patriotic organization first called the Society of St. Tammany, or the Columbian Order. The name Tammany evolved from Tamanend, a legendary Delaware Indian chief, and the members of Tammany Hall used many Indian words to designate their various titles. Each trustee was a sachem, and the presiding officer was a grand sachem; the only person to receive the honor of great grand sachem was a president of the United States. The member who served as secretary was known as a scribe, and the building that housed the Tammany meetings was called a wigwam. From these innocent beginnings, Tammany Hall grew into a political force. Affiliates of the organization actively participated in politics in the early nineteenth century. In 1812 the association moved into the first Tammany Hall with a membership of approximately fifteen hundred members. By 1821 the association was receiving widespread support in New York City. Unfortunately Tammany Hall was also gaining a reputation for corruption, control, and subterfuge. In 1854 Tammany Hall member Fernando Wood was elected mayor of New York City. From then until 1933, City Hall was dominated almost exclusively by Tammany Hall. The most corrupt and infamous member of Tammany Hall was William Marcy Tweed, called “Boss” Tweed. He served as a state senator in 1868 and, with his followers, known as the Tweed Ring, dominated state government and defrauded New York City of millions of dollars. The corruption continued under subse- quent Tammany Hall leaders, such as “Honest John” Kelly, Richard F. Croker, and Charles F. Murphy. By 1930, however, Samuel Seabury had begun to direct revealing inquiries against the city magistrates’ courts. These investigations led to the downfall of Tammany Hall and the resignation of incumbent mayor James J. Walker in 1932. Fiorello LaGuardia was elected mayor in 1933, and an anti-Tammany Hall era began. The once-powerful Tammany Hall machine was resurrected briefl y in the 1950 s by politician Carmine DeSapio but never regained the stronghold in New York politics that it once enjoyed. RESOURCES Allen, Oliver E. 1993. The Tiger: The Rise and Fall of Tammany Hall. New York: DaCapo. LaCerra, Charles. 1997. Franklin Delano Rossevelt and Tammany Hall of New York. New York: Univ. Press Thomas, Samuel J. 2004. “Mugwump Cartoonists, the Papacy, and Tammany Hall in America’s Gilded Age.” Religion and American Culture 114. TAMPER To meddle, alter, or improperly interfere with something; to make changes or corrupt, as in tampering with the evidence or unduly communi- cating with (perhaps threatening or actually harming) a witness in a proceeding for the purpose of influencing the outcome. Witness tampering is a felony. Sentences for witness tampering in federal cases can range up to 30 years, and substantial fines are possible as well. In December 2008, Colorado realtor Arvin Weiss was sentenced to seven years in federal prison for mortgage fraud and witness tampering. Jury tampering, also a felony, involves the undue influence of the makeup or decisions of a jury through any means other than the evidentiary process. It can occur, for example, in the form of an inappropriate communication with a juror, including a threat or a bribe offered. v TANEY, ROGER BROOKE Roger Brooke Taney served as chief justice of the U.S. Supreme Court from 1836 to 186 4. During his almost 30 years on the bench, Taney sought to encourage economic growth The members of Tammany Hall had a corrupt stronghold on New York City politics from the early 1880s until the 1930s. AP IMAGES GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION 478 TAMPER and competition by rendering decisions that reshaped the traditional law concerning prop- erty rights and commerce. Although he s erved with great distinction on the Court, he is best known as the author of the infamous decision in Dred Scott’scase, DRED SCOTT V. SANDFORD, 60 U.S. (19 How.) 393, 15 L. Ed. 691 (1857). This decision fueled sectional hostility and moved the n ation closer to civil war. Taney was born on March 17, 1777, in Calvert County, Maryland. A descendant of an aristocratic tobacco-growing family, Taney graduated from Dickinson College in 1795, studied law, and was admitted to the Maryland bar in 1799. That same year he was elected to a one-year term in the Maryland House of Delegates. Taney practiced briefly in Annapolis before settling in Frederick, where he soon was recognized as a distinguished attorney. Taney was elected to the Mar yland Senate in 1816 as a member of the FEDERALIST PARTY. Despite the party’s belief in a strong national government, Taney endorsed STATES’ RIGHTS.By the time he left the Senate in 1821, the Federalist party was on the verge of extinction. Taney switched his allegiance to the DEMOCRATIC PARTY and soon became an influential figure in the Maryland state party leadership. He was elected Maryland attorney general in 1826 and served until 1831. President ANDREW JACKSON appointed Taney U.S. atto rney general in 1831. Taney supported the president’s opposition to rechartering the Second Bank of the United States and helped him write the VETO message. Jackson and the Democrats saw the bank as a dangerous institution that would enhance the power of the national government. Having vetoed the rechartering, in 1833 Jackson ordered Secretary of the Treasury William J. Duane to withdraw the deposits of the federal government from the bank, but Duane resigned instead. Jackson then appointed Taney secretary of the treasury so that he could carry out the order. Confirmation of Taney’s appointment as treasury secretary was frustrated by members of the WHIG PARTY in the U.S. Senate, but by that time Taney had succeeded in distributing the federal funds among several state banks. Taney returned to private practice, but President Jackson wanted him on the U.S. Supreme Court. In 1835 he nominated Taney as an associate justice, but the Senate, still disgruntled about the bank deposit issue, ▼▼ ▼▼ Roger Brooke taney 1777–1864 17751775 18251825 18501850 18751875 18001800 ❖ 1777 Born, Calvert County, Md. ◆◆ 1795 Graduated from Dickinson College (Pa.) 1799 Admitted to Md. bar; elected to Md. House of Delegates 1775–83 American Revolution 1816–21 Served in Md. Senate ◆ 1826 Elected Md. attorney general ◆ 1831 Appointed U.S attorney general by President Jackson ◆ 1833 Appointed secretary of the Treasury ◆ 1836–64 Served as chief justice of the Supreme Court 1837 Wrote majority opinion in Charles River Bridge v. Proprietors of Warren Bridge ◆ 1857 Wrote majority opinion in Dred Scott v. Sandford ◆ 1866 Civil Rights Act of 1866 passed ❖ 1864 Died, Washington, D.C. 1861–65 U.S. Civil War Roger Taney. PHOTOGRAPH BY MATTHEW BRADY. LIBRARY OF CONGRESS GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION TANEY, ROGER BROOKE 479 refused to confirm the appointment. The composition of the Senate soon changed, however, and upon the death of JOHN MARSHALL in 1836, Taney was nominated and confirmed as chief justice. In his first major opinion as chief justice, in the case of CHARLES RIVER BRIDGE V. PROPRIETORS OF WARREN BRIDGE , 36 U.S. (11 Pet.) 420, 9 L. Ed. 773 (1837), Taney wrote for the majority of a divided Court. Taney decided that a franchise to operate a toll bridge that had been granted by the state of Massachusetts in the late eighteenth century, in the absence of explicit provisions, could not be construed as granting a MONOPOLY to the toll bridge operator. Therefore, when the Massachusetts state legislature later granted another franchise to operate a competing toll bridge nearby, the legislature did not violate Article I, Section 10, of the U.S. Constitution, which forbids states from impairing the obliga- tion of contracts. The opinion demonstrated Taney’s belief that economic development could best be promoted and the public good most expeditiously furthered by fostering competition. Until Dred Scott Taney had demonstrated a reluctance to make the Supreme Court the arbiter of nation al political issues. By the mid- 1850s, however, the national debate over SLAVERY had almost reached the boiling poi nt. Taney believed a decision by the Court would have a tempering effect on the country. He was clearly wrong. Dred Scott was a slave owned by an army surgeon, John Emerson, who resided in Mis- souri. In 1836 Emerson took Scott to Fort Snelling, in what is now Minnesota, but was then a territory in which slavery had been expressly forbidden by the MISSOURI COMPROMISE OF 1820. In 1846 Scott sued for his freedom in a Missouri state court, arguing that his residence in a free territory released him from slavery. The Missouri Supreme Court rejected his argument, and Scott appealed to the U.S. Supreme Court. The Court heard arguments in Dred Scott in 1855 and 1856. The Court could have properly disposed of the case on narrow procedural grounds, but Taney decided that the Court needed to address the status of slavery in the territories. He wrote a tortuous opinion, argu- ing that because of the prevailing attitudes toward slavery and African Americans in 1787– 1789, when the Constitution was drafted and ratified, a slave was not and never could become a federal citizen. In addition, Taney ruled that the free descendants of slaves were not federal citizens and that property in slaves was entitled to such protection that Congress could not constitutionally forbid slavery in the territories. The immediate effect of the Dred Scott decision was to convince abolitionists that the South and the Supreme Court planned to impose slavery throughout the Union. Taney was attacked as a former slave owner (though he had freed his slaves, whom he had inherited) and was called wicked, cowardly, and hypocrit- ical. With the outbreak of the Civil War in 1861, it became clear that Taney’ s decision had failed to achieve its essential purpose. Taney remained loyal to the Union during the Civil War, yet his effectiveness and that of the Court had been seriously compromised by Dred Scott. Taney sought to protect constitutional rights during the Civil War, ruling that even in wartime the EXECUTIVE BRANCH and the military had no power to suspend constitutional protec- tions (Ex Parte Merryman, 17 Fed. Cas. 144 [1861]). Though Taney saw the Court as a restraining influence on the exercise of ARBITRARY power by other branches of government, his efforts were ineffective. The Radical Republican– controlled Congress and President ABRAHAM LINCOLN ignored the pronouncements of the Court. From Lincoln’s EMANCIPATION PROCLAMA- TION and the CIVIL RIGHTS ACT of 1866 (14 Stat. 27) through the passage of the Thirteenth, Four- teenth, and Fifteenth Amendments to the Constitution, the Republicans repeatedly repudi- ated Dred Scott. Nevertheless, Taney continued to hold the office of chief justice until his death on October 12, 1864, in Washington, D.C. FURTHER READINGS Huebner, Timothy S., and Peter Renstrom, eds. 2003. The Taney Court, Justice Rulings and Legacy. Denver, CO: ABC-CLIO. Siegel, Martin. 