CHAPTER EIGHT OVERVIEW OF TAX PROCEDURE

EXPECTED LEARNING OUTCOMES Appreciate and understand: l The voluntary nature of federal tax reporting l The basic tax return filing requirements l The IRS audit and appeals process l Available court forums l The tax penalty provisions l Available privileges

THE ADMINISTRATION OF THE FEDERAL TAX LAWS l Compilation of tax statutes enacted by Congress

ADMINISTRATION OF THE FEDERAL TAX LAWS

VOLUNTARY COMPLIANCE BY TAXPAYER - THE TAX RETURN Requirements: l Must use correct form l Must include sufficient information to compute tax liability l Must be signed under penalty of perjury

Filing Return and Payment of Taxes l Must be timely filed l Tax liability must be paid by return due date without regard to extensions

COMPLIANCE VERIFICATION - THE IRS AUDIT PROCESS l Audit must occur within the statute of limitation period l Audit types include Letter audit Office audit Field audit

Procedure When IRS Finds Taxpayer Position Incorrect

l Failure to do the following will result in the imposition of penalties: Provide copy of return to taxpayer Sign return Accurately report amount of tax liability TAX RETURN PREPARER PENALTIES

TAXPAYER PENALTIES l Accuracy- Related Negligence or disregard Substantially understated income tax l Failure to file l Failure to pay tax due l Underpayment due to fraud l Filing a frivolous tax return l Failure to file l Failure to pay tax due

PRIVILEGED COMMUNICATIONS l Who holds privilege l What the privilege protects