Exam 17: Tax Practice and Ethics

Yang,a calendar year taxpayer,did not file a tax return for 2005 because she honestly believed that no additional tax was due.In 2012,Yang is audited by the IRS and the agent assesses a deficiency of $17,000 for 2005.Yang need not pay this deficiency,since the statute of limitations expired on April 15,2009.

A tax preparer is in violation of Circular 230 if he or she:

The IRS is a subsidiary agency of the Department of the ____________________.

According to the IRS,the annual "Tax Gap" totals about $______________________ billion. or

Chung's AGI last year was $180,000.Her Federal income tax came to $45,000,which she paid through a combination of withholding and estimated payments.This year,her AGI will be $250,000,with a projected tax liability of $60,000,all to be paid through estimates.Ignore the annualized income method.Compute Chung's quarterly estimated payment schedule for this year.

The IRS can waive the penalty for understating a tax liability if the taxpayer shows ____________________ for the position taken on the tax return.

To file for a tax refund,an individual generally uses Form ____________________.

Minnie,a calendar year taxpayer,filed a return correctly showing a zero Federal income tax liability for 2011,because her Form 1040 showed various deductions and credits.During 2012,Minnie's AGI is $120,000 and her tax liability is $20,000.To avoid a penalty for 2012,Minnie must make aggregate estimated tax payments of at least:

The Commissioner of the IRS is appointed by the:

Juanita,who is subject to a 35% marginal gift tax rate,made a gift of a sculpture to Bianca,valuing the property at $150,000.The IRS later valued the gift at $300,000.The applicable undervaluation penalty is:

In connection with the taxpayer penalty for substantial understatement of tax liability,what defenses (if any)are available?

A(n)$____________________ penalty applies if the tax preparer does not sign the client's tax return. or

A CPA and his/her client hold a privilege of confidentiality from the IRS,as to their discussions about completing a tax return.

The tax preparer penalty for taking an unreasonable tax return position is the greater of $____________________ or ____________________ of the tax professional's income from preparing the return.

During an audit,the IRS might require that the taxpayer produce the ____________________ that underlie the tax return data.

When a "prompt assessment" of the tax liability is requested,the taxpayer essentially is volunteering for an IRS audit of the tax return.

When the IRS issues a notice of tax due,the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

The IRS employs about 100,000 personnel,making it one of the largest Federal agencies.

A(n)___________________ member is required to follow the Statements of Standards for Tax Services in conducting a tax practice.

Does the tax preparer enjoy an "attorney-client privilege" of confidentiality with his or her clients?