Keith Mack
Tax laws are derived from a variety of sources, including the US Constitution, statutes, tax treaties, judicial opinions, and IRS documents. The US Constitution grants Congress the power to tax and provides the basis for federal tax law, while statutes enacted by Congress outline specific tax provisions for income, estate, gift, excise, and employment taxes. Judicial opinions from federal courts hearing tax cases also contribute to the body of tax law. The IRS, through its interpretations of the Internal Revenue Code, tax treaties, and regulations, provides additional authority. These various sources collectively shape the complex landscape of tax laws and regulations.
| Characteristics | Values |
|---|---|
| Legislative sources of federal tax law | The U.S. Constitution, U.S. statutes and their legislative histories, and U.S. tax treaties |
| Primary sources of federal tax law | Internal Revenue Code, Treasury regulations, case law, and agency guidance published by the Internal Revenue Service |
| Federal tax law documents | Revenue rulings, revenue procedures, notices, announcements, chief counsel advice, private letter rulings, determination letters, technical advice memoranda, etc. |
| Sources of law | Judicial opinions, court opinions on tax law, federal courts that hear federal tax cases |
| Disclosure laws | Information can be shared with the Social Security Administration (SSA) to carry out responsibilities under the Social Security Act |
| Disclosure laws | Information can be shared with law enforcement agencies for the investigation and prosecution of non-tax crimes |
| Disclosure laws | Information can be shared with third parties in the course of official tax administration investigations if necessary |
| Disclosure laws | Taxpayers may request that the IRS disclose tax records to a third party by providing written authorization |
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What You'll Learn
The U.S. Constitution and federal tax law
Article I, Section 8, Clause 1 of the Constitution grants Congress broad powers to "lay and collect Taxes, Duties, Imposts and Excises" to fund the country's debts, defence, and general welfare. This clause has been interpreted to mean that Congress has the power to impose taxes in general, as long as they do not violate any constitutional restrictions.
The Sixteenth Amendment specifically authorises Congress to levy income taxes without the need for apportionment among the states based on population. This amendment removed the requirement set by the Supreme Court in the Pollock case, which had mandated the apportionment of certain income taxes. The amendment also affirmed that federal income tax statutes do not violate the Fifth Amendment's due process clause or the requirement for geographical uniformity in indirect taxes.
Federal tax law is derived from various sources, including statutes, tax treaties, judicial opinions, and IRS documents. Statutes are considered the primary source of federal tax law and are published in the Internal Revenue Code (IRC) within Title 26 of the United States Code. These statutes cover income, estate, gift, excise, and employment taxes. Tax treaties are also important, especially when taxpayers have connections with the United States and another country. Judicial opinions from federal courts that hear tax cases provide additional sources of federal tax law, as they explain, supplement, and sometimes create new laws.
The IRS publishes documents such as revenue rulings, revenue procedures, notices, and announcements, which provide further sources of federal tax law. These documents interpret and implement the Internal Revenue Code and related statutes, tax treaties, and regulations. The IRS documents are published weekly in the Internal Revenue Bulletin and are cumulated every six months in the Cumulative Bulletin.
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Legislative history and tax law
Legislative history is an important source of federal tax law. Statutes are the primary source of federal tax law, and legislative history underpins the enactment of these statutes. This legislative history may include judicial committee reports and documented debates in the House of Representatives or the Senate. The legislative history of tax law can be found in various sources, such as the Internal Revenue Code, Treasury regulations, case law, and agency guidance published by the Internal Revenue Service (IRS).
The U.S. Constitution, with its references to taxes and the Sixteenth Amendment, which authorises Congress to lay and collect taxes on income, is a foundational legislative source of federal tax law. The Constitution does not, however, outline how Congress should go about collecting taxes, so Congress has enacted various statutes that provide for income, estate and gift, excise, and employment taxes. These statutes are published in Title 26 of the United States Code, also known as the Internal Revenue Code (IRC).
The legislative history of federal tax law can also be found in the form of tax treaties, which are relevant when taxpayers have ties to multiple countries. In the case of a conflict between a tax treaty and a statute, the source enacted or adopted most recently will generally govern.
Judicial opinions form another source of federal tax law. All federal courts that hear federal tax cases publish judicial opinions that explain, supplement, and sometimes create new laws. The authority of these opinions varies depending on the court and the date of the opinion.
In addition to the above, IRS documents provide further sources of federal tax law. These include revenue rulings, revenue procedures, notices, and announcements, as well as other documents such as chief counsel advice, private letter rulings, determination letters, technical advice memoranda, and IRS publications. These documents are published in the Internal Revenue Bulletin and cumulated every six months in the Cumulative Bulletin.
For those interested in researching the legislative history of federal tax law, there are several resources available. The Library of Congress, for example, provides a guide to locating primary sources of federal tax law. Villanova University Law School's LibGuides also offer tips on finding legislative history materials in major legal research databases. Additionally, New York University Law Library and Georgetown Law Library provide access to compiled legislative histories of federal tax laws.
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Tax treaties
The reduced rates and exemptions vary among countries and specific items of income. If the treaty does not cover a particular kind of income, or if there is no treaty between the country and the United States, the default tax rules apply. In such cases, the individual must pay tax on the income in the same way and at the same rates as shown in the instructions for Form 1040-NR, US Nonresident Alien Income Tax Return.
Revenue rulings and revenue procedures are official interpretations by the IRS of the Internal Revenue Code, related statutes, tax treaties, and regulations. Revenue rulings are the IRS's conclusions on how the law is applied to a specific set of facts. Revenue procedures, on the other hand, are official statements of procedures that affect the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties, and regulations.
