income tax law: an overview

In 1913, the Sixteenth Amendment (http://www.law.cornell.edu/constitution/constitution.amendmentxvi.html) to the U.S. Constitution was ratified. It empowered Congress to tax "incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." The Internal Revenue Code is today embodied as Title 26 of the United States Code ( 26 U.S.C.) and is a lineal descendant of the income tax act passed in 1913, following ratification of the Sixteenth Amendment. While some states do not have an income tax (Nevada), all residents and all citizens of the United States are subject to the federal income tax. Not everyone, however, must file a return. The requirements for filing are found in 26 U.S.C. § 6011. As the largest contributor, its purpose is to generate revenue for the federal budget. In 1985 for example, the government collected over $450 billion in income tax from a total of $742 billion in total internal revenue receipts. The funds collected are essential for the shaping and preservation of a free market economy.

Some terms are essential in understanding income tax law. "Gross income" can be generaly defined as "all income from whatever source derived;" a more complete definition is found in 26 U.S.C. § 61. Other important definitions like "taxable income" and "adjusted gross income" can also be found in Chapter I of Title 26. These terms are not fixed nor should anyone be confident in understanding their true meaning after a cursory reading because their imputed definitions change with time. The Supreme Court, through case law, demonstrates the changing meaning of taxable income.

Individuals are not the only ones required to file income tax returns. Corporations do as well. While they are subject to may of the same rules as are individual taxpayers, they are also covered by an intricate body of rules addressed to the peculiar problems of corporations.

menu sources

federal material

U.S. Constitution

• Article I, Section 8 - Congressional Power to Tax (http://www.law.cornell.edu/constitution/constitution.articlei.html#section8)
• 16th Amendment (http://www.law.cornell.edu/constitution/constitution.amendmentxvi.html)
• CRS Annotated Constitution:
  • Fourteenth Amendment: Individual Income Tax (http://www.law.cornell.edu/anncon/search/display.html?terms=income%20tax&url=/anncon/html/amdt14cfrag5_user.html)
  • Sixteenth Amendment: Income Tax (http://www.law.cornell.edu/anncon/search/display.html?terms=income%20tax&url=/anncon/html/amdt16_user.html)

Federal Statutes

• U.S. Code: 26 U.S.C. - Internal Revenue Code

Federal Regulations

• Title 26 C.F.R. (http://www.law.cornell.edu/cfr/26cfr.htm)

Federal Judicial Decisions

• U.S. Supreme Court:
  • Historic Tax Decisions (http://www.law.cornell.edu/supct/search/index.html?query=(income+and+tax)+or+irs&scope=onlyhistoric)
  • Recent Income Tax Decisions (http://supct.law.cornell.edu/supct/search/index.html?query=(income+and+tax)+or+irs)
• U.S. Circuit Courts of Appeals: Recent Income Tax Cases (http://www.law.cornell.edu/usca/search/index.html?query=(income+and+tax)+or+irs)
• U.S. Tax Court: Decisions (http://www.ustaxcourt.gov/UstcInOp/asp/HistoricOptions.asp) (Jan. 1999 - present)

State Material

State Statutes

• Uniform Division of Income for Tax Purposes Act  (http://www.law.cornell.edu/uniform/vol7%2ehtml#inctx)(adopted in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Carolina, South Dakota, Texas, Utah, and Washington)
• State Statutes Dealing with Taxation (http://www.law.cornell.edu/topics/state_statutes.html#tax)

State Judicial Decisions

• N.Y. Court of Appeals:
  • Recent Income Tax Cases (http://www.law.cornell.edu/nyctap/search/index.html?query=income+and+tax+not+liibulletin)
  • Commentary from liibulletin-ny (http://www.law.cornell.edu/nyctap/search/index.html?query=liibulletin+and+income+and+tax)
• Appellate Decisions from Other States (http://www.law.cornell.edu/states/)

Other References

Key Internet Sources

• Federal Agency: Internal Revenue Service (http://www.irs.gov/)
• Income Tax Websites (http://www.taxsites.com/)
• "The Tax Prophet" (http://www.taxprophet.com/)
• Tax and Related Links (Harter,Secrest & Emery) (http://www.hsetax.com/)
• Federation of Tax Administrators (http://www.taxadmin.org/)

Useful Offnet (or Subscription - $) Sources

• Good Starting Point in Print: Posin and Tobin's Principles of Federal Income Taxation Law, The Concise Hornbook Series, 7th ed. (http://west.thomson.com/product/14552113/product.asp), West Group (2005)

Other Topics

Category:Taxation