EA - Part 3 - Unit 1 - 7 (Passkey) || 100% Correct Answers.
Which of the following would have the highest authority in establishing precedent for tax law?
A. Private letter ruling.
B. Treasury regulation.
C. IRS publication.
D. Technical advice memorandum. correct answers B.
A treasury regulation is the Treasury Department's official interpretation of the Internal Revenue
Code. It has substantial authority in establishing precedent for tax law.
In matters of tax law, the IRS must acquiesce in all decisions rendered by the:
A. U.S. Tax Court.
B. U.S. Supreme Court.
C. U.S. Court of Appeals.
D. Both A and B. correct answers B.
The IRS is required to obey all decisions rendered by the highest court of the land, the US
Supreme Court. Although case law helps set precedent and influence the IRS in its regulation,
policies, and procedures, the IRS is not obligated to change its regulations in matters of law that
are decided by other US courts, including the US Tax Court.
Of the following situations, which is most likely to warrant intervention by the Taxpayer
Advocate Service?
A. A taxpayer is experiencing financial difficulty. His home is in foreclosure and he is worried he
will be unable to pay his federal income tax liability by the due date.
B. A taxpayer has experienced multiple, lengthy delays in trying to contact the IRS by telephone.
,C. A taxpayer has waited for weeks for the IRS to discharge the lien on his property, which must
be removed immediately or else the sale of the property will fall through.
D. A taxpayer has received an IRS Notice of Federal Tax Lien that his bank account will be
subject to levy if he does not pay his federal tax liability. correct answers C.
The TAS is designed to attempt to resolve issues when a taxpayer has a serious problem with the
IRS or has experienced a serious delay. There are specific criteria used to determine whether
taxpayer assistance is warranted, and the example in the correct answer is drawn from an actual
case. On Form 911, Request for Tax Payer Advocate Service Assistance, a taxpayer must indicate
one or more of the following reasons he is asking for help:
- He is experiencing economic harm or about to suffer economic harm.
- He is facing an immediate threat of adverse action.
- He will incur significant costs if relief is not granted (including fees for professional
representation).
- He will suffer irreparable injury or long-term adverse impact if relief is not granted.
- He has experience a delay MORE THAN 30 days to resolve a tax account problem.
- He has not received a response or resolution/inquiry by the date promised.
- A system or procedure has either failed to operate as intended, or failed to resolve the taxpayer's
problem or dispute with the IRS.
- The manner in which the tax laws are being administered raises concerns of equity, or has
impaired or will impaire the taxpayer's rights
Of the following choices, which does not meet the substantial authority test?
A. Proposed regulations.
B. Legal opinion printed in a law school journal.
C. Congressional intent as reflected in committee reports.
D. Information form an IRS press release. correct answers B.
A legal opinion printed in a law journal does not have substantial authority. Sources of authority
are as follows: the IRC, temporary and final regulations, court cases, administrative
pronouncements, tax treaties, Congressional intent as reflected in committee reports, proposed
regulations, private letter rulings, technical advice memoranda (TAM), IRS information or press
,releases, IRS notices, and any other similar documents published by the IRS in the Internal
Revenue Bulletin.
Which of the following statements regarding revenue rulings is correct?
A. Revenue rulings cannot be used to avoid certain IRS penalties.
B. Revenue rulings can be used to avoid certain IRS penalties.
C. Revenue rulings are not official IRS guidance.
D. None of the above. correct answers B.
Revenue rulings can be used to avoid certain accuracy-related IRS penalties. Taxpayer may rely
on revenue rulings as official IRS guidance on an issue to make a decision regarding taxable
income, deductions, and how to avoid certain IRS penalties.
Which branch of government is the main source of tax law in the U.S.?
A. Legislative.
B. Executive.
C. Judicial.
D. All three branches contribute equally to the creation and adoption of tax law. correct answers
A.
Although both the judicial and executive brances play important roles in interpreting,
implementing, and enforcing tax laws, the legislative branch (Congress) is the main source of tax
law in the US. Congress is responsible for passing tax laws, which are published as the Internal
Revenue Code (IRC), issued separately as Title 26 of the US Code.
An IRS revenue officer has a question about a collection procedure involving a taxpayer. He
should consult:
A. The Internal Revenue Manual.
B. The Internal Revenue Bulletin.
, C. Publication 594, The IRS Collection Process.
D. The Congressional Record. correct answers A.
The Internal Revenue Manual (IRM) is the single official compilation of policies, delegated
authorities, procedures, instructions, and guidelines relating to the organization, functions,
administration, and operations of the IRS. It is the resource primarily used by the IRS employees
to guide them in all facets of operations.
A private letter ruling is legally binding on the IRS if:
A. The taxpayer fully and accurately described the proposed transaction in his request and
carried out the transaction as described.
B. The IRS is notified of any discrepancies on a taxpayer's return.
C. The taxpayer goes to the Tax Court and requests a formal decision.
D. None of the above. correct answers A.
A private letter ruling (PLR) is binding on the IRS if the taxpayer fully and accurately described
the proposed transaction in his request and carried out the transaction as described.
Which has the highest level of authority?
A. Revenue ruling.
B. Procedural regulation.
C. Interpretative regulation.
D. Legislative regulation. correct answers D.
A legislative regulation is authorized by the Congress to provide the material requirements of a
specific IRC provision. If written correctly, a legislative regulation carries the same authority as
the IRC itself. It can only be overturned if it is outside the power delegated to the US Treasury; it
conflicts with a specific statute; or it is deemed unreasonable by the courts.
