REG, Regulation

Sources for Federal Tax Procedures

Last reviewed 2026-09-14

The standards and authorities behind PocketCPA's REG lessons on Federal Tax Procedures. The topic rests on IRC Sec. 6501, 6502, 6503, 6511, 6513, 6532, 6212, 6213, 6601, 6651, 6654, 6662-6664, 6694, 6695, 7454, 7463, 7491, 7602, 7605, 7803(e).

About this topic

Learn the arithmetic and the answers fall out.

Two structural habits are worth forming before any of the detail.

Key points

• The statute of limitations for assessment is generally three years from the later of the due date or filing date.
• The six-year statute applies when gross income is understated by more than 25%.
• There is no statute of limitations for fraud or failure to file.
• Accuracy-related penalties (Sec. 6662) are 20% of the underpayment for negligence, substantial understatement, or valuation misstatement.
• The IRS collection process includes notice, demand, lien, and levy.

What the lessons cover

1. Examination and appeals
2. Statutes of limitation on assessment
3. Refund claims and collection
4. Taxpayer versus preparer penalties
5. Failure to file, failure to pay, and interest
6. Estimated tax underpayments and the Sec. 6654 exceptions
7. Choosing a forum and carrying the burden of proof

Authoritative references

Where these requirements sit in the literature. Each entry names the provision, then breaks out the subsections that carry separate rules.

