Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Chapter 12, Problem 11MCQ
To determine
Introduction: The Internal Revenue Service (IRS) has a wide range of functions and responsibilities such as look after of administration of federal taxes, and to perform duties like estimating, determining, and collecting taxes in the form of revenue to the government, it also performs tax return audits and imposes penal provisions. It is the office within the revenue department. The task of the department is to provide the taxpayers with quality service by assisting them in proving knowledge content so the taxpayers understand their tax responsibility and pay taxes timely. It is important in maintaining and establishing tax laws.
To choose: The option that does not attract a penalty of $50 on the tax practitioners.
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Which of the following is not a preparer penalty?
a.Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer.
b.Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers.
c.Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return.
d.Tax preparers may be assessed a penalty for failing to sign a tax return.
For each of the following situations, indicate the amount of the penalty that could be imposed on the tax return preparer
A tax return preparer understates the taxpayer’s tax liability with a frivolous position and does not disclose the position. $
A tax return preparer fails to furnish his identifying number $
A tax return preparer aids a taxpayer in understating a tax liability $
A tax return preparer endorses and cashes a client’s tax refund check.
A tax preparer has a client tht recently asked him about the probability ofthe IRS detecting cash transactions not reported on tax return. What are some of the issues the tax preparer should discuss with this client?
Chapter 12 Solutions
Income Tax Fundamentals 2020
Ch. 12 - Which of the following is a responsibility of a...Ch. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 6MCQCh. 12 - Prob. 7MCQCh. 12 - Prob. 8MCQCh. 12 - Prob. 9MCQCh. 12 - Prob. 10MCQ
Ch. 12 - Prob. 11MCQCh. 12 - Prob. 12MCQCh. 12 - Which of the following have privileged...Ch. 12 - Prob. 14MCQCh. 12 - Prob. 15MCQCh. 12 - Prob. 16MCQCh. 12 - Prob. 17MCQCh. 12 - Taxpayers have the right to have an IRS...Ch. 12 - If a U.S. Tax Court agrees with the taxpayer on...Ch. 12 - If the IRS owes a taxpayer a refund, the law...Ch. 12 - Prob. 21MCQCh. 12 - Melodie's taxable income is $39,000 and she pays...Ch. 12 - Jim has a house payment of $2,000 per month of...Ch. 12 - Indicate which of the following statements are...Ch. 12 - Prob. 2PCh. 12 - Prob. 3PCh. 12 - In the 2019 tax year, Michelle paid the following...Ch. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10PCh. 12 - Prob. 11PCh. 12 - Prob. 12P
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- Under what circumstance will the Internal Revenue Service initiate contact asking for personal or financial information by email? When the customer's identity has been marked as suspicious. When the preparer of the return is found in violation of Circular 230. When a return is filed via an ERO. The IRS does not request personal information by email.arrow_forwardAccording to the AICPA's Statements on Standards for Tax Services, what duties does the tax practitioner owe the client? (If an input field is not used leave the input field(s) empty.) not to disclose tax-related errors without the client's consent. to inform the client of corrective measures to be taken. C to inform the client of errors in a previously filed tax return. to inform the client of how the client can avoid a penalty through disclosure. to inform the client of the potential adverse consequences of a tax return position. to inquire of the client when information provided by him or her appears incorrect, incomplete, or inconsistent on its face. to inquire of the client when the client must satisfy conditions to take a deduction. to instruct the client to file an extension based on refunds that are expected. to instruct the client whether or not to file a tax return.arrow_forwardFor each of the following situations, indicate the amount of the penalty that could be imposed on the tax return preparer: a. A tax return preparer understates the taxpayer's tax liability with a frivolous position and does not disclose the position. The greater of $ percent of the income derived by the tax preparer for an undisclosed unrealistic position. or b. A tax return preparer fails to furnish his identifying number. c. A tax return preparer aids a taxpayer (an individual) in understating a tax liability. d. A tax return preparer endorses and cashes a client's tax refund check.arrow_forward
- What are tax preparers asked to do to prevent filing returns with stolen identities?arrow_forwardA taxpayer’s tax-exempt status justifies the non-keeping of books of accountsand other accounting records. TRUE OR FALSE?arrow_forwardWhich of the following statements is false? Select one: O A. In general, individual taxpayers are required to file a tax return only if their gross income exceeds the standard deduction OB. The penalty for failure to file is more severe than the penalty for failure to pay OC. Taxpayers may file a tax return even when they are not required to do so to obtain a refund of income taxes withheld OD. Individual tax returns are always due on April 15 for calendar-year individualsarrow_forward
- Failure to furnish a completed copy of a prepared tax return no later than the time such return is presented for taxpayer signature may be subject to a penalty of?arrow_forward1. What is the tax preparer required to disclose before allowing a customer to apply for a Financial Product? a) All filing and product options available to the customer, including those with no additional costs b) The timing and costs associated with each refund option c) All fees and/or repayments that will be deducted from the refund d) All of the above e) Nothing. The tax preparer is not required to disclose anything to the customer.arrow_forwardWhich of the following instances is not a ground for the BIR Commissioner to inquire or examine the bank deposits of taxpayers? when the taxpayer filed an application for compromise of his tax liability when the taxpayer fails the lifestyle check test and shows unexplained wealth the taxpayers waives his right in writing the confidentiality of the bank deposits to determine the gross estate of a decedentarrow_forward
- LO 12.5 anning 17. Which of the following does not result in a minimum $55 fine for an income tax preparer? a. Failure to provide a tax preparer identification number b. Cashing a refund check for a customer c. Failing to keep any record of the returns prepared d. Failing to provide a copy of their prepared ret to a customerarrow_forwardWhich of the following statements about the Commissioner’s powers is most correct? a. The Commissioner cannot request a taxpayer to provide information in writing. b. The Commissioner can remove documents from a taxpayer’s premises. c. The Commissioner is entitled to access a taxpayer’s premises at any reasonable time without notice. d. The Commissioner needs to obtain a search warrant in order to enter a taxpayer’s premises.arrow_forwardWhy is the receipt of cash so rarely excluded from a taxpayer’s gross income? If an employer gave an employee a gift card to a particular store, should the employee be treated as having received cash for purposes of the income tax? Are there additional facts you might want to know?arrow_forward
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