Internal revenue law

Internal revenue law
Name	Internal revenue law
Jurisdiction	National and subnational
Subject	Taxation, fiscal law, revenue administration
Notable cases	Marbury v. Madison, Cheek v. United States, Commissioner v. Glenshaw Glass Co.
Notable legislation	Internal Revenue Code, Revenue Act of 1913, Tax Reform Act of 1986
Agencies	Internal Revenue Service, Her Majesty's Revenue and Customs, Canada Revenue Agency, Deutsche Finanzverwaltung
Related instruments	Double Taxation Agreement, OECD Model Tax Convention, Foreign Account Tax Compliance Act

Internal revenue law Internal revenue law comprises the statutory, regulatory, and judicial rules that determine how public authorities levy, assess, collect, and enforce taxes on income, gains, transfers, and related transactions. It integrates legislative texts, administrative guidance, and precedent from courts and tribunals to define liabilities, exemptions, procedures, and remedies. Influential actors include legislatures such as United States Congress, administrative bodies such as the Internal Revenue Service and Her Majesty's Revenue and Customs, and appellate courts such as the Supreme Court of the United States and the Supreme Court of Canada.

Overview and Principles

Internal revenue law rests on principles articulated in statutes like the Internal Revenue Code and codified doctrines from cases such as Commissioner v. Glenshaw Glass Co. and Marbury v. Madison. Core principles include definition of taxable capacity reflected in decisions like Commissioner v. Indianapolis Power & Light Co. and the interpretation of tax statutes under doctrines developed by the Supreme Court of the United States and the United Kingdom Supreme Court. Concepts of nexus and source are shaped by rulings such as Quill Corp. v. North Dakota and Complete Auto Transit, Inc. v. Brady and by international instruments like the OECD Model Tax Convention. Equity and neutrality in tax law are debated in scholarship from institutions such as Brookings Institution and Institute for Fiscal Studies.

Scope and Jurisdiction

Scope and jurisdictional questions determine which taxpayers—individuals, corporations, partnerships, trusts, or estates—fall within a taxing statute, and which income streams are taxable. National statutes such as the Income Tax Act 2007 (UK), the Internal Revenue Code and provincial statutes like California Revenue and Taxation Code interact with supranational arrangements such as European Union directives and Double Taxation Agreement networks. Cases like Helvering v. Gregory and Eisner v. Macomber illustrate boundaries of taxable events, while decisions in United States v. Windsor and Kieselbach v. Commissioner shape residency and citizenship-based taxation.

Taxable Income and Deductions

Definitions of gross income, adjusted gross income, capital gains, losses, and allowable deductions are central. The Internal Revenue Code sections on gross income and deductions have been interpreted through cases such as Commissioner v. Glenshaw Glass Co., Gregory v. Helvering, and Eisner v. Macomber. Tax benefits like credits and exemptions appear in statutes such as the Tax Cuts and Jobs Act of 2017 and are litigated in tribunals including the United States Tax Court and the Tax Tribunal of Canada. Specialized regimes—for example, subpart F rules, controlled foreign corporations regimes, and like-kind exchange provisions—affect multinational enterprises represented before bodies such as the European Court of Justice.

Tax Administration and Enforcement

Tax administration is performed by agencies including the Internal Revenue Service, Her Majesty's Revenue and Customs, and the Canada Revenue Agency, guided by statutes like the Internal Revenue Code and enforcement tools developed in cases such as Cheek v. United States. Administrative guidance encompasses revenue rulings, private letter rulings, and procedural manuals from agencies such as the US Department of the Treasury and the HM Treasury. Enforcement techniques—audit selection, information matching, and criminal referrals—are coordinated with investigative bodies like the Federal Bureau of Investigation, Serious Fraud Office (UK), and tax authorities under memoranda with Organisation for Economic Co-operation and Development.

Procedures for Assessment and Collection

Procedures for assessment, notice, levy, lien, and collection derive from statutory frameworks such as the Internal Revenue Code and administrative procedures in tribunals like the United States Tax Court and the First-tier Tribunal (Tax Chamber). Assessment doctrines from cases like United States v. Stuart and collection remedies including distraint, garnishment, and foreclosure are used by agencies such as the Internal Revenue Service and Her Majesty's Revenue and Customs. Statutes of limitation and refund procedures interact with doctrines from courts including the Court of Appeals for the Federal Circuit and the Supreme Court of the United Kingdom.

Penalties, Interest, and Remedies

Penalties for understatement, fraud, and failure to file are codified in statutes such as the Internal Revenue Code and litigated in decisions like Boyle v. United States and Cheek v. United States. Interest accrual and abatement doctrines are shaped by cases from the United States Court of Appeals and national courts like the Supreme Court of Canada. Administrative relief mechanisms include offers in compromise, installment agreements, and penalty abatements offered by agencies such as the Internal Revenue Service and dispute resolution bodies like the Low Incomes Tax Reform Group.

Appeals and Litigation

Disputes proceed from administrative appeals units within agencies to adjudicative forums such as the United States Tax Court, Tax Tribunal of Canada, First-tier Tribunal (Tax Chamber), and ultimately to appellate courts including the Court of Appeal and the Supreme Court of the United Kingdom. Precedents from landmark cases like Commissioner v. Glenshaw Glass Co., Marbury v. Madison, and Kelley v. Commissioner guide doctrines on statutory interpretation, constitutional limits, and relief. Alternative dispute resolution and litigation strategy draw on practice guides from institutions such as the American Bar Association and the Chartered Institute of Taxation.

International and Cross-Border Issues

Cross-border taxation engages instruments like the OECD Model Tax Convention, Double Taxation Agreement, Foreign Account Tax Compliance Act, and supranational bodies such as the European Commission and the OECD. Transfer pricing, permanent establishment, and residency rules are influenced by cases in the European Court of Justice and national courts including the Federal Court of Australia. Anti-avoidance measures—base erosion and profit shifting initiatives, BEPS action plans, and controlled foreign corporation rules—are coordinated through forums like the G20 and the OECD and enacted in legislation such as the Tax Cuts and Jobs Act of 2017.

Category:Tax law