Allowed deductions by the federal or state tax authorities for particular categories of expenses in the economy is referred to as tax relief. Tax relief can be a tool for ensuring that there is equal distribution of resources in the economy amongst the rich and the poor. Tax relief can also be a tool for improving a particular sector in the economy by providing sufficient tax deductions to allow for investors to be attracted to that particular industry. It is easy for the government to put a red tape in the consumption of particular goods and services the economy by increasing the percentage of deductible tax from the income earned by the people trading in the goods and services. The kinds of commodities that the government will implement strict tax policies to ensure that its reduction reduces may include alcohol and drug substances that are harmful to the health of the citizens together with goods that are of delicate value such as ammunitions.
The government can implement tax relief policies to ensure that its citizens are protected from the duties of tax payment and they are faced with calamities such as hurricanes and storms. Tax relief helps everyone in the economy and is particularly helpful in ensuring that the middle- and low-income earners in the economy are protected in the expenditure to ensure that there is equitable growth of the economy. Tax deductions can be of various tax categories such as income tax, state tax, property tax and so on. Tax relief programs such as offer in compromise is one good example as it includes tax deductions aimed at assisting individuals and corporations to pay back taxes that they all for less than the full amount.
A general process undertaken by federal and state tax authorities is undertaken to review taxpayers ability to meet taxable duties and this depends on the individuals income or assets that are within the ownership. The government can only implement tax relief if it is found by the review of federal and state tax authorities in the citizens personal income and assets that the recovery of a particular amount of tax would produce significant reductions in the value of the assets owned by the citizens. Citizens need to make claim of tax relief products authorities to implement tax relieving particular sectors of the economy and this should be done based on the laws of the nation which regard to tax and it is required that the patient reason is given as to why tax relief should be granted. In the case of inheritance and gifts, tax relief only applies if tax duties significantly reduce the value of those particular items.