Tax research Chapter 3
Tax Research - Chapter 3 Homework Assignment
1, 6, 9-24, 31-33, & 81
1. The three primary sources of U.S. federal tax law are the U.S. Constitution, tax treaties, and the Internal Revenue Code.
6. Congress has passed several laws to discourage tax protesters. For instance, a taxpayer is subject to a $5,000 fine if he files a “frivolous” tax return as a form of protest against the IRS or the budgetary process. This fine would be levied, for example, when the taxpayer files a blank tax return accompanied by a note suggesting that the federal income tax is unconstitutional or that the taxpayer wishes to protest against tax revenues going to the creation of nuclear weapons. The tax court can impose a penalty, not to exceed $25,000, if the taxpayer brings a frivolous matter before the court. Under §§ 6673 and 6702, a frivolous matter is one in which the intent is to delay the revenue collection process and the proceedings are found to be groundless, or the taxpayer unreasonably failed to pursue available administrative remedies.
9. Tax treaties are agreements negotiated between countries concerning the treatment of entities subject to tax in both countries. The overriding purpose of such treaties is to eliminate the “double taxation” that the taxpayer would face if his income were subject to tax in both countries. Tax treaties often address issues such as the following:
How to treat the business and investment income of the visiting taxpayer
When the visitor is subject to the host country’s tax laws
How to offset the possibility of taxing the same income or assets more than once
How to compute the taxable amount in the host country
To what extent host-country withholdings taxes are applied to the visitor’s transactions
How taxes levied by a state/province/canton are treated by the taxpayer
What disclosures must be made by the visitor
10. Treaties may be terminated in several ways. They may expire because of a specific congressional time limitation,
1, 6, 9-24, 31-33, & 81
1. The three primary sources of U.S. federal tax law are the U.S. Constitution, tax treaties, and the Internal Revenue Code.
6. Congress has passed several laws to discourage tax protesters. For instance, a taxpayer is subject to a $5,000 fine if he files a “frivolous” tax return as a form of protest against the IRS or the budgetary process. This fine would be levied, for example, when the taxpayer files a blank tax return accompanied by a note suggesting that the federal income tax is unconstitutional or that the taxpayer wishes to protest against tax revenues going to the creation of nuclear weapons. The tax court can impose a penalty, not to exceed $25,000, if the taxpayer brings a frivolous matter before the court. Under §§ 6673 and 6702, a frivolous matter is one in which the intent is to delay the revenue collection process and the proceedings are found to be groundless, or the taxpayer unreasonably failed to pursue available administrative remedies.
9. Tax treaties are agreements negotiated between countries concerning the treatment of entities subject to tax in both countries. The overriding purpose of such treaties is to eliminate the “double taxation” that the taxpayer would face if his income were subject to tax in both countries. Tax treaties often address issues such as the following:
How to treat the business and investment income of the visiting taxpayer
When the visitor is subject to the host country’s tax laws
How to offset the possibility of taxing the same income or assets more than once
How to compute the taxable amount in the host country
To what extent host-country withholdings taxes are applied to the visitor’s transactions
How taxes levied by a state/province/canton are treated by the taxpayer
What disclosures must be made by the visitor
10. Treaties may be terminated in several ways. They may expire because of a specific congressional time limitation,