Exam 26: Tax Practice and Ethics

​The interest rate for tax underpayments of individuals is 4%.In addition:

If the taxpayer refuses to pay an assessed tax,the IRS can seize taxpayer property under the ____________________ process.

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters need be used. a.Ignorance of the tax law b.Reasonable basis c.Reasonable cause d.Complexity of the tax law e.Substantial authority f.Disclosure on return -Filing an improper refund claim.

Compute the failure to pay and failure to file penalties for John,who filed his 2016 income tax return on December 14,2017,paying the $10,000 amount due.On April 1,2017,John submitted a six-month extension of time in which to file his return; he paid no tax with the extension request.He has no reasonable cause for failing to file his return by October 15,or for failing to pay the tax that was due on April 15,2017.John's failure to comply with the tax laws was not fraudulent.

​Young-Eagle files her 2018 Form 1040 on July 1,2019.The Federal tax statute of limitations for this return expires on:

It typically is advisable that an IRS audit be conducted at the office of the tax advisor,and not of the client.

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. a.Taxpayer penalty b.Tax preparer penalty c.Appraiser's penalty -Substantial understatement of a tax.

Ling has hired CPA Gracie to complete this year's Form 1040.Ling uses online accounting software to keep the books for her interior design sole proprietorship.Ling tells Gracie that a $5,000 amount for business supplies is "close enough" to report for this year's deduction.Gracie can use this estimate in completing the Form 1040.

The IRS is organized according to the industry classification of the taxpayer.One of the operating divisions of the IRS deals exclusively with manufacturing and exporting businesses.

With respect to the Small Cases Division of the Tax Court,

Evaluate this statement: the audited taxpayer has more freedom to "trade issues" with the IRS when the dispute progresses to an Appeals conference.Hint: What are the "hazards of litigation?"

In taking a dispute to the Appeals Division,a written protest is required of the taxpayer when the proposed deficiency exceeds $____________________.

Linwell underpaid his taxes by $250,000.Portions of the underpayment were attributable to negligence ($210,000) and to civil fraud ($40,000).Compute the total penalties incurred.

What are the chief responsibilities of the IRS Commissioner,and of the Chief Counsel of the IRS?

Freddie has been assessed a preparer penalty for willful and reckless conduct.When he completed Peggy's Federal income tax return (she is in the 33% tax bracket),Freddie purposely omitted $100,000 of cash receipts that should have been reported as gross income.Freddie charged Peggy $4,000 to prepare the return.What is Freddie's preparer penalty?

Circular 230 allows a tax preparer to:

Mickey,a calendar year taxpayer,was not required to file a Federal income tax return last year because his AGI was negative due to business losses.For this tax year,his AGI is $120,000 and his tax liability is $10,000.To avoid a penalty for tax underpayments for the current year,Mickey must make aggregate estimated tax payments of at least:

A privilege of ____________________ exists between a tax preparer and the client as to tax advice rendered.

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

After a tax audit,the taxpayer receives the Revenue Agent's Report as part of the "30-day letter."