U.S. Tax and IRS Law 2012 (Annotated)

Taxation in the United States

---

Title 3 - The President. Title 5 - Government Organization and Employees. Title 6 - Domestic Security. Title 7 - Agriculture. Title 8 - Aliens and Nationality. Title 9 - Arbitration. Title 10 - Armed Forces. Title 11 - Bankruptcy. Title 12 - Banks and Banking. Title 14 - Coast Guard. Title 15 - Commerce and Trade. Title 16 - Conservation. Title 17 - Copyrights. Title 18 - Crimes and Criminal Procedure. Title 19 - Customs Duties. Title 20 - Education.

Title 21 - Food and Drugs. Title 22 - Foreign Relations and Intercourse. Title 23 - Highways. See c 2. See a 13 , 7. See , 3. See a 5. See a 6 A. See a 6 B. See a 7. See a , d , Rev. See i , a 1 , 1. See a , , Rev. See b 1 , c , Rev. See b 1 A. See b 1 B.

See b 1 C. See a , See 2 , See i , a 6. See b , a Rev. See a 2 C. See b , Rev. See c , Rev. See c , d , Rev.

Current Release Point

See c , e , See d , Rev. See c , d. See , a , a Rev. See , See a 4 , , 3. Customs duties vary by country of origin and product. Goods from many countries are exempt from duty under various trade agreements. Certain types of goods are exempt from duty regardless of source. Customs rules differ from other import restrictions. Failure to properly comply with customs rules can result in seizure of goods and criminal penalties against involved parties. Goods may be imported to the United States subject to import restrictions.

Importers of goods may be subject to tax "customs duty" or "tariff" on the imported value of the goods. Goods may be stored in a bonded warehouse or a Foreign-Trade Zone in the United States for up to five years without payment of duties. Goods must be declared for entry into the U. Many importers participate in a voluntary self-assessment program with CBP. Special rules apply to goods imported by mail. Examples include laptop computers used by persons traveling in the U. Rates of tax on transaction values vary by country of origin.

Goods must be individually labeled to indicate country of origin, with exceptions for specific types of goods. Goods are considered to originate in the country with the highest rate of duties for the particular goods unless the goods meet certain minimum content requirements. Extensive modifications to normal duties and classifications apply to goods originating in Canada or Mexico under the North American Free Trade Agreement. This lengthy schedule [88] provides rates of duty for each class of goods.

Most goods are classified based on the nature of the goods, though some classifications are based on use. Customs duty rates may be expressed as a percentage of value or dollars and cents per unit. Some duties are based in part on value and in part on quantity. Where goods subject to different rates of duty are commingled, the entire shipment may be taxed at the highest applicable duty rate. Imported goods are generally accompanied by a bill of lading or air waybill describing the goods.

For purposes of customs duty assessment, they must also be accompanied by an invoice documenting the transaction value. The goods on the bill of lading and invoice are classified and duty is computed by the importer or CBP. The amount of this duty is payable immediately, and must be paid before the goods can be imported. Most assessments of goods are now done by the importer and documentation filed with CBP electronically. After duties have been paid, CBP approves the goods for import. They can then be removed from the port of entry, bonded warehouse, or Free-Trade Zone.

After duty has been paid on particular goods, the importer can seek a refund of duties if the goods are exported without substantial modification. The process of claiming a refund is known as duty drawback. Certain civil penalties apply for failures to follow CBP rules and pay duty. Goods of persons subject to such penalties may be seized and sold by CBP. In addition, criminal penalties may apply for certain offenses.

Taxation | NYU School of Law

Criminal penalties may be as high as twice the value of the goods plus twenty years in jail. Foreign-Trade Zones are secure areas physically in the United States but legally outside the customs territory of the United States. Such zones are generally near ports of entry. They may be within the warehouse of an importer.

Such zones are limited in scope and operation based on approval of the Foreign-Trade Zones Board. Foreign goods may be used to manufacture other goods within the zone for export without payment of customs duties. Estate and gift taxes in the United States are imposed by the federal and some state governments. It is imposed on the estate, not the beneficiary. Some states impose an inheritance tax on recipients of bequests.

Gift taxes are levied on the giver donor of property where the property is transferred for less than adequate consideration. An additional generation-skipping transfer GST tax is imposed by the federal and some state governments on transfers to grandchildren or their descendants. The federal gift tax is applicable to the donor, not the recipient, and is computed based on cumulative taxable gifts, and is reduced by prior gift taxes paid.

The federal estate tax is computed on the sum of taxable estate and taxable gifts, and is reduced by prior gift taxes paid. Rates and exclusions have varied, and the benefits of lower rates and the credit have been phased out during some years. Taxable gifts are certain gifts of U. Taxable estates are certain U. For aliens, residence for estate tax purposes is primarily based on domicile, but U.

