Tax Law Essay

956 Words4 Pages
Federal taxes are known by many of us as the money that comes out of our pay checks and given to “Uncle Sam”. “Uncle Sam” is also known as the IRS. The IRS is the branch of Treasury Department that is responsible for administrating the federal tax law. Federal taxes help the government pay their expenses within the fiscal year. In order to know how much one owes to the government, tax accounting is preformed. Throughout this paper the tax laws and accounting will be discussed. This will included the objectives of modern tax statues along with the difference between Generally Accepted Accounting Principles (GAAP) and tax accounting. In addition, both tax evasion and tax avoidance will be compared. Objectives Federal income taxes are paid by business, investors and individuals through out the United States. These taxes are a dominant form of taxation in the US and helps aid the government in the payment of expenses. In 1931, the Sixteenth Amendment was passed by the Supreme Court to allow “Congress to lay and collect taxes on income, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration” (University of Phoenix, 2007). Modern tax statues include the numerous amendments that were made between 1913 and 1939 to the original law. These additional amendments were passed as separate revenue acts. Due to these amendments, many tax deductions that were allowed under previous laws were reduced or eliminated. The main objective of modern income tax laws is to improve the fairness of the federal income tax system, which allows for fair collection of tax revenues. These laws restore the confidence in the system by removing inequalities. In addition, other objectives include: 1. Stimulating investments. This law is a fiscal policy tool to stimulate private investment, reduce

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