www.taxprofessionals.com - TaxProfessionals.com
Posted by Tiffany Gaskin

What is IRC (Internal Revenue Code)?

What is IRC (Internal Revenue Code)?

The Internal Revenue Code (IRC) contains laws that guide the operations of the Internal Revenue Service in the United States of America. The code is split into two: the public sector and the private sector. The public sector encompasses the Internal Revenue Service (IRS) and other government agencies that run the affairs of taxes. On the other hand, the private sector covers businesses and individuals that are taxpayers. 

What Is IRC?

The Internal Revenue Code, abbreviated as the IRC, aka IRS tax code, was formed by the United States Congress in 1925. The act is title 26 of the U.S. Code, the official consolidation and codification of the general and permanent laws of the United States. The act covers all rules and regulations regarding income, estate, sales, excise taxes, and payroll. 

The IRC is in place to control federal law on the administration and collection of taxes. Although the state is responsible for legal interests and rights, the IRC decides what to collect and taxes. However, the IRC cannot work pensively. Violation of the code under chapter 75 considers a civil offense, and the punishment depends on the amount missing. Some cases may include money and jail time.

About the Internal Revenue Code (IRC)

The IRC is one of the federal codification laws of the U.S. The laws are written alphabetically and given titles and numbers. The laws are complicated, so it is best to narrow your search by understanding how the code is operated and interpreted. For example, here is the subdivision of Title 26.

  1. Subtitles

  2. Chapters

  3. Subchapters

  4. Parts

  5. Subparts

  6. Sections

  7. Subsections

Trials to Eliminate the Code

There have been many trials to abolish the code. The Tax cuts and Jobs (TCJA) was established in 2017 to alter the preceding laws. Another act named the Tax Code Termination act submitted in 2017 by the U.S House, Bill H.R 29. The act was to put an end to the IRC of 1986 by 2021. However, the preceding tax system is to end on July 4, 2021 so the new federal tax system can succeed. The act was submitted to the U.S. Representatives on January 3, 2017, by suggesting that the  sales of use or consumption goods or services should be taxable. The act replaced taxes on personal and corporate earnings, employment and self-employment earnings, and estate and gifts value. The tax rate was to increase in 2019 by 23% but will face an adjustment in the following years. However, the act exempts utilized and insignificant materials, goods or services for business uses, export or investment uses, and state government uses. 

Another was the Fair Tax Act which benefits the citizen through sales tax breaks, number of household members, and earnings. In addition, states can administer, collect, and remit federal sales tax. Furthermore, the bill could cancel sales tax; suppose the 16th Amendment is not negated in seven years. The introduction of TCJA significantly changed the running tax system but maintained its operating structure.   

However, the code changes frequently, and it is best to remain updated on the changes. The act may not become effective at the start by Congress but may become effective on different dates. However, when a tax law is abolished from the code, the effect may not take place and be left empty for some time before it expires. 

The bottom line is to remain updated on the change in Internal Revenue Codes. Unfortunately, finding answers to specific questions concerning the code may not be easy. Still, you can refer to other sources like judicial decisions, administrative rulings, and secondary sources of the law. However, the courts make different decisions to form judicial sittings. 



Tiffany Gaskin
Contact Member