The Authority and Legal Basis of the Internal Revenue Service (IRS)
The Internal Revenue Service (IRS) is a federal agency tasked with enforcing tax laws in the United States. Its power and authority come from a variety of sources, including the U.S. Constitution, the Internal Revenue Code (IRC), legislation, regulations and rulings, and judicial decisions. This article explores the origins and legal basis of the IRS, as well as the mechanisms through which it operates.
Origins and Initial Renaming
The IRS originated as the Bureau of Internal Revenue around World War I. In 1953, it was officially renamed the Internal Revenue Service. It derives its authority primarily from Title 26 of the United States Code, though there is a mistaken belief among some that Title 26 is not legally binding. This misconception will be addressed in detail later in the article.
The U.S. Constitution and Congressional Power
The U.S. Constitution grants Congress the power to levy taxes. Specifically, according to Article I, Section 8, Congress has the authority to impose taxes, duties, and excises. This constitutional provision serves as the foundation for the IRS's legal authority to collect taxes and enforce tax laws.
Internal Revenue Code (IRC)
The IRC is the primary body of laws that govern federal tax administration. It is a part of Title 26 of the United States Code and outlines the rules for taxation, including the authority and responsibilities of the IRS. The IRC provides the legal framework for tax collection and compliance, detailing how taxes are to be levied, calculated, and paid.
Legislation and Tax Policy
Congress enacts laws establishing tax policy, which the IRS is responsible for enforcing. These laws encompass various types of taxes, such as income tax, payroll tax, and estate tax. The legal authority of the IRS to enforce these laws comes from the specific sections of the IRC that they are tasked with implementing.
Regulations and Rulings
The IRS issues regulations and rulings to provide guidance on how tax laws are to be interpreted and applied. These regulations and rulings are based on the authority granted by the IRC and are subject to public comment and review before they are finalized. These documents help clarify ambiguities in tax laws, ensuring consistent application of the tax code.
Judicial Decisions
Court rulings can also influence the IRS's authority by interpreting tax laws and regulations. These interpretations can establish precedents for how tax laws are applied, providing guidance for future cases. Judicial decisions are an essential part of the IRS's operational framework, helping to maintain consistency and clarity in tax law enforcement.
Legal Authority and Positive Law
It is sometimes erroneously claimed that Title 26 is not law. However, this assertion is incorrect. When laws are passed and signed, they are initially entered into the “Statutes at Large of the United States,” maintained by the U.S. Archivist. These are the actual statutes as passed by Congress, arranged in chronological order. A legal service of Congress then organizes these statutes into appropriate US Code volumes, which include Title 26.
While these volumes are useful for easy access by attorneys and courts, they are not considered the “positive law” unless Congress acts to move them there. Positive law is the written law sanctioned by act of Congress. While Title 26 has never been moved into positive law, it remains a valid and binding source of law. Citing a non-positive code can be problematic if there is a disagreement over wording, as the actual statute in the Statutes at Large would prevail.
Myths and Misconceptions
There are several myths and misconceptions regarding the IRS and its legal authority. Some people erroneously believe that the IRS is a private corporation, which is completely false. The IRS is an agency created by Congress and placed under the Department of the Treasury, under the Secretary thereof. It is a government entity, not a private corporation.
Another misconception is the belief that Title 26 is not a law. This is due to the difference between the Statutes at Large and the organized US Code volumes. Title 26 is a valid and binding source of law, though it has never been moved into positive law. However, this legal status does not negate its authority, nor does it provide a legal advantage in challenges against the IRS.
In conclusion, the IRS is a powerful and legally empowered federal agency with a rich history and a strong foundation in American law. Its authority is derived from the Constitution, the Internal Revenue Code, legislation, regulations, and judicial decisions. Understanding these sources of authority is crucial for anyone dealing with tax matters in the United States.