Exam 18: The Tax Compliance Process

Employees who deliberately have excess income tax withheld from their salaries in order to receive a tax refund are making an interest-free loan of the excess withholding to the government.

Mr.and Mrs.Pitt filed a joint tax return last year.The couple divorced this year.The IRS audited their last year's return and determined that the Pitts had underpaid their tax by $38,200.Which of the following statements is true?

Which of the following statements about the tax litigation process is false?

In which of the following is not a condition for relief of liability under the innocent spouse rule?

According to the Taxpayer Bill of Rights,a taxpayer has the right to both privacy and confidentiality during the course of an IRS audit.

Mrs.Hepp completed her 2018 Form 1040 on April 13,2019.The return showed a $923 balance due.Mrs.Hepp needs more time to double check all her computations.What can Mrs.Hepp do to give herself more time?

The IRS assessed Ms.Tinlock a $3,050 income tax deficiency.Which of the following steps can the IRS not take to collect the deficiency?

Which of the following should increase the likelihood that Ms.Piper's Form 1040 will be selected for audit by the IRS?

The IRS selects returns to audit that have the highest probability of generating additional revenue.

Mr.and Mrs.Ibrah filed their 2018 Form 1040 on June 6,2019.Assuming that the return does not contain any significant errors,what is the latest date that the IRS can assess any additional 2018 tax?

Which of the following statements about taxpayer negligence is false?

For no particularly good reason,Ms.Totter failed to file her current-year Form 1040 by the due date.Which of the following statements is false?

A professional tax return preparer must attach his or her signature and identifying number to each return prepared.

The IRS can't impose an accuracy-related penalty on an individual who relied on the advice of a CPA in preparing his tax return.

Taxpayers who win their case in court are automatically entitled to recover litigation expenses from the government.

Which of the following statements about criminal tax fraud is false?

Which type of audit takes place at the taxpayer's place of business?

The harshest administrative penalty that the IRS can impose is the civil fraud penalty.

Which of the following statements about tax fraud is true?

Corporations are allowed to deduct interest paid on an income tax deficiency as a business expense.