Article II, Section 2 of the Constitution authorizes treaties. The President of the United States is allowed to create treaties with other countries after receiving the advice and consent of the Senate. The President may also enter into other international agreements that have effects upon the federal tax structure. Such agreements need not be ratified by the Senate, however, they are implemented by Congress in accordance with existing federal laws.
Although the Internal Revenue Code is the primary source of tax law in the United States, Congress also enters into tax treaties with various countries. Tax treaties are separate laws that define how citizens of the two countries are to be taxed on income derived from working or investing in the other country. As such, they are important for individuals and corporations that do business in foreign countries. At times, the provisions of a tax treaty may override provisions of the Internal Revenue Code.