Question 1

The National Taxpayer Advocate:
A)represents the IRS in Tax Court cases
B)administers a taxpayer-intervention system
C)assists the IRS in preparing proposed legislation, treaties, regulations, and executive orders
D)prepares IRS rulings and other written determinations

Accepted Answer

The National Taxpayer Advocate administers a taxpayer-intervention system designed to assist taxpayers in resolving problems with the IRS. The Taxpayer Advocate also identifies systemic problems that exist within the IRS and makes recommendations for changes to reduce taxpayer burden and improve tax administration. The other choices listed (A, C, and D) are responsibilities of other offices within the IRS.

Question 2

The Taxpayer Assistance Order (TAO) is issued by the:
A)Secretary of Treasury
B)Chief Counsel
C)National Taxpayer Advocate
D)Commissioner of IRS

Accepted Answer

The Taxpayer Assistance Order (TAO) is issued by the National Taxpayer Advocate, an independent organization within the IRS that works to ensure taxpayers are treated fairly and have access to resources to resolve their tax issues. The TAO is issued when a taxpayer is experiencing significant hardship or suffering an immediate threat of adverse action due to IRS actions or inaction.

Question 3

A statutory notice of deficiency is also known as a:
A)30-day letter
B)10-day letter
C)90-day letter
D)21-day letter

Accepted Answer

A statutory notice of deficiency is commonly referred to as a 90-day letter. It is a formal written communication from the IRS informing a taxpayer that they have a deficiency in their tax payment and giving them 90 days to dispute it before the IRS makes a tax assessment. The other choices listed (30-day letter, 10-day letter, 21-day letter) are not typically associated with a statutory notice of deficiency.

Question 4

What is the formula that assigns numeric weights to certain (undisclosed by the IRS) return items, generating a composite score for the return?
A)selection of returns formula
B)unallowable items formula
C)discriminant function formula (DIF)
D)mathematical errors formula

Accepted Answer

The formula that assigns numeric weights to certain return items, generating a composite score for the return is known as the discriminant function formula (DIF). This formula is used by the IRS to identify potentially fraudulent or inaccurate tax returns.

Question 5

In selecting returns for examination, the primary goal of the IRS is to review only those returns that:
A)belong to taxpayers who were found guilty previously
B)will result in a satisfactory increase in the tax liability
C)have been filed for the first time
D)contain mathematical/clerical errors

Accepted Answer

The primary goal of the IRS is to identify returns that will result in a satisfactory increase in the tax liability. This means the returns with higher risk of noncompliance or underreporting of income are more likely to be selected for examination. The IRS uses various methods such as computerized scoring and human review to select these returns for examination. Returns with mathematical or clerical errors may be subject to automatic adjustments, but they would not necessarily be selected for examination. Returns of taxpayers who were found guilty previously may be subject to enhanced scrutiny, but this is not the primary goal of the IRS in selecting returns for examination. Returns filed for the first time may require additional review due to potential mistakes or fraud, but this is not the only factor considered in selecting returns for examination.

Question 6

Which of the following examinations involves complex issues that require more advanced knowledge of the internal revenue laws and accounting skills?
A)correspondence examination
B)field examination
C)office examination
D)arithmetical error examination

Accepted Answer

Field examinations involve complex issues and require advanced knowledge of internal revenue laws and accounting skills. These examinations are conducted in person at the taxpayer's place of business or at the IRS office. Correspondence and office examinations are typically less complex and require less advanced knowledge. Arithmetical error examinations are focused solely on identifying and correcting mathematical errors on the tax return.

Question 7

The program that is designed to furnish the IRS with statistics concerning the type and number of errors that are made on a representative sample of individual income tax returns is the:
A)Unallowable Items Program
B)Mathematical/clerical Error Program
C)National Research Program
D)Discriminant Function Program

Accepted Answer

The National Research Program is designed to provide the IRS with data on error rates on a representative sample of individual income tax returns. The Unallowable Items Program identifies items that taxpayers have attempted to deduct that are not allowed under tax law. The Mathematical/Clerical Error Program checks returns for mathematical errors or incorrect entries. The Discriminant Function Program uses a mathematical formula to identify potential tax returns for audit based on certain red flags.

