REG 4 - Professional Responsibilities and Federal Tax Procedures Flashcards
(28 cards)
How long must a CPA retain a completed copy of each return after the close of the return period?
3 years
Who has the authority to suspend or revoke a CPA’s license to practice public accounting?
Only a state board of accountancy
Who has the sole power to license CPA’s?
The state board of accountancy
Is the AICPA involved in the licensing of CPA’s?
No
Who is continuing professional education through?
The state board of accountancy
Upon receipt of a notice of deficiency from the IRS, how long does the taxpayer have to pay the deficiency or file a petition with the U.S. Tax Court for a redetermination of the deficiency?
90 days
If you reject the IRS examiner’s audit findings, what will the IRS do?
Issue a 30-day letter (preliminary notice)
A notice of the right to appeal or agree to the IRS proposed adjustments is communicated through what?
A 30-day letter
If a taxpayer agrees with the conclusions reached by the IRS agent in an audit, does the taxpayer need to file an amended return?
NO
The more likely than not standard involves a position that has more than a ______% chance of succeeding.
50%
If the more likely than not standard is achieved, can you avoid or reduce civil and criminal penalties that might otherwise be imposed?
YES
What is the penalty assessed for a substantial understatement of tax?
20% on the understatement
If the taxpayer has a reasonable basis for taking a tax position, it is disclosed on the tax return, and it is not a tax shelter, can the substantial understatement of tax penalty be avoided?
YES
When a taxpayer needs guidance with a specific tax issue related to a proposed transaction, what can the taxpayer ask for from the IRS?
A Private Letter Ruling
Can Private Letter Rulings be relied upon as precedent by other taxpayers?
NO
Can a decision by the Small Cases Division of the U.S. Tax Court be appealed?
NO
The penalty for failure to file a tax return is ____% per month or fraction of month (up to a maximum of 25%) on the amount shown as due on the return.
5%
Always be suspect of broad answer choices (e.g. those with words such as always, never, any, etc.)
Proof that the CPA acted with scienter is a requirement of what?
COMMON LAW FRAUD
Knowing a financial statement is wrong or recklessly disregarding the truth is the definition of what?
Scienter
Proof that the CPA failed to exercise due care is a requirement of what?
COMMON LAW NEGLIGENCE
A CPA who commits ______ is liable to anyone who can prove the case for it.
FRAUD
A CPA is liable for _____________ only to third parties whom the CPA knows or should foresee will be relying on their work.
NEGLIGENCE
What does actual fraud require that constructive fraud does not?
INTENT