1987. The Taney Court, 1836–1864. Millwood, NY: Associated Faculty Press. Smith, Charles W. 1936. Roger B. Taney: Jacksonian Jurist. Reprint, 1973. New York: Da Capo Press. TANGIBLE Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real WE MUST LOOK AT THE INSTITUTION OF SLAVERY AS PUBLICISTS , AND NOT AS CASUISTS .ITISA QUESTION OF LAW , AND NOT A CASE OF CONSCIENCE . —ROGER BROOKE TANEY GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 480 TANGIBLE and substantial. An automobile is an example of tangible PERSONAL PROPERTY. TARIFF The list of items upon which a duty is imposed when they are imported into the United States, together with the rates at which such articles are taxed. The term tariff is also used in reference to the actual custom or duty payable on such items. CROSS REFERENCES Customs Duties; Import Quotas . TAX AVOIDANCE The process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws to reduce taxable income. Through tax avoidance, an individual takes advantage of all legal opportunities to minimize his or her state or federal INCOME TAX, gift tax, or estate tax. An individual may, for example, avoid federal income tax by investing a large sum of money in municipal bonds, since the interest on such bonds is not considered taxable income on which federal tax is due. Interest on the same amount of money placed in a savings account must be included as taxable income. Tax avoidance must be distinguished from TAX EVASION, which is the employment of unlawful methods to circumvent the payment of taxes. Tax evasion is a crime; tax avoidance is not. TAX COURT A specialized federal or state court that decides cases involving tax-related controversies. All state governments and the federal government provide a means of adjudicating cases dealing with taxation. Tax courts deal solely with tax disputes, which may involve the valuation of real property, the amount of tax the state or federal revenue agency seeks to collect, or the tax status of a PENSION plan or a charitable organization. The U.S. Tax Court is organized under Article I of the U.S. Cons titution (26 U.S.C.A. § 7441). Currently an independent judicial body in the legislative branch, the court was originally created as the U.S. Board of Tax Appeals, an independent agency in the EXECUTIVE BRANCH,by the Revenue Act of 1924 (43 Stat. 336) and continued by the Revenue Act of 1926 (44 Stat. 105) and the INTERNAL REVENUE CODES of 1939, 1954, and 1986. The court’s name was changed to the Tax Court of the United States by the Revenue Act of 1942 (56 Stat. 957), and the Article I status and change in name to U.S. Tax Court were effected by the TAX REFORM ACT OF 1969 (83 Stat. 730). The court is composed of 19 judges. Its strength is augmented by senior judges who may be recalled by the chief judge to perform further judicial duties and by fourteen special trial judges who are appointed by the chief judge and serve at the pleasure of the court. The chief judge is elected biennially from among the nineteen judges of the court. The Tax Court tries and adjudicates contro- versies involving deficiencies or overpayments in income, estate, gift, and generation-skipping transfer taxes in cases where deficiencies have been determined by the commissioner of Internal Revenue. It also hears cases started by transferees and fiduciaries who have been issued notices of liability by the commissioner. The Tax Court has jurisdiction to redeter- mine excise taxes and penalties imposed on private foundations. It also has jurisdiction over excise taxes with regard to public charities, qualified pension plans, and real estate invest- ment trusts. At the option of the individual taxpayer, simplified procedures may be used for the trial of small tax cases. In a case conducted under these procedures, the decision of the court is final and is not subject to review by any court. The jurisdictional maximum for such cases is $10,000 for any disputed year. In disputes relating to public inspection of written determinations by the INTERNAL REVENUE SERVICE (IRS), the Tax Court has jurisdiction to restrain disclosure or to obtain addi tional disclosure of written determinations or back- ground files. The Tax Court also has jurisdiction to make declaratory judgments relating to the qualifica- tion of retirement plans, including pension, profit sharing, stock bonus, ANNUITY, and bond purchase plans; the tax-exempt status of a charitable organization, qualified charitable donee, private foundation, or private operating GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION TAX COURT 481 foundation; and the status of interest on certain government obligations. Under the Technical and Miscellaneous Revenue Act of 1988 (102 Stat. 3342), the Tax Court also has injunctive authority over certain assessment procedures, authority to review cert ain assessments and levies, and authority to hear and decide appeals by taxpayers concerning the denial of adminis- trative costs by the IRS. All decisions, other than those in small tax cases, are subject to review by the U.S. COURTS OF APPEALS and thereafter by the U.S. Supreme Court upon the granting of a writ of certiorari. The office of the court and all of its judges are located in Washington, D.C., with t he exception of a field office located in Los Angeles, California. The court conducts trial sessions at various locations in the United States as convenient to taxpayers as is practicable. Each trial session is conducted by a single judge or a special trial judge. All proceedings are public and are conducted judicially in accor- dance with the court’s rules of practice and the RULES OF EVIDENCE applicable in trials without a jury in the U.S. District Court for the District of Columbia. A fee of $60 is required for filing a petition. Practice before the court is limited to practitioners admitted under the court’s rules. State tax courts are generally part of the executive branch of government. These courts handle cases from taxpayers that are primarily concerned with the valuation of real and PERSONAL PROPERTY. FURTHER READINGS Berson, Susan A. 2001. Federal Tax Litigation. New York: Law Journal Press. Casey, Laurence F. 1997. Federal Tax Practice: A Treatise of the Laws and Procedures Governing the Assessment and Litigation of Federal Tax Liabilities. St. Paul, Minn.: West Group. Sharp, William M., William T. Harrison III, and Rachel A. Lunsford. 2002. “Settling IRS Examinations and Tax Court Cases.” Tax Notes (July 8). Shores, David F. 2002. “Deferential Review of Tax Court Decisions: Taking Institutional Choice Seriously.” Tax Lawyer 55 (spring). U.S. Government Manual Website. Available online at www.gpoaccess.gov/gmanual (accessed January 29, 2010). Watson, Cammilla E. 2006. Tax Procedure and Tax Fraud in a Nutshell. 3d ed. St. Paul, Minn.: Thomson/West. TAX DEED A written instrument that provides proof of ownership of real property purchased from the government at a TAX SALE, conducted after the property has been taken from its owner by the government and sold for delinquent taxes. Some areas allow the delinquent owner a chance to buy back the property before an open sale takes place, and this redemtpion period can sometimes last after the sale of the property, where the new purchaser gets reimbursed for the sale price plus a penalty amount paid by the original owner. TAX EVASION The process whereby a person, throu gh commis- sion of fraud, unlawfully pays less tax than the law mandates. Tax evasion is a criminal offense under federal and state statutes. A person who is convicted is subject to a prison sentence, a fine, or both. The failure to file a federal TAX RETURN is a misdemeanor, but a consistent pattern of failure to file for several years will constitute evidence that these failures were part of a scheme to avoid the payment of taxes. If this pattern is established, the violator may be charged with a felony under section 7201 of the INTERNAL REVENUE CODE . The U.S. SUPREME COURT,inSpies v. United States, 317 U.S. 492, 63 S. Ct. 364, 87 L. Ed. 418 (1943), ruled that an OVERT ACT is necessary to give rise to the crime of INCOME TAX evasion. Therefore, the government must show that the taxpayer attempted to evade the tax rather than passively neglected to file a return, which could be prosecuted under section 7203 as a misde- meanor. A person who has evaded taxes over the co urse of several years may be charged with multiple counts for each year taxes were alle- gedly evaded. According to the Supreme Court in Sansone v. United States, 380 U.S. 343, 85 S. Ct. 1004, 13 L. Ed. 2d 882 (1965), a conviction under section 7201 requires proof BEYOND A REASONABLE DOUBT as to each of three elements: the existence of a tax deficiency, willfulness in an attempted evasion of tax, and an affirmative act constitut- ing an evasion or attempted evasion of the tax. An affirmative act is anything done to mislead the government or to conceal funds to avoid payment of an admitted and accurate deficiency. Affirmative behavior can take two forms: the evasion of assessment, and the evasion of payment. Affirmative acts of evasion include evading taxes by placing assets in GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 482 TAX DEED another’s name, dealing in cash, and having receipts or debts paid through and in the name of another person. Merely failing to pay assessed tax, without more, does not constitute tax evasion. The keeping of a double set of books or the making of false invoices or documents can be proof of tax evasion. In some cases, the mailing of a false return may constitute the overt act required under section 7201. The Federal Sentencing Guidelines recom- mend a sentence of between 27 to 33 months for the crime of tax evasion. However, courts may deviate from the Sentencing Guidelines and often do. The Ninth Circuit ruled in U.S. v. Orlando, F.3d 1235 (9th Cir. 2009), that the sentencing court did not abuse its discretion by imposing a 40-month prison sentence for a DEFENDANT convicted of tax evasion where, although the sentence was an up ward variance from the Sentencing Guidelines range of 27 to 33 months’ imprisonme nt, the factual basis the court relied on for the variance did not amount to prejudicial surprise. The court considered the defendant’s long pattern of criminal history, the fact that he had committed the of fense while on supervised release, the seriousness of his crime, and the valuable deterrent effect of a stiff tax evasion sentence. FURTHER READINGS Mertens, Jacob, Jr. 1996. Mertens Law of Federal Income Taxation. Rochester, N.Y.: Clark Boardman Callaghan. CROSS REFERENCES Taxation; Tax Avoidance. TAX RATE The amount of charges imposed by the govern- ment upon personal or corporate income, capital gains, gifts, estates, and sales that are within its statutory authority to regulate. Tax rate schedules are utilized by taxpayers whose taxable incomes exceed certain desig- nated amounts. Separate schedules are provided for married individuals who file jointly, unmar- ried people who maintain a household, single people, estates, trusts, and married couples who file separate returns. CROSS REFERENCES Income Tax; Taxation. TAX REFORM ACT OF 1986 The Tax Reform Act of 1986 (100 Stat. 2085, 26 U.S.C.A. §§ 47, 1042) made major changes to the ways in which income is taxed. The act either altered or eliminated many deductions, changed the tax rates, and eliminated several special calculations that had been permitted on the basis of marriage or fluctuating income. Though the act was the most massive overhaul of the tax system in decades, some of its key provisions were changed in the Revenue Reconciliation Act of 1993 (107 Stat. 416). The 1986 act reduced the number of INCOME TAX rates to two rates of 15 percent and 28 percent for most taxpayers, although a third rate of 33 percent was imposed on income within a certain upper-middle income bracket. Congress and the administration of President RONALD REAGAN believed a policy of low rates on a broad tax base would stimulate the economy and end an era of complex tax laws and regulations that mainly benefited those who knew how to manipulate the system. The 1986 act also sought to eliminate special incentives that made tax shelters attractive and the tax laws more complicated. Income derived from REAL ESTATE became distinguishable on the basis of whether it was “active” or “passive.” Passive income is income derived from a situation in which the taxpayer does not have an active management role, but it does not include capital gains on stocks, interest income on bonds, or interest on money market acc- ounts. Before 1986, wealthy individuals could use passive income losses from a real estate tax shelter to offset active income. The 1986 act Calling the bill a victory for fairness, President Ronald Reagan signs the Tax Reform Act of 1986 into law on the south lawn of the White House. AP IMAGES GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION TAX REFORM ACT OF 1986 483 limited the deduction of passive losses to the amount of passive income but allowed tax- payers to carry forward any excess passive losses to the next year. The act al so eliminated the deductibility of nonmortgage consumer interest payments such as interest on credit card balances, automobile loans, and life insurance loans. It also estab- lished the floor for miscellaneous expenses at two percent of ADJUSTED GROSS INCOME for taxpayers who itemized deductions. Individual Retirement Accounts (IRAs) once allowed a taxpayer to invest before-tax dollars and enjoy tax-free compounding of interest. The 1986 statute ended full deductibility of IRAs for single employees covered by qualified retirement plans and earning more than $35,000 annually. For married employees, the cut-off for full deductibility was set at $50,000. In addition, the law imposed a penalty on withdrawals of IRA contributions before the age of 59 1/2. Another retirement plan, the KEOGH PLAN, permitted under section 401(k), once allowed a taxpayer to invest up to $30,000 a year without paying taxes on this income. The ceiling dropped to $7,000 in 1987. The act also eliminated a provision that had enabled two-income married couples to reduce their taxes. A couple can no longer take a deduction based on the lower salary of the two; the deduction had allowed them to pay the same tax on the lower salary as a single person would pay on that amount. The act also abolished “income averaging.” Formerly, indi- viduals whose incomes varied considerably from year to year could average their income over several years, a calculation that resulted in lower taxes owed in the years of highest income. Pursuant to the Tax Reform Act of 1986, the top TAX RATE in 1988 was lowered from 50 percent to 28 percent, while the bottom rate was raised from 11 percent to 15 percent. This marked the only time in U.S. history that the top rate was reduced while the bottom rate was increased. The reduction of the top tax rate was even more significant considering that the highest tax rate when Reagan took office in 1981 was 70 percent. The ballooning FEDERAL BUDGET deficits of the late 1980s and early 1990s led Congress to make changes to the 1986 act. The 1993 Revenue Reconciliation Act revamped the rate structure, imposing rates of 15, 28, 31, 36, and 39.6 percent. The act also limited itemized deduc- tions for upper-income taxpayers and removed the limit on EARNED INCOME subject to MEDICARE tax. The 1993 act also established tax incentives for selected groups and reduced the amount that can be deducted for moving expenses and meals and entertainment. FURTHER READINGS Bankman, Joseph, Thomas D. Griffith, and Katherine Pratt. 