Internal Revenue Code

What Does Internal Revenue Code Mean?

The Internal Revenue Code (IRC) is a set of laws first enacted by Congress in 1926 and has since undergone several revisions. It primarily consists of federal laws governing taxation on various assets, including income, property, and transactions. Several parts of the code directly affect insurance products, including the rules that determine whether life insurance proceeds are taxable.

Insuranceopedia Explains Internal Revenue Code

As of 2017, the Internal Revenue Code (IRC) is divided into 11 categories:

1. Income taxes
2. Estate and gift taxes
3. Employment taxes
4. Miscellaneous excise taxes
5. Alcohol, tobacco, and certain excise taxes
6. Procedure and administration
7. The Joint Committee on Taxation
8. Financing of Presidential election campaigns
9. Trust fund code
10. Coal industry health benefits
11. Group health plan requirements

The IRC also sets the tax treatment for products like annuities, where earnings grow tax-deferred until the owner takes withdrawals. The laws governing these categories are enforced by the Internal Revenue Service (IRS).