The Tax Compliance Process

This question bank verified by Studydeets

Questions Bank

Taxes and Taxing Jurisdictions
Policy Standards for a Good Tax
Taxes as Transaction Costs
Maxims of Income Tax Planning
Tax Research
Taxable Income from Business Operations
Property Acquisitions and Cost Recovery Deductions
Property Dispositions
Nontaxable Exchanges
Sole Proprietorships
The Corporate Taxpayer
The Choice of Business Entity
Jurisdictional Issues in Business Taxation
The Individual Tax Formula
Compensation and Retirement Planning
Investment and Personal Financial Planning
Tax Consequences of Personal Activities
The Tax Compliance Process

All Questions

Question 1

Free

True/False

Employees who deliberately have excess income tax withheld from their salaries in order to receive a tax refund are making an interest-free loan of the excess withholding to the government.

Choose correct answer/s

True

False

Check answer

Question 2

Free

True/False

An individual taxpayer is not required to give the IRS an explanation for extending the filing date for Form 1040.

Choose correct answer/s

True

False

Check answer

Question 3

Free

True/False

Taxpayers who can't complete their tax return by the filing date can request an automatic extension of time to file the return and pay any balance of tax due.

Choose correct answer/s

True

False

Check answer

Question 4

Free

True/False

Both individual and corporate taxpayers must pay any balance due of their tax by the extended due date of the tax return for the year.

Choose correct answer/s

True

False

Check answer

Question 5

Free

True/False

Gretchen's 2017 tax return, due April 17, 2018, was filed on July 9, 2018. Her tax due with the return was $1,200. Gretchen owes a late filing penalty of $180.

Choose correct answer/s

True

False

Check answer

Question 6

True/False

The fact that a taxpayer receives a refund check indicates that the IRS is satisfied with the accuracy of the taxpayer's return.

Choose correct answer/s

True

False

To unlock the question

Question 7

True/False

Taxpayers should keep all supporting documentation (credit card statements, etc.) for a tax return for at least three years after the return is filed.

Choose correct answer/s

True

False

To unlock the question

Question 8

True/False

The statute of limitations for a tax return does not begin to run until the return is filed.

Choose correct answer/s

True

False

To unlock the question

Question 9

True/False

Macy filed her 2017 tax return on its extended due date of October 17, 2018. The IRS has until December 31, 2020, to audit this return.

Choose correct answer/s

True

False

To unlock the question

Question 10

True/False

The IRS selects returns to audit that have the highest probability of generating additional revenue.

Choose correct answer/s

True

False

To unlock the question

Question 11

True/False

Corporations are allowed to deduct interest paid on an income tax deficiency as a business expense.

Choose correct answer/s

True

False

To unlock the question

Question 12

True/False

Individuals are allowed to deduct interest paid on an income tax deficiency as a miscellaneous itemized deduction.

Choose correct answer/s

True

False

To unlock the question

Question 13

True/False

The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a tax deficiency.

Choose correct answer/s

True

False

To unlock the question

Question 14

True/False

According to the Taxpayer Bill of Rights, a taxpayer has the right to both privacy and confidentiality during the course of an IRS audit.

Choose correct answer/s

True

False

To unlock the question

Question 15

True/False

An individual who didn't graduate from high school has less exposure to a negligence penalty from the IRS than a college graduate.

Choose correct answer/s

True

False

To unlock the question

Question 16

True/False

Mrs Claire underpaid her current-year federal income tax by $11,017. If the entire underpayment was attributable to Mrs Claire's failure to make a good faith effort to comply with the tax law, the IRS may impose a $2,754 negligence penalty.

Choose correct answer/s

True

False

To unlock the question

Question 17

True/False

The IRS can't impose a negligence penalty on an individual who relied on the advice of a CPA in preparing his tax return.

Choose correct answer/s

True

False

To unlock the question

Question 18

True/False

The harshest administrative penalty that the IRS can impose is the civil fraud penalty.

Choose correct answer/s

True

False

To unlock the question

Question 19

True/False

A special agent is assigned to a tax investigation to determine if the government has enough evidence to indict the taxpayer for criminal fraud.

Choose correct answer/s

True

False

To unlock the question

Question 20

True/False

Only attorneys, enrolled agents, and CPAs may prepare tax returns for compensation.

Choose correct answer/s

True

False

To unlock the question