Certified Financial Planner (CFP) Tax Planning Practice Exam 2026 - Free Tax Planning Practice Questions and Study Guide

Ayesha's additional tax liability being due to negligence indicates that her tax situation may involve errors or omissions that are unintentional but still significant enough to warrant an increase in her tax liability. Negligence typically refers to a failure to make a reasonable effort to comply with tax laws, such as not keeping adequate records, miscalculating deductions, or not reporting income. This understanding is crucial because it highlights the importance of diligence when filing taxes and the potential financial consequences of careless mistakes.

The mention of negligence does not imply intent to deceive, which is a critical factor in distinguishing between negligence and fraud; therefore, this option accurately captures the nature of the additional tax liability without crossing into the territory of intentional wrongdoing. Recognizing that negligence can lead to penalties emphasizes the importance of being thorough and accurate in tax filings.

In contrast, the possibility of completely eliminating the tax liability with proper legal representation is not assured, as legal professionals can assist in navigating complex situations but cannot change the underlying facts that led to the liability. Additionally, an increased tax liability does not automatically trigger an audit; audits are based on various criteria and risk assessments performed by the IRS. Finally, labeling the additional tax liability as a criminal fraud penalty would be incorrect, as fraud implies a deliberate