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

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Question 31

True/False

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If an individual taxpayer is unable to file a tax return by its original due date, the taxpayer can request an automatic 9-month extension to file the return.

A) True
B) False

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Question 32

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The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

A) True
B) False

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Question 33

Multiple Choice

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

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.

Lavonda discovered that the 5^th Circuit (where Lavonda resides) has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS. Lavonda should choose which of the following trial courts to hear her case:

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

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

A taxpayer can avoid a substantial understatement of tax penalty:

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%.

In researching a tax issue, Eric finds that the U.S. Circuit Court of Appeals for the Federal Circuit previously has ruled in favor of his tax position, whereas the 11^th Circuit (Eric's circuit) previously has ruled against his tax position. If Eric is contemplating litigating his tax position with the IRS, he should prefer to have his case first tried by the U.S. Tax Court.

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

If a taxpayer is due a refund, she does not have to file a tax return.

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

Circular 230 was issued by:

The regulation with the lowest authoritative weight is the:

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?

Proposed and Temporary Regulations have the same authoritative weight.

Jeremy has a new client. He has identified a research question that relates to a transaction that the client completed several months ago. This type of research question will primarily involve:

Which of the following has the highest authoritative weight?

Rowanda could not settle her tax dispute 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: