© Copyright 1989, 1991, 1993, 1996, 1997, 2000, 2002, 2004

American Education Foundation, Inc.

 

All rights reserved.  No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the copyright holder.

 

 

IRS Practice and Procedure

(TAX 510)

 

Introduction

 

          This syllabus contains the Lesson Assignments for the above referenced course.  This course is one of the required courses in the University's Master of Science in Taxation and Master of Laws in Taxation Programs.  It has a value of 3 semester units.  The course consists of twelve Lesson Assignments and a final examination.

 

You should take the time to carefully read this syllabus and the Student Handbook before you begin the Lesson Assignments.

 

          The required text for this course, IRS Practice and Procedure, by Michael Saltzman is a treatise which has been cited in Supreme Court decisions.  However, it is far too comprehensive for a three semester hour course.  As such, we have divided each chapter into sections you are to study and sections to merely skim.

 

          Cases have been divided in a similar manner.  You will be required to read some cases in full and skim others.  (“Skim” in this context means reading the Lexis® Case Summary and Headnotes.)

 

          In addition to meeting the statutory requirements of the California Education Code for degree granting institutions, the course has been prepared to comply with the AICPA Statement on Standards for Formal Group and Formal Self-Study Programs for 45 hours of continuing education credit.  It is also designed to comply with the Statement on Standards For Formal Continuing Education Programs as promulgated by the National Association of State Boards of Accountancy (NASBA) as well as Treasury Department Circular 230, which deals with continuing education for Enrolled Agents.

 

          The University is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education on the National Registry of CPE Sponsors.

 

          The University has also entered into Sponsor Agreements with the Boards of Accountancy of the states of California, Georgia, Illinois, Kentucky, New Jersey, New York, Ohio, Texas, and Washington.  A similar agreement  

 

-1-

IRS Practice and Procedure

(TAX 510)

 

Introduction  (Concluded)

 

has been entered into with the Office of the Director of Practice of the Internal Revenue Service.

 

          The State Bar of California has approved the University as a provider of continuing legal education under Section 9 of the Minimum Continuing Legal Education Rules and Regulations.  California attorneys should refer to information available from the State Bar of California for requirements and limitations under the law.

 

Expected Student Learning Outcomes

 

After completion of this course you should understand the federal income tax issues associated with:

 

·       ·        The IRS as an Administrative Agency;

·       ·        Taxpayer Access to Information;

·       ·        Statements of IRS Position and Practice;

·       ·        General Rules relating to Tax Returns;

·       ·        Penalties on Income Tax Return Preparers;

·       ·        The Privacy of Tax Returns;

·       ·        Interest on Underpayments and Overpayments;

·       ·        Criminal and Civil Penalties;

·       ·        The Examination Function;

·       ·        The Appeals Function;

·       ·        Assessment Procedures;

·       ·        The Criminal Investigation Function; and

·       ·        IRS Investigatory Powers.

 

 

 

 

 

 

 

 

-2-

IRS Practice and Procedure

(TAX 510)

 

Required and Optional Materials

           

Required Text:

 

IRS Practice and Procedure (Revised Second Edition – Student or Professional Edition) by Michael I. Saltzman is the text for this course.  The text may be purchased through many major University bookstores or directly from the publisher.

 

Students ordering through the publisher (Warren, Gorham & Lamont) should carefully follow the instructions on the text order form provided by the University.  Delivery to the West Coast normally takes approximately three weeks.  For an additional shipping charge, students may request the book be shipped United Parcel, Second Day Delivery.

 

          Students must also have access to the Internal Revenue Code and related Regulations.  (The complete Code and Regulations are available through Lexisâ. For students preferring a printed copy, Warren, Gorham & Lamont offers a paperback version.).

  

Learning Resources

 

          Due to the distance learning nature of the programs, the University does not maintain a library for student use.  Most public and college libraries are available for public use at no charge.  However, in some circumstances, students may incur library charges for certain services.  Upon submission of a paid receipt and petition form, the University will reimburse students in an amount not to exceed $25.00 for library charges paid by a student.

 

          All students enrolled in the School of Business can access the Lexisâ /Nexisâ computer research service through the Internet. Students are encouraged to take advantage of this valuable research tool.  A Request for Lexisâ/Nexisâ Manual form is included as Exhibit "D" to the Student Handbook.

