C11-Chp-17-1-Tax-Practice-2010

C11-Chp-17-1-Tax-Practice-2010 - Chapter 2B. Tax Practice

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Chapter 2B. Tax Practice C8-Chp-02B-1-Tax-Practice-2008 Howard Godfrey, Ph.D., CPA Professor of Accounting Copyright ©, Howard Godfrey, 2008
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The student should be able to: 1. Understand the requirements for practicing before the Internal Revenue Service. Pg. 40. 2. Understand the process by which the IRS issues rulings in response to requests from taxpayers or IRS agents, and the use of those rulings. Pg. 41+. 3. Understand the types of IRS audits. Pg 44+. 4. Understand the appeals process, within the IRS and in the court system. Pg. 47+. 5. Understand the statute of limitations and how it affects audits and refunds. Pg. 53+
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The student should be able to: 1. Understand the most important penalties that may apply to taxpayers, and how to compute them. Pg. 54+ 2. Understand the penalty for underpayment estimated income tax. Pg. 58+. 3. Understand penalties that may apply to tax preparers, and how to compute them. (Please make a note to update your textbook and your codebook for changes made recently in code section 6694. See document below homework on web page) Pg. 59+. 4. Understand ethical requirements and professional responsibilities placed on CPAs by the IRS, the AICPA, and state boards of accountancy. Pg. 60+
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Administrative Procedures (1 of 2) Role of the IRS Audits of tax returns Requests for rulings Due dates Failure-to-file/pay-penalties Estimated taxes
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Administrative Procedures (2 of 2) Severe penalties Statute of limitations Liability for tax Tax practice issues
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1.Understand the role of the IRS in our tax system.
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Role of the IRS Enforcement of tax laws Collection of taxes due Interpretation of Internal Revenue Code
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Organization of the IRS Not on the test in this course Commissioner/ Deputy Commissioner Shared Services Functional Units Operating Divisions Agency Wide Shared Services 4,900 employees Agency Wide Info Systems Services 7,000 employees Appeals 1,900 employees Taxpayer Advocate Service 1,600 employees Criminal Investigation 4,500 employees Wage & Investment Income 21,000 employees Small Business & SE 39,000 employees Large & Mid-size Business 9,500 employees Chief Council 2,600 employees National Office Staff 1,000 employees Tax Exempt & Gov’t Entities 2,800 employees
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2. Discuss how returns are selected for audit and the alternatives available to tax payers whose returns are audited.
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Selecting Returns for Audit Information Document Matching Program Computerized matching of information on return with data from 3 rd parties (W-2 from employer) Mathematical/Clerical Error Program Unallowable Items Program
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Audits of Tax Returns (2 of 3) Returns selected for audit by discriminant function & other means 39% of returns selected by using DIF NRP exams less intrusive than TCMP
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Audits of Tax Returns (3 of 3) Types of audits Correspondence audit Office audit Field audit Appeals process Burden of proof
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Types of Audits Correspondence audit – verify one or two items in question by mail Office audit – requires some analysis & IRS judgment through interview Field audit
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C11-Chp-17-1-Tax-Practice-2010 - Chapter 2B. Tax Practice

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