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What is Tax Regulation?

Tax RegulationWhen thinking about taxes, the first things that come to mind is the paperwork, records, accountant fees or which online service to use, but what we really should be thinking about is “What is tax regulation?” If we really take a look at taxes in general it’s not so much about what we pay, what we owe or what we can deduct, it’s more about understanding how the Internal Revenue Service interprets the tax code.

What Are Tax Regulations?

While we are discussing tax regulations in general, we often think about federal taxes, but it’s important to remember that like the U.S. government, each state government interprets their own tax code through tax regulations as well. So what are they? In short, tax regulations are basically how the Internal Revenue Service (or state department of revenue) interprets the tax code. They are often also referred to as Treasury Regulations. Regulations essentially pick up where the tax laws leave off. Anyone who is interested in reading the Code of Federal Regulations can do so online via the U.S. Government Publishing Office. While income taxes tend to be a large part of the tax code, treasury regulations also cover:

  • Estate and Gift Taxes: Covers the transfer of estates after a person dies
  • Employment Taxes: Anything that refers to taxes paid that are tied to work including FICA.
  • Miscellaneous Excise Taxes: Refers to taxes on goods or activities
  • Procedures and Administration: Details user fees and installment agreement fees for individuals who owe taxes.
  • Regulation Under Tax Conventions: Outlines tax policy and foreign states.
  • Internal Revenue Practice: Explains classification of taxes collected as well as general tax procedure.
  • Proposed Regulations: This area is sort of like a “testing ground” for new regulations. They are not effective until reviewed and discussed.

As you can see, the IRS has a multi-faceted approach to interpreting the tax law in the United States and it’s helpful to have at least an idea of how it works.

How Does Tax Regulation Affect You?

If you pay taxes, then tax regulation will affect you in some way. Considering that they are the highest administrative authority issued by the Treasury Department, they are the final word when it comes to interpretation of the law. When filling out your tax forms and wondering if that home office is deductible or if dinners with clients count as business expenses, it’s the treasury regulations that define this. If for some reason you get backed up on your tax bill, these regulations govern how and when you can get back into the black with the government and how much it’s going to cost you to accomplish that.

Related Resource: Accounting Policy Enforcement Specialist

Outlook and Interpretation

The value of a good accountant or tax attorney is beyond measure at times as they are highly trained in these Internal Revenue Service Regulations, but with a little help, a little Google, you too can begin to understand what exactly tax regulations are and how to use them to create a better tax experience.