The texts of most US income tax treaties in force are available on the US Department of the Treasury website. They are posted on this site upon signature and before ratification and entry into force.
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Judicial opinions
In the federal system, tax cases can be initially litigated in three different courts: the United States Tax Court, the U.S. District Courts, and the Court of Federal Claims. Tax cases tried in all of these courts are later appealed to the U.S. Courts of Appeals. Although it is a national court, the Tax Court hears cases in different locations around the country, and appeals of Tax Court cases are heard by the U.S. Court of Appeals for the circuit in which the taxpayer resides. Appeals of cases from the U.S. District Courts are heard by the U.S. Court of Appeals for the circuit in which they sit. Appeals from cases decided by the U.S. Court of Federal Claims are heard solely by the U.S. Court of Appeals for the Federal Circuit. As with all federal cases, the court of final appeal is the U.S. Supreme Court.
The U.S. Board of Tax Appeals is the predecessor of the United States Tax Court. Before 1942, the Board of Tax Appeals was the prepayment forum for taxpayers who wanted judicial review of the Internal Revenue Service's determination of deficiencies in income, excess profits, and estate and gift taxes. U.S. Supreme Court decisions are binding on the IRS. For opinions issued against the IRS from other courts, the IRS will often issue an announcement on its position.
The Internal Revenue Service (IRS) publishes documents that establish federal tax law. Many of these documents are published weekly in the Internal Revenue Bulletin ("IRB") and are cumulated every six months in the Cumulative Bulletin. These documents include revenue rulings, revenue procedures, notices, and announcements. Revenue rulings are official interpretations by the IRS of the Internal Revenue Code, related statutes, tax treaties, and regulations. Revenue procedures are official statements of a procedure that affect the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties, and regulations. Notices are public pronouncements that may contain guidance that involves substantive interpretations of the Internal Revenue Code or other provisions of the law. Announcements are public pronouncements that have only immediate or short-term value.
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Internal Revenue Service (IRS) documents
The Internal Revenue Service (IRS) is a division of the US Treasury Department and is responsible for the day-to-day operations of federal tax laws. The IRS publishes a range of documents that establish federal tax law. These include:
- Revenue rulings: An official interpretation by the IRS of the Internal Revenue Code, related statutes, tax treaties, and regulations.
- Revenue procedures: An official statement of a procedure that affects taxpayers' rights and duties under the Internal Revenue Code, related statutes, tax treaties, and regulations.
- Notices: A public pronouncement that may contain guidance on the interpretation of the Internal Revenue Code or other provisions of the law.
- Announcements: A public pronouncement with immediate or short-term value.
- Chief counsel advice: Legal advice issued by the IRS Office of Chief Counsel on a specific tax issue.
- Private letter rulings: Written determinations by the IRS on how a specific tax law applies to a specific taxpayer.
- Determination letters: A letter from the IRS stating that an organisation meets the requirements for tax-exempt status.
- Technical advice memoranda: A written response from the IRS National Office to a request for technical advice on a tax issue.
- Actions on decisions: A document issued by the IRS that reflects the effect of a court decision on the IRS's litigation position.
- General counsel memoranda: A document that provides legal analysis and advice on a tax issue, typically issued by the IRS Office of Chief Counsel.
- Field service advice: Legal advice issued by an IRS field office on a specific tax issue.
- Technical expedited advice memoranda: A type of technical advice memorandum that is issued more quickly, typically within 21 days.
- Service centre advice: Written advice issued by an IRS service centre in response to a taxpayer's request.
- Chief counsel bulletins: A periodic publication issued by the IRS Office of Chief Counsel that contains legal advice and guidance on tax issues.
- Litigation guideline memoranda: A document that provides guidance on how to handle legal issues that may arise in litigation.
- IRS information letters: A letter from the IRS that responds to a taxpayer's request for general information, but does not provide specific legal advice or analysis.
- IRS compliance officer memoranda: Internal guidance issued by the IRS to its employees on how to handle certain compliance issues.
- IRS technical assistance: A program where IRS employees provide technical help to taxpayers on how to fill out tax forms and understand tax laws.
- The internal revenue manual: A document that provides detailed instructions and procedures for IRS employees on how to administer and enforce tax laws.
- IRS publications: A range of publications issued by the IRS that provide information and guidance to taxpayers on a variety of tax topics.
These IRS documents are published weekly in the Internal Revenue Bulletin and are cumulated every six months in the Cumulative Bulletin. In addition to these documents, the IRS also offers services such as Direct Pay, where taxpayers can securely pay their taxes directly from their bank accounts, and options to file taxes for free.
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Frequently asked questions
The sources of federal tax law include the U.S. Constitution, U.S. statutes, and their legislative histories, U.S. tax treaties, judicial opinions, and IRS documents.
IRS documents include revenue rulings, revenue procedures, notices, announcements, and other forms of official tax guidance. These are published in the Internal Revenue Bulletin (IRB) and Cumulative Bulletin.
The Internal Revenue Bulletin is a weekly publication that contains rulings and procedures related to tax laws. It serves as the authoritative source for the distribution of official IRS tax guidance.
Yes, federal law requires the IRS to maintain the confidentiality of tax returns and related information. However, there are exceptions where information may be disclosed without the taxpayer's consent, such as court subpoenas or requests from authorized committees.
Yes, taxpayers are free to disclose information about their own tax returns. However, the IRS is restricted from commenting on or confirming any voluntarily disclosed information.
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