Tax Law – What You Need To Know
Tax law or taxation law is a field of legal study where public or officially sanctioned bodies, including state, national and local governments employ a body of rules and methods to assess and collect taxes from individuals, businesses or other entities in a functional legal context. Taxation law involves the collection of personal or corporate income taxes from individuals, businesses and other entities. It also involves the administration of tax payments, including the preparation of return forms and the filing of tax returns. Tax law can be broadly divided into two areas: taxation and law. While taxation deals mainly with the taxation of income, and law deals primarily with issues that arise in the area of taxation.
Taxation law seeks to maximize the revenue from tax revenues while minimizing the expenditure involved in the process. Taxes are collected from individuals, businesses, trusts, estates, international organizations, government agencies, non-profit organizations and corporations. Income tax is one of the direct taxes that are paid to the federal government by individuals and other entities. A similar indirect tax, known as sales tax, is imposed on certain purchases by individuals. Both direct and indirect taxes are needed in order to support public health, education, social security programs and the development of the country.
The progressive income tax system is a basic feature of the tax law. It provides for taxation of income through wages, salaries and inheritances and some property taxes. Taxation on capital gains and dividends is also implemented through progressive taxation. The concept of graduated taxation is also prevalent in tax law.
Tax law defines several subsets of direct and indirect taxes. These include the Excise Tax, the Base Rate, the Substantial Income Tax, the Estate Tax, the Imposition Tax, the Gift Tax, the Social Security Tax and the Interstate Transfer Tax. A number of jurisdictions have incorporated a combination of these sub-categories. For instance, in the state of California, a high estate tax rate is combined with a progressive tax on dividends, while a number of states include personal casualty insurance in their tax codes.
The income tax law provides for several professional organizations that offer legal advice to individuals and businesses. The National Association of Self-Employed is one such professional organization. They provide free publications, web sites and even telephone hot lines. They also offer courses and seminars on taxation issues. Many tax attorneys also belong to this organization. Attorneys may be available to help with virtually any income tax related issue.
Many states have developed special Boards that certify that an accountant or agent is well trained and competent in making tax decisions. Certified public accountants (CPAs) and licensed representatives are required to participate on these boards. Some boards certify local tax managers and some lay down minimum criteria for certification. Certified public accountants and licensed representatives are required to participate regularly on state boards that set licensing policies. Certified agents are required to pass examinations and take continuing education courses that may increase their qualifications to become a CPA.
Taxpayers should also become familiar with the latest code section changes. There are often changes to federal tax law that impact taxpayers. The Internal Revenue Code section that deals with exceptions is constantly changing. These changes could affect a taxpayer’s ability to deduct certain expenses. For example, many taxpayers are finding it difficult to deduct medical expenses.
Taxpayers need to become knowledgeable about the latest changes to the tax law. The Internal Revenue Service (IRS) publishes a large amount of internal revenue news and what exactly is going on with the Internal Revenue Code at the state and federal level. The United States Senate and House each pass a version of tax laws that become law. Federal tax law includes a number of reports and opinions issued by members of Congress concerning federal tax law.
