Question 1

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 2

Mr. Fiocchi filed his unextended 2011 Form 1040 on July 22, 2012, 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 tax due. Therefore, there are no late-filing or late-payment penalties applicable.

Question 3

Only one spouse must sign a jointly filed Form 1040.

Accepted Answer

Both spouses must sign a jointly filed Form 1040, as this indicates that they both agree to the information provided and are jointly responsible for the tax return.

Question 4

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 allows a person to be relieved of liability for a tax deficiency if they can prove that they were unaware of their spouse's erroneous items on a joint tax return. However, if the person enjoyed significant financial benefit from the taxable income that was omitted from the return, they cannot be relieved of liability under the innocent spouse rule.

Question 5

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

Accepted Answer

The IRS has the authority to garnish a taxpayer's salary or wage if they fail to pay a deficiency or tax liability. This is one of the methods the IRS uses to collect unpaid taxes.

Question 6

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

Accepted Answer

Both the government and the taxpayer may appeal a tax case to the U.S. Supreme Court.

Question 7

Which of the following statements about taxpayer responsibility is false?

Accepted Answer

All of the given statements are true, therefore none of them is false. Taxpayers are indeed responsible for paying the correct amount of federal tax, filing the proper federal income tax return, and maintaining adequate tax records.

Question 8

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

Accepted Answer

This statement is true. An offer in compromise is a program offered by the IRS to allow taxpayers to settle their tax debt for a lesser amount if they are unable to pay the full deficiency due to financial hardship. The IRS will evaluate the taxpayer's financial situation and may accept an offer in compromise if it is in the best interest of both parties to do so.

Question 9

Mrs. Hepp completed her 2011 Form 1040 on April 13, 2012. The return showed a $923 balance due. Mrs. Hepp needed 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 pay the estimated balance due with the extension request to avoid penalties.

Question 10

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

Accepted Answer

This is required by the IRS to ensure accountability and accuracy on tax returns.

Question 11

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 correct according to the Internal Revenue Service (IRS). If a taxpayer wants a jury trial, they must first pay the tax deficiency and then sue the government for a refund in U.S. District Court.

Question 12

Ms. Hepp filed her 2011 Form 1040 on February 19, 2012. 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 date. Since Ms. Hepp received her refund within this period, no interest is due.

Question 13

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 14

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

The answer of If the IRS assesses additional tax against...

Question 15

Mr. and Mrs. Chung filed their unextended 2011 Form 1040 on May 30, 2012, 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...

Question 16

Tony Curtis filed her 2011 income tax return on May 2, 2012. Which of the following statements is false?

Accepted Answer

All statements are true. Option A states that Tony will not incur any penalty for filing on May 2 if she is entitled to a refund. Option B indicates that Tony requested an extension and paid the estimated tax due, which exempts her from a late filing penalty. Finally, option C indicates that the IRS may waive a late filing penalty if the reason for the delay was due to unforeseeable circumstances, such as the death of a family member. Therefore, none of the statements are false.

Question 17

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

A person can be relieved of liability for a tax deficiency under the innocent spouse rule even if they were not forced to sign the tax return under duress. They must meet specific criteria, such as not knowing about the tax understatement and not benefiting from it.

Question 18

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 correct. In the United States, the geographic location of the trial court in a tax dispute determines which Circuit Court of Appeals will hear an appeal. There are 13 Circuit Courts of Appeals, each covering a specific geographic region of the country.

Question 19

Ms. Dela filed her unextended 2011 Form 1040 on November 2, 2012, 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 2011 Form...

Question 20

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 may request an informal hearing by the Small Tax Case Division of the Tax Court if they are disputing a deficiency of $50,000 or less. This is a simplified and less formal process than a regular Tax Court case.

Quiz 18: The Tax Compliance Process