During an IRS audit, Ms. H provided the revenue agent with a meticulous set of re-cords substantiating every number on the return. The agent actually complimented her on the quality of her preparation. Nevertheless, Ms. H did make an error in her favor. When she received formal notiﬁcation that she owed an additional $4,350 tax, she was dismayed that the IRS also billed her for $920 interest on the deﬁciency. She doesn’t understand why she must pay interest when she obviously made a good faith effort to comply with the tax law. Can you explain why?
Answer to relevant QuestionsHow do tax payments differ from other payments that people or organizations make to governmental agencies? Discuss the burden of proof as it relates to the penalties for: a. Negligence. b. Civil fraud. c. Criminal fraud. Discuss the policy reasons for a statute of limitations for tax returns. During the audit of Mr. and Mrs. Jessel’s 2012 and 2013 tax returns, the revenue agent learned that they kept two sets of books for their sole proprietorship. A comparison of the two revealed that Mr. and Mrs. Jessel ...Ms. Cross didn’t request an extension of time to ﬁle last year’s income tax return and didn’t mail the completed return to the IRS until August 8. She enclosed a check for $2,380, the correct balance of tax due with ...
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