When the language in the Internal Revenue Code is ambiguous, or when a provision of the Code does not specifically address taxpayer issues, courts often look to Congress when the provision is enacted. Knowing the legislator’s reasons for passing the law can provide insight into the intended application. The legislative history of the provision serves as the best guide to Congressional intent because it is prepared alongside legislation and speaks on behalf of Congress itself. This article explains how the legislative process of forming tax laws produces a history of legislation.
DPR/Committee on Facilities and Infrastructure
The US House of Representatives is the starting point for all federal tax laws. All claims relating to federal income, estate, gift, or excise taxes are under the jurisdiction of the House Ways and Means Committee. The Committee holds hearings on proposed legislation to offer government officials and the general public the opportunity to express their views on proposed changes or additions. Records of Congressional hearings are sometimes published by the Government Printing Office. The Committee then revises, or flags, the bill, making any changes it deems necessary or appropriate. The Committee also prepares a report discussing the changes and explaining its reasons for approving the law. The report is identified as a Home Report and is assigned a report number. If the bill is approved by the full House, it will be passed to the US Senate.
Senate/Financial Committee
The Senate Finance Committee is the Senate counterpart to the House Ways and Means Committee. The Finance Committee also holds hearings for official and public input and flags DPR bills with recommended changes. The committee prepares a report explaining the amendments to the DPR Bill. The full Senate then has the opportunity to consider the bill.
Conference Committee
The version of a proposed bill approved by the House of Representatives may differ significantly from the version passed by the Senate. A Conference Committee consisting of members of the House and Senate is appointed to resolve the conflict between the two bills. The Conference Committee prepared an accompanying report explaining why they adopted or rejected the provisions of the two bills. Conference reports are identified by numbers. The revised bill is sent back to the House and Senate for final approval and then to the President for signature or veto.
Tax Joint Committee
The Joint Committee on Taxation (JCT) is a Congressional committee consisting of five members from each of the House and Senate. The Committee, assisted by non-partisan staff, has several functions, most of which are devoted to analyzing and reporting on proposed or promulgated tax laws. JCT staff participate in every aspect of enactment of the tax law, including writing the law, explaining the law, and estimating the economic impact of proposed changes. Majority and Minority party members can request assistance from the JCT. Before or after a bill becomes law, the JCT prepares a technical explanation, known as a bluebook, which explains the laws before the new law and the reasons for changing the previous law.
Conclusion
The Internal Revenue Code is a federal law located in Title 26 of the United States Code. To amend the Code, Congress must go through the normal process for passing federal laws.
The history of legislation traces the bill since it was introduced in the DPR until it was signed into law by the President. This may include a House bill, a Senate bill, a final compromise bill, four committee reports, and congressional hearings. Legislative history is a fertile source of Congressional intent with respect to any tax act.
