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The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the
United States Statutes at Large The ''United States Statutes at Large'', commonly referred to as the ''Statutes at Large'' and abbreviated Stat., are an official record of Acts of Congress An Act of Congress is a statute enacted by United States Congress, Congress. Acts can ...
, and separately as Title 26 of the
United States Code The Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) is the official compilation and codification Codification may refer to: *Codification ( ...
(USC). It is organized topically, into subtitles and sections, covering
income tax in the United States Income taxes in the United States are imposed by the Federal government of the United States, federal government, and most State governments in the United States, states. The income taxes are determined by applying a tax rate, which Progressive t ...
,
payroll tax Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the em ...
es, estate taxes,
gift tax In economics, a gift tax is the tax on money or property that one living person gives to another. Items received upon the death of another are considered separately under the inheritance tax An inheritance tax is a tax paid by a person who inhe ...
es, and
excise tax An excise, or excise tax, is any on manufactured that is levied at the moment of manufacture rather than at sale. Excises are often associated with (which are levied on pre-existing goods when they cross a designated border in a specific dire ...
es; as well as procedure and administration. The Code's implementing federal agency is the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service A revenue service, revenue agency or taxation authority is a government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. ...
.


Origins of tax codes in the United States

Prior to 1874, U.S. statutes (whether in tax law or other subjects) were not codified. That is, the acts of Congress were not separately organized and published in separate volumes based on the subject matter (such as taxation, bankruptcy, etc.). Codifications of statutes, including tax statutes, undertaken in 1873 resulted in the
Revised Statutes of the United StatesThe Revised Statutes of the United States (in citations, Rev. Stat.) was the first official codification of the Acts of Congress. It was enacted into law in 1874. The purpose of the ''Revised Statutes'' was to make it easier to research federal law ...
, approved June 22, 1874, effective for the laws in force as of December 1, 1873. Title 35 of the Revised Statutes was the Internal revenue title. Another codification was undertaken in 1878. In 1919, a committee of the U.S. House of Representatives began a project to recodify U.S. statutes, which eventually resulted in a new United States Code in 1926 (including tax statutes).


Internal Revenue Code of 1939

The tax statutes were re-codified by an Act of Congress on February 10, 1939 as the "Internal Revenue Code" (later known as the "Internal Revenue Code of 1939"). The 1939 Code was published as volume 53, Part I, of the
United States Statutes at Large The ''United States Statutes at Large'', commonly referred to as the ''Statutes at Large'' and abbreviated Stat., are an official record of Acts of Congress An Act of Congress is a statute enacted by United States Congress, Congress. Acts can ...
and as title 26 of the United States Code. Subsequent permanent tax laws enacted by the
United States Congress The United States Congress is the legislature of the federal government of the United States. It is Bicameralism, bicameral, comprising a lower body, the United States House of Representatives, House of Representatives, and an upper body, t ...

United States Congress
updated and amended the 1939 Code.


Internal Revenue Code of 1954

On August 16, 1954, in connection with a general overhaul of the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service A revenue service, revenue agency or taxation authority is a government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. ...
, the IRC was greatly reorganized by the 83rd United States Congress and expanded (by Chapter 736, ). Ward M. Hussey was the principal drafter of the Internal Revenue Code of 1954. The code was published in volume 68A of the
United States Statutes at Large The ''United States Statutes at Large'', commonly referred to as the ''Statutes at Large'' and abbreviated Stat., are an official record of Acts of Congress An Act of Congress is a statute enacted by United States Congress, Congress. Acts can ...
. To prevent confusion with the 1939 Code, the new version was thereafter referred to as the "Internal Revenue Code of 1954" and the prior version as the "Internal Revenue Code of 1939". The lettering and numbering of subtitles, sections, etc., was completely changed. For example, section 22 of the 1939 Code (defining gross income) was roughly analogous to section 61 of the 1954 Code. The 1954 Code replaced the 1939 Code as title 26 of the
United States Code The Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) is the official compilation and codification Codification may refer to: *Codification ( ...
. The 1954 Code temporarily extended the
Revenue Act of 1951 The United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington ...
's 5 percentage point increase in corporate tax rates through March 31, 1955, increased
depreciation In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in a ...

depreciation
deductions by providing additional depreciation schedules, and created a 4 percent dividend tax credit for individuals.


