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

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Question 31

Multiple Choice

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Which of the following has the highest authoritative weight?

A) Legislative regulation.
B) Private letter ruling.
C) Revenue ruling.
D) Action on decision.
E) Revenue procedure.

F) B) and C)
G) B) and E)

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Question 32

Multiple Choice

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For which of the following tax violations is a civil penalty not imposed on taxpayers?

A) failure to file a tax return.
B) failure to pay tax owed.
C) fraud.
D) failure to make estimated tax payments.
E) None of the choices are correct.

F) C) and D)
G) B) and E)

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Question 33

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

If the IRS assesses additional tax on a tax return upon audit, a taxpayer may be subject to interest and penalties on the underpayment.

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

Revenue rulings and revenue procedures are examples of primary authorities.

Which of the following is not a source of a tax practitioner's professional responsibilities?

Nolene suspects that one of her new clients may be intentionally underreporting his taxable income. What are the potential ramifications to her client for this behavior? What are the consequences to Nolene if she assists the client in underreporting income? Any advice for Nolene?

If a taxpayer has little cash and a very technical tax case about which 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.

Which of the following is not considered a secondary authority?

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

Tina has a very complex tax return and it looks like she will not be able to file her tax return by its due date. When is her tax return due? What are Tina's options for paying her tax due and filing her tax return this year? What are the consequences if Tina does not file or pay her tax in a timely manner? Be specific.

Jaime recently found a "favorable" trial-level court opinion directly on point for her tax question. Which trial-level court would she prefer to have issued the opinion?

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.

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

Closed facts are especially conducive to tax planning.

Hong, an introductory tax student, is beginning his first research project. He has a complete understanding of the relevant facts for his project and has identified the initial research questions. He is now ready to begin using a tax service to identify relevant authorities. What are some suggestions for him on how to use tax services to identify relevant authorities?

For the following tax returns, identify the method the IRS likely used to select the return for audit. a. Dan made a mistake in adding his income on his tax return. b. Juanita failed to report her salary from her second job on her tax return. c. Michael and Venita deducted a relatively large amount of travel expenses on their tax return for their business. The travel expense is large relative to other taxpayers in similar businesses with similar levels of income. d. Paul and Melissa recently went through a very nasty divorce. One of the issues was Paul's less than forthright accounting of his income in determining the appropriate level of alimony.

Allen filed his 2019 tax return on May 15^th, 2020, 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 2019 tax return should end:

Which of the following courts is the only court that provides for a jury trial?