M3-Federal Tax Procedures Flashcards
According to the IRS’s website under Tax Code, Regulations and Official Guidance, the “federal tax law begins with the ________________, which was enacted by congress in Title 26 of the United States Code.” The __________ holds the most authoritative value.
Internal Revenue Code
According to the IRS’s website under Tax Code, Regulations and Official Guidance, the IRS regulations or “Treasury Regulations —- commonly referred to as Federal Tax Regulations—-pick up where the IRC leaves off by providing the official interpretation of the IRS by the US Department of Treasury.” Regulations give direction on how to apply the law outline in the IRC. Regulations have the second most force and effect, second only to the IRC.
Tax court decisions interpret the IRC, they do not have the authority of the IRC.
The reports of IRS agents are used to report on specific taxpayer situations. IRS agents’ reports apply the IRC, IRS regulations, and other forms of authoritative literature, but they do not hold the value that the IRC, the IRS regulations, or even tax court decisions have.
In preparing or signing a return, a CPA may in good faith rely without verification upon information furnished by the client or by third parties. (true or false)
true
A CPA is entitled to rely on the client’s representations that adequate documentations exists to support the expenses that the client claims. As long as the CPA asks the client whether the client has documentation, the CPA will not be liable for either a penalty or interest because of the client’s misrepresentation.
Accuracy-related penalties apply to the portion of tax underpayments attributable to negligence or disregard of tax rules and regulations as well as to any substantial understatement of income tax. (true or false)
true
A taxpayer does not extend the time for payment of tax by extending the filing deadline for the return. If there is tax owed when the return is file, interest must be paid at the rate prescribed by IRC S6621. (true or false)
true
There is no delinquency penalty if the taxpayer files its return, the amount owed on the return is not $500 or more, and the taxpayer pays the balance due on or before the extended due date.
Under the accrual basis of accounting, when you include an amount in gross income on the basis of a reasonable estimate, and you later determine the exact amount, the difference (if any) is taken into account in the tax year in which the determination is made. (true or false)
true
The negligence penalty with respect to understatement of tax is an accuracy-based penalty for negligence or for disregard of tax rules and regulations. (true or false)
true
The negligence penalty with respect to understatement of tax is computed as 20% of the understatement of tax.
The negligence penalty with respect to understatement of tax defines “disregard” as any careless, reckless, or intentional disregard of tax rules and regulations.
The penalty for failure to file a tax return by the due date is 5% per month or fraction of month (up to a maximum of 25%) on the amount of tax shown as due on the return. The penalty for failure to pay by the due date (1/2% per month) is also based on the amount due on the return. (true or false)
true
US District Court Cases are heard before one judge, not a panel of judges. (true or false)
true
The US Court of Federal Claims follows the decisions of the Federal Court of Appeals but not the geographical Court of Appeals.
Judges for the US tax court hear cases at various locations in the country, but the justices for the US Supreme court do not. The supreme court hears cases in washington DC with all nine justices present. The Supreme Court does not conduct jury trials.
When the US Supreme Court denies a writ of certiorari, it does NOT confirm the lower court’s decision.
Following an audit, if agreement is reached with the taxpayer signs Form 870 (Wavier of Restrictions on Assessment and Collection of Deficiency in Tax). (true or false)
true
Office audits are NOT normally performed at the national office of the IRS in Washington DC. (true or false)
true
They are normally performed at local IRS offices
The appeals division, but not a revenue agent, can settle an unresolved tax issue based on the probability of winning the case in court. (true or false)
true
The more-likely-than-not standard involves a position that has a more then 50% chance of succeeding. (true or false)
true
The reasonable basis standard involves a position that is arguable but fairly unlikely to prevail in court. A numerical statement of this standard has at least 20% chance of succeeding.
The substantial authority standard involves a position that has a more than one in three chance, but a less than 50% chance of succeeding.
The US Court of Federal Claims has jurisdiction over most claims for money damages against the United States, one type of which is tax refunds. (true or false)
true
The US Tax Court is a specialized trial court, not an appellate court. It hears only Federal tax cases, not federal tax and other federal cases.
Unlike normal non-tax cases, the taxpayer most often bears the burden of proof in civil tax cases.
The taxpayer can generally avoid penalties if he/she acted in good faith, if there was a reasonable basis to support the tax return position, AND if the taxpayer did not have willful neglect. (true or false)
true
The courts of original jurisdiction for tax cases, i.e., the courts in which a taxpayer would first bring a lawsuit against the IRS, are the Tax Court, the US District Court, and the US Court of Federal Claims. (true or false)
true