 

 

 

                                                          -3-

IRS Practice and Procedure

(TAX 510)

 

Communications with Other Students

 

          Due primarily to the fact no two students from the same geographical area are generally working on the same Lesson Assignment at the same time, the University has found the attempted formation of study groups to be of little practical benefit.

 

          However, the University provides an asynchronous Student Lounge on its website for student use.  You are encouraged to participate with fellow students in discussions related to University degree programs.

 

          You may also choose to post your address, telephone number, and/or e-mail address on the website.  By so doing, you will have access to similar information posted by other students.

 

Communications with the University

 

          The office hours of the University are 9:00 a.m. to 5:00 p.m., Pacific Time, Monday through Friday.  You have several options for contacting faculty or other student services personnel.

 

Mail

 

E-Mail

 

Fax

          (714) 708-2082

 

Telephone

          (714) 850-4800  (Normal School of Business faculty office hours are 10:00 a.m. to 11:30 a.m. Tuesdays and Thursdays.  You may e-mail or FAX at any time.)

 

 

-4- 

University

IRS Practice and Procedure

(TAX 510)

 

How You Will Be Graded for This Course

 

          Following are twelve Lesson Assignments, a Course Submission Checklist and Certification Form, and a Course Evaluation Form.  The course is deemed completed when you complete the final examination.

 

          The Lesson Assignments are weighted as follows:

 

Lesson Assignment # 1  (IRS as an Admin. Agency)   8%

 

Lesson Assignment # 2  (Taxpayer Access to Info.)    4%

 

Lesson Assignment # 3  (Statements of IRS Position) 8%

 

Lesson Assignment # 4  (Returns)                                 8%

 

Lesson Assignment # 5  (Statutes of Limitations)     16%

 

Lesson Assignment # 6  (Interest)                                 4%

 

Lesson Assignment # 7  (Criminal & Civil Penalties) 12%

 

Lesson Assignment # 8  (The Examination Function) 4%

 

Lesson Assignment # 9  (The Appeals Function)        8%

 

Lesson Assignment # 10  (Assessment Procedures)    4%

 

Lesson Assignment # 11  (Overpayment, Refund, etc.)   8%

 

Lesson Assignment # 12  (Service’s Investigatory Powers)       16%

 

 

          Your grade will be influenced by the accuracy of your research and the quality of your writing.  The extent of research necessary will vary from assignment to assignment.  Your work product should not simply consist of quoting from the assigned text. 

 

 

 

 

-5-

University

IRS Practice and Procedure

(TAX 510)

 

How You Will Be Graded for This Course  (Concluded)

 

          Accreditation standards of the Distance Education and Training Council require that adequate steps be taken by an institution offering a degree program to assure that a student has personally fulfilled the course requirements stipulated by the institution.  This assurance is accomplished through a proctored final examination in each subject taken at the end of each trimester.

 

          At the time you submit the assignments for this course, you will generally be notified of the tentative grade for the course within 15 business days.  The grade is tentative in that you must pass the final examination before

the grade becomes official and recorded on the student’s transcript.  The final examination is graded on a credit/no-credit basis.  When you pass the final

examination, the tentative grade previously awarded becomes the final grade.  If you fail the examination, no credit is awarded.

 

          The final examination for this course consists of 40 objective questions.

 

Final examination procedures are set forth on pages 31 through 34 of this syllabus and in the Student Handbook.

 

Course Completion Requirements

 

          The course will be deemed completed only when all the following has been accomplished:

 

·       ·        You have completed the twelve Lesson Assignments and they have been received by the University.

 

·       ·        You have taken the course Final Examination.  (See page 31.)

 

·       ·        You have completed the Course Submission Checklist and Certification Form and it has been received by the University.  (See page 35.)

 

·       ·        You have completed the Course Evaluation Form and it has been received by the University.  (See page 36.)

 

 

 

-6-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 1  The IRS as an Administrative Agency

 

Text:  Study Sections 1.03 through 1.09 of the text.  (Skim the remainder of the chapter.)

 

Internal Revenue Code:  Read the following Internal Revenue Code sections:

§7402; §7421; §7422; §7430; §7442; §7453; §7454(a); §7481-§7483; §7491; §7502; §7503; §7521; §7522; §7805 (a), (b), (d) and (e); §7806; §7811; and §7852.

 

Cases: Skim the following:

 

Helvering v Taylor, 293 US 507 (1935);

Cohan v Commissioner, 39 F2d 540 (2nd Cir 1930); and

Conforte v Commissioner, 74 TC 1160 (1980).