The taxable amount of a gift is the fair market value of the property in excess of consideration received at the date of gift. The taxable amount of an estate is the gross fair market value of all rights considered property at the date of death or an alternative valuation date "gross estate" , less liabilities of the decedent, costs of administration including funeral expenses and certain other deductions. State estate taxes are deductible, with limitations, in computing the federal taxable estate.

Bequests to charities reduce the taxable estate. Gift tax applies to all irrevocable transfers of interests in tangible or intangible property. Estate tax applies to all property owned in whole or in part by a citizen or resident at the time of his or her death, to the extent of the interest in the property. Generally, all types of property are subject to estate tax. Certain interests in property that lapse at death such as life insurance are included in the taxable estate. Taxable values of estates and gifts are the fair market value. For some assets, such as widely traded stocks and bonds, the value may be determined by market listings.

The value of other property may be determined by appraisals, which are subject to potential contest by the taxing authority. Special use valuation applies to farms and closely held businesses , subject to limited dollar amount and other conditions. Monetary assets, such as cash, mortgages, and notes, are valued at the face amount, unless another value is clearly established. Life insurance proceeds are included in the gross estate. The value of a right of a beneficiary of an estate to receive an annuity is included in the gross estate. Certain transfers during lifetime may be included in the gross estate.

Certain powers of a decedent to control the disposition of property by another are included in the gross estate. The taxable estate of a married decedent is reduced by a deduction for all property passing to the decedent's spouse. Certain terminable interests are included. Other conditions may apply. Donors of gifts in excess of the annual exclusion must file gift tax returns on IRS Form and pay the tax.

Executors of estates with a gross value in excess of the unified credit must file an estate tax return on IRS Form and pay the tax from the estate.

Navigation menu

Returns are required if the gifts or gross estate exceed the exclusions. Each state has its own forms and filing requirements. Tax authorities may examine and adjust gift and estate tax returns. Many jurisdictions within the United States impose taxes or fees on the privilege of carrying on a particular business or maintaining a particular professional certification. These licensing or occupational taxes may be a fixed dollar amount per year for the licensee, an amount based on the number of practitioners in the firm, a percentage of revenue, or any of several other bases.

Persons providing professional or personal services are often subject to such fees. Common examples include accountants, attorneys, barbers, casinos, dentists, doctors, auto mechanics, plumbers, and stock brokers. In addition to the tax, other requirements may be imposed for licensure. All 50 states impose vehicle license fee. Generally, the fees are based on type and size of vehicle and are imposed annually or biannually. All states and the District of Columbia also impose a fee for a driver's license, which generally must be renewed with payment of fee every few years.

Fees are often imposed by governments for use of certain facilities or services. Such fees are generally imposed at the time of use. Multi-use permits may be available. For example, fees are imposed for use of national or state parks, for requesting and obtaining certain rulings from the U. Internal Revenue Service IRS , for the use of certain highways called "tolls" or toll roads , for parking on public streets, and for the use of public transit. Taxes in the United States are administered by hundreds of tax authorities.

At the federal level there are three tax administrations. Most domestic federal taxes are administered by the Internal Revenue Service, which is part of the Department of the Treasury. Taxes on imports customs duties are administered by U. Organization of state and local tax administrations varies widely. Every state maintains a tax administration. A few states administer some local taxes in whole or part. Most localities also maintain a tax administration or share one with neighboring localities.

The Internal Revenue Service administers all U. Taxpayers generally file most types of tax returns by mail with these Service Centers, or file electronically. The selection of returns uses a variety of methods based on IRS experiences. On examination, the IRS may request additional information from the taxpayer by mail, in person at IRS local offices, or at the business location of the taxpayer. The taxpayer is entitled to representation by an attorney , Certified Public Accountant CPA , or enrolled agent , at the expense of the taxpayer, who may make representations to the IRS on behalf of the taxpayer.

Taxpayers have certain rights in an audit. Upon conclusion of the audit, the IRS may accept the tax return as filed or propose adjustments to the return. The IRS may also assess penalties and interest. Generally, adjustments must be proposed within three years of the due date of the tax return. Certain circumstances extend this time limit, including substantial understatement of income and fraud.

If the IRS proposes adjustments, the taxpayer may agree to the adjustment, appeal within the IRS , or seek judicial determination of the tax. In addition to enforcing tax laws, the IRS provides formal and informal guidance to taxpayers. IRS guidance consists of:.

TTB has six divisions, each with discrete functions:. It has a workforce of over 58, employees covering over official ports of entry to the United States.

