Tax Return Requirements PDF

- Regardless of the level of income all Corporations must file a tax return annually - Filing requirements for individual taxpayers - Age - Gross income - Filing status - Gross income filing thresholds are calculated as the sum of - Standard deductions -...

- Regardless of the level of income all Corporations must file a tax return annually - Filing requirements for individual taxpayers - Age - Gross income - Filing status - Gross income filing thresholds are calculated as the sum of - Standard deductions - Additional deductions - Self-employed people have lower gross income thresholds for filing than the general filing requirements - What is the due sate for calendar-year partnership income returns - March 15 - Estates and Trusts must file a tax return if their gross income exceeds \$600 - A six-month extension allows a taxpayer to file a tax return up to six months after the original due date, but still have to pay tax on the original due date and not the extension date - S corporations may request an automatic six-month extension to file - If a taxpayer does not file a tax return or pay a tax due by the due date - interest and penalty if owed any tax for the year will be assessed - The statute of limitations defines the period in which the taxpayer can file an amended tax return, or the IRS can assess a tax deficiency for a specific year - Due date for filing an individual tax return - April 15 - If the taxpayer misreports income (not exceeding 25 percent of gross income) or deductions - Three years - If the taxpayer omits items of gross income that exceed 25 percent of gross income - Six years - If the taxpayer commits fraud or does not file a tax return - No statute of limitations - This is not a computer initiative that helps the IRS identify tax returns that may have an understated tax liability - Statistical percentage program - All tax returns are checked for mathematical and tax calculation errors with a process referred to as the Document Perfection Program - The penalty for failing to file a tax return that would have a balance due from the taxpayer is 5% of the tax due for each month or partial month that the return is late. The maximum penalty is generally 25% - What audit function does the information matching program perform - This program matches the information on the tax return to information reported to the IRS by third parties - Correspondence examination is the most common type of audit - Office examination is more comprehensive in scope and takes place at the IRS office - Field examination is the most extensive and takes place at the taxpayer's home or place of business - What action does the 30-day letter provide a taxpayer if the taxpayer does not agree with an assessment after being audited by the IRS? - The taxpayer can request an appeals conference - The Discriminant Function System assigns a score to each tax return representing the probability the tax liabilities on the return have been underreported - All tax returns are compared to data submitted by third parties such as banks, employers, mortgage companies; etc. with a program referred to as the - Information Matching Program - U.S. tax court does not require the taxpayer to pay the deficiency before the case is heard - How does the losing party in a trial court decide which U.S. Circuit Court of Appeals will hear this case? - The case must be appealed to the U.S. Circuit Court with jurisdiction over the taxpayer's case (typically based on the taxpayer's residence) - What action does the 90-day letter provide a taxpayer if the taxpayer does not agree with an assessment after being audited by the IRS and participating in the appeals conference? - The taxpayer should petition the U.S. Tax Court to hear the case - The U.S. Supreme Court agrees to hear only a few tax cases each year. The cases must have great significance to a broad cross-section of taxpayers or settle disagreement among the circuit courts in order to be heard in this court - Primary Authorities -- describes the official sources of the tax law generated by one the branches of government - Trial court has a small claims division for tax liabilities of \$50,000 or less - The U.S. Tax Court - The losing party has the right to request on of the 13 U.S. Circuit Court of Appeals to hear the case, after the trial court's verdict - Treasury treaties is not a legislative source of authority - The tax issues are not clearly covered in the Internal Revenue Code is not a sufficient reason for the supreme court to agree to hear a tax case - Administrative and judicial tax authorities are interpretations of the Internal Revenue Code - The primary authorities are official sources of the tax law generated by one of the branches of government - The secondary authorities are unofficial tax authorities that help explain the law - House of Representatives is where a tax bill originates in the legislative process for enacting a law - Primary authorities do not include IRS forms and publications - Primary sources consist of statutory, administrative, and judicial sources of the