Deck 2: Tax Compliance, the Irs, and Tax Authorities

Question 1

If a taxpayer has little cash and a very technical tax case that she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S. Tax Court.

Answer 1

True

Question 2

If an individual taxpayer is unable to file a tax return by its original due date, thetaxpayer can request an automatic 9-month extension to file the return.

Answer 2

False

Question 3

In researching a tax issue, Eric finds that the U.S. Circuit Court of Appeals for the Federal Circuit previously has ruled in favor of his tax position, whereas the 11th Circuit (Eric's circuit) previously has ruled against his tax position. If Eric is contemplatinglitigating his tax position with the IRS, he should prefer to have his case first tried by theU.S. Tax Court.

Answer 3

False

Question 4

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Question 5

The three basic types of IRS examinations are computer exams, office exams, and business exams.

Question 6

Joel reported a high amount of charitable contributions as a deduction on his individual tax return relative to taxpayers with similar income levels. The information matching program is the IRS program most likely to identify Joel's tax return for audit.

Question 7

If a taxpayer loses a case at the Circuit Court level, he is granted an automatic appeal hearing with the Supreme Court.

Question 8

The IRS DIF system checks each tax return for mathematical mistakes and errors.

Question 9

If April 15th falls on a Saturday, the due date for individual tax returns will be onMonday, April 17th.

Question 10

Revenue rulings and revenue procedures are examples of primary authorities.

Question 11

The "90-day" letter gives the taxpayer the opportunity to pay a proposed IRS taxadjustment or file a petition in the U.S. District Court to contest the adjustment and hear the case.

Question 12

The tax return filing requirements for individual taxpayers only depend on the taxpayer'sfiling status.

Question 13

The "30-day" letter gives the taxpayer the opportunity to request an appeals conference or agree to a proposed IRS adjustment on the taxpayer's income tax return.

Question 14

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

Question 15

An extension to file a tax return does not extend the due date for tax payments.

Question 16

For fraudulent tax returns, the statute of limitations for IRS assessment is ten years.

Question 17

The statute of limitations for IRS assessment generally ends four years after the date atax return is filed.

Question 18

If a taxpayer is due a refund, she does not have to file a tax return.

Question 19

Office examinations are the most common type of IRS audit.

Question 20

Corporations are required to file a tax return annually regardless of their taxable income.

Question 21

An acquiescence indicates that the IRS lost a court case and that it has decided to follow the court's ruling in the future.

Question 22

Corporations are required to file a tax return only if their taxable income is greater than:

A) $600.
B) $1,000.
C) $0.
D) $750.
E) None of the choices are correct. Corporations are always required to file a tax return.

Question 23

This year April 15th falls on a Saturday. Individual tax returns will be due on:

A) April 17th.
B) April 14th.
C) April 16th.
D) April 15th.
E) None of the choices are correct.

Question 24

Which of the following is not a factor that determines whether a taxpayer is required to file a tax return?

A) Taxpayer's employment.
B) Filing status.
C) Taxpayer's gross income.
D) Taxpayer's age.
E) None of the choices are correct.

Question 25

The Internal Revenue Code of 1986 is the name of the current income tax code of theUnited States of America.

Question 26

A taxpayer can avoid an underpayment penalty if there is substantial authority that supports her tax return position.

Question 27

Proposed and Temporary Regulations have the same authoritative weight.

Question 28

Of the two basic types of tax services, beginning tax researchers often prefer topical tax services.

Question 29

Temporary Regulations have more authoritative weight than revenue rulings.

Question 30

In researching a question of fact, the researcher should focus her efforts on identifying authorities with fact patterns similar to her client's facts.

Question 31

Under the tax law, taxpayers may be subject to both civil and criminal penalties for underpaying their tax liability (e.g., due to fraud).

Question 32

If the IRS assesses additional tax on a tax return upon audit, a taxpayer may be subject to interest and penalties on the underpayment.

Question 33

Closed facts are especially conducive to tax planning.

Question 34

In general, a CPA will satisfy his professional responsibilities under the Statement on Standards for Tax Services when recommending a tax return position if he complies with the standards imposed by the applicable tax authority.

Question 35

Under the Statement on Standards for Tax Services, a CPA may recommend a tax return position if the position is frivolous and the position is not disclosed on the tax return.

Question 36

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S.Senate.

Question 37

As required by the Constitution, all tax bills are supposed to originate in the House ofRepresentatives.

Question 38

Because the U.S. District Court hears a broader set of cases, decisions by the U.S.District Court may be considered to have more authoritative weight than the U.S. Court of Federal Claims.

Question 39

If Paula requests an extension to file her individual tax return, the latest she could file her return without a failure-to-file penalty is:

A) November 15th.
B) October 15th.
C) September 15th.
D) August 15th.
E) None of the choices are correct.

Question 40

If Lindley requests an extension to file her individual tax return, the latest she could pay her tax due without penalty is:

A) October 15th.
B) November 15th.
C) August 15th.
D) April 15th.
E) None of the choices are correct.

