Question 1

A taxpayer who wants a jury trial must pay the tax deficiency and then sue the government for a refund in U.S.District Court.

Accepted Answer

This is known as the "pay and sue" rule, and it applies to taxpayers who want a jury trial to dispute a tax deficiency. They must first pay the amount owed and then bring a refund suit in U.S. District Court.

Question 2

Mrs.Hepp completed her 2018 Form 1040 on April 13,2019.The return showed a $923 balance due.Mrs.Hepp needs more time to double check all her computations.What can Mrs.Hepp do to give herself more time?

Accepted Answer

Mrs. Hepp can file a request for an automatic extension of time to file her Form 1040 by April 15, and she should pay the estimated balance due with the extension request to avoid penalties and interest.

Question 3

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule if that person enjoyed significant financial benefit from taxable income omitted from the return.

Accepted Answer

The innocent spouse rule generally does not apply if the person significantly benefited from the omitted income, as it indicates awareness or acceptance of the financial situation.

Question 4

Mr.Fiocchi filed his unextended 2018 Form 1040 on July 22,2019,and had no reasonable cause for the delinquency.The return showed a $1,906 overpayment of tax (refund due).Compute Mr.Fiocchi's late-filing and late-payment penalty.

Accepted Answer

Since Mr. Fiocchi's return showed an overpayment of tax, there is no late-filing or late-payment penalty because penalties are based on the amount of tax due, and in this case, there was no tax due.

Question 5

Ms.Hepp filed her 2018 Form 1040 on February 19,2019.The return showed a $2,730 overpayment of tax,and Ms.Hepp received her refund check from the IRS on April 30.Which of the following statements is true?

Accepted Answer

The IRS does not pay interest on refunds issued within 45 days of the filing deadline or the date the return was filed, whichever is later. Ms. Hepp received her refund within this period.

Question 6

Tony Curtis filed her 2018 income tax return on May 2,2019.Which of the following statements is false?

Accepted Answer

All the statements provided are true, so none of them is false.

Question 7

The geographic location of the trial court in a tax dispute determines which of the appellate courts will hear an appeal.

Accepted Answer

This is true because the appellate court that hears an appeal in a tax dispute is determined by the geographic location of the trial court. This is because different appellate courts are assigned to different geographic regions.

Question 8

Only one spouse must sign a jointly filed Form 1040.

Accepted Answer

Both spouses must sign a jointly filed Form 1040.

Question 9

A professional tax return preparer must attach his or her signature and identifying number to each return prepared.

Accepted Answer

This is a requirement set by the Internal Revenue Service (IRS) for tax return preparers. The signature and identifying number help to ensure accountability and accuracy in the preparation of tax returns.

Question 10

Mr.and Mrs.Chung filed their unextended 2018 Form 1040 on May 30,2019,and had no reasonable cause for the delinquency.The return showed a $10,479 balance of tax due.Compute the Chungs' late-filing and late-payment penalty.

Accepted Answer

The answer of Mr.and Mrs.Chung filed their unextended 2018 Form...

Question 11

A taxpayer who is disputing a deficiency of $50,000 or less may request an informal hearing by the Small Tax Case Division of the Tax Court.

Accepted Answer

This statement is true. Taxpayers can request an informal hearing for disputes of $50,000 or less through the Small Tax Case Division of the Tax Court, which is designed to be a simplified and cost-effective alternative to a regular Tax Court proceeding.

Question 12

If a taxpayer fails to pay a deficiency after receiving notice of the deficiency,the IRS can garnish the taxpayer's salary or wage to settle the liability.

Accepted Answer

This is true. The IRS has the authority to garnish wages or salary if a taxpayer does not pay a deficiency after receiving notice.

Question 13

Which of the following statements about taxpayer responsibility is false?

Accepted Answer

All the statements A, B, and C are true regarding taxpayer responsibilities, so none of them is false.

Question 14

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule unless that person was forced to sign the tax return under duress.

Accepted Answer

While duress can be one factor considered in determining eligibility for innocent spouse relief, it is not a requirement. Other factors such as knowledge or involvement in the incorrect reporting of tax liabilities may also be considered.

Question 15

If a taxpayer has insufficient financial means to pay a deficiency,the IRS may accept the taxpayer's offer in compromise to settle the deficiency for a lesser amount.

Accepted Answer

This is true. The IRS has the authority to accept an offer in compromise from a taxpayer who is unable to pay the full amount owed. The taxpayer must submit an application and provide documentation of their financial situation to be considered for an offer in compromise. The IRS may accept an offer if it is deemed to be in the best interest of both the taxpayer and the government.

Question 16

Only the government may appeal a tax case to the U.S.Supreme Court.

Accepted Answer

Both the taxpayer and the government have the right to appeal a tax case to the U.S. Supreme Court if the case involves significant legal issues.

Question 17

Ms.Dela filed her unextended 2018 Form 1040 on November 2,2019,and had no reasonable cause for the delinquency.The return showed a $22,840 balance of tax due.Compute Ms.Dela's late-filing and late-payment penalty.

Accepted Answer

The answer of Ms.Dela filed her unextended 2018 Form 1040...

Question 18

Taxpayers who win their case in court are automatically entitled to recover litigation expenses from the government.

Accepted Answer

Taxpayers who win their case in court are not automatically entitled to recover litigation expenses from the government. The recovery of such expenses is subject to specific legal criteria and court discretion.

Question 19

Which of the following statements about federal tax return filing dates is false?

Accepted Answer

The answer of Which of the following statements about federal...

Question 20

If the IRS assesses additional tax against a corporation after it has liquidated,the shareholders can't be held liable for the tax due.

Accepted Answer

Shareholders can be held liable for the corporation's tax liabilities if they received distributions during liquidation, as they may be considered transferees of the corporation's assets.

Quiz 18: The Tax Compliance Process