law. The statutory source includes committee reports from the House Ways and Means Committee or the Senate Finance Committee - U.S. District Courts do appeal to U.S. Circuit Courts - Citator - a research tool that allows one to check the status of several types of authorities - can be used to review the history of the case to find out, for example, whether it was subsequently appealed and overturned, and to identify subsequent cases that cite the case - can also be used to check the status of revenue rulings, revenue procedures, and other IRS pronouncements - The two types of tax services that tax professionals use in tax research are annotated tax services, arranged by code selection, and topical services, arranged by topic - IRC Code of 1986 is legislative - The Joint Conference Committee attempts to reconcile the House and Senate versions of a tax bill - Our Judicial System has the ultimate authority to interpret the IRC and to settle disputes between the IRS and taxpayers - Secondary authorities do not include rulings by the appellate courts because they are the second tier of the court system - The Supreme Court and the IRC represent the highest tax-specific authorities in tax law - Treasury regulations is not a legislative source of authority - Best describes the judicial doctrine of stare decisis - A court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction - When a new tax law is passes, it is incorporated into the IRC - By being placed within a specific subtitle, chapter, subchapter, part, subpart, and section of the code where it is most appropriate - It is incorporated with other code sections addressing similar transactions - Steps in the legislative process to enact a tax law - The bill is discussed in the House Ways and Means Committee and moves to the House of Representatives for a vote - The bill is reviewed in the Senate Finance Committee for discussion and revisions - The revised bill from the Finance Committee passes a vote in the Senate - The two versions of the bill are reconciled in the Joint Conference Committee - The bill passes both the House of Representatives and the Senate - The bill is signed into law or vetoed by the president - Golsen Rule - The rule that states that the U.S. Tax court will abide by the rulings of the circuit court that has appellate jurisdiction for a case - The judicial system has the ultimate authority to interpret the IRC and settle tax disputes - The highest authoritative weight when interpreting the IRC are regulations or Treasury Regulations issued by the Treasury Department - The highest judicial authority is the U.S. Supreme Court followed by the 13 U.S. Circuit Court of Appeals, the U.S. Tax Court, the U.S. Court of Federal Claims, and the District Court. - Treasury regulations come in three forms: Final regulations have been issued in their final form and represent the Treasury's interpretations of the Code; Temporary Regulations have a limited life but carry high authoritative weight; and proposed regulations, which have the lowest authority. - Highest authoritative weight in order - Internal Revenue Code - Treasury Regulations - Revenue rulings and revenue procedures - Letter Rulings - 5 steps in the tax research process - Understand facts - Identify issues - Locate relevant tax authorities - Analyze tax authorities - Document and communicate results - Open facts have not yet occurred. - Closed facts have already occurred. - Basic components of a client letter - Research questions and limitations - Facts, analysis - Closing - Question of fact - A research question that hinges upon the facts and circumstances of the taxpayer's transactions - Tax practitioners are subject to a variety of statutes, rules, and codes of professional conduct. - American Institute of CPA's (AICPA) Code of Professional Conduct - AICPA's Statements on Standards for Tax Services (SSTS) - The IRS's Circular 230 - The IRC imposes a penalty on a tax practitioner for any position that is not supported by Substantial Authority. - Once the tax researcher had identified the relevant authorities, the researcher must make sure the authorities are still Valid and Up to Date. - Circular 230 - Provides regulations governing tax practice that apply to all persons practicing before the IRS - 5 Basic parts of the Internal Research Memo - Facts - Issues - Authority List - Conclusion - Analysis - The IRS can impose both Criminal and Civil Penalties to encourage tax compliance by both tax professionals and taxpayers - A taxpayer will NOT be subject to an underpayment penalty due to noncompliance when there was substantial authority that supports the tax return position. - The following are examples of statutes, rules, and criteria that may govern tax practitioners - IRS Circular 230 - Statutes enacted by a CPA's specific state board of accountancy - AICPA Statements of Standards for Tax Services - AICPA Code of Professional Conduct - A tax preparer will likely incur a penalty if the tax position is supported by one authority, contradicted by several other authorities, and is not disclosed on the tax return.