Exam 12: Tax Administration and Tax Planning

Janet did not file her tax return or pay her taxes for 2014 until November of 2015. She paid the following amounts to the IRS related to the late filing and payment of tax: What amount of the above items may be deducted on Janet's 2015 individual income tax return? Explain.

Mark with a "Yes" if the following statement is true and is in Publication 1, The Taxpayers Bill of Rights. Mark with a "No" if the following statement is false or is not addressed in Publication 1. a.If you do not agree with the IRS examiner's proposed changes in an audit, you must go directly to the court system to resolve the issue. b.If a taxpayer is due a refund, but did not file a return, then the IRS uses statistics to reconstruct an individual's income in order to compute the refund for the taxpayer. c.The tax law generally provides for interest on your refund if it is not paid within 45 days of the date you filed your return or filed your claim for refund. d.Publication 1 explains how to file an amended tax return.

If a taxpayer makes all of his income from his job and various investments, which office of the IRS would likely investigate his return if it were audited?

Mark with a "Yes" if the following statement is true and is in Publication 1, The Taxpayer Bill of Rights. Mark with a "No" if the following statement is false or is not addressed in Publication 1. ​ a.A phone number to call to have tax questions answered. b.If a taxpayer is unable to provide or to verify information, then the IRS may contact a neighbor, bank, employer, or employees in order to obtain the information. c.Only the taxpayer has the right to represent themselves in front of the IRS. d.Publication 1 explains what to do if an IRS employee has not provided prompt, courteous, and professional assistance to the taxpayer.

A taxpayer with an average tax rate of 20 percent who receives additional income of $20,000 will pay additional taxes of $4,000.

The IRS charges a fixed 10 percent interest rate on underpayments of taxes.

The Taxpayer Bill of Rights is summarized in IRS Publication 1.

Which of the following is the calculation of the failure-to-file penalties?

A tax return with a large casualty loss would be most likely selected for audit through:

Which of the following is false regarding the return audit process?

Which of the following types of audits was suspended due to protests from taxpayers and lawmakers?

Which of the following is not a preparer penalty?

If a taxpayer has too much income tax withheld from his salary during the tax year, the IRS will pay interest on the excess amount.

Taxpayers are required by law to maintain records to facilitate an IRS audit.

At which of the following IRS locations are tax returns processed?

List three different ways that a tax return may be selected for an audit.

List three things that a preparer needs to do in order to participate in the Annual Filing Season Program.

All paid tax return preparers must sign up with the IRS, pay a fee, and obtain a preparer tax identification number.

Tax evasion involves the use of illegal methods to reduce or avoid income tax.

Tax return preparers must enter the annual filing season program (AFSP).