Hierarchy of Tax Authorities

Tax laws are covered in Title 26 of the United States Code and is commonly referred to as the Internal Revenue Code or IRC. When citing Title 26 of the United States Code or "26 USC," do so simply by its name, the Internal Revenue Code or IRC. The ultimate authority to consult when researching federal tax law issues, the IRC serves as the foundation of all federal tax authority in the United States. Treasury regulations, cases explicating tax law, and IRS rulings provide interpretations of the IRC.

The IRC is supplemented by individual laws passed by Congress and signed into law by the President. Laws can also be enacted by Congress by a two-thirds vote to override a Presidential veto. Assigned a Public Law number (P.L.) and published in the Statutes at Large, these individual laws amend the IRC and include additional information such as effective dates, transitional rules, and special rules not formally included in the codified IRC.

Extraneous rules incorporated as part of the IRC are often referred to as non-code provisions and include income, estate and gift, employment, and excise taxes as well as administrative and procedural rules.

It is important to note, the IRC does not include all federal tax statutes. For examples, laws related to bankruptcy are cover in USC Title 11 and those related to the judiciary are covered in Title 28. In addition, other federal statutes such as effective date provisions or sunset provisions are not included in the IRC, but nevertheless must be followed. 

In some ways state and local taxation schemes resemble those at the federal level. As with the federal system, state legislatures are charged with passing laws related to the assessment of taxes that in turn are codified in the statutes. Analogous to the IRS on the federal level, each state has a corresponding regulatory tax agency responsible for passing state administrative regulations and rulings. And just as federal tax courts issue judicial opinions, so to do state courts, although most states do not have an official tax court.

Researching issues related to state personal and corporate income tax can be conducted much in the same way as when researching those issues at the federal level. In fact, many of the state income tax schemes "piggyback" on the federal tax scheme. Thus, a large component of the research on state personal and corporate income tax will be conducted in the federal sphere. 

However, it is important to note states engage in assessing taxes in a variety of areas unrelated to income, such as property taxes, sales and use taxes, and liquor taxes. It is not uncommon for these different types of taxes to be scattered throughout a state's codes and consequently are not codified together into a cohesive "tax code." Therefore, it is helpful to consult specialized state tax resources to streamline the research process.