08 Feb Tax Law
What is Tax Law?
Definition: Tax law refers to the rules made by the government to collect revenues. Taxes can be imposed on individuals, businesses, corporations, and other legal entities.
What does Tax Law mean?
Taxes are collected by the federal, state, and local governments on the basis of the applicable tax laws. Most of these laws are made by the U.S. Congress and the state legislatures.
Federal tax collections in the U.S. run into trillions of dollars. According to details provided on the website of the Federal Reserve Bank of St. Louis, the federal government’s tax receipts in the third quarter of 2018 (the latest period for which data has been provided) was $1.97 trillion. On an annualized basis that’s almost $8 trillion.
There are state and local laws as well. So, a person may have to pay taxes to three different authorities – the federal government, the state government, and the local government.
Example of Tax Law
These are some of the different types of taxes that the government levies:
⇨ Income tax – this is an important source of revenue for the government. The Internal Revenue Service (IRS) is responsible for collecting income tax from individuals and businesses. The IRS is a bureau of the Department of the Treasury.
⇨ Tax paid by corporations – large firms are required to pay a specific percentage of their net income as taxes.
⇨ Capital gains tax – if an asset is sold for an amount that is greater than the price at which it was purchased, the owner may be required to pay capital gains tax.
⇨ Estate tax – this is the tax payable on the property and assets of an individual upon his or her death. There are various deductions and exclusions available under the law.
Tax law is the collection of rules made by the government to collect revenues from individuals and businesses.