CTP IRS Procedures, Audits & Controversy Resolution

Question 1

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

Accepted Answer

3 years from the due date or filing date, whichever is later

Answer

The IRS generally has 3 years from the later of the return's due date or actual filing date to assess additional tax under IRC §6501.

Question 2

Which type of IRS audit is conducted entirely through written correspondence without requiring the taxpayer to appear in person?

Accepted Answer

Correspondence audit

Answer

A correspondence audit is handled entirely by mail, typically for simple issues like unreported income or math errors on a return.

Question 3

A Statutory Notice of Deficiency (90-day letter) issued by the IRS gives the taxpayer the right to do what before paying the disputed tax?

Accepted Answer

Petition the U.S. Tax Court

Answer

Upon receiving a 90-day letter, the taxpayer may petition the U.S. Tax Court within 90 days to contest the deficiency without first paying the tax.

Question 4

When the IRS suspects that a taxpayer has omitted more than 25% of gross income from a return, the statute of limitations for assessment is extended to:

Accepted Answer

6 years

Answer

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

Question 5

Which IRS audit type is the most comprehensive and typically involves an IRS agent visiting the taxpayer's home or place of business?

Accepted Answer

Field audit

Answer

A field audit is the most extensive type, with an IRS revenue agent examining records at the taxpayer's location, typically used for complex business returns.

(CTP) Certified Tax Professional Practice Test

(CTP) Certified Tax Professional Practice Test

CTP IRS Procedures, Audits & Controversy Resolution