Chapter 02 - Tax Compliance, the IRS, and Tax Authorities
Tax Compliance, the IRS, and Tax Authorities
(1) [LO1] Name three factors that determine whether a taxpayer is required to file a
Filing status (e.g., single, married filing joint, etc.), age, and the taxpayer’s
(2) [LO1] Benita is concerned that she will not be able to complete her tax return by
Can she request an extension to file her return?
By what date must she
do so? If so, what is the latest date that she could file her return this year without
Benita can file an automatic six month extension to file her tax return. This
extension must be filed by April 15th.
October 15th is the latest date she can
file her return without penalty.
If October 15th falls on a Saturday, Sunday,
or holiday, the extended due date will be the 1st day after October 15th that
is not a Saturday, Sunday, or holiday.
(3) [LO1] Agua Linda, Inc., is a calendar-year corporation. What is the original due
date for the corporate tax return? What happens if the original due date falls on a
The original due date for Agua Linda, Inc.’s corporate tax return is March
If the 15th falls on a Saturday, Sunday, or holiday, the due date will be
the 1st day after March 15th that is not a Saturday, Sunday, or holiday.
this example, Agua Linda, Inc.’s due date is March 17th (i.e., the Monday
after Saturday the 15th).
(4) [LO2] Approximately what percentage of tax returns does the IRS audit?
are the implications of this number for the IRS’s strategy in selecting returns for
Currently, less than 2 percent of all tax returns are audited.
The IRS must
be strategic in selecting returns for audit in an effort to promote the highest
level of voluntary taxpayer compliance.
(5) [LO2] Explain the difference between the DIF system and the National Research
How do they relate to each other?