13.2 - Tax Procedures Flashcards
Tax Prepayments:
What percentage is the Internal Revenue Code structured to obtain for final tax purposes and by what means?
90% through withholding and estimated tax payments
Tax Prepayments:
How often are tax payments required to be made if not subject to withholding?
Quarterly
Tax Prepayments:
By what date(s) must taxpayers make tax payments if they are not subject to withholding?
- April 15th
- June 15th
- September 15th
- January 15th of the following year
Tax Prepayments:
Identify 4 examples of tax prepayments
- Overpayment of tax in a prior year
- Amount withheld by an employer from wages
- Direct payment by the individual
- Excess FICA withheld
Quarterly Installment Prepayments:
When are taxpayers allowed to annualize tax?
when income is uneven
Quarterly Installment Prepayments:
Quarterly tax payments must be 25% of the least of???
- 100% of PY tax if return was filed or 110% if AGI > $150k
- 90% of CY tax
- 90% of annualized CY tax
Quarterly Installment Prepayments:
Identify the formula used to calculate quarterly tax
Regular Tax
+ Alternative Minimum Tax
+ Self Employment Tax
+ Household Employee Tax
= Quarterly Tax
Estimated Tax Penalty
When is the estimated tax penalty imposed?
- Imposed if the total of estimated tax payments is less than 25% of the required minimum
Estimated Tax Penalty
Calcualte the estimated tax penalty
Federal Short term rate
+ (3% * Underpayment)
= Estimated Tax Penalty
Estimated Tax Penalty
How often is the estimated tax penalty calculated or determined?
- Penalty determined each quarter
Estimated Tax Penalty
True or False >>>
The estimted tax penalty is deductible as interest expense
False -
- Not deductible as interest expense
Estimated Tax Penalty
Identify the 3 exceptions to estimated tax penalty
- Actual tax liability is less than $1,000
- No tax liability incurred in prior year
- IRS waives it for reasonable cause
Estimated Tax Penalty
Does the automatic extension for filing the return also extend the time to pay taxes?
No
Other Penalties:
What are the amount of penalties assessed for failure to file a return?
- 5% per month up to 25% of unpaid liability assessed for failure to file a return
Other Penalties:
What is the minimum penalty assessed for failure to file a return?
- Minimum penalty lesser of:
- $135
- 100% tax due
Other Penalties:
How much is the penalty for failing to pay tax due?
- 0.5% per month (or fraction of a month) up to 25% of unpaid liability for failure to pay tax
Other Penalties:
At what point is the failure to pay penalty calculated?
- Failure to pay penalty is calculated from date liability is due
Other Penalties:
Can failure to pay penalty offset failure to file penalty?
Yes
Other Penalties:
How can the failure to pay penalty be avoided?
- Failure to pay penalty may be avoided by timely filing an extension request and paying a portion of estimated tax due
Filing Requirements
Identify the 3 filing requirements
- Gross income above a certain threshold
- Net earnings from self-employment are $400 or greater
- Dependent with gross income in excess of the STD deduction or unearned income over $1,050
Due Dates / Extensions:
When are individual returns due?
- April 15th for calendar year taxpayers
Due Dates / Extensions:
What form must individuals file for an automatic 6 month filing extension?
Form 4868
Due Dates / Extensions:
When are tax returns due for individuals who filed an extension?
October 15th
Due Dates / Extensions:
When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for tax years 2016 - 2025?
- April 15th filing due date
- 4th month after fiscal year end
Due Dates / Extensions:
When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for tax years 2016 - 2025 if the corporation file for a 5 month extension?
-
Extension: September 15th due date
- Due 9 – months after fiscal year end
- 5 – month extension granted
Due Dates / Extensions:
When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for tax years 2026 if the corporation file for a 6 month extension?
-
Extension: October 15th due date
- Due 10 – months after fiscal year end
- 6 – month extension granted
Due Dates / Extensions:
When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for 2026 tax year?
- April 15th filing due date
- 4th month after fiscal year end
Due Dates / Extensions:
When are C - Corporations with a June 30th fiscal year end tax returns due for tax years 2016 - 2025?
- September 15th filing due date
- 3rd month after fiscal year end
Due Dates / Extensions:
When are C - Corporations with a June 30th fiscal year end tax returns due for tax years 2016 - 2025 if a 7 - month extension is filed and granted?
-
Extension: April 15th due date
- Due 10-months after fiscal year end
- 7 – month extension granted
Due Dates / Extensions:
When are C - Corporations with a June 30th fiscal year end tax returns due for 2026 tax year?
