1. Your return may be selected for examination on the basis of computer scoring. This is a computer program that assigns a numeric score to each individual and some corporate tax returns after they have been processed. This computer program is called the

A. Tax Return with Errors Selector (TRE).
B. Taxpayer Random Selector (TRS).
C. Discriminant Inventory Function System (DIF).
D. Discriminant Delinquent Taxpayer Finder (DDTF).

2. Your return may be selected for examination on the basis of

A. Information received from third-party documentation.
B. Discriminant Inventory Function System (DIF).
C. A selection to address both the questionable treatment of an item and to study the behavior of similar taxpayers in handling a tax issue.
D. Any of the above.

3. Your return may be selected for examination as a result of information received from

A. Newspapers.
B. Public records.
C. Individuals.
D. Any of the above.

4. The person that represents you can be a federally authorized practitioner, including an attorney, a certified public accountant, an enrolled agent, an enrolled actuary, or the person that prepared your return and signed as a preparer. The same confidentiality protection that you have with an attorney also applies to certain communications that you have with

A. The IRS.
B. Federally authorized practitioners.
C. The attorney representing the IRS.
D. Your family.

5. Advising you on tax matters within the scope of the practitioner's authority before the IRS, would be an example of a

A. Confidential communication between you and the IRS.
B. Confidential communication between you and the attorney representing the IRS.
C. Confidential communication between you and the federally authorized practitioner.
D. Confidential communication between you and your family.

6. The IRS tries to avoid repeat examinations of the same items, but sometimes this happens. If your tax return was examined for the same items in either of the 2 previous year and no change was proposed to your tax liability, contact the IRS to

A. Report the abuse of the employee whom selected you for the second time.
B. See what other paperwork they want you to send them.
C. Tell them to stop and that it is against the law.
D. See if examination should be discontinued.

7. If your examination takes place in the IRS office, you can request an immediate meeting with the examiner's supervisor to explain your position. If an agreement is reached, your case will be closed. If you cannot reach an agreement with the supervisor at this meeting,

A. The examiner will close your case.
B. The examiner will write up your case explaining your position and the IRS' position.
C. The examiner will offer you an offer in compromise.
D. The examiner will try to convince you to agree.

8. File Form 1040X only after you have filed your original return. Generally, for a credit or refund, Form 1040X must be filed within

A. 3 years after the date you filed the original return.
B. 2 years after the date you paid the tax.
C. 5 years after the due date of your return.
D. Either A or B, whichever is later.

9. The IRS has selected Frances' 2009 tax return for examination. The only item of inquiry in the IRS contact letter was for verification of charitable contributions. France's tax return for 2008 was also examined to verify her charitable contributions, and no change was proposed to her tax liability. If Frances advises the IRS representative that no change resulted in her tax return for 2008, the examination of her tax return for 2009

A. Might be discontinued.
B. Screened more carefully for other errors.
C. Will continue no matter what.
D. Be delayed because of Frances' interference, but no change will result.

10. Karl had his 2005 income tax return examined resulting in adjustments. Karl has administratively appealed the adjustments. Some of them were sustained, resulting in an income tax deficiency. Karl wants to appeal his case to the U.S. Tax Court and is entitled to invoke the Small tax case request if the amount of tax deficiency is not over

A. $100,000.
B. $10,000.
C. $25,000.
D. $50,000.

11. The examination of Linda's tax return for 2006 resulted in adjustments creating a tax liability in the amount of $30,000. Linda does not believe she owes anything. A Notice of Proposed Income Tax Deficiency is issued to Linda, who wants to appeal the Revenue Agent's adjustments by taking the matter to the IRS Office of Appeals. Linda must file an appeal no later than

A. 10 days.
B. 30 days.
C. 90 days.
D. None of the above.

12. During the course of examining Ollie's income tax return, the Revenue Agent required information from third party sources. Which of the following provisions does not apply to the Revenue Agent giving Ollie reasonable notice before contacting third parties?