 

Lesson Assignment # 1 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      List and briefly explain three ways in which the application of administrative law to the IRS is important to tax practitioners.

 

2.    2.      How does the scope of review of courts in tax cases differ from the scope of judicial review described in Administrative Procedures Act (“APA”) Section 706?

 

3.    3.      What procedural safeguards and remedies applicable to all administrative agencies apply to the IRS?

 

4.    4.      Briefly explain the advantages and disadvantages of litigating a tax case in a U.S. District Court, the Court of Federal Claims, and the Tax Court.

 

 

-7-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 1  The IRS as an Administrative Agency

       (Concluded)

 

5.    5.      Briefly explain I.R.C. §7421 and its importance.

 

6.    6.      Briefly explain the following judicial limitations of IRS discretion:

a.     a.       Adherence to Precedent

b.     b.      Doctrine of Equality of Treatment

c.     c.       Compliance with Published Procedural Rules

d.     d.      Estoppel

e.     e.       Judicial Estoppel (See footnote 245)

 

7.    7.      Explain the impact of a taxpayer executing a power of attorney.

 

8.    8.      a.  List and briefly explain the twelve duties and restrictions on practice before the IRS listed in the text.

 

b.  Obtain a current copy of Circular 230.  Explain whether any of the duties or restrictions listed in your response have been modified or expanded.

 

 

          This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 

 

 

 

 

 

 

 

-8-

 

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 2  Taxpayer Access to Information

 

Text:  Study Sections 2.01; 2.02; 2.03 [2], [4] and [5]; 2.04 [1], [5] [a] of the text.  (Skim the remainder of the chapter.)

 

Internal Revenue Code:  Read the following Internal Revenue Code sections:

§6103 (a-c), (k); §6110 (a)-(d)

 

Cases: Skim the following:

 

6103 (d), (e), (h), (i), (l), (m) and (q); 6110 (e)-(h)

 

Lesson Assignment # 2 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      Briefly explain the Freedom of Information Act (“FOIA”).

 

2.    2.      Briefly explain the following exceptions to FOIA.

a.     a.       Materials exempt by statute

b.     b.      (1)  Inter- and Intra-agency memoranda

(2)  Does this exception incorporate the privileges and protections that government lawyers typically raise in tax litigation? Explain.

c.     c.       Investigatory records

 

          This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

                                                          -9-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 3  Statements of IRS Position and Practice

 

Text: Study Sections 3.01; 3.02 [1], [3] and [4];  3.03 [1], [2] and [3] [a] and [b]; 3.04 [1], [2] [a] and [d], [4], [5], [7] and [10] of the text.  (Skim the remainder of the chapter.)

 

Cases:  Skim the following: 

 

Commissioner v South Texas Lumber Co., 333 US 496 (1948)

Chevron, U.S.A., Inc. v Natural Resources Defense Council, Inc., 467 US 837 (1984)

 

Lesson Assignment # 3 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      Fully explain the following types of regulations and their legal effect.

a.     a.       Legislative

b.     b.      Interpretive

c.     c.       Procedural

 

2.    2.      Do Treasury Regulations apply retroactively?  Explain fully.

 

3.    3.      Briefly explain the authoritative weight of the following.

a.     a.       Revenue Rulings

b.     b.      Letter Rulings

c.     c.       Revenue Procedures

d.     d.      Technical Advice

e.     e.       Chief Counsel Advice

f.      f.        Acquiescenes

g.     g.       Internal Revenue Manual

h.     h.       Oral Communications

 

 

 

                                                          -10-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 3  Statements of IRS Position and Practice

      (Concluded)

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 -11-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 4  Returns

 

Text:  Study Sections 4.01; 4.03; 4.04; 4.05; 4.06 (exclude [3] [b]).  (Skim Section 4.07)

 

Internal Revenue Code: Read the following Internal Revenue Code sections: §6001; §6011 (a); §6012; §6020; §6107; §6151; §6159; §6161; and §6694.  Skim the following: §6013; §6015; §6061-§6065; §6163-§6167; §6401-§6407

 

Cases: Skim the following:

 

Crocker v Commissioner, 92 TC 899 (1989)

 

Lesson Assignment # 4 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      Briefly explain the formal requirements of a return.

 

2.    2.      When must returns be filed?

 

3.    3.      When are returns considered filed?

