Principles of Taxation

Business

Quiz 18 :

The Tax Compliance Process

Quiz 18 :

The Tax Compliance Process

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Taxpayers who cannot complete their tax return by the filing date can request an extension of time to pay any tax due for the year.
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True False
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False

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

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

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According to the Taxpayer Bill of Rights,a taxpayer has the right to both privacy and confidentiality during the course of an IRS audit.
True False
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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.
True False
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The statute of limitations for a tax return does not begin to run until the return is filed.
True False
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The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a tax deficiency.
True False
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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.
True False
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Gretchen's 2018 tax return,due April 15,2019,was filed on July 9,2019.Her tax due with the return was $1,200.Gretchen owes a late filing penalty of $180.
True False
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Taxpayers should keep all supporting documentation (credit card statements,etc.)for a tax return for at least three years after the return is filed.
True False
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The IRS can't impose an accuracy-related penalty on an individual who relied on the advice of a CPA in preparing his tax return.
True False
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Macy filed her 2018 tax return on its extended due date of October 15,2019.The IRS has until December 31,2021,to audit this return.
True False
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Only attorneys,enrolled agents,and CPAs may prepare tax returns for compensation.
True False
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Individuals are allowed to deduct interest paid on an income tax deficiency as an itemized deduction.
True False
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Corporations are allowed to deduct interest paid on an income tax deficiency as a business expense.
True False
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The fact that a taxpayer receives a refund check indicates that the IRS is satisfied with the accuracy of the taxpayer's return.
True False
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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.
True False
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The harshest administrative penalty that the IRS can impose is the civil fraud penalty.
True False
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An individual who didn't graduate from high school has less exposure to a negligence penalty from the IRS than a college graduate.
True False
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An individual taxpayer is not required to give the IRS an explanation for extending the filing date for Form 1040.
True False
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