Question 1

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return. Since the taxes were paid in full, would there be a penalty? Explain.

Question 2

In the following independent situations, is it better to make an installment agreement with the IRS, an offer in compromise with the IRS, or ask for an extension of time to pay any taxes owed? a. A taxpayer is unlikely to pay the tax amount they owe. b. Using monthly payments, a taxpayer can afford to pay off the tax owed within 2 years. c. A taxpayer can pay off their tax owed when they sell their boat which is up for sale.

Question 3

Linda filed her individual income tax return on its due date, but failed to pay $1,000 in taxes that were due with the return. Linda promptly paid the taxes upon receipt of a notice and demand for payment. If Linda pays the taxes exactly 5 months late, calculate the amount of her failure-to-pay penalty.

Question 4

For the following independent situations, list who (the IRS or the taxpayer) has the burden of proof in most civil tax cases: a. The tax case involves a penalty. b. The tax case involves a trust with net worth of $8.3 million. c. The taxpayer has credible evidence, maintains records, and cooperates with reasonable IRS requests. d. The IRS uses statistics to reconstruct an individuals income.