R4 review Flashcards
Upon discovery of an error in a previously filed return the tax practitioner should
promptly notify the client (either orally or in writing) of the error, noncompliance, or omission and advise the client of reasonably likely penalties
Who is not allowed to obtain a preparer tax identification number
Revenue agent
If the CPA does not have possession or control of the records
The CPA must notify the IRS of the identity of any person who, according to the CPA’s belief, could have the records.
According to Treasury Circular 230
A practitioner is not required to provide a client with the practitioner’s work product, which would include a mathematical schedule prepared by the practitioner.
Circular 230 provides that practitioners are prohibited from
Charging contingent fees on a claim for any refund of income tax paid to the IRS.
(They can however put contingent fees on Interest and penalties)
Requirements related to the communication of fee information from a tax practitioner to a taxpayer:
It may be communicated in a number of ways, including in professional lists, telephone directories, mailings, and electronic mail.
A tax return preparer is
any person who prepares for compensation (Therefore volunteers are not tax preparers)
The courts of original jurisdiction for tax cases
Tax Court (Do not need to pay first)(Heard by a tax professional)(No Jury)
the U.S. District Court (Pay first, sue for refund)(Optional Jury)
and the U.S. Court of Federal Claims. (Pay First, sue for refund)(Focuses on money damages against the US)(No Jury)
Upon receipt of a notice of deficiency from the IRS
the taxpayer has 90 days to pay the deficiency or file a petition with the Tax Court for a redetermination of the deficiency.
30 day letter
You can pay the penalty or take it up with whichever court you want
90 day letter
Pay the penalty or go only to the Tax Court to defend yourself
When can you file for a small case hearing
When the penalty is for 50k or less (Cannot be appealed by any party after the decision)(It also cannot be used as a precedent for any other court)
How can someone avoid penalties when making estimated payments?
Off by $500
Paid 90% of current year tax
Paid 100% of prior year tax (110% if prior year AGI is above $150,000)
The IRS issues a private letter ruling (PLR) in response to a
taxpayer’s request for guidance on the tax treatment of a proposed transaction
A temporary regulation issued by the U.S. Department of the Treasury is
Priority superior: a primary authority because it is an official tax law issued by a branch of the federal government, the administrative branch.
Priority 1: A private letter ruling (PLR) is the IRS’s application of the Internal Revenue Code limited to the particular taxpayer to whom it is issued.
Priority level 2: A decision of a previous similar case, unofficial interpretation or explanation of primary sources of tax law
