Tax Research and Practice

Question 1

Nonfiling penalty

Answer 1

5% per month, max of 25% of tax due

Question 2

Underpayment penalty

Answer 2

None if tax due $1,000

No penalty if tax payments during year:

• at least 90% current year taxes
• 100% last years taxes. (110% for AGI >$150K)

Question 3

Nonpayment penalty

Answer 3

Penalty AND Interest

Starts on due date for filing

0.5% of underpayment per month (up to 25% in total)

If both nonpayment and nonfiling penalties are in effect, then man penalty is 5% of tax due per month

Neither penalties are imposed if TP has reasonable cause for failing to file or pay

Question 4

Accuracy penalty

Answer 4

20% of tax due

40% for “gross misvaluation”

75% for fraud + 50% interest

Question 5

Statue of Limitations

Answer 5

Primarily 3 years from the
Later of due date or filing date

Extended to 6 years if >25% gross income understated

Never expires if fraud or TP fails to file return

Question 6

Statute of Limitations for Claiming a Refund

Answer 6

Form 1040X

Later of:
2 years from payment of tax, or
3 years from filing date (April 15)

Question 7

Filing deadline & extension for Individual (1040)

Answer 7

15th day of 4th month (April 15)

6 month extension

Question 8

Filing deadline & extension for partnership (1065)

Answer 8

15th day of 4th month

5 month extension

Question 9

Filing deadline & extension for Corporation (1120) & S Corporation (1120S)

Answer 9

15th day of 3rd month (March 15)

6 month extension

Question 10

Filing deadline & extension for Fiduciaries (Estates and Trusts)

Answer 10

15th day of 4th month

5 month extension

Estate INCOME TAX Return: 9 months from DOD, 6 month extension

Question 11

Filing deadline for Estate Tax Return

Answer 11

9 months after DOD

6 month extension

Question 12

Who may practice before the IRS?

Answer 12

Attorneys
CPAs
Agents

Question 13

Must a TP respond to a 30-day letter?

Answer 13

No.

Question 14

Weighting of Authority

Answer 14

Legislative

• U.S. Constitution
• IRC
• Treaty

Administrative

• Regulations
• Revenue Rulings
• Private Letter Rulings

Judicial

• Level of court
• Legal residence of TP
• Date of decision

Question 15

Courts of Original Jurisdiction. Pay first? Jury?

Answer 15

Tax Court - No pay, no jury

District Court - Pay, Jury

Court of Federal Claims - Pay, no jury

Tax Court - Small Cases Division

• $50,000 or less
• No appeal

Question 16

Administrative Authority (order of authority)

Answer 16

*Regulations
-Legislative
-Interpretive
-Procedural
each may be:
-proposed
-temporary (3 years)
-final

• Revenue Rulings
• Private Letter Rulings (PLRs)
• Revenue Procedures
• Technical Advice Memos

Question 17

Where must all tax bills originate? Which committee of the Senate reviews the bill after the House of Reps?

Answer 17

Originate in the House Ways and Means Committee

Then moves to House of Reps

Then to Senate FINANCE Committee

Joint Conference Committee

President

-Congress can override president veto with 2/3 vote