Taxation Definition in the United States

• Tax Portal in the US Encyclopedia of Law
• U.S. Law Dictionary
• Taxation Definition in the Legal Dictionary
• Tax Definition in the Legal Dictionary
• U.S. Dictionaries
• U.S. Definitions

Complexity of Taxation Terms

By Michael E. Mares

The Code is replete with terms of art. In many cases, a term of art (e.g., related party) is defined differently for different purposes. The structure of the Code itself, and cross references between Code sections, make interpretation difficult.

Throughout the Code, terms are used that are not clearly defined for all contexts or that may have more than one meaning. For example, the term related taxpayer has one meaning in IRC section 267 and another in the mitigation provisions of IRC section 1313. Differences between concepts such as controlled groups and affiliated groups are also hard to grasp. Definitions of the same or similar words also differ among the various types of taxes.

It is difficult to apply a relatively straightforward term such as earned income in light of the increasing complexity of our tax structure. Furthermore, a long-established term such as adjusted gross income becomes more confusing when, in certain situations, modified adjusted gross income must be computed (e.g., when a taxpayer has rental real estate activities, computes individual estimated tax payments, or may be subject to tax on social security benefits).

The cross-referencing from one Code section to another is also difficult at times. For instance, in computing the allowable exclusion for employer-provided child-care assistance under IRC section 129(b)(2), the special limitation on income for a student spouse contained in IRC section 21(d)(2) is often overlooked by the tax planner, who simply sees a $5,000 limit in the body of IRC section 129. Some of the complexity associated with cross-references could be eliminated if the Code consistently included a brief description of the interacting provision, as well as the Code section reference.

See Related Concepts in other Legal Encyclopedias

• Australian Taxation Office in the Australian Encyclopedia of Law
• Tax Discrimination in the European Encyclopedia of Law

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