A. Pending criminal investigations.
B. Providing notice might result in reprisal against the contact.
C. When providing notice would jeopardize collection of any tax liability.
D. Any of the above.

13. Harry claimed gambling losses on his income tax return. The return was examined by the IRS and the losses were disallowed and the disallowance increased his tax liability. Harry pursued an appeal before the IRS Appeals Office, which sustained the Revenue Agent's adjustment. Harry now wants to take his case to a judge. In which of the following courts can Harry file a tax action?

A. United States Court of Federal Claims.
B. United States District Court.
C. United States Tax Court.
D. Any of the above.

14. In certain circumstances, the IRS will allow you to pay less than the full amount you owe. There being any doubt about the amount you owe (or whether you owe it), or if there is doubt as to whether you can pay the amount you owe based on your financial situation, would be a good indication that that the IRS will accept your

A. Offer to enlist with the IRS.
B. Collection Agreement.
C. Offer in Compromise.
D. Offer in installments.

15. The IRS offers fast track meditation services to help taxpayers resolve many disputes resulting from

A. Examinations (audits).
B. Offers in Compromise. 
C. Trust fund recovery penalties, and other collection actions.
D. Any of the above.

16. The Internal Revenue Service (IRS) accepts most federal returns as filed. Some returns, however, are examined, or audited to determine if the following is reported accurately.

A. Income.
B. Expenses.
C. Credits.
D. Any of the above.

17. The IRS has the burden of initially producing evidence in court proceedings with respect to the liability of any individual taxpayer for any penalty, addition of tax, or additional amount imposed by the tax laws.         

True False

18. Any tax court with proper jurisdiction, including the Tax Court, can order the IRS to refund any part of a tax deficiency that the IRS collects from you during a period when the IRS is not permitted to assess the deficiency or to levy or engage in any court proceeding to collect that deficiency. Generally, the IRS is not permitted to take action on a tax deficiency during

A. The 90-day (or 150-day if outside the United States) period that you have to petition a notice of deficiency to the Tax Court.
B. The period that the case is under appeal if a bond is provided.
C. Either A or B above.
D. The 30-day (or 90-day if outside the United States) period that you have to petition a notice of deficiency to the Tax Court.

19. If you are an individual, the period of limitations on credits and refunds can be suspended during periods when you cannot manage your financial affairs because of physical or mental impairment that is medically determinable and

A. Someone else was authorized to act for your in financial matters and he or she was vacation.
B. Has lasted or can be expected to last continuously for at least 12 months, or can be expected to result in death.
C. Has lasted or can be expected to last continuously for at least 12 months.
D. Can be expected to result in death.

20. Federal tax overpayments can be used to offset past-due, legally enforceable state income tax obligations. Overpayment will be offset with a first priority placed on

A. Past-due child support because children are placed first in priority.
B. Federal income tax owed.
C. Future federal income tax liability.
D. Past-due, legally enforceable state income tax debt.

21. The IRS accepts most taxpayers' returns as filed. If they inquire about your return or select it for examination, it

A. Suggests that you are dishonest.
B. Does not suggest that you are dishonest.
C. Means that your return will be changed.
D. Means that you may receive a refund.

22. If your examination is conducted by mail and you don't act on you own behalf, you can have someone represent you in correspondence with the IRS. This person must be an attorney, accountant, enrolled agent, an enrolled actuary, or the person who prepared your return and signed as the preparer. You must furnish a written authorization allowing this person to act on your behalf. Make this authorization on

A. Form 1040.
B. Form 1040A.
C. Form 2106.
D. Form 2848 or any other properly written authorization.

23. During an examination, if you think you will owe additional tax at the end of the examination, you can stop interest from accumulating by

A. Paying all or part of the amount you think you will owe.
B. Closing the case right away without putting a up a fight.
C. Declaring to the auditor that you will not owe any tax.
D. Asking the auditor to charge interest only on the date the penalties are assessed.

