Do you know what the Internal Revenue Code (IRC) is?
Internal Revenue Code is called Title 26 of the U.S. Code, which is the legal “consolidation and codification of the general and permanent laws of the United States,” as it says at the beginning of the Code. Title 26 has laws implemented by the Internal Revenue Service (IRS). These laws are often called the “IRS code” or “IRS tax code.” The United States Code was first set out by the U.S. House of Representatives in 1925. Title 26 has all the rules you need to know about taxes on income, gifts, estates, sales, wages, and excise.
Getting to know the Internal Revenue Code (IRC)
Here are the different parts of the Internal Revenue Code that make it easier to understand:
A. Taxes on income
B. Taxes on gifts and estates
C. Taxes on employment
D. Different Excise Taxes
E. Excise taxes on tobacco, alcohol, and some other goods
F. Procedure and Management
This is the Joint Committee on Taxation.
H. How to Pay for Campaigns for President
I. Code for Trust Funds
J. Health Benefits of the Coal Industry
K. Needs for a Group Health Plan
How the Internal Revenue Code came to be
In 1919, the U.S. House of Representatives started a project to rewrite the U.S. Statutes in Code. In 1925, the finished version came out. The Internal Revenue Code, or Title 26, was created in 1939. Every year, Congress can change the tax code and add new things. For instance, the Tax Cut and Jobs Act, which Congress passed in 2017, made significant changes to the tax code that affected both people and companies.
The codes in Title 26 are run by the Internal Revenue Service (IRS), created in 1862. The IRS is in charge of collecting taxes and is based in Washington, D.C. The Internal Revenue Code allows the IRS to fine and punish people who break it.
Campaigns to Get Rid of the Code
The Tax Cuts and Jobs Act (TCJA) of 2017 significantly changed the laws already in place. But there have also been ongoing efforts to eliminate the whole setup. The last two bills are:
In 2017, H.R. 29, the Tax Code Termination Act, was introduced in the House of Representatives. Its goal is to eliminate the Internal Revenue Code 1986 by the end of 2021. The H.R. 29 bill says that Congress needs to agree on a new federal tax system by July 4, 2021, before the old system is thrown out.
Congress was first given Bill S.18, the Fair Tax Act of 2017, on January 3, 2017. Instead of personal and business income tax, employment and self-employment tax, and estate and gift tax, the bill wants to put a national sales tax on the use or consumption of taxable goods and services in the U.S. The suggested sales tax rate for 2019 would be 23%. The rate would be changed each year after that. Some types of used and intangible property, goods and services bought for business, export, or investment, and state government activities are exempt from the tax. The Internal Revenue Service would no longer exist and would not have any money to run its business after 2021.
The Fair Tax Act would let people in the U.S. get a monthly sales tax rebate based on their family size and income. It would be up to all 50 states to manage, collect, and send the sales tax to the federal government. The central part of the bill is that it would end the national sales tax if the Sixteenth Amendment, which allows the federal income tax, is not overturned within seven years of the bill’s passing.
Since it was first passed, the Fair Tax Act hasn’t done much. The TCJA passed, which changed the current tax system but kept its general structure. This means that the future of the Fair Tax Act and the Tax Care Termination Act is unlikely.
John Buhl, who used to be in charge of media relations for the Tax Foundation, says that the recent changes to the tax code may make people less interested in making more significant changes to the tax system. He also says that the new tax reform plan was made because people were worried that the old plan was meant to help the rich. Trying to replace it with a sales tax would also make people wonder if it would help more affluent Americans more.”Replacing all federal taxes with a consumption tax would make those arguments stronger from a distributional point of view,” says Buhl.
