Chapter 1 – Introduction To Federal Income Tax System Flashcards
Which amendment, adopted in 1909, forms the basic foundation and framework for income tax law?
The 16th amendment
What are the four goals of income taxation?
- Revenue
- Economic
- Regulatory
- Social
What is the primary goal of income taxation?
Revenue production
Higher taxes will lead to reduced consumer spending, causing a…
reduction in inflation or inflationary trends.
Lower taxes results in increased consumer spending, possibly preventing or reducing the impact of…
recessions.
What deduction can cause business owners to invest in their businesses?
Depreciation deduction
Which body of Congress initiates revenue bills?
Legislative branch
Which body of Congress is responsible for the internal revenue code?
Legislative branch
Which body of Congress delegates the responsibility of collecting taxes to the Department of the Treasury?
Executive branch
Who explains and interpret particular Internal Revenue Code sections?
Treasury Regulations
Who has the force and effect of the law?
Treasury regulations
The treasury regulations are written by…
IRS and approved by the treasury
The official interpretation of the tax laws by the National Office of the IRS are called…
Revenue Rulings
Private letter ruling’s ______ be cited as a precedent in court.
cannot
An interpretation of a transaction of a specific taxpayer.
Private letter rulings
This goal of taxation is imposed to discourage the purpose of weapons.
Regulatory goals
This goal of taxation helps to redistribute wealth and sometimes will require higher income individuals will pay more taxes.
Social goals
This tax research services is organize by code section.
Commerce Clearing House (CCH)
This tax research services is organize by topic and chapter.
Research Institute of America (RIA)
the highest tax authority
Internal Revenue Code
Who initiates revenue bills?
House of Representatives
Rank the hierarchy for tax authority and regulations for the following.
Treasury Regulations
Private Letter Rulings
Revenue Rulings
Internal Revenue Code
Internal Revenue Code
Treasury Regulations
Revenue Rulings
Private Letter Rulings
Official interpretations of the tax laws and do not have the authority of regulations.
Revenue Rulings
This is a letter that is written to answer a question that is specifically covered by a statute.
Determination letter
Can treasury regulations be challenged by taxpayers without going to court?
Yes, they may file objections or participate in public hearings, but they do not have to do a “formal” court.
How long does the IRS have, if fraud is involved, to assess additional taxes?
Unlimited time
These procedures are often use to announce procedures to guide the public and dealing with the IRS.
Revenue procedures
How long does the IRS have to assess additional taxes if your taxes were filed incorrectly?
Three years
What is the hierarchy for the three court systems?
- Supreme Court
- Court of Appeals or Appellate Court
- Trial Courts (District, Federal Claims, Tax Court)
This is the “only trial court” that allows you to use a jury.
US District Court
This is the only trial court where taxpayers do not have to pay the tax deficiency prior to bringing the case to court.
US Tax Court
This is the highest court of the land and the only cord that the IRS is bound to court decisions.
US Supreme Court