24. If you filed a joint tax return, you are jointly and individually responsible for the tax and any interest or penalty due on the joint return,

A. Even if you later divorce.
B. However, a spouse may be relieved of the tax, interest, and penalties on a joint return.
C. But not if you later divorce.
D. Both A and B above.

25. If you do not agree with any or all of the IRS findings, to help resolve disputes resulting from the examination (audits), 

A. You may demand an expedited service.
B. You may request Fast Track Mediation services.
C. You may pay the amount in full.
D. Any of the above.

26. You may appeal the IRS' decision with this office, which is separate and independent of the IRS Office that is taking the action that you disagree with. An __________ is the only level of appeal within the IRS. 

A. Appeals office.
B. Agreement to mediate.
C. Office of Fast Track Mediation services.
D. IRS Office.

27. If you want to have a conference with an appeals officer, you may also need to file 

A. A small case request.
B. Formal written protest.
C. Installment agreement.
D. Either A or B above.

28. The following is a case in which a written protest is not required.

A. All employee plan and exempt organization cases without regard to the dollar amount at issue.
B. All partnership and S corporation cases without regard to the dollar amount at issue. 
C. All other cases that don't qualify for the small case request procedure, or the special appeal procedures such as requesting Appeals consideration of liens, levies, seizures, or installment agreements.
D. None of the above.

29. If you filed a joint tax return, you are jointly and individually responsible for the tax and any interest or penalty due on the joint return, even if you later divorce. In the following case, a spouse may be relieved of the tax, interest, and penalties on a joint return:

A. Innocent spouse relief.
B. Separation of liability. 
C. Equitable relief.
D. Any of the above.

30. If you are nonresident alien, you cannot take your appeals case to a United States District Court.

True False

31. You have the right to be treated professionally, fairly, promptly, and courteously by IRS employees and Private Collection Agencies (PCAs) contacting you on behalf of the IRS. You also have the right to

A. Meet with an IRS manager if you disagree with the IRS employee who handles your tax case.
B. Be represented by someone when dealing with IRS matters. 
C. Disagree with your tax bill and appeal most IRS collection actions.
D. All of the above.

32. What can you do to avoid having overdue taxes next year?

A. If you owe taxes because you did not have enough money withheld from your income, you should claim a lower number of allowances on your Form W-4.
B. If you owe tax, you should increase your estimated tax payments. 
C. You could take advantage of the Electronic Federal Tax Payment System.
D. All of the above.

33. If you believe your bill is wrong, let the IRS know as soon as possible by

A. Writing to the IRS office sent you the bill.
B. Calling the IRS office that sent you the bill. 
C. Gathering a copy of the bill along with copies of any records, tax returns, and cancelled checks that will help the IRS understand the problem before you visit your local IRS office.
D. Any of the above.

34. When dealing with the Internal Revenue Service (IRS), you may not choose to represent yourself.

True False

35. If you want your representative to appear without you, and receive or inspect confidential material but not represent you before the IRS, you must file

A. Form 8821.
B. Form 2848. 
C. Form 9465.
D. Form 2159.

36. By law, the IRS can share your tax information with

A. A member of your immediate family, or in the case of a business, with regular full-time employees, general partners or bona fide officers.
B. An attorney, a certified public accountant, enrolled agent, or any person enrolled to practice before the IRS as these are exempt from the permission requirements. 
C. City and state tax agencies, and in some cases with the Department of Justice, and other federal agencies.
D. Any of the above.

37. By law, the IRS has the authority to collect outstanding Federal taxes for 10 years from the date your tax liability was assessed, unless the 10-year collection period is suspended. For example, on the date your tax was assessed, you filed bankruptcy. Your automatic stay period was for 3 months. How much time does the IRS have to collect your outstanding federal taxes?