Relationship to Title 26 of the United States Code

The Internal Revenue Code of 1954 was enacted in the form of a separate code by act of August 16, 1954, ch. 736, . The
Tax Reform Act of 1986 The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986. The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The ac ...
changed the name of the 1954 Code to the "Internal Revenue Code of 1986". In addition to being published in various volumes of the United States Statutes at Large, the Internal Revenue Code is separately published as
Title 26 of the United States Code A title is one or more words used before or after a person's name, in certain contexts. It may signify either generation, an official position, or a professional or academic qualification. In some languages, titles may be inserted between the firs ...
. The text of the Internal Revenue Code as published in title 26 of the U.S. Code is virtually identical to the Internal Revenue Code as published in the various volumes of the
United States Statutes at Large The ''United States Statutes at Large'', commonly referred to as the ''Statutes at Large'' and abbreviated Stat., are an official record of Acts of Congress An Act of Congress is a statute enacted by United States Congress, Congress. Acts can ...
.An apparently insignificant discrepancy between the wording in the Statutes at Large and the wording in some editions of the U.S. Code with respect to a provision of the Internal Revenue Code (specifically, the words "any papers" in the first sentence of is described by the U.S. Court of Appeals for the District of Columbia in the case of '' Tax Analysts v. Internal Revenue Serv.'', 214 F.3d 179 (D.C. Cir. 2000), in footnote 1, a

According to the Court, some versions of the U.S. Code show the text as "any paper" while the Statutes at Large version shows the text as "any papers".
Of the 50 enacted titles, the Internal Revenue Code is the only volume that has been published in the form of a separate code.


Progressivity of the 1954 Code

With respect to the Income tax in the United States, federal income tax on individuals, the 1954 Code imposed a
progressive tax A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progre ...
with 24 income brackets applying to tax rates ranging from 20% to 91%. For example, the following is a schedule showing the federal marginal income tax rate imposed on each level of
taxable income Taxable income refers to the base upon which an income tax system imposes tax. In other words, the income over which the government imposed tax. Generally, it includes some or all items of income and is reduced by expenses and other deductions. Th ...
of a single (unmarried) individual under the 1954 Code: * ''Source: Internal Revenue Code of 1954, (modified from text of the statute).'' * Relative GDP: 37.5 ** ''Source
Bureau of Economic Analysis historical GDP tables
'


Internal Revenue Code of 1986

References to the Internal Revenue Code in the
United States Code The Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) is the official compilation and codification Codification may refer to: *Codification ( ...
and other statutes of Congress subsequent to 1954 generally mean Title 26 of the Code as amended. The basic structure of the Title 26 remained the same until the enactment of the comprehensive revision contained in
Tax Reform Act of 1986 The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986. The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The ac ...
, although of course individual provisions of the law were changed on a regular basis. Section 2 of the
Tax Reform Act of 1986 The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986. The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The ac ...
provides (in part): :(a) Redesignation of 1954 Code. – The Internal Revenue Title enacted August 16, 1954, as heretofore, hereby, or hereafter amended, may be cited as the "Internal Revenue Code of 1986". :(b) References in Laws, Etc. – Except when inappropriate, any reference in any law, Executive order, or other document – ::(1) to the Internal Revenue Code of 1954 shall include a reference to the Internal Revenue Code of 1986, and ::(2) to the Internal Revenue Code of 1986 shall include a reference to the provisions of law formerly known as the Internal Revenue Code of 1954. Thus, the 1954 Code was renamed the ''Internal Revenue Code of 1986'' by section 2 of the
Tax Reform Act of 1986 The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986. The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The ac ...
. The 1986 Act contained substantial amendments, but no formal re-codification. That is, the 1986 Code retained most of the same lettering and numbering of subtitles, chapters, subchapters, parts, subparts, sections, etc. The 1986 Code, as amended from time to time (and still published as title 26 of the United States Code), retains the basic structure of the 1954 Code.


Commonly misunderstood special definitions

*
Employee Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or ot ...
*
Wages A wage is the distribution from an employer Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profi ...
* Many others can be found at https://www.law.cornell.edu/uscode/text/26/3401


Individual and corporate income tax

Section 1 of the Internal Revenue Code imposes the federal income tax on the taxable income of U.S. citizens and residents, and of estates and trusts. The corporate income tax is imposed by Internal Revenue Code section 11.


