What Is the Internal Revenue Code (IRC)?
The Internal Revenue Code (IRC), also known as the IRS code or IRS tax code, represents Title 26 of the U.S. Code, which serves as the official compilation and codification of the enduring laws of the United States. Enforced by the Internal Revenue Service (IRS), Title 26 encompasses regulations concerning income, gift, estate, sales, payroll, and excise taxes.
Understanding the Internal Revenue Code (IRC)
The Internal Revenue Code is structured into various categories or subgroups, 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
Originally compiled in 1939, the Internal Revenue Code, Title 26, traces its origins back to the efforts of a U.S. House of Representatives committee in 1919 to re-codify the U.S. Statutes. Over the years, Congress has continuously amended and updated the tax code to reflect changing economic landscapes and governmental priorities. Notable reforms include the Tax Cuts and Jobs Act of 2017, which introduced significant alterations affecting both individual and corporate taxation.
The Internal Revenue Service (IRS), established in 1862 and headquartered in Washington, D.C., serves as the governing body overseeing the regulations outlined in Title 26. Apart from tax collection, the IRS holds the authority to levy fines and penalties for violations of the Internal Revenue Code.
Campaigns to Abolish the Code
Following the enactment of the Tax Cuts and Jobs Act of 2017, which ushered in substantial modifications to existing tax laws, movements advocating for the complete abolition of the tax system have gained traction. Notable proposals for overhauling the tax structure include:
– House of Representatives Bill H.R. 29, The Tax Code Termination Act, aiming to abolish the Internal Revenue Code of 1986 by the end of 2021, necessitating a new federal tax system approval beforehand.
– Bill S.18, the Fair Tax Act of 2017, proposing a national sales tax to replace various existing taxes, including personal and corporate income tax, employment taxes, and estate and gift taxes. As part of this Act, the Internal Revenue Service would cease to exist post-2021.
The Fair Tax Act introduces provisions for a monthly sales tax rebate based on household size and income, emphasizing state-level administration of tax collection. Noteworthy is the Act’s condition for terminating the national sales tax in the absence of repealing the Sixteenth Amendment within seven years from enactment.
While these reformative propositions have sparked discussions, the implementation of comprehensive changes faces uncertainties due to recent tax system revisions and prevailing concerns about the potential impact on wealth distribution.
As highlighted by John Buhl, a former media relations manager at the Tax Foundation, recent alterations to the tax code may diminish the impetus for pursuing extensive tax system overhauls. He points out that replacing federal taxes with a consumption tax may reignite debates regarding wealth distribution, underscoring the complexities inherent in restructuring the tax framework.