A taxpayer is a person or organization (such as a

company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

) subject to pay a

tax A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...

. Modern taxpayers may have an identification number, a reference number issued by a

government A government is the system or group of people governing an organized community, generally a State (polity), state. In the case of its broad associative definition, government normally consists of legislature, executive (government), execu ...

citizens Citizenship is a membership and allegiance to a sovereign state. Though citizenship is often conflated with nationality in today's English-speaking world, international law does not usually use the term ''citizenship'' to refer to nationality; ...

firm A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

s. The term "taxpayer" generally characterizes one who pays

es. A taxpayer is an

individual An individual is one that exists as a distinct entity. Individuality (or self-hood) is the state or quality of living as an individual; particularly (in the case of humans) as a person unique from other people and possessing one's own needs or g ...

entity An entity is something that Existence, exists as itself. It does not need to be of material existence. In particular, abstractions and legal fictions are usually regarded as entities. In general, there is also no presumption that an entity is Lif ...

that is obligated to make

payment A payment is the tender of something of value, such as money or its equivalent, by one party (such as a person or company) to another in exchange for goods or services provided by them, or to fulfill a legal obligation or philanthropy desir ...

s to

municipal A municipality is usually a single administrative division having corporate status and powers of self-government or jurisdiction as granted by national and regional laws to which it is subordinate. The term ''municipality'' may also mean the gov ...

or government taxation-agencies. Taxes can exist in the form of

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

es and/or

property tax A property tax (whose rate is expressed as a percentage or per mille, also called ''millage'') is an ad valorem tax on the value of a property.In the OECD classification scheme, tax on property includes "taxes on immovable property or Wealth t ...

es imposed on owners of real property (such as homes and vehicles), along with many other forms. People may pay taxes when they pay for

goods and services Goods are items that are usually (but not always) tangible, such as pens or Apple, apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the Production (economics), production, distributio ...

which are taxed. The term "taxpayer" often refers to the workforce of a country which pays for government systems and projects through taxation. The taxpayers' money becomes part of the

public funds Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual o ...

, which comprise all money spent or invested by government to satisfy individual or collective needs or to generate future benefits. For tax purposes,

business entities In law, a legal person is any person or legal entity that can do the things a human person is usually able to do in law – such as enter into contracts, sue and be sued, own property, and so on. The reason for the term "''legal'' person" is t ...

are also taxpayers, making their

revenue In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business. Commercial revenue may also be referred to as sales or as turnover. Some compan ...

s and

expenditures An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition is ...

subject to taxation.

Types of taxes

; Taxes on income The government levy

es on personal and business revenue and interest income. In addition to income taxes, the government can also mandate that employers subtract

payroll tax Payroll taxes are taxes imposed on employers or employees. They 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 ...

es from their workers' paychecks each pay period, and then match the sums deducted.

Capital gains tax A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property. In South Africa, capital g ...

es are those paid on any profits made from the sale of an asset and are usually applied to stock and bond transactions. Estate taxes are imposed on the transfer of property upon the death of the owner. ; Taxes on property Property tax, sometimes known as an

ad valorem tax An ''ad valorem'' tax (Latin for "according to value") is a tax whose amount is based on the value of a transaction or of a property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT) ...

, is imposed on the value of real estate or other personal property. Property taxes are usually imposed by local governments and charged on a recurring basis. Real estate taxes are often subject to fluctuation based upon a jurisdiction's assessment of the worth of a property based on its condition, location and market value, and/or changes to the amounts apportioned to various recipients of the tax. ; Taxes on goods and services The sales tax is most often used as a method for states and local governments to raise revenue. Purchases made at the retail level are assessed a percentage of the sales price of a particular item. Rates vary between jurisdictions and the type of item bought. Excise taxes are based on the quantity of an item and not on its value. User fees are taxes that are assessed on a wide variety of services, including airline tickets, rental cars, toll roads, utilities, hotel rooms, licenses, financial transactions and many others. So-called

sin tax A sin tax (also known as a sumptuary tax, or vice tax) is an excise tax specifically levied on certain goods deemed harmful to society and individuals, such as Alcohol tax, alcohol, tobacco tax, tobacco, drugs, candy, soft drinks, fast foods, c ...

es are imposed on items like cigarettes and alcohol. Luxury taxes are imposed on certain items, such as expensive cars or jewelry.

Types of taxpayers

Taxpayers can be classified into two major categories – individual and corporation. A corporation is a legal entity that is separate from the owners for tax purposes. These major categories can be further divided in different subcategories. Individual taxpayers can be classified as either a citizen or an alien (an alien is a person who resides within the borders of a country and is not a national of that country). A citizen can further be classified as either a resident citizen or a non-resident citizen. Corporations can be classified into domestic, foreign and partnership. A foreign corporation is either resident foreign or non-resident foreign corporation. A resident foreign corporation is a foreign corporation engaged in trade or business in the country. A non-resident foreign corporation is a foreign corporation not engaged in trade or business within the country but deriving income from sources in the country. A partnership is a business structure where ownership and management responsibility of a company is split between two or more individuals. A partnership is not a legal entity that is separate from the owners and therefore the partnership itself does not pay taxes. The classification depends on given country and may vary. Net taxpayers are individuals which pay more taxes to the government than they receive benefits from the government in a given year or over life time.

Taxpayers' money

Taxpayers' money help to pay for the items on the federal budget. The gap between revenue (money collected via taxes) and spending is known as the budget deficit. The money the federal government borrows to cover the budget deficit is what creates the national debt. The government spends money for a variety of reasons: reduce inequality ("safety net" programs), provide public goods (fire, police, national defence), provide important public services like education and health (merit goods), debt interest payments, transport and military spending. The "safety net" programs are initiatives that give extra financial support to the elderly, unemployed, disabled and the poor. Examples include the earned income tax credit, child tax credits, unemployment insurance, food stamps, subsidized school meals, low-income housing assistance, energy assistance and more. The federal government spends its money in four major ways: direct payments, grants, contracts and insurance.

Tax avoidance and tax evasion

Tax avoidance Tax avoidance is the legal usage of the tax regime in a single territory to one's own advantage to reduce the amount of tax that is payable. A tax shelter is one type of tax avoidance, and tax havens are jurisdictions that facilitate reduced taxe ...

is the use of legal methods to modify an individual's financial situation to lower the amount of income tax owed.

Tax evasion Tax evasion or tax fraud is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to red ...

is an illegal practice where a person, organization or corporation intentionally avoids paying his true tax liability. Those caught evading taxes are generally subject to criminal charges and substantial penalties. It's considered tax evasion if the taxpayer knowingly fails to report income or under-report income (claiming less income than you actually received from a specific source), provides false information to the IRS about business income or expenses, deliberately underpays taxes owed or substantially understates taxes (by stating a tax amount on return which is less than the amount owed for the income reported).

References

{{Reflist

External links

''Financial Dictionary (Taxes)'' Tax terms fr:Contribuable