Organization

The organization of the Internal Revenue Code, as enacted in hundreds of Public Laws passed by the U.S. Congress since 1954, is identical to the organization of the Internal Revenue Code separately published as Title 26 of the U.S. Code. For example, section 162(e)(4)(B)(ii) ( 26 U.S.C. ) would be as follows: Title 26: Internal Revenue Code * Subtitle A: Income Taxes ** : Normal Taxes and Surtaxes *** : Computation of Taxable Income **** Part VI: Itemized Deductions for Individuals and Corporations ***** : Trade or business expenses ****** Subsection (e): Denial of deduction for certain lobbying and political expenditures ******* Paragraph (4): Other special rules ******** Sub-paragraph (B)): De minimis exception ********* Clause (ii): In-house expenditures The Internal Revenue Code is topically organized and generally referred to by section number (sections 1 through 9834). Some topics are short (e.g., tax rates) and some quite long (e.g., pension & benefit plans). Key IRC Topics By Section:


Subtitles

* A. Income Taxes (sections 1 through 1564)
As a further example, here are the chapters of this subtitle: ** (sections 1 through 1400U3) ** (sections 1401 through 1403) ** (sections 1441 through 1464) ** (sections 1471–1474) ** (sections 1491-1494) ** (sections 1501 through 1564) * B. Estate and Gift Taxes (sections 2001 through 2801) * C. Employment Taxes (sections 3101 through 3510) * D. Miscellaneous Excise Taxes (sections 4001 through 5000) * E. Alcohol, Tobacco, and Certain Other Excise Taxes (sections 5001 through 5891) * F. Procedure and Administration (sections 6001 through 7874) * G. The Joint Committee on Taxation (sections 8001 through 8023) * H. Financing of Presidential Election Campaigns (sections 9001 through 9042) * I. Trust Fund Code (sections 9500 through 9602) ("Trust Fund Code of 1981") * J. Coal Industry Health Benefits (sections 9701 through 9722) * K. Group Health Plan Requirements (sections 9801 through 9834)