CBP has authority to seize and dispose of cargo in the case of certain violations of customs rules. Every state in the United States has its own tax administration, subject to the rules of that state's law and regulations. These are referred to in most states as the Department of Revenue or Department of Taxation. The powers of the state taxing authorities vary widely.

Most enforce all state level taxes but not most local taxes. However, many states have unified state-level sales tax administration, including for local sales taxes. State tax returns are filed separately with those tax administrations, not with the federal tax administrations. Each state has its own procedural rules, which vary widely. Most localities within the United States administer most of their own taxes. In many cases, there are multiple local taxing jurisdictions with respect to a particular taxpayer or property.

Congress has enacted numerous laws dealing with taxes since adoption of the Constitution. These laws specifically authorize the United States Secretary of the Treasury to delegate various powers related to levy, assessment and collection of taxes. State constitutions uniformly grant the state government the right to levy and collect taxes.

Limitations under state constitutions vary widely. Various individuals and groups have questioned the legitimacy of United States federal income tax. These arguments are varied, but have been uniformly rejected by the Internal Revenue Service and by the courts and ruled to be frivolous. Commentators Benjamin Page, Larry Bartels and Jason Seawright contend that Federal tax policy in relation to regulation and reform in the United States tends to favor wealthy Americans.

They assert that political influence is a legal right the wealthy can exercise by contributing funds to lobby for their policy preference. Each major type of tax in the United States has been used by some jurisdiction at some time as a tool of social policy. Both liberals and conservatives have called for more progressive taxes in the U. Tax cuts were provided during the Bush administration, and were extended in , making federal income taxes less progressive.

U.S. Code: Title 26 - INTERNAL REVENUE CODE

Before , the American Colonies were subject to taxation by the United Kingdom, and also imposed local taxes. Property taxes were imposed in the Colonies as early as Most of the colonies and many localities adopted property taxes. All such power lay with the states. The United States Constitution , adopted in , authorized the federal government to lay and collect taxes, but required that some types of tax revenues be given to the states in proportion to population.

Tariffs were the principal federal tax through the s. By , state and local governments in fourteen of the 15 states taxed land.

Posted December 14, 2018

Delaware taxed the income from property. The War of required a federal sales tax on specific luxury items due to its costs. However, internal taxes were dropped in in favor of import tariffs that went to the federal government. However, the increasing importance of intangible property, such as corporate stock, caused the states to shift to other forms of taxation in the s. Income taxes in the form of "faculty" taxes were imposed by the colonies.

These combined income and property tax characteristics, and the income element persisted after in a few states. Several states adopted income taxes in The first federal income tax was adopted as part of the Revenue Act of Subsequently enacted income taxes were held to be unconstitutional by the Supreme Court in Pollock v. The federal income tax enacted in included corporate and individual income taxes. It defined income using language from prior laws, incorporated in the Sixteenth Amendment , as "all income from whatever source derived".

The tax allowed deductions for business expenses, but few non-business deductions. In the income tax law was expanded to include a foreign tax credit and more comprehensive definitions of income and deduction items. Various aspects of the present system of definitions were expanded through , when U. Income, estate, gift, and excise tax provisions, plus provisions relating to tax returns and enforcement, were codified as Title 26, also known as the Internal Revenue Code.

This was reorganized and somewhat expanded in , and remains in the same general form. Federal taxes were expanded greatly during World War I. In , Treasury Secretary Andrew Mellon engineered a series of significant income tax cuts under three presidents. Mellon argued that tax cuts would spur growth. Income tax rates were reduced significantly during the Johnson , Nixon , and Reagan presidencies. Significant tax cuts for corporations and all individuals were enacted during the second Bush presidency.

In , Congress adopted, with little modification, a major expansion of the income tax portion of the IRS Code proposed in by the U. Treasury Department under President Reagan. The thousand-page Tax Reform Act of significantly lowered tax rates, adopted sweeping expansions of international rules, eliminated the lower individual tax rate for capital gains, added significant inventory accounting rules, and made substantial other expansions of the law.

Federal income tax rates have been modified frequently. Tax rates were changed in 34 of the 97 years between and The first individual income tax return Form under the law was four pages long.

• Cross Exchange Rate and Depreciation/Appreciation of Currencies.
• Historical Dictionary of Naval Intelligence (Historical Dictionaries of Intelligence and Counterintelligence)
• Insanely Simple: The Obsession That Drives Apples Success
• R&D Creativity and Innovation Handbook
• Lives of female Mormons; a narrative of facts stranger than fiction (1860)
• Children of Wrath: Book 2 of Post-Apocalyptic Series (Land of Tomorrow)