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The Internal Revenue Code (IRC) is the statutory basis for the system of taxation in the United States. It spells out the numerous types of taxes people pay and describes accounting practices that can be used in the calculation of taxes. The Internal Revenue Service (IRS) is the government agency responsible for enforcing the Internal Revenue Code. The IRS collects taxes from people in the United States on behalf of the United States Treasury.
Various forms of tax laws have been present in the United States since the beginning. A highly recognizable form of the Internal Revenue Code appeared in 1939, when the United States Code was reorganized and the tax statutes were inserted into Title 26 of the United States Code, where they can be found today. The 1939 reorganization was a reflection of a larger cleanup and reorganization of American statutes.
In 1954 and again in 1986, the Internal Revenue Code underwent substantial overhauls. It is also periodically updated on a less extensive level. Updates do things like changing tax brackets, introducing new definitions, and taking other measures to ensure that the Code keeps up with changes in the economy and society of the United States. Failure to keep pace with developments can put the Internal Revenue Service at a disadvantage when it comes to collecting taxes on a fair basis.
In the Internal Revenue Code, people can find information about income taxes, excise taxes, estate taxes, and other types of taxes. The Code also goes over the numerous exemptions, deductions, and credits that are available to people when they file taxes. The structure of the Internal Revenue Code is intended to promote fairness, especially for people of low income who may not be able to deal with a high tax liability. It also establishes standards that can be applied across the board to keep taxes consistent.
Forms provided by the Internal Revenue Service to taxpayers are designed with the Internal Revenue code in mind. Using forms such as the 1040, the basic form for filing individual income taxes, people can comply with the Code when they file their taxes. It is important to be aware that these forms are sometimes updated to address changes in the IRC and that people should use forms designed for the year in which they are filing. Using forms from the wrong year can cause confusion and may lead to a mistake on a tax declaration.