Question

Which of the following statements is INCORRECT regarding effective dates in the Internal Revenue Code:

a. All sections of a new tax law go into effect at the same time.
b. New Code provisions may not go into effect immediately upon adoption by Congress.
c. Some effective dates can precede passage of the act.
d. All of the above are correct.

Answer 1

The incorrect statement about effective dates in the Internal Revenue Code is that all sections of a new tax law go into effect at the same time. In reality, different sections may have varied effective dates, accommodating specific legislative goals or administrative concerns.

Step-by-step explanation:

The statement regarding effective dates in the Internal Revenue Code that is INCORRECT is:

a. All sections of a new tax law go into effect at the same time.

This statement is incorrect because new tax laws can have different effective dates for various sections. Provisions of new tax legislation do not necessarily become effective immediately upon adoption by Congress, and in some cases, effective dates can indeed precede the passage of the act. It is possible for a law to include provisions that are retroactive or have delayed effective dates. The process of enacting tax laws is complex, and different sections can be phased in at different times to meet specific legislative goals or to address administrative concerns.

It is important to understand this because tax changes can have significant effects on income distribution, leading to political debate over the fairness and efficiency of tax laws. As such, the Internal Revenue Code is subject to ongoing revisions as government officials adjust policies to reflect the economic and social objectives of the administration.