Deck 13: Tax Practice and Administration

Question 1

The standard for conviction in a criminal case is establishment of:

A)guilt with some reasonable doubt
B)guilt beyond reasonable doubt
C)any guilt even though highly doubtful
D)criminal intent even though not implemented

Answer 1

B

Question 2

An individual whois convicted of willfully aiding or assisting in the preparation of a false return is subject towhich of the following penalties?

A)imprisonment up to2 years and/or fine that cannot exceed $10,000
B)imprisonment up to5 years and/or fine that cannot exceed $50,000
C)imprisonment up to10 years and/or fine that cannot exceed $15,000
D)imprisonment up to3 years and/or fine that cannot exceed $100,000

Answer 2

D

Question 3

The number of days the IRS is allowed in which it may refund an overpayment without incurring interest is:

A)15 days
B)20 days
C)35 days
D)45 days

Answer 3

D

Question 4

For purposes of calculating the interest rate on overpayments and underpayments, the federal short-term interest rate is rounded tothe nearest:

A)one-tenth percent
B)one percent
C)tenth percent
D)none of these are correct

Question 5

Interest imposed by the IRS is compounded:

A)annually
B)quarterly
C)daily
D)monthly

Question 6

When the accuracy-related penalty applies, interest on the penalty accrues from the:

A)date on which the assessment is made
B)date on which the penalty was imposed or December 31, whichever is earlier
C)date on which the penalty was imposed
D)due date of the return

Question 7

A tax return preparer (TRP)is:

A)a CPA as required by the IRS
B)not subject toany kind of penalty as he/she prepares returns on behalf of taxpayers
C)any person whoprepares tax returns gratuitously
D)any person whoprepares tax returns for compensation

Question 8

Which of the following would lead toimposition of civil penalties?

A)violation of civil protocols
B)violation of tax laws as a result of negligence
C)violation of tax statutes due toreasonable cause
D)violation of social rules and norms

Question 9

Toavoid the penalty, the ___________ must meet the burden of proof that the failure tofile was the result of reasonable cause.

A)IRS
B)TRP
C)taxpayer
D)none of these are correct

Question 10

Penalties that are based on a percentage of the delinquent tax are referred toas:

A)assessable penalties
B)ad valorem penalties
C)criminal penalties
D)nominal penalties

Question 11

For § 6502, requests for equitable relief may be filed within:

A)3 years
B)10 years
C)7 years
D)none of these are correct

Question 12

The civil fraud penalty is:

A)5%
B)20%
C)25%
D)75%

Question 13

Samuels, a calendar-year taxpayer, filed his 2017 federal income tax return on October 1, 2020. His return showed an overpayment of $1,200, for which Samuels requested a full refund. The IRS refunds the amount without any interest. Which of the following could be the date of refund by the IRS?

A)November 17, 2020
B)December 29, 2020
C)November 12, 2020
D)December 12, 2020

Question 14

Julian filed a valid extension for his 2020 tax return, giving him until October 15, 2021, tofile his return. He filed his return on November 30 and paid $1,000 of tax due.  For what period of time will Julian be subject tothe failure-to-file and failure-to-pay penalties?

A)2 months for both
B)2 months for failure tofile and 8 months for failure topay
C)8 months for both
D)None of the above.

Question 15

A tax return preparer may disclose information obtained from the taxpayer without being subject tocivil and criminal penalty if such disclosure is:

A)for other than the specific purpose of preparing a tax return
B)pursuant tofulfillment of his own financial goals
C)pursuant toany provisions of the code, or toa court order
D)required for the growth of his profession

Question 16

Jennie received a 6-month extension (toOctober 15, 2021)tofile her 2020 tax return. Jennie actually filed the return on November 20, 2021, paying the $20,000 amount due at that time. She has noreasonable cause for failing tofile the return by October 15 or for failing topay the tax that was due on April 15, 2021. How much is the failure-to-file penalty?

A)$1,800
B)$1,900
C)$2,000
D)$1,000

Question 17

William, a taxpayer, timely mailed his tax return. However, it was returned for insufficient postage. IRS imposed a penalty. Can William claim waiver of penalty?

A)Yes, William can claim waiver of penalty since it is his first tax return.
B)Yes, William can claim waiver since the failure tofile tax return is due toa reasonable cause.
C)No, William cannot claim waiver since it is a case of willful neglect.
D)No, William cannot claim waiver of penalty as he is a delinquent taxpayer.

Question 18

Jennie received a 6-month extension (toOctober 15, 2021)tofile her 2020 tax return. Jennie actually filed the return on November 20, 2021, paying the $20,000 amount due at that time. She has noreasonable cause for failing tofile the return by October 15 or for failing topay the tax that was due on April 15, 2021. How much is the failure-to-pay penalty?

