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68 Cards in this Set
- Front
- Back
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What are the Three facors that determine whether a taxpayer is requreid to file.
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Filing Status
Age Gross Income |
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Can you request an extension to file your return? What date must you request and extension by and what is the latest date to file a return without penalty?
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You have to request an extension before the tax deadline April 13th and you have to estimate the tax and pay it when you file your extension. You cannot just say ill pay you later. It has to be before october 15th
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What is the due date for the corporate tax return?
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March 15th. and if it lands on a Saturday then you have to file it before that Monday.
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What percentage of tax returns do the IRS audit?
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Less than 2%. They tend to audit using a number of computer programs and outside data sources (newspapters, financial statement diclosures, informants and other public and private sources) to identify tax returns with understated tax liability.
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DIF System
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The most important initiative. It assigns a score to each tax return that represents the probability the tax liability on the return has been underreported.
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What is a high score in a DIF Report signify
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a higher likely hood of underreporting
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Information matching program
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compares the taxpayers tax return to infomation submitted to the irs from other taxxpayers like banks employers mutual funds brokerage companies and mortgage companies.
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document perfection program
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All returns are checked for mathematical and tax calculation errors, a process referred to as the document perfection program.
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National Research Program (NRP)
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Analyzes a large sample of tax returns that are randomly selected for audit. From these, the IRS identifies characteristics associated with underreported liablities. Add weights to the characteristics and then incorporates them into the Dif system.
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How does the IRS derive the weight of assigned to spceific attributes on a tax return
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Where the IRS derives the weights assigned to specific tax return attributes from historical IRS audit adjustment data from the National research program
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The Difference between DIF system and NRP
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NRP is Random selection
DIF is Targeted selection |
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Three types of audits
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Coorespondance
Field Office |
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Field Audit
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MOst scary of the audits. They will come to you.
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Office Audit
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THey will have you come to their office and you have a little time to shape things up
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Correspondence Audit
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they right you a letter and you get to explain your side of the story. it is themost cost beneficial to the irs.
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What happens when you recieve a 30-day letter from the irs?
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You have 2 options.
1. He can request for the appeal conference. 2.You can agree to it and you get a 90 day letter. IF you dont pay you go to court. |
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Three trial level courts
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U.S. tax court
U.s. district court U.s. Court of Federal Claims. |
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As a CPA which Court can you practice in
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You can Practice in Tax Court.
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U.S. Tax Court
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National court whose judges are tax experts and only hear tax cases. the only court that allows tax cases to be heard Before the taxpayer pays the Deficiency
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U.S. District Court / U.S. Court of Federal Claims
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tax cases to be heard AFTER the taxpayer pays the Deficiency. For it to be heard in this court. you would have to pay the tax deficiency first then Sue the IRS. It is the only court with a jury
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What are the 3 Law Sources.
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The Code
Court Rulings Tresury Rulings You can quote these sources |
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The Next highest tax authorities under the constitution?
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Supreme court decisions
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Stare Decisis
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The court will rule with they did in the past. It references old cases.
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what do you have to be careful about with Stare Decisis
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What circuit your in. In California you rule in one way and it goes down the list of court. In wyoming its different.
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What are the three committees that debate proposed tax legislation.
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House ways/means
Senate Finance Committee Joint Committee |
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Legislative Branch Deals with which primary authority?
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Tax Code
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Judicial Branch Deals with which primary authority?
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Rulings
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Executive Branch Deals with which primary authority?
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Administrative
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What are the secondary authorities?
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Research Journals Law reviews ETC
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Circular 230
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Governs people who practice in front of the IRS. 2-25
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The constitution
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the ultimate authority.
