REG Deck 3 Flashcards
(129 cards)
An individual tax return preparer must include the preparer’s ________ on any tax returns prepared for compensation.
PTIN
any transaction that the Secretary of the U.S. Treasury Department has determined as having a potential for either tax avoidance or tax evasion.
reportable transaction
What is the penalty when a tax preparer is liable for willful or reckless conduct
Greater of $5,000
75% of the income derived with respect to the tax return or refund claim on which the willful or reckless conduct exercised
How long must a CPA retain a completed copy of each return after the close of the return period (IRC Section 6107)
3 years
Internal Revenue Code (IRC) Section 6695(b) provides a penalty of ________ for each failure of a preparer to sign a tax return [maximum penalty of _________ per calendar year (2024)].
$60
$31,500
The penalty for failure to comply with the IRS’ “due diligence” requirements with respect to determining a client’s eligibility for the earned income credit is a penalty of _______ (2024) for each such failure
$635
When can a CPA disclose confidential client information without the consent of the client
Preparation of state and local tax returns
Quality and peer reviews
Court order or administrative order
Which regulatory body coordinates the state boards of accountancy in their role of licensing and regulation for CPAs?
National Association of State Board of Accountancy (NASBA)
A tax return preparer who discloses taxpayer information without the taxpayer’s formal consent is subject to a civil penalty under Internal Revenue Code (IRC) Section 6713 of ______ for each such disclosure (maximum annual penalty of _________) and a criminal penalty under IRC Section 7216 of a fine up to ________ and/or imprisonment up to one year.
$250
$10,000
$1,000
Where, if any location is personal property tax on personal automobile deductible?
On Schedule A, as an itemized deduction
Where, if any location is current-year state and city income taxes withheld deductible?
On Schedule A, as an itemized deduction
The accumulated earnings tax is a penalty tax:
On C-Corps
Excess of retained earnings of $250,000 without a valid reason
The tax rate is 20% for the penalty
The reasonable basis standard is a tax position that has at least a __________ percent chance of succeeding, one that is arguable but fairly unlikely to prevail in court
20%
The substantial authority standard is a position that has more than a ______ percent chance of succeeding in court.
40%
The more likely than not standard is met when there is greater than a ______ percent likelihood of a tax position being upheld by the courts
50%
If an individual taxpayer rejects the IRS examiner’s findings in an audit of the taxpayer’s tax return, the IRS will issue the taxpayer a ___________________________ notifying the taxpayer of the right to appeal.
30 day letter (preliminary notice)
If the taxpayer agrees with the conclusions reached by the IRS agent in an audit, the taxpayer will sign _______________ and pay any additional tax assessed (plus interest and penalties).
Form 870
Which of the following is a list of courts that are referred to as courts of original jurisdiction, or trial courts, for tax matters?
The Tax Court
U.S. District Court
U.S. Court of Federal Claims
Upon receipt of a notice of deficiency from the IRS, the taxpayer has _________________ to pay the deficiency or ______________________________________ for a redetermination of the deficiency.
90 days
File a petition with the Tax Court
The IRS issues a _____________________________ in response to a taxpayer’s request for guidance on the tax treatment of a proposed transaction, typically one with significant tax consequences.
private letter ruling (PLR)
Interest on a tax deficiency begins to accrue _______________________________________________, even if an extension of time to file was filed.
on the date the original tax was due
What are the types of IRS audits?
Correspondence audit
office audit
field audit
Taxpayers who file petitions with the U.S. Tax court have the option of having the case heard before the informal small cases division if the amount of tax in dispute does not exceed ___________ for any one tax year
$50,000
A taxpayer who disagrees with the IRS may take his or her case to a _______________ only after paying the disputed tax liability and then sue the IRS for a refund.
U.S. District Court
