Tax Law and Accounting
In today's society income taxes are something in which almost everyone is familiar. However, the tax law and general purpose of income taxes is something in which the general society gives little thought. In addition, few tax preparers are aware that differences exist between the Generally Accepted Accounting Principles (GAAP) and tax accounting, not to mention the ramifications of avoiding or evading to proper complete the reporting of income taxes. This paper will discuss the objectives of modern tax law, the differences between Generally Accepted Accounting Principles (GAAP) and tax accounting as well as the differences between tax evasion and tax avoidance.
Objectives of Modern Tax Law
William Perez explains that income taxes are paid because the United States has to pay for such expenses as "schools, roads, hospitals, the military, government employees, national parks, and so forth" (2007, ¶ 2) and the process in which the United States pays for these expenses is through income taxes. The United States requires that the people and companies with earned income pay to the government a portion of the income earned. This portion of earned income paid to the government helps to pay for the many expenses needed by our society.
The process in which income taxes are paid is simple. Tax laws are written by the President and Congress of the United States. Enforcing the laws written by the President and Congress is the responsibility of the Internal Revenue Service (Perez, 2007), an organization that was once named the Bureau of Internal Revenue but was changed to the Internal Revenue Service (IRS) in the 1950s (IRS, Brief History of IRS, n.d., ¶ 4). The IRS is responsible for collecting taxes, issuing refund...
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Individual. 2007 edition. Pearson Prentice Hall, Upper Saddle River, NJ
The majorities of financial advisers do not have a formal accounting or tax background and thus have some challenges to overcome when reading tax returns of their clients. However they are still asked to help their clients in future planning. Since most accounting is to be done based on compliance with GAAP it would make sense to think that tax accounting should also be done this way, however both the IRS and the courts have stated that compliance with GAAP is of little significance when dealing with the objectives of tax accounting. The objectives of both accounting methods are simply different, because the primary goal of financial accounting is to provide useful information to all stakeholders and the primary goal of the income tax system is the equitable collection of revenue. Because of these differences it can be said that the users of accounting information are different for both methods. The assumption for financial accounting is the going-concern and the tax accounting system ignores this assumption. These differences give us the concept of timing differences and permanent differences. Understanding...
Taxation is a system that the government uses to gain money, they gain this money to support the government and provide public services. The government may secure their profits without taxation from natural resources, products, or services. (Taxation 1)
Taxes are the dollars that we pay to government to supply the services that are not or can not be provided through the free enterprise system. Taxes have been around since the beginning of organized societies. They come in various forms. Most common are income taxes both federal and local government. These taxes are assessed on the amount of income a person earns. Other taxes come in the form of user taxes; these taxes are imposed on the people that are using the goods being taxed, such as gas tax, alcohol tax, sales tax, and luxury taxes. Property taxes make up the major revenues for local and city governments. Furthering the burden of taxation are taxes that are attached to such bills as utility bills and rental expenses.
Taxation is as old as civilization itself. Kings and governments collected tribute from their peasants and citizens even before the invention of currency. Taxes in a form of cattle and labor were popular. However, in the modern era every industrial nation taxes their citizens though multiple ways. Federal income tax and sales tax are some examples of government taxation. Taxation is essential for any government, as it is their primary source of income. For instance, the Internal Revenue Service, a U.S. government agency responsible for tax collection, “receives over 140 million individual tax returns and collects over $950 billion in taxes” (Wood). Considering taxation is human made, it does have flaws that affect both the poor and the rich.
If a person is required by the law to pay federal income taxes every year, then his money is being given to someone else. For example, if a student worker is required to work 20 hours a week but he is only getting paid for 15 hours, then his income for 5 hours’ work is being taken away.
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The government use of taxes plays a crucial role in today’s economy as well as personal finances, it has and will continue to leave its mark on the world we live in.
The tax system is an important part of our country's method of ensuring that government leaders are paid, roads are maintained, and we have a well-armed military to defend all of our citizens. But that doesn't stop the millions of people who live in the United States from dreading the complicated procedures set up by the Internal Revenue System (IRS) that they have to go through to pay their fair share of the expenses each year. Part of the reason for this is that there are so many myths surrounding the process. Unfortunately, those who believe in them end up with costly fines and legal problems though. So to help clear things up, the following is a list of five of the top tax myths and the real truth behind them all.
s had with this topic. Following are summaries of major pronouncements dealing with accounting for income taxes.
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In this project we will be looking at the tax evasion by individuals and how banking secrecy laws in certain countries aiding this tax evasion. First we define what is tax heaven, the problems faced by both developing and developed countries due to tax evasion and what are the various arguments in favor of the banking secrecies and the fundamental flaws in those arguments then we will be looking at the existing approaches to combat these tax heavens by TIEA and OECD approach then the EU directive and thirdly eliminating the capital gain taxes all over the world and the weaknesses of these three approaches then we move on to the potential solution by creating a global tax organization on the lines of WTO where all countries ...
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