Please provide me the right answers from the Prentice Hall’s Federal taxation 20

Question

Please provide me the right answers from the Prentice Hall’s Federal taxation 2016 comprehensive for each questions.

1. In each of the following cases, distinguish between the terms.

90-day letter and 30-day letter.

Negligence and fraud

Criminal and civil tax fraud.

2. Discuss the concept of statues of limitations in the context of the Federal income tax law.

A. Who benefits when the statute applies-the government, the taxpayer, both?

B. What happens when the statute is scheduled to expire within two weeks but the IRS audit will not be completed by then?

3. What do the following abbreviations stand for?

CA-2

Fed.C1.

aff’d

rev’d

T.C.

F.Supp.2d

F.3d

USSC

Explanation / Answer

Answer 1 : Distinguish between the terms

90-day letter and 30 day letter Under sec 6212 (a) IRS can issue a statutory notice of deficiency which is known as 90 days letter. A 90 days letter is aforma legal notice, sent by certified or registered mail. Taxpayers have a statutory 90-day window from the date of the notice to either agree to the government’s adjustments or file a petition with the Tax Court for a redetermination of the deficiency. If the letter is addressed to a taxpayer outside the United States, the period is 150 days.The 90 days letter notice issue after issue of 30 days letter.the 90-day notice is the government’s final determination of an assessable amount and its proposal to immediately assess and collect the tax.

A 30 days letter will be issue when  IRS and a taxpayer disagree on the treatment of an item following an audit.  it gives the taxpayer 30 days in which to appeal the decision of the examining agent. This letter is not a statutory letter. It issued before 90 days notice.

Negligence and fraud

IRC section 6662 (c), "negligence" is defined as any failure to make a reasonable attempt to comply with the provisions of this title, and the term "disregard" includes any careless, reckless or intentional disregard.

Fraud is always intentional. Some of example of fraud as following

False explanations regarding understated or omitted income;

Large discrepancies between actual and reported deductions of income;

Concealment of income sources;

Numerous errors, all in the taxpayer’s favor;

Fictitious records or other deceptions;

Large omissions of personal service income, specific items of income, gambling winnings, or illegal income;

False deductions, exemptions, or credits;

Failure to keep or furnish records;

Incomplete information given to the return preparer regarding a fraudulent scheme;

Large and frequent cash dealings that may or may not be common to the taxpayer’s business; and

Verbal misrepresentations of the facts and circumstances.

Criminal and civil tax fraud

Civil fraud results in a remedial action taken by the Government, such as assessing the correct tax and imposing civil penalties as an addition to tax, as well as retrieving transferred assets. Civil penalties are assessed and collected administratively as part of the unpaid balance of assessment.

Criminal fraud results in a punitive action with penalties consisting of fines and/or imprisonment. Criminal penalties:

Answer-2 (a) Naturally, a statute of limitations can benefit or harm either the government or the taxpayer. A taxpayer who incorrectly includes income in a closed year cannot recover the overpaid tax, no matter how strident his claim. Also, a taxpayer who incorrectly, but honestly, deducts an item in a closed year need not repay the benefit, no matter how great the loss in revenue. To provide otherwise would cause the ceaseless maintenance of records.

Are enforced only by prosecution;

Are provided to punish the taxpayer for wrongdoings; and

Serve as a deterrent to other taxpayers.

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