Tax Consulting Tax Compliance and Reporting 2

Question 1

A taxpayer who owes taxes but cannot pay in full should consider which IRS program to pay over time?

Accepted Answer

Installment Agreement

Answer

An Installment Agreement allows taxpayers to pay their tax debt in monthly payments over time when they cannot pay the full amount immediately.

Question 2

Under FBAR rules, US persons must report foreign financial accounts when aggregate value exceeds what threshold at any point during the year?

Accepted Answer

$10,000

Answer

US persons must file a FinCEN Form 114 (FBAR) if the aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year.

Question 3

What IRS program allows taxpayers with unpaid taxes to settle for less than the full amount owed?

Accepted Answer

Offer in Compromise

Answer

An Offer in Compromise (OIC) allows qualifying taxpayers to settle their tax debt for less than the full amount when full payment would create financial hardship.

Question 4

Which IRS notice typically initiates an audit by mail for a specific item on a return?

Accepted Answer

CP2000 Notice

Answer

A CP2000 notice is sent when information from third parties doesn't match the amounts reported on a return, proposing changes to income, deductions, or credits.

Question 5

What is the trust fund recovery penalty (TFRP) and who can be held personally liable?

Accepted Answer

A penalty equal to 100% of unpaid payroll taxes imposed on responsible persons who willfully fail to pay

Answer

The TFRP equals 100% of unpaid payroll taxes and can be assessed personally against any responsible person who willfully fails to collect or pay over trust fund taxes.

Tax Consulting Practice Test

Tax Consulting Practice Test

Tax Consulting Tax Compliance and Reporting 2