Formal tax legislation refers to the process through which a tax rule or modification is proposed and may be made law in the United States. The U.S. Constitution defines the steps that constitute formal tax legislation. Like all federal laws, the legislation must be approved by the Senate, House of Representatives, and the President.

Understanding Formal Tax Legislation

The formal tax legislation process begins with the proposed tax laws, which must be introduced in the House of Representatives before becoming law. Because the House of Representatives is meant to represent individuals, not whole states like the Senate, the tax bill must be presented in the House of Representatives. These steps are the formal steps for tax legislation:

• The House of Representatives is the source of the tax bill and is referred to as Ways and Means Committee. The proposed tax law will be written once the committee members agree on the legislation.
• The full House will debate, amend, and approve the tax bill.
• The Senate passes the tax bill. The Senate then reviews it. Before the full Senate is presented with the tax bill, the Finance Committee could rewrite it.
• After Senate approval, the tax bill goes to a joint committee consisting of Senate and House members. They work together to find a compromise version.
• The Senate and House will approve the compromise version.
• After Congress passes the bill, it is sent to President, who will sign or veto it. The President must sign the bill. If so, the relevant agencies must take appropriate action to implement the bill. If the President decides to veto it, he/she must return it to the House with a statement explaining why he/she disagrees with certain portions.

While Presidents can recommend changes to tax laws that have been in effect for some time, only Congress can do so. The informal tax legislation process allows citizens to influence tax laws. This includes reaching out to elected officials and members of Congress, attending meetings in their localities, signing petitions, and participating in lobbying. Citizens can influence the outcome by influencing the tax legislation process individually or collectively through this informal process.

Voluntary Disclosure

A taxpayer may have certain non-declared income and assets. This could include revenue from an entity or foreign bank accounts. A taxpayer often wants to be honest and report any hidden income or assets over time. One taxpayer may accept a public function, or he might not wish to leave his children the inheritance of "black money."

A taxpayer might want to talk freely about the terms of voluntary disclosure with a professional advisor. A tax attorney is better than a regular tax consultant for this discussion. A tax attorney not only knows all aspects of voluntary disclosure but also considers all criminal aspects. While voluntary disclosure may help you avoid tax penalties and fines, it does not automatically make you immune from criminal prosecution. This area of law is not something that most tax professionals can advise you on, but Baker Tilly Dutch Caribbean is an expert.

TIO or FIOD Investigation

TIO or FIOD can show up at your door unannounced and demand to see your books and computers or seize your administration. Are you prepared for when they arrive? Are you prepared to tell them what to do, how to ask, and what to avoid? Contrary to the Tax Authority's audit, formal tax investigators don't always make appointments, and visits usually indicate that there are criminal elements.

Court of Appeal for Tax Matters

You can appeal to the Court of Appeal for Tax Matters if you disagree with the decision of the Tax Inspector concerning an objection you have filed. The Court proceedings are often your last resort for defending your case. The proceedings should be handled with precision and care. A professional tax lawyer is a must.

Tax Collection Proceedings

If a taxpayer fails to pay a tax assessment within the time allowed, the Tax Collector may initiate formal proceedings to collect the amount due. The Collector has a lot of authority and many means to do this. The Collector usually starts by sending a reminder to pay. The Collector may summon a tax bailiff to enforce an injunction if the taxes are not paid. If you fail to pay, the Collector can seize your wages, real property, and possessions. You can object to an injunction by sending a notice to the Collector. A case against the Collector must be filed at the Court of First Instance. This must be done within one month from the date of the injunction. This is a civil court proceeding, so you must have an attorney representing you.