GlossaryGuide

Volunteer Income Tax Assistance (VITA) This provides free income tax return preparation for certain taxpayers. The VITA program assists taxpayers who have limited or moderate incomes, have limited English skills, or are elderly or disabled. Many VITA sites offer electronic preparation and transmission of income tax returns.

Voluntary Compliance A system of compliance that relies on individual citizens to report their income freely and voluntarily, calculate their tax liability correctly, and file a tax return on time.

Vertical Equity The concept that people in different income groups should pay different rates of taxes or different percentages of their incomes as taxes. “Unequals should be taxed unequally.”

User Tax A tax that is paid directly by the consumer of a good, product, or service.

User Fees An excise tax, often in the form of a license or supplemental charge, levied to fund a public servic

Underground Economy Money-making activities that people don’t report to the government, including both illegal and legal activities.

Transmitter Sends the electronic return data directly to the IRS.

Transmit To send a tax return to the IRS electronically. Tax returns prepared on paper can be sent through the mail.

Transaction Taxes Taxes on economic transactions, such as the sale of goods and services. These can be based on a set of percentages of the sales value (ad valorem-sales taxes), or they can be a set amount on physical quantities (“per unit”-gasoline taxes).

Tip Income Money and goods received for services performed by food servers, baggage handlers, hairdressers, and others. Tips go beyond the stated amount of the bill and are given voluntarily.