ETHICS, PROF RESP, & FED TAX PROCEDURES - 10-20% Flashcards
Under Circular 230, it is proper to delay as long as possible in fulfilling an IRS request for records or info if:
After investigating the request and believe in good faith the information is privileged.
What is JEEP
Joint, Ethics, Enforcement, Program
Substantial authority is equal to what numerical value for tax positions?
Substantial authority = 40%
What numerical value does reasonable basis standard position apply?
Reasonable basis greater than or equal to 20%
What is the penalty amount for individuals regarding substantial understatements?
20%
What constitutes a substantial understatement penalty for an individual?
One that exceeds the greater of 10% of the tax, or $5,000
What constitutes a substantial understatement penalty for non-S-corps?
One that exceeds the lesser of, 10% of the tax (or, if greater, $10,000), or $10M
In which order would the administrative, legislative, and judicial courts rank, in order of authority?
Legislative
Administrative
Judicial
What are examples of Legislative authority?
U.S. constitution, IRC, tax treaties
What are examples of Administrative authority?
Revenue rulings, and
Private letter rulings
What are the courts of original jurisdiction?
Tax court, District Court, and the Court of Federal Claims
A statutory notice of deficiency explains that the taxpayer has 90 days to either pay or file a what?
Petition with the US Tax Court
If a taxpayer receives a 30-day letter from the IRS, the taxpayer:
May ignore the letter, and take no action.
To what extent is an auditor liable to third parties of an engagement?
Where the CPA knows (a) the info was supplied to the client for the benefit of this limited class, and (b) the info will influence third parties in a specific transaction or type of transaction
A CPA who has agreed to prepare a corporation’s taxes will generally be liable for breaching promises made in the written engagement letter, or promises made orally?
Both. Unless the statute of frauds applies (not usually the case) an accountant will be liable to perform promises made both in writing and orally. Once exception, not applicable here, is when the engagement letter contains a “merger clause” that provides all agreements of the parties are merged into the writing and no other agreements exist. Except for minor exceptions, such provisions generally prevent enforcement or collateral oral promises.
