Internal Revenue Code (IRC): Definition, Coverage, and History

What is the Internal Revenue Code?

The Internal Revenue Code (IRC) is the federal tax law contained in Title 26 of the United States Code. It is the consolidated set of general and permanent laws governing federal taxation. The Internal Revenue Service (IRS) administers and enforces the IRC, including tax collection and assessment of penalties for violations.

What the IRC covers

Title 26 addresses virtually all aspects of federal taxation, including:

• Income taxes (individual and corporate)
• Estate and gift taxes
• Employment taxes (payroll taxes, Social Security, Medicare)
• Excise taxes (general and industry-specific)
• Alcohol, tobacco, and certain other excise taxes
• Procedural and administrative rules for tax collection, assessment, appeals, and enforcement
• Oversight and technical bodies, such as the Joint Committee on Taxation
• Financing rules for presidential election campaigns
• Trust fund provisions and related accounting rules
• Special industry provisions (e.g., coal industry health benefits)
• Group health plan requirements and related tax treatment

Structure

The IRC is organized into subtitles, chapters, and sections within Title 26. These divisions separate substantive taxes, procedures, and special provisions, making it the authoritative statutory framework for federal tax law.

Brief history

• The United States Code (consolidation of federal statutes) was first published in 1925. Title 26, the Internal Revenue Code, was originally compiled in 1939 and has been amended many times since.
• The IRS, which enforces the IRC, traces its origins to 1862.
• Congress regularly updates the tax code; amendments can be enacted annually and may restructure rates, deductions, credits, and administrative rules.
• A significant recent overhaul was the Tax Cuts and Jobs Act (TCJA) of 2017, which made widespread changes affecting individual and corporate taxation.

Proposals to replace or abolish the IRC

There have been legislative efforts to replace the federal income tax system with alternatives:

• H.R. 29 (Tax Code Termination Act, 2017) proposed abolishing the IRC and required Congress to adopt a new federal tax system by a specified date before terminating the existing code.
• S. 18 (Fair Tax Act, 2017) proposed replacing federal income, payroll, corporate, estate, and gift taxes with a national retail sales tax. Key elements included:
• A proposed federal sales tax rate (23% was cited as an estimate for 2019)
• Monthly rebates to households to offset taxation of necessities
• Elimination of the IRS as a federal agency and transfer of collection responsibilities to the states
• Termination of the new system if the Sixteenth Amendment (which authorizes federal income tax) was not repealed within a set timeframe

These proposals have seen limited legislative progress. Major reforms such as the TCJA have reduced momentum for complete replacement of the current income-tax-based system.

Key takeaways

• The IRC (Title 26) is the primary body of federal tax law in the United States, administered by the IRS.
• It covers income, employment, estate and gift, excise taxes, and procedural and administrative rules.
• The code has evolved over decades through periodic congressional amendments; major recent reform occurred in 2017 (TCJA).
• Proposals to abolish or replace the IRC (e.g., national sales tax plans) have been introduced but remain politically and legislatively uncertain.