Chapter 01
Taxes and Taxing Jurisdictions
True / False Questions
1. Payment of a tax entitles the payer to a specific good or service from the government.
True False
2. A user fee entitles the payer to a specific good or service from the government.
True False
3. A tax is intended to deter or punish unacceptable behavior.
True False
4. A tax is a payment to support the cost of government.
True False
5. Under U.S. tax law, corporations are entities separate and distinct from their shareholders.
True False
6. The person who pays a tax directly to the government always bears the economic incidence
of the tax.
True False
,7. In some cases, the payer of a tax can shift the economic incidence of the tax to a third party.
True False
8. The U.S. government has jurisdiction to tax individuals who are not U.S. citizens but who are
permanent U.S. residents.
True False
9. A tax with a graduated rate structure must have at least two brackets of tax base.
True False
10. A sales tax is an example of a transaction-based tax.
True False
11. A tax on net income is an example of a transaction-based tax.
True False
12. A sales tax is an example of an activity-based tax.
True False
13. Ad valorem property taxes are the major source of revenue for local governments.
True False
14. Taxes on personal property are more difficult to administer and enforce than taxes on real
property.
True False
,15. A state government may levy either a sales tax or a use tax on consumers but not both.
True False
16. Sellers of retail goods are responsible for collecting sales tax from their customers and
remitting the tax to the state government.
True False
17. Purchasers of consumer goods through the mail are responsible for paying use tax on goods
for which sales tax was not collected by the seller.
True False
18. The majority of state governments raise revenue from both personal and corporate income
taxes.
True False
19. The federal government imposed the first income tax to raise money to fight the War of 1812.
True False
20. The U.S. Constitution gives the federal government the power to impose a tax on income
from whatever source derived.
True False
21. The federal government collects more revenue from the corporate income tax than from the
individual income tax.
True False
22. The federal government does not levy property taxes or a general sales tax.
True False
, 23. A business that operates in more than one state is required to pay state income tax only to
the state in which it is incorporated.
True False
24. The potential for conflict among taxing jurisdictions is greatest for businesses operating on a
global scale.
True False
25. Fewer than half of the state governments depend on gambling as a source of revenue.
True False
26. Businesses that sell over the internet must collect sales tax only from purchasers living in a
state in which the business has a physical presence.
True False
27. The Internal Revenue Code is written by the Internal Revenue Service.
True False
28. Treasury regulations are tax laws written by the Treasury Department.
True False
Multiple Choice Questions
Taxes and Taxing Jurisdictions
True / False Questions
1. Payment of a tax entitles the payer to a specific good or service from the government.
True False
2. A user fee entitles the payer to a specific good or service from the government.
True False
3. A tax is intended to deter or punish unacceptable behavior.
True False
4. A tax is a payment to support the cost of government.
True False
5. Under U.S. tax law, corporations are entities separate and distinct from their shareholders.
True False
6. The person who pays a tax directly to the government always bears the economic incidence
of the tax.
True False
,7. In some cases, the payer of a tax can shift the economic incidence of the tax to a third party.
True False
8. The U.S. government has jurisdiction to tax individuals who are not U.S. citizens but who are
permanent U.S. residents.
True False
9. A tax with a graduated rate structure must have at least two brackets of tax base.
True False
10. A sales tax is an example of a transaction-based tax.
True False
11. A tax on net income is an example of a transaction-based tax.
True False
12. A sales tax is an example of an activity-based tax.
True False
13. Ad valorem property taxes are the major source of revenue for local governments.
True False
14. Taxes on personal property are more difficult to administer and enforce than taxes on real
property.
True False
,15. A state government may levy either a sales tax or a use tax on consumers but not both.
True False
16. Sellers of retail goods are responsible for collecting sales tax from their customers and
remitting the tax to the state government.
True False
17. Purchasers of consumer goods through the mail are responsible for paying use tax on goods
for which sales tax was not collected by the seller.
True False
18. The majority of state governments raise revenue from both personal and corporate income
taxes.
True False
19. The federal government imposed the first income tax to raise money to fight the War of 1812.
True False
20. The U.S. Constitution gives the federal government the power to impose a tax on income
from whatever source derived.
True False
21. The federal government collects more revenue from the corporate income tax than from the
individual income tax.
True False
22. The federal government does not levy property taxes or a general sales tax.
True False
, 23. A business that operates in more than one state is required to pay state income tax only to
the state in which it is incorporated.
True False
24. The potential for conflict among taxing jurisdictions is greatest for businesses operating on a
global scale.
True False
25. Fewer than half of the state governments depend on gambling as a source of revenue.
True False
26. Businesses that sell over the internet must collect sales tax only from purchasers living in a
state in which the business has a physical presence.
True False
27. The Internal Revenue Code is written by the Internal Revenue Service.
True False
28. Treasury regulations are tax laws written by the Treasury Department.
True False
Multiple Choice Questions