 

4.    4.      Briefly explain where returns must be filed.

 

5.    5.      Explain the requirements for a valid extension of time for filing a return.

 

6.    6.      Explain the effect of a valid extension of time for filing.

 

7.    7.      Explain the requirements for a valid extension of time for payment of tax.

 

8.    8.      Explain the effect of a valid extension of time for payment of tax.

 

 

-12-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 4 Returns (Concluded)

 

9.    9.      Generally, when and where must tax be paid?

 

10.           10.  Do special rules apply to corporations with respect to payment of tax?  Explain.

 

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 

 

                                                          -13-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 5 Statutes of Limitations

 

Text: Study Sections 5.01; 5.02; 5.03 [1], [2] and [4]; 5.06; 5.07 and 5.08. (Skim Sections: 5.04; 5.05)

 

Internal Revenue Code: Read the following Internal Revenue Code sections: §6013(b)(4); §6501-6504; §6521; §6531-§6533; §6229

 

Cases: Skim the following:

 

Bufferd v US, 506 US 523 (1993)

Adler v Comm, 85 TC 535 (1985)

Zellerbach Paper Co. v Helvering (1934)

Badaracco v Comm, 464 US 386 (1984)

Goldring v Comm, 20 TC 79 (1953)

Burbage v Comm, 774 F2d 644 (4th Cir. 1985)

Insulglass Corp. v Comm, 84 TC 203 (1984)

Colony, Inc. v Comm, 357 US 28 (1958)

Quick Trust v Comm, 54 TC 1336 (1970), aff’d 444 F2d 90 (8th Cir. 1971)

University Country Club, Inc. v Comm, 64 TC 460 (1975)

Davenport v Comm, 48 TC 921 (1967)

Northern Ind. Pub. Serv. Co. v Comm, 101 TC 294 (1993)

Colestock v Comm, 102 TC 380 (1994)

Calumet Indus., Inc. v Comm, 95 TC 257 (1990)

Hill v Comm, 95 TC 437 (1990)

 

Lesson Assignment # 5 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.  What is the general period of limitations on assessment of income tax?

 

                                                          -14-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 5 Statutes of Limitations (Continued)

 

2.  Explain whether the filing of returns in the following situations begins the statute of limitations on assessment:

 

a.  Joe Johnson files his return in a timely manner, but does not sign it.

 

b.  Mary Apple files an amended return approximately one year after she filed her original return.

 

c.  Tommy Gunn files a partnership return in a timely manner.  His organization is later held to be a corporation.

 

d.  Elliot Shaft files his individual tax return on April 20.

 

3.  Fred Fraud timely filed his 19x1 return with many fabricated deductions and credits.  In 19x3, Fred could no longer bear the guilt of having filed a fraudulent return, and he filed an amended return correcting the fabrications on the original return.  In 19x7, the IRS assessed additional tax on Fred for the 19x1 year.  Has the statute of limitations run on the 19x1 return, barring the IRS from assessing additional tax?  Explain.

 

4.  Name and describe three categories of exceptions to the three-year general rule for the statute of limitations on assessment.

 

5.  In each of the following cases, when does the statute of limitations expire?  Why?

 

a.  Frannie Smithe timely files her return on April 15, 19x1, stating that her income is $60,000.  Her actual income is $100,000.

 

b.  Bob Unbanks has not filed a return for the past five years, because he does not believe the government is working for him.

 

c.  A taxpayer undergoing an audit signs a Form 872, Consent to Extend the Time to Assess Income Tax, and agrees to extend the period of limitations for another six months.

 

d.  ZEEE Company carries back a net operating loss to its third prior tax year by filing an amended return for the carryback year.

 

 

 

 

                                                          -15-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 5 Statutes of Limitations (Continued)

 

6.  X purchased stock for $1,000 and sold the stock for $100,000 some years later.  In the year of the sale, X had $25,000 of income from other sources and reported the stock sale.  X incorrectly but unintentionally reported that the stock sold was purchased for $100,000, however, resulting in no gain or loss.  What is the statute of limitations on assessment on the tax return reporting the stock sale?

 

7.  What is the statute of limitations for collecting tax assessed?

 

 

8.  In each of the following situations, state whether the statute of limitations on assessment is suspended:

 

a.  The taxpayer files a petition in Tax Court to litigate the deficiency in tax proposed by the IRS.

