Tax_Law

The importance of federal and state taxes has been the cause of many discussions throughout history. From the introduction of the first income tax in 1862 to present taxation, the government strives to maintain an effective and fair taxation for every income level. Tax laws and government agencies are continuality under scrutiny by the Federal government as well as taxpayers. In order to understand and comply with taxation laws the Federal government has established organizations to provide support to taxpayers and help to ensure that the taxpayer is complying with said laws. The Bureau of Internal Revenue was first in 1862 in order to help fund the Civil War. Ten years later the income tax was repealed. In 1894, Congress revived the tax but after a ruling by the Supreme Court, the tax was found to be unconstitutional. Nineteen years later, the 19th Amendment was ratified and Congress was given the authority to enact an income tax. In the 1950’s, the Bureau of Internal Revenue was “reorganized to replace a patronage system with career, professional employees” (Internal Revenue Services, 2007) and renamed to the Internal Revenue Service. “The Internal Revenue Service strives to maintain the fairest and most effective system of voluntary tax compliance in the world. The environment in which we operate is complex and constantly changing, and the IRS must change with it” (Internal Revenue Services, 2009). In doing so, the IRS has two main goals that it strives towards. The first one is to improve its service and to make voluntary compliance easier for all taxpayers. The IRS hopes to achieve this goal by making forms and applications easily accessible to all taxpayer via their website and local government offices. The second is to enforce the laws and to help ensure that all taxpayers meet their obligation to pay taxes. One way that the IRS has changed a law to help enforce its other laws and ensure compliance is with the new tax whistleblower laws. The article entitled An Information Resource for Tax Whistleblowers was written in 2006, in the wake of the Enron scandal. The IRS reacted to such a scandal by providing higher rewards for whistleblowers. The article states that “a reward of up to 30% of the funds recovered by the IRS based on information provided by whistleblowers” (Scott, 2006, p. 1). A whistleblower can request these rewards after reporting information regarding underpaid taxes by filling out Form 211. The payment of the reward is based on the government’s decisions regarding this Form. This is one type of form that would go to the United States courts. The United State Tax court is a court of record established by Congress under Article I under the U.S. Constitution. The main purpose of the court is to hear the dispute between the IRS and the taxpayer when the IRS has determined a deficiency. The tax payer has the right to dispute the deficiency in the court before paying any disputed amount. The court is composed of 19 presidentially appointed members who have the authority to re-determine transferee liability, make certain types of declaratory, determine relief from joint and several liability on a joint return, review certain collection actions, and review awards to whistleblowers who provide information to the commissioner of internal revenue on or after December 20, 2006 (http://www.ustaxcourt.gov/about.htm). The U.S. Tax court website provides information on how to file a petition, the time frame and fee associated with petition. If the tax dispute is less than $50,000 the case can be conducted under the small tax case procedure what is a speedier process, less formal but the decision in small case court cannot be appealed. The vast majority of cases are settled by mutual agreement without going to trial and the taxpayers can choose to represent themselves or by practitioners. Treasury regulations are another example of the primary sources of income tax law. Treasury regulations are issued by the United States Treasury Department. The Treasury Department provides the Treasury Regulations as summaries, examples and computations of the Internal Revenue Code provisions. The Treasury Department finalizes the regulations in steps. According to the textbook titled, Federal Taxation 2010, there three stages to the completion of the Treasury Regulations. These stages begin with the proposed form. The proposed regulations are proposed and available to the public to give comments and suggestions on how the regulation would affect the tax payers. The proposed regulations are not legally binding until they go to the next stage, temporary regulations. Temporary regulations are legal and binding laws that the tax payer must abide by. The temporary regulations are considered less authoritative than final regulations. Final regulations are the completion of the Treasury Regulations. The regulations are considered law once it is classified as finalized. At this point the regulations almost have the same authority as the Internal Revenue Code. There are many sources that help navigate the different tax codes. These sources were determined by the ease of navigation and the information that was discovered during research. These articles were chosen because they provide examples of how the IRS reacts to problems with underpaid taxes in the changing business climate as well as providing great information about tax laws and the how to both before and after trial. The website from tax court provides a definition of terms used during trial for the taxpayer to understand. If needed the website provides resources to obtain a copy of the tax court rules that will give more step-by-step explanation of the petition process and the taxpayer’s rights. Provided are contact information as well as information about previous cases. A tax law source is also referred to as tax law authority. These sources are used whenever a tax question arises that cannot easily be answered or derived. One tax law source is revenue rulings. Revenue rulings are a published opinion of the Internal Revenue Service stating what it would rule on future tax questions based on the same circumstances. In summary, revenue rulings are the same idea that is in the United States courts system. If a ruling is made in one case, a later judge would use that ruling as a basis of law. The rulings that the IRS create are used by basically any tax payer or preparer that want to anticipate a tax treatment. The IRS has the force of law until otherwise determined by the federal tax court or a new revenue ruling. Tax laws will always be in the center of debates. By continually reviewing and update both the tax laws themselves and the resources that are available to the general public, it will help to make matters less complicated and easier for all taxpayers to comply with said laws. References: Dictionary Law. http://dictionary.law.com/Default.aspx'selected=1846&bold=|||| Internal Revenue Services. ( [Move the period to follow the citation] 2007). Brief History of IRS. Retrieved September 30, 2009, from http://www.irs.gov/irs/article/0,,id=149200,00.html Internal Revenue Service. ( [Move the period to follow the citation] 2009). Strategic Plan and Other References. Retrieved September 30, 2009, from http://www.irs.gov/pub/irs-pdf/p3744.pdf Internal Revenue Service. ( [Move the period to follow the citation] 2009). Treasury Regulations. Retrieved October 3, 2009, from http://www.irs.gov/taxexemptbond/article/0,,id=134358,00.html Law Offices of Paul D. Scott, P.C. ( [Move the period to follow the citation] 2006). An Information Resource for Tax Whistleblowers. Retrieved on October 3, 2009 from http://www.taxwhistleblowers.org/main/page.php'page_id=1 United States Tax Court. ( [Move the period to follow the citation] 2009). Retrieved October 3, 2009 from http://www.ustaxcourt.gov/