A fundamental rule of statutory construction is that laws which are in pari materia (related in subject matter) are to be read and construed together. “[A]ll acts in pari materia are to be taken together, as if they were one law.” See United States v. Stewart, 311 U.S. 60, 64 (1940), Sanford's Estate v. Commissioner of Internal Revenue, 308 U.S. 39, 44 (1939), and Harrington v. United States, 78 U.S. 356, 365 (1877). This is particularly true for the federal tax laws. While there are many such acts, all of them are regarded as parts of one system of taxation, and construction of any one act may be assisted by review of other acts in this “system.” See United States v. Collier, Fed.Cas.No. 14,833 (Cir. Ct. S.D.N.Y. 1855). A prior tax act, even one which has been repealed, still is to be considered as explanatory of later acts. See Southern Ry. Co. v. McNeill, 155 F. 756, 769 (Cir. Ct. E.D.N.C. 1907).

On February 24, 1919, the Revenue Act of 1918 was adopted by Congress. See “An Act To provide revenue, and for other purposes,” 40 Stat. 1057, ch. 18. This Act was different from the 1916 Act in that it imposed a tax merely “in lieu of the tax” [FN 1] imposed by the 1916 Act. This is shown by the plain language of § 210 (40 Stat. at 1062):

“Sec. 210. That, in lieu of the taxes imposed by subdivision (a) of Section 1 of the Revenue Act of 1916 and by Section 1 of the Revenue Act of 1917, there shall be levied, collected and paid for each taxable year upon the net income of every individual a normal tax at the following rates:”

    The Revenue Act of 1921 was adopted by Congress on November 23, 1921. See “An Act To reduce and equalize taxation, to provide revenue, and for other purposes,” 42 Stat. 227, ch. 136. This act closely followed the pattern of the Revenue Act of 1918 in that it also imposed a tax in lieu of the 1918 tax. In § 210 of this act (42 Stat. at 233), the section imposing the tax read as follows:

“Sec. 210. That, in lieu of the tax imposed by section 210 of the Revenue Act of 1918, there shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax * * * .”

    The Revenue Act of 1924 was adopted by Congress on June 2, 1924. See “An Act To reduce and equalize taxation, to provide revenue, and for other purposes,” 43 Stat. 253, ch. 234. Like its predecessors, this act imposed a tax in lieu of the previous tax. Section 210 (43 Stat. at 264) read as follows:

“Sec. 210. (a) In lieu of the tax imposed by Section 210 of the Revenue Act of 1921, there shall be levied, collected, and paid for each taxable year upon the net income of every individual (except as provided in subdivision (b) of this section) a normal tax * * *. ”

    Two years later, Congress enacted the Revenue Act of 1926. See “An Act To reduce and equalize taxation, to provide revenue, and for other purposes,” 44 Stat. 9, ch. 27. Section 210 of this act read almost identically as the former acts imposing the tax:

“Sec. 210. (a) In lieu of the tax imposed by section 210 of the Revenue Act of 1924, there shall be levied, collected and paid for each taxable year upon the net income of every individual (except as provided in subdivision (b) of this section) a normal tax * * *.”

    Again, two years later, Congress enacted another act named the Revenue Act of 1928. See “An Act To reduce and equalize taxation, provide revenue, and for other purposes,” 45 Stat. 791, ch. 852. By this time, Congress had been enacting similar legislation for 15 years, and it changed the format of the income tax acts. The format of this act was decidedly different from the previous acts, and this format was ultimately used for the 1939 Internal Revenue Code. In this new format, the tax became imposed in § 11:

“Sec. 11. Normal Tax on Individuals. There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax * * *. ”

It must be noted that while the “in lieu of” feature of the tax appeared directly in the section imposing the tax in the prior acts, this § 11 made no reference to the same, although the act itself did. Congress moved the “in lieu of” feature from the section imposing the tax and placed it in § 63 (45 Stat. at 810) of the act:

“Sec. 63. Taxes in Lieu of Taxes Under 1926 Act. The taxes imposed by this title shall be in lieu of the corresponding taxes imposed by Title II of the Revenue Act of 1926, in accordance with the following table:

“Taxes under this Title          Taxes under 1926 Act
     Secs. 11 and 211 ....           in lieu of ...    sec. 210
     Sec. 12 ...................            in lieu of ...    sec. 211”

    Congress did not enact after 1928 another major tax law for four years; on June 6, 1932, it did enact, however, the Revenue Act of 1932. See “An Act To provide revenue, equalize taxation, and for other purposes,” 47 Stat. 169, ch. 209. This act was patterned upon its predecessor, the 1928 Act, and it thus had a § 11 which imposed the tax, and a § 63 providing the “in lieu of” feature:

“Sec. 11. Normal Tax on Individuals. There shall be levied, collected, and paid for each taxable year upon the entire net income of every individual a normal tax * * *. ”

“Sec. 63. Taxes In Lieu of Taxes Under 1928 Act. The taxes imposed by this title shall be in lieu of the corresponding taxes imposed by the sections of the Revenue Act of 1928 bearing the same numbers.”

    Two years later, Congress enacted the Revenue Act of 1934. See “An Act To provide revenue, equalize taxation, and for other purposes,” 48 Stat. 680, ch. 277. Like the 1928 and 1932 Acts, this act contained a § 11 as well as a § 63:

“Sec. 11. Normal Tax on Individuals. There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax * * * .”

