While the Constitution provides for federal taxation, federal tax law is primarily statutory in nature. This means that federal tax law is based on actual statutes enacted by Congress. These statues are compiled into and referred to as the Internal Revenue or Tax Code. This article explains how Congress goes about enacting statutes to amend or supplement the Tax Code.

Article I Section 7 of the U.S. Constitution is the starting point. This Section says that all revenue bills must originate in the House of Representatives. Within the House of Representatives, revenue bills are dealt with by the House Ways and Means Committee (this committee also deals with social security and international trade bills).

The Ways and Means Committee initially writes a tax law bill. The bill will specify the text for the new tax law being proposed. The tax law bill will then go to the Rules Committee. It will then be presented to the House for ratification.

Amendments to the bill are not allowed from the House floor.

If the tax law bill is not passed by the House, the bill will die in the House. If it is passed, the tax law bill may be considered by the Senate.

Much like the House Ways and Means Committee, the Senate Finance Committee has jurisdiction over tax law bills. The Finance Committee is responsible for marking up tax bills.

The Senate can amend the bill proffered by the House. Bills can even be amended from the House floor. Indeed, the Senate can and does even go so far as to delete everything in tax law bills and start over (all tax law bills still must technically originate in the House, even if they are rewritten from scratch).

Fifty one votes are needed to pass a bill in the Senate. If passed, the tax law bill will be signed into law by the president or vetoed by the president.

If the bill passed by the House and the Senate are not equal, the bill goes to the Conference Committee. If there is no agreement in the Conference Committee the bill will be killed. In many cases, the Conference Committee will reach an Agreement on a compromise bill. Compromise bills may be voted on in the House and the Senate without the possibility of further amendment.

While the Tax Code provides the bulk of our tax laws, it is not the only source of tax law. In fact, by bulk, not necessarily by importance, much of our tax laws consist of rules created outside of the Tax Code. Let’s take a look at these various sources of tax law.