Taxation Law

Tax law involves the taxation of income and property acquired through personal and professional efforts. In addition to income tax, there is sales tax, gift tax, inheritance tax, capital gains tax, property tax, and a myriad of other areas of tax. Tax law is divided into both federal tax and state tax.

Federal Income tax became law in 1913 when the Sixteenth Amendment to the U.S. Constitution was ratified. While some states do not have an income tax, all residents and citizens of the United States are subject to federal income tax. The more assets that an individual owns, unfortunately, the more complicated the tax law becomes.

Congress writes the tax laws, which become part of the tax code. The Internal Revenue Service (IRS) is charged with interpreting the tax code. The IRS is a branch of the U.S. Treasury Department, with headquarters in Washington, D.C., and is ruled by a commissioner appointed by the President. Regional commissioners and district directors, also political appointees, oversee IRS operations. There are also service centers located in Andover, Mass., Atlanta, Austin, Cincinnati, Fresno, Holtsville, Kansas City, Memphis, Ogden and Philadelphia. Each center has its own computer that mails out tax notices, collection notices, audit notices, and tax forms. Every person liable for income tax must maintain books and records sufficient to establish the amount of his gross income.

The Secretary of the Treasury is authorized and has great latitude in reconstructing income in accordance with any reasonable method that accurately reflects actual income. There are scores of deductions and credits that taxpayers can qualify for, including the earned income tax credit, child tax credit, and deductions and credits for college education.