“Sec. 63. Taxes In Lieu of Taxes Under 1932 Act. The taxes imposed by this title shall be in lieu of the corresponding taxes imposed by the Revenue Act of 1932.”

    The next major income tax act of Congress was the Revenue Act of 1936. See “An Act To provide revenue, equalize taxation, and for other purposes,” 49 Stat. 1648, ch. 690. Here, Congress continued the same scheme first established in 1928, with §§ 11 and 63:

“Sec. 11. Normal Tax on Individuals. There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax * * * .”

“Sec. 63. Taxes In Lieu of Taxes Under 1934 Act. The taxes imposed by this title and Title IA shall be in lieu of the taxes imposed by Titles I and IA of the Revenue Act of 1934, as amended.”

    Finally, on May 28, 1938, Congress enacted the Revenue Act of 1938. See “An Act To provide revenue, equalize taxation, and for other purposes,” 52 Stat. 447, ch. 289. This act followed the format of the similar income tax acts adopted in 1928, 1932, 1934, and 1936, and it established much of the format for the 1939 Internal Revenue Code. Here again, there was a § 11 and a § 63:

“Sec. 11. Normal Tax on Individuals. There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax * * * .”

“Sec. 63. Taxes In Lieu of Taxes Under 1936 Act. The taxes imposed by this title and Title IA shall be in lieu of the taxes imposed by Titles I and IA of the Revenue Act of 1936, as amended.”

    On December 31, 1938, there was in existence a federal income tax that was imposed by the Revenue Act of 1938. But, this act simply imposed a tax which was in lieu of the 1936 tax, which tax was in lieu of the 1934 tax, which was in lieu of the 1932 tax, which was in lieu of the 1928 tax, which was in lieu of the 1926 tax, which was in lieu of the 1924 tax, which was in lieu of the 1921 tax, which was in lieu of the 1918 tax, which was in lieu of the 1916 tax. At that time, many other taxes were scattered throughout various Congressional tax acts, and there appeared to Congress a need to consolidate these laws into one act. This was the purpose for enacting the 1939 Internal Revenue Code.

    On February 10, 1939, the 1939 Internal Revenue Code was approved and became law. The preface to this Code made it clear that it simply codified the existing tax acts into one law:

“The internal revenue title, which comprises all of the Code except the preliminary sections relating to its enactment, is intended to contain all the United States statutes of a general and permanent nature relating exclusively to internal revenue, in force on January 2, 1939; also such of the temporary statutes of that description as relate to taxes the occasion of which may arise after the enactment of the Code. These statutes are codified without substantive change and with only such change of form as is required by arrangement and consolidation. The title contains no provision, except for effective date, not derived from a law approved prior to January 3, 1939.”

In essence, those various internal revenue laws then in force and effect on January 2, 1939, were placed into this one act that created the 1939 IRC. Section 4 of the enacting clause of this Code provided that any prior law codified in this act was thereby repealed; but § 4 did not repeal any law not so codified. Most of the income tax provisions in the 1939 IRC were derived from the 1938 Revenue Act, and § 11 of the 1938 Revenue Act became § 11 in the 1939 Code. But while §§ 11 through 62 of the 1938 Act were incorporated into the 1939 Code, § 63, which provided the “in lieu of” feature, was not, and therefore was not repealed. Thus, the 1939 Code was nothing more than an incorporation of the 1938 Act into its provisions, and the un-repealed § 63 in the 1938 Act operated to make the 1939 Code's income tax laws an act which was in lieu of the 1936 tax.

    The 1954 Internal Revenue Code, 68A Stat., was a rearrangement of the provisions of the 1939 Internal Revenue Code combined with some other changes. See Detailed Discussions of the Technical Provisions of the Bill by the House and Senate, 1954 U.S.C.A.N.S., pp. 4145 and 4793, as well as Table II, 68A Stat. at 952. The 1986 Internal Revenue Code is just simply the renamed 1954 Internal Revenue Code. See 100 Stat. 2085, at 2095. Today, the 1986 Code is merely a replacement or substitute for the 1954 Code, which was a replacement or substitute for the 1939 Code, which was the codification of the 1938 Revenue Act. The 1938 tax was one which was in lieu of the 1936 tax, which was in lieu of the 1934 tax, which was in lieu of the 1932 tax, which was in lieu of the 1928 tax, which was in lieu of the 1926 tax, which was in lieu of the 1924 tax, which was in lieu of the 1921 tax, which was in lieu of the 1918 tax, which was in lieu of the 1916 tax.

A PDF of the relevant parts of these tax acts is posted here.

The official tables for the derivations of the various sections of the 1939 and 1954 IR Codes is posted here. 

FN 1:  “In lieu of” means: “Where one statute adopts the particular provisions of another by a specific and descriptive reference to the statute or provisions adopted, the effect is the same as though the statute or provisions adopted had been incorporated bodily into the adopting statute . . . Such adoption takes the statute as it exists at the time of adoption and does not include subsequent additions or modifications of the statute so taken unless it does so by express intent.” Hassett v. Welch, 303 U.S. 303, 314, 58 S.Ct. 559 (1938). See also United States  v. Oates, 427 F.3d 1086, 1089 (8th Cir. 2005); United States  v. D'Amario, 412 F.3d 253, 256 (1st Cir. 2005); United States v. Griner, 358 F.3d 979, 982 (8th Cir. 2004); and Ashness v. Tomasetti, 643 A.2d 802, 809 (R.I. 1994)(“When a statute adopts the provisions of another statute by specific reference, the effect is as if the referenced statute had been incorporated into the adopting statute.”).