| When appealing the filing of a Notice of Federal Tax Lien, which of the following is true? |
In appealing the filing of a Notice of Federal Tax Lien, Form 12153, Request for a Collection Due Process or Equivalent Hearing, is completed and sent to the address from which the lien came. The request must be received within 30 days.
The IRS must enter into a guaranteed installment agreement with a taxpayer as long as, during the past 5 years, the taxpayer has
When certain conditions are met, the IRS must enter into a guaranteed installment agreement with any taxpayer requesting such an arrangement. These requirements also apply to the taxpayer’s spouse if the liability proposed to be paid in installments related to a joint return. The taxpayer must not owe more than $10,000. Also, during the past 5 years, the taxpayer must not have (1) failed to file any income tax return, (2) failed to pay any income tax, and (3) entered into any installment agreement for payment of any income.
Which function is NOT performed by the National Taxpayer Advocate Office?
| 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? |
After the seizure of property, the IRS gives notice of sale to the public and to the taxpayer from whom the property was seized. Under Sec. 6335(d), the time of sale must be not less than 10 days nor more than 40 days from the time of giving public notice. Section 6336 provides an exception to this rule in the case of perishable goods, which must be returned to the taxpayer if (s)he pays the appraised value of the goods or posts a bond. If the taxpayer does not pay such amount or post a bond, the goods must be sold immediately.
| A levy on wages ends under all of the following circumstances, EXCEPT |
A levy on wages begins from the date the levy is enacted until (1) the tax liability assessed is satisfied, (2) the levy is released, or (3) the levy becomes unenforceable due to lapse of time. The IRS will also release a levy if the IRS determines the levy is creating an economic hardship for the taxpayer. A levy on wages will not end even if the penalties and interest on the tax liability are satisfied.
| 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 |
A levy is the seizure of property by the IRS in order to satisfy a tax debt. Section 6334 and Reg. 301.6334-1 list the items of property that are statutorily exempt from a levy:
Which of the following taxes may be discharged in bankruptcy?
The IRS will not discharge taxes through bankruptcy unless certain conditions are met. These conditions are applicable to tax returns and tax assessments independently. One of the conditions is that the tax to be discharged must be an income tax. Therefore, gift tax, estate tax, and employment taxes do not qualify for bankruptcy.
Which of the following statements is false with respect to taxpayers’ offers in compromise on unpaid tax liabilities?
Under Sec. 7122, the Commissioner of the Internal Revenue Service has the authority to compromise all taxes, interest, and penalties arising under the Internal Revenue laws, except those relating to alcohol, tobacco, and firearms. A compromise may be made on one, two, or all three grounds: (1) doubt as to the liability for the amount owed, (2) doubt as to the taxpayer’s ability to make full payment, or (3) promotion of effective administration [Reg. 301.7122-1(a)(b)]. The doubt as to the liability for the amount owed must be supported by the evidence. In the case of inability to pay, the amount offered must exceed the total value of the taxpayer’s equity in all his or her assets and must give sufficient consideration to present and future earning capacity. The IRS may enter into a compromise with a taxpayer at any time before, during, or after collection proceedings.
| 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 |
Under Sec. 6331(a), a taxpayer has 10 days to pay the tax after receiving a Notice and Demand for Tax. If the taxpayer neglects or refuses to pay the tax within that time, the IRS may issue a Final Notice (Notice of Intent to Levy) giving the taxpayer 30 days to pay the tax. If the tax is not paid within that period, the IRS may proceed to collect the tax by levy upon the taxpayer’s property. If the IRS makes a finding that the assessment or collection of the tax deficiency is in jeopardy, the IRS may waive the 10-day notice and demand period and/or the 30-day Final Notice (Notice of Intent to Levy) period. Jeopardy levies may occur when delay would endanger the collection of the tax, interest, penalties, etc. (Sec. 6861).
| Which of the following statements with respect to taxpayers’ offers in compromise on unpaid tax liabilities is true? |
Under Sec. 7122, the Commissioner of the Internal Revenue Service has the authority to compromise all taxes, interest, and penalties arising under the internal revenue laws, except those relating to alcohol, tobacco, and firearms. A compromise may be made on one, two, or all three grounds: (1) doubt as to the liability for the amount owed, (2) doubt as to the taxpayer’s ability to make full payment, or (3) promotion of effective tax administration [Reg. 301.7122-1(a)]. The doubt as to the liability for the amount owed must be supported by the evidence. In the case of inability to pay, the amount offered must exceed the total value of the taxpayer’s equity in all his or her assets and must give sufficient consideration to present and future earning capacity. A compromise may be entered into by the IRS, whether a suit has been instituted or not, and may be entered into after a judgment has been rendered.
Which of the following statements with respect to a continuous levy is false?
A levy generally does not apply to property acquired after the date of levy. However, there is an exception for salaries and wages.
