Tax Compliance and Procedure Flashcards
7 cards from real CTA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Tax Compliance and Procedure flashcards as text
What is the general statute of limitations for the IRS to assess additional taxes on a filed return?
Answer: 3 years from the date the return was filed or due, whichever is later
Under IRC Section 6501, the IRS generally has 3 years from the later of the filing date or the due date of the return to assess additional taxes.
Which IRS notice is typically the first formal notice that a taxpayer's return has been selected for examination?
Answer: Letter 566 (Initial Contact Letter)
Letter 566 is the IRS's initial contact letter informing a taxpayer that their return has been selected for examination and identifying the items under review.
A taxpayer who disagrees with an IRS examination decision may request an appeal. What is the typical deadline to file a protest for a large case (over $25,000 in dispute)?
Answer: 30 days from the date of the examination report
For cases involving more than $25,000 in dispute, taxpayers must file a written protest within 30 days of the date of the examination report to request an Appeals conference.
What is the penalty rate for failure to pay taxes by the due date under IRC Section 6651(a)(2)?
Answer: 0.5% per month, up to 25% maximum
The failure-to-pay penalty under IRC Section 6651(a)(2) accrues at 0.5% of the unpaid tax per month (or partial month), with a maximum of 25%.
Under which circumstance does the IRS statute of limitations extend to 6 years instead of the normal 3 years?
Answer: When the taxpayer omits more than 25% of gross income from the return
Under IRC Section 6501(e), the statute of limitations extends to 6 years when a taxpayer omits more than 25% of gross income from the return.
What IRS program allows taxpayers to voluntarily disclose previously unreported income to reduce penalties and avoid criminal prosecution?
Answer: Voluntary Disclosure Program (VDP)
The IRS Voluntary Disclosure Program (VDP) allows taxpayers to come forward voluntarily to report previously undisclosed income in exchange for reduced penalties and protection from criminal prosecution.
What is a 'Notice of Deficiency' (also called a 90-day letter)?
Answer: A formal IRS notice giving the taxpayer 90 days to petition the U.S. Tax Court before the deficiency is assessed
A Notice of Deficiency is a statutory notice under IRC Section 6212 that gives the taxpayer 90 days (150 days if outside the U.S.) to petition the U.S. Tax Court to dispute the proposed deficiency before it is assessed.