Final

Under a guaranteed installment agreement between the IRS and a taxpayer, the taxpayer must agree to pay in full within how many years?

3 years

Jeopardy levies may occur when the IRS waives the 10-day notice and demand period and/or the 30-day Final Notice (Notice of Intent to Levy) period because

A delay would endanger the collection of tax.

Until the IRS files a Notice of Federal Tax Lien, the lien is ineffective against certain parties. Which of the following is not one of these parties?

A holder of an artisan’s lien.

Which of the following statements with respect to a continuous levy is false?

A levy does not apply to wages and salaries received after the date of levy.

Which of the following best describes a levy when it relates to a tax debt?

A levy on salary or wages will end when the time expires for legally collecting the tax.

When dealing with IRS employees, taxpayers have certain rights. Which of the following most accurately reflects those rights?

A right of appeal is available for most collection actions.

Which of the following statements is false in respect to a Notice of Federal Tax Lien?

A taxpayer cannot sue the federal government for damages if the IRS knowingly or negligently fails to release a Notice of Federal Tax Lien when a release is warranted.

Which of the following statements in respect to IRS seizure and sale of a taxpayer’s property to satisfy his or her federal tax bill is false?

A taxpayer does not have the right to redeem any property seized once the IRS has sold it.

A preparer depreciated furniture that the taxpayer purchased in the current year by using the wrong class life because the preparer did not understand the MACRS method. This position was not disclosed on the tax return, and it resulted in an understatement of tax. The preparer would not be subject to the penalty for negligent or intentional disregard of rules and regulations.

False

Late payments by a taxpayer on an installment agreement to pay a tax liability will

Generate a 30-day notice as to the cessation of the agreement.

Which of the following disqualifies a taxpayer’s income tax liability from being discharged in bankruptcy? (I) Being charged of tax evasion or fraudulent tax activities (II)Being convicted of tax evasion or fraudulent tax activities

II only.

Mr. Alomar’s income tax return was examined by the IRS, and he agreed with the proposed changes. He has several ways by which he may settle his account and pay any additional tax that is due. Which of the following statements with respect to this situation is false?

If the bill is delayed, he will not be billed for additional interest for more than 60 days from the date he signed the agreement.

With regard to seizure of property in satisfaction of a tax liability, all of the following are true except

If the proceeds of a sale by the IRS are less than the total of the tax bill and the expenses of the levy and sale, the taxpayer will not have to pay the balance.

Mr. Smith’s 2012 income tax return, which he filed on May 3, 2013, was examined by the IRS. Smith did not have an extension of time to file. On October 20, 2014, he signed a report agreeing to a deficiency of $10,000. He received a notice and demand showing additional tax, interest, and penalties. The notice was dated November 7, 2014. If Mr. Smith paid the bill on November 12, 2014, which of the following reflects the date interest started accruing and the date it stopped?

Interest Started 5/3/13 Interest Ended 11/07/14

What is the type of collection that allows the IRS to waive the 10-day period of Notice and Demand for Tax?

Jeopardy levy.

All of the following are types of offer in compromise payment terms, except

Lump sum cash payments must be paid within 24 months.

Maria received a Notice of Tax Due and Demand for Payment in the amount of $30,000 as a result of an examination of her 2014 Form 1040. She is not able to pay the entire amount at this time and would like to set up an installment agreement. Which of the following statements are not true regarding setting up an installment agreement?

Maria must wait for a Notice of Federal Tax Lien to be filed before she can request an installment agreement.

The IRS must enter into a guaranteed installment agreement with a taxpayer as long as, during the past 10 years, the taxpayer has not

None of the answers are correct.

With regard to an installment agreement with the IRS to pay a federal tax debt, which of the following statements is false?

Once an installment payment plan has been approved, the IRS will not continue to charge the taxpayer’s account with interest on the taxpayer’s unpaid balance of penalties and interest.

A guaranteed installment agreement is one of the acceptable methods of paying off a tax debt to the United States Treasury. The IRS must enter into an installment agreement provided all of the following requirements are met, except the taxpayer

Previously entered into a nonguaranteed installment agreement.

Which of the following properties is not exempt from levy?

State income tax refunds.

