Administrative (Lesson 3) Flashcards
(62 cards)
1
Q
What is the first primary source of tax law
A
- Internal Revenue Code
2
Q
What are the second primary source of tax law
A
- Administrative sources
3
Q
Who issues regulations
A
- US Treasury department
4
Q
What is a regulation
A
- have the full force and effect of law and are the second highest authority of tax law after the IRC
5
Q
What are the three types of regulations
A
- Proposed
- Temporary
- Final
6
Q
What is proposed regulation
A
- a preview of final regulations and do not have legal precedence
7
Q
What are temporary regulations
A
- are issued when guidance is needed quickly and have the same authoritative value as final regulations
8
Q
What are final regulations
A
- have full force and effect of law
9
Q
What are three types of final regulations
A
procedural regulations
- are essentially housekeeping instructions
interpretive regulations
- implement the intent of committee reports and the IRC
Legislative regulations
- allow the Treasury to determine the details of the law, but congress must specifically delegate this authority
10
Q
What is a revenue ruling
A
- interpretations of the tax laws issued by the IRS
- usually provided in response to a taxpayer request and are based on facts common to many taxpayers
11
Q
Do revenue rulings have the full force and effect of law
A
- no they do not have full force and effect of law but they are binding on officials of the IRS
12
Q
Are courts bound by revenue rulings
A
- no but they can be cited as precedent
13
Q
What are published weekly in the Internal revenue bulleten
A
- revenue rulings
- revenue procedures
14
Q
What are revenue procedures
A
- describe internal practices and procedures within the IRS
- Published in Internal revenue bulletin
- state changes in techniques and administrative procedures used by the IRS
15
Q
What is a private letter ruling
A
- PLRs are issued by the IRS at the request of the taxpayer
- IRS is only bound for that taxpayer
- cannot be relied on by other taxpayers as precedent
16
Q
What are determination letters
A
- are issued by the District directors for returns that will be filed in their respective districts
- only issued with regard to completed transactions
17
Q
Determination letters are only issued if the answer is specifically covered by
A
- statute
- treasury decision or regulation or
- ruling opinion or court decision published in the internal revenue bulletin
18
Q
What is a technical advice memorandum
A
- are issued by the national IRS office
- usually issued in response to a request by an agent performing an audit
- provide clarification that cannot be provided by the local IRS office
- deal with completed transactions
- only apply to the taxpayers involved
19
Q
What are the third primary source of tax law
A
- Judicial sources
20
Q
What must taxpayers do if they cannot resolve disputes with the IRS
A
- seek adjudication from the federal courts
21
Q
What are court decisions considered
A
- official interpretations and applications of the IRC by the judicial branch of the government
- can carry the full force for the statute itself
22
Q
What is the role of the IRS
A
- organized to carry out the responsibilities of the secretary of the treasury
23
Q
How long does a taxpayer have to file a return for a claim of refund
A
- 3 year window from the due date of the return or then the money becomes property of the US treasury
24
Q
If no return has been filed what is the statute of limitations if the individual owes
A
- statute does not start until a return is filed
25
If a return how long does the IRS have to audit the return
- 3 years from the due date of the return and 10 year statute of limitations for the IRS collecting tax
26
If the taxpayer omits additional gross income in excess of \_\_\_% of the amount of gross income stated in the tax return filed with the IRS the statute of limitations is \_\_\_\_\_\_\_
-25% and 6 years
27
What is the statute of limitations in the case of a false tax return or fraudulent tax return filed with the IRS with intent to evade any tax
- statute does not apply
28
How is interest assessed on tax due
- accrues from the original due date even if an extension is obtained
- interest is compounded daily
- rate is the federal ST rate plus 3 percent
29
When is interest paid on refunds
if not received within 45 days of the taxpayer filing a claim for a refund
30
How much is the failure to file penalty
- accrues on a monthly basis at the rate of 5% per month up to 25%
31
What is the failure to file penalty if it relates to a fraudulent failure to file
- the penalty is increased to 15% per month up to 75%
32
If a tax return is filed more than 60 days late what is the penalty
- the minimum failure to file penalty is $435 or
- the amount of the tax due
33
How much is the failure to pay penalty
- accrues at a rate of .5% per month up to 25%
34
What happens if there is a failure to file penalty and a failure to pay penalty
- the failure to file penalty is reduced by the failure to pay penalty
35
What is an accuracy related penalty
- 20% applies to any underpayment due to negligence or disregard of rules or regulations, or substantial understatement of income tax
- not applied if there is reasonable cause accompanied by good faith
36
How much is the tax have to be understated for the 20% penalty to apply
- understatement of tax exceeds the greater of 10% of the correct tax or $5,000
37
How much is a fraud penalty
- 75% of the tax underpayment attributed to fraud
38
What can the taxpayer do after an examination and more tax is assessed
- taxpayer can either agree with those changes and pay any additional tax or
- taxpayer can disagree with the changes and appeal the decision
39
What is the discriminant inventory function (DIF) system
- computer scoring system that assigns a numeric score to each individual and some corporate returns
- higher score triggers an audit
40
Can an attorney represent a client during an audit by the IRS
Yes
41
Can an CPA represent a client during an audit by the IRS
Yes
42
Can an enrolled agent represent a client during an audit by the IRS
Yes
43
Can an CFP represent a client during an audit by the IRS
No
44
Which courts are appellate courts
- US Supreme Court
- US Court of Appeals (Reginal Circuit)
- US Court of Appeals (Federal Circuit)
45
Who handles deficiencies under $50,000 at the taxpayer request
- Small Tax Case Division of the US Tax Court
46
What is the US Tax Court
- No payment of tax is necessary in order to bring a claim before the US tax court
- Trial by jury is not available
- decisions do not bind the IRS with respect to other taxpayers
- appeals to the US court of appeals
47
Where does the US Tax Court appeal to
- US court of appeals
48
Are trials by jury available in the US Tax Court
No
49
Do you have to pay the tax in order to bring a claim before the US tax court
No
50
What is the US Court of Federal Claims
- Sits only in Washington, DC
- only hears claims against the United states
- Tax deficiencies must be paid to proceed in this forum
- appeals to the US Court of Appeals for the Federal Circuit
51
Where does the US Court of Federal Claims sit
- Washington, DC
52
What does the US Court of Federal Claims hear
- claims against the United States
53
Do tax deficiencies have to be paid in order to hear a case before the US Court of Federal Claims
Yes
54
Where does the US Court of Federal Claims appeal to
- US Court of Appeals for the Federal Circuit
55
What is the US District Court
- Tax deficiencies must be paid to proceed in this forum
- US District court is the only forum which allows a Jury trial
- District Court is bound by decision of its Appeals Court and the US Supreme Court
56
Do you have to pay the tax in order to bring a claim before the US District Court
Yes
57
Does the US District Court allow a jury
Yes
58
What is the US Court of Appeals
- there are 12 Circuit Courts located throughout the United States
- US Court of Appeals handles appeals from Tax Court and District Court
- Court of Appeals of one region is not bound to follow the decisions of the court of apples in another region
59
How many US Court of Appeals are there
- 12 Circuit Courts throughout the United States
60
What does the US Court of Appeals handle
- Appeals from Tax Court and District Court
61
Who is bound by the US Supreme Court decisions
- Decisions of the US Supreme Court are binding on taxpayers and the IRS
62
When does the US Supreme Court review tax cases
- there is a conflict between the circuit courts
- an important and recurring problem in tax law administration is involved
- many taxpayers are involved or if
- the decision of a lower court conflicts with long standing practice or the regulations
