Chapter 2

Question 1

Notice informing the taxpayer, post examination, that they have 30 days to request a conference with an appeals officer or agree to the proposed adjustments

Answer 1

30- day letter

Question 2

(AKA statutory notice of deficiency). Sent after agreement not reached on appeal. Explains that the taxpayer has 90 days to pay the proposed deficiency or file a petition in the US Tax Court to hear the case

Answer 2

90-day letter

Question 3

Alerts a tax payer that the IRS doesn’t plan to continue with litigation after losing a case

Answer 3

acquiescence

Question 4

Explains the background reasoning behind the IRS acquiescence or non- asquiescence

Answer 4

action of decision

Question 5

Issued by the IRS. Provides regulations governing tax practice and applies to all persons practicing before the IRS. Contains five parts

Answer 5

Circular 230

Question 6

A research tool that allows you to check the status of several types of tax authorities

Answer 6

citator

Question 7

Used to encourage tax compliance by tax professionals and tax payers (i.e. monetary penalties)

Answer 7

civil penalties

Question 8

The most common type of IRS audit. Audits conducted by mail and generally limited to one or two items on the taxpayer’s return. Narrowest in scope and the least complex.

Answer 8

correspondence examination

Question 9

Less common than civil penalties. Usually involve charges of tax evasion (willful intent to defraud the government). Penalties include higher fines and jail time

Answer 9

criminal penalties

Question 10

A type of letter rulings that is issued by the local IRS directors

Answer 10

determination letters

Question 11

Assigns a score to each tax return that represents the probability the tax liability on the return has been underreported.

Answer 11

DIF (discriminant function system)

Question 12

One of the computer systems used to identify tax returns that may have an understated tax liability

Answer 12

document perfection program

Question 13

Least common type of audit. Broadest in scope. Takes place at the taxpayer’s place of business or place where books, records or source materials are maintained.

Answer 13

field examination

Question 14

Regulations that have been issued in final form, and, thus, unless or until revoked, the represent the Treasury’s interpretation of the Code

Answer 14

final regulations

Question 15

States that the Tax Court will abide by rulings of the circuit court that has appellate jurisdiction for a case

Answer 15

Golsen rule

Question 16

One of the computer systems used to identify tax returns that may have an understated tax liability

Answer 16

information matching program

Question 17

The second (and main) statutory authority, known as the Code. Has the same authoritative weight as tax treaties and Supreme Court rulings. Unique in that all federal tax authorities can be seen as an interpretation of it

Answer 17

Internal Revenue Code of 1986

Question 18

The Treasury’s interpretation of the Code

Answer 18

interpretative regulations

Question 19

Rarest type of regulations. Issued when Congress specifically directs the Treasury Dept to create regulations to address an issue in an area of law. The treasury in actually writing law instead of interpreting the Code

Answer 19

legislative regulations

Question 20

Alerts taxpayers that the IRS plans to continue to litigate an issue that loss in court previously

Answer 20

nonacquiescence

Question 21

Second most common type of audit. Conducted at its local office. Broader in scope and more complex that correspondence examinations.

Answer 21

office examination

Question 22

Tax law generated by the legislative branch, judicial branch or executive branch

Answer 22

primary authorities

Question 23

Represent the IRS’s application of the Code and other tax authorities to a specific transaction and tax payer. Issued in response to a taxpayer request and are common for proposed transactions with potentially large tax implications

Answer 23

private letter rulings

Question 24

Explain the Treasury department procedures as they relate to administering the Code

Answer 24

procedural regulations

Question 25

Answer hinges upon the facts and circumstances of the taxpayer’s transaction

Answer 25

question of fact

Question 26

Answer hinges upon the interpretation of law

Answer 26

question of law

Question 27

The Treasury Dept official interpretation of the Internal Revenue Code, have the highest authoritative weight, and often contain examples for the application of Code that may be helpful to the tax researcher

Answer 27

regulations

Question 28

More detailed that regulations. They explain in greater detail IRS practice and procedures in administering the tax law

Answer 28

revenue procedure

Question 29

Less authoritative in weight. They provide a much more detailed interpretation of the Code as it applies to a specific transaction and fact pattern

Answer 29

revenue rulings

Question 30

Unofficial tax authorities that interpret and explain the primary authorities (e.g. tax research services, tax articles from professional journals and law reviews, newsletters and textbooks

Answer 30

secondary authorities

Question 31

This doctrine means that a court will rule consistently with its previous rulings an the rulings of higher courts of appellate jurisdiction

Answer 31

stare decisis

Question 32

A statement by the AICPA that recommends appropriate standards of practice for tax professionals and are intended to complement other provisions that govern tax practice

Answer 32

Statements on Standards for Tax Services (SSTS)

Question 33

Defines the period in which the taxpayer can file an amended tax return or the IRS can assess a tax deficiency for a specific tax year

Answer 33

statue of limitations

Question 34

Suggests the probability that the taxpayer’s position will be sustained upon audit or litigation is in the 35 to 40 percent range or above.

Answer 34

substantial authority

Question 35

One of three legislative or statutory tax authorities. Negotiated agreements between countries that describe the tax treatment of entities subject to ta x in both countries . President has authority to enter into a tax treaty with another country after receiving the Senate’s advice

Answer 35

tax treaties

Question 36

Differ from private letter rulings in that they are generated for completed transactions and usually are requested by an IRS agent during an IRS audit

Answer 36

technical advice memorandum

Question 37

Have a limited life (3yrs for those issued after 11.20.88). They carry the same authoritative weight as final regulations

Answer 37

temporary regulations

Question 38

Service that identifies tax issues that relate to each topic and then explain and cite authorities relevant to the issue

Answer 38

topical tax service

Question 39

13 total. Appeals filed here based on taxpayer’s residence

Answer 39

U.S. circuit courts of appeals

Question 40

The highest authority in the US. It provides very little in the way of tax law.

Answer 40

U.S. Constitution

Question 41

Court that hears tax cases and provides for a jury trail

Answer 41

U.S. district court

Question 42

Final court to appeal to. Hears few cases. Cases with a broad cross section of taxpayers or cases litigating issues where there’s been disagreement among the circuit courts

Answer 42

U.S. Supreme Court

Question 43

A national court whose judges are tax experts who hear only tax cases. Only court that allows for the case to be heard before the taxpayer pays the disputed amount. Only court with a small claims division– less than 50K

Answer 43

U.S. Tax Court

Question 44

Orders a lower court to deliver its record in a case so that the higher court may review it

Answer 44

writ of certiorari