Dec 012014
 

The Sixteenth Amendment to the United States Constitution gives the U.S. Congress the authority to levy an income tax. The two specific provisions are Article 1, Section 2, part 3, and Article 1, Section 8, part one. Born from the funding of the Civil War, the Income Tax became enshrined in law in the case of Pollock v. Farmers Loan & Trust Co. in 1895. The Sixteenth Amendment was then adopted February 3rd, 1913.

Income tax is generally used the Federal, State, and local governments, as a way to fund multiple programs. Partnership income is pass thru income, the taxable portion to each partner being the amount that passes thru as income. Business expenses are generally used to offset income, reducing taxes. Even Capital Gains are taxable, usually at a lower rate.

In January of the New Year, the IRS starts to process tax returns as they receive them. The deadline for filing a tax return is April 15th each year, unless the 15th falls on a Saturday or Sunday, in which case the filing date would be the following monday. If you want to avoid late payment penalties, the tax amount you owe must be paid by April 15th, even if you file for an extension to file. October 15th is the deadline to file, if you filed an extension prior to or on April 15 of the tax year.

Your taxes are considered late, or BACK TAXES, if you did not pay with your extension, or if you failed to file a tax return by April 15th of that tax year. The IRS generally only goes back 7 years on back taxes, but due to the 10 year statute of limitations on collections, they may file a Substitute for Return (where they file for you) for up to ten years.

 December 1, 2014

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