INTUIT ACADEMY TAX LEVEL 1 TEST BANK
ACTUAL QUESTIONS AND VERIFIED
RESPONSES FULL SOLUTION
⩥ Grounds.
Answer: Reason for a position or conclusion. Examples include the
taxpayer's state basis for objecting to an assessment, and the taxing
authority's basis for agreeing or disagreeing with the taxpayer.
⩥ Hearing.
Answer: When used broadly any setting (including informal meetings)
in which a person presents evidence or arguments to a decision maker.
More narrowly used to refer to a formal proceeding such as a court
session.
⩥ Home rule jurisdiction.
Answer: Self-regulating municipality, county, or other political
subdivision that has authority to levy or administer its local sales and use
taxes. The sales and use tax definitions and exemptions of home rule
jurisdictions may differ from those in their state's statutes and
regulations.
⩥ Imposition clause.
,Answer: The section in the statute that levies the tax. Also see "Legal
incidence" and the four types of sales taxes ("Consumer levy", "Gross
receipts tax", "Privilege tax" and "Transaction tax").
⩥ Jeopardy assessment.
Answer: A type of assessment, issued without the usual review
procedures, when a jurisdiction believes that collection of an amount due
would be jeopardized by delay.
⩥ Lease.
Answer: a contract by which one party (lessor) gives to an other (lessee)
the use and possession of property for a specified time and for specified
payments or other consideration. Short-term leases may be referred to as
"rentals".
⩥ Legal incidence.
Answer: Generally refers to the object of a tax as expressed in the law. A
state's law may impose a sales tax on the seller, on the buyer, or on the
transaction. The legal incidence can affect who is liable to the state for
the tax, who can sue or be sued for the tax, and who can claim refunds or
seek other relief.
⩥ Local tax caps.
, Answer: A cap on the local tax. State tax is still calculated on the full
amount of the selling price. Caps can be applied on the total invoice
price or an individual item depending on the tax law.
⩥ Managed Audit ("MA").
Answer: A tax compliance audit that the taxpayer conducts of its own
records. Representatives of the taxpayer and the taxing authority will
typically meet to discuss the parameters of the audit and the other
pertinent data. The areas reviewed in an MA are similar to those
reviewed ina routine audit conducted by a state tax auditor
⩥ Managed Compliance Agreement ("MCA").
Answer: An agreement that allows the taxpayer to accrue tax on its
purchases on a percentage basis. Before the MCA is formalized,
representatives of the taxpayer and taxing authority will typically meet
to discuss the taxpayer's operations, accounting systems utilized, how
data can be extracted changes or anticipated changes within the
company and how the Taxpayer will monitor the accruals.
⩥ Manufacturing.
Answer: The process of taking raw materials or component parts and
creating a new product which has a different form, with a change in this
physical and/or chemical properties, and which has a greater value than
in this previous form.
⩥ Measure.
ACTUAL QUESTIONS AND VERIFIED
RESPONSES FULL SOLUTION
⩥ Grounds.
Answer: Reason for a position or conclusion. Examples include the
taxpayer's state basis for objecting to an assessment, and the taxing
authority's basis for agreeing or disagreeing with the taxpayer.
⩥ Hearing.
Answer: When used broadly any setting (including informal meetings)
in which a person presents evidence or arguments to a decision maker.
More narrowly used to refer to a formal proceeding such as a court
session.
⩥ Home rule jurisdiction.
Answer: Self-regulating municipality, county, or other political
subdivision that has authority to levy or administer its local sales and use
taxes. The sales and use tax definitions and exemptions of home rule
jurisdictions may differ from those in their state's statutes and
regulations.
⩥ Imposition clause.
,Answer: The section in the statute that levies the tax. Also see "Legal
incidence" and the four types of sales taxes ("Consumer levy", "Gross
receipts tax", "Privilege tax" and "Transaction tax").
⩥ Jeopardy assessment.
Answer: A type of assessment, issued without the usual review
procedures, when a jurisdiction believes that collection of an amount due
would be jeopardized by delay.
⩥ Lease.
Answer: a contract by which one party (lessor) gives to an other (lessee)
the use and possession of property for a specified time and for specified
payments or other consideration. Short-term leases may be referred to as
"rentals".
⩥ Legal incidence.
Answer: Generally refers to the object of a tax as expressed in the law. A
state's law may impose a sales tax on the seller, on the buyer, or on the
transaction. The legal incidence can affect who is liable to the state for
the tax, who can sue or be sued for the tax, and who can claim refunds or
seek other relief.
⩥ Local tax caps.
, Answer: A cap on the local tax. State tax is still calculated on the full
amount of the selling price. Caps can be applied on the total invoice
price or an individual item depending on the tax law.
⩥ Managed Audit ("MA").
Answer: A tax compliance audit that the taxpayer conducts of its own
records. Representatives of the taxpayer and the taxing authority will
typically meet to discuss the parameters of the audit and the other
pertinent data. The areas reviewed in an MA are similar to those
reviewed ina routine audit conducted by a state tax auditor
⩥ Managed Compliance Agreement ("MCA").
Answer: An agreement that allows the taxpayer to accrue tax on its
purchases on a percentage basis. Before the MCA is formalized,
representatives of the taxpayer and taxing authority will typically meet
to discuss the taxpayer's operations, accounting systems utilized, how
data can be extracted changes or anticipated changes within the
company and how the Taxpayer will monitor the accruals.
⩥ Manufacturing.
Answer: The process of taking raw materials or component parts and
creating a new product which has a different form, with a change in this
physical and/or chemical properties, and which has a greater value than
in this previous form.
⩥ Measure.
