What is the 'Internal Revenue Code - IRC'
The Internal Revenue Code (IRC) refers to Title 26 of the U.S. Code, which acts as the laws of the country. Commonly referred to as IRS code or IRS tax code, the laws are enforced by the Internal Revenue Service (IRS). The Internal Revenue Code was first published in 1926 by the U.S. House of Representatives. The code is organized according to topic and covers all relevant rules pertaining to income, gift, estate, sales, payroll and excise taxes.
BREAKING DOWN 'Internal Revenue Code - IRC'
The Internal Revenue Code is broken down into the following topics or subcategories:
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 of the U.S. House of Representatives began a project to recodify the U.S. Statutes, which resulted in Title 26. The completed version was the resulting Internal Revenue Code, published in 1926. Congress has the authority to rewrite the tax code and add items to it every year. In 2015, Congress passed an appropriation bill. This bill made the first significant changes to a section of the small business portion of the Internal Revenue Code in 30 years.
The Internal Revenue Service, which was founded in 1862, governs the codes in Title 26. Based in Washington D.C., the IRS is also responsible for collecting taxes and enforcing the Affordable Care Act. The IRS is granted the right to issue fines and punishments for violations to the Internal Revenue Code.
The nature of these laws are very complex and also expose several loopholes in the American tax system. Pressure continues to mount to abolish the Internal Revenue Code. In 2015, House of Representatives Bill H.R. 27, The Tax Code Termination Act, was filed to abolish the Internal Revenue Code by the end of 2019. The H.R. 27 bill will require Congress to approve a new federal tax system by July 2019, prior to abolishing the current system.
A Fair Tax Act has also been proposed, which would completely abolish the Internal Revenue System. This new law would introduce a point of purchase tax, giving employees more money on their paychecks until they spend their earnings. The law would cut out loopholes in current tax wording.