• IRC Sec. 6501 is the assessment statute.
  • (a) the 3-year rule from filing, expressly whether or not the return was filed on or after the prescribed date.
  • (b)(1) deems an early return filed on the last day prescribed.
  • (b)(3) provides that a Sec. 6020(b) return by the Secretary does not start the period.
  • (d) 18 months after a request for prompt assessment, never beyond the ordinary 3 years, and (h) and (i) tie a carryback deficiency to the period for the carryback year.
• IRC Sec. 6501(c) holds the unlimited periods and the consent rule.
  • (c)(1) a false or fraudulent return with intent to evade tax, (c)(2) a willful attempt to evade a tax outside subtitle A or B, and (c)(3) a failure to file.
  • (c)(4)(A) a written consent effective only if made before the period expires, each further extension requiring agreement before the prior one lapses, with (c)(4)(B) requiring notice of the right to refuse or limit.
  • (c)(7) a 60-day extension for a signed document received in the final 60 days.
• IRC Sec. 6501(e)(1) is the substantial-omission engine, operating only "except as otherwise provided in subsection (c)."
  • (e)(1)(A)(i) 6 years for an omission exceeding 25 percent of the gross income stated in the return, and (e)(1)(A)(ii) 6 years for a Sec. 6038D omission over 5,000.
  • (e)(1)(B)(i) business gross income measured prior to diminution by cost.
  • (e)(1)(B)(ii) a basis overstatement treated as an omission from gross income.
  • (e)(1)(B)(iii) adequate disclosure removing an amount, other than in the basis case.
• IRC Sec. 6511 is the refund statute, with two independent tests: a deadline for the claim, and a cap on the amount the claim can reach.
  • (a) the three periods, 3 years from filing, 2 years from payment, whichever is later, and a flat 2 years from payment if no return was filed.
  • (b)(1) no refund absent a claim inside that period.
  • (b)(2)(A) the lookback cap of 3 years plus any filing-extension period, (b)(2)(B) 2 years for a later claim, and (b)(2)(C) the same caps tested on the allowance date.
  • (c)(1) open until 6 months after an agreed Sec. 6501(c)(4) period, and (d)(1) 7 years from the date prescribed for filing for worthless securities and bad debts.
  • (d)(2)(A) carrybacks anchored to the loss year.
  • (d)(3)(A) 10 years from the date prescribed for the year the foreign taxes were actually paid or accrued.
  • (h) suspension while financially disabled, withdrawn by (h)(2)(B) whenever another person is authorized to act.
• IRC Sec. 6513 supplies the deemed dates the Sec. 6511 caps run against.
  • (a) an early return and an early payment are treated as made on the last day prescribed, without regard to any extension.
  • (b)(1) withheld tax is deemed paid on the 15th day of the fourth month after year end.
  • (b)(2) estimated tax is deemed paid on the last day prescribed for filing.
• IRC Sec. 6502 and Sec. 6503 are the collection clock and its stops.
  • 6502(a)(1) 10 years after the assessment.
  • (a)(2)(A) 90 days after a collection period agreed in writing when a Sec. 6159 agreement was entered into, and (a)(2)(B) a Sec. 6343 release of levy.
  • The flush sentence extends the levy period after a timely court proceeding until the liability or judgment is satisfied or unenforceable.
  • (b) dates a levy from the Sec. 6335(a) notice of seizure.
  • 6503(a)(1) suspends both periods while the Secretary is prohibited, plus 60 days, with further suspensions in (b) court custody, (c) taxpayer abroad, (h) title 11, and (j) designated summonses.
• IRC Sec. 6212 and Sec. 6213 run the deficiency procedure.
  • 6212(a) certified or registered mail plus taxpayer-advocate contact information.
  • (b)(1) the last known address suffices even for a deceased, disabled or dissolved taxpayer, and (b)(2) a single joint notice absent notice of separate residences.
  • (c)(1) no further deficiency for the year once a timely petition is filed, except fraud and the enumerated exceptions, and (d) permits rescission with consent.
  • 6213(a) 90 days, or 150 if addressed abroad, from mailing, excluding weekends and District of Columbia holidays as the last day, with a petition filed by the last date specified in the notice treated as timely.
  • (b)(1) excepts mathematical or clerical error assessments.
• IRC Sec. 6532 governs suits.
  • (a)(1) no refund suit before 6 months from the claim absent an earlier decision, and none after 2 years from the mailing of a notice of disallowance.
  • (a)(2) a period extended in writing between the taxpayer and the Secretary.
  • (a)(3) a written waiver of the notice requirement starts the 2 years.
  • (a)(4) reconsideration does not extend it.
