CTA Tax Compliance and Procedure 3

Question 1

What is the civil fraud penalty percentage under IRC Section 6663?

Accepted Answer

75% of the fraudulent underpayment

Answer

20% of the fraudulent underpayment

Answer

50% of the fraudulent underpayment

Answer

100% of the fraudulent underpayment

Question 2

A taxpayer who has an unpaid tax liability and the IRS has filed a Notice of Federal Tax Lien (NFTL) wants to sell their home. What IRS document would allow the property to be sold free and clear of the lien?

Accepted Answer

Certificate of Discharge of Federal Tax Lien

Answer

Certificate of Release of Federal Tax Lien

Answer

Subordination Agreement

Answer

Withdrawal of Notice of Federal Tax Lien

Question 3

Under the Trust Fund Recovery Penalty (TFRP), which individuals can be held personally liable for a corporation's failure to remit payroll taxes to the IRS?

Accepted Answer

Any 'responsible person' who willfully failed to collect or pay over the withheld taxes

Answer

Only the CEO and CFO of the corporation

Answer

Only the payroll department employees who processed the paychecks

Answer

Only shareholders who own more than 50% of the corporation

Question 4

When does the IRS's 10-year collection statute of limitations (CSED) generally begin?

Accepted Answer

The date the tax was assessed

Answer

The date the tax return was filed

Answer

The date the IRS issued a Notice of Deficiency

Answer

The date the IRS filed a Notice of Federal Tax Lien

Question 5

What is the penalty for a preparer who understates a taxpayer's liability due to an 'unreasonable position' under IRC Section 6694(a)?

Accepted Answer

The greater of $1,000 or 50% of the income derived by the preparer from preparation of the return

Answer

The greater of $1,000 or 25% of the income derived by the preparer from preparation of the return

Answer

The greater of $5,000 or 75% of the income derived by the preparer from preparation of the return

Answer

A flat penalty of $500 per return

Question 6

Which IRS program allows currently uncollectible taxpayers to delay collection activity while their financial situation is monitored?

Accepted Answer

Currently Not Collectible (CNC) Status

Answer

Offer in Compromise (OIC)

Answer

Installment Agreement

Answer

Penalty Abatement Program

Question 7

A taxpayer receives a CP2000 notice from the IRS. What does this notice indicate?

Accepted Answer

The IRS has detected a discrepancy between information reported by third parties and the taxpayer's return

Answer

The IRS has accepted the return and is issuing a refund

Answer

The IRS is initiating a full audit of the taxpayer's return

Answer

The IRS is proposing to levy the taxpayer's wages