3 Government Branches of Taxation

taxes with andy magnus

Ex-IRS agent, Andy Magnus from ProactiveTaxPros.com, shares the three levels of government that affect tax policy and enforcement:

  • Executive Branch: Enforces tax law and interprets how the law is applied
  • Legislative Branch: Enacts tax law
  • Judicial Branch: Interprets tax law when it is disputed

Listen to the discussion by clicking here –> [12:15]

Executive Branch

They will write regulation and revenue rulings or procedures and publish it so the taxpayers and tax professionals can see what the IRS’s position is.

It is also where the IRS resides and works for the President (Executive Officer of the U.S.).

Judicial Branch

When the IRS says one thing and taxpayers claim they get it wrong.

Legislative Branch

Creates tax law and passes bills.

Here's a Schoolhouse Rock video to show how it works:

WHICH BRANCH HAS MORE POWER?

While the Supreme Court, part of the Legislative Branch, is the supreme law of the land, the Judicial branch has final say when it comes to tax policy.

Andy says it is not unusual for a court in one state to interpret a set of facts entirely different than a court in another.

This allows someone in St. Louis, as an example, to use the interpretation that benefits them the most.

TAX LAW IS NOT WRITTEN IN NUMBERS

This is supposed to be math, but Andy reminds us that tax law is not written in numbers – it’s written in words. Words can be subject to interpretation – even something as simple as a nursery rhyme like…

Mary had a little lamb

A) You may envision a curly blonde haired girl in a blue dress and white apron carrying the shepherdess crook herding her sheep.

B) But what if Mary is sitting in a French restaurant having a little lamb with some wild rice and a glass of chardonnay?

SAME WORDS, DIFFERENT INTERPRETATION

This is why the IRS doesn’t necessarily agree with someone else’s interpretation, the tax payer doesn’t agree with what the IRS says, and so we take it on to the Supreme Court.

You can hear more from our conversation here > [12:15]

What are the tax benefits of a home business?
What Does the IRS Consider Taxable Income?

Leave A Response

* Denotes Required Field