Deck 14: Tax Practice and Administration: Sanctions, Agreements, and Disclosures

Question 1

The standard for conviction in a criminal case is establishment of:

A)guilt with some reasonable doubt
B)guilt beyond reasonable doubt
C)any guilt even though highly doubtful
D)criminal intent even though not implemented

Answer 1

B

Question 2

For § 6502, requests for equitable relief may be filed within:

A)3 years
B)10 years
C)7 years
D)none of these are correct

Answer 2

B

Question 3

The maximum annual penalty that a TRP could be assessed is:

A)$5,000
B)$15,000
C)$25,000
D)none of these are correct

Answer 3

C

Question 4

A "large corporation" as defined in the Code is one which had a taxable income of:

A)$10 million or more in any of the ten immediately preceding taxable years
B)$2 million or more in any of the two immediately preceding taxable years
C)$5 million or more in any of the five immediately preceding taxable years
D)$1 million or more in any of the three immediately preceding taxable years

Question 5

Penalties that are based on a percentage of the delinquent tax are referred to as:

A)assessable penalties
B)ad valorem penalties
C)criminal penalties
D)nominal penalties

Question 6

A tax return preparer (TRP) is:

A)a CPA as required by the IRS
B)not subject to any kind of penalty as he/she prepares returns on behalf of taxpayers
C)any person who prepares tax returns gratuitously
D)any person who prepares tax returns for compensation

Question 7

A tax return preparer may disclose information obtained from the taxpayer without being subject to civil and criminal penalty if such disclosure is:

A)for other than the specific purpose of preparing a tax return
B)pursuant to fulfillment of his own financial goals
C)pursuant to any provisions of the code, or to a court order
D)required for the growth of his profession

Question 8

Noel, a calendar-year taxpayer, filed his 2016 income tax return on October 20, 2017, paying an amount due of $2,000. On April 1, 2017, he had obtained a six- month extension of time in which to file his return. However, he could not assert a reasonable cause for failing to file the return by October 15, 2017 (the extended due date), nor did he show any reasonable cause for failing to pay the tax that was due on April 15, 2017. Noel's failure to file was not fraudulent. The penalty for failure-to-pay tax is:

A)$35
B)$10
C)$70
D)$40

Question 9

William, a taxpayer, timely mailed his tax return. However, it was returned for insufficient postage. IRS imposed a penalty. Can William claim waiver of penalty?

A)Yes, William can claim waiver of penalty since it is his first tax return.
B)Yes, William can claim waiver since the failure to file tax return is due to a reasonable cause.
C)No, William cannot claim waiver since it is a case of willful neglect.
D)No, William cannot claim waiver of penalty as he is a delinquent taxpayer.

Question 10

The number of days the IRS is allowed in which it may refund an overpayment without incurring interest is:

A)15 days
B)20 days
C)35 days
D)45 days

Question 11

After the assessment has been made, the taxes assessed must be collected within:

A)2 years
B)10 years
C)5 years
D)8 years

Question 12

In which of the following cases does a taxpayer hold the right to refuse to answer inquiries that are made by the IRS in a criminal setting?

A)The taxpayer would suffer a monetary loss by answering a criminal inquiry.
B)The nature of the crime is not severe.
C)The taxpayer is confident that a conviction will be obtained.
D)The taxpayer would suffer a loss of some constitutional right by answering a criminal inquiry.

Question 13

The burden of proof in a fraud case is on the:

A)taxpayer
B)tax court
C)IRS
D)tax practitioner

Question 14

If a taxpayer fails to file her return due to willful neglect, the minimum penalty is:

A)25 percent or 5 months cumulative penalty
B)lesser of $205 or the full amount of taxes that are required to be shown on the return
C)15 percent monthly penalty
D)lesser of $135 or the full amount of taxes that are required to be shown on the return

Question 15

Samuels, a calendar-year taxpayer, filed his 2014 federal income tax return on October 1, 2017. His return showed an overpayment of $1,200, for which Samuels requested a full refund. The IRS refunds the amount without any interest. Which of the following could be the date of refund by the IRS?

A)November 17, 2017
B)December, 29 2017
C)November, 12 2017
D)December, 12 2017

Question 16

An individual who is convicted of willfully aiding or assisting in the preparation of a false return is subject to which of the following penalties?

