Question 1

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Accepted Answer

The IRS is organized functionally into four divisions: (1)Wage and Investment, (2)Small Business, (3)Middle Market/Large Corporate,and (4)Tax Exempt.Each division is headed by a divisional director.
The Wage and Investment Division is responsible for individual taxpayers who report only wage and investment income.Most of these taxpayers file Forms 1040,1040A,or 1040EZ.The Small Business Division is responsible for sole proprietors,individuals with supplemental income,and small corporations and partnerships.Most of these taxpayers file Forms 1065 and 1120S or Schedules C,E,and F.The Middle Market/Large Corporate Division is responsible for corporations with assets of $5 million or more.Most of these taxpayers file Form 1120.The tax Exempt Division is responsible for tax-exempt organizations,employee plans,and state and local governments.Most of these entities file forms relating to tax exempt status.
The shift to a functional mode of organization reflects Congress's desire to render the IRS more efficient and client-oriented.Through this mode of organization,tax administrators can focus on their areas of technical expertise,and taxpayers can deal with the same technical experts wherever they reside.

Question 2

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

Accepted Answer

The Tax Court is the only court in which the taxpayer does not have to first pay the tax before litigating for a refund. The U.S. Court of Federal Claims and the Federal district court both require the taxpayer to pay the tax before litigating for a refund.

Question 3

Identify which of the following statements is true.

Accepted Answer

Statement A is true. The special audit relief rule applies if the taxpayer has been audited on the same item in at least one of the two previous years and no additional tax was owed as a result of the earlier audit. Statement B is false because taxpayers cannot request an exemption from an audit. Statement C is false because Form 870 is an agreement between the taxpayer and the IRS to settle a tax liability, but it does not provide a 30-day interest-free period.

Question 4

Identify which of the following statements is false.

Accepted Answer

This statement is false. Signing Form 870 does not preclude the taxpayer from filing a refund suit. It only means that the taxpayer agrees to pay the assessed deficiency and waives certain rights to challenge the deficiency in court.

Question 5

Identify which of the following statements is false.

Accepted Answer

A and C are true statements. "Entered under Rule 155" does mean the parties must determine the tax due, and either party can appeal a decision. However, B is false because a taxpayer must pay the assessed tax before suing for a refund in a U.S. district court or the U.S. Court of Federal Claims.

Question 6

The majority of the individual tax returns that are audited are selected under the DIF program.

Accepted Answer

The DIF program is a computerized scoring system used by the IRS to identify returns with a high likelihood of containing errors or fraud. However, it is not the only method used to select returns for audit. Other factors such as random selection, referrals from other agencies or sources, and targeted enforcement efforts may also result in an audit.

Question 7

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

Accepted Answer

The 90-day letter, also known as a Statutory Notice of Deficiency, typically gives the taxpayer 90 days to file a petition with the Tax Court if they want to dispute the proposed adjustments made by the IRS. If the taxpayer fails to file a petition within the 90-day period, the proposed adjustments in the notice become final and the taxpayer will generally receive a bill for the full amount of the additional tax, plus interest and penalties. However, in certain circumstances, the taxpayer may be able to contest the proposed adjustments after the 90-day period has expired, but it becomes more difficult and the burden of proof is generally on the taxpayer.

Question 8

A taxpayer will receive a 30-day letter

Accepted Answer

The answer of A taxpayer will receive a 30-day letter
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Question 9

The IRS will issue a 90-day letter (a Statutory Notice of Deficiency)if the taxpayer does not file a protest letter within 30 days of the date of the 30-day letter.

Accepted Answer

The 90-day letter, also known as a Statutory Notice of Deficiency, is issued if the taxpayer does not file a protest letter within 30 days of the date of the 30-day letter.

Question 10

If the taxpayer has credible evidence,the IRS bears the burden of proof in a tax dispute.

Accepted Answer

This statement is true as per the Taxpayer Bill of Rights which states that taxpayers have the right to a fair and just tax system, and in a tax dispute, the burden of proof rests with the IRS. However, the taxpayer must provide credible evidence to support their claim.

Question 11

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 12

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

Accepted Answer

The DIF program, or Discriminant Function System, is specifically designed to identify returns with a high potential for a deficiency assessment, by using a mathematical formula to assign scores to certain return characteristics, such as income and deductions. The TCMP program is a more comprehensive audit program that selects returns based on a statistical sampling method. The instant audit program and 1040 program are not specifically designed to identify returns with a high potential for a deficiency assessment.

Question 13

Identify which of the following statements is false.

Accepted Answer

B) is false because when dealing with an "appeals coordinated issue," an appeals officer does not have the authority to settle based on the "hazards of litigation" without getting further approval or following specific procedures, as these issues are of significant importance or complexity and require consistent treatment across different cases.

Question 14

Identify which of the following statements is true.

Accepted Answer

Form 870-AD is indeed used when the taxpayer and an IRS representative agree on a tax liability that is less than originally proposed. This form signifies an agreement to the adjustments and typically includes a waiver of restrictions on assessment and collection of the deficiency and a waiver of the right to claim a refund or credit for overpayment.

Question 15

The Internal Revenue Service is part of the

Accepted Answer

The Internal Revenue Service (IRS) is part of the Treasury Department, which is responsible for collecting taxes and administering the country's finances. The IRS is specifically responsible for enforcing tax laws and regulations, processing tax returns, and collecting taxes from individuals and businesses.

Question 16

The IRS provides advice concerning an issue that arises during an audit by issuing

Accepted Answer

The IRS provides advice concerning an issue that arises during an audit by issuing a technical advice memorandum. This is a written advice from the National Office to the field offices, providing guidance on the tax treatment of a specific issue or transaction. It is binding on the IRS and can be relied upon by taxpayers. Revenue rulings provide general guidance on the interpretation of the tax laws, audit memorandums are internal documents used by IRS examiners, and private letter rulings provide guidance to specific taxpayers on their own tax situations.

Question 17

Identify which of the following statements is false.

Accepted Answer

The answer of Identify which of the following statements is...

Question 18

How long does a taxpayer have to file a petition with the U.S.Tax Court following the date of the Statutory Notice of Deficiency?

Accepted Answer

Taxpayers have 90 days from the date of the Statutory Notice of Deficiency to file a petition with the U.S. Tax Court. It is important to file the petition within this time frame to preserve the right to challenge the proposed deficiency in court.

Question 19

In order to appeal to the Appeals Division,a taxpayer must submit a protest letter to the IRS

Accepted Answer

The answer of In order to appeal to the Appeals...

Question 20

Identify which of the following statements is false.

Accepted Answer

This statement is false. Decisions from the Tax Court can be appealed to a higher court, such as the U.S. Court of Appeals. However, the taxpayer may have to pay the tax assessment before appealing to a higher court.

Quiz 15: Administrative Procedures

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is false.

The majority of the individual tax returns that are audited are selected under the DIF program.

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

A taxpayer will receive a 30-day letter

The IRS will issue a 90-day letter (a Statutory Notice of Deficiency)if the taxpayer does not file a protest letter within 30 days of the date of the 30-day letter.

If the taxpayer has credible evidence,the IRS bears the burden of proof in a tax dispute.

Identify which of the following statements is true.

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

Identify which of the following statements is false.

Identify which of the following statements is true.

The Internal Revenue Service is part of the

The IRS provides advice concerning an issue that arises during an audit by issuing

Identify which of the following statements is false.

How long does a taxpayer have to file a petition with the U.S.Tax Court following the date of the Statutory Notice of Deficiency?

In order to appeal to the Appeals Division,a taxpayer must submit a protest letter to the IRS

Identify which of the following statements is false.