CTRS Tax Problem Resolution Strategies 3

Question 1

A self-employed taxpayer failed to file returns for 5 years due to severe depression. Which IRS program or provision should the tax resolution specialist explore to address the non-filing and potential penalties?

Accepted Answer

First-Time Abatement combined with Reasonable Cause abatement

Answer

First-Time Abatement can eliminate penalties for one year, while Reasonable Cause based on mental illness can address the remaining years' failure-to-file and failure-to-pay penalties.

Question 2

Under the Trust Fund Recovery Penalty (TFRP), the IRS can assess 100% of unpaid payroll taxes against which individuals?

Accepted Answer

Any person who was responsible for collecting and paying over taxes and willfully failed to do so

Answer

The TFRP applies to any 'responsible person' who willfully failed to collect, account for, or pay over trust fund taxes, which can include officers, directors, employees, or others with authority.

Question 3

A taxpayer received a Notice of Deficiency (90-day letter). They disagree with the IRS findings but missed the 90-day deadline to petition Tax Court. What is their primary remaining option to dispute the liability without paying first?

Accepted Answer

Request an Audit Reconsideration

Answer

Audit Reconsideration allows taxpayers who disagree with an assessment but missed the Tax Court deadline to submit new information for the IRS to review the assessment.

Question 4

The IRS is about to levy a taxpayer's wages. The taxpayer requests a Collection Due Process (CDP) hearing. What is the primary effect of filing a timely CDP request?

Accepted Answer

It suspends the IRS's ability to levy while the hearing is pending

Answer

A timely CDP request suspends levy action during the CDP hearing and any subsequent Tax Court review, protecting the taxpayer from collection while the case is being reviewed.

Question 5

Which type of Offer in Compromise is appropriate when a taxpayer believes the tax assessed was incorrect or does not legally owe the amount?

Accepted Answer

Doubt as to Liability

Answer

Doubt as to Liability OICs are appropriate when there is a genuine dispute about whether the assessed tax is legally correct, such as when new evidence surfaces.

(CTRS) Certified Tax Resolution Specialist Practice Test

(CTRS) Certified Tax Resolution Specialist Practice Test

CTRS Tax Problem Resolution Strategies 3