Practice before the IRS does not include:
Which of the following would have the highest authority in establishing precedent for tax law?
A. Private letter ruling.
B. Treasury regulation.
C. IRS publication.
D. Technical advice memorandum. correct answers B.
A treasury regulation is the Treasury Department's official interpretation of the Internal Revenue
Code. It has substantial authority in establishing precedent for tax law.
In matters of tax law, the IRS must acquiesce in all decisions rendered by the:
A. U.S. Tax Court.
B. U.S. Supreme Court.
C. U.S. Court of Appeals.
D. Both A and B. correct answers B.
The IRS is required to obey all decisions rendered by the highest court of the land, the US
Supreme Court. Although case law helps set precedent and influence the IRS in its regulation,
policies, and procedures, the IRS is not obligated to change its regulations in matters of law that
are decided by other US courts, including the US Tax Court.
Of the following situations, which is most likely to warrant intervention by the Taxpayer
Advocate Service?
A. A taxpayer is experiencing financial difficulty. His home is in foreclosure and he is worried he
will be unable to pay his federal income tax liability by the due date.
B. A taxpayer has experienced multiple, lengthy delays in trying to contact the IRS by telephone.
,C. A taxpayer has waited for weeks for the IRS to discharge the lien on his property, which must
be removed immediately or else the sale of the property will fall through.
D. A taxpayer has received an IRS Notice of Federal Tax Lien that his bank account will be
subject to levy if he does not pay his federal tax liability. correct answers C.
The TAS is designed to attempt to resolve issues when a taxpayer has a serious problem with the
IRS or has experienced a serious delay. There are specific criteria used to determine whether
taxpayer assistance is warranted, and the example in the correct answer is drawn from an actual
case. On Form 911, Request for Tax Payer Advocate Service Assistance, a taxpayer must indicate
one or more of the following reasons he is asking for help:
- He is experiencing economic harm or about to suffer economic harm.
- He is facing an immediate threat of adverse action.
- He will incur significant costs if relief is not granted (including fees for professional
representation).
- He will suffer irreparable injury or long-term adverse impact if relief is not granted.
- He has experience a delay MORE THAN 30 days to resolve a tax account problem.
- He has not received a response or resolution/inquiry by the date promised.
- A system or procedure has either failed to operate as intended, or failed to resolve the taxpayer's
problem or dispute with the IRS.
- The manner in which the tax laws are being administered raises concerns of equity, or has
impaired or will impaire the taxpayer's rights
Of the following choices, which does not meet the substantial authority test?
A. Proposed regulations.
B. Legal opinion printed in a law school journal.
C. Congressional intent as reflected in committee reports.
D. Information form an IRS press release. correct answers B.
A legal opinion printed in a law journal does not have substantial authority. Sources of authority
are as follows: the IRC, temporary and final regulations, court cases, administrative
pronouncements, tax treaties, Congressional intent as reflected in committee reports, proposed
regulations, private letter rulings, technical advice memoranda (TAM), IRS information or press
,releases, IRS notices, and any other similar documents published by the IRS in the Internal
Revenue Bulletin.
Which of the following statements regarding revenue rulings is correct?
A. Revenue rulings cannot be used to avoid certain IRS penalties.
B. Revenue rulings can be used to avoid certain IRS penalties.
C. Revenue rulings are not official IRS guidance.
D. None of the above. correct answers B.
Revenue rulings can be used to avoid certain accuracy-related IRS penalties. Taxpayer may rely
on revenue rulings as official IRS guidance on an issue to make a decision regarding taxable
income, deductions, and how to avoid certain IRS penalties.
Which branch of government is the main source of tax law in the U.S.?
A. Legislative.
B. Executive.
C. Judicial.
D. All three branches contribute equally to the creation and adoption of tax law. correct answers
A.
Although both the judicial and executive brances play important roles in interpreting,
implementing, and enforcing tax laws, the legislative branch (Congress) is the main source of tax
law in the US. Congress is responsible for passing tax laws, which are published as the Internal
Revenue Code (IRC), issued separately as Title 26 of the US Code.
An IRS revenue officer has a question about a collection procedure involving a taxpayer. He
should consult:
A. The Internal Revenue Manual.
B. The Internal Revenue Bulletin.
, C. Publication 594, The IRS Collection Process.
D. The Congressional Record. correct answers A.
The Internal Revenue Manual (IRM) is the single official compilation of policies, delegated
authorities, procedures, instructions, and guidelines relating to the organization, functions,
administration, and operations of the IRS. It is the resource primarily used by the IRS employees
to guide them in all facets of operations.
A private letter ruling is legally binding on the IRS if:
A. The taxpayer fully and accurately described the proposed transaction in his request and
carried out the transaction as described.
B. The IRS is notified of any discrepancies on a taxpayer's return.
C. The taxpayer goes to the Tax Court and requests a formal decision.
D. None of the above. correct answers A.
A private letter ruling (PLR) is binding on the IRS if the taxpayer fully and accurately described
the proposed transaction in his request and carried out the transaction as described.
Which has the highest level of authority?
A. Revenue ruling.
B. Procedural regulation.
C. Interpretative regulation.
D. Legislative regulation. correct answers D.
A legislative regulation is authorized by the Congress to provide the material requirements of a
specific IRC provision. If written correctly, a legislative regulation carries the same authority as
the IRC itself. It can only be overturned if it is outside the power delegated to the US Treasury; it
conflicts with a specific statute; or it is deemed unreasonable by the courts.
Practice before the IRS does not include:
