How The U.S.

Tax Code
Works and Its Sections
What Is a Tax Code?
The term “tax code” refers to a series of laws and regulations that outline the
rights and responsibilities of the general public as they relate to taxation.

Understanding the tax code is important for anyone who prepares and files taxes,
including individuals, corporations, and tax preparers, so they can avoid any errors
and penalties.

The rules that make up a tax code are passed by governments at various levels.
For instance, the federal tax code in the United States is called the Internal
Revenue Code (IRC). This tax code is the main focus of this article.

How a Tax Code Works

Tax codes are a series of laws passed by governments to provide taxpaying
entities with information on how they must prepare, file, and pay their taxes.

As noted above, the federal tax code in the U.S. is called the Internal Revenue
Code (IRC). Enacted by the U.S. Congress, it is made up of a series of laws that
are designed to raise revenue for the federal government and are enforced by
the Internal Revenue Service (IRS). 1

The IRS implements statutory rules in accordance with Treasury Department

regulations that prescribe their applications in different scenarios.2

What the Tax Code Covers

The IRC contains thousands of numbered sections that provide specific
definitions, rules, and levies. The regulations issued under the tax code contain
more detailed rules that prescribe the code’s application in specific circumstances.

These regulations are legal requirements that taxpayers must follow. They are
published in Title 26 of the Code of Federal Regulations (26 CFR).13

Laws under the IRC outline the responsibilities of individual and corporate
taxpayers, including (but not limited to) income tax deadlines, filing statuses,
income thresholds, tax brackets, information about tax deductions and credits,
required forms and schedules, fees, penalties, and the course of action in cases of
dispute. The tax code also covers:4
  The tax treatment of estates and gifts
 The setup of retirement and benefit plans (like Social Security and Railroad
Retirement) and unemployment taxes
 How to establish procedural, penalty, withholding, and other rules

Code Sections
For example, Sections 1 through 5 of the IRC impose the federal income tax on
the taxable income of individual U.S. citizens and residents, Section 11 imposes
the corporate income tax, and Section 641 taxes estates and trusts.456

Subsequent provisions encompass a broad range of topics, like alcohol, tobacco,

and other excise taxes beginning with Section 5001, and rules on crimes and
criminal penalties starting at Section 7201.378

Cornell Law School, Legal Information Institute. “26 U.S. Code § 7201—Attempt to
Evade or Defeat Tax .”

Tax codes are not static. As such, they can evolve based on economic shifts and
political changes.

Tax Codes: Title 26—Internal Revenue Code

The following is a list of some of the sections of Title 26 of the IRC. Each subtitle
has different chapters that contain specific rules and regulations.3

 Subtitle A: Income Taxes

 Subtitle B: Estate and Gift Taxes (Sections 2001 to 2704)
 Subtitle C: Employment Taxes (Sections 3101 to 3512)
 Subtitle D: Miscellaneous Excise Taxes (Sections 4041 to 4982)
 Subtitle E: Alcohol, Tobacco, and Certain Other Excise Taxes (Sections
5001 to 5872)
 Subtitle F: Procedure and Administration (Sections 6012 to 7874)
 Subtitle G: The Joint Committee on Taxation (Sections 8001 to 8023)
 Subtitle H: Financing of Presidential Election Campaigns (Sections 9001
to 9042)
 Subtitle I: Trust Fund Code (Sections 9500 to 9602)
 Subtitle J: Coal Industry Health Benefits (Sections 9702 to 9722)
 Subtitle K: Group Health Plan Requirements (Sections 9801 to 9834)

Tax laws are set as well by state, local, and county government
authorities. Many states model major provisions of their income tax laws
on the federal tax code’s substantive rules, but impose different rates and
often provide different exemptions and exclusions.
Tax Code Resources for U.S. Taxpayers
Most individual taxpayers with typical sources of income do not need to research
the technical intricacies of the federal tax code and its regulations. The IRS issues
standard income tax forms and instructions each year that instruct taxpayers in
how to complete and file their returns.9

Internal Revenue Service. “Forms, Instructions & Publications .”

Other resources include those that describe the special rules for charities and other
organizations. IRS publications are freely available in print or online on the IRS
website.10
Internal Revenue Service. “Publications Online .”

These resources enable taxpayers to handle their own tax returns or, for
complicated returns, help them better understand the issues that they take to their
advisors.

What Is a Tax Code?

A tax code is a law that prescribes the levies imposed by a government on
individuals, businesses, and other entities and on transactions, such as property
sales, that are subject to its jurisdiction, to fund its operations. In the U.S., federal,
state, and local governments have enacted tax codes of varied scope and design.

What Tax Codes Apply to Individuals?

The U.S. government and most state and local governments have income tax
codes that are the principal tax obligation for most individual taxpayers. State and
local jurisdictions also impose a variety of taxes that in some cases create
substantial costs for individuals, such as the sales and use tax and the real property
tax.

Where Can You Find the U.S. Income Tax Rules?

Taxpayers can obtain guidance on tax compliance in clear, ordinary language free
of charge on the IRS website. The site provides articles on common tax topics and
offers links to IRS publications that contain more detailed guidance generally
understandable by a nontechnical reader.
Known officially as the Internal Revenue Code (IRC), the U.S. tax code contains
the statutory rules enacted by the U.S. Congress to determine taxable income and
the amount of tax due on that income. Regulations issued by the U.S. Department
of the Treasury provide more detailed rules based on the code. These regulations
also have the force of law.

The Bottom Line

Tax codes are laws that define the rules and regulations for taxation. In the U.S.,
the federal government’s tax code is called the Internal Revenue Code.

Taxpayers are obligated to comply with both the code and the regulations issued
under it. Many tax rules are highly technical and complex, but for most individual
taxpayers, the IRS provides readily accessible, clear guidance free of charge.

Regardless of where a taxpayer lives, they can easily access the rules and
regulations of most jurisdictions online. For instance, taxpayers can consult the
electronic version of the Code of Federal Regulations.

Most individuals, though, will find adequate information in the topical income tax
guidance on the IRS website. In addition, the IRS publications accessible through
the links on the site offer clear, useful assistance in ordinary language.