8.5 Tax Collection Steps

The collection of taxes—or more accurately, the entire tax system—involves several steps:

1. Compilation and maintenance of taxpayers information
2. Declaration or assessment (tabulation of taxable activity)
3. Revenue and taxpayer accounting
4. Delinquency control, compliance, and collections
5. Audits

The compilation and maintenance of taxpayer information involve tracking identifiers such as social security numbers, taxpayer identification numbers, and parcel numbers for properties such as homes. This information is important to manage tax-related activities and ensuring accurate records for each taxpayer. The declaration or assessment process refers to the tabulation of taxable activities. For the income tax case, this includes sources like miscellaneous income, interest income, dividends, and distributions besides the main source of income.

Revenue and taxpayer accounting is a critical step where payments must be deposited, recorded, and properly distributed. After taxpayers submit their returns, the relevant information must be posted and made accessible to taxpayers for review. Delinquency control, compliance, and collections ensure that taxpayers meet their obligations. Active compliance requires taxpayers to understand their responsibilities, with accessible resources available to assist them in meeting legal requirements. Audits are conducted to ensure that taxpayers comply with tax laws. This process helps detect and address discrepancies, ensuring proper taxation and collection.