Administrative (Tax) Flashcards
what does IRC stand for?
Internal Revenue Code
what created the IRC?
The Revenue Act of 1913
what are the 3 sources of tax law?
- Internal Revenue Code
- Administrative law sources
- Judicial sources
what are Regulations?
- 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
what are the 3 types of Regulations?
- proposed
- temporary
- final
what are Proposed Regulations?
a preview of final regulations and do not have legal precedence
what are Temporary Regulations?
issued when guidance is needed quickly and have the same authoritative value as final regulations
what are Final Regulations?
have the full force and effect of the law
3 types
what are the 3 types of Final Regulations?
- procedural regulations
- interpretive regulations
- legislative regulations
what are Procedural Regulations?
- a type of final regulation
- essentially housekeeping instructions
what are Interpretive Regulations?
- a type of final regulation
- implement the intent of the committee reports and the IRC
what are Legislative Regulations?
- a type of final regulation
- allow the Treasury to determine the details of the law
what are Revenue Rulings?
- 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
what does IRS stand for?
Internal Revenue Service
what are Revenue Procedures?
- 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
what are Private Letter Rulings (PLRs)?
- 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
what are Determination Letters?
- 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
what are Technical Advice Memorandums (TAMs)?
- 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
what is the role of the IRS?
the IRS is organized to carry out the responsibilities of the Secretary of the Treasury under section 7801 of the IRC
what is the statute of limitations for a taxpayer to claim a refund for a return that has not been filed?
3 years
what happens to the money when a taxpayer fails to claim a refund within the statute of limitations?
the money becomes the property of the US Treasury
what is the statute of limitations for the IRS auditing a filed tax return?
3 years
what is the statute of limitations for the IRS to collect tax for a filed return?
10 years
when does the statute of limitations not apply for the IRS in regards to a return filed?
when there is a false tax return or fraudulent tax return
what is the failure to file penalty (for a normal tax return)?
5% per month up to 25%
what is the failure to file penalty (for a fraudulent failure to file)?
15% per month up to 75%
when does the minimum failure to file penalty apply?
if a tax return is filed more than 60 days late
for a tax return filed more than 60 days late, what is the minimum failure to file penalty?
$435 or the amount of the tax due
what is the failure to pay penalty?
0.5% per month up to 25%
what happens where there is both a failure to file and a failure to pay penalty?
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%)
when can someone avoid payment estimated tax?
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
what is the amount of estimated taxes a person must pay that has an AGI over $150k ($75k MFS)?
pay estimated taxes based on 110% of the prior year or 90% of the current year
what is the accuracy related penalty amount?
20% applies to any underpayment
when is the accuracy related penalty incurred?
when there is negligence or disregard of rules or regulations, or substantial understatement of income tax
when is income tax considered to be substantially understated?
if the understatement of tax exceeds the greater of 10% of the correct tax, or $5,000
what is the underpayment penalty attributed to fraud?
75% of the tax underpayment
who may represent a client during an IRS audit?
- attorney
- CPA
- enrolled agent (EA)
who may NOT represent a client during an IRS audit?
a CFP professional
what is the US Tax Court?
- no payment of tax is necessary
- trial by jury is not available
- decisions do not bind the IRS with respect to other taxpayers
when does the Small Tax Case Division handle a case?
when the deficiency is under $50,000
what is the US Court of Federal Claims?
- sits in Washington DC
- only hears claims against the US
- tax deficiencies must be paid to proceed
what is the US District Court?
- tax deficiencies must be paid
- the only forum that allows a jury trial
what is the only forum of the courts that allows a jury?
the US District Court
what is the US Court of Appeals?
- 12 circuit courts
- handles the appeals from Tax Court and District Court
what is the US Supreme Court?
-decisions are binding on taxpayers and the IRS
