Understanding IRS Tax Law

Taxes are confusing. The different boxes on all of the forms and the numbers in those boxes can make even the most number savvy person go cross-eyed just by thinking about tax season. Without a dedicated tax specialist or easy to use tax software, doing your own taxes accurately can sometimes be nearly impossible. This can sometimes get you in trouble with the Internal Revenue Service (IRS), and in serious cases state or federal government. In today’s blog, the Law Offices of Charles R. Frazier, the experienced and knowledgeable tax lawyers of Nashville, will go over and help you understand what IRS tax laws are before you file your tax return.

WHAT ARE TAX LAWS?

Tax laws are rules set in place by federal, state, and local governments that help those entities calculate how much you owe in taxes each year. There are tax laws for every kind of tax set in place, such as income, estate, luxury, property, corporate, and more. Congress and state legislatures are the ones that create the majority of tax laws for federal and state taxes respectively. They’re also the ones who go back in and update, revise, or get rid of tax laws on their respective levels. Tax laws change almost every year, so it can be hard to know and keep track of every individual law when tax season comes around. There are, however, some laws that will always stay in place no matter what, such as not being able to falsely report deductions on your tax return, or not being able to falsely claim dependents when you have none. Tax laws are largely set in place to protect both the taxpayers as well as the government from false claims.

FEDERAL TAX LAWS

The Internal Revenue Code (IRC) is the foundation of all federal tax law here in the United States. The Code is made up of 11 different subtitles, all of which cover the different kinds of federal taxes (estate, excise, income, etc.). The IRC is the main authority for federal taxes and all tax forms and their instructions are based off the IRC. These codes also make the rules that taxpayers and the IRS are required to follow.

Federal tax regulations allow for more laws than are contained in the IRC. The Department of Treasury is allowed to set regulations that are used to interpret every code section. The regulations that the Department of Treasury issue all have high authority, forcing the IRS to enforce tax laws in accordance with the regulations. Most of the tax laws set forth by the IRC are quite short, with some being no more than a few sentences. The regulations that the Treasury applies to the code, however, are quite long, with some being several pages long as to go in-depth on how to enforce the regulations set in place on their corresponding codes.

STATE/LOCAL TAX LAWS

State and local tax laws vary not only from each other, but from the federal laws as well. While some states don’t have income taxes to enforce, other tax laws revolving around inheritance or sales tax may be put in place. Every state makes their own tax codes that are completely separate from the other states and the federal tax codes alike. This means that every state has their own tax code that does the same thing as the IRC does on the federal level. Tax laws can also be made on the county and city levels as well. Each of these would have their own tax codes as well to help regulate their own laws that are in accordance with both state and federal tax laws.

As we said before, tax laws are not permanent features by any means on any level. Over the years, the federal government has issued income tax cuts and business tax incentives to help revitalize or strengthen the economy as a whole. At the state and local levels, property tax can fluctuate depending on the state of the local economy, and sales tax can change on certain items depending on the market as well as state or federal factors. To change a tax law, Congress or your local legislature will first propose the potential law. The proposition will then go to a vote, and if it passes then the idea will then be made into a law at its respective level.

If the IRS is coming after you because they believe you’ve broken a tax law on any level, the first thing you should do is hire an experienced tax attorney for help. The tax lawyers at the Law Offices of Charles R. Frazier are highly knowledgeable in all forms of IRS tax law and are ready to help you. Learn more about our professional tax attorneys, get answers to our most frequently asked questions, or contact us today to set up your appointment.