Question 8

The IRS:
A)facilitates the processing of tax returns
B)enforces the internal revenue laws of the United States
C)is a bureau within the U.S. Department of Finance
D)all of these are correct

Accepted Answer

The answer of The IRS:
A)facilitates the processing of tax returns
B)enforces...

Question 9

The procedure used to match the information recorded on a return with corresponding data received from third parties is referred to as the:
A)Information Document Reconciliation Program
B)Information Document Review Program
C)Information Document Check Program
D)none of these are correct

Accepted Answer

The procedure described does not match any of the given options exactly, suggesting that the correct terminology or program name is not listed among the choices provided.

Question 10

The IRS Oversight Board:
A)has the authority to affect tax policy
B)has the authority to affect the processing of individual tax cases
C)can intervene in IRS personnel or procurement matters
D)can review and approve the IRS annual budget request

Accepted Answer

The IRS Oversight Board can review and approve the IRS annual budget request, but it does not have authority to affect tax policy, individual tax cases processing, or IRS personnel or procurement matters.

Question 11

In case of underpayment of taxes, if the deficiency is not paid in a timely fashion, interest is imposed on the unpaid amount for a period that begins on the date of:
A)filing the return and ends on the date of payment or the last working day of the respective year, whichever is later
B)filing the return and ends on the date of payment
C)the notice and demand and ends on the date of payment
D)the notice and demand and ends on the date when the taxpayer receives the notice

Accepted Answer

The interest on underpayment of taxes starts from the date of notice and demand, which is typically the date when the IRS sends a bill for the unpaid taxes. Interest continues to accrue until the date of payment is made. The other choices mention the filing of the return, which may not be relevant if the underpayment occurred after the return was filed.

Question 12

If a return is identified as including an unallowable item, the IRS:
A)computes the seemingly necessary adjustment in taxes and notifies the taxpayer by mail
B)sends a formal notice of deficiency to the taxpayer
C)considers the contact that it makes with a taxpayer under this circumstance to be an examination
D)cancels the return and asks the taxpayer to file his return again

Accepted Answer

If an unallowable item is identified in a return, the IRS will calculate the necessary adjustment in taxes and notify the taxpayer via mail. This is not considered an examination, and the return is not cancelled unless the unallowable item is fraudulent or seriously erroneous. A formal notice of deficiency is only sent if the IRS determines a deficiency in tax liability.

Question 13

When a taxpayer does not agree with the IRS agent's proposed adjustments a:
A)30-day letter is issued
B)RAR is issued
C)10-day notice is issued
D)21-day notice is issued

Accepted Answer

When a taxpayer does not agree with the IRS agent's proposed adjustments, a 30-day letter (also known as a statutory notice of deficiency) is issued. This letter gives the taxpayer 30 days to respond before the IRS can proceed with the proposed changes. The other answer choices are not applicable in this situation. A RAR (report of examination changes) is a document that outlines the proposed adjustments made by the IRS agent during the examination process. A 10-day notice is issued when the IRS plans to levy a taxpayer's assets or wages. A 21-day notice is issued when a taxpayer receives a refund offset notice, which is a notification that the IRS is going to use all or part of a taxpayer's refund to pay off any outstanding tax liabilities.

Question 14

The Commissioner of the Internal Revenue Service (IRS) is appointed by the:
A)President of the United States
B)Secretary of the Treasury
C)Senate
D)Congress

Accepted Answer

The Commissioner of the Internal Revenue Service (IRS) is appointed by the President of the United States, reflecting the executive branch's control over federal tax administration.

Question 15

A written revenue agent's report (RAR) is prepared by the IRS agent and is given to the taxpayer:
A)before the commencement of the examination
B)upon conclusion of the examination
C)during the examination
D)none of these are correct

Accepted Answer

A RAR is prepared by the IRS agent upon conclusion of the examination, and is given to the taxpayer along with the examination report. The RAR summarizes the findings of the examination and the adjustments to be made to the taxpayer's return, if any.

