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Governments get their financial support by taxing the people or organizations, who either reside within the country or who are citizens. Tax law governs the method and the amount of taxation. In the United States (US ), tax law originates with the United States Congress. However, most of the detailed tax rules are actually enacted by the Department of the Treasury, which is an agency of the United States government, and its subagency, the Internal Revenue Service (IRS ). Regulations issued by the Department of the Treasury must conform both to the Tax Code, which is the law enacted by Congress and to any constitutional requirements; otherwise, the regulation may be voided by the courts.

Because the amount of taxes that must be paid depends on transactions, especially the receipt of income, tax authorities depend heavily on self reporting by those who are taxed, that may be subject to review by the IRS through audits.

Before 1913, the US government's main source of income was from excise taxes. However, the government's revenue requirements could not easily be fulfilled by excise taxes, so in 1913, the 16 th amendment to the U.S. Constitution was added, thus beginning the era of the federal income tax: The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration. The federal government tried to enact an income tax several times before, but it was declared unconstitutional by the courts, which partly explains the wording of the 16 th amendment.

Before 1939, the tax code consisted of individual revenue acts enacted by Congress. Then in 1939, Congress consolidated all the federal tax laws into what is known as the Internal Revenue Code (IRC) of 1939,publishing them in a logical sequence in a separate part of the Federal Register. Major revisions also occurred in 1954 and 1986. New amendments to the tax code are incorporated into the Internal Revenue Code of 1986.

The Tax Code, found in Title 26 of the US Code and enacted by Congress, defines what income is, exemptions, what expenses can be deducted, filing requirements. and other necessary components of the tax system. After the Constitution, the Tax Code is considered the highest authority, which any regulations promulgated by agencies of the US government must conform to.

Tax treaties. which usually pertain to transactions where the tax laws of different countries may apply, also have the force of law. When provisions in the tax law conflict with the provisions in a tax treaty with another country, the most recently enacted provision takes precedence. However, the taxpayer is generally required to note where there is a conflict, if the taxpayer uses the treaty provision.

Generally, administrative tax laws are issued by either the U.S. Treasury Department or the IRS and published in the Federal Register. Regulations generally start as Proposed Regulations, which are published to allow comments by the public or by those who may be affected by the regulation. After the comment period, the Proposed Regulation becomes a Finalized Regulation. issued as a Treasury Decision. which has the force of law and can be cited as precedent. However, proposed regulations cannot be cited as precedent. Treasury Decisions report new Regulations, changes to existing Regulations, or how the Treasury Department interprets a specific court decision.

Temporary regulations are issued by the IRS to cover situations that require immediate resolution or interpretation, though some temporary regulations can last for many years.

Revenue procedures are official statements of a procedure that affects taxpayers under the code, statutes, treaties, and regulations and are published annually in the Internal Revenue Bulletin (IRB), by year and by the order in which the revenue procedure was enacted. Revenue Procedures cover the internal management practices and procedures of the IRS.

Revenue rulings. which are also published in the IRB, are issued by the IRS on how it would interpret the law to a specific set of facts. Although they provide interpretation of the tax law, they do not carry the authority of Regulations, since Regulations are approved by the Secretary of the Treasury, whereas revenue rulings are not. Although taxpayers do not necessarily have to follow revenue rulings, any deviation from the rulings must be noted on the tax return, which may cause the return to be examined. Rulings and procedures may be revoked or modified by later rulings or procedures, Regulations, court decisions, or legislation.

Letter rulings are issued by the IRS to a specific taxpayer, where, for a fee, the IRS describes how it would treat a proposed transaction. The taxpayer can rely on that ruling, but no one else can. It applies only to the specific taxpayer and only if the proposed transaction accurately described the actual transaction. Letter rulings were once private, but are now published with private information redacted.

Determination letters are much like letter rulings, in that the taxpayer requests information from the IRS on how it would treat a given transaction. However, a determination letter usually rules on a transaction that is already occurred and is not published. Determination letters are usually issued by the Area Director of the IRS rather than the National Office of the IRS, which issues letter rulings.

General Counsel Memoranda (GCM), Technical Advice Memoranda (TAM) and Field Service Advice (FSA) are internal memoranda that are issued to offer guidance to IRS employees working in the field. Although they are published, they cannot be used as precedent, but they do provide guidance as to how the IRS will treat given situations.

• Federal tax legislation originates in the House of Representatives, specifically by the House Ways and Means Committee .
• Proposals by the committee are then voted on by the entire House of Representatives.
  • The House of Representatives votes on the proposals of the House Ways and Means Committee without modifying those proposals.
• Bills that are approved by the House are then sent to the Senate Finance Committee. who may modify the proposals before sending it to the floor for a debate or vote.
  • Senators have the power to amend proposals by the Senate Finance Committee by attaching riders, which is why changes are frequently made to proposals in the Senate.