1
Q
According to Internal Revenue Code Section 6502, what is the length of the period for collection after a tax assessment?
A
10 years.
2
Q
Which form must be filed to authorize a representative to receive a taxpayer’s confidential material and contact the IRS on their behalf?
A
Form 2848 (Power of Attorney and Declaration of Representative).
3
Q
During the collection process, the IRS may share tax information with certain foreign governments only under what specific provisions?
A
Tax treaty provisions.
4
Q
What type of notice must the IRS provide before contacting neighbors or banks regarding a taxpayer’s liability?
A
Reasonable notice in advance.
5
Q
List one instance where the IRS is NOT required to provide notice before contacting a third party.
A
A pending criminal investigation (or when notice would jeopardize collection, result in reprisal, or was authorized by the taxpayer).
6
Q
If the IRS serves a third-party summons to determine liability, how many days after the notice must the IRS wait before reviewing information or receiving testimony?
A
23 days.
7
Q
Within how many days of the notice date must a taxpayer petition to ‘quash’ a third-party summons?
A
20 days.
8
Q
When will a taxpayer NOT receive notice or the right to quash a third-party summons?
A
When the summons is issued to collect taxes the taxpayer already owes.
9
Q
Which form is used to request an extension of time for payment due to ‘undue hardship’ under Section 6161?
A
Form 1127.
10
Q
In the context of Form 1127, how is ‘undue hardship’ defined relative to a taxpayer’s finances?
A
The taxpayer must show a substantial financial loss (e.g., selling property at a sacrifice price) if the tax is paid when due.
11
Q
What is the maximum debt amount for an individual to apply for an Installment Agreement online?
A
$50,000 or less.
12
Q
Which form is used for an Installment Agreement request if the taxpayer owes $25,000 or less?
A
Form 9465.
13
Q
What form is used to request a Payroll Deduction Agreement for tax payments?
A
Form 2159.
14
Q
To be eligible for an Installment Agreement, what is the primary filing requirement for the taxpayer?
A
The taxpayer must have filed all required tax returns.
15
Q
If an Installment Agreement request is rejected, which IRS office may review the case at the taxpayer’s request?
A
The Office of Appeals.
16
Q
Define an Offer in Compromise (OIC).
A
An agreement to settle unpaid tax debt for less than the full amount owed.
17
Q
What are the three grounds upon which the IRS may accept an Offer in Compromise?
A
Doubt as to liability (accuracy), doubt as to collectibility (insufficient assets/income), or effective tax administration (hardship/unjust).
18
Q
Under what condition is an Offer in Compromise automatically accepted by the IRS?
A
If the IRS does not make a determination within two years of the receipt date.
19
Q
Which form is used to appeal a rejected Offer in Compromise?
A
Form 13711.
20
Q
What is a Revenue Agent Report (RAR)?
A
A report containing information to ensure understanding of adjustments and showing how tax liability was computed.
21
Q
Which form is used for a regular ‘agreed’ Revenue Agent Report involving income tax examination changes?
A
Form 4549.
22
Q
What is the purpose of Form 886-A in an unagreed examination case?
A
It provides the written explanation of adjustments.
23
Q
What are the four components of the format used for preparing Form 886-A?
A
Facts, Law, Government’s Position, and Taxpayer’s Position.
24
Q
True or False: A Notice CP-2000 is a bill for unpaid taxes.
A
False (it is a proposal to adjust income, credits, or deductions).
25
Which form should a taxpayer use to request a copy of a previously filed tax return (for a fee)?
Form 4506.
26
What is the standard time limit for a taxpayer to submit Form 8857 for Innocent Spouse Relief after the first collection attempt?
2 years.
27
How does living outside the U.S. for at least 6 months affect the collection statute of limitations?
The collection period is suspended while the taxpayer is outside the U.S.
28
During a bankruptcy with an automatic stay, the IRS suspends collection for the duration of the stay plus how many additional months?