- October 15th filing due date
- 4th month after fiscal year end
Due Dates / Extensions:
When are C - Corporations with a June 30th fiscal year end tax returns due for 2026 tax year if a 6 - month extension is filed and granted?
-
Extension: April 15th due date
- Due 10 – months after fiscal year end
- 6 – month extension granted
Due Dates / Extensions:
What is the return due date and extension due date for corporations with other fiscal years outside of the calendar or June 30th fiscal year end?
- Return due in the 4th month after close of fiscal year
- Extension: due 10th month after close of fiscal year
Due Dates / Extensions:
When are returns due for S - Corporations?
- Returns are due no later than the 15th day of the 3rd month of the year
- March 15th for calendar year taxpayers
Due Dates / Extensions:
What form must S - Corporations file for an automatic 6 - month extension?
- Automatic 6-month extension available for corporate returns by filing Form 7004
Due Dates / Extensions:
What is the extended due date for S - Corporations who file for an automatic 6 - month extension?
- Extends the deadline to September 15th for calendar year taxpayers
Due Dates / Extensions:
When are partnership and trust tax returns due?
- Must be filed by the 15th day of the 3rd month of the year
- March 15th for calendar year taxpayers
Due Dates / Extensions:
What form must partnerships and trusts file for an extension request?
Form 7004
Due Dates / Extensions:
How long are due dates extended for partnerships and trusts who file for an extension?
automatic 6 - month
Due Dates / Extensions:
What is the extended due date for partnerships and trusts who file for and is granted an extension?
- Extends deadline to September 15th for calendar year taxpayers
Due Dates / Extensions:
What is the filing due date for the filing of information returns by exempt organizations?
- File information returns by 15th day of the 5th month following close of taxable year
- May 15th for calendar year entities
Due Dates / Extensions:
What form must exempt organizations file to request an automatic 6 - month extension for filing their informational return?
Form 8868
Due Dates / Extensions:
What is the filing due date for estate and trust tax returns?
- Filed by 15th day of the 4th month following close of tax year
- April 15th for trusts and calendar-year estates
Due Dates / Extensions:
What form must estates and trusts file to request an extension to file ?
Form 7004
Due Dates / Extensions:
How long is the automatic extension for etates and trusts who request an extension to file?
5 1/2 months
Disclosure of Tax Positions:
When might accuracy related penalties be avoided?
- if return position adequately disclosed and has a reasonable basis
- understatement is due to substantial authority
- Substantial authority depends on the facts & circumstances
Disclosure of Tax Positions:
How much is the accuracy related penalty?
- Penalty = 20% of the underpayment
Disclosure of Tax Positions:
Is the accuracy related penalty figured on any part of an underpayment on which the fraud penalty is charged?
No
Disclosure of Tax Positions:
What is a substantial understatement?
larger of 10% of correct tax or $5,000
Disclosure of Tax Positions:
Give 6 examples of items that represent substantial authority?
HINT: CRTRII
- Court opinions
- Revenue rulings
- Treasury regulations
- Revenue procedures
- IRS notices & announcements
- IRB publishings
Claim for Refunds
How long are taxpayers required to retain records?
- Must maintain records as long as the contents may be material in administration of any internal revenue law
- Retain 3-7 years
Claim for Refunds
What form is used to claim a refund if it not for a current year refund (Form 1040) or prior year refund (Form 1040X)?
Form 843
When must a taxpayer file for a claim for refund?
- Must be filed by the later of 3 years from the filing of the return or 2 years after the tax was paid
Claim for Refunds
What is the statute of limitations for filing a claim for refunds when having worthless securities or bad debts?
statutue of limitations extended to 7 years
IRS Statute of Limitations:
What is the IRS statute of limitations for tax return assessments?
- Assessment limited to 3 years from later of return due date or filing date
IRS Statute of Limitations:
When is the IRS statute of limitations for assessments extended and for how long is the extension?
- Assessment period extended to 6 years in the case of gross omission
- gross omission = in excess of 25% of gross income
IRS Statute of Limitations:
True or False >>>
Gross omission = 50% of GI stated in the return
False - 25% of GI stated in the return
IRS Statute of Limitations:
What items are counted in the assessment of gross omission on a tax return?
- Only items completely omitted from the return are counted
What is the IRS statute of limitations for the assessment period in the case of a nonexistent or fraudulent return?
- Assessment period unlimited in the case of a nonexistent or fraudulent return
When will the IRS issue a release of the notice of federal tax lien once it has been filed?
within 30 days after the tax due has been satisfied
What does gross income mean for a trade or business?
Total of the amounts received from the sale of goods before deductions and cost of goods sold
