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Income Tax Planning > Administrative (Lesson 3) > Flashcards

Administrative (Lesson 3) Flashcards

1
Q

What is the first primary source of tax law

A
  • Internal Revenue Code
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2
Q

What are the second primary source of tax law

A
  • Administrative sources
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3
Q

Who issues regulations

A
  • US Treasury department
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4
Q

What is a regulation

A
  • have the full force and effect of law and are the second highest authority of tax law after the IRC
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5
Q

What are the three types of regulations

A
  • Proposed
  • Temporary
  • Final
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6
Q

What is proposed regulation

A
  • a preview of final regulations and do not have legal precedence
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7
Q

What are temporary regulations

A
  • are issued when guidance is needed quickly and have the same authoritative value as final regulations
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8
Q

What are final regulations

A
  • have full force and effect of law
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9
Q

What are three types of final regulations

A

procedural regulations

  • are essentially housekeeping instructions

interpretive regulations

  • implement the intent of committee reports and the IRC

Legislative regulations

  • allow the Treasury to determine the details of the law, but congress must specifically delegate this authority
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10
Q

What is a revenue ruling

A
  • interpretations of the tax laws issued by the IRS
  • usually provided in response to a taxpayer request and are based on facts common to many taxpayers
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11
Q

Do revenue rulings have the full force and effect of law

A
  • no they do not have full force and effect of law but they are binding on officials of the IRS
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12
Q

Are courts bound by revenue rulings

A
  • no but they can be cited as precedent
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13
Q

What are published weekly in the Internal revenue bulleten

A
  • revenue rulings
  • revenue procedures
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14
Q

What are revenue procedures

A
  • describe internal practices and procedures within the IRS
  • Published in Internal revenue bulletin
  • state changes in techniques and administrative procedures used by the IRS
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15
Q

What is a private letter ruling

A
  • PLRs are issued by the IRS at the request of the taxpayer
  • IRS is only bound for that taxpayer
  • cannot be relied on by other taxpayers as precedent
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16
Q

What are determination letters

A
  • are issued by the District directors for returns that will be filed in their respective districts
  • only issued with regard to completed transactions
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17
Q

Determination letters are only issued if the answer is specifically covered by

A
  • statute
  • treasury decision or regulation or
  • ruling opinion or court decision published in the internal revenue bulletin
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18
Q

What is a technical advice memorandum

A
  • are issued by the national IRS office
  • usually issued in response to a request by an agent performing an audit
  • provide clarification that cannot be provided by the local IRS office
  • deal with completed transactions
  • only apply to the taxpayers involved
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19
Q

What are the third primary source of tax law

A
  • Judicial sources
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20
Q

What must taxpayers do if they cannot resolve disputes with the IRS

A
  • seek adjudication from the federal courts
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21
Q

What are court decisions considered

A
  • official interpretations and applications of the IRC by the judicial branch of the government
  • can carry the full force for the statute itself
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22
Q

What is the role of the IRS

A
  • organized to carry out the responsibilities of the secretary of the treasury
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23
Q

How long does a taxpayer have to file a return for a claim of refund

A
  • 3 year window from the due date of the return or then the money becomes property of the US treasury
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24
Q

If no return has been filed what is the statute of limitations if the individual owes

A
  • statute does not start until a return is filed
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25
Q

If a return how long does the IRS have to audit the return

A
  • 3 years from the due date of the return and 10 year statute of limitations for the IRS collecting tax
26
Q

If the taxpayer omits additional gross income in excess of ___% of the amount of gross income stated in the tax return filed with the IRS the statute of limitations is _______

A

-25% and 6 years

27
Q

What is the statute of limitations in the case of a false tax return or fraudulent tax return filed with the IRS with intent to evade any tax

A
  • statute does not apply
28
Q

How is interest assessed on tax due

A
  • accrues from the original due date even if an extension is obtained
  • interest is compounded daily
  • rate is the federal ST rate plus 3 percent
29
Q

When is interest paid on refunds

A

if not received within 45 days of the taxpayer filing a claim for a refund

30
Q

How much is the failure to file penalty

A
  • accrues on a monthly basis at the rate of 5% per month up to 25%
31
Q

What is the failure to file penalty if it relates to a fraudulent failure to file

