Part 3 - Representation, Practices & Procedures - Unit 4 - Questions Flashcards
Which of the following statements is correct concerning the EFTPS?
A. Taxpayers can make a tax payment using EFTPS without enrolling in the system.
B. Only tax preparers can make a tax payment using EFTPS without enrolling in the system.
C. Taxpayers can make a tax payment using EFTPS if they are enrolled in the system.
D. Only tax preparers can make a tax payment using EFTPS if they are enrolled in the system.
C. Taxpayers can make a tax payment using EFTPS if they are enrolled in the system.
- Publication 966, page 2, provides that the Electronic Federal Tax Payment System (EFTPS) is a tax payment system provided free by the U.S. Department of the Treasury that enables business and individual taxpayers to make all their federal tax payments electronically, 24 hours a day, 7 days a week, 365 days a year, using the Internet or phone.
- When a taxpayer enrolls in EFTPS, the taxpayer will receive by mail a personal identification number (PIN) and instruction on obtaining an Internet password. After enrolling in the program, the taxpayer can select how he or she wants the payments to be made; that is, the taxpayer may choose to make his or her tax payment online or by phone (page 2).
- Notice the key word in the prior paragraph: “enrolls.” So, it is incorrect to say that taxpayers can use these methods if they do not enroll. Moreover, EFTPS is available to any business or individual taxpayer.
Gail files her return electronically. What responsibility does her Electronic Return Originator (ERO) have if the return is rejected?
A. No responsibility once the return is filed
B. Notify her if her return is rejected and results in a change of more than $25 total tax.
C. Take reasonable steps to inform the taxpayer of the rejection within 10 calendar days.
D. Provide the taxpayer with the reject code(s) accompanied by an explanation.
D. Provide the taxpayer with the reject code(s) accompanied by an explanation.
- Publication 1345, page 26, provides that if the Internal Revenue Service rejects the electronic portion of a taxpayer’s return for processing, and the reason for the rejection cannot be rectified, the ERO must take reasonable steps to inform the taxpayer of the rejection within 24 hours.
- When the ERO advises the taxpayer that the return has not been filed, the ERO must provide the taxpayer with the reject code(s) accompanied by an explanation. If the taxpayer chooses not to have the electronic portion of the return corrected and transmitted to the Service or if it cannot be accepted for processing by the Service, the taxpayer must file a paper return.
- In order to be filed timely, the paper return must be filed by the later of the due date of the return or 10 calendar days after the date the Service gives notification that the electronic portion of the return is rejected or that it cannot be accepted for processing. The paper return should include an explanation of why the return is being filed after the due date.
- The ERO is obligated to notify Gail that her return is rejected regardless of the reason.
Vivian Blake is an enrolled agent who participates in the Internal Revenue Service e-file Program as an Electronic Return Originator and Transmitter. Fred Birch has not filed his Form 1040 for tax years 2010 and 2011. Fred hires Vivian in March 2023 to prepare and file the delinquent returns. Which of the following statements about the delinquent returns is correct?
A. Vivian will be able to electronically file the delinquent 2010 and 2011 returns after April 15, 2023, and before January 1, 2024.
B. Vivian will be able to electronically file the delinquent 2010 and 2011 returns after April 15, 2023, and before October 15, 2023.
C. Vivian will be able to electronically file the delinquent 2010 and 2011 returns as long as it is before April 15, 2023.
D. Vivian will not be able to electronically file the delinquent 2010 and 2011 returns.
D. Vivian will not be able to electronically file the delinquent 2010 and 2011 returns.
- Publication 1345, pages 9–10, provides, in part, that filing individual income tax returns using IRS e-file is limited to tax returns with prescribed due dates in the current and 2 previous tax years.
- The following individual income tax returns and related return conditions cannot be processed using IRS e-file:
- Tax returns with fiscal-year tax periods
- Amended tax returns (for individual returns for tax years 2018 and prior)
- Returns containing forms or schedules that cannot be processed by IRS e-file other than those forms and schedules that are required to be submitted with Form 8453
- Tax returns with TINs (taxpayer identification numbers) within the range of 900-00-0000 through 999-99-9999, with a few exceptions
- Therefore, Vivian will not be able to electronically file the delinquent 2009 and 2010 returns because they are not current-year or the 2 previous tax years’ returns.
The Internal Revenue Service e-file Program allows taxpayers to schedule the payment for withdrawal on a future date. Scheduled payments must be effective on or before the return due date. Which of the following is correct concerning when the taxpayer must specify the withdrawal be made if the provider transmits an individual income tax return in February?
