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

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Question 1

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In general, a CPA will satisfy his professional responsibilities under the Statements on Standards for Tax Services when recommending a tax return position if he complies with the standards imposed by the applicable tax authority.

A) True
B) False

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Question 2

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Kim has decided to litigate a tax issue with the IRS.Describe the trial - level courts that Kim may use to litigate the case.

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There are three trial - level courts tha...

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Question 3

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Rebecca is at a loss.A new tax law was recently passed, and she needs to get a better understanding of why the tax law was passed and the intent of the law from an official authority.Describe what authorities may be especially helpful to Rebecca and why she can't find many authorities that discuss the new law.

For the 2019 tax returns, indicate when the statute of limitations expires and why. a.Phoenix filed his tax return on February 28, 2020. b.Jill and Randy filed their tax return on August 16, 2020. c.Although required to file, Catherine chose not to file a tax return this year because she was expecting a tax refund and could not pull together all the information needed to file the return. d.Jerry filed his tax return on May 22, 2020, but has accidentally underreported his taxable income by 30 percent.

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

Josephine is considering taking a six-month rotation in Paris for her job.Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

In researching a question of fact, the researcher should focus her efforts on identifying authorities with fact patterns similar to her client's facts.

For the following tax returns, identify the method the IRS likely used to select the return for audit. a.Dan made a mistake in adding his income on his tax return. b.Juanita failed to report her salary from her second job on her tax return. c.Michael and Venita deducted a relatively large amount of travel expenses on their tax return for their business.The travel expense is large relative to other taxpayers in similar businesses with similar levels of income. d.Paul and Melissa recently went through a very nasty divorce.One of the issues was Paul's less than forthright accounting of his income in determining the appropriate level of alimony.

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Jaime recently found a "favorable" trial-level court opinion directly on point for her tax question.Which trial-level court would she prefer to have issued the opinion?

Which of the following has the lowest authoritative weight?

If Paula requests an extension to file her individual tax return in a timely manner, the latest she could file her return without a failure-to-file penalty is:

Which of the following is a false statement? A taxpayer filing a fraudulent tax return:

Which of the following is not a source of a tax practitioner's professional responsibilities?

Office examinations are the most common type of IRS audit.

The tax return filing requirements for individual taxpayers only depend on the taxpayer's filing status.

Temporary regulations have more authoritative weight than revenue rulings.

Nolene suspects that one of her new clients may be intentionally underreporting his taxable income.What are the potential ramifications to her client for this behavior? What are the consequences to Nolene if she assists the client in underreporting income? Any advice for Nolene?

The IRS DIF system checks each tax return for mathematical mistakes and errors.

Lakeisha, a first-year staff accountant, was researching a tax issue and found what appears to be the answer to her question in her introductory tax textbook that she bought three years ago.She is thrilled because she thought it would take much longer to find her answer.What type of authority is the textbook? What are other examples of this type of authority? Can Lakeisha base her research conclusion on the textbook or similar authorities? Any suggestions for Lakeisha?