A)imprisonment up to 2 years and/or fine that cannot exceed $10,000
B)imprisonment up to 5 years and/or fine that cannot exceed $50,000
C)imprisonment up to 10 years and/or fine that cannot exceed $15,000
D)imprisonment up to 3 years and/or fine that cannot exceed $100,000

Question 17

When the accuracy-related penalty applies, interest on the penalty accrues from the:

A)date on which the assessment is made
B)date on which the penalty was imposed or December 31, whichever is earlier
C)date on which the penalty was imposed
D)due date of the return

Question 18

Which of the following would lead to imposition of civil penalties?

A)violation of civil protocols
B)violation of tax laws as a result of negligence
C)violation of tax statutes due to reasonable cause
D)violation of social rules and norms

Question 19

When a taxpayer is subject to both underpayment and overpayment computations for the same time period, which of the following rates of interest applies to the net amount payable to or receivable from the government?

A)4%
B)6%
C)0%
D)5%

Question 20

The statute of limitations refers to a:

A)set of provisions that limits a tax return preparer's rights
B)specific period of time within which returns must be filed
C)set of provisions that limits a taxpayer's rights
D)specific period of time within which all taxes must be assessed and collected, and all refund claims must be made

Question 21

An individual should make a claim for refund or credit in the Form 1040X.

Question 22

For purposes of calculating the interest rate on overpayments and underpayments, the federal short-term interest rate is rounded to the nearest:

A)one-tenth percent
B)one percent
C)tenth percent
D)none of these are correct

Question 23

The civil fraud penalty is:

A)5%
B)20%
C)25%
D)75%

Question 24

Generally, an overpayment can be refunded or credited to the person who was subject to the original tax.

Question 25

The penalty for a willful failure to pay to the government a tax withheld from an employee's paycheck is one hundred percent of the unpaid tax.

Question 26

If a taxpayer is convicted of criminal fraud, he or she can contest a civil fraud determination.

Question 27

Interest imposed by the IRS is compounded:

A)annually
B)quarterly
C)daily
D)monthly

Question 28

One example of reasonable cause that the Internal Revenue Manual describes would include a timely mailed return sent to the wrong IRS address.

Question 29

Tax return preparers are subject to criminal prosecution for willful misconduct.

Question 30

To avoid the penalty, the ___________ must meet the burden of proof that the failure to file was the result of reasonable cause.

A)IRS
B)TRP
C)taxpayer
D)none of these are correct

Question 31

A fraudulent failure-to-file tax return is subject to a 25 percent monthly penalty.

Question 32

The penalty for failure to make payment of quarterly estimated income taxes is computed without any daily compounding and is not deductible.

Question 33

Criminal and civil penalties are mutually exclusive.

Question 34

Assessable penalties typically are expressed as a flat dollar amount and are usually imposed on third parties, such as tax return preparers.

Question 35

Assessable penalties are subject to review by the Tax Court.

Question 36

The Employee Withholding Allowance Certificate is required to be given by the employee to the employer.

Question 37

The Code provides for payment of interest on underpayments and overpayments of tax at an adjustable rate compounded annually.

Question 38

Willful attempt to evade or defeat a tax (i.e., tax evasion) is a felony offense that is punishable by a fine not to exceed $300,000 ($500,000 for corporations), reimbursement of the government's cost of prosecution, and/or imprisonment for a period not to exceed 5 years.

Question 39

If a taxpayer understates gross income by 25 percent, the IRS has a 6-year statute of limitations on assessment.

Question 40

A failure-to-pay penalty is imposed when the taxpayer fails to pay either a tax shown on his or her return or an assessed deficiency within 10 days of an IRS notice or demand.

Question 41

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?

Question 42

Cite two instances that would lead to imposition of criminal penalties on tax return preparers.

Question 43

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

Question 44

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

Question 45

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

Question 46

The accuracy-related penalty amounts to 20 percent of the portion of the tax underpayment.

Question 47

What are the requirements to be satisfied for the issue of an injunction by the IRS against a TRP who is guilty of misconduct to prohibit him or her from engaging in such misconduct or from practicing as a return preparer?

Question 48

Failure to file as a result of a taxpayer not having the sufficient funds to pay the tax liability is an example of reasonable cause.

Question 49

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

Question 50

A taxpayer can avoid the failure-to-file penalty if an extension of the return's due date is granted by the IRS.

Question 51

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

Question 52

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.