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The Internal Revenue Code of 1986 (IRC) is the major document governing taxation laws in the United States of America. A substantial addition to early tax documents, the 1986 IRC was created as part of an overhaul of the Internal Revenue Service (IRS) meant to modernize the taxation system. It is generally regarded as an extension of a 1954 version of the same code; although few original provisions were changed, many additional items were added, clarified, or expanded.
The taxation and legal process of nearly every type of monetary transaction that the country could face is covered by this document. Areas described include taxes on gifts and estates, tobacco, firearms, alcohol, trust funds, employment, self-employment, pension plans, gambling, and property. Naturally, the document ended up being incredibly long, leaving room for many members of Congress to object to the literal size of the tax code. Interestingly, few Congresspeople who have commented on the length agree on the actual size; estimates given in congressional speeches range from 2,000 pages to 2.5 million pages.
Complicated as it may be, the IRC implemented and altered many policies in an attempt to meet the changing financial world of the late 20th century. One major change was the restriction of Individual Retirement Account (IRA) deductions. Prior to the change, anyone could deduct contributions to the universal IRA from their taxes, even if the taxpayer had other pension plans through employers or had significant personal wealth to sustain him or her through retirement. After the Internal Revenue Code of 1986, deductions could only be taken by certain individuals, particularly those with no other pension plans.
Another major change was the elimination of federal taxes for those under the set poverty limit. This helped taxpayers already struggling to survive, particularly in the climate of heavy inflation of the early 1980s. The elimination of this tax, along with several provisions that closed tax shelter avenues for wealthy taxpayers, helped draw the support of Congressional Democrats to the document.
Since the original passage of the Internal Revenue Code of 1986, Congress has altered the document practically every year to reflect changing needs and a fluctuating financial system. Although no change has been large enough to call for the document to be renamed again, the length and provisions continue to creep up. Some critics of the tax code complain that the document is now so long, it is nearly impossible to comprehend and leads to contradiction, confusion, and loss of revenue due to the weighty provisions within the code.