How to Understand Tax Law

Understanding tax law may help someone prepare a return.

Tax laws dictate the fundamentals of the income tax system on the federal and state levels. These laws stipulate how income taxes are collected, what factors qualify a taxpayer for deductions and credits, and what types of income must be taxed. The audit processes, tax penalties and legal defenses a taxpayer has are also established by tax legislation. There are several federal and state tax codes, and understanding these laws may help someone prepare taxes or resolve a legal tax issue.

Instructions

1. Research the federal tax law you want to understand. You can read the publications found on the official IRS website, particularly the Internal Revenue Code (IRC), or Title 26, which is the basis for federal tax laws. Focus on the specific law you want to know about by using the search terms in the query box on the IRS website. Check the Internet or a legal dictionary to define words you are unfamiliar with and write the translated terms down to gain a better understanding of the law you're studying.

2. Read the tax legislation in your state. Use the legal definition resources for words you are unsure of. Most states have the individual tax codes and guides available on their official department of revenue or treasury websites. Some states allow you to search tax code with keywords, while others have the chapters in numerical order with the corresponding titles on a drop-down menu. Scroll through this type of menu and look for titles that contain one or more of the key terms you are researching the law for. Many states also have the tax codes in book form in the main public library of each county.

3. Contact a taxpayer assistance agency in your community. Local charity groups or public associations offer tax information to members of the community. Typically, these centers have volunteer tax professionals available to answer questions and explain common tax laws for little or no cost.

4. Contact a local tax professional or firm to schedule a consultation. The fees for this service depend on the difficulty of the question and the type of professional asked. A local accountant may charge less for a consultation than a larger company that focuses more on return preparation and filing than on detailed explanation of procedures.

5. Consult with a tax law attorney to see if he or she will explain a tax law to you. Some attorneys will not give out advice over the phone or will require you sign a wavier indicating the conversation is not intended to be legal advice. The amount of any fees charged by the attorney for this service depend on the length of the consultation and complexity of the explanation.

6. Call the IRS tax assistance line at 800-829-1040 for personal tax questions. For business tax matters, call 800-829-4933. The answers from the IRS are free, but may not be in-depth or cover complicated laws and issues.

Tips & Warnings

• Retain a tax law attorney if you are in serious legal trouble with a taxing authority.

References

• IRS: Tax Code, Regulation, and Official Guidance
• IRS: Help With Tax Questions
• Texas Consitution and Statues: Tax Code