Denise Davison
ACC 421 – February 2013
Written Assignment One

Question 33 – VAT a. Including all of the OECD members there are about 120 countries which impost VAT. The United States has no VAT and places a lot of their dependence on income taxes as a major source of revenue.

b. A VAT taxes the increment in value as goods move through the production and manufacturing stages to the marketplace. Although the tax is paid by the producer, it is reflected in the selling price of the goods. Therefore, a VAT is a tax on consumption.

c. The VAT it is an effective generator of revenue and has been criticized as leading to more government spending.

Question 37 – IRS Audit: characteristics of a. The DIF score helps determine which returns the IRS selects for audit.

b. A correspondence audit is most likely involved. These audits involve a limited number of issues, like taxpayer failed to report some dividend income, and most often are easily resolved.

c. A field audit is being described.

d. The revenue agent’s report accepts the taxpayer’s return as filed.

e. If a special agent appears it would usually indicate that some kind of fraud has occurred.

Question 40 – Statute of Limitations a. The normal three-year statute of limitations will begin to run on April 17, 2012. When the return is filed early, the regular filing date controls.

b. Now the statute of limitations starts to run on the filing date. If the date of filing controlled [see part (a) above], the taxpayer could shorten the assessment period by filing late.

c. If a return that is due is not filed, the statute of limitations does not start to run. It does not matter that the failure to file was due to an innocent error on the part of the taxpayer or adviser.

d. Regardless of the fact that an innocent misunderstanding was involved, there is no