A)$800
B)$700
C)$2,000
D)$1,000

Question 19

The burden of proof in a fraud case is on the:

A)taxpayer
B)tax court
C)IRS
D)tax practitioner

Question 20

In which of the following cases does a taxpayer hold the right torefuse toanswer inquiries that are made by the IRS in a criminal setting?

A)The taxpayer would suffer a monetary loss by answering a criminal inquiry.
B)The nature of the crime is not severe.
C)The taxpayer is confident that a conviction will be obtained.
D)The taxpayer would suffer a loss of some constitutional right by answering a criminal inquiry.

Question 21

Joanne filed her unextended 2020 tax return on September 14, 2021, paying the $5,000 amount due at that time. Joanne has noreasonable cause for failing tofile the return by April 15 or for failing topay the tax that was due on April 15, 2021. Compute the failure-to-pay penalty.

A)$25
B)$125
C)$150
D)None of the above.

Question 22

A taxpayer can avoid the failure-to-file penalty if an extension of the return's due date is granted by the IRS.

Question 23

One example of reasonable cause that the Internal Revenue Manual describes would include a timely mailed return sent tothe wrong IRS address.

Question 24

Assessable penalties are subject toreview by the Tax Court.

Question 25

If a taxpayer understates gross income by 25 percent, the IRS has a 6-year statute of limitations on assessment.

Question 26

Tax return preparers are subject tocriminal prosecution for willful misconduct.

Question 27

A fraudulent failure-to-file tax return is subject toa 25 percent monthly penalty.

Question 28

Kenny underpaid his taxes by $15,000. Of this amount, $7,500 was the result of negligence on his part. What is the amount of the negligence penalty?

A)$0
B)$1,500
C)$3,000
D)$6,000

Question 29

Unless a gross valuation misstatement is made, the accuracy-related penalty amounts to20 percent of the portion of the tax underpayment.

Question 30

An individual should make a claim for refund or credit in the Form 1040X.

Question 31

Assessable penalties typically are expressed as a flat dollar amount and are usually imposed on third parties, such as tax return preparers.

Question 32

Criminal and civil penalties are mutually exclusive.

Question 33

Generally, an overpayment can be refunded or credited tothe person whowas subject tothe original tax.

Question 34

Failure tofile as a result of a taxpayer not having the sufficient funds topay the tax liability is an example of reasonable cause.

Question 35

A failure-to-pay penalty is imposed when the taxpayer fails topay either a tax shown on his or her return or an assessed deficiency within 10 days of an IRS notice or demand.

Question 36

The penalty for a willful failure topay tothe government a tax withheld from an employee's paycheck is one hundred percent of the unpaid tax.

Question 37

The penalty for failure tomake payment of quarterly estimated income taxes is computed without any daily compounding and is not deductible.

Question 38

If a taxpayer is convicted of criminal fraud, he or she can contest a civil fraud determination.

Question 39

Joanne filed her unextended 2020 tax return on September 14, 2021, paying the $5,000 amount due at that time. Joanne has noreasonable cause for failing tofile the return by April 15 or for failing topay the tax that was due on April 15, 2021. Compute the failure-to-file penalty.

A)$250
B)$1,250
C)$1,125
D)$1,000

Question 40

The Employee Withholding Allowance Certificate is required tobe given by the employee tothe employer.

Question 41

Bennie files his 2021 income tax return on April 15, 2022, showing a tax liability of $10,000 and a balance due of $1,000. Bennie does not pay the $1,000 until June 30, 2022. The failure-to-pay penalty is $15.

Question 42

Could a taxpayer make such a small amount of income that a tax return not be filed and still have an unlimited statute of limitations on assessment?

Question 43

How dothe courts define reasonable cause?   List the examples of reasonable cause.

Question 44

"In case of both civil and criminal frauds, the burden of proof is on the IRS." Explain.

Question 45

List some of the possible defenses that a taxpayer may use against a charge of criminal tax offense.

Question 46

What are the requirements tobe satisfied for the issue of an injunction by the IRS against a TRP whois guilty of misconduct toprohibit him or her from engaging in such misconduct or from practicing as a return preparer?

Question 47

What is the procedure for claiming a refund or credit for overpayment of tax?

Question 48

Cite twoinstances that would lead toimposition of criminal penalties on tax return preparers.

Question 49

Elton filed his 2019 income tax return on July 31, 2020, showing total tax of $5,000 and a refund of $100. All tax had been paid by the due date of April 15, 2020. The failure tofile penalty is $0.

Question 50

Underpayment is defined in § 6664 as the correct amount of tax, less the sum of the amount of tax reported by the taxpayer on the return, plus any amount previously assessed or collected, less the amount of rebates made.

Question 51

Give an example of what it means for failure tomake deposits of taxes.   Describe the penalties involved.