When we talk about Taxes we talk about Laws that regulate and dictate everything related to our income, the deductions and credits that we can claim and how to do so when preparing our tax returns.

Let’s start with the US Constitution, in 1909 the XVI Amendment to the Constitution was created and approved by Congress, which establishes that Congress has the authority to create and collect taxes on income regardless of what source they come from, it was not until 1913 when said amendment was ratified by the states of the American Union. In 1986, it was codified within the US Federal Code, Title 26 being what would be called “The Internal Revenue Code”, which is nothing more than the set of laws that govern all federal tax activities, with the Department of the Treasury being the in charge of implementing the laws through the “Treasury Regulations” and if these are not clear, the federal courts are in charge of interpreting the law, creating a legal precedent. In short, this set of the Tax Code, Federal Regulations and Court cases are the highest authorities when it comes to federal taxes.

But where do we leave the IRS? This is in charge of implementing, managing and collecting federal taxes through an army of well-trained agents of different branches, levels and authority.

In the next segment we will talk about audits, how the returns are selected to be subjected to an examination, what depth and scope these can have and what we should do in case of being selected for one of these nightmares called: IRS tax examination