Question 41

Lavonda discovered that the 5th Circuit (where Lavonda resides) has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS. Lavonda should choose which of the following trial courts to hear her case?

A) Tax Court or the U.S. Court of Federal Claims.
B) U.S. Court of Federal Claims only.
C) Tax Court or the U.S. District Court.
D) U.S. District Court only.
E) Tax Court only.

Question 42

Dominic earned $1,500 this year, and his employer withheld $200 of federal income tax from his salary. Assuming that Dominic is single, 30 years old, and will have zero tax liability this year, he:

A) is required to file a tax return.
B) is required to file a tax return but should not file because he owes no tax.
C) is not required to file a tax return and should not file a return.
D) is not required to file a tax return but should file a return anyway.
E) None of the choices are correct.

Question 43

Tyrone claimed a large amount of charitable contributions as a tax deduction relative to taxpayers with similar levels of income. If Tyrone's tax return is chosen for audit because of his large charitable contributions, which audit program likely identified Tyrone's tax return for audit?

A) Information matching.
B) Deduction Detective.
C) DIF System.
D) Document perfection.
E) None of the choices are correct.

Question 44

Allen filed his 2017 tax return on May 15th, 2018 and underreported his gross income by30 percent. Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2017 tax return should end:

A) April 15th, 2020.
B) April 15th, 2021.
C) May 15th, 2021.
D) May 15th, 2020.
E) None of the choices are correct.

Question 45

Which of the following audits is the least common, broadest in scope, and typically most complex?

A) Targeted.
B) Field.
C) Correspondence.
D) Office.
E) None of the choices are correct.

Question 46

Which of the following audits is the most common and typically less comprehensive?

A) Correspondence.
B) Field.
C) Random.
D) Office.
E) None of the choices are correct.

Question 47

Leslie made a mathematical mistake in computing her tax liability. Which audit program will likely catch Leslie's mistake?

A) Document perfection.
B) Information matching.
C) DIF System.
D) Mathematical correction.
E) None of the choices are correct.

Question 48

Which of the following is not considered a primary authority?

A) Revenue Ruling.
B) Tax Court case.
C) Tax service.
D) Treasury Regulation.
E) None of the choices are correct.

Question 49

Dan received a letter from the IRS that gave him the choice of (1) requesting aconference with an Appeals Officer or (2) agreeing to a proposed tax adjustment. Dan received the:

A) 30-day letter.
B) Tax adjustment letter.
C) Appeals letter.
D) 90-day letter.
E) None of the choices are correct.

Question 50

Henry filed his 2017 tax return on May 15th, 2018. The statute of limitations for IRSassessment on Henry's 2017 tax return should end:

A) May 15th, 2021.
B) April 15th, 2020.
C) May 15th, 2020.
D) April 15th, 2021.
E) None of the choices are correct.

Question 51

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

A) Tax adjustment letter.
B) 90-day letter.
C) Appeals letter.
D) 30-day letter.
E) None of the choices are correct.

Question 52

Andy filed a fraudulent 2017 tax return on May 1, 2018. The statute of limitations forIRS assessment on Andy's 2017 tax return should end:

A) May 1st, 2021.
B) May 1st, 2024.
C) April 15th, 2024.
D) April 15th, 2021.
E) None of the choices are correct.

Question 53

Greg earned $21,500 this year and had $1,500 of federal income taxes withheld from his salary. Assuming that Greg is single, 25 years old, and will have a total tax liability of$1,000 (and thus will receive a $500) refund, he:

A) is required to file a tax return but should not file because he owes no tax.
B) is required to file a tax return.
C) is not required to file a tax return but should file a return anyway.
D) is not required to file a tax return and should not file a return.
E) None of the choices are correct.

Question 54

Martin has never filed a 2017 tax return despite earning approximately $20,000 providing landscaping work in the community. In what tax year, will the statute of limitations expire for Martin's 2017 tax return?

A) 2020.
B) 2024.
C) 2021.
D) 2025.
E) None of the choices are correct.

Question 55

Lavonda discovered that the U.S. Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS. Lavonda should choose which of the following trial courts to hear her case?

A) Tax Court or the U.S. Court of Federal Claims.
B) Tax Court only.
C) U.S. Court of Federal Claims only.
D) Tax Court or the U.S. District Court.
E) U.S. District Court only.

Question 56

Which of the following is not a common method that the IRS uses to select returns for audit?

A) Information matching.
B) DIF system.
C) Document perfection.
D) Tax Select system.
E) None of the choices are correct.

Question 57

Which of the following courts is the only court that provides for a jury trial?

A) U.S. District Court.
B) U.S. Circuit Court of Appeals.
C) Tax Court.
D) U.S. Court of Federal Claims.
E) None of the choices are correct.

