In: Accounting
Ans: Formal tax legislation is the process by which a proposed tax rule or tax change may become law in the United States. Formal tax legislation follows specific steps as defined by the U.S. constitution. The legislation, like all federal laws, requires the consent of both houses of congress- the Senate and House of Representatives- and presidential approval.
The formal tax legislation process follows these specific steps:
1. The tax bill originates in the House of Representatives and is referred to the ways and Means Committee. Once committee members reach an agreement regarding the legislation, a proposed tax law is written.
2.The tax bill goes to the full House for debate, amendment, and approval.
3.The tax bill is passed to the Senate where it is reviewed.The Finance committee may rewrite the proposed before it is presented to the full Senate.
4.Following Senate approval, the tax bill is sent to a joint committee of House and Senate members who work to create a compromise version.
5.The compromise version is sent to the House and Senate for approval.
6.Once congress passes the bill, it is sent to the president who will either sign it into law or veto the bill. If the president signs the bill, the responsible agencies, such as the Treasury Department and Internal Revenue Service, must take actions to carry out the bill. If he decides to veto the bill, he returns it to the House along with a statement of why he opposes various portions of the bill.
7.In the event the president vetoes the tax bill, Congress can make the Changes that the President wants or override the veto with a two-thirds vote of each house; if successful, the tax bill becomes law without the signature of the President.
Presidents can, and frequently do, recommend changes to current tax laws, but only congress can make the Changes.