A
  • the penalty is increased to 15% per month up to 75%
32
Q

If a tax return is filed more than 60 days late what is the penalty

A
  • the minimum failure to file penalty is $435 or
  • the amount of the tax due
33
Q

How much is the failure to pay penalty

A
  • accrues at a rate of .5% per month up to 25%
34
Q

What happens if there is a failure to file penalty and a failure to pay penalty

A
  • the failure to file penalty is reduced by the failure to pay penalty
35
Q

What is an accuracy related penalty

A
  • 20% applies to any underpayment due to negligence or disregard of rules or regulations, or substantial understatement of income tax
  • not applied if there is reasonable cause accompanied by good faith
36
Q

How much is the tax have to be understated for the 20% penalty to apply

A
  • understatement of tax exceeds the greater of 10% of the correct tax or $5,000
37
Q

How much is a fraud penalty

A
  • 75% of the tax underpayment attributed to fraud
38
Q

What can the taxpayer do after an examination and more tax is assessed

A
  • taxpayer can either agree with those changes and pay any additional tax or
  • taxpayer can disagree with the changes and appeal the decision
39
Q

What is the discriminant inventory function (DIF) system

A
  • computer scoring system that assigns a numeric score to each individual and some corporate returns
  • higher score triggers an audit
40
Q

Can an attorney represent a client during an audit by the IRS

A

Yes

41
Q

Can an CPA represent a client during an audit by the IRS

A

Yes

42
Q

Can an enrolled agent represent a client during an audit by the IRS

A

Yes

43
Q

Can an CFP represent a client during an audit by the IRS

A

No

44
Q

Which courts are appellate courts

A
  • US Supreme Court
  • US Court of Appeals (Reginal Circuit)
  • US Court of Appeals (Federal Circuit)
45
Q

Who handles deficiencies under $50,000 at the taxpayer request

A
  • Small Tax Case Division of the US Tax Court
46
Q

What is the US Tax Court

A
  • No payment of tax is necessary in order to bring a claim before the US tax court
  • Trial by jury is not available
  • decisions do not bind the IRS with respect to other taxpayers
  • appeals to the US court of appeals
47
Q

Where does the US Tax Court appeal to

A
  • US court of appeals
48
Q

Are trials by jury available in the US Tax Court

A

No

49
Q

Do you have to pay the tax in order to bring a claim before the US tax court

A

No

50
Q

What is the US Court of Federal Claims

A
  • Sits only in Washington, DC
  • only hears claims against the United states
  • Tax deficiencies must be paid to proceed in this forum
  • appeals to the US Court of Appeals for the Federal Circuit
51
Q

Where does the US Court of Federal Claims sit

A
  • Washington, DC
52
Q

What does the US Court of Federal Claims hear

A
  • claims against the United States
53
Q

Do tax deficiencies have to be paid in order to hear a case before the US Court of Federal Claims

A

Yes

54
Q

Where does the US Court of Federal Claims appeal to

A
  • US Court of Appeals for the Federal Circuit
55
Q

What is the US District Court

A
  • Tax deficiencies must be paid to proceed in this forum
  • US District court is the only forum which allows a Jury trial
  • District Court is bound by decision of its Appeals Court and the US Supreme Court
56
Q

Do you have to pay the tax in order to bring a claim before the US District Court

A

Yes

57
Q

Does the US District Court allow a jury

A

Yes

58
Q

What is the US Court of Appeals

A
  • there are 12 Circuit Courts located throughout the United States
  • US Court of Appeals handles appeals from Tax Court and District Court
  • Court of Appeals of one region is not bound to follow the decisions of the court of apples in another region
59
Q

How many US Court of Appeals are there

A
  • 12 Circuit Courts throughout the United States
60
Q

What does the US Court of Appeals handle

A
  • Appeals from Tax Court and District Court
61
Q

Who is bound by the US Supreme Court decisions

A
  • Decisions of the US Supreme Court are binding on taxpayers and the IRS
62
Q

When does the US Supreme Court review tax cases

A
  • there is a conflict between the circuit courts
  • an important and recurring problem in tax law administration is involved
  • many taxpayers are involved or if
  • the decision of a lower court conflicts with long standing practice or the regulations

Income Tax Planning (5 decks)

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