  • (b) the United States has 2 years to recover an erroneous refund, 5 years if induced by fraud or misrepresentation.
• IRC Sec. 6651 carries the delinquency additions.
  • (a)(1) 5 percent per month or fraction to 25 percent, measured with regard to a filing extension, and (a)(2) 0.5 percent to 25 percent, measured with regard to a payment extension.
  • (a)(3) the same rate on an unshown amount unpaid 21 calendar days after notice and demand.
  • The last sentence of (a) is the 60-day floor, the lesser of the indexed amount or 100 percent of the tax required to be shown.
  • (b)(1) through (b)(3) net each base against tax paid and credits claimable on the return.
  • (c)(1) offsets (a)(1) by (a)(2) for overlapping months, but never below the floor.
  • Rate substitutions: (d) 1 percent after a Sec. 6331(d) notice, (f) 15 percent to 75 percent for a fraudulent failure to file, and (h) 0.25 percent during a Sec. 6159 agreement for a timely filer.
  • (e) excludes estimated tax.
  • (g) disregards a Sec. 6020(b) return for (a)(1) only.
  • (j) indexes the 435 figure.
• IRC Sec. 6601 is interest, not penalty.
  • (a) the Sec. 6621 underpayment rate, running from the last date prescribed for payment to the date paid.
  • (b)(1) that date fixed without regard to any payment extension or Sec. 6159 agreement.
  • (e)(1) interest treated as tax.
  • (e)(2)(A) interest on most penalties runs only from notice and demand, with (e)(3) forgiving it if paid inside the window.
  • (e)(2)(B) interest on a Sec. 6651(a)(1) addition runs from the date the return was required to be filed, including extensions.
• IRC Sec. 6654 is the estimated-tax addition.
  • (a) the addition is charged at the Sec. 6621 rate.
  • (b)(1) and (b)(2) the amount of the underpayment, and the period it runs for.
  • (b)(3) payments credited against unpaid required installments in order.
  • (c) four installments due April 15, June 15, September 15 and January 15.
  • (d)(1)(A) each 25 percent of the required annual payment.
  • (d)(1)(B) the lesser of 90 percent current-year or 100 percent prior-year, with clause (ii) unavailable for a short or unfiled prior year, and (d)(1)(C) 110 percent above 150,000 of prior-year AGI, or 75,000 filing separately.
  • (d)(2)(A) the annualized income installment with recapture.
  • (e)(1) excepts an amount under 1,000 after the Sec. 31 credit, and (e)(2) a 12-month prior year with no liability and citizenship throughout.
  • (e)(3)(A) casualty and disaster.
  • (e)(3)(B) newly retired after 62 or disabled.
  • (g)(1) deems the Sec. 31 credit paid ratably unless the actual dates are established.
• IRC Sec. 6662 is the accuracy-related penalty.
  • (a) 20 percent.
  • (b)(1) through (b)(10) the grounds that make the section apply.
  • (b)(6) economic substance within Sec. 7701(o), and (b)(9) an overstatement of the Sec. 170(p) non-itemizer deduction.
  • The flush language after (b) switches the section off for any portion penalized under Sec. 6663.
  • (c) defines negligence and disregard.
  • (d)(1)(A) the individual greater-of threshold (10 percent or 5,000).
  • (d)(1)(B) the corporate lesser-of threshold (10 percent or 10,000 if greater, capped at 10,000,000), inapplicable to an S corporation or personal holding company.
  • (d)(1)(C) the 5 percent substitution for a Sec. 199A claimant.
  • (d)(2)(A) defines the understatement, (d)(2)(B) reduces it for substantial authority or disclosure plus reasonable basis, and (d)(2)(C) withdraws that for a tax shelter.
  • (e)(1)(A) the 150 percent valuation test with the 5,000 / 10,000 floor in (e)(2).
  • (h) 40 percent for gross misstatements at 200 percent.
  • (i) 40 percent for a nondisclosed noneconomic substance transaction.
• IRC Sec. 6663 and Sec. 6664 are fraud and its defenses.
  • 6663(a) 75 percent of the fraudulent portion.
  • (b) the entire underpayment is fraudulent once the Secretary establishes any portion, except what the taxpayer establishes by a preponderance is not, and (c) reaches, on a joint return, only a spouse whose own fraud contributed.
  • 6664(b) applies the part only where a return is filed.
  • (c)(1) excuses a penalty under section 6662 or 6663 for reasonable cause and good faith.
  • (c)(2) withdraws it for a Sec. 6662(b)(6) transaction or Sec. 6662(b)(10) disallowance, making them strict liability.
  • (c)(3) withdraws it for valuation overstatements on charitable deduction property, restoring it for a merely substantial overstatement backed by a qualified appraisal plus a good faith investigation.
• IRC Sec. 6694 and Sec. 6695 are the preparer counterparts, developed in full in the ethics lesson. Procedural, and therefore tested here.
