Question

1. Please discuss the concept of "voluntary compliance" as it relates to our federal tax system.

2. Please compare and contrast the differences between civil and criminal penalties.

3. Would you rather work as an IRS agent or as a tax practitioner? Please explain your answer.

Answer 1

1.Voluntary compliance refers to the principle that taxpayers will cooperate with the tax system by filing honest and accurate annual returns. The U.S. income tax system operates under this assumption. Voluntary means that each taxpayer is expected to prepare and file returns without government involvement.

For example, a taxpayer who receives a W-2 form from their employer reports that income on their form 1040. The Internal Revenue Service (IRS) also receives a copy of that W-2 and is aware of that income. That individual may also have a part-time job that does not file a W-2. Under the principle of voluntary compliance, the taxpayer is expected to report that second income in their annual return.

2.Civil law and criminal law are two separate limbs of the legal system in America. Each one is broad, with its own set of laws and punishments. There are several differences between criminal cases and civil cases. Criminal cases aim to punish the offender, who has offended the state (or society). Civil lawsuits, on the other hand, are filed to get the offender to make good the wrong they’ve done to another individual. Civil cases may involve matters such as small claims, personal injury or property damage. By contrast, criminal cases involve misdemeanours or felonies committed against the state. Five major differences between the two entities are listed below:

1 Who Files the Case?

Criminal cases, such as murder cases, are prosecuted by the state. The offender has offended the state. Therefore, the persecutor acts on behalf of the state and files the case in court for criminal offenses. Although the offender may have wronged another individual in a criminal case, he has also committed a crime against the state, so there is a need for criminal proceedings. Civil cases are filed when the offense is against an individual who seeks restitution or compensation to right the wrongs done to him (or her) by the defendant.

2 Burden of Proof

The standard of proof is lower for civil cases. While criminal cases must be proven beyond a reasonable doubt, civil cases follow standards like the preponderance of the evidence. In other words, if something seems more likely to have happened a certain way than not, the case is proven. The criminal defendant is entitled to an attorney, and the state must provide one he/she cannot afford one. In civil cases, the defendant must provide their own representation. The differences in standards of proof exist because civil cases are considered less blameworthy and the punishments less severe.

3 Legal Protections

The defendants in criminal cases are afforded many protections under law, such as the protection against illegal searches and seizures. Those same protections are not available to defendants in civil cases.

4 Jury or Judge?

Many civil cases are decided by a judge, although juries may be involved in some civil cases. Criminal cases are almost always tried by juries, per the Bill of Rights and trial by jury.

5 The Punishment

Criminal cases have jail and prison sentences and potentially even death depending on the state as a potential punishment. In civil cases, the punishment usually only involves monetary payment for damages, though other types of restitution are ordered as well.

3.The Internal Revenue Service (IRS) is a U.S. government agency responsible for the collection of taxes and enforcement of tax laws. People colloquially refer to the IRS as the "tax man."

A tax preparer license enables a person to lawfully prepare personal income tax returns in the State of Oregon. A tax preparer must work under the supervision of a licensed tax consultant, a certified public accountant, a public accountant, or an attorney who prepares tax returns for their clients.

Unfortunately many tax resolution firms have capitalized on the tax practitioner distinction by selling the false claim that you want to be represented by an attorney. An Attorney is provided the right to represent taxpayers before the IRS simply because they are licensed attorneys. There is no special education or specific training that an attorney must take to represent taxpayers before the IRS. Often times, many of the large tax resolution firms will hire an attorney simply for advertising purposes.

The only tax practitioner who is required to have actual working knowledge of the IRS to earn their credentials are Enrolled Agents. An enrolled agent must pass a rigorous exam administered by the IRS. This exam covers all forms, publications, and extensive knowledge of IRS rules and procedures. This is why you will find that most tax resolution firms use enrolled agents to actually negotiate and truly represent their tax resolution clients.

It is unfortunate that so many taxpayers have been led to believe that an attorney is required to represent them before the IRS. It would be even worse for those taxpayers who bought into the myth to find out that the attorney never worked their file and that they were charged much more than they would have had they just hired an Enrolled Agent or a CPA.