Tax returns can be subject to review {audit, tax}. Audits question statements on tax returns.
process
An Internal Revenue Service (IRS) letter asks for records supporting tax-return statements. You must send requested records and a statement defending tax return or request an appointment with an IRS agent to deliver them.
If IRS rejects answers, you can appeal for review with IRS agent at IRS District Director office. However, burden of proof is on you. If review goes against you, you can appeal to Audit Division, then District Director, then Appellate Division of Office of Regional Commissioner, and then tax court.
field audit
Auditors can come to home or business in cases of complicated returns.
probability
Tax returns are more likely to have an audit if you have income greater than $60,000, large deductions, many deductions, cash income, casualty claims, conflict between reported and W-2 income, or conflict between 1099 and reported interest or dividends. Auditing is by random selection or in response to an informer who thinks people broke tax law.
time
If people did not file a tax return, IRS has unlimited time. IRS must question tax returns within three years of due date, unless it suspects fraud or gross income misstatement. If IRS claims fraud or gross misstatement, limit is six years for criminal charges. In case of fraud, IRS has unlimited time to attempt to recover due tax, plus penalties and interest.
IRS Special Agents investigate crime. Penalties {tax penalty} exist for willfully failing to file returns, evading taxes, and filing intentionally false returns. Civil penalties can be up to 50% of tax.
Private businesses must pay tax {business tax} on profits. Private businesses can be corporations {corporate tax}. Businesses take tax deductions for depreciation, inventory changes, and investment credits.
People must pay tax {customs tax}| on property value brought into country directly from another country, unless bought in duty-free zones and so marked.
People must pay income tax {gift tax}| on gifts received, because gifts represent income. Gifts up to $10,000 from relatives are exempt.
People can pay tax {income tax}| on wages, salaries, interest, capital gains, gifts, bequests, tips, and other income.
withholding
Employers typically send part of paychecks to government {withholding, income}.
date
USA income tax is due on April 15, for preceding fiscal year.
form
USA national income tax form {Form 1040} {1040 Form} has various lettered supplements, used for calculating deductions and taxes on businesses, rentals, royalties, interest, dividends, capital gains, child care, and moving.
statements
In January, USA W2 form shows wages or salaries paid and deductions taken by employer. This form must accompany the 1040 tax form. Statements of income from banks, mutual funds, and companies {form 1099} {1099 form} do not need to accompany tax form.
rate
Income tax rate varies from 0% to 36% for federal government and from 0% to 12% for state government.
Taxes {surtax} can be percentages of original tax.
City and/or county tax offices collect tax {property tax} on properties owned, based on current market value, not purchase price. Property has assessment each year.
types
Property types subject to taxation include houses, land, trailers, boats, and cars.
tax
Taxes are typically due in the fall. Taxes are a percentage of market value, typically 100%. Property taxes range from 1% to 3% of market value.
lien
Counties or states can place liens {tax lien} to pay taxes on real property. Counties or states usually wait for tax, sometimes paid by new purchaser, rather than foreclosing.
City or county officials {assessor} can determine property values {assessment}.
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Date Modified: 2022.0225