Question 1

Bennie files his 2021 income tax return on April 15, 2022, showing a tax liability of $10,000 and a balance due of $1,000. Bennie does not pay the $1,000 until June 30, 2022. The failure-to-pay penalty is $15.

Accepted Answer

The failure-to-pay penalty is typically 0.5% of the unpaid taxes for each month or part of a month that the tax remains unpaid, starting after the due date of the return until the tax is paid. In Bennie's case, the penalty for 2.5 months (April 15 to June 30) on the $1,000 unpaid balance would indeed be $15 (0.5% * 2.5 * $1,000).

Question 2

Could a taxpayer make such a small amount of income that a tax return not be filed and still have an unlimited statute of limitations on assessment?

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Question 3

How dothe courts define reasonable cause?   List the examples of reasonable cause.

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Question 4

"In case of both civil and criminal frauds, the burden of proof is on the IRS." Explain.

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Question 5

List some of the possible defenses that a taxpayer may use against a charge of criminal tax offense.

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Question 6

What are the requirements tobe satisfied for the issue of an injunction by the IRS against a TRP whois guilty of misconduct toprohibit him or her from engaging in such misconduct or from practicing as a return preparer?

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Question 7

What is the procedure for claiming a refund or credit for overpayment of tax?

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Question 8

Cite twoinstances that would lead toimposition of criminal penalties on tax return preparers.

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Question 9

Elton filed his 2019 income tax return on July 31, 2020, showing total tax of $5,000 and a refund of $100. All tax had been paid by the due date of April 15, 2020. The failure tofile penalty is $0.

Accepted Answer

Since Elton paid all his taxes by the original due date (April 15, 2020), the failure to file penalty, which is based on unpaid taxes, would be $0 because there were no unpaid taxes.

Question 10

Underpayment is defined in § 6664 as the correct amount of tax, less the sum of the amount of tax reported by the taxpayer on the return, plus any amount previously assessed or collected, less the amount of rebates made.

Accepted Answer

Underpayment is calculated as the correct tax amount minus the sum of the reported tax, any previously assessed or collected amounts, and rebates, as defined in § 6664.

Question 11

Give an example of what it means for failure tomake deposits of taxes.   Describe the penalties involved.

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Quiz 13: Tax Practice and Administration