6 months.
29
What are the two main programs for appealing an IRS collection action?
Collection Due Process (CDP) and the Collection Appeals Program (CAP).
30
Which form is used to request a Collection Due Process (CDP) hearing?
Form 12153.
31
A taxpayer generally has _____ days from the date of a lien or levy notice to request a CDP hearing.
30 days.
32
What is the main difference between CAP and CDP regarding judicial review?
A taxpayer cannot proceed to court if they disagree with a CAP decision, whereas a CDP determination can be contested in Tax Court.
33
Within how many business days of filing a Notice of Federal Tax Lien must the IRS notify the taxpayer?
5 business days.
34
What are the timeframes for requesting an 'Equivalent Hearing' for a Lien Notice and a Levy Notice?
One year plus 5 business days for a Lien Notice; one year for a Levy Notice.
35
To establish authorization for a decedent's tax information, a preparer must provide a death certificate and which other court-approved document?
Letters Testamentary (or Letters of Administration/Representation).
36
Which form notifies the IRS of a fiduciary relationship, such as an executor or trustee acting for a taxpayer?
Form 56.
37
Distinguish between a tax 'lien' and a tax 'levy'.
A lien is a security interest/claim against property; a levy is the actual legal seizure of property to pay debt.
38
At least how many days before a levy must the IRS send a Final Notice of Intent to Levy?
30 days.
39
A request for the return of levy proceeds must be made within _____ months from the date of the levy.
9 months.
40
If a taxpayer requests an appeal after a seizure but before the sale, they must appeal to the Collection manager within _____ business days of the Notice of Seizure.
10 business days.
41
List three examples of property exempt from IRS seizure.
Unemployment benefits, worker's compensation, and necessary schoolbooks/clothing.
42
What happens to a balance due account when it is designated as 'Currently Not Collectible' (CNC)?
The IRS stops active collection action and suspends the case until the taxpayer’s ability to pay improves.
43
At what aggregate unpaid balance threshold will the IRS generally file a Notice of Federal Tax Lien on accounts reported as CNC?
$10,000 or more.
44
What is the maximum percentage for the failure to deposit penalty for employment taxes?
0.15
45
What is the purpose of the Trust Fund Recovery Penalty (TFRP)?
To encourage prompt payment of withheld income and employment taxes by holding responsible individuals personally liable.
46
In the context of TFRP, what two requirements must be met for a person to be assessed the penalty?
They must be a 'responsible person' and they must have 'willfully' failed to collect or pay the taxes.
47
How is the amount of the Trust Fund Recovery Penalty calculated?
It is equal to the unpaid balance of the trust fund tax (withheld income tax plus the employee's portion of FICA).
48
How many days does a taxpayer have to appeal the IRS's plan to assess a TFRP (if addressed within the U.S.)?
60 days.
49
What are the four general categories for penalty relief?
Reasonable cause, statutory exceptions, administrative waivers, and correction of Service error.
50
What is the standard Failure to File (FTF) penalty rate per month?
5% of the unpaid taxes (up to a 25% maximum).
51
What is the standard Failure to Pay (FTP) penalty rate per month?
0.5% (one-half of one percent) of the unpaid taxes (up to a 25% maximum).
52
What is the 'First-Time Abate' (FTA) administrative waiver?
An IRS waiver for FTF or FTP penalties granted to taxpayers with a compliant tax history for the prior three years.
53
Which form is used to request an interest abatement or a refund of interest already paid?
Form 843.
54
The IRS will only abate interest if it resulted from an unreasonable error or delay in performing what two types of acts?
Managerial or ministerial acts.
55
True or False: 'Reasonable cause' is a valid basis for abating interest.
False (it is never the basis for abating interest).
56
What are the two ways a taxpayer is notified that their account has been selected for an audit?
By mail and by telephone.
57
What are the three possible ways an audit can conclude?
No change, Agreed, or Disagreed.
