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TAXATION:
TAX PROBLEMS AND TAX INFORMATION
This tax
problems and tax information page contains tax law and taxation
articles containing tax help, tax advice and tax questions answers.
Plus other tax information and tax problems regarding tax refund,
tax cut, income tax, turbo tax, tax cut, child tax credit, income
tax, federal income tax, tax rebate, as well as tax return.
What is taxation?
Taxation refers to the power of the government to impose a financial
obligation, within its jurisdiction, on persons whether natural or
juridical (corporations, partnerships, and other organizations for
profit), on (a) property owned, (b) income earned, (c) business
or profession engaged in, or any similar activity in order to raise
the necessary funds in order to finance government expenditure as
well as for all public needs.
It includes federal
and state income taxes, county and city taxes on real property,
state and/or local sales tax based on a percentage of each retail
transaction, duties on imports from foreign countries, business
licenses, federal tax (and some states' taxes) on the estates of
persons who have died, taxes on large gifts and a state "use" tax in
lieu of sales tax imposed on certain goods bought outside of the
state.
What is tax law?
Tax law is the collective term used for all laws dealing with
taxation, which is generated at practically all levels of
government, such as the federal government, state government,
counties, cities, and other municipalities.
Sources of Federal tax law are:
a) Title 26 of the United States Code - the Internal
Revenue Code (Tax Code) of 1986 as amended
b) Title 26 of the Code of Federal Regulations.
c) proposed regulations issued by the Internal Revenue
Service ("IRS")
d) temporary regulations issued by the IRS,
e) revenue rulings issued by the IRS,
f) private letter rulings issued by the IRS,
g) revenue procedures, policy statements, and technical
information releases issued by the IRS
f) federal tax court decisions.
State, county, city or municipality tax laws
vary but are in most cases patterned after federal tax law.
What does IRS mean?
It is the acronym for Internal Revenue Service, which is the United
States' tax collection agency. The IRS implements and administers
the Internal Revenue Code.
What type of income is subject to tax?
All income is subject to tax. When the law uses the word "gross
income," it includes all sources of wealth such as those
income derived from services (wages, fees or commissions), as well
as business income, interests earned, dividends received, receipt of
alimony, pensions, discharge of debts, inheritance, as well as those
derived from an interest in an estate or trust.
Note: In general, income derived from illegal sources or activities
is subject to tax. It does not mean that the law encourages or
tolerates these illegal acts when it imposes tax on income derived
from illegal products or activities, but that the law finds it
"proper to tax those who profit from drug related offenses and to
dispose of the tax proceeds through providing additional anticrime
initiatives without burdening law abiding taxpayers."
-- Department of Revenue of Mont. v. Kurth Ranch, 511 US 767
(1994).
However, this taxing power has its limitations. It may not be used
to violate a person's basic rights, such as those protected by the
Fifth Amendment, like the privilege against self-incrimination and
the double jeopardy clause. For example, when the tax imposed is too
excessive as to constitute a penalty to a crime which the defendant
(the accused) has already been tried for.
"The
Court has repeatedly indicated that the unlawfulness of an
activity does not prevent its taxation, and nothing that
follows is intended to limit or diminish the vitality of those
cases...the issue is instead whether the methods employed by
Congress in the federal wagering tax statutes are, in this
situation, consistent with
the limitations created by the privilege against
self-incrimination guaranteed by the Fifth Amendment. We
must for this purpose first examine the implications of these
statutory provisions." -- Marchetti v. UNITED STATES, 390 U.S. 39
(1968).
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