Question 1

When the IRS mails a statutory notice of deficiency to the taxpayer, the assessment and collection period is suspended for 150 days 210 days if the letter is addressed to a person who is outside the United States).

Accepted Answer

According to IRC Section 6213(a), the assessment and collection period is suspended for 150 days (or 210 days if the letter is addressed to a person who is outside the United States) after the mailing of a statutory notice of deficiency.

Question 2

Return preparers are subject to criminal prosecution for willful misconduct.

Accepted Answer

According to the Internal Revenue Service (IRS), return preparers who engage in willful or reckless conduct may face criminal prosecution.

Question 3

A taxpayer who files a corrected 1040 after filing a fraudulent 1040 will have a statute of limitations on the assessment of that return of:
A) 3 years
B) 6 years
C) 1 and a half years
D) None

Accepted Answer

The statute of limitations does not apply to fraudulent returns. Therefore, filing a corrected return after a fraudulent one does not change the fact that there is no statute of limitations for assessment in cases of fraud.

Question 4

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

Accepted Answer

An individual should use Form 1040X when they need to amend their tax return to claim a refund or credit.

Question 5

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

Accepted Answer

The answer of The code provides for payment of interest...

Question 6

Some taxpayers may request to have their taxes assessed in 18 months.

Accepted Answer

Taxpayers can request to have their taxes assessed in 18 months through an installment agreement with the IRS.

Question 7

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.

Accepted Answer

This statement is true. A failure to pay penalty is imposed when a taxpayer does not pay their taxes shown on their return or an assessed deficiency within 10 days of an IRS notice or demand.

Question 8

The civil fraud penalty is:
A) 5%
B) 20%
C) 25%
D) 75%

Accepted Answer

The answer of The civil fraud penalty is:
A) 5%
B) 20%
C)...

Question 9

If a taxpayer mistakenly overstates itemized deductions which results in an understatement of adjusted gross income of 25 percent, the IRS has a 6-year Statute of Limitations on assessment.

Accepted Answer

The answer of If a taxpayer mistakenly overstates itemized deductions...

Question 10

The 10-year period of limitations for collection begins from the due date of filing the return.

Accepted Answer

The answer of The 10-year period of limitations for collection...

Question 11

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

Accepted Answer

If a taxpayer is convicted of criminal fraud, it is unlikely that he or she will be able to contest a civil fraud determination. This is because the criminal conviction serves as strong evidence of the taxpayer's fraudulent behavior, making it difficult to challenge the civil fraud determination in court.

Question 12

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

Accepted Answer

The answer of A fraudulent failure to file tax returns...

Question 13

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

Accepted Answer

The answer of The Employee Withholding Allowance Certificate is required...

Question 14

Criminal and civil penalties are mutually exclusive.

Accepted Answer

Criminal and civil penalties can both be imposed in some cases. For example, a person may be criminally charged and face prison time for committing a crime, while also being sued in civil court and ordered to pay damages to the victim.

Question 15

Assessable penalties are subject to review by the Tax Court.

Accepted Answer

The answer of Assessable penalties are subject to review by...

Question 16

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

Accepted Answer

According to the IRS, if a taxpayer understates gross income by more than 25 percent, the statute of limitations on assessment is extended to 6 years from the date of filing the tax return. Therefore, if the understatement is 25 percent or less, the normal statute of limitations for assessment is 3 years from the date of filing the tax return.

Question 17

Assessment of an internal revenue tax must be made within three years of the later of date that the return was actually filed or the actual i.e., not extended) due date of the return.

Accepted Answer

This is the statute of limitations for the assessment of an internal revenue tax, as stated in Section 6501(a) of the Internal Revenue Code.

Question 18

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

Accepted Answer

This is generally true, as overpayments of taxes can be refunded or credited back to the taxpayer who paid them. However, there may be certain circumstances where the overpayment is credited to a different tax account or applied to a different tax liability.

Question 19

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.

Accepted Answer

This is stated in section 6672 of the Internal Revenue Code.

Question 20

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

Accepted Answer

The penalty for failure to make payment of quarterly estimated income taxes is calculated on a simple interest basis and is not deductible.

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