What is the Internal Revenue Service (IRS) and what does it do?
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What is the Internal Revenue Service (IRS)?
The Internal Revenue Service (IRS) is a bureau of the U.S. Department of Treasury and is responsible for assessing and collecting tax revenue in the United States.
The IRS dates back to 1862 when President Abraham Lincoln enacted the nation’s first income tax to pay for the Civil War. The IRS has gone through several changes, reorganizations and modernizations over the years, including being renamed and placed under the authority of the Department of Treasury.
The mission of the IRS is to carry out the tax laws in the United States. It assesses and collects taxes, helps taxpayers understand and meet their tax responsibilities and enforces tax laws to ensure everyone pays their fair share.
What does the IRS do?
The IRS has many responsibilities, which can largely be broken down into three categories: tax collection, taxpayer services and tax law enforcement.
One of the most important responsibilities of the IRS is to assess and collect taxes on behalf of the federal government. In 2020, the IRS collected roughly $3.5 trillion in taxes made up of income taxes, employment taxes, business income taxes, excise taxes and estate and gift taxes.
Along with collecting taxes, the IRS is also responsible for issuing tax refunds, which an individual or business can receive as a result of the overpayment of taxes.
Providing services to taxpayers
Another important responsibility of the IRS is providing services to taxpayers. These services are provided through the IRS website, its telephone helplines, IRS Taxpayer Assistance Centers and volunteer tax assistance. In 2020, the IRS assisted more than 64 million taxpayers through these communication methods, in addition to the 1.6 billion visits to the IRS website that year.
Enforcing tax laws
A final responsibility of the IRS is the enforcement of tax laws. The IRS seeks to identify those who have underpaid their taxes, whether as a result of a math error or criminal activity. These examinations usually take the form of either correspondence or field examinations.
From 2010 to 2018, the IRS examined about 0.63 percent of individual tax returns and 1 percent of corporate tax returns for errors. While most errors likely aren’t intentional, the IRS completed 2,624 criminal investigations in 2020 alone.
Who operates the IRS?
The IRS is overseen by a commissioner who is nominated by the president and confirmed by the Senate. The commissioner serves five-year terms. The other appointed position within the agency is the IRS Chief Counsel. The Office of Commissioner of Internal Revenue was created by Congress in 1862, and changes were made to the office in the IRS Restructuring and Reform Act of 1998. The current commissioner of the IRS is Charles P. Rettig, who took over the office in September 2018.
In addition to being under the authority of the IRS commissioner, the agency is also overseen by the IRS Oversight Board. The board was created by the IRS Restructuring and Reform Act of 1998 to provide long-term guidance and expertise to help the IRS best meet the needs of taxpayers.
How you may interact with the IRS
If you’re a taxpayer in the United States, you interact with the IRS whether you realize it or not. The most common way most people interact with the IRS is through the payment of their individual income taxes. Regardless of whether you use software or a financial professional to file your taxes, your return eventually ends up with the IRS. And if you qualify for a federal tax refund, it’s the IRS that you receive it from.
During the pandemic, most taxpayers have had even more interactions with the IRS. Over the span of about a year, the federal government issued three different Economic Impact Payments (known as stimulus checks) to taxpayers whose income fell under a certain level. You may have received a stimulus check from the IRS either as a direct deposit into your bank account or as a check in the mail.
A less desirable interaction you may have with the IRS is if you’re subject to an audit. An audit could occur if you fail to report income you earned throughout the year, make a math error on your tax return, claim too many business or personal deductions and more. In the most simple type of audit, the IRS may request more information from you. But they may also do a field audit, where they conduct a full audit of your tax return, often in a face-to-face setting (at least pre-pandemic).
These are just a few examples of interactions you might have with the IRS. You may have visited the IRS website before to use one of the many tools and services they offer or may have spoken to an IRS representative to get your tax questions answered.
How to contact the IRS
There are a variety of reasons you might need to contact the IRS, including asking tax-filing questions, inquiring about a tax refund, paying your tax bill and more.
The simplest way to get answers to your tax questions is using the interactive tax assistant on the IRS website, where you can find answers to a wide range of tax questions. If you need more personalized help or have a question that can’t be answered with the interactive tax assistant, you can call one of the many IRS phone numbers. Here are the numbers for a variety of tax topics:
|Estate and gift taxes||866-699-4083|
|Interpretation services||800-829-1040 for Spanish
833-553-9895 for other languages
|Request a face-to-face meeting||844-545-5640|
Before calling one of the IRS’s phone numbers, be sure to have your Social Security number or Individual Taxpayer Identification Number (ITIN), birth dates, filing status, previous correspondence and the tax return you’re calling about. This information will help the IRS representative to identify you and best answer your questions.