A tax code is a unique identifier assigned to individuals or businesses by a tax authority, such as the Internal Revenue Service (IRS) in the United States or Her Majesty’s Revenue and Customs (HMRC) in the United Kingdom. It is used to identify taxpayers and determine their tax obligations, such as the amount of income tax they owe.
Tax codes are important because they ensure that taxpayers are paying the correct amount of tax. They also help to prevent fraud and abuse of the tax system. In some countries, tax codes are also used to determine eligibility for certain tax benefits, such as tax credits or deductions.