Exam 17: Tax Practice and Ethics

Vera is audited by the IRS for three tax years. Her returns were prepared by the following parties to each of whom Vera paid a professional fee. Tax Year Preparer 1 Sally Vera's niece, a dentist) 2 Wesley an enrolled agent) 3 Alex a CPA) Vera wants help in appearing before the IRS Revenue Agent for the audit. Which of the following statements is Correct?

Specific factors that are used in selecting tax returns for audit and the weights for such factors are not released to the public. Summarize the public information about tax audit selection; how might a tax return's chances of audit increase above national norms?

The IRS pays interest on a refund to the taxpayer unless the IRS's payment is made within________ days of the date that a return is filed.

The IRS's attorney is known as the Chief Counsel.

Evaluate this statement: A taxpayer is liable not only for tax penalties as described in the tax Code and Regulations. Sanctions elsewhere in Federal law, such as in the criminal code, also apply in a tax dispute.

If the taxpayer comes to the office of the IRS for the audit of a tax return, the review is called an) ____________________ audit.

The Statements on Standards for Tax Services are issued by the:

The IRS targets high-income individuals for an audit rate that is much higher than that of the general populace.

With respect to tax misconduct, a ______________penalty usually involves only a fine, but a_________penalty also can include jail time.

Minnie, a calendar year taxpayer, filed a return correctly showing a zero Federal income tax liability for last year because her Form 1040 showed various deductions and credits. For this tax year, Minnie's AGI is $120,000, and her tax liability is $20,000. To avoid a penalty for the current year, Minnie must make aggregate estimated tax payments of at least:

Some taxpayers must make quarterly estimated payments of their income tax. Describe these requirements. In your answer, include both corporate and noncorporate taxpayers.

The tax penalty imposed on appraisers:

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter. -Fraudulent failure to file a tax return.

An) $__________ penalty applies if the tax preparer does not sign the client's tax return.

Lisa, a calendar year taxpayer subject to a 32% marginal Federal income tax rate, claimed a Form 1040 charitable contribution deduction of $250,000 for a sculpture that the IRS later valued at $160,000. The applicable overvaluation penalty is:

The IRS national office is organized into operating divisions, broadly on the basis of the tax returns that are the responsibility of each division. List the four IRS operating divisions.

Circular 230 requires that the tax practitioner use the best practices of the tax profession in carrying out a tax engagement. Specify what some of these best practices entail.

Which of the following is subject to tax return preparer penalties?

CPA Shearer is required by AICPA tax ethics rules to inform her client Martinez of significant changes in the Federal income tax laws.

Lori, a calendar year individual taxpayer, files her 2018 return on February 10, 2020. She had obtained a six-month extension for filing her return. There was additional income tax of $30,000 due with the return. a. What are Lori's penalties for failure to file and to pay? a. change if Lori, before the due date of the return, had retained a CPA to prepare the return and it was the CPA's negligence that caused the delay? b. Would your answer to