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

A) April 15th.
B) October 15th.
C) August 15th.
D) November 15th.
E) None of these.

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

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Question 32

Multiple Choice

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The regulation with the lowest authoritative weight is the:

A) procedural regulation
B) interpretative regulation
C) proposed regulation
D) legislative regulation
E) None of these

F) A) and E)
G) All of the above

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Question 33

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An acquiescence indicates that the IRS lost a court case and that it has decided to follow the court's ruling in the future.

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

In researching a question of fact, the researcher will focus her efforts on identifying authorities with fact patterns similar to her client's facts.

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 2nd 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.

Henry filed his 2014 tax return on May 15th, 2015. The statute of limitations for IRS assessment on Henry's 2014 tax return should end:

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

Raul was researching an issue and found two Tax Court decisions issued within 6 months of each other, one for a taxpayer residing in California and the other for a taxpayer residing in New York whose rulings were inconsistent. Raul knows that the federal tax law does not differ by state and the issue was exactly the same in both cases. Raul is confused because he thought that a basic judicial doctrine was that a court is supposed to rule consistently. Name and describe this judicial doctrine that requires judicial consistency and discuss why the Tax Court may have intentionally ruled inconsistently in this example.

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 11th 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.

Rebecca is at a loss. A new tax law was recently passed, and she needs to get a better understanding of why the tax law was passed and the intent of the law from an official authority. Describe what authorities may be especially helpful to Rebecca and why she can't find many authorities that discuss the new law.

Hong, an introductory tax student, is beginning his 1st 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?

Proposed and Temporary Regulations have the same authoritative weight.

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

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

Ramon's tax return was randomly selected for audit. Which IRS program likely selected Ramon's return for audit?

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.

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

Princess, who resides in the 2nd Circuit, recently found a circuit court case that is favorable to her research question. Which of the following circuits would she prefer to have issued the opinion?

Lindy, a tax intern, is beginning her 1st tax research case for her employer. Her manager has given her a basic understanding of the facts and has identified the basic research question. Lindy is now ready to begin searching for relevant tax authorities. Describe the different types of research tools available to help a tax researcher locate relevant authority and identify which type may be especially useful for Lindy.