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CFP Exam > Administrative (Tax) > Flashcards

Administrative (Tax) Flashcards

1
Q

what does IRC stand for?

A

Internal Revenue Code

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2
Q

what created the IRC?

A

The Revenue Act of 1913

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3
Q

what are the 3 sources of tax law?

A
  1. Internal Revenue Code
  2. Administrative law sources
  3. Judicial sources
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4
Q

what are Regulations?

A
  • a type of the administrative tax law sources
  • issued by the US Treasury Dept
  • interpretations of the IRC
  • have the full force and effect of the law
  • the 2nd highest authority of tax law
  • 3 types
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5
Q

what are the 3 types of Regulations?

A
  1. proposed
  2. temporary
  3. final
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6
Q

what are Proposed Regulations?

A

a preview of final regulations and do not have legal precedence

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7
Q

what are Temporary Regulations?

A

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 the full force and effect of the law

3 types

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9
Q

what are the 3 types of Final Regulations?

A
  1. procedural regulations
  2. interpretive regulations
  3. legislative regulations
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10
Q

what are Procedural Regulations?

A
  • a type of final regulation

- essentially housekeeping instructions

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11
Q

what are Interpretive Regulations?

A
  • a type of final regulation

- implement the intent of the committee reports and the IRC

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12
Q

what are Legislative Regulations?

A
  • a type of final regulation

- allow the Treasury to determine the details of the law

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13
Q

what are Revenue Rulings?

A
  • a type of the administrative tax law sources
  • interpretations of the tax laws issued by the IRS
  • provided in response to a taxpayer request
  • do not have the full force and effect of the law, but are binding on officials of the IRS
  • published weekly in the Internal Revenue Bulletin
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14
Q

what does IRS stand for?

A

Internal Revenue Service

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15
Q

what are Revenue Procedures?

A
  • a type of administrative tax law sources
  • describe internal practices and procedures within the IRS
  • published in the Internal Revenue Bulletin
  • state changes in techniques and administrative procedures used by the IRS
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16
Q

what are Private Letter Rulings (PLRs)?

A
  • a type of administrative tax law sources
  • issued by the IRS at the request of the taxpayer
  • the IRS is bound by its determination of the ruling with regard to the taxpayer requesting the PLR
  • cannot be relied on by other taxpayers as precedent
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17
Q

what are Determination Letters?

A
  • a type of administrative tax law sources
  • 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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18
Q

what are Technical Advice Memorandums (TAMs)?

A
  • a type of administrative tax law sources
  • issued by the national IRS office
  • 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 in the audit
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19
Q

what is the role of the IRS?

A

the IRS is organized to carry out the responsibilities of the Secretary of the Treasury under section 7801 of the IRC

20
Q

what is the statute of limitations for a taxpayer to claim a refund for a return that has not been filed?

A

3 years

21
Q

what happens to the money when a taxpayer fails to claim a refund within the statute of limitations?

A

the money becomes the property of the US Treasury

22
Q

what is the statute of limitations for the IRS auditing a filed tax return?

A

3 years

23
Q

what is the statute of limitations for the IRS to collect tax for a filed return?

A

10 years

24
Q

when does the statute of limitations not apply for the IRS in regards to a return filed?

A

when there is a false tax return or fraudulent tax return

25
Q

what is the failure to file penalty (for a normal tax return)?

A

5% per month up to 25%

26
Q

what is the failure to file penalty (for a fraudulent failure to file)?

A

15% per month up to 75%

27
Q

when does the minimum failure to file penalty apply?

A

if a tax return is filed more than 60 days late

28
Q

for a tax return filed more than 60 days late, what is the minimum failure to file penalty?

A

$435 or the amount of the tax due

29
Q

what is the failure to pay penalty?

A

0.5% per month up to 25%

30
Q

what happens where there is both a failure to file and a failure to pay penalty?

A

the failure to file penalty is reduced by the failure to pay penalty

(4.5% per month failure to file + 0.5% per month failure to pay, combined up to 25%)

31
Q

when can someone avoid payment estimated tax?

A

when their withholding and credits equal 100% of the tax shown on the prior year’s tax return, or if it is 90% of the current year’s tax liability

32
Q

what is the amount of estimated taxes a person must pay that has an AGI over $150k ($75k MFS)?

A

pay estimated taxes based on 110% of the prior year or 90% of the current year

33
Q

what is the accuracy related penalty amount?

A

20% applies to any underpayment

34
Q

when is the accuracy related penalty incurred?

A

when there is negligence or disregard of rules or regulations, or substantial understatement of income tax

35
Q

when is income tax considered to be substantially understated?

A

if the understatement of tax exceeds the greater of 10% of the correct tax, or $5,000

36
Q

what is the underpayment penalty attributed to fraud?

A

75% of the tax underpayment

37
Q

who may represent a client during an IRS audit?

A
  • attorney
  • CPA
  • enrolled agent (EA)
38
Q

who may NOT represent a client during an IRS audit?

A

a CFP professional

39
Q

what is the US Tax Court?

A
  • no payment of tax is necessary
  • trial by jury is not available
  • decisions do not bind the IRS with respect to other taxpayers
40
Q

when does the Small Tax Case Division handle a case?

A

when the deficiency is under $50,000

41
Q

what is the US Court of Federal Claims?

A
  • sits in Washington DC
  • only hears claims against the US
  • tax deficiencies must be paid to proceed
42
Q

what is the US District Court?

A
  • tax deficiencies must be paid

- the only forum that allows a jury trial

43
Q

what is the only forum of the courts that allows a jury?

A

the US District Court

44
Q

what is the US Court of Appeals?

A
  • 12 circuit courts

- handles the appeals from Tax Court and District Court

45
Q

what is the US Supreme Court?

A

-decisions are binding on taxpayers and the IRS

CFP Exam (24 decks)

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