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Flashcards in Federal Tax Process Deck (13):

Where does a Federal tax legislation generates?

Generally it originates in the House of Representatives


What is process for federal tax bills?

1. Starts in the House Ways and Means Committee
2. If it passes, then sent to full House for approval
3. Once approved, the bill is sent to the Senate
4. The Senate Finance Committee, reviews and CHANGES the bill
5. Then, bill is sent to Senate for vote
6. Then approved bill will be sent to the Joint Conference Committee.
7. Once approved it goes to the President for signature


What is the job of the Joint Conference Committee?

To produce a compromise bill from the bills passed by the House and the Senate.

It is made up of members from both the House ways and the senate finance committee.


Federal Tax due date and extensions - Individuals

Due-Date - April 15
In order to claim a refund an amended returns must be filed: within 3yrs from original return due date or within 2yrs from date individual paid tax, whichever is later.

Extension Date - Six month (10/15) to FILE return NOT to pay tax due FORM 4868

Automatic filing and payment for six months issued for people in military service located outside US.


Federal Tax due date and extensions - Corporations

Due-Date - March 15

Extension Date - Six month (9/15) to FILE return NOT to pay tax due FORM 7004


Federal Tax due date and extensions - Partnerships

FILED with individual returns
Due-Date - April 15

Extension Date - Six month (10/15) to FILE return NOT to pay tax due FORM 7004


Federal Tax due date and extensions - Gifts

Due-Date - April 15
A gift tax return must be filed by April 15 of the yr following the year of the gift. If a taxpayer dies during the year, the gift tax return for the year of death must be filed by the date of the estate tax return (nine months after the death)

Extension Date - NONE


Federal Tax due date and extensions - Estates

Due-Date - 9Mo after death

Extension Date - Six Months; Form 4768


How does the IRS select returns to audit?

Method called Discriminant Function System (DFS). This method uses mathematical formulas in order to select returns that are most likely to contain errors and to generate the most additional revenue on audit.

In addition, IRS uses other methods or resources to determine if an audit is needed.


What types of examinations does the IRS perform?

1. Correspondence examinations - if only a few items are under investigation
2. Office examinations - to examine more complex issues
3. Field examinations - to investigate even more complex issues


When appealing an IRS tax decision, what must the protest letter include?

1. Taxpayer's name, address, and daytime phone number
2. statement requesting the appeal on the IRS findings
3. copy of the letter showing the findings
4. tax periods or years involved
5. a list of a proposed changes the taxpayer DOES NOT agree with and why
6. the facts to support the taxpayer's position
7. the law or authority supporting the taxpayers' position
8. A signature from the taxpayer stating that it is true, under the penalties of perjury.


Federal Tax dispute court levels

1 - US Tax Court (in various cities across US, 1 judge, no jury) A deficiency court - wo having to pay tax upfront.
2 - US District Court (in district of residence, 1 judge - may request jury) Must pay tax upfront and then sue govt for refund
3 - US Court of Federal Claims (in Washington, 1 judge, no jury) Must pay tax upfront and then sue govt for refund


What is a Writ of certiorari?

It is a petition from the taxpayer or government asking the Supreme Court to review the decision of a lower court.