Title 26 — Internal Revenue CodeRelease 119-73
§4906 Application of State Laws
Title 26 › Subtitle Subtitle D— Miscellaneous Excise Taxes › Chapter 40— GENERAL PROVISIONS RELATING TO OCCUPATIONAL TAXES › § 4906
Summary
Paying the federal special tax on a trade or business, such as wagering, does not shield you from state penalties for running that business, and it does not make the business legal where state or local law prohibits it. States also remain free to put their own taxes on the same trade or business.
Full Legal Text
Title 26, §4906
Internal Revenue Code — Source: USLM XML via OLRC
The payment of any special tax imposed by this subtitle for carrying on any trade or business shall not be held to exempt any person from any penalty or punishment provided by the laws of any State for carrying on the same within such State, or in any manner to authorize the commencement or continuance of such trade or business contrary to the laws of such State or in places prohibited by municipal law; nor shall the payment of any such tax be held to prohibit any State from placing a duty or tax on the same trade or business, for State or other purposes.
Reference
Citations & Metadata
Citation
26 U.S.C. § 4906
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73