Question 1

A disadvantage of electing to use the small claims division of the Tax Court is that

Accepted Answer

The disadvantage of electing to use the small claims division of the Tax Court is that the decision is final and cannot be appealed.

Question 2

The IRS may acquiesce or nonacquiesce to decisions from which of the following courts:

Accepted Answer

The IRS may acquiesce or nonacquiesce to decisions from all the mentioned courts: U.S. Tax Court, U.S. District Court, U.S. Court of Appeals, and U.S. Court of Federal Claims.

Question 3

Which of the following is generally accorded the highest level of authority?

Accepted Answer

A legislative regulation is generally accorded the highest level of authority because it is a rule created by Congress and carries the full force of law. It must be followed by both taxpayers and the IRS unless it is successfully challenged in court. Private letter rulings, revenue rulings, and the Internal Revenue Bulletin are all administrative guidance issued by the IRS, and while they carry weight and provide insight into how the IRS will interpret and apply the law, they are not binding on the IRS or taxpayers. Decisions of a U.S. District Court are important legal precedents, but they pertain to specific cases and may not be applicable to other taxpayers or situations.

Question 4

Which of the following courts is a trial court for tax cases?

Accepted Answer

The U.S. District Court is the trial court for tax cases. The U.S. Supreme Court and U.S. Court of Appeals are appellate courts, while the U.S. Court of Appeals for the Federal Circuit has jurisdiction over specialized areas such as patent law and international trade.

Question 5

What body prepares a compromise version of tax legislation when the House and Senate versions are not in agreement?

Accepted Answer

The Joint Conference Committee is responsible for reconciling differences between the House and Senate versions of tax legislation and preparing a compromise version that can be voted on by both chambers. The other options listed may play a role in the legislative process, but they do not specifically prepare compromise versions of tax legislation.

Question 6

If the House and the Senate both approve similar but not identical tax bills,any differences between the two pieces of legislation are resolved by the

Accepted Answer

Differences between tax bills passed by the House and the Senate are resolved through a Joint Conference Committee, which is made up of members of both chambers. This committee is responsible for ironing out any discrepancies between the two bills and coming up with a final version that can be approved by both the House and the Senate. The other committees listed (Ways and Means Committee, Finance Committee, and House Appropriations Committee) do not play a role in resolving differences between tax bills passed by the House and Senate.

Question 7

Which of the following statements pertaining to acquiescence and nonacquiescence is not true?

Accepted Answer

An announcement of nonacquiescence does not prevent a taxpayer with similar circumstances from following that court decision. Taxpayers are free to follow court decisions, even if the IRS has announced nonacquiescence. However, the IRS may continue to litigate the issue in other cases.

Question 8

A nonacquiescence

Accepted Answer

A nonacquiescence means that the IRS disagrees with a decision of the court and will not follow it in similar situations.

Question 9

Taxpayers may elect to use the small claims division of the U.S.Tax Court if the amount of tax in dispute is less than

Accepted Answer

Taxpayers may elect to use the small claims division of the U.S. Tax Court if the amount of tax in dispute is less than $50,000. This provision allows for a simpler and less formal process for resolving smaller tax disputes.

Question 10

Which of the following is true of revenue rulings?

Accepted Answer

Revenue rulings represent the official IRS stance on specific tax issues, but they do not have the binding authority of law on courts. Courts can, and sometimes do, overrule the interpretations presented in revenue rulings.

Question 11

Tara does not agree with a proposed deficiency of additional tax resulting from an examination of her individual income tax return.She has not been able to satisfactorily resolve her case within the administrative processes of the Internal Revenue Service.Which of the following courts may she petition without first making payment of the contested deficiency?

Accepted Answer

The United States Tax Court is a special court that hears cases solely related to tax issues. Taxpayers may petition the Tax Court without prepayment of the contested deficiency, allowing them to challenge the IRS without first paying the disputed amount. The other courts listed may also hear tax cases, but they generally require payment of the disputed tax before allowing taxpayers to bring their case to court.

Question 12

During the legislative process,several groups of lawmakers become part of the system.Those groups include the
I.House Ways and Means Committee
II.Joint Conference Committee
III.U.S.Supreme Court
IV.Joint Committee on Taxation
V.U.S.Senate

Accepted Answer

The House Ways and Means Committee and the Joint Committee on Taxation are both involved in the legislative process related to taxes and revenue. The U.S. Supreme Court is not a group of lawmakers, but rather a separate branch of government responsible for interpreting the constitutionality of laws. The U.S. Senate is also involved in the legislative process, making statement V correct; however, statement II is incorrect as the Joint Conference Committee is not a separate group of lawmakers, but rather a temporary committee created to resolve differences between the House and Senate versions of a bill. Therefore, only statements I, II, and V are correct.

Question 13

Which of the following types of cases are subject to the Chief Counsel's Acquiescence / Non -acquiescence Policy?

Accepted Answer

The Chief Counsel's Acquiescence / Non-acquiescence Policy applies to all types of case decisions listed in the options A, B, C and D.

Question 14

Which of the following is/ are trial level courts for tax cases?
I.U.S.Court of Federal Claims.
II.U.S.Supreme Court.
III.U.S.Court of Appeals for the Federal Circuit.
IV.U.S.Court of Appeals for the Tenth Circuit.
V.U.S.District Court.

Accepted Answer

The U.S. Court of Federal Claims and the U.S. District Court are trial level courts for tax cases. The U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit and the Tenth Circuit are appellate courts, which means they handle appeals of cases that have already been decided in lower courts. Therefore, statements II, III, and IV are incorrect.

Question 15

Which of the following is a characteristic of U.S.District Courts?

Accepted Answer

One characteristic of U.S. District Courts is that the taxpayer may obtain a jury trial, and the jury decides matters of fact but not matters of law. This means that the jury can determine what happened in the case, but the judge has the final say on how the law should be applied to those facts. Choices A, B, and C are incorrect statements about U.S. District Courts.

Question 16

The acquiescence policy of the IRS extends to

Accepted Answer

The acquiescence policy of the IRS applies to all the above-mentioned courts, which means that the IRS will follow court decisions on a particular issue or case and will not appeal to a higher court.

Question 17

Taxpayers need to pay the tax deficiency in advance and sue for a refund in
I.U.S.Tax Court.
II.U.S.District Court.
III.U.S.Court of Federal Claims.

Accepted Answer

Taxpayers do not need to pay the tax deficiency in advance to sue in U.S. Tax Court; this is the primary venue where disputes can be resolved before paying the deficiency. However, to sue for a refund in U.S. District Court or the U.S. Court of Federal Claims, the taxpayer must first pay the tax deficiency. Therefore, statements II and III are correct.

Question 18

The Internal Revenue Service is a branch of

Accepted Answer

The Internal Revenue Service (IRS) is a branch of the Treasury Department, which is responsible for collecting taxes and enforcing tax laws in the United States.

Question 19

Which of the following authorities can help the taxpayer interpret a new tax law soon (i.e.during the first few months)after it becomes law?

Accepted Answer

Committee Reports are often the most immediate source of interpretation for new tax laws, as they provide insight into the legislative intent behind the law. Treasury Regulations, Revenue Rulings, the Internal Revenue Code, and Court Cases typically take longer to update or become available following new legislation.

Question 20

Tax regulations are first issued in

Accepted Answer

Tax regulations can be first issued in either Proposed form or Temporary form, allowing for public comment and immediate guidance, respectively.

Quiz 16: Tax Research