CTRS Tax Law and Regulations 2

Question 1

Under IRC Section 6651, what is the maximum combined penalty for both failure to file and failure to pay?

Accepted Answer

47.5%

Answer

The failure-to-file penalty (up to 22.5% after the 5% overlapping reduction) plus the failure-to-pay penalty (up to 25%) can reach a combined maximum of 47.5%.

Question 2

Which IRS collection method allows the government to legally seize a taxpayer's wages, bank accounts, or other property to satisfy a tax debt?

Accepted Answer

Notice of Levy

Answer

A Notice of Levy (IRS Form 668-A or 668-W) is the legal mechanism that allows the IRS to seize and apply a taxpayer's assets or income to satisfy an unpaid tax liability.

Question 3

How long does the IRS generally have to collect a tax liability after assessment under IRC Section 6502?

Accepted Answer

10 years

Answer

IRC Section 6502 grants the IRS a 10-year statute of limitations from the date of assessment to collect a tax liability.

Question 4

A taxpayer files a tax return on April 15 but does not pay the tax owed. Under IRC Section 6651(a)(2), the failure-to-pay penalty accrues at what monthly rate?

Accepted Answer

0.5%

Answer

The failure-to-pay penalty under IRC Section 6651(a)(2) accrues at 0.5% per month on the unpaid balance, up to a maximum of 25%.

Question 5

What type of IRS agreement allows a taxpayer to pay a tax debt in full within 120 days without formal installment agreement paperwork?

Accepted Answer

Full-Pay Short-Term Extension

Answer

A Full-Pay Short-Term Extension (also called a 120-day extension) lets taxpayers pay in full within 120 days without requiring a formal installment agreement.

(CTRS) Certified Tax Resolution Specialist Practice Test

(CTRS) Certified Tax Resolution Specialist Practice Test

CTRS Tax Law and Regulations 2