41. LO.5 Brianna, a calendar year taxpayer, files her income tax return for 2012 on February
1, 2013. Although she makes repeated inquiries, she does not receive her refund from the IRS until May 28, 2013. Is Brianna entitled to interest on the refund? Explain.
42. LO.5, 6 On a Federal income tax return filed five years ago, Andy inadvertently omitted a large amount of gross income.
a. Andy seeks your advice as to whether the IRS is barred from assessing additional income tax in the event he is audited. What is your advice?
b. Would your advice differ if you were the person who prepared the return in question? Explain.
c. Suppose Andy asks you to prepare his current year’s return. Would you do so? Explain.
43. LO.5 Isabella files her income tax return 35 days after the due date of the return without obtaining an extension from the IRS. Along with the return, she remits a check for $40,000, which is the balance of the tax she owes. Disregarding the interest element, what are Isabella’s penalties for failure to file and for failure to pay?
44. LO.5 For tax year 2010, the IRS assesses a deficiency against David for $500,000. Disregarding the interest component, what is David’s penalty if the deficiency is attributable to:
45. LO.5, 6 In March 2013, Jim asks you to prepare his Federal income tax returns for tax years 2010, 2011, and 2012. In discussing this matter with him, you discover that he also has not filed for tax year 2009. When you mention this fact, Jim tells you that the statute of limitations precludes the IRS from taking any action as to this year.
a. Is Jim correct about the application of the statute of limitations? Why or why not?
b. If Jim refuses to file for 2009, should you prepare returns for 2010 through 2012? Explain.
46. LO.5, 6 The Benson CPA firm is considering utilizing an offshore service provider to prepare many of its tax returns. In this regard, what ethical considerations must be taken into account?