Understanding Tax Law

Basis of the Tax Law

According to the common definition, tax law is the codified system of law that explains the different government levies which a taxpayer needs to adhere to on various economic transactions. The main taxation issues in the US include taxes like income, estate, capital gains, corporations, LLCs, partnerships, taxes on specific investment products or retirement accounts.

Great Income Tax

US Tax laws

Taxation in the United States is a complicated system which includes payment for different sections of the government and involves various types of taxation. Tax law is developed by the federal government, state government as well as those created by counties, cities and other municipalities. It also involves sections like school, utility and transit districts. The tax laws are distributed into codes sections, regulations, procedures, statements and administrative codes announced by the government along with state court pronouncements. Usually, the state tax laws are designed based on the federal tax laws.

The National Bureau of Economic Research results indicate that the combined federal, state and local government average marginal tax rate is 40% of the earnings of most workers. The Tax Foundation announced that the government at various levels would need to gather 30.8% of US income for budget balancing in 2008.

Everyone must pay taxes so tax laws influence all. In terms of federal taxes, the tax laws are available in :

• Title 26 of the United States Code - the Internal Revenue Code of 1986 as amended (the "Code" as promulgated by the Congress of the United States).
• Title 26 of the Code of Federal Regulations.
• Proposed regulations issued by the Internal Revenue Service.
• Temporary regulations issued by the IRS.
• Revenue rulings issued by the IRS.
• Private letter rulings issued by the IRS.
• Revenue procedures, policy statements, and technical information releases issued by the IRS.
• Federal tax court decisions.

Understanding Tax Law

One of the main responsibilities of a tax attorney is to offer legal advice with respect to all relevant legal matters especially understanding tax laws. Legal advice offered is basically to apply the tax laws which are in abstract form into the concrete form based on the taxpayers’ requirement. This enables the attorney to advise the taxpayer on the proper handling of their taxes. Only an authorized and licensed tax attorney is allowed to provide legal advice, even if it is any lawsuit in progress or planned. Tax attorneys not abiding to the laws and without a proper license can fall under the crime of unauthorized practice of law.

A tax attorney can help in understanding the income reporting responsibilities, as well as reviewing and structuring the financial matters of a company so that no additional taxes, interest, or penalties are charged to the company. They also help companies that have setup businesses outside their own state to understand the tax laws in the new location as well as their initial company’s tax needs. An experienced tax attorney can also advise companies in choosing the most viable form of business with regard to tax responsibilities as businesses are strongly dependent on tax factors.