Internal Revenue Code of 1986

📌 Link to the Text of the Act

Read the statute (26 U.S.C.)

📌 Why It Was Done

The Internal Revenue Code of 1986 was enacted as part of the Tax Reform Act of 1986, a major overhaul of the U.S. tax system. It simplified tax brackets, broadened the base, and closed loopholes while lowering overall rates.

📌 Pre-existing Law or Constitutional Rights

Federal income tax authority comes from the 16th Amendment (1913). Prior versions of the tax code existed (notably the Internal Revenue Code of 1954), but the 1986 reform modernized it.

📌 Overreach or Proper Role?

Supporters say it created a fairer and simpler tax system. Critics argue it still left many complexities, created new loopholes, and entrenched federal control over personal and corporate finances.

📌 Who or What It Controls

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  Individuals and families (income, deductions, credits)
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  Businesses (corporate tax, deductions, credits)
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  Nonprofits (tax-exempt rules, 501(c)(3))
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  IRS (enforcement and interpretation of tax law)

📌 Key Sections / Citations

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  26 U.S.C. § 1: Income tax rates
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  26 U.S.C. § 61: Definition of gross income
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  26 U.S.C. § 501: Rules for tax-exempt organizations
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  26 U.S.C. § 7801: Powers of the IRS

📌 Recent Changes or Live Controversies

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  Major amendments: Tax Cuts and Jobs Act (2017), ongoing annual revisions
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  Debates continue over corporate tax rates, capital gains, and IRS funding
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  Ongoing litigation around tax exemptions, credits, and enforcement authority

📌 Official Sources

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  U.S. Code – Title 26 (IRC)
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  IRS – About the Tax Code
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  Congress.gov – Tax Reform Act of 1986