A. The taxpayer must specify that the withdrawal be made on or before the return due date.
B. The taxpayer must specify that the withdrawal be made when the tax return is being filed.
C. The taxpayer must specify that the withdrawal be made within 15 days of the tax return filing.
D. The taxpayer must specify that the withdrawal be made within 45 days of the tax return filing.
A. The taxpayer must specify that the withdrawal be made on or before the return due date.
- Publication 1345, page 14, provides that taxpayers can e-file and, at the same time, authorize an electronic funds withdrawal (EFW). Taxpayers who choose this option must provide account numbers and routing transit numbers for qualified savings, checking, or share draft accounts to the Authorized e-file Provider.
- Likewise, taxpayers can schedule the payment for withdrawal on a future date. Scheduled payments must be effective on or before the return due date.
- For example, the provider may transmit an individual income tax return in March and the taxpayer can specify that the withdrawal be made on any day on or before the return due date. The taxpayer does not have to remember to do anything at a later date. For returns transmitted after the due date, the payment date must be the same as the date the return is transmitted. Electronic funds withdrawal payments must be authorized at the time the balance due return or form is e-filed.
- Payments can be made by EFW for the following:
- Current-year Form 1040 series return
- Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return
- Form 2350, Application for Extension of Time to File U.S. Income Tax Return for U.S. Citizens and Resident Aliens Abroad Who Expect to Qualify for Special Tax Treatment
- Form 1040-ES, Estimated Tax for Individuals (Taxpayers can make up to four estimated tax payments at the time that the Form 1040 is electronically filed.)
- Providers should be careful to ensure that all the information needed for the electronic funds withdrawal request is included with the return.
Which of the following statements is correct regarding electronically filed returns?
A. A return for a deceased taxpayer may not be electronically filed.
B. U.S. Individual Income Tax Returns may not be electronically filed after April 15, 2023.
C. For tax year 2023, current-year tax returns may be electronically filed.
D. For tax year 2023, all electronically filed returns require a separate signature document to be submitted to the appropriate Internal Revenue Service Center.
C. For tax year 2023, current-year tax returns may be electronically filed.
- Publication 1345, pages 6 and 7, provides the basic rule for e-filing. Specifically, filing a return through the IRS e-file Program is limited to tax returns with prescribed due dates in the current and 2 previous tax years. A taxpayer can electronically file an individual income tax return year-round except for a short cutover period at the end of the calendar year.
- Publication 1345, page 7, provides a list of returns that are not eligible for the IRS e-file Program. The following is a list of some of the returns and return conditions that cannot be processed by the IRS e-file Program:
- Tax returns with fiscal-year tax periods
- Returns containing forms or schedules that cannot be processed by IRS e-file
- Tax returns with TINs (taxpayer identification numbers) within the range of 900-00-0000 through 999-99-9999. There are a few exceptions within this range.
- The IRS cannot electronically process tax returns with rare or unusual processing conditions or that exceed the specifications for returns allowable in IRS e-file.
- Hence, current-year tax returns may be electronically filed.
- Treasury Regulations Section 301.6011-3(a) provides that if a partnership with more than 100 partners is required to file a partnership return, the information required by the applicable forms and schedules must be filed electronically, unless a waiver from the electronic filing requirement has been granted. Returns filed electronically must be prepared in accordance with applicable revenue procedures or publications.
- Be aware that certain partnerships with more than 100 partners are required to file Form 1065, Schedules K-1, and related forms and schedules electronically. Other partnerships generally have the option to file electronically (Form 1065 Instructions, page 4) and estate and trust returns may be able to file Form 1041 and related schedules electronically.
Tunica Blake is an enrolled agent who participates in the Internal Revenue Service e-file Program as an Electronic Return Originator and Transmitter. Which of the following individual returns can be e-filed?
A. Delinquent tax returns.
B. Amended tax returns (2018 and prior).
C. Tax returns with fiscal-year tax periods.
D. None of the responses are eligible for e-filing.
D. None of the responses are eligible for e-filing.
- Publication 1345, pages 6–7, provides, in part, that filing individual income tax returns using IRS e-file is limited to tax returns with prescribed due dates in the current and 2 previous tax years.
- The following individual income tax returns and related return conditions cannot be processed using IRS e-file:
- Tax returns with fiscal-year tax periods.
- Amended tax returns (2018 and prior).
- Returns containing forms or schedules that cannot be processed by IRS e-file other than those forms and schedules that are required to be submitted with Form 8453.
- Tax returns with TINs (taxpayer identification numbers) within the range of 900-00-0000 through 999-99-9999, with a few exceptions.
- Therefore, none of the responses (delinquent tax returns, amended tax returns, or tax returns with fiscal-year tax periods) are eligible for e-filing per Publication 1345.
Which of the following tax credits being claimed by a taxpayer on their 2023 tax return requires the paid tax preparer to file Form 8867, Paid Preparer’s Due Diligence Checklist, with the taxpayer’s tax return?
