CTC Tax Law & Compliance 2

Question 1

Under the general rule, how long does the IRS have to assess additional tax after a return is filed?

Accepted Answer

3 years

Answer

IRC 6501(a) generally allows the IRS three years from the later of the filing date or due date to assess additional tax.

Question 2

A taxpayer omits gross income exceeding 25% of the gross income reported on the return. What assessment period applies?

Accepted Answer

6 years

Answer

A substantial omission of more than 25% of reported gross income extends the assessment period to six years.

Question 3

What is the assessment statute of limitations when a taxpayer files a fraudulent return?

Accepted Answer

No limitation period

Answer

Under IRC 6501(c), tax may be assessed at any time when a return is false or fraudulent with intent to evade tax.

Question 4

A refund claim generally must be filed within which period?

Accepted Answer

3 years from filing or 2 years from payment, whichever is later

Answer

IRC 6511 allows a refund claim within the later of three years from filing or two years from payment.

Question 5

What is the maximum failure-to-file penalty under IRC 6651(a)(1), not counting fraud?

Accepted Answer

25% of unpaid tax

Answer

The failure-to-file penalty is 5% per month or part of a month, capped at 25% of the unpaid tax.

CTC - Certified Tax Coach Practice Test