1. C

A prior IRS audit that did not result in any additional tax deficiency would not be a red flag for increasing your chance of another audit.

2.
A

The three types of audits are field, office and correspondence. The field audit is the only audit where the IRS will come to your home or place of business.

3.
D

Failure to file and fraudulent filings have NO statute of limitations.

4.
C

The interest rate charged by the IRS on underpayments is the federal short-term rate plus 3%.

5.
D

Larry will be assessed a late payment fee of 0.5% on the net amount of tax due not paid by the due date, with a 25% maximum. This penalty is in addition to the normal interest charge.

6.
B

An estimated tax liability payment must be made when you apply for a tax filing extension on Form 4868, on or before April 15. Once the actual tax deficiency is calculated, a payment received that is 90% or less of the actual payment will be subject to a late-payment fee. Interest occurs on the tax due date, starting on April 15.

Introduction

Related Articles
  1. Taxes

    Surviving The IRS Audit

    Keeping thorough records and knowing the penalties make this experience easier than you'd expect.
  2. Taxes

    What To Do If You Get Audited

    If you're in the minority of those that get audited, find out how to prepare and how to handle the process.
  3. Managing Wealth

    10 Tips for Avoiding a Tax Audit

    To help you avoid a tax audit this year make sure you stay away from these ten red flags.
  4. Taxes

    Should You Be Worried About a Tax Audit This Year?

    Tax audits have decreased in recent years and are targeted toward high earners and business owners.
  5. Managing Wealth

    Make $1 Million? Expect an Audit

    If you make $1 million or more, the IRS has its eyes on you. Here's what you can do about it.
  6. Insights

    How The IRS Works: Functions & Audits

    Even the most enlightened citizen curses taxes, possibly while simultaneously acknowledging that they're the price of a civilized society.
  7. Taxes

    How to Avoid the 6 Most Common Tax Audit Triggers

    These are the most common scenarios that can trigger the IRS to audit a tax return.
  8. Financial Advisor

    SEC Audit? No Problem (If You're Prepared)

    Audits are unwanted and unpleasant, but by getting your proverbial ducks in a row ahead of time you can ease and simplify the process.
  9. Taxes

    Audit Stories You Won't Believe

    Take comfort: Even if you do get audited, you'll have an easier time that these unlucky taxpayers.
  10. Taxes

    Avoid an Audit: 6 "Red Flags" You Should Know

    Don't make yourself a target - steer clear of these attention-grabbing tax-filing practices.
Frequently Asked Questions
  1. Is There a Difference Between the Equity Market and the Stock Market?

    Equities and stocks refer to the same thing.
  2. What Happens to a Company's Stock When it Goes Bankrupt?

    Shareholders may be entitled to a portion of the liquidated assets in the wake of a bankrutpcy, but the stock will be worthless.
  3. What are Advantages and Disadvantages of Preference Shares?

    Preference shares have advantages and disadvantages for both investors and issuing companies.
  4. When am I eligible to receive Social Security benefits?

    Understand when you are eligible to begin collecting Social Security retirement benefits and how retiring at different ages ...
Trading Center