Class 5 Tax Forms

Tax Class #5 and the IRP (Information Returns Process)

 

Received an email the other day about the identity of the a class 5 tax and the relationship the certain tax forms.  The class 5 tax is identified by the Internal Revenue as relating to the Information Returns Processing (IRP) system and estate and gift taxes.  Most sites leave off the IRP and list only estate and gift taxes.  Giving this some thought, I feel that there might be some creditability to this.  According to the Internal Revenue Service (IRS.gov):

“The Information Returns Processing (IRP) System receives data submitted by employers and other third parties (payers) reporting taxpayer income such as wages, pensions, interest and dividends paid during the tax year. This information is validated and stored in the Information Return Master File (IRMF). ”

In reality, the IRP system is not a “tax”.  It is a system or procedure by which forms received are processed and matched up against individual 1040 returns, etc.; “IRP also has two Correlation projects which attempts to match income reported on information returns against income reported by taxpayers on their individual income tax returns.  If no match is discovered, the potential NON FILER cases are referred to Collection for possible action.  If the match discovers sufficient under reported income an UNDERREPORTER case is created and routed to Examination function for follow-up.”

Why the Internal Revenue Service puts the IRP under a class 5 tax is beyond me.  As the 6209 manual explains; ” (b) The third digit is the tax class. This identifies the type of tax each transaction involves.”  Again, the IRP is not a tax, but a system!

Section 2 of the ADP and IDRS Information Manual identifies several of the commonly used tax form that we, or some, use to report their taxes.  For example:  W-2, W-4, 1099 (et. al.) are all identified as forms used for class 5 taxes, estate and gift taxes.

I have read through Geri Powers research on this issue, which is well written, but the question in my mind is still why did the IRS list the IRP, which is a “system”, not a tax?

Study both ideas and make the determination for your own case.  As for me, I choose to go beyond the particulars and work on the foundation of the taxing structure.  No matter what the government does or how many manuals they choose to publish, none will apply to the individual who understands the source of their authority.  Their authority to take your property does not come from me!  And their authority to take my property does not come from you!  Do the genealogy. . . . .

 

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