 

b.  The taxpayer files a petition in bankruptcy with the federal bankruptcy court.

 

9.  What is the applicable statute of limitations in each of the following independent situations?

 

a.  No return was filed by the taxpayer.

 

b.  A corporation is determined to have been a personal holding company for the year in question.

 

c.  For 19x1, the XYZ Associates filed a Form 1065 (a partnership return).  In 19x6, the IRS determined that the organization was not a partnership in 19x6 but a corporation.

 

d.  In 19x1, T incurred a bad-debt loss that she failed to claim.

 

e.  On his 1986 return, a taxpayer inadvertently omitted a large amount of gross income.

 

f.  Assume the same situation as that in situation e, except that the omission was deliberate.

 

g.  For 1986, a taxpayer innocently overstated her deductions by a large amount.

 

 

 

                                                          -16-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 5 Statutes of Limitations (Concluded)

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 

 

                                                          -17-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 6 Interest

 

Text: Study Sections 6.01; 6.02 [3] of the text. (Skim 6.02 [1] and [2]; 6.03 through 6.06 of the chapter.)

 

Internal Revenue Code: Read the following Internal Revenue Code sections: §6601; §6611; §6621; §6622; §6631

 

Lesson Assignment # 6 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      Your client owes $1,000 of back taxes upon which over $2,000 of accrued interest and $1,000 of penalties is due.  Can the IRS abate either the interest or the penalties?

 

2.    2.      Administrative procedures permit a taxpayer to make remittances in order to stop the running of interest while preserving the right to Tax Court review.  Explain these procedures.  Are there other methods of stopping interest?  Explain.

 

3.    3.      Taxpayer Y owes $1,000 of tax from taxable year 19x1.  In 19x3, Y incurs a net operating loss that Y carries back to 19x1, eliminating taxable income and tax for that year.  Does the carryback of a loss to satisfy the underpayment of tax abate accrued interest?  Explain.

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

                                                          -18-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 7  Criminal and Civil Penalties

 

Text: Study Sections 7A.04; 7A.05; 7B.03 [1-3]; 7B.04; and 7B.11 of the text. (Skim Sections: 7A.08; 7B.02; 7B.05 through 7B.09; 7B.09A; 7B.10; 7B.12 through 7B.22 of the chapter.)

 

Internal Revenue Code: Read the following Internal Revenue Code sections:  §6651; §6654; §6655; §6662-§6665; and §7206

 

Regulations: Read the following Internal Revenue Code sections: §1.6662-1, 2, 3, 4 and 7

 

Cases: Skim the following:

 

Zach v Comm, 692 F2d 29 (6th Cir. 1983)

Catalano v Comm, 81 TC 8 (1983)

Estate of Mason v Comm, 64 TC 65 (1975), aff’d 566 F2d 2 (6th Cir. 1977)

Keene v Comm, 44 TCM 1335 (1982)

 

Lesson Assignment # 7 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      Briefly explain the bank deposits method of reconstruction of income.

 

2.    2.      Briefly explain the net worth method of reconstruction of income.

 

3.    3.      List and briefly explain the key types of evidence of fraud.

 

4.    4.      Define “negligence” for purposes of I.R.C. § 6662.

 

 

 

-19-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 7  Criminal and Civil Penalties (Concluded)

 

5.    5.      What must a taxpayer prove to establish the defense of shift of responsibility for purposes of I.R.C. § 6662?

 

6.  What must a taxpayer prove to establish that an understatement of income tax should not be subject to the I.R.C. § 6662 penalty because of the following.

 

a.  Reduction for substantial authority for return position

 

b.  Reduction for disclosure in return

 

7.  What must a taxpayer prove to establish the defense of mistake for purposes of I.R.C. § 6662?

 

8.  Fully explain the Reasonable Cause Exception of I.R.C. § 6664.

 

9.  How is “underpayment” determined for purposes of the Civil Fraud and I.R.C. § 6662 penalty?

 

10.         Billy Jean filed her 19x1 return in a timely manner but fraudulently omitted several items of income.  Subsequently, she amended the return, including the omitted income, and paid the additional tax and interest.  May the IRS assess a civil fraud penalty?  Explain.

 

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 

 

 

 

                                                          -20-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 8  The Examination Function

 

Text: Study Sections 8.01; 8.02; 8.04 through 8.08; 8.11 through 8.14; 8.16 of the text. (Skim 8.09; 8.10; 8.15 through 8.23 of the chapter.)

