The Importance of Tax Law and Its Ramifications

by kaliastrong on June 20, 2013

Taxes are a monetary assessment imposed on an individual or a business by the legislative branch of the federal government. In the United States, some but not all states assess individuals with taxes similar to the federal assessment.  Tax law is a collection of laws that regulate taxation. Because tax mistakes can affect an individual or a business both financially and legally, laws ensure individuals and businesses that a set of rules in place is their best defense against chaos. Many known firms such as Ernst & Young, can help the average person understand tax law. Mark Weinberger has a firm grip on tax law, and aims to help those who come to Ernst & Young for guidance.

Knowing tax law, understanding tax law, and applying tax law are important aspects for operating a successful business because mistakes where taxes are concerned can be costly to the individual, the business as well as the business investors. It is important that tax law is understood at all three levels of government, federal, state, and local because laws at the three levels may be somewhat different depending on locale. 

Some important aspects of tax law are as follows:

  • Provides legalities where there are questions: Tax law provides all the legalities that are presented where taxation is concerned.
  • Provides protection: In a sense tax law provides protection to the individual tax payer and the business tax payer. Tax law insures that taxes are levied within the confines of the current tax laws and therefore favoritism of individuals or businesses is obsolete.
  • Reduces error: Tax law reduces error for an individual or a business when filing taxes because the laws are what determine what is taxed, how it is taxed, and to what degree something is taxed. Tax law is fairly concrete as far as understanding the ramifications of following the law or breaking the law.
  • Provides security for a business or an individual for expense planning: Tax law provides an individual or a business a sense of security when budget planning is in order. Part of an individual’s expense or a business’s expense is taxes and tax law allows an individual or a business a sense of security in knowing what to budget annually for this expense. Tax law ensures the individual or the business that tax rates are fixed for a certain period of time and that should an increase in taxes be levied the individual or the business would not be hit out of the blue with an expense not budgeted.

Tax laws begin as a tax bill and then follow certain steps in the governmental process before they become a law. While tax law appears to be absolute once a tax bill becomes a law, there may be circumstances under which an individual or a business challenges the law. Sometimes laws tend to treat individuals and businesses as a one size fits all when this may not necessarily be the case for all circumstances all of the time. A system of checks and balances is in place for tax laws in the United States and individuals and businesses may challenge tax laws in circuit courts throughout the country as well as lobby the government for tax reform where some laws are concerned.  



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