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| Taxation in the United States |
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In the United States, the term trust fund recovery penalty refers to a tax penalty assessed against the directors or officers of a business entity which failed to pay a required tax on behalf of its employees. [1] Common violations can come in the form of not paying Medicare and Social Security deductions. [2]
The United States has separate federal, state, and local governments with taxes imposed at each of these levels. Taxes are levied on income, payroll, property, sales, capital gains, dividends, imports, estates and gifts, as well as various fees. In 2020, taxes collected by federal, state, and local governments amounted to 25.5% of GDP, below the OECD average of 33.5% of GDP.
In the United States, a 401(k) plan is an employer-sponsored, defined-contribution, personal pension (savings) account, as defined in subsection 401(k) of the U.S. Internal Revenue Code. Periodic employee contributions come directly out of their paychecks, and may be matched by the employer. This legal option is what makes 401(k) plans attractive to employees, and many employers offer this option to their (full-time) workers. 401(k) payable is a general ledger account that contains the amount of 401(k) plan pension payments that an employer has an obligation to remit to a pension plan administrator. This account is classified as a payroll liability, since the amount owed should be paid within one year.
In the United States, Social Security is the commonly used term for the federal Old-Age, Survivors, and Disability Insurance (OASDI) program and is administered by the Social Security Administration (SSA). The Social Security Act was passed in 1935, and the existing version of the Act, as amended, encompasses several social welfare and social insurance programs.
The Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund are trust funds that provide for payment of Social Security benefits administered by the United States Social Security Administration.
An individual retirement account (IRA) in the United States is a form of pension provided by many financial institutions that provides tax advantages for retirement savings. It is a trust that holds investment assets purchased with a taxpayer's earned income for the taxpayer's eventual benefit in old age. An individual retirement account is a type of individual retirement arrangement as described in IRS Publication 590, Individual Retirement Arrangements (IRAs). Other arrangements include employer-established benefit trusts and individual retirement annuities, by which a taxpayer purchases an annuity contract or an endowment contract from a life insurance company.
Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the employer, but almost all economists agree that the true economic incidence of a payroll tax is unaffected by this distinction, and falls largely or entirely on workers in the form of lower wages. Because payroll taxes fall exclusively on wages and not on returns to financial or physical investments, payroll taxes may contribute to underinvestment in human capital, such as higher education.
A credit-linked note (CLN) is a form of funded credit derivative. It is structured as a security with an embedded credit default swap allowing the issuer to transfer a specific credit risk to credit investors. The issuer is not obligated to repay the debt if a specified event occurs. This eliminates a third-party insurance provider.
Tax withholding, also known as tax retention, pay-as-you-earn tax or tax deduction at source, is income tax paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, tax withholding applies to employment income. Many jurisdictions also require withholding taxes on payments of interest or dividends. In most jurisdictions, there are additional tax withholding obligations if the recipient of the income is resident in a different jurisdiction, and in those circumstances withholding tax sometimes applies to royalties, rent or even the sale of real estate. Governments use tax withholding as a means to combat tax evasion, and sometimes impose additional tax withholding requirements if the recipient has been delinquent in filing tax returns, or in industries where tax evasion is perceived to be common.
A user fee is a fee, tax, or impost payment paid to a facility owner or operator by a facility user as a necessary condition for using the facility.
The United States federal government and most state governments impose an income tax. They are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowable deductions. Income is broadly defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. Most business expenses are deductible. Individuals may deduct certain personal expenses, including home mortgage interest, state taxes, contributions to charity, and some other items. Some deductions are subject to limits, and an Alternative Minimum Tax (AMT) applies at the federal and some state levels.
An honorarium is an ex gratia payment, i.e., a payment made, without the giver recognizing themself as having any liability or legal obligation to the recipient for their volunteered services, or for services for which fees are not traditionally required. It is a common remuneration practice in schools or sports clubs, for teachers and coaches. Another example includes the payment to guest speakers at a conference meeting to cover their travel, accommodation, or preparation time. Services for Christian Church funerals and/or memorial services are often paid by honorarium, as the minister, musicians, organist, soloist and others, out of care, do not have a set fee for services to grieving families. Likewise, wedding officiants are sometimes paid through honorarium. When required, honorariums may be termed altarages, although an altarage may be paid to a church or parish rather than a person.
The Pension Protection Act of 2006, 120 Stat. 780, was signed into law by U.S. President George W. Bush on August 17, 2006.
Proposition 1A was a defeated California ballot proposition that appeared on the May 19, 2009 special election ballot. It was a constitutional amendment that would have increased the annual contributions to the state's rainy day fund. The proposition was legislatively referred to voters by the State Legislature.
Back taxes is a term for taxes that were not completely paid when due. Typically, these are taxes that are owed from a previous year. Causes for back taxes include failure to pay taxes by the deadline, failure to correctly report one's income, or neglecting to file a tax return altogether.
Taxes in Indiana are almost entirely authorized at the state level, although the revenue is used to fund both local and state level government. The state of Indiana's income comes from four primary tax areas. Most state level income is from a sales tax of 7% and a flat state income tax of 3.23%. The state also collects an additional income tax for the 92 counties. Local governments are funded by a property tax that is the sum of rates set by local boards, but the total rate must be approved by the Indiana General Assembly before it can be imposed. Residential property tax rates are capped at maximum of 1% of property value. Excise tax is the fourth form of taxation and is charged on motor vehicles, alcohol, tobacco, gasoline, and certain other forms of movable property; most of the proceeds are used to fund state and local roads and health programs. The Indiana Department of Revenue collects all taxes and pays them out to the appropriate agencies and municipalities. The Indiana Tax Court deals with all tax disputes issues, but decisions can be appealed to the Indiana Supreme Court.
Uninsured employer in the United States is a term to identify an employer of workers under circumstances where there is no form of insurance in place to provide certain benefits to those workers. More specifically, it is a term used in workers’ compensation law to identify an employer who does not have some form of worker's compensation insurance or self-insurance coverage in effect at the time of, or during the time of, a claimed injury.
A trust-fund tax is any type of tax in which the person or entity who is liable for the tax obtains it by collecting it from another party and holding the tax until paid to the particular government to which it is owed. For example a merchant collecting sales tax or an employer collecting payroll tax. The party collecting the tax is presumed to hold it in trust for the benefit of the government to whom it is due. They become liable for payment of the tax. A trust-fund tax is a type of tax or debt where the management or responsible employees of a corporation or other entity with limited liability can be held personally liable for its non-payment.
Major League Baseball (MLB) has a luxury tax called the "Competitive Balance Tax" (CBT). In place of a salary cap, the competitive balance tax regulates the total sum of money a given team can spend on their roster. Salary caps are common across professional sports leagues in the United States. Without these measures, teams would not be restricted on the amount of money spent on players' salaries. Therefore, teams with greater funding or revenue would possess a competitive advantage in their ability to attract top talent via higher salaries.
Apple's EU tax dispute refers to an investigation by the European Commission into tax arrangements between Apple and Ireland, which allowed the company to pay close to zero corporate tax over 10 years.