The Not So Simple Basics of Tax Law

January 8, 2024

Tax Law Basics

Introduction to Tax Law

Something as dreary as Tax Law may seem somewhat constant, and less prone to volatility, however the reality is the tax system has become increasingly complex. As the world’s population continues to grow and inequality expands, it should be no surprise that the amount of tax legislation has doubled in the past decade. Unknown to many except for the attorneys that practice Law, (especially in California), it’s a segment of law under consistent and rapid evolution.

We always assume it will never be us. Being audited by the IRS is no different. We assume it won’t be us, until that letter from the IRS arrives at your door. Historically speaking this rationalization has some merit. According to financial advisor, “historically only about 1 percent of filers get audited”. However take 1% of all the filers in the United States, that’s still a lot of cases. Sometimes it’s a nice rebate, but for many business owners, especially independent contractors, are concerned they’ll be audited.

As wages continue to stagnate while prices continue to inflate, and laws continue to become more complex, the need for professional, local tax attorneys has never been more valuable. In the industry we refer to what are called specialist tax advisers. This is comprised of taxation lawyers and tax accountants. Simply speaking attorney’s navigate the through the tax paradigm and system, while accountants confirm numeric validity and fact. By combining the two professions you’re given a more robust overall picture and thus better understanding in how to address the IRS and render your situation as positively as possible.

Common Tax Areas

A competent IRS tax attorney will be able to assist you in all areas of tax law in both a business context or personal finances. Many Cailfornia IRS attorney’s may specialize in either sector, while some take on all cases. Case profiles include:

  • Inheritance Tax
  • Property taxes
  • Employment Taxes
  • Back Taxes
  • Income Taxes
  • Dividends Tax
  • Capital gains tax (CGT)
  • Trusts and Funds
  • Buying or selling of a Business
  • Corporate tax

These are just a few common examples of tax law areas American’s often face. Naturally we try to pay as little taxes as possible but just enough to avoid tax evasion. Sometimes mistakes are made to trigger an audit. However at the other spectrum we have highly intricate and complex systems for evasion, especially for the top 1% as we’ve seen recently in Panama.

Tax Law Institutions

Tax Law lays out the rules, policies, and laws to oversee the U.S.’s taxation process. This may involve property, income, transactions, licenses, and more by the government. Duties on imports from other countries, required levies upon individuals, all fall under taxation law.

In segmenting the various kinds of taxation, tax law encapsulates payment to four levels of government. Indirect taxes are levied against consumer products and services, paid to an intermediary. Purchasing groceries for example is an indirect tax. The grocery store charges you a tax on your milk, which they pay to the government. You are indirectly paying taxes.

Direct taxes are taxes you pay directly to the government. Examples such as income tax, personal property, and land. The list of institutions and entities that interact with tax laws and collection revenues is vast. They’re comprised from cities, municipalities, townships, districts, counties, state, and federal level. All these local governments require taxes to continue to fund their various agencies, transit districts, utility companies, and school districts are well known.

The increased state of entropy in taxation law is largely associated with two on-going factors. The first being tax code is being leveraged more and more for political, economic, and social objectives. As a result the incentive to amend and lobby tax code adds to the increasing complexion. Corporations have large incentives to evade as much tax as they can, thus the existence of massive offshore tax havens.

Federal tax law is largely overseen by the U.S. Treasury, specifically a bureau called the Internal Revenue Service, or the IRS, or also referred to as “the Feds”. The Internal Revenue Code of 1986 as amended (Title 26 of the U.S. Code) is where you may find all the rules and regulations for the United States tax code. Other tax laws such as:

  • Proposed regulations issued by the IRS
  • Private letter rulings
  • Revenue procedures
  • Policy statements
  • Technical information
  • Federal tax court decisions

These can all be found in Title 26 of the Code of Federal Regulations. State and local government tax policy are found in their respective code sections, admin codes, regulations, courts and procedures.

The U.S. Tax Court is designed as a special trial court to levy disputes between the IRs and taxpayers in matters such as federal income, estate, and gift tax underpayments. Based in Washington D.C., the federal court has 19 presidentially appointed judges to travel and oversee trial courts. These trial courts are based in designated cities, often large, iconic metropolises of America. Tax courts decisions may be able to be overturned or “appealed” to the Federal District Court of Appeals. Where final review is overseen by the U.S. Supreme Court.

Get Representation

The importance of a federal and local tax attorneys cannot be overstated in an area as complicated as tax law. Representation is available throughout all stages of tax disputes. From the initial IRS audit to administrative appeals, Tax Court, Court of Appeals, and should it go that far, the U.S. Supreme Court. The key is being able to help you navigate and understand the various intricacies and complexities of tax code regulation and law.

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