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Exam 2: Tax Compliance, the Irs, and Tax Authorities

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Question 1

True/False

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

A) True
B) False

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Question 2

Multiple Choice

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If Lindley requests an extension to file her individual tax return, the latest she could pay her tax due without penalty is:

A) April 15^th.
B) October 15^th.
C) August 15^th.
D) November 15^th.
E) None of the above.

F) B) and C)
G) A) and B)

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Question 3

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Office examinations are the most common type of IRS audit.

Henry filed his 2016 tax return on May 15^th, 2017. The statute of limitations for IRS assessment on Henry's 2016 tax return should end:

Mary Ann is working on a pretty big research project. Her manager has alerted her to the possibility that some of her research questions are likely to be questions of fact, whereas others are likely to be questions of law. Explain the difference between the two types of questions and how this would influence her research.

Temporary Regulations have more authoritative weight than revenue rulings.

Under the tax law, taxpayers may be subject to both civil and criminal penalties for underpaying their tax liability (e.g., due to fraud).

Circular 230 was issued by:

Allen filed his 2016 tax return on May 15^th, 2017 and underreported his gross income by 30 percent. Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2016 tax return should end:

Proposed and Temporary Regulations have the same authoritative weight.

For the following taxpayers indicate whether the taxpayer should file a tax return and why. a. Robert earned $50,000 this year as a staff accountant. His estimated tax liability is $4,500, and he expects to receive a $500 tax refund. b. Amy earned $4,000 this year working part-time. She will have no federal tax liability and has not made any federal tax payments. c. Ty earned $2,500 this summer and had $200 of federal taxes withheld from his paycheck. He will have no federal tax liability this year. d. Startup Corporation had a $50,000 loss this year. e. The Walker Family Trust earned $500 of gross income this year.

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

For the 2016 tax returns, indicate when the statute of limitation expires and why. a. Phoenix filed his tax return on February 28, 2017. b. Jill and Randy filed their tax return on August 16, 2017. c. Although required to file, Catherine chose not to file a tax return this year because she was expecting a tax refund and could not pull together all the information needed to file the return. d. Jerry filed his tax return on May 22, 2017 but has accidentally underreported his taxable income by 30%.

A taxpayer can avoid a substantial understatement of tax penalty:

A tax practitioner can avoid IRS penalty relating to a tax return position:

For the 2016 tax returns, indicate when the statute of limitation expires and why. a. Simon filed his tax return on April 10, 2017. b. Billy and Barbara filed their tax returns late on December 1, 2017. c. Pearson earns a living through various illegal activities. He filed his tax return on March 14, 2017 but did not report his illegal income on his tax return. d. Luther filed his tax return on July 17, 2017 but has accidentally underreported his taxable gross income by 20%.

Which of the following is not considered a primary authority?

Of the two basic types of tax services, beginning tax researchers often prefer topical tax services.

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

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