Income Tax Law

In any systemized society, tax is vital and has become the building block of civility. Income tax is a charge that government sets upon individuals, corporations, or any taxable unit (called taxpayers) and is then used as the government’s revenues. These taxes can vary depending on the profits or income of the taxpayer, and can also vary according to jurisdictions. Failure to pay taxes can render a person or corporation in danger of criminal charges, which can come with significant penalties, fines and even jail time.

The Internal Revenue Code has set forth the federal tax laws which the government follows. Tax laws in the United States are handled and enforced by the Internal Revenue Service (IRS), and these taxes are regulated by a tax rate. Direct taxes are taken from individuals and corporations. There are several situations, credits, and exemptions that can be applied to lower the amount of tax, and each taxpayer is generally responsible for filing their income tax returns.

Normally, tax is computed as the result of tax rate multiplied by the taxable income, however, deductions and tax rates can change depending on the status of the taxpayer upon the filing of the income tax returns. Tax rates generally increase as the taxable income also increases, also known as graduated rates and usually applies at a federal level. Because each jurisdictions have their own due dates and other administrative processes, it is the jurisdictions own responsibility to adjust the tax provided by the taxpayer.

Penalties are given to those who have failed to file tax returns, have filed them incorrectly, or were late in their filing. These penalties are usually based on the amount of tax stated as well as the degree of lateness. However, intentional failures (for example, tax fraud) have criminal charges and can cause loss or forfeiture of property. When these tax issues arise, the IRS and the Department of Justice takes over the case. People who are in trouble with the IRS should get help from a professional who is well-versed in tax law, such as an accountant or an attorney.


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