Question 1

For fraudulent tax returns, the statute of limitations for IRS assessment is ten years.

Accepted Answer

False

Question 2

The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

Accepted Answer

The statute of limitations for IRS assessment generally ends three years after the date a tax return is filed.

Question 3

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Accepted Answer

The Internal Revenue Code and tax treaties are both written laws that have been passed by Congress or agreed upon between countries, making them examples of statutory authorities.

Question 4

The IRS DIF system checks each tax return for mathematical mistakes and errors.

Accepted Answer

The IRS DIF system (Discriminant Information Function) scores tax returns for potential audit selection based on a formula that predicts the likelihood of tax underreporting, not for checking mathematical mistakes and errors.

Question 5

In researching a tax issue, Eric finds that the U.S. Circuit Court of Appeals for the Federal Circuit previously has ruled in favor of his tax position, whereas the 11^th Circuit (Eric's circuit) previously has ruled against his tax position. If Eric is contemplating litigating his tax position with the IRS, he should prefer to have his case first tried by the U.S. Tax Court.

Accepted Answer

The answer of In researching a tax issue, Eric finds...

Question 6

Revenue rulings and revenue procedures are examples of primary authorities.

Accepted Answer

Revenue rulings and revenue procedures are considered primary authorities because they are issued by the Internal Revenue Service (IRS) and have the force and effect of law.

Question 7

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

Accepted Answer

Secondary authorities are unofficial sources of tax law, such as tax services, newsletters, and articles, that provide interpretation, commentary, or analysis of primary authorities but do not have legal binding authority.

Question 8

Joel reported a high amount of charitable contributions as a deduction on his individual tax return relative to taxpayers with similar income levels. The information matching program is the IRS program most likely to identify Joel's tax return for audit.

Accepted Answer

The answer of Joel reported a high amount of charitable...

Question 9

If a taxpayer loses a case at the Circuit Court level, he is granted an automatic appeal hearing with the Supreme Court.

Accepted Answer

This statement is false. Taxpayers do not have an automatic right to appeal to the Supreme Court after losing at the circuit court level. They must petition the Supreme Court for a writ of certiorari, and the Court has discretion to accept or deny the case.

Question 10

Corporations are required to file a tax return annually regardless of their taxable income.

Accepted Answer

Corporations are required to file a tax return annually, regardless of their taxable income. Even if a corporation has no taxable income or has incurred a loss, it still needs to file a tax return to report its financial information to the government.

Question 11

The "90-day" letter gives the taxpayer the opportunity to pay a proposed IRS tax adjustment or file a petition in the U.S. District Court to contest the adjustment and hear the case.

Accepted Answer

The "90-day" letter, officially known as a Statutory Notice of Deficiency, gives the taxpayer the opportunity to pay a proposed IRS tax adjustment or file a petition in the Tax Court to contest the adjustment, not the U.S. District Court.

Question 12

If a taxpayer has little cash and a very technical tax case that she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S. Tax Court.

Accepted Answer

The U.S. Tax Court is designed for taxpayers who cannot afford legal representation and can provide more favorable rulings in technical tax cases.

Question 13

The "30-day" letter gives the taxpayer the opportunity to request an appeals conference or agree to a proposed IRS adjustment on the taxpayer's income tax return.

Accepted Answer

The purpose of the "30-day" letter is to give the taxpayer the opportunity to either request an appeals conference or agree to the proposed IRS adjustment on their income tax return.

Question 14

The three basic types of IRS examinations are computer exams, office exams, and business exams.

Accepted Answer

The three basic types of IRS examinations are correspondence audits, office audits, and field audits.

Question 15

If a taxpayer is due a refund, she does not have to file a tax return.

Accepted Answer

Even if a taxpayer is due a refund, they must still file a tax return in order to claim the refund.

Question 16

If an individual taxpayer is unable to file a tax return by its original due date, the taxpayer can request an automatic 9-month extension to file the return.

Accepted Answer

The answer of If an individual taxpayer is unable to...

Question 17

The tax return filing requirements for individual taxpayers only depend on the taxpayer's filing status.

Accepted Answer

The tax return filing requirements for individual taxpayers depend on several factors, including their income, age, and filing status.

Question 18

An extension to file a tax return does not extend the due date for tax payments.

Accepted Answer

An extension to file a tax return gives the taxpayer additional time to submit the return, but it does not extend the due date for tax payments. Tax payments are still due on the original deadline, and failure to pay on time can result in penalties and interest charges.

Question 19

If April 15^th falls on a Saturday, the due date for individual tax returns will be on Monday, April 17^th.

Accepted Answer

The IRS generally allows an extension when the last day to file falls on a weekend or a holiday observed by the federal government. In this case, April 15, 2017 falls on a Saturday, so the due date for individual tax returns is moved to the next business day, which is Monday, April 17, 2017.

Question 20

Office examinations are the most common type of IRS audit.

Accepted Answer

The answer of Office examinations are the most common type...

Quiz 2: Tax Compliance, the IRS, and Tax Authorities