Exam 2: Tax Compliance, the IRS, and Tax Authorities

Because the U.S. District Court hears a broader set of cases, decisions by the U.S. District Court may be considered to have more authoritative weight than the U.S. Court of Federal Claims.

Which of the following types of tax services are arranged by code section?

Which of the following audits is the most common and typically less comprehensive?

Leslie made a mathematical mistake in computing her tax liability. Which audit program will likely catch Leslie's mistake?

Office examinations are the most common type of IRS audit.

Which of the following is not considered a primary authority?

Of the two basic types of tax services, beginning tax researchers often prefer topical tax services.

Caitlin is a tax manager for an accounting firm, and Duff is a first year staff accountant. Describe the differences in the manner in which Caitlin and Duff may identify research issues and in general how one may identify research questions.

Houston has found conflicting authorities that address a research question for one of his clients. The majority of the authorities provide a favorable answer for his client. Nonetheless, there are several authorities that provide an unfavorable answer. Houston estimates that if the client takes the more favorable position on its tax return that there is approximately a 60 percent chance that the position will be sustained upon audit or judicial proceeding. If the client takes this position on its tax return, will Houston be subject to penalty? Will the client potentially be subject to penalty?

Under the Statement on Standards for Tax Services, a CPA may recommend a tax return position if the position is frivolous and the position is not disclosed on the tax return.

If Lindley requests an extension to file her individual tax return, the latest she could pay her tax due without penalty is:

Chris and Chuck were recently debating whether the Internal Revenue Code is "logical." Chris offers that she has briefly reviewed the Code and could hardly understand its organizational structure, if there is one. Please describe the basic organization of the code and how understanding its organization may be especially beneficial to the tax researcher.

Revenue rulings and revenue procedures are examples of primary authorities.

Joel reported a high amount of charitable contributions as a deduction on his individual tax return relative to taxpayers with similar income levels. The information matching program is the IRS program most likely to identify Joel's tax return for audit.

Which of the following has the lowest authoritative weight?

For which of the following tax violations is a civil penalty not imposed on taxpayers?

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S. Senate.

Greg earned $25,500 this year and had $1,500 of federal income taxes withheld from his salary. Assuming that Greg is single, 25 years old, and will have a total tax liability of $1,430 (and thus will receive a $70) refund, he:

Under the tax law, taxpayers may be subject to both civil and criminal penalties for underpaying their tax liability (e.g., due to fraud).

Closed facts are especially conducive to tax planning.