A. Head of Household.
B. Earned income tax credit.
C. Child tax credit.
D. All of the listed items.
D. All of the listed items.
- Regulation Sections 1.6695-2 and 1.6695-2T provide guidance on satisfying the due diligence requirement for a paid tax return preparer claiming the earned income tax credit, the child tax credit/additional child tax credit, and/or the American opportunity tax credit for a client. Beginning in 2018, this form is required whenever a taxpayer files as the Head of Household. In particular, Form 8867 is required whenever a taxpayer is claiming any one of the three tax credits or claiming Head of Household filing status.
- Failure to comply with the due diligence regulations results in a penalty for each failure on a tax return.
Martha and Max have two children. Martha and Max each have earned income of $10,000 in 2023. They decided to file separate returns, with each one of them claiming one child as a dependent. Which of the following statements is correct with respect to claiming the earned income credit (EIC)?
A. Either Martha or Max can claim the EIC, but not both spouses.
B. Only Martha can claim the EIC.
C. Only Max can claim the EIC.
D. Neither Martha nor Max can claim the EIC.
D. Neither Martha nor Max can claim the EIC.
- As found in Rule 3 in Table 1 appearing on page 2 of Publication 596, a taxpayer who is married is required to file a joint return in order to claim the EIC.
- There is an exception to this rule as given in the explanation for Rule 3 appearing on page 24 of Publication 17. That is, the taxpayer cannot file as married filing separately unless the taxpayer’s spouse did not live in the taxpayer’s home at any time during the last 6 months of the year. In this case, the taxpayer may be able to file as head of household, instead of married filing separately and as such may be able to claim the EIC.
- For more details on this issue, you should consult Publication 596.
- Note: Although the subject matter of this question is not included in the content outline of Part 3 of the examination, there is a possibility that such a question may appear on the Part 3 exam (graded or ungraded).
What action must an ERO take if the Internal Revenue Service rejects the electronic portion of a taxpayer’s return for processing and the reason for the rejection cannot be rectified with the information already provided to the ERO?
A. The ERO must take reasonable steps to inform the taxpayer of the rejection within 48 hours.
B. The ERO must provide the taxpayer with the reject code(s) accompanied by an explanation.
C. The ERO must take reasonable steps to inform the taxpayer of the rejection within 48 hours and provide the taxpayer with the reject code(s) accompanied by an explanation.
D. None of the answer choices are correct.
B. The ERO must provide the taxpayer with the reject code(s) accompanied by an explanation.
- Publication 1345, page 26, provides that if the Service rejects the electronic portion of a taxpayer’s return for processing and the reason for the rejection cannot be rectified, the Electronic Return Originator (ERO) must take reasonable steps to inform the taxpayer of the rejection within 24 hours.
- When the ERO advises the taxpayer that the return has not been filed, the ERO must provide the taxpayer with the reject code(s) accompanied by an explanation. If the taxpayer chooses not to have the electronic portion of the return corrected and transmitted to the Service or if it cannot be accepted for processing by the Service, the taxpayer must file a paper return.
- In order to be filed timely, the paper return must be filed by the later of the due date of the return or 10 calendar days after the date the Service gives notification that the electronic portion of the return is rejected or that it cannot be accepted for processing. The paper return should include an explanation of why the return is being filed after the due date.
Which of the following is correct if an authorized Internal Revenue Service electronic filing provider uses radio, television, Internet, signage, or other methods of communication to advertise Internal Revenue Service electronic filing?
A. The provider must keep a copy and provide the text to the Internal Revenue Service upon request.
B. The provider is not required to keep the recorded advertisement, if it is prerecorded.
C. The provider must keep a copy and provide the text to the Internal Revenue Service upon request and, if prerecorded, the recorded advertisement.
D. The provider is not required to keep a copy of the text or, if prerecorded, the recorded advertisement.
C. The provider must keep a copy and provide the text to the Internal Revenue Service upon request and, if prerecorded, the recorded advertisement.
- “IRS e-file” is a brand name. Firms accepted for participation in IRS e-file as EROs, Transmitters, Intermediate Service Providers, Reporting Agents and Software Developers are “Authorized IRS e-file Providers.” Acceptance to participate in IRS e-file does not imply endorsement of the software or quality of services provided by the IRS, Financial Management Service, or Treasury. All Providers must abide by the following advertising standards. (Publication 3112, page 17).
- An Authorized IRS e-file Provider must comply with the advertising and solicitation provisions of 31 CFR Part 10 (Treasury Department Circular 230). This circular prohibits the use or participation in the use of any form of public communication containing a false, fraudulent, misleading, deceptive, unduly influencing, coercive, or unfair statement or claim. Additionally, a Provider must adhere to all relevant federal, state, and local consumer protection laws that relate to advertising and soliciting. (Publication 3112, page 17).
- Specific to this question, if an Authorized IRS e-file Provider uses radio, television, Internet, signage, or other methods of communication to advertise IRS e-file, the Provider must keep a copy of the text or, if prerecorded, the recorded advertisement. A Provider must retain copies until the end of the calendar year following the last transmission or use (Publication 3112, page 18).
