CTP IRS Procedures, Audits & Controversy Resolution 2

Question 1

What is the primary function of the IRS Independent Office of Appeals?

Accepted Answer

To provide an impartial administrative forum for resolving tax disputes without litigation

Answer

The IRS Office of Appeals offers taxpayers a way to resolve disputes with the IRS through an impartial administrative process, avoiding the time and expense of court litigation.

Question 2

Under what circumstances can a taxpayer request a Collection Due Process (CDP) hearing?

Accepted Answer

Only after the IRS files a Notice of Federal Tax Lien or issues a levy notice

Answer

A CDP hearing may be requested within 30 days of a Notice of Federal Tax Lien filing or within 30 days of a final levy notice, giving taxpayers due process rights before collection action.

Question 3

An Offer in Compromise (OIC) allows a taxpayer to settle a tax liability for less than the full amount owed. Which of the following is NOT a valid basis for an OIC?

Accepted Answer

Disagreement with the tax rate applied

Answer

Valid OIC bases are doubt as to liability, doubt as to collectibility, and effective tax administration; a mere disagreement with statutory tax rates is not a qualifying basis for an OIC.

Question 4

What is the legal distinction between a federal tax lien and a federal tax levy?

Accepted Answer

A lien creates a legal claim against property; a levy is the actual seizure of property

Answer

A federal tax lien is a legal claim the government asserts against a taxpayer's property as security for a tax debt, while a levy is the actual taking (seizure) of property to satisfy the debt.

Question 5

How long does the IRS generally have to collect taxes after they have been assessed?

Accepted Answer

10 years

Answer

Under IRC §6502, the IRS has 10 years from the date of assessment to collect taxes through levy or court proceedings.

(CTP) Certified Tax Professional Practice Test

(CTP) Certified Tax Professional Practice Test

CTP IRS Procedures, Audits & Controversy Resolution 2