Chapter 2 Review

Question 1

What powers does the 16th Amendment give Congress with regard to the
collection of taxes?

Answer 1

Ratified in 1913 the government can collect tax from whatever source derived

Question 2

Describe the historical evolution of the codified tax system that
culminated in the current Internal Revenue Code.

Answer 2

First Codified in 1939 recodified in 1954 and last changed in 1986. The tax reform act of 1986

Question 3

What is the legal effect of the Code?

Answer 3

These are statements and we must follow them only can be changed by congress

Question 4

Identify the functions of the income tax system, and describe generally the
purposes that each function is designed to accomplish.

Answer 4

Revenue Producing, Economic Functions, social functions and regulatory function

Question 5

Explain how the income tax system can be used to help curb inflation or
lessen the adverse effects of a recession.

Answer 5

The greater the taxes the less spending the people can do. Taxes are progressive

Question 6

Describe the procedure for the passage and adoption of tax bills

Answer 6

Taxes start at the house ways and means committee, then full house the senate ways and means then if full house the president

Question 7

Describe the executive powers regarding tax law as well as the delegation of
authority for enforcing the law and collecting taxes.

Answer 7

Department of treasury who delegates power to the IRS, who enforces the law and collects taxes

Question 8

Explain the function of a Treasury regulation.

Answer 8

its just the explanation of the sections of the IRC

Question 9

Describe the effect of a particular regulation when it has been held invalid by
a. trial or appeals court

Answer 9

They are not bound by it

Question 10

Describe the effect of a particular regulation when it has been held invalid by
b. the Supreme Court

Answer 10

The law has to change and it will effect every tax payor

Question 11

What is a revenue ruling and why is it important? [

Answer 11

Revenue ruling is an explaination of everything that is going on. They are binding new rule new law

Question 12

By whom are revenue rulings issued and where can the rulings be
found?

Answer 12

Everyone and published weekly

Question 13

How does a private ruling differ from a revenue ruling?

Answer 13

Private ruling is an individual ruling where a private letter ruling is to a single tax payer

Question 14

Describe the purpose of revenue procedures.

Answer 14

Those are the internal practices of the IRS

Question 15

Explain what is meant by a determination letter

Answer 15

Set of circumstances that will effect individual tax payer, normally a number of them. DL are issued in advance of a transaction EX For a plan to be qualified, pre tax and tax deferred. To get this in place you need a plan document ins a prototype plan. The IRS will give you a plan document in advance of a letter of determination

Question 16

When there is a conflict between a taxpayer and the IRS with regard to
the amount of tax owed, explain the statutory procedure for resolution of
the conflict.

Answer 16

They would go to the applet court

Question 17

Distinguish between the three courts that have original jurisdiction to hear
tax matters.

Answer 17

US Tax court is the 1st one you can not have a jury. Its just a judge and facts. You do not have to pay them first
US District court you can have a jury trial this is the only one with a jury
US Court Federal Claims, pay first denied a refund it is a trial court with no jury

Question 18

The only trial court that allows jury trials is the _________.

Answer 18

The US District Court

Question 19

Cases heard by the U.S. Court of Federal Claims may be appealed to the
_________.

Answer 19

Applet Court

Question 20

The trial court in which a taxpayer can litigate without first paying an
assessed deficiency is the __________.

Answer 20

Tax Court

Question 21

When is the IRS bound to follow a court decision?

Answer 21

US Supreme Court Ruling

Question 22

What avenues of appeal exist if a taxpayer loses a tax case in a trial court?

Answer 22

Go to the applet court