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Exam 2: Tax Compliance, the Irs, and Tax Authorities

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Question 61

Multiple Choice

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Princess,who resides in the 2ⁿᵈ Circuit,recently found a circuit court case that is favorable to her income tax research question.Which of the following circuits would she prefer to have issued the opinion?

A) 2ⁿᵈ Circuit.
B) Federal Circuit.
C) 1ˢᵗ Circuit.
D) 2ⁿᵈ Circuit or the Federal Circuit.
E) None of the choices are correct.

F) A) and D)
G) A) and C)

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Question 62

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If an individual taxpayer is unable to file a tax return by its original due date,the taxpayer can request an automatic 9-month extension to file the return.

A) True
B) False

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Question 63

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For the following tax returns,identify the method the IRS likely used to select the return for audit. a.Dan made a mistake in adding his income on his tax return. b.Juanita failed to report her salary from her 2ⁿᵈ job on her tax return. c.Michael and Venita deducted a relatively large amount of travel expenses on their tax return for their business.The travel expense is large relative to other taxpayers in similar businesses with similar levels of income. d.Paul and Melissa recently went through a very nasty divorce.One of the issues was Paul's less than forthright accounting of his income in determining the appropriate level of alimony.

Kim has decided to litigate a tax issue with the IRS.Describe the trial level courts that Kim may use to litigate the case.

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S.Senate.

Leslie made a mathematical mistake in computing her tax liability.Which audit program will likely catch Leslie's mistake?

Which judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

Which types of penalties are only imposed after normal due process including a trial?

Raul was researching an issue and found two Tax Court decisions issued within 6 months of each other,one for a taxpayer residing in California and the other for a taxpayer residing in New York whose rulings were inconsistent.Raul knows that the federal tax law does not differ by state and the issue was exactly the same in both cases.Raul is confused because he thought that a basic judicial doctrine was that a court is supposed to rule consistently.Name and describe this judicial doctrine that requires judicial consistency and discuss why the Tax Court may have intentionally ruled inconsistently in this example.

Campbell was researching a tax issue and found a favorable Tax Court opinion and an IRC Code Section that appears to answer the question.Is she finished with the research process? If so,why? If not,what must she do?

Lavonda discovered that the U.S.Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS.Lavonda should choose which of the following trial courts to hear her case: