Ask a Tax Lawyer about the Tax Law

Originally posted by hotpinkurinalmint
reply to post by tgidkp

 

You cannot leave it up to people to pay on their own volition. Many people would not pay their tax bills unless there was some sort of coercion or threat of coercion in place. Also, taxes are withheld from wages so the tax man can get his cut before the bar tender.

Nice to hear from some one who knows!


Where taxes are concerned, I happen to be on the other side; I work for one of my State's revenue agencies (there are three in my state).


Overall, I have to applaud your responses on this forum. But I must take minor exception to part of what you've said above. To wit:

"Also, taxes are withheld from wages so the tax man can get his cut before the bar tender."

In my State at least, taxes are withheld from an employee's wages by the employer. Amounts withheld for Personal Income Tax are then remitted to the State's Employement Development Department in a kind of escrow account.

The State's revenue agency, the agency I work for, has no access to these funds until and unless the taxpayer files a tax return and provides the proper authorizing document (usually a W-2), which can then be presented to the EDD allowing the release of said funds for the purpose of paying the taxpayer's tax liability.


In essence, the State is actually the last to get their cut.

However, having been burned a sufficient number of times in the past, the State has gotten wise enough to insure that it does indeed get its cut.

[edit on 5-1-2010 by Bhadhidar]

reply to post by Jean Paul Zodeaux


You are right that the definition of "income" in the code itself is circular. It However, the code is relatively clear as to what is not "income." For example, if you inherit money this is not income. It also lists several exclusions like fringe benefits and such. As a rule of thumb, pardon me for the double negative, if something is not not-income, then it is income.

reply to post by Bhadhidar


Interesting.

Correct me if I am wrong, even though the state does not get the money right away, the money is nevertheless set aside for the state. The taxpayer cannot go out and spend his entire paycheck without the tax man getting his future set aside.

Originally posted by hotpinkurinalmint
reply to post by Jean Paul Zodeaux

 

You are right that the definition of "income" in the code itself is circular. It However, the code is relatively clear as to what is not "income." For example, if you inherit money this is not income. It also lists several exclusions like fringe benefits and such. As a rule of thumb, pardon me for the double negative, if something is not not-income, then it is income.

Okay, don't get angry with me my friend and I am truly sorry, but now I am more confused than ever! I have not argued that the definition of "income" in the code is circular, what is circular is "taxable income" that leads to "gross income" which is defined as being "all income from whatever source derived..." but what is income? Where is income defined? Do you understand? I am provided with a term "taxable income" and I find there is a statutory definition for that term which leads me to "gross income" and I find there is a statutory definition for that word which leads me to "income" and then the definitions stop? What the hell is that?

What kind of tax law would go about laying a tax upon income by first taxing "taxable income" which means "gross income" which means income?
There's something really fishy in Denmark I've heard, but Hamlet ain't got nothing on the tax code. And, to only further confound the situation whenever I start asking why this is, immediately those in the know begin accusing me of playing semantics! Either I am insane or I am not, and if I am not, then something else is.

So, let's back up and go back to "taxable income" and let's assume that I am not going to itemize my deductions, what then?

reply to post by hotpinkurinalmint



The withheld funds are set aside for the use of the taxpayer, not the State.

The amount (if any) that is withheld is determined by the taxpayer through the information the taxpayer provides on his/her W-4, which determines how much the employer withholds from each paycheck.

An employee can, at anytime, change the information on the W-4; therefore, change the amount withhheld.


And, as with any kind of "escrow" account, niether party is allowed access to the funds held until and unless the provisions of the account are met.

hey chief

My father passed in july bless him...

My stepmother is the executor of his estate (I BELIEVE)

I received a copy of the will from their lawyer

WILL stated I was to inherit $5,000

I did not contest it and let the time expire to do so - 90 days-

Does this mean I have to hit up my bitchy (sorry its the truth) and devastated Step Mom directly? Problem is I have sisters that she CAN restrict my access to if I enrage her, which is very easy to do...

And if by a miracle of the universe I ever see a cent, would I have to pay taxes if I had ZERO/ $.00 income in 2009?





[edit on 6-1-2010 by Janky Red]

reply to post by Jean Paul Zodeaux


To define "income," the law uses the plain and ordinary meaning of the term "income." The plain and ordinary meaning of the term income, as it is listed in my Webster's dictionary is "money and other benefits received."

Statutes sometimes take the time to define a specific term, but more often than not a word that appears in a statute is not defined. Statutes have to assume the reader of the statute has a vocabulary.

reply to post by Janky Red


Without knowing the size of your relative's estate at death, the size of the gifts your relative made, or other activity I cannot comment whether the estate would be subject to an estate tax. FederalEstate taxes are paid by the estate, not the devisees. Your gift may also be subject to local and/or state estate taxes, which I cannot comment on.

Keep in mind, as far as the federal estate tax is concerned, it only affects a VERY small number of people. There has been a lot of controversy about the "death" tax. The fact of the matter is only the very rich (those with over $3.5 million in their estate) pay the estate or "death" tax. This means that 99% of the population does not pay it.

As an aside, the controversy over the "death" tax is a conspiracy that most of you have missed the boat on. 40% of the US population thinks they have to worry about a tax that only affects the wealthiest 1%. In short, people have been duped into fighting for rich people once again.

Originally posted by hotpinkurinalmint
reply to post by captaintyinknots

 

You are right. Nobody should be taking tax advice over the internet which is why I am not giving any.

You are also right. I am a big sellout whore. However, the difference between me and you is that I understand the things I criticize and you do not. There are portions of the tax law I do not agree with. For example, hedge fund managers can make millions of dollars a year in compensation, yet they only get taxed at a 15% tax rate instead of a marginal rate of 39.6%.

Perhaps conspiracy theorists should be focusing on anomalies like this rather than posting all sorts of garbage about who the income tax is completely voluntary. This is where the conspiracy lies.

This is a VERY arrogant statement to make, considering I havent said a think about my understanding of tax law, or even my feelings on the subject.

yet you immediately make this a personal thing, about me, and not the topic.

Again, you are here to toot your own horn, and nothing else. It is quite obvious, and made even moreso when you make statements such as the one in bold above.

Originally posted by hotpinkurinalmint
reply to post by Janky Red

 

Without knowing the size of your relative's estate at death, the size of the gifts your relative made, or other activity I cannot comment whether the estate would be subject to an estate tax. FederalEstate taxes are paid by the estate, not the devisees. Your gift may also be subject to local and/or state estate taxes, which I cannot comment on.

Keep in mind, as far as the federal estate tax is concerned, it only affects a VERY small number of people. There has been a lot of controversy about the "death" tax. The fact of the matter is only the very rich (those with over $3.5 million in their estate) pay the estate or "death" tax. This means that 99% of the population does not pay it.

As an aside, the controversy over the "death" tax is a conspiracy that most of you have missed the boat on. 40% of the US population thinks they have to worry about a tax that only affects the wealthiest 1%. In short, people have been duped into fighting for rich people once again.

Thank you very much

Please this one last question

How do I take payment, from the lawyer or Stepmother, who do I approach TYPICALLY?

Originally posted by hotpinkurinalmint
reply to post by Jean Paul Zodeaux

 

To define "income," the law uses the plain and ordinary meaning of the term "income." The plain and ordinary meaning of the term income, as it is listed in my Webster's dictionary is "money and other benefits received."

Statutes sometimes take the time to define a specific term, but more often than not a word that appears in a statute is not defined. Statutes have to assume the reader of the statute has a vocabulary.

The simple truth about this particular law is that a tax was not laid upon income but was laid upon "taxable income". There is a reason for that, and it was not done so out of some arbitrary or insane method of legislation. This is why I have asked whether the tax on income is a direct tax or an indirect tax and this is exactly why the question is wholly relevant.

Congress can't just play games with the law nor can judges! Isn't it true that SCOTUS has explained why income is not defined within the Internal Revenue Code and isn't it also true that they have explained the nature of this income tax in terms of direct or indirect?

i bought a car for $13,000 i put in about $30,000 into it, and then i sold it for $80,000 . The buyer wired me the money and i shipped him the car. i dont have a business or anything, im assuming this goes just as any other vehicle being sold and doesnt count as income correct? i have sold many vehicles but mostly around $15-$20K, profit a little here and there, but thats why buyer pays the DMV tax and i pay nothing correct? plus being wired $80,000 would surely raise a flag on me with IRS right?

Does not signing a personal tax form, where they have written out the perjury claim rider and the penalties for not filling out your tax returns break the tenant of self incrimination. Hence;if you fill it out wrong, you are guilty of perjury and if you do not fill it out, you are guilty of another statute.

If it does, how does the tax court get away with this.

If it does not, what constitutional authority is this tied to. Please state case for clarification.

Now, with the tax code being 1000's of pages long in length, no one not trained in tax accounting or tax law can in anyway, be considered able to follow these draconian laws. This would than require someone to hire a state sanctioned arbiter (accountant or lawyer) to file the taxes because of the instituted complexity of the code itself.

Wanted to add, in regards to previous paragraph. The situation in above, sound like if you have a Mafia style protection racket that you are required to pay 20% of your profits to said mafia, then on top of that, you are required to pay the collector(lawyers and accountants) an additional fee, to have the honor of being ripped off in the first place. Please tell us some of the stories from your law school days where your professor's made jokes on behest of us. I am sure you have probably in the neighborhood of 25 stories minimum. Please give us the satisfaction of telling us a couple of these stories.

Does this not break the tenant of the Pursuit of Life, Liberty and the Pursuit of Happiness(property)? Has this been argued in US Federal Tax Court?

Has the complexity of the code requiring said arbiters been argued?

Please state all cases referenced for clarification.


[edit on 1/6/2010 by endisnighe]

How do auditors choose the people that they audit?

Is the choice partially determined by the amount of money that the auditor will collect ?

Do middle income people get chosen or just the upper income?

reply to post by NickT916


When you sell something, the gain you recognize is the amount realized minus your basis in the property you sold. Generally speaking, your basis of any property you own is the amount of money you paid for it.

To take the example of a car, if I buy a car for $15,000 then sell it for $20,000, I realized $5000 gain. This gain is income. On the other hand, if I buy a car for $15,000, and sell it at a lower price as is often the case, I realize no income.

reply to post by endisnighe


Criminal law is outside of my area of expertise, but from what I understand the 5th amendment privilege against self incrimination has only been extended to two circumstances: (1) criminal defendants do not have to testify at their own trials and (2) police cannot interrogate people they hold in custody without giving the Miranda warnings. That being said, the signature line on the tax form does not violate the Fifth amendment as it has been applied by the courts.

As far as the tax law being complex, you are right. However, there are forms like the 1040EZ which are relatively easy to fill out. 1040's are also easy to fill out. It only gets complicated when you want to take complicated deductions, own your own business, or have engaged in many complicated transactions. You also have to keep in mind large portions of the code do not apply to everyday individuals. For example there are several statutes which govern corporations, partnerships, S corporations, and banks.

The tax law's complexities are a blessing and a curse. One one hand, the complexity not only confuses many people, but it also offers potential abuses to people with the resources to exploit those abuses (or lobby Congress to create abuses). On the other hand, a complex code can also prevent certain abuses or avoid harsh results.

Many people like the idea of a "flat tax." This seems fine, but can be unduly harsh in certain circumstances and unduly lenient in others. For starters, we have to define what the flat tax would tax. If a store owner pays $100K a year for inventory and sells $200K a year worth of inventory, do we apply the flat tax based on the gross revenue or a net revenue. It might be harsh to tax him on $200K. What other expenses will we allow the store owner to deduct? Can he deduct his electricity bill? What about employee salaries? What about his student loan payments?

Now let us assume are store owner decides to sell his business for $500K. How much should the owner be taxed on then? Should he pay $500K? This might be harsh as the store owner has probably paid some money out of his own pocket for the business?

So as you can see, if we would implement a "flat tax" we will need to start making rules to define what a person is supposed to pay as they engage in transactions like selling inventory, selling a business, or earning wages.

reply to post by Wildbob77


I never worked for the IRS so I could not tell you exactly what goes into picking who gets audited. Some audits are purely random. Other people get audited because their tax returns have "red flags." For example, if you are living in an affluent zip code and you are claiming a small amount of income your return might get a "red flag."

I could not tell you whether middle class people get more scrutiny than wealthy people. I know from limited empirical experience the IRS seems to dedicate more resources to litigating with wealthy people and large businesses just because there is a greater prize to be won.

reply to post by Janky Red


The executor generally has the legal obligation of distributing the estate's assets.

I would argue that there is no "TAX LAW" only implied "TAX CODE"

What Federal, State, District or Civil Court has jurisdiction to hear a case about
taxes?

Why is the government so extensively protective, doing all they can to avoid

hearing cases about "TAX LAW"?

How is it that wages from personal work performed are subject to FEDERAL tax?

Federal Income Tax was only supposed to be a tax on Certain Privileged Federal Employees
and that was only supposed to be temporary related to recovery from war.

Define "Federal Income"

Define "Federal Employer"

Define mass deception





[edit on 7-1-2010 by FallenFromTheTree]

reply to post by hotpinkurinalmint

So as you can see, if we would implement a "flat tax" we will need to start making rules to define what a person is supposed to pay as they engage in transactions like selling inventory, selling a business, or earning wages.

A perfect example of someone that believes that labor, is a product to be taxed like a good.

Can you show me the EXACT code or law that states LABOR is taxable income.

I would assume by your discussion with Jean Paul that you cannot.

It could be I am a little frustrated with the government's position that I need to be taxed on my labor, where a Corporation is allowed to deduct expenses but an individual is not.

For your information only, I have had 3 semesters of Accounting.

Here is a good question.

Can I as an individual, incorporate myself, then use all of my expenses such as vehicle, housing, food, entertainment, and all other life expenses of my day to day life to expense out my gross income to indicate my net income?

In other words, take my take home pay before any deductions from government, put that on my accounts receivable side, then place ALL of my expenses on the accounts payable side, then the remaining balance be my NET INCOME.

This is how CORPORATIONS are allowed to operate, which have been given all of the benefits of personhood, without all of the negative aspects of actually being a person.

[edit on 1/7/2010 by endisnighe]