Western Federal Taxation - Ch 1
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| ad valorem tax | A tax imposed on the value of property. The most common ad valorem tax is that imposed by states, counties, and cities on real estate. Ad valorem taxes can be imposed on personal property as well.
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| correspondence audit | audit conducted by the IRS by mail. The IRS writes the taxpayer req verification of a particular deduction or exemption. The completion of a special form or the remittance of copies of records or other support is all that is requested of the taxpayer.
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| death tax | A tax imposed on property transferred by the death of the owner.
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| employment taxes | taxes that an employer must pay on acct of its employees; incl FICA (Fed Ins Cont Act) and FUTA (Fed Unemp Tax Act). taxes are paid to the IRS in addition to income tax withholdings at specified intervals. Such taxes levied on the emp/employer/both.
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| estate tax | A tax imposed on the right to transfer property by death. Thus, an estate tax is levied on the decedent’s estate and not on the heir receiving the property.
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| excise tax | A tax on the manufacture, sale, or use of goods; on the carrying on of an occupation or activity; or on the transfer of property. Thus, the Federal estate and gift taxes are, theoretically, excise taxes
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| FICA tax (Fed Ins Cont Act) - Social Security Tax | comp of Soc Sec tax and Medic tax; imp on both employers/employees. employer resp for w/hold from the employee wage the Soc Sec tax rate of 6.2% on a max wage base of $106,800 and the Medicare tax rate of 1.45% The empl is req to match the employee cont
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| field audit | An audit conducted by the IRS on the business premises of the taxpayer or in the office of the tax practitioner representing the taxpayer.
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| flat tax | In its pure form, a flat tax would eliminate all exclusions, deductions, and credits and impose a one-rate tax on gross income.
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| franchise tax | A tax levied on the right to do business in a state as a corporation. Although income considerations may come into play, the tax usually is based on the capitalization of the corporation.
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| FUTA tax | An employment tax levied on employers; administered by the Federal and state governments, the tax provides funding for unemployment benefits.
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| gift tax | A tax imposed on the transfer of property by gift. The tax is imposed upon the donor of a gift and is based on the fair market value of the property on the date of the gift.
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| inheritance tax | A tax imposed on the right to receive property from a decedent. Thus, theoretically, an inheritance tax is imposed on the heir. The Federal estate tax is imposed on the estate.
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| national sales tax | replacement for the current Federal income tax. Unlike a value added tax (VAT), which is levied on the manufacturer, its imposed on cons upon final sale of goods/serv. To keep the tax from being regressive, low-income taxpayers would be granted credit
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| occupational tax has occupational fees | A tax imposed on various trades or businesses. A license fee that enables a taxpayer to engage in a particular occupation.
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| office audit | An audit conducted by the IRS in the agent’s office.
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| personality | All property that is not attached to real estate (realty) and is movable. Examples of personalty are machinery, automobiles, clothing, household furnishings, inventory, and personal effects.
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| revenue neutrality | A description that characterizes tax legislation when it neither increases nor decreases the revenue result. Thus, any tax revenue losses are offset by tax revenue gains.
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| sales tax | state/local tax on the retail sale of specified prop; purch pays tax, but the seller collects it, as an agent for the gov. Var tax juris allow exemp for purchases of specific items. If the purch and seller are in dif states, a use tax usually applies.
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| severance tax | A tax imposed upon the extraction of natural resources.
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| statute of limitations | Prov of the law that specify the maximum period of time in which action may be taken on a past event. Code §§ 6501–6504 contain the limitation periods applicable to the IRS for additional assessments, and §§ 6511–6515 relate to refund claims by taxpayers
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| sunset provision | prov attc to new tax legis that will cause legis to exp at spec date. Sunset prov attac to tax cut bills for long-term budg reason to make effect temp. Once in play, the tax cut is rescinded and form law is reinst.
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| use tax | A sales tax that is collectible by the seller where the purchaser is domiciled in a different state.
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| VAT - Value Added Tax | A national sales tax that taxes the increment in value as goods move through the production process. A VAT is much used in other countries but has not yet been incorporated as part of the U.S. Federal tax structure.
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| wherewithal to pay | recog the inequity of taxing a trans when the taxpayer lacks means with which to pay tax; there is a correlation bet the imposition of tax and ability to pay tax; partic suited to situat in which the taxpayer’s econ pos has not chg sig as result of trans
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