[timmyj]

Which of the following are exempt from the registration requirements of the Securities Act of 1933?

A.
All industrial development bonds issued by municipalities
B.
Stock of a corporation offered and sold only to residents of the state in which the issuer was incorporated and doing all of its business
C.
Bankers’ acceptances with maturities at the time of issue ranging from one to two years
D.
Participation interests in a money market fund that consists wholly of short-term commercial paper
You answered: A. The correct answer is: B
Explanation:
The Securities Act of 1933 generally requires all securities to be registered before they may be offered or sold to the public except for those securities which the Act exempts. One of the available exemptions, known as the Intrastate exemption, is for securities which are part of an issue offered and sold only to persons who are residents of the same state by an issuer also residing and doing business within that same state.
————————-
I thought you didn’t have to turn over information to the IRS without the consent of your client or a valid subpoena. So many other questions seem to always hammer this point across, having one of the wrong answer always being “request from the IRS”

[AusNat]

I'm not sure how you're connecting IRS information requests (or anything to do with the IRS) to this question, honestly. This is specifically about the Securities and Exchange Act of 1933 (which regulates initial offerings of securities) and what types of securities & activity the SEC can regulate at the federal level.

AUD - 94
BEC - 90
FAR - 95
REG - NINJA in Training

Are we there yet?

Waiting impatiently on my last score.

[Tncincy]

This is a concept question. Nothing to do with clients. Security activity in connection with the Exchange Act, who has to register.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[timmyj]

I posted the wrong question here, for this question I thought if its a government security (i.e municipal bonds) it is exempt from registration.

[timmyj]

The IRS requested client records from a CPA who does not have possession or control of the records. According to Treasury Circular 230, the CPA must

A.
Notify the IRS of the identity of any person who, according to the CPA’s belief, could have the records.
B.
Require the client to submit the records to the IRS or withdraw from the engagement.
C.
Obtain the records from the client and submit them to the IRS.
D.
Contact all third parties associated with the records, such as banks and employers, to obtain the requested records for submission to the IRS.
You answered: D. The correct answer is: A
Explanation:
The correct answer is (A).

Generally, client information is confidential and cannot be shared with anyone, unless client consent is received.

However, a CPA can respond to information request for investigation, inquiry or review by AICPA, State CPA society or any government authorities such as the IRS, without prior client consent.

Therefore, when the IRS seeks client records from a CPA who is not in possession of the records, the CPA can notify the IRS of the identity of any person who is believed to have the records.

Additionally, the CPA may make reasonable inquiries with the client about the third party who may have the information.
————
This is the IRS question I meant to post.
——–
I thought you didn't have to turn over information to the IRS without the consent of your client or a valid subpoena. So many other questions seem to always hammer this point across, having one of the wrong answer always being “request from the IRS”

[Tncincy]

All you can do is learn from the answer. According to the answer, it is reasonable to inform the IRS who might have the records if the CPA is not in possession of them. I'm not a CPA but I let my clients know that the IRS can ask for any information/documents concerning your taxes, you should be able to provide the information if requested. And then, I have them sign a statement along with a due diligence statement to keep me clear. So really just learn from the answer to the question.

It begins with a 75
Been here too long as a cheerleader.....time to pass

It begins with a 75
Been here too long as a cheerleader....ready to pass

[AusNat]

For the IRS request question, your thinking (as you explained it) is actually correct and should get you to the right answer, or at least narrow it down to A and B … C and D should be immediately ruled out because they involve you handing over information to the IRS (presumably) without client consent. If all you could remember on the exam was “you can't divulge client info/data without a subpoena or client permission” then looking for the best or most reasonable answer choice from those four options based on what you do know should bring you to A as best guess. Then knowing more detail from circular 230 (in this case, that you can divulge who may/should have that information but not the information itself) will confirm that answer.

AUD - 94
BEC - 90
FAR - 95
REG - NINJA in Training

Are we there yet?

Waiting impatiently on my last score.

[Silent]

Regarding tax return and IRS request, you as CPA have a duty to give IRS any information you have. Remember there is no such thing as accountant/client privilege. The only time there is technically privilege is if you are hired by a lawyer to work on someone tax return in that case you have attorney/client privilege and even then it might not permit you to refuse to answer IRS questions.

[Author]

Replies