If the IRS must seize (levy) a taxpayer’s property, the taxpayer has the right by federal law to keep all of the following except

Tangible personal business property if the collection of tax is in jeopardy.

After assessment, as a general rule, the Internal Revenue Service has the authority to collect outstanding federal taxes for which of the following?

Ten years.

A taxpayer’s business real property may not be seized and sold by the IRS unless the collection of the tax is in jeopardy or approval has been secured from

The IRS area director or assistant area director.

With regard to the levy method used by the IRS to collect tax that has not been paid voluntarily, which of the following statements is false?

The IRS cannot levy any state income tax refund checks and apply the state refund to a federal tax debt.

With regard to the IRS filing a Notice of Federal Tax Lien, which of the following statements is not a requirement?

The IRS must give individual notices to all of the taxpayer’s creditors.

Which of the following statements with respect to IRS seizure and sale of a taxpayer’s property to satisfy the taxpayer’s tax bill is false?

The IRS must wait 30 days after seizure before conducting a sale.

Once a notice of federal tax lien has been filed, all of the following are true except

The IRS will issue a release of the notice of federal tax lien within 15 business days after the taxpayer satisfies the tax due (including interest and other additions) by paying the debt, by having it adjusted, or if the IRS accepts a bond that the taxpayer submits, by guaranteeing a payment of the debt.

Which of the following statements regarding the use of the national and local expense standards to determine whether the taxpayer can provide for basic living expenses is false?

The taxpayer should not consider the taxpayer’s family to determine whether or not the taxpayer can provide for basic living expenses.

An individual shall be considered a preparer of a return if (s)he furnishes to a taxpayer or other preparer sufficient information and advice so that the completion of the return or claim for refund is simply a mechanical or clerical matter, even though that person does not actually place or review placement of information on the return or claim for refund.

True

Joni is a tax return preparer. She is not a preparer bank. Joni prepared Judy’s income tax return and then cashed Judy’s refund check. Joni is subject to a penalty of $500.

True

More than one preparer may be subject to the penalty for willful understatement of tax liability on the same tax return.

True

The maximum penalty that can be imposed on a tax return preparer for failure to provide copies of tax returns as required under Sec. 6107(a) is $25,000.

True

Unless a tax return preparer can show reasonable cause, (s)he is subject to a penalty for failure to retain and keep available for a 3-year period a copy of any return prepared, or a record of the name, taxpayer identification number, and taxable year of the taxpayer for whom the return was prepared, including the type of return prepared.

True

Select the correct statement concerning a taxpayer’s appeal of the filing of a Notice of Federal Tax Lien.

Upon the conclusion of the CDP hearing, the IRS will issue a determination.

If the IRS seizes property that is not perishable, the IRS will

Wait at least 10 days after seizure before conducting the sale.

Which of the following statements with respect to resolving tax problems involving the collection process is false?

While a taxpayer is making installment payments, interest will continue to accrue only on the tax liability due.

Under which of the following circumstances is the IRS allowed to take collection actions?

While it considers a request for an installment agreement.

The definition of a tax return preparer includes a fiduciary who prepares a return for the trust.

false

A levy on wages ends under all of the following circumstances, except

he penalties and interest on the tax liability are satisfied.

All of the following persons may be responsible for the trust fund tax except

An employee in the payroll department.

What is the name given to the last date the IRS can collect unpaid tax from the taxpayer?

Collection Statute Expiration Date (CSED).

Which of the following statements regarding a Notice of Federal Tax Lien is true?

All fees charged by the state or other jurisdiction for both filing and releasing the lien will be added to the balance the taxpayer owes.

Which of the following is true with respect to an offer in compromise?

All of the answers are correct.

Which statement is true about the IRS providing notice and demand relating to a tax levy?

All of the answers are correct.

The collection process begins

At the IRS service center where notices are generated requesting payment.

Sam timely filed his U.S. individual income tax return for calendar year 2014 without any extensions. The return showed a balance of income taxes due in the amount of $75,000. Sam has not paid his IRS liability, nor has he entered into any installment agreement extending the statute of limitations or submitted any offer in compromise. The statute of limitations for collection of Sam’s tax liability expires on which of the following dates?

April 15, 2019.