A. 10 years.
B. 10 years 9 months.
C. 10 years 6 months.
D. 10 years 3 months.

38. The IRS generally cannot levy against your property

A. For 60 days after your request for an installment agreement has been rejected.
B. After 90 days after the IRS termination of an installment agreement (due to your default of the agreement). 
C. While your request for an installment agreement is being considered, or while the agreement is in effect.
D. None of the above.

39. The IRS will withdraw a Notice of Federal Tax Lien if the notice was filed

A. During a bankruptcy automatic stay period.
B. Too soon or not according to IRS procedures. 
C. And the IRS determines that it would be in your best interest (as determined by the National Taxpayer Advocate) and the best interest of the government.
D. Any of the above.

40. The following is true regarding a levy.

A. A levy is a claim used as security for a tax debt.
B. A levy is a legal seizure of your property to satisfy a tax debt.
C. The IRS cannot take property that is yours that is held by someone else.
D. All of the above.

41. If you request the return of levied property within 9 months from the date of the levy, the IRS may consider returning the property if returning the property will help you pay your taxes.

True False

42. If you do not take action and the IRS sells your levied property, and if the proceeds of the sale are less than the total of the tax bill and the expenses of levy and sale,

A. The IRS will notify you of the surplus and give you instructions on getting a refund.
B. You will still have to pay the unpaid balance.
C. You may redeem your property within 90 days after the sale.
D. You must pay the purchaser the amount paid for the property plus interest at 10% annually.

43. This is an independent organization that provides low income taxpayers with representation in federal tax controversies with the IRS for free or at nominal charge.

A. Low Income Tax Clinic.
B. Power of Attorney and Declaration of Representative. 
C. Collection Appeals Program (CAP).
D. Collection Due Process (CDP).

44. For each tax and period, the IRS is required to notify you the first time it intends to collect a tax liability by taking your property or rights to property. The IRS does this by

A. Issuing you a collection notice.
B. Issuing you a lien notice. 
C. Issuing you a levy notice.
D. Issuing you an appeals notice.

45. After you request a hearing, you may still discuss your concerns with the Collection Office that sent the lien or levy notice. If you are not able to resolve the issues with that office, you may withdraw your request for a hearing. If you are unable to, or do not care to, resolve the issues with the Collection Office, your case

A. Will be closed.
B. Will be forwarded immediately to Appeals.
C. Will be scheduled for conference.
D. Will be referred to Tax Court.

46. Once Appeals makes a decision regarding your case, that decision is binding on both you and the IRS. After that

A. You cannot obtain judicial review of Appeals' decision following a CAP hearing.
B. You can still obtain judicial review of Appeals' decision following a CAP hearing. 
C. You can dispute a penalty in Appeals.
D. You have 76 days from that date to terminate your appeal.

47. You may represent yourself at the mediation session, or someone else can act as your representative. The following statement is also true about the mediation process:

A. You may not withdraw from the mediation process once it is started.
B. Fast Track Mediation offers an expedited process, a trained mediator, and a neutral setting.
C. Issues for which there is no legal precedent is included in Fast Track Mediation.
D. Constitutional issues are included in Fast Track Mediation.

48. The Internal Revenue Service offers fast track mediation services to help taxpayers resolve many disputes. The following is a true statement regarding fast track mediation:

A. Most cases that are not docketed in any court qualify.
B. You don't have to file a written protest to request fast track mediation. 
C. You may withdraw from the mediation process anytime.
D. All of the above.

49. If you don't agree with any or all of the IRS' findings given you, you may request a meeting or a telephone conference with the supervisor of the person who issued the findings. If you still don't agree, you may appeal your case to the.

A. Appeals Office of the IRS.
B. Small Case Request Program. 
C. Prevailing Party Office.
D. Administrative and Litigation Office.

50. The Tax Court may award a penalty of up to $25,000 to the United States in its decision if it determines that

A. Your case is intended primarily to cause a delay.
B. Your position is frivolous or groundless. 
C. Either A or B above.
D. Your choice of court or appeal process is improper.