It doesnt have tax law but it includes the 16th amendment to the consituttion which provides congress the ability to tax income directly. |
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Primary Authorities
Statutory Authorities |
Internal Revenue Code
Senate Finance Committee report House ways and Means committee report |
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Primary Authorities
Administrative Authorities |
Final Regulation
Temporary Regulation Proposed Regulation REvenue ruling Revenue procedure Private letter ruling Technical advice Memorandum |
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Primary Authorities
Judicial authorities |
U.S. Supreme Court
U.S. Court of Appeals U.S. Tax Court- Regular decision U.S. Tax Court Memorandum Decision U.S. Court of Federal Claims U.S. District Court. |
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Secondary Authorities
Tax Research Services |
BNA Tax Management Portfolios
CCH Standard Federal Tax Reporter CCH Tax Research COnsultant RIA Federal Tax Coordinator RIA United States Tax Reporter |
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Secondary Authorities
Newsletters |
Daily Tax Report
Federal Tax Weekly Alert Tax Notes |
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Secondary Authorities
Law Reviews |
Tax Law Review
Virginia Tax Review |
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Secondary Authorities
Professional Journals |
Journal of Accountancy
Journal of Taxation Practical Tax Strategies Taxes Tax Adviser |
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Secondary Authorities
Quick Reference Sources |
IRS Publications
CCH Master Tax Guide RIA Federal Tax Handbook. |
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Internal Revenue Code aka The Code
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The main statutory authority.
Holds the same weight as tax treaties and Supreme Court rulings. |
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How is the Code Unique?
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All administrative and juciial authorities except tax treaties and the constutition- can be seen as an interpretation of it.
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Joint Conference Committee
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House and Senate versions of the Bill goes here if If approved by the senate.
Consists of members of both the senate finance committee and house Ways and means committee. |
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What is the 10 step order of passing a bill?
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1. house ways and means
2. House 3. Senate Finance 4. Senate 5.Joint committee 6 House 7. Senate 8. President (sign/Veto) 9a Goes into act 9bCongressional Override? (yes/no) 10a goes into act 10b RIP Tax Act |
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How can Congress override a Presidential Veto
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two-thirds positive vote in house and senate.
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How is the IRC organized
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Subtitles, chapters, Subchapters, parts, subparts, and sections
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Tax Treaties
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Negotiated Agreements betwen countries that describe the tax treatement of entities subject to tax in both countries.
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Which courts Lowest level of Judicial Authority
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The Trial courts
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WHich courts have the 2nd level of judicial Authority
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The 13 U.S. Circuit courts of appeal
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Which court has the highest level of authority
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The Supreme Court
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Stare Decisis
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THe court will rule with previous rulings
the court will rule w/ role of appelate cours jurisdiction |
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Administrative Sources:
The U.S. Treasury |
The Tresury dept is charged with administering and interpreting the tax lawsof the united states. Through
Regulations Revenue rulings Revenue procedures |
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Regulations
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The tresury departments official interpretation of the internal revenue code
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Final regulations
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issued in fianl form and thus unless or until revoked.
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Temporary Regulations
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a limited life. (3 years after any year after 1988)
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Proposed regulations
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To allow the public to comment on it.
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Three Basic Purposes of Regulations
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Interpretive
Procedural Legislative |
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Interpretive regulations
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Tresurys interpretation of the code
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Procedural regulations
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Explain treasury depts procedures as they relate to administering the code.
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Legislative regulations
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Rarest. When congress directs the treasury dept to address an issue in an area of law. They are actually writing a law instead of interpreting
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Revenue Rulings
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They address the code to an actual situation. It will reference a common sitution like " Rev. Rul. 87-22 is deductions of prepaide interest a taxpayer may claim....
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Reveune procedures
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Go in deeper than revenue rulings
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Letter Rulings
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Below Revenue rulings and revenue procedures in authoritative weight. Less authoritive but more specific
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Private letter rulings
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represent the irs's application of the Code and other tax authorities to a specific transaction and taxpayer.
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Determination letters
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not controversial
isssued by local irs directors a request for an employer to confirm that the taxpayers retirement plan is a qualified plan |
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Technical advice memorandums
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they are generated from completeted transactions and usually are requested by an IRS agent during an IRS audit.
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Aquiescence/Non acquiescence
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guidance for how the IRS intends to respond to the loss.
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acquienscence
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indicates that the IRS ha decided to follow the court's adverse ruling in the future, it does not mean that the IRS agrees with it. Instead it means the irs will no longer litigate the issue
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Non acquiences
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Has the opposite implicatiosn and alerts taxpayers that the IRS does plan to continue to litigate this issue.
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