 

Internal Revenue Code: Read the following Internal Revenue Code section: §6020. (Skim §6221-§6234 sections)

 

Lesson Assignment # 8 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      On July 1, 19x5, following an examination of T’s returns for 19x1 and 19x2, the IRS issued, and T signed, a Form 870 agreeing to certain deficiencies.  On December 1, 19x5, the IRS notified T that certain partnership losses reflected on the 19x1 and 19x2 returns are disallowed, thereby changing the deficiencies agreed to on the Form 870.  Can the IRS reopen the examination of returns for the 19x1 and 19x2 tax years?

 

2.    2.      What is a Revenue Agent Report (RAR), and how is it used?

 

3.    3.      Jo is being audited by the IRS.  The revenue agent determines that certain expenses that were deducted on Jo’s return are not valid, and the agent accordingly makes adjustments to Jo’s tax liability.  Upon receipt of her thirty-day letter, Jo phones you for advice regarding possible future action on the matter.  What options would you discuss with Jo?

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones,

# 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

                                                          -21-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 9  The Appeals Function

 

Text: Study Sections 9.02; 9.03; 9.05 through 9.08 of the text. (Skim 9.01; 9.02; 9.04; 9.09 and 9.10 of the chapter.)

 

Internal Revenue Code: Read the following Internal Revenue Code sections: §7121-7123

 

Cases: Skim the following: 

 

Luhring v Glotzbach, 304 F2d 560 (4th Cir. 1962)

Golsen v Comm, 54 TC 742 (1970)

Lardas v Comm, 99 TC 490 (1992)

Whitney v US, 826 F2d 986 (9th Cir. 1987)

 

Lesson Assignment # 9 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      Briefly describe each of the following:

 

a.     a.       Revenue Agent Report

b.     b.      Form 870

c.     c.       Thirty-day letter

d.     d.      Ninety-day letter

e.     e.       Closing Agreement

f.      f.        Offer in Compromise

 

2.    2.      List and briefly describe matters over which the Appeals Office’s authority is limited or restricted.

 

 

 

 

                                                          -22-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 9  The Appeals Function (Concluded)

 

3.  In each of the following cases, state whether Appeals has jurisdiction over the issue:

 

a.  Bill files his return late, paying the tax due plus interest.  The IRS sends Bill a notice assessing a failure-to-file penalty.  Bill believes that the penalty should not be assessed, because he has a reasonable cause for not filing.

 

b.  Hank files an amended return requesting a refund of tax.  The refund request is rejected by the IRS.

 

c.  Don owes the IRS a sizeable sum that he cannot pay.  He submits an offer in compromise, proposing to pay one-half of the liability if the IRS forgives the other half.  The IRS collection officer assigned to the case rejects the offer.

 

4.  What are the pros and cons of filing a Protest?

 

5.  In deciding whether to settle a case, what factors does an Appeals Officer take into consideration?

 

6.  What are the types of settlement agreements into which the IRS may enter with taxpayers?  What forms are used by the IRS to settle cases?  Explain the legal effect of each such form.

 

7.  What is the purpose of a closing agreement, and what is the difference between a closing agreement and Forms 870 and 870-AD?

 

8.  What is the difference between Form 870 and Form 870-AD?

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 

 

                                                          -23-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 10  Assessment Procedures

 

Text: Study Sections 10.01; 10.02 of the text. (Skim 10.04 and 10.05 of the chapter.)

 

Internal Revenue Code: Read the following Internal Revenue Code sections: §6201-§6207. Skim sections §6211-§6216.

 

Lesson Assignment # 10 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      What is the assessment of a tax liability, and what is its significance?

 

2.    2.      What must happen before an assessment and collection of a deficiency can properly occur?

 

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 

 

 

                                                          -24-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment #11  Overpayment, Refund, Credit, and

Abatement

 

Text: Study Sections 11.01 through 11.10 and 11.12 of the text. (Skim 11.11 and 11.13 of the chapter.)

 

Internal Revenue Code: Read the following Internal Revenue Code sections: §6411; §6511; §6513; §6532 and §7422. Skim sections §6512; §6514 and §6515.

 

Lesson Assignment # 11 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      What is an I.R.C. §6411 “quick refund”?

 

2.    2.      What is the statute of limitations on filing for a credit or a refund?