58
What is a '30-day letter' in the audit process?
A letter notifying the taxpayer of their right to appeal proposed changes within 30 days.
59
What is a '90-day letter', and what is its formal name?
A Statutory Notice of Deficiency; it notifies the taxpayer of the intent to assess a deficiency and their right to petition Tax Court.
60
When can a taxpayer request an 'Audit Reconsideration'?
Any time after an examination assessment has been made and the tax remains unpaid, provided they have new information or did not appear for the audit.
61
Under the Bipartisan Budget Act of 2015 (BBA), at what level are partnership audits and adjustments generally conducted?
The partnership level.
62
Who has the sole authority to act on behalf of a partnership during a BBA audit?
The designated partnership representative.
63
To what extent does the tax confidentiality privilege apply to Federally authorized practitioners (like EAs or CPAs)?
The same protection as between an attorney and taxpayer, but only for noncriminal tax matters before the IRS or in Federal court.
64
When is a 'small case request' (instead of a formal written protest) sufficient for an appeal?
When the total amount for any tax period is $25,000 or less.
65
A taxpayer generally has the burden of proof in court if their net worth is $7 million or less and they have met which other requirement?
They cooperated with all reasonable IRS requests for information and met substantiation/record-keeping requirements.
66
If a taxpayer receives a Notice of Deficiency, they must file a petition with the Tax Court within _____ days (if addressed inside the U.S.).
90 days.
67
What is the maximum amount at issue for a case to qualify for 'small tax case' procedures in the Tax Court?
$50,000 or less.
68
Under what circumstance must a taxpayer usually pay the tax before filing suit in a District Court or the Court of Federal Claims?
In almost all cases (these courts hear tax cases only after the tax is paid and a refund claim is filed/disallowed).
69
What are the four basic elements required in a Freedom of Information Act (FOIA) request letter to the IRS?
State it is a FOIA request, identify records specifically, include requester's name/address/ID, and commit to paying fees.
70
Name the four specific areas of representation discussed in the EA Exam Preparation Part 3 Video 3 material.
Collection process, penalty and interest abatement, examinations (audits), and appeals.
71
Which IRS publication covers 'Practice Before the IRS and Power of Attorney'?
Publication 947.
72
What is the common name for IRS Forms 433-F, 433-A, and 433-B?
Collection Information Statement.
73
Which form is used to file a 'Claim for Refund and Request for Abatement'?
Form 843.
74
Starting in October 2025, the IRS will generally stop issuing _____ for federal disbursements and tax refunds.
Paper checks
75
As of 2024, which previously available tax refund option can no longer be used to purchase a specific type of government security?
U.S. savings bonds.
76
What is the primary advice for a taxpayer who does not have the money to pay their tax liability when the return is due?
File the return anyway.
77
Identify the three main options available to a taxpayer who cannot pay their tax debt immediately.
Extension of time to pay, installment agreement, and offer in compromise.
78
Which form is titled 'Application for Extension of Time for Payment of Tax Due to Undue Hardship'?
Form 1127.
79
For an extension of time to pay filed with a return, what is the maximum duration usually granted?
6 months.
80
In response to a deficiency notice, an extension of time to pay usually will not exceed _____ months.
18 months
81
When applying for a Form 1127 extension, the taxpayer must provide an itemized list of income and expenses for the previous _____ months.
3 months
82
Under an extension of time to pay (Form 1127), _____ continue to accrue, but penalties are forgiven if paid within the agreed period.
Interest
83
What is the maximum time allowed for making periodic payments under an installment agreement?
72 months.
84
What is a prerequisite regarding tax return filings before an installment agreement can be established?
All required tax returns must have been filed.
85
For an individual to apply for an installment agreement online at a reduced fee, the total amount owed must be $ $50,000 $ or less.
True
86
What is the maximum debt amount for a business to apply for an installment agreement online?
$ $25,000 $.
