Income Tax Law

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What Is Income Tax Law?

Income tax is a percentage of your earnings. These taxes are due to the state and federal governments every year on April 15. The amount of tax you pay is generally a function of your income minus any deductions that the tax law allows. The amount of taxes you have to pay is set by legislators. The taxes are collected by the Internal Revenue Service (IRS).

Income tax law is an area of finance law that deals with filing taxes and handling disputes with the IRS.

What Happens If I Don't Pay All of My Taxes?

You are required to pay taxes by law. If you don't, the government can demand the money you owe and even put you in jail for tax evasion. If you underpay your taxes, you'll probably have to face a tax audit.

What Is an Income Tax Audit?

When the IRS thinks that you haven't paid your fair share of taxes, they may perform an "income tax audit" on your tax return. They usually come to this conclusion when they think either you 1) haven't reported all your income, or 2) made deductions you shouldn't have.

In an income tax audit, you meet with an IRS officer who asks you about your tax return. You'll have to convince the officer that you fully reported all your income and that all the deductions you declared were appropriate. If you succeed, your tax return will be closed and you have nothing to worry about. If you don't succeed, then you may be subject to additional taxes and monetary penalties. Therefore it is very important to keep your expense records that substantiate the deductions that you claimed on your tax return.

After your audit, if the IRS demands payment of less than $50,000 in taxes during a single year, you can go to tax court. In tax court, you can dispute the amount of money you owe. The judgment of the tax court is final.

What Is an Offer in Compromise?

An offer in compromise is an agreement between an income taxpayer and the IRS to allow the taxpayer to pay less than the full amount of back taxes owed. You should speak to an attorney about whether an offer in compromise is an option for you.

What Is an Installment Payment Agreement?

Many income taxpayers are unable to pay the full amount of tax they owe. In some instances an installment payment agreement can be reached between the taxpayer and the government to pay back taxes in installments. A lawyer with income tax experience can help negotiate an installment payment agreement.

Do I Need an Income Tax Law Attorney?

Tax law can be very difficult to understand. To make matters worse, tax law changes every year. An attorney can help you understand current tax law and how it affects your income tax problem. If you haven't paid income taxes for several years, a lawyer can assist you by negotiating with the IRS for an offer in compromise or installment payment agreement. If you need to go to tax court, an attorney can represent you and help minimize your income tax bill. An expert income tax law attorney can protect your rights and interests in the event of income tax audit.

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Last Modified: 05-08-2014 12:10 PM PDT

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