Internal Revenue Code

Internal Revenue Code
Title	Internal Revenue Code
Enacted by	United States Congress
Signed by	Richard Nixon
Enacted	1954
Amended by	Tax Reform Act of 1986, Internal Revenue Service Restructuring and Reform Act of 1998
Status	current

Internal Revenue Code The Internal Revenue Code is the primary statutory framework for federal United States tax law enacted by the United States Congress and administered by the Internal Revenue Service. It codifies rules governing taxation of individuals, corporations, estates, trusts, and exempt organizations, and it interacts with landmark statutes such as the Revenue Act of 1913, the Tax Reform Act of 1986, and the Affordable Care Act. Courts including the United States Supreme Court, the United States Court of Appeals for the Federal Circuit, and the United States Court of Appeals for the Second Circuit have produced influential decisions interpreting its provisions.

Overview and history

The code traces origins to revenue statutes like the Revenue Act of 1861 and the Revenue Act of 1913 following the ratification of the Sixteenth Amendment to the United States Constitution. Major reorganizations occurred with codification into the 1939 and 1954 editions and the comprehensive recodification leading to the 1986 Tax Reform Act of 1986 enacted under President Ronald Reagan and shepherded by lawmakers from the United States Senate and the United States House of Representatives. Subsequent legislative milestones include the Economic Growth and Tax Relief Reconciliation Act of 2001 signed by George W. Bush, the American Recovery and Reinvestment Act of 2009 during Barack Obama's administration, and the Tax Cuts and Jobs Act of 2017 enacted under Donald Trump.

Structure and organization

The code is organized into subtitles, chapters, subchapters, parts, and sections codified in the United States Code. It is divided into subtitles addressing subjects such as income taxation for individuals and corporations, procedure and administration, and tax-exempt organizations including Section 501(c)(3) organizations linked to philanthropic entities like the Bill & Melinda Gates Foundation and the Red Cross. Statutory cross-references connect provisions to institutions like the Treasury Department and to procedural rules found in the Administrative Procedure Act. Legislative sources include committee reports from the United States Senate Committee on Finance and the United States House Committee on Ways and Means.

Major substantive provisions

Key substantive areas encompass definitions of gross income in cases involving entities such as Apple Inc., ExxonMobil, and Amazon (company), rules on deductions and credits that affect taxpayers ranging from small businesses to multinational firms like General Electric, and provisions governing tax-exempt status for organizations such as the United Nations affiliate bodies and private foundations. The corporate tax regime interacts with international measures like the Organisation for Economic Co-operation and Development guidelines and the Tax Cuts and Jobs Act of 2017 changes to the global intangible low-taxed income (GILTI) rules affecting cross-border income involving jurisdictions such as Ireland and Luxembourg. Estate and gift taxation provisions connect to cases involving estates of figures like Walt Disney and policy debates in the United States Senate. Other substantive topics include retirement plan rules tied to instruments such as 401(k), Individual Retirement Account, and employer-sponsored plans governed by the Employee Retirement Income Security Act of 1974, as well as excise taxes and incentives affecting industries represented by associations such as the U.S. Chamber of Commerce.

Administration and enforcement

Administration is carried out by the Internal Revenue Service within the United States Department of the Treasury, guided by Treasury regulations and administrative pronouncements from the Office of Management and Budget and the Government Accountability Office. Enforcement tools include audits, liens, levies, and criminal referrals coordinated with agencies like the Department of Justice and prosecutions in federal courts such as the United States District Court for the Southern District of New York. Compliance is influenced by tax return reporting requirements involving institutions like Ernst & Young, Deloitte, and PwC, and by information exchanges under treaties with countries such as Canada and members of the European Union.

Amendments and legislative process

Amendments arise through bills introduced and passed by the United States Congress and signed by presidents including Franklin D. Roosevelt, Dwight D. Eisenhower, and Bill Clinton. Major amendments have been advanced via key committees like the United States Senate Committee on Finance and reconciled through conference committees between the United States House of Representatives and the United States Senate. Interim modifications can occur through revenue rulings and notices issued by the United States Department of the Treasury and by regulatory actions in the Federal Register.

Interpretation and judicial review

Judicial interpretation occurs in venues including the United States Tax Court, the United States Court of Appeals for the Ninth Circuit, and the United States Supreme Court, whose decisions in cases analogous to disputes involving entities like Ernst & Young LLP or individuals such as Nelson Rockefeller shape doctrine on tax shelters, substantial authority, and the economic substance doctrine. Principles from landmark decisions by justices of the United States Supreme Court and precedent from the Federal Circuit inform statutory construction, while administrative deference doctrines implicate decisions referencing the Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. framework and the Administrative Procedure Act. Litigation often involves amici curiae briefs from organizations such as the American Bar Association and the Tax Policy Center.

Category:United States federal taxation law