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

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Question 1

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Lindy,a tax intern,is beginning her first tax research case for her employer.Her manager has given her a basic understanding of the facts and has identified the basic research question.Lindy is now ready to begin searching for relevant tax authorities.Describe the different types of research tools available to help a tax researcher locate relevant authority and identify which type may be especially useful for Lindy.

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Tax services aid the researcher in ident...

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Question 2

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For the 2018 tax returns,indicate when the statute of limitation expires and why. a.Phoenix filed his tax return on February 28,2019. b.Jill and Randy filed their tax return on August 16,2019. 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 22,2019 but has accidentally underreported his gross income by 30%.

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(a)April 15,2022.The statute of limitations expires three years from the later of the original due date of the return or the date the return was filed.(b)August 16,2022.The statute of limitations expires three years from the later of the original due date of the return or the date the return was filed.(c)Because Catherine failed to file a tax return,the statute of limitation will not lapse for her 2018 tax return.(d)May 22,2025.Because Jerry underreported his gross income by 30%,the statute of limitations is extended to six years.

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

The IRS has recently completed its audit of Lorene's corporation.As a tax novice,she has very little understanding regarding the audit process and what happens next.Describe the post-audit process for Lorene and identify her options.

Tina has a very complex tax return and it looks like she will not be able to file her tax return by its due date.When is her tax return due? What are Tina's options for paying her tax due and filing her tax return this year? What are the consequences if Tina does not file or pay her tax timely? Be specific.

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

For the 2018 tax returns,indicate when the statute of limitation expires and why. a.Simon filed his tax return on April 10,2019. b.Billy and Barbara filed their tax returns late on December 1,2019. c.Pearson earns a living through various illegal activities.He filed his tax return on March 14,2019 but did not report his illegal income on his tax return. d.Luther filed his tax return on July 17,2019 but has accidentally underreported his gross income by 20%.

For the following tax returns,identify which of the three audit types will most likely be utilized. a.The IRS selected Don's return for audit because of his high itemized deductions.The IRS would like documentation of these deductions. b.Large Public Corporation is a very large publicly traded corporation.It is involved in many complex transactions that have significant tax ramifications. c.George and Barbara operate a small business out of their home.The IRS has identified a couple of issues that may relate to their business. d.The IRS selected Bill and Hillary's tax return for review because of some of their investment sales.They would like a better understanding of the transactions and parties involved.

Ramon's tax return was randomly selected for audit.Which IRS program likely selected Ramon's return for audit?

Edie would like to better understand a new code section enacted four weeks ago.Which of the following authorities will help Edie understand the newly enacted code section?

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

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.

Dominic earned $1,500 this year,and his employer withheld $200 of federal income tax from his salary.Assuming that Dominic is single,30 years old,and will have zero tax liability this year,he:

The "90-day" letter gives the taxpayer the opportunity to pay a proposed IRS tax adjustment or file a petition in the U.S.District Court to contest the adjustment and hear the case.

According to Statement on Standards for Tax Services No.1,a tax practitioner can recommend a tax return position:

The "30-day" letter gives the taxpayer the opportunity to request an appeals conference or agree to a proposed IRS adjustment on the taxpayer's income tax return.

Hong,an introductory tax student,is beginning his first research project.He has a complete understanding of the relevant facts for his project and has identified the initial research questions.He is now ready to begin using a tax service to identify relevant authorities.What are some suggestions for him on how to use tax services to identify relevant authorities?

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

If a taxpayer has little cash and a very technical tax case that she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S.Tax Court.

Temporary Regulations have more authoritative weight than revenue rulings.