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CHAPTER TWO

CHAPTER TWO. THE INTERNAL REVENUE CODE. EXPECTED LEARNING OUTCOMES. Appreciate and understand: The significance of the Internal Revenue Code The legislative process How to find legislative history How to locate and analyze Code provisions How to properly cite the Code.

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CHAPTER TWO

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  1. CHAPTER TWO THE INTERNAL REVENUE CODE

  2. EXPECTED LEARNING OUTCOMES • Appreciate and understand: • The significance of the Internal Revenue Code • The legislative process • How to find legislative history • How to locate and analyze Code provisions • How to properly cite the Code

  3. Sources of tax law • Sixteenth Amendment ratified in 1913 created income tax. • Internal Revenue Code was created in 1939 and subsequently revised in 1954 and 1986. • Statutory authority = Internal Revenue Code (Legislative) • Administrative authority (Executive) • Judicial authority (Judicial)

  4. THE SIGNIFICANCE OF THE INTERNAL REVENUE CODE • Compilation of tax statutes enacted by Congress

  5. THE LEGISLATIVE PROCESS

  6. FINDING LEGISLATIVE HISTORY • Each act is a “Public Law” and given a designated number – pg. 54 • Recent public laws (CCH and RIA) • Older legislation • Cumulative Bulletins • BNA’s Primary Sources

  7. Joint Committee On Taxation • Created by the IRC • Works with W&M committee and SFC committee – Brings tax law knowledge to the process. • Provide explanations of the law: Blue Book • Do not confuse with conference committee in the legislative process

  8. ORGANIZATION OF THE CODE • Title 26 of the United States Code • Organized into segments • See Illustration on pg. 58 • Citation of Code: Sec. #, subsection, paragraph, subparagraph, clause: Sec 162(g) (1)(A)(i) – see pg. 62-63. • Flush language---

  9. LOCATING RELEVANT PROVISIONS • Table of Contents – reference noted is to Code Section • Index • Knowledge of pertinent provision • Reference from a secondary source

  10. Analyzing the Code • Logical skimming • Terms of art: special meaning when using the IRC • Determining the tax context and relative importance of words. • IRC Sec 7701 – useful definitions • Connecting words: or v. and to assess if criteria are met. • Measuring words: less than, equal to, greater than etc. • Use of male pronoun: used for brevity

  11. Analyzing the Code(Continued) • Limiting language: For purposes of a) this title v. b) this section • Pinballing: reference to other sections rather than repeat of provisions • Sunset provisions: time limitation of section, requiring future reenactment. • Transition provisions: safe harbors during pending legislation. • Historical notes: insight into previous versions of the code section.

  12. Accessing the Code • Print/Paper • CD-ROM • Modem • Web

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