 

3.    3.      In year 1, X timely filed his income tax return.  X properly owed and paid tax for that year.  In year 4, X incurs a net operating loss.  What is the statute of limitations for obtaining a refund for year 1 taxes upon the carryback of the loss?  Explain.

 

4.    4.      Once a request for a refund has been filed, can it be changed?  Explain.

 

5.    5.      Explain the Joint Committee review process.

 

6.    6.      On April 2, 19x1, Sam filed his 19x0 income tax return, which showed a tax due of $40,000.  On June 1, 19x3, Sam filed an amended return for 19x0 that showed an additional tax of $12,000.  Sam paid the additional amount.  On May 18, 19x4, Sam files a claim for a refund of $18,000.

 

a.     a.       If Sam’s claim for a refund is correct, how much tax will he recover?

 

b.     b.      For what period will interest run in regard to Sam’s claim for a refund?

 

 

 

                                                          -25-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment #11  Overpayment, Refund, Credit, and

Abatement (Concluded) 

 

7.                7.  7.                  Harry had $40,000 withheld in 19x2.  Because of large itemized deductions, he figured that he had no further tax to pay for the year.  For this reason, and because of personal problems, and without securing an extension, he did not file his 19x0 return until July 1, 19x1.  Actually, the return showed a refund of $2,400, which Harry ultimately received.  On May 10, 19x4, Harry filed a $16,000 claim for refund of his 19x0 taxes.

 

a.     a.       How much, if any, of the $16,000 may Harry recover?

 

b.     b.      Would it have made any difference if Harry had requested and secured from the IRS an extension of time for filing his 19x0 tax return?

 

 

This assignment is to be submitted via one e-mail attachment sent to the Records Office (records@blanku.edu) at the conclusion of the course with the other assignments. 

 

IMPORTANT: The subject heading of your e-mail must read TAX 510 followed by your last name and student number (Example: TAX 510, Jones, # 3500).

 

          The Microsoft Word® file name of the attachment must be the same as the subject heading of the email (Example: TAX 510, Jones, # 3500).

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                          -26-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 12  The Service’s Investigatory Powers

 

From Chapter 13: Study Sections 13.01; 13.02 [1], [2], [3], [5], [7], [9]; 13.03; 13.04; 13.05; 13.07; 13.11.  Skim 13.02 [4], [6]; 13.06; 13.08; 13.09; 13.10; 13.12 through 13.15

 

Internal Revenue Code: Read the following Internal Revenue Code sections: §6001; §6503 (j); §7521; §7525; §7601-§7610; §7612 and §7622

 

Regulations: Read the following Internal Revenue Code section: §1.6001-1

 

Cases: Skim the following:

 

Mimick v US, 952 F2d 230 (8th Cir. 1991)

Marc Rich and Co., AG v US, 707 F2d 663 (2nd Cir. 1983)

US v Monahan, 80 AFTR2d par. 97-6694 (WD Wash 1997)

Couch v US, 409 US 332 (1973)

US v Myslajek, 568 F2d 55 (8th Cir. 1978)

US v Powell, 379 US 48 (1964)

US v Arthur Young and Co., 465 US 805 (1984)

Fisher v US, 425 US 391 (1976)

US v Rockwell Int’l, 897 F2d 1255 (3rd Cir. 1990)

Colton v US, 306 F2d 633 (2nd Cir. 1962)

US v Davis, 636 F2d 1028 (5th Cir. 1981)

US v Abrahams, 905 F2d 1276 (9th Cir. 1990)

US v Bell, 95-1 USTC par. 50,006 (ND Cal. 1994)

In re Sealed Case, 676 F2d 793 (DC Cir. 1982)

In re John Doe Corp, 675 F2d 482 (2nd Cir. 1982)

In re Pioneer Hi-Bred Int’l, Inc., 2001-1 USTC par. 87,431 (Fed Cir. 2001)

International Bus. Mach. Corp. v. US, 37 Fed. Cl. 599 (Fed Cl. 1997)

US v. Chevron Corp., 77 AFTR2d par. 96-649 (ND Cal. 1996)

Upjohn Co. v. US, 449 US 383 (1981)

US v IBM, 66 FRD 511 (SDNY 1974)

US v Frederick, 1999 US App Lexis 7420 (7th Cir. 1999)

US v Adlman, 68 F3d 1495 (2nd Cir. 1995)

US v Adlman, 134 F3d

US v Ackert, 169 F3d 136 (2nd Cir. 1999)

Harding v Dana Transp., Inc., 914 F.Supp 1084 (DNJ 1996)

US v Lawless, 709 F2d 485 (7th Cir. 1983)

 

 

                                                          -27-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 12  The Service’s Investigatory Powers (Continued)

 

Lesson Assignment # 12 Questions:

 

Instructions:      This assignment must be completed using Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs.  Each page must be numbered and your last name and student number included on the upper left hand corner of each page.

