end} = \max(\text{return due date}, \text{IRS received date}) + 3 \text{ yrs}

— Form 8879 = e-file signature authorization retained by the ERO

Practices and Procedures 12 items

§6695(g) due diligence requires Form 8867, with records retained for 3 years and a penalty of $635 per failure per return for 2025.

Under §10.25, personal-and-substantial participation triggers a permanent bar, official responsibility a 2-year bar, and rule development a 1-year bar.

§10.27 permits contingent fees on amended returns or refund claims filed within 120 days of a formal IRS examination notice or challenge.

EA renewal requires 72 CPE hours per 3-year cycle, with at least 16 hours per year and 2 ethics hours annually.

IRC §6702 imposes a $5,000 frivolous-return penalty applied per spouse on a joint return, so a joint frivolous 1040 triggers $10,000.

OPR sanctions escalate from censure to monetary penalty (capped at gross income from the conduct) to suspension (1-59 months) to disbarment with a 5-year reapply bar.

EA enrollment renewal is filed on Form 8554 every 3 years with a $140 user fee, and CE records must be retained for 4 years.

EA continuing education requires 72 hours per 3-year cycle, with a minimum of 16 hours per year and 2 ethics hours per year.

§6662 imposes a 20% accuracy penalty for negligence and 150%+ valuation misstatements, and 40% for gross valuation misstatements at 200%+ of correct value.

§6695 fixed penalties are $60 per failure for copy/signature/PTIN/recordkeeping, $635 per credit per return for due diligence, and $600 per refund check negotiated.

§6694(a) unreasonable position penalty is greater of $1,000 or 50% of fee; §6694(b) willful is greater of $5,000 or 75% of fee.

To dispute a preparer penalty, pay 15%, file Form 6118, then sue for refund in district court within 2 years of disallowance.

Representation Before the IRS 8 items

A representative may sign a taxpayer's return only for disease/injury, 60 days continuous U.S. absence before the due date, or specific written IRS permission.

Streamlined installment agreements cover assessed balances of $50,000 or less paid within 72 months, with non-streamlined available up to $250,000.

IRC §7216 carries up to $1,000 fine and 1 year imprisonment per violation, while §6713 civil penalty is $250 per disclosure capped at $10,000/year.

Bankruptcy discharge of income tax requires the 3-year due-date rule, 2-year filing rule, and 240-day assessment rule all satisfied with no fraud or willful evasion.

The §6501 assessment statute is 3 years standard, 6 years for 25%+ gross income omission, and unlimited for fraud or unfiled returns.

§7201 tax evasion is a felony punishable by up to 5 years imprisonment and a fine of $100,000 ($500,000 corporate).

§6511 refund claims must be filed within the later of 3 years from filing or 2 years from payment, and §6502 collection runs 10 years.

Response windows: CP2000 is 30 days, math error abatement under §6213(b) is 60 days, and the CP3219A Tax Court petition is 90 days.

Specific Areas of Representation 8 items

Passport revocation under §7345 triggers at $62,000 (2025) of seriously delinquent tax debt, and the TFRP protest window on Letter 1153 is 60 days.

Form 12153 (CDP) must be filed within 30 days of an LT11/Letter 1058, and a CDP Notice of Determination is appealable to Tax Court within 30 days.

An OIC requires Form 656, a $205 application fee, and 20% lump-sum down, and is deemed accepted if the IRS does not rule within 24 months.

Under §6502 the CSED is 10 years from the date of assessment, tolled by a pending OIC plus 30 days and bankruptcy stay plus 6 months.

Form 12203 small case request applies when disputed tax per period is $25,000 or less; above that a formal written protest is required.

IRC §7491 shifts the burden to the IRS only if the entity has net worth under $7 million and 500 or fewer employees.

The 30-day letter accompanies the RAR and opens Appeals while the 90-day letter under IRC §6212 opens Tax Court jurisdiction.

A Tax Court petition must be filed within 90 days of the notice date, or 150 days if addressed to a person outside the US.

Filing Process 4 items

Rejected e-filed returns require taxpayer notification within 24 hours and paper-filing fallback within 10 calendar days to preserve timely filing.

The §6011(e)(3) e-file mandate triggers at 11 or more covered returns per firm per year, with Form 8948 documenting paper-filing exceptions.

Form 8879 must be retained 3 years from the later of the return due date or IRS received date.

FTC Safeguards Rule breach notification is required when 500 or more consumers are affected, filed within 30 days of discovery.

Free IRS Enrolled Agent SEE Part 3 (Representation, Practices and Procedures) Formula and Limits Sheet (2026)

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