2008. Federal Income Tax: Examples and Explanations. 5th ed. Frederick, Md.: Aspen Publishers. Chirelstein, Marvin A. 2009. Federal Income Taxation: A Law Student’s Guide to the Leading Cases and Concepts. 11th ed. St. Paul, Minn.: Foundation Press. CROSS REFERENCE Taxation. TAX RETURN The form that the government requires a taxpayer to file with the appropriate official by a designated date to disclose and detail income subject to taxation and eligibility for deductions and exemp- tions, along with a remittance of the tax due or a claim for a refund of taxes that were overpaid. The federal and state governments specify the deadlines for filing tax returns without incurring any additional interest or penalties for lateness. For most income taxpayers, the deadline of April 15 of the year following the close of the tax year for which the report is filed applies to both federal and many state returns. For persons who have made taxable gifts, the federal gift tax return is due annually on or before April 15 of the year following the tax year (as opposed to the former requirement of quarterly filing). For executors or administrators of estates that owe estate tax, a federal estate tax return must be filed within nine months of the date of death of the decedent. States may have comparable deadlines for gift and estate tax returns. CROSS REFERENCES Estate and Gift Taxes; Income Tax. TAX SALE A transfer of real property in exchange for money to satisfy charges imposed thereupon by the government that have remained unpaid after the legal period for their payment has expired. Tax sales are authorized by state statutes to collect taxes that are long overdue to the GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 484 TAX RETURN state government from negligent or unwilling individuals. Requirements Any sale of real property for delinquent taxes must be conducted in compliance with legally imposed requirements, or it is not valid. Ordinarily the tax collector is required to make and publish a list of property on which taxes have not been paid. Such a list must contain an adequate description of each parcel of land to be sold, the owner’s name, the amount due, and the period of time for which the taxes are due. The interest permitted by law on the delinquent taxes, penalties for default in payment, and the costs incurred for the sale may be included in the amount due. Certain states mandate that this delinquency list must be filed or recorded in the office of the county clerk, and statutes may indicate specifically the newspapers in which the list is to be published. Notice The purpose of a no tice of a tax sale is to warn the owner of the property that it will be sold and to furnish information to prospective buyers. Failure to provide notice to the owner renders any subsequent sale of the property invalid. This rule is co nsistent with DUE PROCESS requirements that any individual must be given notice and opportunity to defend himself or herself before being deprived of his or her property. The notice given to the owner must adequately describe the property, the amount of tax owed, and for what years it is due. Manner State statutes regulate the manner in which tax sales may be conducted. Ordinarily the sale is open to the public in order to ascertain that a fair price for the property will be obtained in the open market. A private sale is valid, however, when authorized by statute. Price The general rule is that land offered at a tax sale must bring at least the total amount of taxes due on it, plus legal costs and charges. In some jurisdictions, a sale for a smaller amount is invalid. In the event that the land is sold at the tax sale for a price that exceeds the amount owed, the sale might be valid, depending upon the state; however, the excess must be given to the delinquent taxpayer. Buyer Any individual who is not disqualified by statute may purchase land at a tax sale provided he or she is the highest bidder. Upon payment of the amount bid, the buyer will be given a tax deed that serves as proof of his or her ownership of the property. Certain states mandate that a tax sale be confirmed in a court proceeding before the purchaser actually takes title or ownership to the property. A state, county, MUNICIPAL CORPORATION,or other governmental unit may buy land sold at a tax sale only if authorized by statute. Redemption The owner of property that is the subject of a tax sale is given a statutory