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Tax Practices

Terms in this set (30)

Where do all tax bills originate?
The House Ways and Means Committee.
After moving through the House, where does the bill go.
Senate Finance Committee.
Which of the three tax courts allows for a jury trial?
U.S. District Courts
Which tax court(s) do(es) taxpayer not have to pay the deficiency first? Which one(s) do(es) they have to pay first and then sue the IRS for a refund?
Tax court - Don't have to pay deficiency
U.S. District Court & Court of Federal Claims - Pay first and then sue
Where is the U.S. Court of Federal Claims?
Washington D.C.
The U.S. Court of Appeals hears appeals from which tax court(s)?
Tax Court and District Court
The U.S. Court of Appeals for the Federal Circuit hears appeals from which tax court(s)?
U.S. Court of Federal Claims
What are the sources of legislative authority?
The Constitution, IRC, and treaties.
When can an IRS agent reopen an examination?
If there's fraud or some other similar misrepresentation.
What happens if the taxpayer does not respond to the 90 day letter in the allotted time?
They can only go to the U.S. District Court or a Claims Court, which require that the deficiency be paid first.
What document describes the rules that one must meet to be eligible to practice before the IRS?
Circular 230
CPA's are subject to what rules of conduct regarding tax practice?
1) AICPA's Code of Professional Conduct
2) AICPA's Statements on Standards for Tax Services
According to Circular 230's standards of conduct in practicing before the IRS, an individual must:
ANUS

-Advise a client of any noncompliance
-Not charge an unconscionable fee
-Undertake due diligence in representations
-Submit requested records to IRS
What are the four major types of penalties imposed on a taxpayer?
NANA

1) Nonfiling penalty - 5% per month, maximum of 25% of liability
2) An underpayment penalty during the year - 0.5% per month of taxes owed
3) Nonpayment penalty - 0.5% per month (plus interest)
4) Accuracy penalties - 20% of the understatement due to negligence or if it's a "substantial understatement"
What is the penalty to a TRP who prepares a return with an unreasonable position?
The greater of $1,000 or 50% of the income derived from preparing the return.
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