CTC CTC Tax Controversy & Audit Procedures

Question 1

What is the standard statute of limitations for the IRS to assess additional tax on a timely filed return?

Accepted Answer

3 years from the later of the due date or filing date

Answer

Under IRC §6501(a), the IRS generally has 3 years from the later of the return's due date or actual filing date to assess additional tax.

Question 2

When does the IRS have 6 years (instead of 3) to assess tax under the extended statute of limitations?

Accepted Answer

When the taxpayer omits more than 25% of gross income from the return

Answer

IRC §6501(e) extends the statute of limitations to 6 years when a taxpayer omits more than 25% of gross income from a return.

Question 3

What type of IRS audit is conducted entirely by mail, without requiring the taxpayer to appear in person?

Accepted Answer

Correspondence audit

Answer

A correspondence audit (also called a mail audit) is conducted entirely through written communication and is used for straightforward issues on a return.

Question 4

What is a 'Notice of Deficiency' (90-day letter) and what right does it give the taxpayer?

Accepted Answer

A formal IRS notice that gives the taxpayer 90 days to petition the Tax Court before assessment

Answer

A Notice of Deficiency is a statutory notice that gives the taxpayer 90 days (150 days if abroad) to petition the U.S. Tax Court before the IRS can assess and collect the deficiency.

Question 5

Which IRS office handles appeals of examination findings before a taxpayer proceeds to court?

Accepted Answer

IRS Independent Office of Appeals

Answer

The IRS Independent Office of Appeals provides taxpayers an independent review of disputed examination findings to resolve controversies without litigation.

(CTC) Chartered Tax Consultant Practice Test

(CTC) Chartered Tax Consultant Practice Test

CTC CTC Tax Controversy & Audit Procedures