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How the IRS Works

The IRS is one of the most loathed and essential organizations in the country. When the United States was first established, America was wary of taxation and there was no organization set up to collect taxes. When the Civil War was over, the Bureau of Internal Revenue was created. This led to the establishment of the Internal Revenue Service (IRS). Today, the IRS is the country’s tax collecting agency. So how does it work?

Government Organization
The IRS is part of the Department of Treasury, and it employs thousands of employees. A commissioner heads the organization and is selected by the President to serve a five-year term. The President also selects a Chief Counsel to the IRS. This person handles all legal matters relating to the agency. The IRS is primarily located in Washington, D.C.; however, there are regional offices located in cities throughout the United States.

Oversight Board
There is an IRS Oversight Board that is compiled of nine members. These people are responsible for supervising the activities of the IRS and ensuring that audits are performed correctly. They also review and approve budget requests each year. However, they do not have any control over policy changes.

Taxes
During 2013, the IRS collected nearly $2.86 trillion in revenue. They also processed approximately 240 million tax returns and paid refunds totaling $364 billion. The money that they collect is used to pay for government operations.

Audits
Each year, certain businesses and individuals will receive audits on their tax returns. The IRS performs audits to make sure that a business or individual is providing accurate financial information and paying the right amount of taxes. The possibility of a future audit encourages the majority of people to be honest on their taxes. However, paying your taxes on time and honestly does not guarantee that you will avoid an audit. Audits are chosen based on different reasons including some of the following:

  • Random computer selections
  • Mismatching documents or information
  • Transactions involving people who have been audited

Computer System
Since the IRS stores and processes so much information, they need extremely powerful computer systems. According to 2290tax.com, the main IRS computer system handles the majority of their work. This computer or server is used for IRS notices, EIN’s, and SSN’s. It also calculates penalties and determines who gets audited. Another important IRS computer system controls the e-file system. Once the returns are filed, it checks for any errors, issues confirmations, and it backs up the information.

Although most people are wary of the agency, the truth is that the IRS is necessary and extremely efficient. While some view the agency as antiquated, in recent years the agency has aimed to work better with taxpayers, even setting up the Office of Appeals, which helps to resolve tax disputes impartially and out of court.

Variable rate financing in real estate investing

When it comes to real estate investing, the investor usually has one of two primary goals, obtaining ongoing cash flow or getting either a short-term or long term capital gain. First, some basic definitions:

Capital Gains – If you invest for capital gains, your goal is to sell something for more than you bought it after that asset has appreciated. In order to receive the gain, you typically no longer own or control the asset.

Cash Flow – If you are a cash flow investor, your goal is to receive a series of cash payments from your investment, typically monthly or quarterly rental payments, while you own or control the asset.

There are of couse other considerations for real estate investing, primarily depreciation and tax advantages, that go into a decision to buy, sell, or hold an asset such as a residential or commercial real estate property. No matter what your goals, unless you are financing the purchase with existing assets, you will have to consider the role that your loan or mortgage will play.

If you’ve ever taken out a loan, owned a credit card, or have a mortgage for your house, you are probably quite familiar with the various interest rate options you may have. Investors are typically more sophisticated than buyers who are only looking for a place to live in rather than an investment property, and this could give the investor certain advantages. For example, if you have an investment that was financed at a fixed rate, and you are in a position to sell to a buyer who is unable to find a reasonable rate loan, if your fixed rate were low enough, you could offer a variable rate that would ensure a larger cash flow to you in the future.

To get an idea of what the situation may be like for someone who is considering purchasing a single family residential property that you own, you may want to visit a bank site to see what a Standard Variable Rate may be for your buyer.

If you know what kind of options your buyer has, and what your options are for offering alternative financing options, you could put yourself in a better position to profit over the long term.

How to use graphics to explain complex economic relationships

The world of business and finance are filled with numbers, and often filled with fairly complex mathematical concepts in probability, statistics, game theory, and operations research. This is true in just about any enterprise, and is especially true in those kinds of large-scale activities that support basic services in large metropolitan areas.

Dealing with garbage and recycling are one of those kinds of activities that every community has to deal with, and for larger communities it often involves many issues ranging policy making, taxation, electoral politics, and long term planning. Because of the policy and political aspects of these kinds of endeavors, it is vital that every stakeholder in the affected communities have at least a basic understanding of the scale and scope of what that community faces.

When it comes to these kinds of ongoing issues, anyone who is interested in affecting the outcome of the decisions that have to be made should embrace any tool that will help stakeholders and decisions makers agree to their point of view.

One example is the following graphic called the Secret Life of Garbage. A colorful and well-designed graphic like this may not immediately change hearts and minds about how to deal with garbage, but it would almost certainly encourage people to learn something about the issue.

Life of Garbage
Created by: BusinessDegree.net