What is the Internal Revenue Code (IRC)?
The Internal Revenue Code (IRC) refers to Title 26 of the U.S. Code, the official consolidation and codification of the federal laws of the United States. Commonly known as the IRS code or tax code, these laws are enforced by the Internal Revenue Service (IRS). The United States Code was first published in 1925 by the U.S. House of Representatives. Title 26 covers the comprehensive set of rules regarding income, gift, estate, sales, payroll, and excise taxes.
Understanding the Internal Revenue Code (IRC)
The Internal Revenue Code is subdivided into various topics or subcategories, including:
- A. Income Taxes
- B. Estate and Gift Taxes
- C. Employment Taxes
- D. Miscellaneous Excise Taxes
- E. Alcohol, Tobacco, and Certain Other Excise Taxes
- F. Procedure and Administration
- G. The Joint Committee on Taxation
- H. Financing of Presidential Election Campaigns
- I. Trust Fund Code
- J. Coal Industry Health Benefits
- K. Group Health Plan Requirements
History of the Internal Revenue Code
In 1919, a committee within the U.S. House of Representatives initiated a project to re-codify U.S. statutes. This endeavor culminated in the 1925 publication of the United States Code. Title 26, the Internal Revenue Code, was first compiled in 1939. Congress regularly updates the tax code to introduce new measures and reforms. For example, the Tax Cut and Jobs Act of 2017 introduced significant changes affecting both individuals and businesses.
The IRS, established in 1862, governs the provisions set forth in Title 26. Residing in Washington, D.C., the agency is responsible for collecting taxes and has the authority to impose fines and other penalties for noncompliance with the IRC.
Campaigns to Abolish the Code
Despite significant reforms with the passage of the Tax Cuts and Jobs Act (TCJA) of 2017, there have been persistent campaigns to abolish the tax system entirely. Highlights include:
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H.R. 29 - The Tax Code Termination Act: Filed in 2017, this bill aimed to abolish the Internal Revenue Code of 1986 by the end of 2021. It required Congress to approve a new federal tax system by July 4, 2021.
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S.18 - The Fair Tax Act of 2017: Proposed a national sales tax in place of personal, corporate income, and other taxes, with an initial sales tax rate of 23% as of 2019. The IRS would be disbanded with no further funding post-2021.
Though the Fair Tax Act proposed significant systemic changes, its passage remains unlikely given the major reforms already enacted via the TCJA.
John Buhl, former manager of media relations for the Tax Foundation, noted that recent changes to the tax code may reduce momentum for drastic overhauls, like those proposed by the Fair Tax Act.
Related Terms: Tax Code, IRS, Tax Cuts and Jobs Act, Fair Tax Act.
References
- United States Congress. “How Our Laws Are Made”.
- Library of Congress. “Historical Versions of the United States Code Now Online”.
- United States Census Bureau. “Title 26, U.S. Code”.
- U. S. Government Publishing Office. “Title 26: Internal Revenue Code”, Page 22.
- Ralph H. Dwan and Ernest R. Feidler. “The Federal Statutes: Their History and Use”, Page 1018-1019. Minnesota Law Review, 1938.
- Internal revenue Service. “Evolution of Taxes”.
- Internal Revenue Service. “Publication 5307: Tax Reform Basics for Individuals and Families”, Page 1.
- Internal Revenue Service. “Historical Highlights of the IRS”.
- Internal Revenue Service. “The Agency, its Mission and Statutory Authority”.
- U.S. Congress. “H.R. 29: Tax Code Termination Act”,
- U.S. Congress. “S.18: Fair Tax Act of 2017”.
- U.S. Congress. “S.18: Fair Tax Act of 2017”.