Which of the following disqualifies a taxpayer’s income tax liability from being discharged in bankruptcy?
|
| A. I and II |
| B. I and II |
| C. Neither I nor II |
| D. II Only. |
The IRS will not discharge taxes through bankruptcy unless certain conditions are met. These conditions are applicable to tax returns and tax assessments independently. One of the conditions is that the taxpayer must not have a conviction of tax evasion or fraudulent tax activities. Simply being charged with evasion or fraudulent tax activities does not disqualify the taxpayer from relief through bankruptcy.
| Which of the following is true with respect to an offer in compromise? | |
The IRS may accept an offer in compromise to settle unpaid tax accounts for less than the full amount of the balance due when the facts support the likelihood that the IRS will be unable to collect the debt in full. The amount offered must reflect the taxpayer’s maximum ability to pay. The IRS is also permitted to delay collection actions, and a taxpayer may appeal a rejected offer.
| 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 2021 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? |
Publication 594 explains the collection process. In order to obtain an installment agreement, the taxpayer must file all of his or her tax returns and make the current estimated tax payment, if required. The IRS will assess a user fee to set up the installment agreement (Pub. 594). In addition, the IRS recommends that the taxpayer set up a direct deposit or a payroll deduction to prevent a default in the agreement. The IRS may also require that the taxpayer fill out a Collection Information Statement explaining the situation. If the taxpayer defaults on the agreement, the IRS may file a lien or levy the taxpayer’s assets.
| 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 30 days after the tax due is satisfied. The tax due also includes all fees charged by the state or other jurisdiction for both filing and releasing the lien. The fees are added to the balance owed.
With respect to the IRS’s seizures and sales of personal property to satisfy a federal tax debt, which of the following statements is false?
The sale proceeds are applied first against the expenses of the proceedings, next against any federal excise tax imposed directly on the property, and then against the tax liability for which the levy was made, including a separate supporting statement containing the basis for the taxpayer’s explanation.
Under which of the following circumstances is the IRS allowed to take collection actions?
The IRS is authorized to, and in certain cases must, enter into a written agreement with a person for payment of a tax liability in installments. The payment plan is based on an individual’s current financial condition. The IRS cannot take any collection actions under the following circumstances: (1) while it considers a request for an installment agreement, (2) while the agreement is in effect, (3) for 30 days after an agreement is rejected, or (4) for any period while an agreement rejection is being appealed.
When levies are attached, the IRS has the authority to take property to satisfy a tax debt. The IRS may levy all of the following EXCEPT
A levy is the seizure of a taxpayer’s property in order to satisfy a tax debt. A levy can be made on property that is held by the taxpayer or property that is held for a taxpayer by third parties. However, a taxpayer has the legal right to keep workers’ compensation.
With regard to an installment agreement with the IRS to pay a federal tax debt, which of the following statements is false?
Under Sec. 6159, the IRS is authorized to enter into a written agreement with a taxpayer for the payment of a tax liability in installments. Installment agreements are set up on an individual basis. They are based on the taxpayer’s current financial circumstances and are not necessarily paid off in four equal installments. Interest and penalties will continue to accrue. Failure to pay an installment can result in the termination of the agreement.
| The Internal Revenue Service may accept an Offer in Compromise to settle unpaid tax accounts for less than the full amount due. A Collection Information Statement (financial statement) is NOT required with the offer when the reason for the offer is |
The IRS will permit less than full payment of amounts owed in certain instances. These include doubt as to a taxpayer’s liability, collectibility, a resulting economic hardship if full payment was required, or full payment by the taxpayer would harm voluntary compliance by the taxpayer or others. Additionally, a Collection Information Statement is not required if the compromise is based on doubt of the liability (Pub. 594).
| If the IRS seizes property that is not perishable, the IRS will |
After the seizure of property, the IRS gives notice of sale to the public and to the taxpayer from whom the property was seized. Under Sec. 6335(d), the time of sale must be not less than 10 days nor more than 40 days from the time of giving public notice. Section 6336 provides an exception to this rule in the case of perishable goods, which must be returned to the taxpayer if (s)he pays the appraised value of the goods or posts a bond. If the taxpayer does not pay the appraised amount or post a bond, perishable goods must be sold immediately.
| With regard to the trust fund recovery penalty assessments for employers, which of the following statements is false? | |
Answer (B) is correct.
When a person is responsible for the collection and payment of trust fund taxes, (s)he is assessed a penalty equal to the amount of the delinquent trust fund taxes. Trust fund taxes are the taxes an employer is required to withhold from employees, including income taxes withheld and the employee’s share of FICA taxes.
| Installment agreements may require that a Collection Information Statement be filled out with pertinent financial information about the taxpayer. However, the statement need not be filled out if the dollar amount of the installment agreement is |
For amounts under $50,000, installment agreements do not require the filing of Form 433-F, Collection Information Statement. For amounts between $25,000 and $50,000, however, the agreements require either direct debit information (e.g., routing number and account number of the taxpayer’s bank account) or a completed Form 2159, Payroll Deduction Agreement, to be provided. |
| Under a guaranteed installment agreement between the IRS and a taxpayer, the taxpayer must agree to pay in full within how many years? |
Under certain conditions, the IRS must enter into an installment agreement with any taxpayer requesting such an arrangement. These requirements also apply to the taxpayer’s spouse if the liability proposed to be paid in installments related to a joint return. One of the requirements concerns the time period within which the taxpayer must pay the liability in full. The taxpayer must agree to pay in full within 3 years.
| Select the correct statement concerning a taxpayer’s appeal of the filing of a Notice of Federal Tax Lien. |
A taxpayer may appeal the filing of a Notice of Federal Tax Lien if the taxpayer believes the IRS filed in error. Upon the conclusion of the CDP hearing the IRS will issue a determination stating whether the lien will be removed or will continue its existence
