Ethics, Professional Responsibilities, and Federal Tax Procedures Flashcards
(26 cards)
Practice before the IRS includes
Preparing and filing documents, corresponding and communicating with the IRS, rendering written advice , representing a client
A practitioner can charge a contingent fee for
services rendered in connection with the IRS examination of an original return or an amended return
A practitioner may represent conflicting interests provided that each client waives the conflict by
informed, written consent
Can monetary penalty be imposed on a practitioner
Monetary penalties are allowed, but the amount shall not exceed the gross income derived from the conduct giving rise to the penalty
When may a practitioner petition for reinstatement after they’ve been disbarred
5 years
A compensated preparer can be liable
the greater of $1,000 or a 50% penalty of income derived
Failure to file penalty
$50 for each failure no to exceed $26,500
What must a written protest to an IRS audit include
a list of the proposed changes that the taxpayer does not agree with and the reason for disagreement, the tax periods involved, statement of facts supporting the taxpayers position and a statement of the law or other authorities that the taxpayer relies on
For federal tax disput there are three trial courts in which a case may be heard
tax court, us district court, us court of federal claims
If a taxpayer agrees to changes made during an examination and he signs an agreement, but does not pay the taxes due
If the taxpayer pays the amount due within 21 calendar days of the billing date and the amount is les than $100k the tax payer will not have to pay more interest or penalties
Failure to file penalty
5% per month up to 25% on the amount of tax shown as being due on the return. If due to fraud it is 15% up to 75%
Failure to pay tax
.5% per month up to 25%. Doubled if deficiency assessment has been made
Penalty for estimated payments is not applied if
the tax due is less than $500 for corps and $1,000 for other taxpayers
Estimated tax payments are
Lowest of 90% of the current year tax or 100% of prior year tax up to $150,000 then the 100% becomes 110%
A substantial understatement of tax liability occurs if the understatement exceeds
the larger of 10% of the tax due or $5,000.
Substantial valuation overstatement penalty
20% of the additional tax that should have been paid if the correct value would have been used. Penalty applies only if the valuation used is 150% ore more of the correct valuation
Substantial valuation understatement
20% of the additional estate or gift tax that would be due if the correct valuation had been used. Penalty applies only if the value of the property claimed on the return is 65% or less than the correct valuation
Civil fraud penalty
75% applied to an underpayment of tax resulting from fraud by the taxpayer
Erroneous fraud claims
20% of the improperly claimed amount applies
Failure to deposit taxes
15% penalty of any under-deposited amount can be imposed
Willful attempt to evade tax
$100k fine and/or 5 years of prison max $500k
Failure to pay over tax
$10k and/or 5 years of prison
Willful failure to pay a tax or an estimated tax, to file a return, to keep required records, or to provide required information
max penalty is a $26k fine and/ore 1 year in prison. Corp $100k fine but no prison
Legislative sources of tax regulations
IRC, house ways and means committee reports, senate finance committee report, joint conference committee report
