introduction to tax
Chapter 1
I. History of Taxation
1861:
1894:
1909:
1913:
II. Criteria for Evaluating a Tax Structure
Adam Smith -canons of taxation
Equality
Convenience
Certainty
Economy
III. Tax Structure
Tax base:
Tax rates:
Incidence of tax:
Examples:
Income
$10
$20
$30
$3 (30%)
$6 (30%)
$9 (30%)
$3 (30%)
$7 (35%)
$12 (40%)
IV. Major Types of Taxes
Property Taxes
Transaction Taxes
Death Taxes
Gift Taxes
Income Taxes
Employment Taxes
Other U.S. Taxes
V. Formula for Federal Income Tax on Individuals
Figure 1.2
VI. Corporate Income Tax
Corporate Taxable Income = Income – Deductions
VII. State Income Tax
All but the following states impose an income tax on individuals:
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming
New Hampshire and Tennessee impose an individual income tax only on interest and dividends
VIII. Employment Taxes
FICA taxes
FUTA (Unemployment) taxes
IX. Other Taxes
Federal customs duties
Franchise taxes
Occupational taxes
X. Proposed Taxes
Flat tax
Value added tax
National sales tax
XI. Tax Administration
Internal Revenue Service (IRS)
Types of audits:
Correspondence audit
Office audit
Field audit
XII. Statute of Limitations
Statute of limitations offers a defense against a suit brought by another party after the expiration of a specified period of time
For Federal income tax purposes, the two categories involved relate to the statute of limitations applicable to:
For a deficiency assessment by IRS
Generally 3 years from the later of the due date or the filing date of the return
For material (more than 25%) omissions of gross income, time period is 6 years
No statute if no return filed or fraudulent return filed
For a refund claim by taxpayer
Generally 3 years from date return filed or 2 years from date tax paid, whichever is later
XIII. Interest and
I. History of Taxation
1861:
1894:
1909:
1913:
II. Criteria for Evaluating a Tax Structure
Adam Smith -canons of taxation
Equality
Convenience
Certainty
Economy
III. Tax Structure
Tax base:
Tax rates:
Incidence of tax:
Examples:
Income
$10
$20
$30
$3 (30%)
$6 (30%)
$9 (30%)
$3 (30%)
$7 (35%)
$12 (40%)
IV. Major Types of Taxes
Property Taxes
Transaction Taxes
Death Taxes
Gift Taxes
Income Taxes
Employment Taxes
Other U.S. Taxes
V. Formula for Federal Income Tax on Individuals
Figure 1.2
VI. Corporate Income Tax
Corporate Taxable Income = Income – Deductions
VII. State Income Tax
All but the following states impose an income tax on individuals:
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming
New Hampshire and Tennessee impose an individual income tax only on interest and dividends
VIII. Employment Taxes
FICA taxes
FUTA (Unemployment) taxes
IX. Other Taxes
Federal customs duties
Franchise taxes
Occupational taxes
X. Proposed Taxes
Flat tax
Value added tax
National sales tax
XI. Tax Administration
Internal Revenue Service (IRS)
Types of audits:
Correspondence audit
Office audit
Field audit
XII. Statute of Limitations
Statute of limitations offers a defense against a suit brought by another party after the expiration of a specified period of time
For Federal income tax purposes, the two categories involved relate to the statute of limitations applicable to:
For a deficiency assessment by IRS
Generally 3 years from the later of the due date or the filing date of the return
For material (more than 25%) omissions of gross income, time period is 6 years
No statute if no return filed or fraudulent return filed
For a refund claim by taxpayer
Generally 3 years from date return filed or 2 years from date tax paid, whichever is later
XIII. Interest and