ACCT 328 Tax John Janiga(Correctly solved)
Percentage of individual returns audited. correct answers The number of individual returns
audited by the IRS is relatively small and has increased or decreased
only slightly over the last decade or so. For the fiscal year ended September 30, 2014, the IRS
audited
only 0.86 percent of all individual income tax returns filed. The rate for higher income
individuals was
significantly higher. For e.g., for taxpayers with adjusted gross income (AGI) of $1M or more
but less
than $5M, the rate was about 9%.
Availability of an "informant's fee." correct answers The tax law permits the IRS to pay rewards
to persons who provide information that leads to the detection
and punishment of those who violate the tax laws. The reward varies depending on the
underlying facts,
but may never exceed 30% of the taxes, fines, and penalties recovered as a result of such
information
DIF score correct answers The DIF (Discriminant Information Function) score helps determine
which returns the IRS selects for
audit. The IRS utilizes mathematical formals and statistical sampling techniques to select tax
returns that
are most likely to contact errors and to yield substantial amounts of additional tax revenues upon
audit.
The mathematical formula yields the DIF score.
Relevance of information returns (e.g., Form 1099) correct answers The IRS requires certain
information returns to be filed by payors (e.g., employers, banks). If the income
recognized by the payees does not conform to that reported by the payors, further inquiry by the
IRS will
almost certainly take place.
Type of audit (i.e., correspondence, office, field). correct answers A correspondence audit
involves matters that can be resolved by mail. An office audit usually is
restricted in scope and is conducted in the facilities of the IRS. A field audit involves an
examination of
numerous items reported on the return and is conducted on the premises of the taxpayer or the
taxpayer's
representative.
Revenue Agent's Report (RAR) correct answers A Revenue Agent's Report, or RAR,
summarizes the findings of an audit. The RAR can result in no
change being made, a deficiency being assessed, or a refund being due.
Special agent joins the audit team. correct answers When a special agent appears, this usually
means that fraud is suspected. In these situations, the taxpayer
Percentage of individual returns audited. correct answers The number of individual returns
audited by the IRS is relatively small and has increased or decreased
only slightly over the last decade or so. For the fiscal year ended September 30, 2014, the IRS
audited
only 0.86 percent of all individual income tax returns filed. The rate for higher income
individuals was
significantly higher. For e.g., for taxpayers with adjusted gross income (AGI) of $1M or more
but less
than $5M, the rate was about 9%.
Availability of an "informant's fee." correct answers The tax law permits the IRS to pay rewards
to persons who provide information that leads to the detection
and punishment of those who violate the tax laws. The reward varies depending on the
underlying facts,
but may never exceed 30% of the taxes, fines, and penalties recovered as a result of such
information
DIF score correct answers The DIF (Discriminant Information Function) score helps determine
which returns the IRS selects for
audit. The IRS utilizes mathematical formals and statistical sampling techniques to select tax
returns that
are most likely to contact errors and to yield substantial amounts of additional tax revenues upon
audit.
The mathematical formula yields the DIF score.
Relevance of information returns (e.g., Form 1099) correct answers The IRS requires certain
information returns to be filed by payors (e.g., employers, banks). If the income
recognized by the payees does not conform to that reported by the payors, further inquiry by the
IRS will
almost certainly take place.
Type of audit (i.e., correspondence, office, field). correct answers A correspondence audit
involves matters that can be resolved by mail. An office audit usually is
restricted in scope and is conducted in the facilities of the IRS. A field audit involves an
examination of
numerous items reported on the return and is conducted on the premises of the taxpayer or the
taxpayer's
representative.
Revenue Agent's Report (RAR) correct answers A Revenue Agent's Report, or RAR,
summarizes the findings of an audit. The RAR can result in no
change being made, a deficiency being assessed, or a refund being due.
Special agent joins the audit team. correct answers When a special agent appears, this usually
means that fraud is suspected. In these situations, the taxpayer
