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Federal tax procedures and taxpayer penalties

REG Chapter 3 · Area I · Blueprint I.C.1–4

A return is filed, and then what? This chapter follows a client, Nora Feld, from the day the IRS picks her return for examination, through Appeals and the courts, and back to the penalties that can be added to the tax. On the way it covers when a position must be disclosed, how foreign accounts are reported, what records prove a deduction, and which authorities outrank which. The Blueprint asks you to explain the process, identify penalties and judge whether substantiation is sufficient. Penalty minimums are those for returns due in 2027 (tax year 2026).

In this chapter

1. How returns are chosen and how long the IRS has
2. After the audit: 30-day letter, Appeals and the 90-day letter
3. The courts in tax disputes
4. Disclosing a return position
5. Reporting foreign accounts and assets
6. Substantiation: proving the numbers
7. Taxpayer penalties
8. The hierarchy of tax authority

This chapter has 8 lessons, 51 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Audits and appeals
• the courts
• disclosure of return positions
• foreign account reporting
• substantiation
• taxpayer penalties
• the hierarchy of tax authority

Chapter 2: Licensing and disciplinary systems · Chapter 4: Legal duties and responsibilities