87
If an installment plan is for _____ days or less, the online application limit for debt increases to $ $100,000 $.
180 days
88
Which form is used to request an installment agreement by mail?
Form 9465.
89
Under what payment condition is the setup fee for an installment agreement waived for low-income taxpayers?
Payments are made by direct debit.
90
Define 'Offer in Compromise' (OIC).
An agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed.
91
Under what specific qualification category will the IRS accept an OIC if they don't expect to recover more than the offered amount?
Doubt as to collectability.
92
Which form is used to file for an OIC based on 'Doubt as to Liability'?
Form 656-L.
93
A business owner with employees applying for an OIC must have made all required federal tax deposits for the current quarter and the _____ preceding quarters.
Two
94
Identify one legal proceeding that, if active, prevents a taxpayer from qualifying for an Offer in Compromise.
Bankruptcy.
95
If an Offer in Compromise is denied, how many days does the taxpayer have to file an appeal?
30 days.
96
What are the five primary categories of information shown on a Collection Information Statement (Form 433 series)?
Assets, liabilities, income, expenses, and digital assets.
97
Name five avenues the IRS uses to collect unpaid taxes as 'Collection Actions'.
Levy (seizure), lien, summons, passport revocation/non-issuance, and refund offsets.
98
How many days must the IRS normally wait after sending a Notice of Intent to Levy before actually seizing property?
30 days.
99
Under what condition is the IRS prohibited from issuing a levy?
There is a current or pending installment agreement, Offer in Compromise, or an agreed inability to pay.
100
Identify three types of property the IRS is legally prohibited from seizing via levy.
Unemployment benefits, worker's compensation, and court-ordered child support payments.
101
Define a 'Federal Tax Lien'.
A legal claim against all of a taxpayer's current and future property to establish priority over other creditors.
102
Where is a Federal Tax Lien generally filed if the taxpayer resides overseas?
Washington D.C.
103
List two conditions under which a tax lien may be 'withdrawn'.
An installment agreement is entered into or the IRS failed to follow its own procedures.
104
What is the purpose of an IRS 'summons'?
To legally compel a taxpayer or third-party to meet with an IRS officer and provide info, documents, or testimony.
105
In 2025, what is the approximate debt threshold that triggers the IRS to notify the State Department of a 'seriously delinquent tax debt'?
More than $ $64,000 $.
106
Under the Treasury Offset Program, tax refunds can be used to pay off which non-tax debts?
Federal student loans, state income tax, and child support payments.
107
Identify the two main administrative options for appealing IRS collection actions.
Collection Due Process (CDP) and Collection Appeals Program (CAP).
108
Which form is used to request a Collection Due Process (CDP) hearing?
Form 12153.
109
What is a significant procedural advantage of a timely filed Collection Due Process (CDP) request?
It normally stops IRS levies until after the hearing and allows for judicial appeal.
110
What must a taxpayer do before filing a Collection Appeals Program (CAP) request regarding a levy or lien?
Request a conference with the manager of the IRS employee who made the decision.
111
Within how many business days must a taxpayer notify the Collection office of their intent to appeal using CAP?
2 business days.
112
Which form is used to request a Collection Appeals Program (CAP) hearing?
Form 9423.
113
What is the primary disadvantage of using the Collection Appeals Program (CAP) instead of CDP?
The taxpayer cannot go to court if the outcome is unfavorable.
114
What is 'Currently Not Collectible' status?
A temporary delay of collection efforts granted when the IRS determines a taxpayer has no assets or income to pay the debt.
115
In 'Currently Not Collectible' status, interest and penalties cease to accrue.
False
116
If a deceased taxpayer owes tax from a jointly filed return, who is responsible for the debt?
The surviving spouse.
117
Absent fraud, are descendants (e.g., children) responsible for the tax debts of their deceased parents?
No.
118
What is the 'Trust Fund Recovery Penalty'?
