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

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Question 21

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 E)
G) D) and E)

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Question 22

True/False

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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.

A) True
B) False

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Question 23

Multiple Choice

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Which of the following has the highest authoritative weight?

Revenue rulings and revenue procedures are examples of primary authorities.

Which of the following committees typically initiates tax legislation?

A taxpayer can avoid an underpayment penalty if there is substantial authority that supports her tax return position.

Roddy was researching an issue and found a favorable tax court decision that addresses his issue.He also determined that there was a nonacquiescence for the case.Who issued the nonacquiescence? What is it? What does it mean and how would it affect Roddy's reliance on the court case?

Greg earned $25,500 this year and had $1,500 of federal income taxes withheld from his salary.Assuming that Greg is single, 25 years old, and will have a total tax liability of $1,402 (and thus will receive a $98 refund) , he:

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.

Circular 230 was issued by:

Martin has never filed a 2019 tax return despite earning approximately $30,000 providing landscaping work in the community.In what tax year, will the statute of limitations expire for Martin's 2019 tax return?

Campbell was researching a tax issue and found a favorable tax court opinion and an IRC Code

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

Carey was researching a tax issue and located what appears to be a favorable IRS regulation.He knows that regulations serve different purposes and are issued in different forms.Which purpose and which form of regulation would provide Carey the most confidence that he has found an authority that carries a lot of weight for the long term? How could Carey check the status of this regulation?

Leslie made a mathematical mistake in computing her tax liability.Which audit program will likely catch Leslie's mistake?

For fraudulent tax returns, the statute of limitations for IRS assessment is 10 years.

As required by the Constitution, all tax bills are supposed to originate in the House of Representatives.

Andy filed a fraudulent 2019 tax return on May 1, 2020.The statute of limitations for IRS assessment on Andy's 2019 tax return should end:

Mel recently received a 30-day letter from the IRS.Although his tax return being audited has several potential large issues (potential tax consequences of $70,000 − $80,000), the IRS agent auditing his return only identified one item that will require a modest adjustment of $10,000.Mel feels strongly that the $10,000 adjustment would not hold up in court and was surprised that the IRS agent did not identify some of the other potential larger issues.What are Mel's choices with respect to the 30-day letter and what factors should influence his decisions?

Bill filed his 2019 tax return on March 15^th, 2020.The statute of limitations for IRS assessment on Bill's 2019 tax return should end: