In connection with the taxpayer penalty for

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Introduction to Probability and Statistics
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Chapter 6 / Exercise 9
Introduction to Probability and Statistics
Beaver/Mendenhall
Expert Verified
147. In connection with the taxpayer penalty for substantial understatement of tax liability, what defenses (if any) are available? 148. A taxpayer penalty may be waived if there is shown to be reasonable causefor the misstatement on the taxreturn. The courts have applied this standard strictly. List three or more assertions for a waiver of a taxpayer penalty that courts have found notto constitute reasonable cause. Example: Ignorance of the tax law. 149. The taxpayer or a tax advisor may be subject to penalties if there is a misstatement of the valuation of an item reported on the tax return. Describe how these penalties work. 150. Some taxpayers must make quarterly estimated payments of their income tax. Describe the structure of these requirements. In your answer, include both corporate and non-corporate taxpayers.
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Introduction to Probability and Statistics
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Chapter 6 / Exercise 9
Introduction to Probability and Statistics
Beaver/Mendenhall
Expert Verified
151. Evaluate this statement: a taxpayer is liable not only for tax penalties as described in the tax Code and Regulations. Sanctions elsewhere in Federal law, such as in the criminal code, also apply in a tax dispute. 152. Circular 230 requires that the tax practitioner use the “best practices” of the tax profession in carrying out atax engagement. Specify what some of these best practices entail. 153. Carole, a CPA, feels that she cannot act as an aggressive advocate for tax clients in today’s environment. What aspects of the ethical conduct of a tax practice might have influenced Carole’s attitude? 154. Attorneys are allowed an “attorney-client privilege” of confidentiality with clients. Does a registered tax preparer enjoy the same privilege? On which types of tax and financial work?
155. Comment on the AICPA’s Statements on Standards for Tax Services. To whom do the standards apply? Are they binding or merely advisory? 156. Minnie, your tax client, has decided to dispute the Revenue Agent’s Report. List and discuss at least four ofyour “next steps” as you prepare to represent Minnie concerning her tax issue within the IRS and in the courts.
CHAPTER 17--TAX PRACTICE AND ETHICS Key1. 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.
2. The IRS employs about 90,000 personnel, making it one of the largest Federal agencies.
3. Recently, the overall Federal income tax audit rate for the Form 1040 has been about 1%.

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