CTRS Tax Problem Resolution Strategies 5

Question 1

A taxpayer owes $500,000 in tax debt and has assets worth $600,000 but is unable to liquidate them easily. Which Offer in Compromise basis might the IRS accept in this scenario?

Accepted Answer

Effective Tax Administration based on economic hardship

Answer

Effective Tax Administration OICs may be accepted when collecting the full liability would create economic hardship or when special circumstances make collection inequitable, even if the taxpayer technically has sufficient assets.

Question 2

The Collection Statute Expiration Date (CSED) is generally how many years from the date of assessment?

Accepted Answer

10 years

Answer

Under IRC Section 6502, the IRS generally has 10 years from the date of assessment to collect a tax liability before the CSED expires.

Question 3

Which action by a taxpayer does NOT toll (extend) the Collection Statute Expiration Date?

Accepted Answer

Making a voluntary tax payment

Answer

Voluntary tax payments do not toll the CSED; only specific actions like bankruptcy, OIC submissions, CDP hearings, and certain agreements suspend or extend the collection statute.

Question 4

A taxpayer's spouse died and left them with a joint tax liability of $45,000 from a prior year. The surviving spouse had no involvement in creating the debt. Which relief provision should be explored?

Accepted Answer

Separation of Liability Relief under IRC 6015(c)

Answer

Separation of Liability Relief under IRC 6015(c) is designed for divorced, legally separated, or widowed taxpayers and allocates the joint liability between the two spouses based on each person's items.

Question 5

During an IRS collection interview, the revenue officer asks the taxpayer to complete Form 433-A. What information does this form capture?

Accepted Answer

The taxpayer's financial information including assets, liabilities, income, and expenses for collection determination

Answer

Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) is used by the IRS to evaluate a taxpayer's full financial picture to determine the appropriate collection resolution.

(CTRS) Certified Tax Resolution Specialist Practice Test

(CTRS) Certified Tax Resolution Specialist Practice Test

CTRS Tax Problem Resolution Strategies 5