Exam 18: The Tax Compliance Process

Mrs. Hepp completed her 2015 Form 1040 on April 13, 2016. The return showed a $923 balance due. Mrs. Hepp needed more time to double check all her computations. What can Mrs. Hepp do to give herself more time?

This year, the IRS audited Mr. and Mr. Simon's 2013 income tax return and determined that they underpaid their tax by $13,780. Which of the following statements is true?

Which of the following statements about taxpayer responsibility is false?

Both individual and corporate taxpayers must pay any balance due of their tax by the extended due date of the tax return for the year.

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 type of audit has the broadest scope and may involve a complete analysis of the taxpayer's accounting records?

Which type of audit takes place at an IRS district office?

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

Mr. and Mrs. Clyde were married for 21 years before Mrs. Clyde divorced her husband in 2015. This year, the IRS determined that the Clydes underpaid their 2014 tax by $19,650. In which case would Mrs. Clyde be relieved of liability for the underpayment under the innocent spouse rule?

Macy filed her 2015 tax return on its extended due date of October 15, 2016. The IRS has until December 31, 2018, to audit this return.

The fact that a taxpayer receives a refund check indicates that the IRS is satisfied with the accuracy of the taxpayer's return.

Mrs. Jordan applied for an automatic six-month extension of time (until October 15, 2016) to file her 2015 income tax return. She actually filed an accurate return on July 9, 2016. The IRS may audit the return and assess Mrs. Jordan for additional 2015 tax at any time through:

Gretchen's 2015 tax return, due April 15, 2016, was filed on July 15, 2016. Her tax due with the return was $1,200. Gretchen owes a late filing penalty of $180.

Mrs. Lui decided to contest a negligence penalty in federal court. Which of the following statements is true?

Only attorneys and CPAs may prepare tax returns for compensation.

Mr. and Mrs. Nestor were assessed a $51,240 income tax deficiency. Which of the following statements is false?

The statute of limitations for a tax return does not begin to run until the return is filed.

Only the government may appeal a tax case to the U.S. Supreme Court.

Mr. and Mrs. Ibrah filed their 2015 Form 1040 on June 6, 2016. Assuming that the return does not contain any significant errors, what is the latest date that the IRS can assess any additional 2015 tax?

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