Taxation Law
Taxation law deals with the laws and regulations governing taxes. Taxes are paid by corporations and individuals in order to fund federal, state, as well as municipal services and programs that serve the population of a municipality, state, or country. For example, property taxes are used to pay for running the school systems in most states, regardless of whether you have school age children or not.Taxes are not voluntary; they are mandatory. Citizens must obey tax laws or face punishment by fines or imprisonment. Many criminals are sent to jail not for their crimes, but rather for breaking the tax laws and not paying their taxes.
Types of Taxes
There are several different types of taxes that must be paid to local, state, and federal governments. The most common types of taxes affect:
- Income
- Property
- Estates
- Corporations
- Cigarettes
- Tobacco
- Gasoline
- Alcohol
- Local sales
Income Taxes
Income taxes are paid on any income a person makes, whether it stems from hourly wages, a salary, rental properties, or interest and dividends. There are two types of income taxes:
- Individual taxes on individuals and families
- Corporate taxes on business organizations
Most income taxes are direct taxes. The income is taken directly from, or paid by, the individual or corporation. Estate taxes are another type of income tax that is paid by the heirs, and is based on the value of a person’s estate after he or she is deceased.
Property Taxes
Property taxes are also considered direct taxes. They are paid based on the value of a property. Examples of property include a home, farm, manufacturing plant, land, or business equipment that is used in the office. Sales and gasoline taxes are levied on individuals or corporations when they buy goods. The so-called “sin taxes” for alcohol, cigarettes, gambling, and tobacco are another type of tax that most people pay. Again, these are considered direct taxes.
Practicing Taxation Law
Most attorneys practicing taxation law work for law firms, accounting firms, corporations, non-profit organizations, government agencies, or consulting groups. They must keep up-to-date with current taxation laws, which change quite often. Tax attorneys must also have in-depth understanding of the tax code in the United States as well as the state and municipality in which they are licensed to practice law. Some of the more common areas of taxation practice are estate planning, business tax planning, employee benefits, pensions, profit sharing, tax audits, acquisitions, and mergers.
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