List of commonly referenced sections

''(This is not intended to be a complete list of sections.)'' * Subtitle A: Income Taxes (–) ** : Normal Taxes and Surtaxes (–) *** Subchapter A: Determination of Tax Liability (–) **** Part I: Tax on Individuals (–) ***** Section 1: Tax imposed () ***** ... ***** Section 41: Credit for increasing research activities () ***** ... *** Subchapter B: Computation of Taxable Income (–) **** Part I: Definition of Gross Income, Adjusted Gross Income, Taxable Income, Etc. (–) ***** Section 61: Gross income defined () ***** ... ***** Section 63: Taxable income defined () ***** ... **** Part II: Items Specifically Included in Gross Income (–) ***** ... ***** Section 79: Group-term life insurance purchased for employees () ***** ... **** Part III: Items Specifically Excluded from Gross Income (–) ***** ... ***** Section 132(a): Fringe benefits excluded from gross income () ***** ... **** Part VI: Itemized Deductions for Individuals and Corporations (–) ***** ... ***** Section 162(2): Trade or business expenses () ***** ... *****
Section 179 Section 179 of the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. s ...
: Election to expense certain depreciable business assets () ***** ... ***** Section 183: Activities Not Engaged in for Profit () ***** ... **** Part VII: Additional Itemized Deductions for Individuals (–) ***** ... ***** Section 212: Expenses for production of income () ***** ... *** Subchapter C: Corporate Distributions and Adjustments (–) **** ... **** Part III: Corporate Organizations and Reorganizations (–) ***** ... ***** Subpart B: Effects on Shareholders and Security Holders (–) ****** ... ****** Section 355: Distribution of stock and securities of a controlled corporation () ****** ... **** ... *** Subchapter D: Deferred Compensation, Etc. (–) **** Part I: Pension, Profit-sharing, Stock Bonus Plas, etc. (–) ***** Subpart A: General Rule (–) ****** Section 401: Qualified pension, profit-sharing, and stock bonus plans ******* paragraph (a) (" 401(a)"): employer-sponsored
retirement plan A pension (, from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of ...
for employees of state and local governments and certain tax-exempt entities () ******* ... ******* paragraph (k) ("
401(k) In the United States, a 401(k) plan is an employer-sponsored defined contribution, defined-contribution pension account defined in subsection 401(k) of the Internal Revenue Code. Employee funding comes directly off their paycheck and may be matched ...
"): employer-sponsored
retirement plan A pension (, from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of ...
() ****** ... ****** Section 402A ("
Roth 401(k) The Roth 401(k) is a type of retirement Retirement is the withdrawal from one's position or occupation or from one's active working life. A person may also semi-retire by reducing work hours or workload. Many people choose to retire when they ...
"): Optional treatment of elective deferrals as Roth contributions () ****** Section 403: Taxation of employee annuities ******* ... ******* paragraph (b) ("
403(b) In the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists of 50 U.S. state, states, a Washing ...
"): employer-sponsored
retirement plan A pension (, from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of ...
at non-profit organizations () ****** ... ****** Section 408:
Individual Retirement Account An individual retirement account (IRA) in the United States is a form of "individual retirement plan", provided by many financial institutions, that provides tax advantage Tax advantage refers to the economic bonus which applies to certain accounts ...
s () ****** Section 408A:
Roth IRA A Roth IRA is an individual retirement account (IRA) under United States law that is generally not Taxation in the United States, taxed upon distribution, provided certain conditions are met. The principal difference between Roth IRAs and most other ...
s () ****** ... ****** Section 409A: Inclusion in gross income of deferred compensation under nonqualified deferred compensation plans () ****** ... *** Subchapter E: Accounting Periods and Methods of Accounting (–) **** ... **** Part II: Methods of Accounting (–) ***** Subpart B: Taxable Year for Which Items of Gross Income Included (–) ****** ... ****** Section 457:
retirement plan A pension (, from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of ...
for governmental and certain non governmental employers () ****** ... ***** Subpart D: Inventories (–) ****** ... ****** Section 475: Mark to market accounting method for dealers in securities () ***** ... *** Subchapter F: Exempt Organizations (–) **** Part I: General Rule (–) ***** Section 501: Exemption from tax on corporations, certain trusts, etc. () ****** ... ****** paragraph (c) ("
501(c) A 501(c) organization is a nonprofit organization A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public ...
"): List of exempt organizations () ******* subparagraph (1) (" 501(c)(1)"): corporations organized under Acts of Congress such as Federal Credit Unions () ******* subparagraph (2) (" 501(c)(2)"): title-holding corporations for exempt organizations () ******* subparagraph (3) ("
501(c)(3) A 501(c)(3) organization is a corporation, trust, unincorporated association, or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of the 29 types of 501(c) organizat ...
"): charitable, non-profit, religious, and educational organizations () ******* subparagraph (4) ("
501(c)(4) A 501(c) organization is a nonprofit organization A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public ...
"): political education organizations () ******* subparagraph (6) ("
501(c)(6) A 501(c) organization is a nonprofit organization in the Law of the United States#Federal law, federal law of the United States according to Internal Revenue Code and is one of over 29 types of nonprofit organizations exempt from some Taxation i ...
"): business leagues and chambers of commerce () ******* subparagraph (7) ("
501(c)(7) A 501(c) organization is a nonprofit organization in the Law of the United States#Federal law, federal law of the United States according to Internal Revenue Code and is one of over 29 types of nonprofit organizations exempt from some Taxation i ...
"): recreational clubs () ***** ... **** Part VI: Political Organizations (§ 527) ***** Section 527:
Political organizations A political organization is any organization An organization, or organisation ( Commonwealth English; see spelling differences), is an entity – such as a company, an institution, or an association – comprising one or more peopl ...
() **** ... **** Part VIII: Certain Savings Entities (–) ***** Section 529: Qualified tuition programs () ***** Section 529A: ABLE accounts for benefit of certain individuals with disabilities () ***** Section 530: Coverdell Education Savings Accounts () *** ... *** Subchapter N: Tax Based on Income From Sources Within or Without the United States (–) **** Part I: Source Rules and Other General Rules Relating To Foreign Income (–) ***** Section 861: Income from sources within the United States () ***** ... *** Subchapter O: Gain or Loss on Disposition of Property (–) **** ... **** Part III: Common Nontaxable Exchanges (–) *****
Section 1031 :''For former Section 1031 of the National Defense Authorization Act of 2012 (U.S.), see National Defense Authorization Act for Fiscal Year 2012#Indefinite detention without trial: Section 1021, Indefinite Detention: Section 1021'' Under Section ...
: Exchange of property held for productive use or investment () ***** ... ***** Section 1041: Transfers of Property Between Spouses or Incident to Divorce () ***** ... * Subtitle C: Employment Taxes (–) ** ... ** : Collection of Income Tax at Source on Wages (–) *** Section 3401: Definitions ()


See also

*'' Mazzei v. Commissioner'' *'' Turner v. Commissioner'' * SECURE Act of 2019 *'' Estate of Carter v. Commissioner''


References


External links


U.S. Code Title 26
via
United States Government Printing Office The United States Government Publishing Office (USGPO or GPO; formerly the United States Government Printing Office) is an agency of the legislative branch A legislature is a deliberative assembly A deliberative assembly is a gathering of ...

Title 26 at Cornell's Legal Information Institute

Bloomberg Tax Internal Revenue Code
continuously updated wit
Editor's Notes
{{USCTitles