Tax law refers to the rules, regulations, and policies that govern the tax process. The tax process includes the imposition of tax by the government on:

There are many different areas of tax law, including but not limited to:

  • Income Tax Law: Federal tax law is based on the Internal Revenue Code (“IRC”), which is in Title 26 of the U.S. Code. It addresses the rules and regulations associated with the federal income tax, which is a charge on nearly all Americans or businesses that have earned income. It is important to note that federal income tax applies to everyone, including those who are not considered to be U.S. citizens, as long as they have earned income from sources within the U.S. Income tax is intended to increase revenue that is needed in order to operate the government, and to offer various services.
    • The majority of taxpayers pay these taxes by having them withheld from their paychecks by their employers, who then send that amount to the IRS. The amount of tax withheld is sometimes insufficient to cover the entire amount of federal income tax liability, in which case the taxpayer must also send a payment to the IRS by April 15th. If you are unable to pay the entire amount of federal income tax that is owed, you can inform the IRS in order to arrange making installment payments;
  • Corporate Tax Law: Corporate tax law addresses the ways in which incorporated entities are taxed. Such entities include both businesses and not-for-profit charities. Corporate tax laws are different from those involving the taxation of individuals, but in certain instances can also have an impact on individual taxation. An example of this would be the pass-through taxation of S corporations. Although the corporation is not required to pay taxes, its shareholders must pay them instead.
    • Corporate tax law also taxes various types of corporations, including not-for-profit companies and partnerships. An example of this would be how a not-for-profit corporation that is involved in charitable or religious activities would be eligible for 501(c)3 tax-exempt status. The IRS treats partnerships as pass-through entities, meaning that all of the partnership’s profits and losses “pass through” to the partners, who are then taxed on their share of the profits. If the partnership has realized a loss, the partners deduct their portion of the loss by claiming it on their individual tax returns; and
  • International Tax Law: International tax law addresses the ways in which individuals and businesses are affected by the tax laws of various countries. While some countries impose tax only on local income, other countries impose tax on worldwide income.
    • Generally speaking, when there is a tax on worldwide income, there is a reduction of tax or a provision for foreign credits for taxes paid to other jurisdictions. As such, corporations that have offices in various countries generally seek the advice of international tax specialists in order to reduce their worldwide tax liabilities. Both lawyers and accountants may offer advice associated with issues relevant to international tax.

What Are Property Taxes?

Property taxes are taxes that are assessed on property that you own. In many states, real property or real estate is taxed on an annual or quarterly basis. However, some states also tax personal property, such as your motor vehicle.

The amount of property taxes that you must pay largely depends on the state in which you live. While each state has a different tax rate for property, taxes are generally based on a percentage of the property’s appraised or assessed value.

It is most common for local officials to determine the value of the property by performing an appraisal or assessment of the property, and then applying the tax rate. In many areas, your property tax bill may include:

  • County or state taxes;
  • City or town taxes; and
  • School taxes.

What Is Fair Market Value? How Is It Different From The Assessed Value?

It is important to note that the assessed value of your property as determined by the tax office does not have anything to do with the fair market value of your property. Fair market value is the artificial price that a court will determine some real estate, or interest therein, is worth. Fair market value is what a buyer would be willing to pay for the property on the open market—with no undue influence or pressure from a seller.

However, in terms of property taxes, the value of the property is not necessarily based on the fair market value. Rather, the tax value of the property is the assessed value; meaning, the value that is assigned by the town or county in which the property is located. While the two figures might be the same in some areas, it is more common that the assessed value of a piece of property is lower than the fair market value.

The assessed value of the property is only used for tax purposes, and is calculated by considering comparable home sales and inspections in the nearby area. It is not intended to be a standard for determining what the property would be worth on the market.

How Do I Pay My Property Tax Bill?

In general, the government entity that is responsible for assessing property taxes will send out the tax bills on an annual basis. If you purchased your home with a loan from a lender, such as a bank or credit union, and have an established escrow account for the purpose of paying the property taxes, your bill will be paid directly through the escrow account.

If you do not have an escrow account with a lender, you are responsible for ensuring that your property taxes are paid on time to the correct government office. Generally speaking, you can submit a paper check to the tax office, but many states also offer an online payment option.

Missing property tax payments can result in penalties, late fees, and fines on the bill. Additionally, if you do not pay your property taxes, the government may put a lien on the property which can have some negative repercussions if you try to sell the property later on.

If you are not sure whether your taxes have been paid, you should contact your local tax office in order to verify. Additionally, you may be able to check on your property tax bills online. Otherwise, you should call your local tax office in order to ensure that your taxes are paid up and your account is current.

What If The Government Valued My Property Incorrectly?

If you believe that the government has incorrectly valued your property when calculating your property taxes, you should contest the valuation of your property. Each state has its own, different process for contesting the property tax values; in general, most offer a hearing in front of a committee from the entity that was responsible for land appraisals. The committee or hearing body will make a determination and rule on whether the original appraisal value of the property was correct.

While at the hearing, you will need to present evidence that explains why you believe the government has incorrectly valued your property for tax purposes. This can include:

  • Details about the age, size, and condition of your home;
  • The acreage of the surrounding land; and/or
  • A comparison of your home to other similar properties in your area.

If other similar properties in your area pay lower tax bills, this could prove to the committee that your property was improperly valued. If you do compare your home to others in your area, however, it is important that you ensure that the home you are using for comparison has the same tax classifications. What this means is that it is a similar age, size, and has similar characteristics.

If you disagree with the ruling of the committee, you may appeal the decision. Depending on the state in which you live, property tax determinations can be appealed either to a governing body that specifically handles these appeals, or to a state court.

Do I Need An Attorney For Issues With Real Estate Taxes?

If you have any questions regarding real estate taxes, you should speak with an experienced and local tax lawyer.

An attorney will be best suited to helping you understand your state’s specific laws regarding property taxes. They will also be able to represent you in court, as needed, should any issues arise.