Tax Forms and Procedures Flashcards

Electronic filing (e-file) requires returns to be accepted or rejected within how many days by the IRS?

Answer: 24–48 hours

The IRS generally accepts or rejects electronically filed returns within 24–48 hours of submission.

Form 8867 must be completed by a paid tax preparer who claims which credits for a client?

Answer: EITC, CTC, AOTC, and Head of Household

Paid preparers must complete Form 8867 (Due Diligence) when claiming the EITC, Child Tax Credit, American Opportunity Tax Credit, or Head of Household status.

A taxpayer owes $3,000 in taxes but cannot pay. What is the best first step?

Answer: File the return on time and pay what they can, then request a payment plan

Filing on time avoids the larger failure-to-file penalty; paying what is possible and setting up an installment agreement minimizes penalties and interest.

An Offer in Compromise (OIC) allows a taxpayer to:

Answer: Settle their tax debt for less than the full amount owed

An OIC is an IRS program that allows qualifying taxpayers to settle their tax debt for less than the total amount owed based on their ability to pay.

Which IRS notice is sent when a taxpayer has an unpaid balance and the IRS intends to levy?

Answer: CP504

CP504 is a final notice before levy, warning the taxpayer that the IRS may seize assets (including state tax refunds) if the balance is not paid.

A tax preparer who prepares more than 11 returns in a year is required to do what?

Answer: File all returns electronically (e-file mandate)

Paid tax preparers who prepare more than 10 individual returns per year are subject to the IRS e-file mandate and must file returns electronically.