right of redemption— that is, if, within a certain period, the owner pays the back taxes plu s any other legal charges due, he or she will regain complete ownership of the property free of the prior tax debt. The public policy behind such a statute is to provide the taxpayer with every reasonable opportunity to redeem property since FORFEITURE of land has always been regarded as a drastic remedy. Generally any individual interested in the property sold for taxes is entitled to redeem it if his or her interest in the property will be affected by the purchaser taking complete ownership of the land, such as in the case of an individual who has a life estate in the property. Redemption must occur within the time and in the manner specified by the statute. Sale Prohibited Courts can proscribe a tax sale in cases where (1) a sale would be unlawful, so that the buyer’s ownership of the land would be open to question; (2) the taxes have been paid; (3) the levy or assessment was unlawful or fraudulent; or (4) the valuation was grossly excessive. Where errors or irregularities exist in the assessment that could have been rectified if promptly brought to the attention of the proper authorities, the tax sale will not be enjoined if such errors have no effect upon the substantial justice of the tax or the liability of the property for its satisfaction. FURTHER READINGS Edson, Pattie, 1998. How to Buy Land at Tax Sales. Kansas City, MO: Truman. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION TAX SALE 485 Lilienthal, Christopher. 2003. “Tax Sale Set Aside: Officials Failed to Examine Past Due Taxes: County and Township Tax Offices Failed to Use ‘Common Sense Business Practices’.” Pennsylvania Law Weekly (March 31). Sacks, Michael E. 1998. “Escape Clause in Tax Sale Law under Review by High Court.” Pennsylvania Law Weekly (November 9). TAXABLE INCOME Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity’s tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. CROSS REFERENCE Income Tax. TAXABLE SITUS The location where charges may be levied upon PERSONAL PROPERTY by a government, pursuant to provisions of its tax laws. The situs of property for tax purposes is determined on the basis of whether the state imposing the tax has adequate contact with the property it is seeking to tax so that the particular tax is justified in fairness. Ordinarily personal property has its taxable situs in the place where its owner is domiciled or in the state where the owner has a true, fixed, and permanent home. TAXATION The process whereby charges are imposed on individuals or property by the legislative branch of the federal government and by many state governments to raise funds for public purposes. The theory that underlies taxation is that charges are imposed to support the government in exchange for the general advantages and protection afforded by the government to the taxpayer and his or her property. The existence of government is a necessity that cannot continue without financial means to pay its expenses; therefore, the government has the right to compel all citizens and property within its limits to share its costs. The state and federal governments both have the power to impose taxes upon their citizens. Kinds of Taxes The two basic kinds of taxes are excise taxes and property taxes. Excise Tax An excise tax is directly imposed by the law-making body of a government on merchandise, products, or certain types of transactions, including carrying on a profession or business, obtaining a license, or transferring property. It is a fixed and absolute charge that does not depend upon the taxpayer’s financial status or the value that the taxed property has to the taxpayer. An estate tax is a tax that is placed on, and paid by, the estate of a decedent prior to the distribution of the property among the heirs in exchange for the privilege of transferring the property. Individuals who inherit property may be required to pay an inheritance tax on the value of the particular property received. Gift taxes are incurred by an individual who gives another a valuable gift. Another type of excise tax is a sales tax, which is placed on certain goods and services. Precisely what goods and services are taxed is determined by the individual state legislatures. In some instances, a sales tax placed upon expensive items that are considered luxuries is known as a luxury tax. A corporate tax is an excise tax imposed upon the privile ge of conducting business in the corporate capacity, which provides certain advantages to individuals, such as limited liability. It is measured by the income of the corporation involved. Other common examples of excise taxes are those imposed upon the processing of meat, tobacco, cheese, and sugar. Property Tax A property tax takes the tax- payer’s wealth into account, as represented by the taxpayer’s income or the property he or she owns. INCOME TAX, for example, is a property tax that is assessed and levied upon the taxpayer’s income; property taxes are imposed mainly on real property. Direct and Indirect Taxes Taxes are also classified as direct and indirect. A DIRECT TAX is one that is assessed upon the property, business, or income of the individual who is to pay the tax. Conversely, indirect taxes are taxes that are levied upon commodities before they reach the con- sumer who ultimately pays the taxes as part of the market price of the commodity. One common example of an indirect tax is a value-added tax, which is paid on the value added to the product at each stage of production, distribution, and sales. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 486 TAXABLE INCOME Federal Tax The Constitution and laws passed by Congress have given the U.S. government authorization to collect variou s taxes. For example, duties are taxes imposed upon imports and can be either AD VALOREM (a percentage of the value of the property) or specific (a fixed amount). An impost is another name for an import tax. Congress may not tax exports, however. The SIXTEENTH AMENDMENT to the Constitu- tion gives Congress the power to impose a federal income tax. Congress has also enacted laws that allow the federal government to tax estates remaining after people die, and gifts made while people are alive. State Tax States possess the inherent power to levy both property and excise taxes. The TENTH AMENDMENT to the Constitution, which reserves to the states powers that have neither been granted to the United States nor proscribed to the states by the Constitution, implicitly acknowledges this FUNDAMENTAL RIGHT. A state may raise funds by taxation in aid of its own welfare, provided the tax does not constitute unjust DISCRIMINATION among those who are to share the tax burden. Property taxes, for example, may properly be imposed on landowners within the jurisdiction. In addition, the state may levy income, gift, estate, and inheritance taxes upon its residents. The question of whether states should be able to tax sales conducted over the INTERNET has generated increased interest as states scramble for additional funding in the wake of budget deficits. Technically, these transactions are tax- able. A U.S. Supreme Court ruling in 1992, however, stated that states can only require sellers to collect taxes if they have a physical presence in the same state as the consumer. The reason, said the Court in Quill Corp. v. North Dakota, 504 U.S. 298 112 S. Ct. 1904, 119 L. Ed. 2d 91, is that the current system of 7,500 taxing jurisdictions across the country makes it too complicated for online retailers to collect sales taxes fairly and efficiently. In 1998 Congress imposed a three-year MORATORIUM against any Internet taxes. The moratorium has been extended three times, the last coming in 2007, when Congress set a new expiration date of 2014. Online businesses and consumers have sup- ported these moratoria for the obvious reason that taxes would cost money and affect sales, as well as the less obvious reason that tracking Internet sales would violate individual privacy by generating records of who is purchasing what. The National Governors Association (NGA) initiated the Streamlined Sales Tax Project (SSTP) in 2000 with the goal of adopting uniform tax rates among the states and thus making it easier for online retailers to co llect taxes. By 2009, 44 states participated in the project, with 15 states in total compliance with the uniform rates. Equality Equality is a fundamental principle of taxation. The taxing power of the legislature must always be exercised in such a way that the burdens imposed by taxation are laid as equally as possible on all classes. The PROGRESSIVE TAX, which imposes a higher rate of taxation upon individuals with large incomes than on those with small incomes, is an attempt to achieve this objective. Equality in taxation is achieved when no higher rate in proportion to value is imposed on one individual or his or her property than on other people or prop erty in similar circum- stances. Equality does not mandate that the benefits that arise from taxation should be enjoyed by all the people in equal degree or that each individual should share in each particular benefit. For example, the fact that a HUSBAND AND WIFE have no children or choose to send their children to private school does not signify that State Tax Revenues, 2008 SOURCE: U.S. Census Bureau, State Government Tax Collections: 2008. Property taxes Sales and gross receipts Licenses Individual income Corporation net income Death and gift Documentary and stock transfer Severance Other taxes Millions of dollars 48,806 280,683 51,805 5,101 7,727 18,260 395 356,292 12,719 0 100,000 200,000 300,000 400,000 ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION TAXATION 487 . Tax Reform Act of 198 6 into law on the south lawn of the White House. AP IMAGES GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION TAX REFORM ACT OF 198 6 483 limited the deduction of passive losses. AT THE INSTITUTION OF SLAVERY AS PUBLICISTS , AND NOT AS CASUISTS .ITISA QUESTION OF LAW , AND NOT A CASE OF CONSCIENCE . —ROGER BROOKE TANEY GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 480. operating GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION TAX COURT 481 foundation; and the status of interest on certain government obligations. Under the Technical and Miscellaneous Revenue Act of 198 8