Question 1

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 2

If a return is identified as including an unallowable item, the IRS:
A) Computes the seemingly necessary adjustment in taxes, and the taxpayer is notified 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

When an unallowable item is identified in a return, the IRS computes the necessary adjustment in taxes and notifies the taxpayer by mail. This is not considered an examination, and the return is not canceled or replaced. If the adjustment results in a deficiency, the IRS may issue a formal notice of deficiency at a later time.

Question 3

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

Accepted Answer

According to the IRS website, the Chief Counsel of the Internal Revenue Service "reports directly to the IRS Commissioner" and is responsible for providing legal guidance and support to the agency. Therefore, choice A is the best answer.

Question 4

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 also known as a 90-day letter. This notice gives the taxpayer 90 days to file a petition with the Tax Court to challenge the IRS's determination of deficiency before it becomes final.

Question 5

The procedure used to match the information recorded on a return with corresponding data received from third parties is referred to as:
A) Information Document Reconciliation Program
B) Information Document Review Program
C) Information Document Check Program
D) Information Document Matching Program

Accepted Answer

The term "matching" indicates a comparison of two sets of data to identify similarities or differences, which is the purpose of this procedure. The other answer choices do not accurately reflect the process used to match information.

Question 6

A written RAR is prepared by the IRS agent and is given to the taxpayer:
A) before the commencement of the examination
B) at the beginning of the examination
C) during the examination
D) upon the conclusion of the examination

Accepted Answer

The RAR or Revenue Agent's Report is provided by the IRS agent at the beginning of the examination. It is a written summary of the agent's findings regarding the taxpayer's tax return.

Question 7

A form 911 is filed by the Taxpayer for which of the following:
A) National Research Program
B) Appeals Conference
C) Tax Court Hearing
D) Taxpayer Assistance

Accepted Answer

Form 911 is used by taxpayers to request assistance from the Taxpayer Advocate Service when they are experiencing financial difficulties or other significant issues with the IRS.

Question 8

In selecting returns for examination, the primary goal of the IRS is to review only those returns that:
A) Belong to the taxpayers who were found guilty before.
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 IRS primary goal in selecting returns for examination is to review returns that contain mathematical and clerical errors. This is because these errors are easily quantifiable and can be corrected without too much effort. Additionally, correcting these errors may result in a revenue increase for the IRS without having to audit returns with potentially more complex issues. The other choices (A, B, and C) are not relevant factors to the primary goal of selecting returns for examination.

Question 9

The two methods of judicial review of an administrative action taken by the Service in determining whether a taxpayer owes taxes are:
A) Release method and the deficiency method.
B) Refund method and the assessment method.
C) The refund method and the deficiency method.
D) The protest method and the deferral method.

Accepted Answer

The answer of The two methods of judicial review of...

Question 10

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 National Taxpayer Advocate, who leads the Taxpayer Advocate Service (an independent organization within the IRS), has the authority to issue a Taxpayer Assistance Order (TAO) to provide relief to taxpayers experiencing significant hardship due to the manner in which the internal revenue laws are being administered.

Question 11

An office examination is scheduled when a selected return for examination:
A) belongs to a taxpayer who was previously found guilty of manipulating return
B) belongs to a taxpayer who resides near to 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 involves one or more issues that will require some analysis and the exercise of the IRS personnel's judgment. This indicates that the return has certain complexities or discrepancies that need to be thoroughly analyzed by the IRS personnel to make an informed decision about the taxpayer's tax liabilities.  The other options do not determine the need for an office examination.

Question 12

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 return and ends on the date of payment or the last working day of the respective year, whichever is later.
B) Filing 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

Interest on underpayment of taxes begins on the date of notice and demand (when the IRS informs the taxpayer of the deficiency) and ends on the date of payment. This is outlined in IRS guidelines and regulations.

Question 13

When the IRS examines the returns of large corporate taxpayers, it uses a team approach in its field audits known as the:
A) Collective Examination Program
B) Grouped Examination Program
C) Coordinated Examination Program
D) Team Examination Program

Accepted Answer

The answer of When the IRS examines the returns of...

Question 14

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 called a "Notice of Proposed Adjustment") is issued, giving the taxpayer 30 days to either agree with the proposed adjustments or request a conference with the IRS. This is the first step in the IRS's formal appeals process. A RAR (Report of Examination Changes) is a document that the IRS prepares to explain the changes made to a taxpayer's return after an examination. A 10-day notice is related to levies and seizures, while a 21-day notice is related to the assessment of taxes.

Question 15

The IRS is now organized into what kind of lines:
A) Type of taxpayer
B) Remedy requested
C) Functional
D) Type of tax

Accepted Answer

The IRS is organized into functional lines based on the type of work they perform, such as processing tax returns or conducting audits. This allows for more specialized and efficient handling of taxpayer issues.

Question 16

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 is responsible for administering the Taxpayer Advocate Service, a taxpayer-intervention system within the IRS that provides assistance to taxpayers who are experiencing financial difficulty or who believe that their rights as taxpayers have been violated. Option A is incorrect because the National Taxpayer Advocate is an independent office within the IRS and does not represent the IRS in Tax Court cases. Option C is incorrect because the National Taxpayer Advocate does not assist the IRS in preparing proposed legislation, treaties, regulations, and executive orders; rather, the Advocate communicates directly with Congress and identifies taxpayer issues that require legislative action. Option D is incorrect because the National Taxpayer Advocate does not prepare IRS rulings and other written determinations; those responsibilities fall to other offices within the IRS.

Question 17

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 has the authority to review and approve the IRS annual budget request. It does not have the authority to affect tax policy, individual tax cases processing, or intervene in personnel or procurement matters.

Question 18

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

The Field Examination involves complex issues that require more advanced knowledge of the internal revenue laws and accounting skills. The examination takes place at the taxpayer's place of business or at the IRS office. The other exams listed (Correspondence Examination, Office Examination, Arithmetical Error Examination) are generally less complex and do not require as much advanced knowledge or in-person interactions.

Question 19

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, who provides legal guidance and interpretive advice to the IRS and Treasury.

Question 20

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 (NRP) is designed to provide the IRS with statistics on the type and number of errors made on individual income tax returns. This program involves detailed audits of a representative sample of returns to assess compliance and understand where errors are most commonly made.

Quiz 13: Working With the IRS

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

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

To whom does the Chief Council of the Internal Revenue Service report to:

A statutory notice of deficiency is also known as a:

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

A written RAR is prepared by the IRS agent and is given to the taxpayer:

A form 911 is filed by the Taxpayer for which of the following:

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

The two methods of judicial review of an administrative action taken by the Service in determining whether a taxpayer owes taxes are:

The Taxpayer Assistance Order TAO) is issued by the:

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

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:

When the IRS examines the returns of large corporate taxpayers, it uses a team approach in its field audits known as the:

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

The IRS is now organized into what kind of lines:

The National Taxpayer Advocate:

The IRS Oversight Board:

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

The highest ranking legal adviser of the IRS is the:

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: