Question 1

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

Accepted Answer

A) The higher DIF score a return gets, the higher the likelihood for audit. 
B) An office audit is performed at an IRS office. 
C) 50 percent of taxpayers are audited every year. 
D) None of the above is false. 
A) The higher DIF score a return gets, the higher the likelihood for audit. 
B) An office audit is performed at an IRS office. 
C) 50 percent of taxpayers are audited every year. 
D) None of the above is false. C

Question 2

As a result of an IRS audit, a taxpayer may be required to pay additional taxes, but he or she is never paid a refund.

Accepted Answer

A) True 
 B)False  False

Question 3

For the following independent situations, list who (the IRS, the taxpayer, the party who initiates the case, or both sides)has the burden of proof in most civil tax cases:
a.The tax case involves a penalty.
b.The tax case involves a trust with net worth of $8.3 million.
c.The taxpayer has credible evidence, maintains records, and cooperates with reasonable IRS requests.
d.The IRS uses statistics to reconstruct an individual's income.

Accepted Answer

a.The IRS
b.The taxpayer
c.The IRS
d.The IRS

Question 4

Tax returns selected for most audits are selected by the Discriminant Function System.

Accepted Answer

A) True 
 B)False

Question 5

The tax law is administered by the Federal Trade Commission.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

In the following independent situations, is it better to make an installment agreement with the IRS, an offer in compromise with the IRS, or ask for an extension of time to pay any taxes owed?
a.A taxpayer is unlikely to pay the tax amount they owe.
b.Using monthly payments, a taxpayer can afford to pay off the tax owed within 2 years.
c.A taxpayer can pay off their tax owed when they sell their boat which is up for sale.

Accepted Answer

a.An offer in compromise
b.Ins

Question 8

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return.Since the taxes were paid in full, would there be a penalty?

Accepted Answer

The penalty for failure to fil

Question 9

The Discriminant Function System is designed to identify tax returns that may contain errors.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a type of IRS audit?

Accepted Answer

A) Office audit 
B) Field audit 
C) Correspondence audit 
D) Operational audit 
E) All of the above are types of IRS audits 
A) Office audit 
B) Field audit 
C) Correspondence audit 
D) Operational audit 
E) All of the above are types of IRS audits

Question 11

The tax law contains a penalty for filing a "frivolous" tax return.

Accepted Answer

A) True 
 B)False

Question 12

The IRS may issue summons for a taxpayer's bank account records.

Accepted Answer

A) True 
 B)False

Question 13

What are the requirements that an unenrolled preparer needs to do in order to participate in the Annual Filing Season Program?

Accepted Answer

In order to participate in the Annual Fi

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a possible result of an audit by the IRS?

Accepted Answer

A) Payment of a refund to the taxpayer 
B) Payment of a deficiency by the taxpayer 
C) An appeal 
D) No change in the liability 
E) All of the above are possible results 
A) Payment of a refund to the taxpayer 
B) Payment of a deficiency by the taxpayer 
C) An appeal 
D) No change in the liability 
E) All of the above are possible results

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

What is the difference between tax avoidance and tax evasion?

Accepted Answer

Tax avoidance consists of usin

Question 18

Match the following titles with their descriptions:a.Commissioner of Internal Revenueb.IRS Campus Processing Sitec.Large Business and International Divisiond.Small Business/Self-Employed Divisione.Wage & Investment Division 
1.Services taxpayers with assets of $10 million or more
2.Services taxpayers who pay most of their taxes through withholding
3.Establishes policy, supervises the activities of the organization, and acts in an advisory capacity to the Treasury Department on legislative matters
4.Services individuals who file Form 1040 Schedules, C, E, or F5.Processes the information from tax documents
a.Commissioner of Internal Revenue
b.IRS Campus Processing Site
c.Large Business and International Division
d.Small Business/Self-Employed Division
e.Wage & Investment Division

Accepted Answer

The answer of Match the following titles with their descriptions:a.Commissioner...

Question 19

Answer the following:
a.​​Geoffrey filed his tax return 2 months and 8 days late and had not requested an extension of time for filing.Geoffrey's return indicated that he is to receive a $600 refund in taxes.Calculate the amount of Geoffrey's penalty for failure to file his tax return on time, assuming the failure to file was not fraudulent.
b.​​​​John filed his individual income tax return 3½months after it was due.He had not requested an extension of time for filing.Along with his return, John remitted a check for $1,000, which was the balance of the taxes he owed with his return.Disregarding interest, calculate the total penalty that John will be required to pay, assuming the failure to file was not fraudulent (and that he is not subject to failure-to-pay penalties).

Accepted Answer

a.$0, since no taxes

Question 20

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.

Accepted Answer

a.Yes
b.Ye

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

As a result of an IRS audit, a taxpayer may be required to pay additional taxes, but he or she is never paid a refund.

Tax returns selected for most audits are selected by the Discriminant Function System.

The tax law is administered by the Federal Trade Commission.

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

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return.Since the taxes were paid in full, would there be a penalty?

The Discriminant Function System is designed to identify tax returns that may contain errors.

Which of the following is not a type of IRS audit?

The tax law contains a penalty for filing a "frivolous" tax return.

The IRS may issue summons for a taxpayer's bank account records.

What are the requirements that an unenrolled preparer needs to do in order to participate in the Annual Filing Season Program?

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

Which of the following is not a possible result of an audit by the IRS?

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

What is the difference between tax avoidance and tax evasion?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Filters

Exam 12: Tax Administration and Tax Planning

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

As a result of an IRS audit, a taxpayer may be required to pay additional taxes, but he or she is never paid a refund.

Tax returns selected for most audits are selected by the Discriminant Function System.

The tax law is administered by the Federal Trade Commission.

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

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return.Since the taxes were paid in full, would there be a penalty?

The Discriminant Function System is designed to identify tax returns that may contain errors.

Which of the following is not a type of IRS audit?

The tax law contains a penalty for filing a "frivolous" tax return.

The IRS may issue summons for a taxpayer's bank account records.

What are the requirements that an unenrolled preparer needs to do in order to participate in the Annual Filing Season Program?

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

Which of the following is not a possible result of an audit by the IRS?

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

What is the difference between tax avoidance and tax evasion?

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Filters