Question 58

Rowanda could not settle her tax dispute with the IRS at the appeals conference. If she wants to litigate the issue but does not have sufficient funds to pay the proposed tax deficiency, Rowanda should litigate in the:

A) U.S. Circuit Court of Appeals.
B) U.S. District Court.
C) Tax Court.
D) U.S. Court of Federal Claims.
E) None of the choices are correct.

Question 59

Ramon's tax return was randomly selected for audit. Which IRS program likely selectedRamon's return for audit?

A) DIF System.
B) Information matching.
C) Document perfection.
D) National Research Program.
E) None of the choices are correct.

Question 60

Bill filed his 2017 tax return on March 15th, 2018. The statute of limitations for IRSassessment on Bill's 2017 tax return should end:

A) March 15th, 2020.
B) April 15th, 2021.
C) April 15th, 2020.
D) March 15th, 2021.
E) None of the choices are correct.

Question 61

In a planning context,

A) old facts are preferred to new facts.
B) closed facts are preferred to open facts.
C) new facts are preferred to old facts.
D) open facts are preferred to closed facts.
E) None of the choices are correct.

Question 62

Generally, code sections are arranged (grouped together):

A) randomly.
B) by length.
C) by topic.
D) chronologically.
E) None of the choices are correct.

Question 63

Which of the following types of tax services are arranged by code section?

A) topical tax service.
B) legal tax service.
C) professional tax service.
D) annotated tax service.
E) None of the choices are correct.

Question 64

Which judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

A) Judicial consistency.
B) Judicial hierarchy.
C) The Goldman rule.
D) Stare decisis.
E) None of the choices are correct.

Question 65

Which of the following has the lowest authoritative weight?

A) Interpretative regulation.
B) Revenue ruling.
C) Revenue procedure.
D) Private letter ruling.
E) Legislative regulation.

Question 66

The regulation with the lowest authoritative weight is the:

A) Procedural regulation.
B) Legislative regulation.
C) Proposed regulation.
D) Interpretative regulation.
E) None of the choices are correct.

Question 67

Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

A) Private letter ruling.
B) Determination letter.
C) Revenue procedure.
D) Tax treaty.
E) Regulation.

Question 68

Which of the following committees typically initiates tax legislation?

A) Senate Finance Committee.
B) Senate Tax Committee.
C) Joint Conference Committee.
D) House Ways and Means Committee.
E) None of the choices are correct.

Question 69

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position:

A) only if the position meets the "more likely than not" standard.
B) if the position complies with the standards imposed by the applicable tax authority.
C) only if the position meets the "clear and convincing evidence" standard.
D) if the position is frivolous and disclosed on the tax return.
E) None of the choices are correct.

Question 70

If the President vetoes tax legislation, Congress:

A) cannot override the President's veto.
B) can override the President's veto with a 50 percent positive vote in the House and Senate.
C) can override the President's veto with a 75 percent positive vote in the House and Senate.
D) can override the President's veto with a 2/3rd positive vote in the House and Senate.
E) None of the choices are correct.

Question 71

Which of the following has the highest authoritative weight?

A) Legislative regulation.
B) Revenue procedure.
C) Revenue ruling.
D) Action on decision.
E) Private letter ruling.

Question 72

Which of the following is not a source of a tax practitioner's professional responsibilities?

A) Circular 230.
B) Statements on Standards for Tax Services.
C) AICPA Code of Professional Conduct.
D) State Board of Accountancy statutes.
E) None of the choices are correct.

Question 73

Circular 230 was issued by:

A) IRS.
B) State Boards of Accountancy.
C) AICPA.
D) American Bar Association.
E) None of the choices are correct.

Question 74

Which of the following is not a common tool used in conducting tax research?

A) Keyword search.
B) Annotated tax service.
C) Topical tax service.
D) Citator.
E) None of the choices are correct.

Question 75

Jeremy has a new client. He has identified a research question that relates to a transaction that the client completed several months ago. This type of research question willprimarily involve:

A) new facts.
B) old facts.
C) closed facts.
D) open facts.
E) None of the choices are correct.

Question 76

Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would she prefer to have issued the opinion?

A) Divorce Court.
B) Circuit Court.
C) Tax Court.
D) District Court.
E) None of the choices are correct.

Question 77

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

A) IRS revenue rulings.
B) U.S. Tax Court cases.
C) Committee reports.
D) IRS regulations.
E) None of the choices are correct.

Question 78

Which of the following has the highest authoritative weight?

A) Revenue ruling.
B) Tax article.
C) Private letter ruling.
D) Tax service.
E) Text book.

Question 79

Princess, who resides in the 2nd Circuit, recently found a circuit court case that is favorable to her income tax research question. Which of the following circuits would she prefer to have issued the opinion?

A) 1st Circuit.
B) Federal Circuit.
C) 2nd Circuit or the Federal Circuit.
D) 2nd Circuit.
E) None of the choices are correct.

Question 80

Which of the following is not considered a secondary authority?

A) Text book.
B) Tax article.
C) Tax service.
D) Private Letter Ruling.
E) None of the choices are correct.