Chapter 2 T/F Flashcards
Congress was given the power by the original Constitution to lay and collect taxes on all income without apportionment among the states and without regard to census or enumeration.
False. The original Constitution enacted in 1789 actually limited the original taxing power of the federal government by its uniformity and apportionment clauses under Article I, Sections 8 and 9. The 16th Amendment to the Constitution, passed in 1909, gave Congress the power to tax income from whatever source derived.
Congress has the power to tax all income from whatever source derived, whether by corporations, individuals, or estates and trusts.
True
he statutory source of tax law today is the Internal Revenue Code of 1986, as amended.
True
The primary function of the income tax system is the regulatory function.
False. The bulk of the government’s funds are produced through the federal income tax. Although the regulatory function is important, it is not more important than revenue production.
The Ways and Means Committee of the House of Representatives generally performs the initial functions related to the introduction of a tax bill.
True
The Internal Revenue Service is under the authority of Congress.
False. The Internal Revenue Service is under the authority of the Department of the Treasury and the Secretary of the Treasury. The Secretary of the Treasury is responsible to the President of the United States. Therefore the source of authority for the Internal Revenue Service and the Treasury Department lies in the executive branch. The Internal Revenue Service is not responsible to Congress.
The only source of tax law today is the Internal Revenue Code.
False. Each of the three coequal branches of the federal government - the legislative, the executive, and the judicial - has a major role in shaping the federal income tax system.
A regulation may be declared invalid by the courts if the regulation is ambiguous and without persuasive force in determining the true construction of a statute.
True
Regulations are written by the Internal Revenue Service and serve as the official Treasury interpretation of the Internal Revenue Code.
True
Revenue rulings are written in response to a taxpayer’s request for an administrative interpretation as to the validity of a prospective transaction.
False. This statement applies to private rulings. Revenue rulings state the IRS’s interpretation of an unclear point of law. They are usually based on a specific set of facts that involve a problem common to many taxpayers.
After an initial IRS audit, the taxpayer will receive a letter stating the agent’s recommendation and giving him or her 30 days to appeal from the determination of any assessed deficiency.
True
Taxpayers who bring their cases before the U.S. Tax Court are entitled to a jury trial if they desire.
False. The only trial court in which the taxpayer is entitled to a jury trial in a tax case is the U.S. District Court in the district in which the taxpayer resides. No jury trials are permitted either in the U.S. Tax Court or the U.S. Court of Federal Claims, which are the other two trial court tribunals.
If a refund case is brought before the U.S. Court of Federal Claims and denied, the only avenue to appeal the decision lies with the U.S. Supreme Court
False. Appeals from the U.S. Court of Federal Claims are heard by the Court of Appeals for the Federal Circuit, which is an Appellate Court. It is no longer possible to take appeals from a trial court directly to the U.S. Supreme Court.
The IRS is bound by all lower court decisions with respect to tax cases.
False. The IRS does not consider itself bound beyond a particular case by court decisions other than those of the U.S. Supreme Court and those of a U.S. Circuit Court of Appeals with respect to cases arising in the same circuit.
Acquiescence (“acq.”) is the IRS’s willingness to follow a decision in future similar cases.
True