Question 16

The highest ranking legal adviser of the IRS is the:
A)Attorney General
B)Chief Attorney
C)District Attorney
D)Chief Counsel

Accepted Answer

The highest ranking legal adviser of the IRS is the Chief Counsel.

Question 17

A Form 911 is filed by the taxpayer as a request for which of the following?
A)National Research Program
B)Appeals Conference
C)Tax Court Hearing
D)Taxpayer Advocate Service Assistance

Accepted Answer

A Form 911 is filed by the taxpayer to request assistance from the Taxpayer Advocate Service (TAS). The TAS is an independent organization within the IRS that assists taxpayers who are experiencing economic harm, who are seeking help in resolving issues with the IRS, or who believe an IRS system or procedure is not working as it should. The TAS can help with issues such as resolving tax account problems, checking the status of a refund, or responding to IRS notices and letters.

Question 18

To whom does the Chief Counsel of the Internal Revenue Service report?
A)Commissioner of the Internal Revenue Service
B)Secretary of the Treasury
C)Regional Council in National Office
D)Attorney General

Accepted Answer

The Chief Counsel of the Internal Revenue Service is responsible for providing legal counsel to the IRS, and therefore reports directly to the Commissioner of the IRS.

Question 19

An office examination is scheduled when a selected return for examination:
A)belongs to a taxpayer who previously was found guilty of manipulating a return
B)belongs to a taxpayer who resides near the IRS local office
C)requires a mere verification of record-keeping
D)involves one or more issues that will require some analysis and the exercise of the IRS personnel's judgment

Accepted Answer

An office examination is scheduled when the selected return requires analysis and judgment on the part of the IRS personnel. This typically happens when there are issues or discrepancies in the return that need to be looked into further. A mere verification of record-keeping can often be done through correspondence or a phone call, and a taxpayer's residence location is not a determining factor in determining whether or not an office examination is needed. Additionally, while previous manipulations of a return may raise red flags for future returns, it is not the sole determining factor for scheduling an office examination.

Question 20

Signed into law in 1996, it guarantees taxpayers various rights to representation before the IRS. What is it called?
A)the Constitution
B)the Sixteenth Amendment
C)the Taxpayer Bill of Rights
D)the Taxpayer Advocate

Accepted Answer

The Taxpayer Bill of Rights is a law that was implemented in 1996, which provides taxpayers with certain rights to representation before the IRS.

Quiz 13: Working With the IRS

The National Taxpayer Advocate:

The Taxpayer Assistance Order (TAO) is issued by the:

A statutory notice of deficiency is also known as a:

What is the formula that assigns numeric weights to certain (undisclosed by the IRS) return items, generating a composite score for the return?

In selecting returns for examination, the primary goal of the IRS is to review only those returns that:

Which of the following examinations involves complex issues that require more advanced knowledge of the internal revenue laws and accounting skills?

The program that is designed to furnish the IRS with statistics concerning the type and number of errors that are made on a representative sample of individual income tax returns is the:

The IRS:

The procedure used to match the information recorded on a return with corresponding data received from third parties is referred to as the:

The IRS Oversight Board:

In case of underpayment of taxes, if the deficiency is not paid in a timely fashion, interest is imposed on the unpaid amount for a period that begins on the date of:

If a return is identified as including an unallowable item, the IRS:

When a taxpayer does not agree with the IRS agent's proposed adjustments a:

The Commissioner of the Internal Revenue Service (IRS) is appointed by the:

A written revenue agent's report (RAR) is prepared by the IRS agent and is given to the taxpayer:

The highest ranking legal adviser of the IRS is the:

A Form 911 is filed by the taxpayer as a request for which of the following?

To whom does the Chief Counsel of the Internal Revenue Service report?

An office examination is scheduled when a selected return for examination:

Signed into law in 1996, it guarantees taxpayers various rights to representation before the IRS. What is it called?