About The IRS
The Internal Revenue Service (IRS) is an agency of the United States federal government overseen by the United States Department of the Treasury. Tasked with assessing and collecting taxes owed the government, the bureau interprets relevant federal tax laws and applies them to determine which individuals and business entities should be taxed, and for how much money.
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Function
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The IRS does more than just apply federal tax laws and collect tax revenue, however. Its obligations also include issuing formal decisions, such as a private letter ruling when a taxpayer asks for assistance; a revenue ruling to clarify the relevance of tax law in specific situations; and declarations in the Internal Revenue Bulletin called revenue procedures, which clearly explain the agency's various practices. Taxpayers can consider all three types of administrative statements binding, and they can dispute them to have them ruled invalid, as well.
Origin
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In order to pay for Civil War expenses in 1862, Congress and President Abraham Lincoln passed the Revenue Act of 1862 and created a position called the Commissioner of Internal Revenue. Known as the Bureau of Internal Revenue, the agency's mandate involved collecting taxes from residents within the United States, as opposed to other federal agencies responsible for managing external revenue, such as tariffs.
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History
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A major roadblock for internal taxation occurred in 1894, when the Supreme Court decided income taxes were unconstitutional. That ruling remained in place until the ratification of the 16th Amendment to the United States Constitution in 1913, which authorized Congress's ability to collect income taxes.
The contemporary name Internal Revenue Service didn't gain official status until Treasury Decision 6038, also called Change of Nomenclature, in 1953. At that time, the bureau simultaneously progressed to hiring professional employees to eliminate a history of patronage.
Reform
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Substantial change aimed at increasing proficiency and customer service came to the IRS again at the end of the 20th century with the passage of the IRS Restructuring and Reform Act of 1998. The legislation enabled the bureau to divide responsibilities among three internal divisions, each with an independent commissioner: the division under the already existing Commissioner, Services and Enforcement and Operations Support. The last two units have deputy commissioners supervised by the first commissioner, who also functions as the IRS chief of staff.
Enforcement
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In an effort to ensure taxpayers perceive the tax system as fair and legitimate, the IRS dedicates significant time to compliance and enforcement initiatives, such as auditing individuals and pursuing criminal convictions in particularly flagrant cases of nonpayment, underpayment and fraud. When a person becomes the target of an IRS audit or criminal case, she should take the matter very seriously and either consult or hire an experienced and capable accountant, tax attorney or financial advisor with tax expertise.
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