Tax Law FAQ

Tax Law FAQ Related Information:

What is taxation law and what are its categories?

Taxation law is a very broad category of law under which different types of tax laws are detailed. Taxation laws are passed by all levels of government, from the federal government, to state governments, to your local school district. All the different bodies levy some type of tax so as to raise money in order to fulfill their public duties and projects. Some of the various kinds of tax law categories are:

• Corporate (Business) Tax
• Personal Income tax
• Health Tax
• Education Tax
• Payroll Tax
• Real Estate Tax
• Excise and Sales Tax
• International Tax

How long does one need to be concerned about non-filed tax returns?

The IRS has a period of six years, from the date a tax return was due, within which it has to take any criminal action on taxpayers who fail to file a tax return. However, for the purpose of an audit, or to recover taxes or penalties on a non-filed return, there is no time limit. The period of audit starts from the day a return is filed (or due) and is valid for three years, while the collection period runs for ten years. This is all in theory and for all practical purposes, if it has been over six years since you have not filed a due tax return, then you can more or less stop being concerned about it. The IRS, very rarely, if at all, goes after taxpayers for non-filed returns after six years. They may only be inclined to do so if your owed taxes amount to a large sum.

If I file for innocent spouse relief, will my spouse be contacted by the IRS?

If a married person has filed for innocent spouse relief, then the IRS has to notify the other spouse so that he or she can be involved in the proceedings and appeal the claim or appeal against the IRS’ decision to grant any partial or complete innocent spouse relief.

If I have been denied innocent spouse relief, can I again file for separation of liability or equitable relief?

No, you need not. If you have filed a claim for innocent spouse relief, the IRS will determine whether or not you qualify for the relief under innocent spouse and will also automatically consider if you can qualify for separation of liability or equitable relief. So you cannot file separately if denied innocent spouse relief, as all your options will have been considered by the IRS before denying relief.

If the IRS levies my bank account, is all the money in the account frozen?

If your bank account has been levied by the IRS, then the amount that will be frozen depends on your outstanding taxes. If you have money in your account, in excess of your liability, then amount to the extent of your outstanding debt will be frozen. If you have lesser funds than your total liability, then all the funds will be frozen.

If I am an American citizen working in another country, will my foreign income be taxed by the IRS?

As a citizen of the United States, all your worldwide income is subject to tax, irrespective of where you live or work. But if you are living abroad, then you may be entitled to certain deductions such as foreign housing deduction, foreign income deduction, etc. which may reduce your tax payable on foreign income, or even totally eliminate your foreign income from tax. Consult a tax attorney to know the exact details.