Exam 18: The Tax Compliance Process

Mr. Beale prepared and signed his 2015 tax return on April 3, 2016. However, he carelessly forgot to mail the return until May 19. He enclosed his check for the $11,940 balance of tax due with the return. Compute Mr. Beale's late-filing and late-payment penalty.

Which type of audit is handled by a revenue agent?

If a taxpayer fails to pay a deficiency, the IRS can garnish the taxpayer's salary or wage to settle the liability.

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

Which of the following statements about tax fraud is true?

Tony Curtis filed her 2015 income tax return on May 2, 2016. Which of the following statements is false?

A taxpayer who is disputing a deficiency of $50,000 or less may request an informal hearing by the Small Tax Case Division of the Tax Court.

Mr. Boyd is a bookkeeper for a local auto repair company. Several years ago, he began to prepare federal income tax returns for his friends and relatives and has developed this sideline into a profitable business. Which of the following statements is true?

Which of the following statements about the tax return filing process is false?

Only one spouse must sign a jointly filed Form 1040.

If the IRS requests information during the course of an audit, the taxpayer has the right to know how the information will be used.

If a taxpayer has insufficient financial means to pay a deficiency, the IRS may make an offer in compromise to settle for a lesser amount.

Which of the following is not a legal obligation of an income tax return preparer?

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

The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a tax deficiency.

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?

Mr. Fiocchi filed his unextended 2015 Form 1040 on July 22, 2016, and had no reasonable cause for the delinquency. The return showed a $1,906 overpayment of tax (refund due). Compute Mr. Fiocchi's late-filing and late-payment penalty.

An individual taxpayer is not required to give the IRS an explanation for extending the filing date for Form 1040.

Ms. Dela filed her unextended 2015 Form 1040 on November 2, 2016, and had no reasonable cause for the delinquency. The return showed a $22,840 balance of tax due. Compute Ms. Dela's late-filing and late-payment penalty.

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule unless that person was forced to sign the tax return under duress.