ch26 - 1. The tax professional can do more than just tax...

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1. The tax professional can do more than just tax compliance work. He or she can work with the client in consultation over the strategy and tactics of dealing with a Federal tax audit. *a. True b. False 2. The IRS employs almost 90,000 personnel, making it one of the largest Federal agencies. *a. True b. False 3. Recently, the overall Federal income tax audit rate for individual returns has been about 3%. a. True *b. False 4. The IRS targets high-income individuals for an audit rate that is about double that of the general populace. a. True *b. False 5. IRS computers use document matching programs for both individuals and business taxpayers to keep the audit rate low. *a. True b. False 6. In a letter ruling, the IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction. *a. True b. False 7. An IRS letter ruling might determine that an employee’s compensation is unreasonable in amount. a. True *b. False 8. A letter ruling is issued by the IRS at no charge. a. True *b. False
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9. The IRS can require that the taxpayer produce its financial accounting records, to determine if taxable income is computed correctly. *a. True b. False 10. When a tax issue is taken to court, the burden of proof is on the taxpayer to show that the items reported on the return are correct. a. True *b. False 11. When the IRS issues a notice of tax due, the taxpayer has 30 days to either pay the tax or file a petition with the Tax Court. This is conveyed in the “thirty-day letter.” a. True *b. False 12. An “office audit” takes place at the headquarters office of the corporate taxpayer. a. True *b. False 13. After a tax audit, the taxpayer receives the Revenue Agent’s Report as part of the “90-day letter.” a. True *b. False 14. Neither the taxpayer nor the government can appeal a decision of the Tax Court Small Cases Division. *a. True b. False 15. Babs filed an amended return in 2011, claiming a refund relative to her 2009 tax computation. When the IRS approves the amended return, it will pay Babs interest with respect to the overpayment. *a. True b. False
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16. During any month in which both the failure-to-file and failure-to- pay penalties apply, both penalties must be paid in full. a. True *b. False 17. Maria and Miguel Blanco are in the midst of negotiating a divorce. Because both parties are unwilling to share any current financial information, their joint Form 1040 for 2011 is not filed until October 31, 2012, when the respective divorce attorneys forced them to cooperate. The Blancos should not be subject to any Federal late-filing penalties, because of the reasonable cause exception. a. True *b. False 18. A negligence penalty is 20% of the underpayment attributable to negligence. *a. True
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This note was uploaded on 04/02/2012 for the course ECON 101 taught by Professor Sing during the Spring '12 term at CUNY Hunter.

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ch26 - 1. The tax professional can do more than just tax...

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