 

          Each question should be reproduced in bold italic type, followed by your answer in normal type.  There is no minimum or maximum length for your answers.  They should simply be sufficient to answer the questions.

 

1.    1.      Last year, Bill’s 19x1 tax return was audited by the IRS, with certain adjustments to which he has agreed and paid the additional tax.  Last week, Bill received a letter from the IRS stating that it wanted to examine his 19x2 return and that in connection with that audit he should make available all his books and records for 19x1 in the event the IRS wished to reexamine that year.  Bill was outraged and thought he had made a deal with the IRS about 19x1, a deal on which it is now reneging.  Can the IRS do this to Bill?  Explain.

 

2.    2.      Does the IRS have the power to summons records in a foreign country?  Explain.

 

3.    3.      The IRS has ordered your client to present all of his books and records for review in connection with an audit of his tax returns for the past five years.  In this request, the agent has also asked that the taxpayer prepare a chronological summary of all deposits to his various checking accounts.  The client complains to you that obtaining checking account statements for such a long period and preparing the summary will be costly and time consuming.  What is your advice?

 

4.    4.      Your client has received a letter (not a summons) from the IRS that requests that he appear before the IRS at a certain date and time to give testimony about a third party.  Your client says it will be expensive for him to go to the meeting and wants you to go instead.  Can you represent him?  Explain.  Would your answer change if the letter were instead a summons?

 

5.    5.      Your client has just received an IRS summons to appear for an interview.  Describe, in general, what will occur.

 

6.    6.      Your client has just received a summons from the IRS to appear before it with all of his bank statements for the last three years.  What possible objections might you raise to such a summons?  Explain each briefly.

 

                                                          -28-

University

IRS Practice and Procedure

(TAX 510)

 

Lesson Assignment # 12  The Service’s Investigatory Powers (Continued)

 

7.    7.      How does a taxpayer stop a third-party recordkeeper from handing over information summoned from that recordkeeper by the IRS?

 

8.    8.      The IRS can summon only relevant material.  What is meant by the term “relevant” for this purpose?

 

9.    9.      Discuss what constitutional challenges a taxpayer could make to an IRS summons.

 

10.           10.  How does the attorney-client privilege affect a summons under I.R.C. § 7601?

 

11.           11.  The IRS summons Forms 1099 from Bank B, which responds that the information is already possessed by the IRS.  Can the summons be enforced?

 

12.           12.  The Justice Department is currently conducting a criminal prosecution against Taxpayer in connection with his 19x2 income tax return.  Can the IRS issue a summons regarding Taxpayer’s 19x2 tax liability?

 

13.           13.  Attorney A is retained by B to prepare B’s tax return.  A is later summoned to testify regarding B’s tax returns and to produce books and records relating to his preparation of the return.  A refuses to comply with the summons on the basis of the attorney-client privilege.  Can the summons be enforced against A?  Explain.

 

14.           14.  During an independent audit, it is discovered that Corporation X has made payments to foreign government officials to secure business with a foreign country.  The matter is brought to the attention of X’s in-house counsel, who consults with X’s outside counsel.  In-house counsel prepare and distribute investigation questionnaires to managers, who are instructed to treat the questionnaires as highly confidential.  Responses are sent directly to X’s outside counsel.  On the basis of the reports, X voluntarily discloses the preliminary reports to the IRS, which immediately begins an investigation.  The IRS subsequently issues summons seeking all documents relating to the payments, including the questionnaires.  X refuses to comply.  What will be the result?  Explain fully.

 

 

 

 

 

 

 

 

                                                          -29-

 

 

MICHAEL A. S. GUTH, Ph.D., J.D.
Professor of Financial Economics and Law
send e-mail
(E-mail is quickest method of contact).
  116 Oklahoma Ave.
  Oak Ridge, TN
  37830-8604
  Phone: (865) 483-8309

 

Financial Economics Homepage      ||       Attorney at Law Homepage



webmaster@michaelguth.com