Question

1. President Franklin D. Roosevelt once said, “I am wholly unable to figure out the amount of tax,” and wrote to the Federal Commissioner of Revenue, “may I ask that (the agency) let me know the amount of the balance due.” When a friend of FDR was ordered to pay $420,000 in tax penalties, the President called the Commissioner within earshot of reporters and told him to cut the penalties to $3,000. One listener, journalist David Brinkley, recalled years later: “Nobody seemed to think it was news or very interesting.” Evaluate the President’s comments and actions.

2. Consider all accessions to wealth that you had in the past year including any service that was provided to you without cost, or any debt of yours that was forgiven. Which of these items of income do you think belong on your tax return and which items do not?

3. The U.S. Constitution limits Congress’ ability to tax its citizens. Why do you think Article 1, Section 2, Clause 3 required both representatives and direct taxes to be apportioned (that is, why are they linked together?) and why does the clause say that “three fifths of all other Persons” were to be included in determining the number of citizens within a State?

Answer 1

Answer to question 01)

·       Taxpayers in the USA may face many penalties for failures related to Federal, state, and local tax matters.

·       The Internal Revenue Service is mainly responsible for charging these penalties at the Federal level.

·       The IRS can assert only those penalties specified imposed under Federal tax law. State and local rules vary widely, are managed by state and local authorities.

·       Penalties may be monetary or may involve forfeiture of property.

·       Criminal penalties may include jail time, but are imposed only by a federal judge after a defendant is convicted.

·       Most monetary penalties are based on the amount of tax not properly paid. Penalties may increase with the period of nonpayment.

·       Some penalties are fixed dollar amounts or fixed percentages of some measure required to be reported.

·       Excise taxes used as penalties are imposed in the Code sections relating to particular kinds of transactions.

·       Some penalties may be waived or abated where the taxpayer shows reasonable cause for the failure.

·       Penalties apply for failures to file income tax returns or information returns, or for filing incorrect returns.

·       Some penalties may be very minor. Penalties apply for certain types of errors on tax returns, and may be substantial.

·       Some penalties are imposed as excise taxes on particular transactions. Certain other penalties apply for other types of failures. Certain acts may result in forfeiture of property of the taxpayer.

The above tax related information reveals that , the president has to direct respective officers to review the tax penalties, and why this amount has been accumulated and is it acceptable under tax law to cut the tax penalties and etc. Before coming to the decision

Answer to question 02)

Any service that was provided without cost will not come under taxable income

If your debt is forgiven or discharged for less than the full amount you owe, the debt is considered canceled in the amount that you don't have to pay. The canceled debt is not taxable, however, if the law specifically allows you to exclude it from gross income.

Answer to question 03)

3.1

This separation of powers ensures that no one person or group could create, administer, and interpret the laws at the same time, and that each branch would serve .

3.2

This clause explains that the number of persons in each state, for the purpose of representation and taxation, is to be determined by adding to the whole number of free persons three fifths "of all other Persons"

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years.