A $ 100 \% $ penalty imposed on individuals who willfully fail to turn over withheld social security and Medicare taxes.
119
To qualify for 'First Time Abate' (FTA), a taxpayer must have a clean penalty history for the prior _____ years.
3 years
120
Which three specific penalties are eligible for First Time Abate (FTA)?
Failure to File, Failure to Pay, and Failure to Deposit.
121
Name three examples of 'Reasonable Cause' for penalty abatement.
Natural disasters, death/serious illness, or inability to obtain records.
122
Does 'reliance on a tax professional' typically qualify as reasonable cause for penalty abatement?
No.
123
What is a 'Statutory Exception' for penalty abatement?
Relief granted because the taxpayer followed incorrect written advice from the IRS or lived in a federal disaster area.
124
Under what condition will the IRS consider abating interest?
The interest was applied due to an IRS employee's unreasonable error or delay during a ministerial or managerial act.
125
To claim interest abatement, the claim must be filed within _____ years of filing or _____ years of paying the tax, whichever is later.
3; 2
126
Is interest on employment taxes eligible for interest abatement?
No.
127
What computer scoring system does the IRS use to select returns for audit based on potential for error?
Discriminatory Inventory Function System (DIF).
128
Which IRS notice is sent when there is a mismatch between a tax return and third-party documents like W-2s or 1099s?
CP2000 Notice.
129
What does the acronym 'RAR' stand for in the context of an IRS examination?
Revenue Agent Report.
130
What are the three possible ways the IRS can conclude an audit?
No change, agreed, or disagreed.
131
After an audit closing conference, if the taxpayer disagrees with the results, the IRS first sends a _____ letter.
30-day
132
What is the common name for a '90-day letter'?
Notice of Deficiency.
133
Under what specific condition can a taxpayer request to discontinue a 'repeat examination'?
The return was examined for the same items in either of the 2 previous years and resulted in no change.
134
In an audit, who bears the 'burden of proof' to substantiate entries and deductions on the tax return?
The taxpayer.
135
When does the burden of proof in a tax case switch from the taxpayer to the IRS?
When the case goes to court and the taxpayer presents credible evidence.
136
Name the three courts where a taxpayer can appeal an IRS decision.
U.S. Tax Court, U.S. District Court, and U.S. Court of Federal Claims.
137
Which court allows a taxpayer to appeal a deficiency without paying the tax first?
U.S. Tax Court.
138
A 'Small Case Request' for an IRS appeal is available for disputed amounts of $ $25,000 $ or less.
True
139
What document must be received before a taxpayer can petition the U.S. Tax Court?
A 90-day letter (Notice of Deficiency).
140
Can an Enrolled Agent represent a taxpayer in U.S. District Court?
No (limited to licensed attorneys).
141
Which form can be used for a Small Case Request in place of a formal written protest?
Form 12203.
142
If a representative prepares a formal written protest for appeals, what must their perjury statement clarify?
Whether or not the representative has personal knowledge that the information is accurate.
143
What happens to a Tax Court case after a petition is filed but before the trial begins?
The case is sent back to IRS Appeals to attempt a settlement.
144
What is the main goal of the IRS Appeals Office employees?
To fairly settle disputes between taxpayers and the IRS by applying tax law to the facts.
145
Identify the threshold below which a 'Small Case Request' does not require a formal written protest.
$ $25,000 $.
146
What specific IRS function is described as 'independent and separate' from the division that proposed tax changes?
IRS Appeals Office.
147
Under 'Reasonable Cause,' name one 'system issue' that might qualify for penalty relief.
A system failure that delayed a timely electronic filing or payment.
148
If a taxpayer provides notice to the IRS that they were in a combat zone, which reason for penalty abatement are they using?
Statutory Exception.
149
How does the IRS usually handle a mismatch between a W-2 and a return for an individual taxpayer?
By issuing a CP2000 Notice.
EA Part 3
flashcards
Decks in class (4)
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