Chapter 2 Tax Compliance, the IRS, and Tax Authorities

Chapter 2
Tax
Compliance, the IRS, and Tax AuthoritiesDiscussion
Questions (1)
[LO1] Name three factors that determine
whether a taxpayer is required to file a tax return.

(2)
[LO1] Benita is concerned that
she will not be able to complete her tax return by April 15. Can she request an extension to file her
return? By what date must she do so? If
so, what is the latest date that she could file her return this year without
penalty?

(3)
[LO1] Agua Linda, Inc., is a
calendar-year corporation. What is the original due date for the corporate tax
return? What happens if the original due date falls on a Saturday?

(4)
[LO2] Approximately what
percentage of tax returns does the IRS audit?
What are the implications of this number for the IRS’s strategy in
selecting returns for audit?

(5)
[LO2] Explain the difference
between the DIF system and the National Research Program? How do they relate to each other?

(6) [LO2] Describe the
differences between the three types of audits in terms of their scope and
taxpayer type.

(7)
[LO2] Simon just received a 30-day letter from
the IRS indicating a proposed assessment.
Does he have to pay the additional tax?
What are his options?

(8)
[LO2] Compare and contrast the
three trial-level courts.

(9)
[LO3] Compare and contrast the
three types of tax law sources and give examples of each.(10)
very little in the way of tax
laws. What are the next highest tax
authorities beneath the U.S. Constitution?

(11)
[LO3] Jackie has just opened her Code for the
first time. She looks at the table of
contents and wonders why the Code is organized the way it is. She questions whether it makes sense to try
and understand the Code’s organization.
What are some reasons why understanding the organization of the Internal
Revenue Code may prove useful?

[LO3] Laura Li, a U.S. resident, works for three months this summer in Hong
Kong. What type of tax authority may be
especially useful in determining the tax consequences of her foreign income?

(12) [LO3] What are the basic differences between regulations, revenue
rulings, and private letter rulings?

(13)
[LO3] Under what circumstances
would the IRS issue an acquiescence? A nonacquiescence? An action on decision?(14)
[LO3] Carlos has located a regulation that
appears to answer his tax research question.
He is concerned because the regulation is a temporary regulation. Evaluate the authoritative weight of this
type of regulation. Should he feel more
or less confident in his answer if the regulation was a proposed regulation?

[LO3] Tyrone recently read a regulation that Congress specifically requested
the IRS to issue. What type of
regulation is this? How does this
regulation’s authoritative weight compare to other regulations?

(15)
[LO3] In researching a tax
question, you find only one authority (a trial-level court opinion) that is
directly on point. Which court would you
least prefer to have heard this case and why?

(16)
[LO3] What is stare decisis
and how does it relate to the Golsen rule?(17)
[LO4] Mason was shocked to
learn that the current Code is the Internal Revenue Code of 1986. He thought that U.S. tax laws change more
frequently. What is wrong with Mason’s
perception?

(18)
[LO4] Describe in general the
process by which new tax legislation is enacted.