Section 1: 10–20%R2
Federal Tax Procedures, Penalties, and Statutes of Limitations
Exam insight
The statute-of-limitations rules and the penalty percentages are worth memorizing cold. The AICPA expects you to know that omitting more than 25% of gross income extends the period to 6 years and that fraud is unlimited. Choosing the right court after a 90-day letter is another recurring tested decision.
What AICPA wants you to know
- 1State the general 3-year assessment statute and its 6-year and unlimited extensions
- 2Distinguish the assessment statute from the 10-year collection statute
- 3Compute the failure-to-file and failure-to-pay penalties and their interaction
- 4Apply the accuracy-related (20%) and civil fraud (75%) penalties
- 5Apply preparer penalties under §6694 and §6695
- 6Trace the audit, appeals, and litigation path, including the 90-day letter and court choices
Patterns in this topic
The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.
The Procedure ClockAssessment runs 3, 6, or unlimited; collection runs 10 from assessment; and only the Tax Court lets you fight before you pay.The Practitioner RulesMatch the conduct to its rulebook: Circular 230 for practice before the IRS, the SSTS for AICPA members, and sections 6694 and 6695 for preparer dollars.
Exam tip
Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.