Question 1

Tony Curtis filed her 2015 income tax return on May 2, 2016. Which of the following statements is false?

Accepted Answer

None of the statements in the options are false. Option A is correct because a taxpayer who files a return within three years from the due date of the original return or the extended due date, whichever is later, is entitled to a refund of any overpayment. Option B is also correct because if a taxpayer files a request for an automatic extension of time to file by the original due date of the return and pays the estimated tax due with the request for extension, the taxpayer will not be subject to penalty and interest for late payment of tax. Option C is also accurate because the IRS has the authority to waive penalties for taxpayers who can demonstrate reasonable cause for their failure to file or pay on time, and an unexpected death in the family is considered a reasonable cause.

Question 2

Only one spouse must sign a jointly filed Form 1040.

Accepted Answer

Both spouses must sign a jointly filed Form 1040, as this indicates that they both agree to the information provided and are jointly responsible for the tax return.

Question 3

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule unless that person was forced to sign the tax return under duress.

Accepted Answer

While duress can be a factor in innocent spouse relief, it is not the only factor. Other factors such as lack of knowledge or involvement in the tax issues may also be considered. Therefore, a person may be relieved of liability under the innocent spouse rule even if they were not forced to sign the tax return under duress.

Question 4

A professional tax return preparer must attach his or her signature and identifying number to each return prepared.

Accepted Answer

This is required by the IRS to track who prepared each return and hold preparers accountable for any inaccuracies or fraudulent actions.

Question 5

Mr. and Mrs. Chung filed their unextended 2015 Form 1040 on May 30, 2016, and had no reasonable cause for the delinquency. The return showed a $10,479 balance of tax due. Compute the Chungs' late-filing and late-payment penalty.

Accepted Answer

The answer of Mr. and Mrs. Chung filed their unextended...

Question 6

Ms. Hepp filed her 2015 Form 1040 on February 19, 2016. The return showed a $2,730 overpayment of tax, and Ms. Hepp received her refund check from the IRS on April 30. Which of the following statements is true?

Accepted Answer

The IRS generally does not pay interest on refunds issued within 45 days of the filing date or due date of the return, whichever is later. Since Ms. Hepp received her refund within this period, no interest is due.

Question 7

Mr. Fiocchi filed his unextended 2015 Form 1040 on July 22, 2016, and had no reasonable cause for the delinquency. The return showed a $1,906 overpayment of tax (refund due). Compute Mr. Fiocchi's late-filing and late-payment penalty.

Accepted Answer

Since Mr. Fiocchi's return showed an overpayment of tax, there is no tax due. Therefore, there are no late-filing or late-payment penalties applicable.

Question 8

If a taxpayer fails to pay a deficiency, the IRS can garnish the taxpayer's salary or wage to settle the liability.

Accepted Answer

This is true. The IRS has the authority to garnish a taxpayer's wages for unpaid tax liabilities.

Question 9

Taxpayers who win their case in court are automatically entitled to recover litigation expenses from the government.

Accepted Answer

Taxpayers who win their case in court are not automatically entitled to recover litigation expenses from the government. The recovery of such expenses is subject to specific legal criteria and court discretion.

Question 10

If a taxpayer has insufficient financial means to pay a deficiency, the IRS may make an offer in compromise to settle for a lesser amount.

Accepted Answer

The IRS may make an offer in compromise to settle for a lesser amount if a taxpayer has insufficient financial means to pay a deficiency.

Question 11

A taxpayer who is disputing a deficiency of $50,000 or less may request an informal hearing by the Small Tax Case Division of the Tax Court.

Accepted Answer

According to the Internal Revenue Service (IRS), taxpayers who dispute a deficiency of $50,000 or less may request an informal hearing by the Small Tax Case Division of the Tax Court.

Question 12

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule if that person enjoyed significant financial benefit from taxable income omitted from the return.

Accepted Answer

The innocent spouse rule may relieve an individual of tax liability for a deficiency on a joint tax return if certain conditions are met. However, if the individual benefited financially from taxable income that was omitted from the return, they may not be eligible for relief under the innocent spouse rule.

Question 13

Mrs. Hepp completed her 2015 Form 1040 on April 13, 2016. The return showed a $923 balance due. Mrs. Hepp needed more time to double check all her computations. What can Mrs. Hepp do to give herself more time?

Accepted Answer

Mrs. Hepp can file a request for an automatic extension of time to file her Form 1040 by April 15 and pay the estimated balance due with the extension request to avoid penalties.

Question 14

Ms. Dela filed her unextended 2015 Form 1040 on November 2, 2016, and had no reasonable cause for the delinquency. The return showed a $22,840 balance of tax due. Compute Ms. Dela's late-filing and late-payment penalty.

Accepted Answer

The answer of Ms. Dela filed her unextended 2015 Form...

Question 15

A taxpayer who wants a jury trial must pay the tax deficiency and then sue the government for a refund in U.S. District Court.

Accepted Answer

This is true according to U.S. tax law. A taxpayer who wants a jury trial must pay the tax deficiency and then sue the government for a refund in U.S. District Court.

Question 16

The geographic location of the trial court in a tax dispute determines which of the appellate courts will hear an appeal.

Accepted Answer

The geographic location of the trial court in a tax dispute determines which circuit court of appeals will have jurisdiction over the appeal. The United States has 13 circuit courts of appeals, each covering a different geographic region.

Question 17

Which of the following statements about taxpayer responsibility is false?

Accepted Answer

All of the statements are true. Taxpayers are responsible for paying the correct amount of federal tax, filing the proper federal income tax return, and maintaining adequate tax records.

Question 18

Only the government may appeal a tax case to the U.S. Supreme Court.

Accepted Answer

Any party to the case may appeal a tax case to the U.S. Supreme Court, not just the government.

Question 19

If the IRS assesses additional tax against a corporation after it has liquidated, the shareholders can't be held liable for the tax due.

Accepted Answer

The answer of If the IRS assesses additional tax against...

Question 20

Which of the following statements about federal tax return filing dates is false?

Accepted Answer

The answer of Which of the following statements about federal...

Quiz 18: The Tax Compliance Process