  • 6694(a)(1) the greater of 1,000 or 50 percent of income derived, with reasonable cause only under (a)(3).
  • (b)(1) the greater of 5,000 or 75 percent for willful or reckless conduct, reduced by (b)(3) by the (a) penalty paid.
  • (c)(1) the 15 percent within 30 days collection stay.
  • (d) mandatory abatement without regard to any period of limitations where a final determination finds no understatement.
  • 6695(a) through (e) the 50 per failure penalties with 25,000 caps.
  • (f) and (g) the 500 penalties, and (h) the indexation.
• IRC Sec. 7602 and Sec. 7605 govern the examination.
  • 7602(a) the authority to examine records, summon persons and take testimony.
  • 7602(d)(1) no summons and no Sec. 7604 enforcement while a Justice Department referral is in effect.
  • (d)(2)(A) the referral takes effect on a recommendation to the Attorney General.
  • (d)(2)(B) it ends only on written non-prosecution or final disposition.
  • 7605(a) at least 10 days between summons and appearance, and 7605(b) no unnecessary examinations and only one inspection of the books per taxable year absent the taxpayer's request or the Secretary's written notice.
• IRC Sec. 7803(e) is the Independent Office of Appeals.
  • (e)(1) establishes it.
  • (e)(2)(A) a Chief of Appeals reporting directly to the Commissioner.
  • (e)(3) resolution without litigation on a basis fair and impartial to both sides.
  • (e)(4) generally available to all taxpayers.
  • (e)(5)(A) a detailed written notice on denial of a referral request by the holder of a Sec. 6212 notice, with a frivolous position carve-out in (e)(5)(D).
  • (e)(6)(B) Chief Counsel advice from staff not involved in the case.
  • (e)(7)(A) the nonprivileged case file 10 days before a scheduled conference for a specified taxpayer.
  • (e)(7)(B) the expedite election, which moves access to the date of the conference.
  • (e)(7)(C)(i) a natural person with AGI not over 400,000, or any other taxpayer with gross receipts not over 5,000,000.
• IRC Sec. 7463 is the Tax Court small-case procedure.
  • (a)(1) 50,000 or less for any one taxable year, at the taxpayer's option concurred in by the Court before the hearing.
  • (b) the decision is unreviewable in any other court and non-precedential.
  • (c) limits it to the amounts in dispute and conceded.
  • (d) permits discontinuance.
  • (e) counts additions, additional amounts and chapter 68 penalties toward the limit.
  • (f) extends the election to Sec. 6015(e) relief, a Sec. 6330(d)(1)(A) collection determination and a Sec. 6404(h) abatement.
• IRC Sec. 7491 and Sec. 7454 allocate the burdens.
  • 7491(a)(1) shifts the burden of proof on a factual issue where the taxpayer introduces credible evidence.
  • (a)(2) conditions it on substantiation, recordkeeping and cooperation, plus Sec. 7430(c)(4)(A)(ii) for an entity.
  • (a)(3) yields to any specific burden provision.
  • (b) shifts it for income reconstructed from statistics.
  • (c) gives the Secretary the burden of production on any penalty against an individual.
  • 7454(a) puts the burden of proof on the Secretary on fraud with intent to evade tax and states no evidentiary standard; the clear-and-convincing standard is a Tax Court rule, not a Code provision.
• Supporting definitions and adjacent provisions.
  • Sec. 7701(a)(36)(A) defines a tax return preparer by compensation and substantial portion, with four exclusions in (B).
  • Sec. 6107(a) requires a completed copy at the time the return is presented for signature, and (b) retention for 3 years after the close of the return period.
  • Sec. 6109(a)(4) the preparer's identifying number.
  • Sec. 6701(a) aiding and abetting at 1,000, or 10,000 for a corporation's liability.
  • Sec. 7216(a) is the criminal misdemeanor for improper disclosure or use of return information, and Sec. 6713(a) the civil twin at 250 per act with no state-of-mind element.
  • Sec. 7525(a) confines the practitioner privilege to tax advice in noncriminal matters.
  • Sec. 6013(d)(3) makes joint-return liability joint and several, subject to Sec. 6015.
  • Sec. 170(p) is the OBBBA non-itemizer charitable deduction at 1,000 (2,000 joint) of cash contributions.
  • Sec. 199A(i) is now the 400 minimum deduction rather than the repealed sunset, which is what keeps Sec. 6662(d)(1)(C) permanently in force.

How PocketCPA uses these sources

Every lesson is written in original words and cites the paragraph each rule comes from. No standard's text is reproduced. How lessons and questions are written and checked is set out in our methodology.

See also

• Sources for every REG topic
• Free REG sample questions
• The CPA exam glossary