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

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Question 21

True/False

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

A) True
B) False

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Question 22

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Which of the following has the lowest authoritative weight?

A) Legislative regulation.
B) Private letter ruling.
C) Revenue ruling.
D) Interpretative regulation.
E) Revenue procedure.

F) All of the above
G) A) and D)

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Question 23

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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.

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

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

Rowanda could not settle with the IRS at the appeals conference. If she wants to litigate the issue but does not have sufficient funds to pay the proposed tax deficiency, Rowanda should litigate in the:

Which of the following committees typically initiates for tax legislation?

A taxpayer can avoid a substantial understatement of tax penalty:

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.

If a taxpayer loses a case at the Circuit Court level, he is granted an automatic appeal hearing with the Supreme Court.

Greg earned $20,500 this year and had $1,500 of federal income taxes withheld from his salary. Assuming that Greg will have a total tax liability of $1,000 (and thus will receive a $500) refund, he:

A taxpayer can avoid an underpayment penalty if there is substantial authority that supports her tax return position.

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

A taxpayer can avoid a substantial understatement of tax penalty:

Allen filed his 2014 tax return on May 15th, 2015 and underreported his gross income by 30 percent. Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2013 tax return should end:

For the following taxpayers, please recommend the most advantageous trial level court(s) to litigate a tax issue with the IRS. a. Joe is litigating a tax issue with the IRS that is considered a question of fact (i.e., the answers depends on the facts of the case). There is not a lot of authority on point for this case but Joe has a very appealing story to justify his position that is likely to be viewed sympathetically by his peers. b. The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is very favorable to the issue that Jesse plans to litigate with the IRS. c. The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is not favorable to the issue that Hank plans to litigate with the IRS. d. The 7th Circuit (where Elizabeth resides) recently issued an opinion that is very favorable to the issue that Elizabeth plans to litigate with the IRS.

An acquiescence indicates that the IRS lost a court case and that it has decided to follow the court's ruling in the future.

Dan received a letter from the IRS that gave him the choice of (1) requesting a conference with an Appeals Officer or (2) agreeing to a proposed tax adjustment. Dan received the:

For the 2014 tax returns, indicate when the statute of limitation expires and why. a. Simon filed his tax return on April 10, 2015. b. Billy and Barbara filed their tax returns late on December 1, 2015. c. Pearson earns a living through various illegal activities. He filed his tax return on March 14, 2015 but did not report his illegal income on his tax return. d. Luther filed his tax return on July 17, 2015 but has accidentally underreported his taxable gross income by 20%.

The regulation with the lowest authoritative weight is the: