Question

Individual Income Taxes 2020

CHAPTER 1 An Introduction to Taxation and Understanding the Federal Tax Law 36. LO.5 With regard to the IRS audit process, comment on the following: a. The audit is resolved by mail. b. The audit is conducted at the office of the IRS. c. A "no change" RAR results. d. A special agent joins the audit team. 37. LO.5 Aldo has just been audited by the IRS. He does not agree with the agent's findings but believes that he has only two choices: pay the proposed deficiency or resort to the courts. Do you agree with Aldo's conclusion? Why of why not? 38. LO.5 What purpose is served by a statute of limitations? How is it relevant in the case of tax controversies? 39. LO.5 Regarding the statute of limitations on additional assessments of tax by the IRS, determine the applicable period in each of the following situations. As sume a calendar year individual with no fraud or substantial omission involved. a. The income tax return for 2018 was filed on February 19, 2019. b. The income tax return for 2018 was filed on June 25, 2019. c. The income tax return for 2018 was prepared on April 4, 2019, but was never filed. Through some misunderstanding between the preparer and the taxpayer, each expected the other to file the return. d. The income tax return for 2018 was never filed because the taxpayer thought no additional tax was due. northynayer, files her income tax return for 2018 on at receive

Answer 1

ANSWER-36)

1) The IRS audit was a minor or correspondence type. The type of audits involve a limited number of issues (which means the taxpayer failed to report certain income from dividend or omission of some interest) and usually these are easily resolved

2) At the office of the IRS there is an office audit; and often involves complicated issues thus necessitate office meetings, which cannot be resolved easily through the mail correspondence.

3) RAR (Revenue Agent’s Report) a would accepts the tax return of the taxpayer as filed. Upon the audit conclusion, the examining agent would issues RAR report. It will result in a a deficiency (the tax was underpaid), refund (the tax was overpaid), or a no change (the correct tax) finding. It means the filing of taxation was correct.

4) When in the audit team a special agent gets involved, it often indicates that fraud is suspected

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