Tax Law
Explore federal and state taxation frameworks, IRS audits, business tax obligations, capital gains, and taxpayer rights under the Internal Revenue Code.
9 states have no state personal income tax. State sales, excise, and corporate franchise taxes vary widely across all 50 states.
Understanding Tax Law in the United States
Tax law encompasses the constitutional, statutory, regulatory, and common-law rules governing taxation by federal, state, and municipal governments. Tax law governs individual income, corporate profits, payroll, sales, property, capital gains, and international transactions, administered at the federal level by the Internal Revenue Service (IRS).
Primary Governing Authorities in Tax Law
Internal Revenue Code (Title 26 of the U.S. Code)
The primary federal statutory tax law passed by the United States Congress.
Treasury Regulations
Official interpretations and administrative regulations issued by the Department of the Treasury.
United States Tax Court
Specialized judicial forum permitting taxpayers to dispute IRS deficiency notices before paying disputed taxes.
Key Legal Scenarios & Decision Thresholds
What are the differences between tax deductions and tax credits?
A deduction lowers your taxable income, while a tax credit directly reduces your tax liability dollar-for-dollar.
What triggers an IRS tax audit?
Audits are triggered by computer scoring (DIF scores), substantial income mismatches, unusually high deductions, or random statistical sampling.
What are the tax consequences of independent contractor 1099 income?
Contractors must pay self-employment tax (15.3% for Social Security and Medicare) in addition to standard income taxes.
In-Depth Legal Guides in Tax Law
New guides for Tax Law are currently in editorial review.
Frequently Asked Questions in Tax Law
What is the statute of limitations for the IRS to audit a tax return?
The IRS generally has three (3) years from the filing date to assess additional tax. This increases to six (6) years if gross income is understated by more than 25%, and there is no time limit for fraudulent or unfiled returns.
What is an Offer in Compromise (OIC)?
An agreement between a taxpayer and the IRS that settles a tax liability for less than the full amount owed, based on inability to pay.
What should you do if you cannot pay your taxes on time?
File on time to avoid failure-to-file penalties, and request an installment agreement or payment plan from the IRS.