Internal Revenue Service
This is the most common use of IRS. For other uses, see IRS (disambiguation).
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Seal of the Internal Revenue Service |
The
Internal Revenue Service (
IRS) is the
United States government agency that collects
taxes and enforces the
internal revenue laws. The IRS is a bureau of the
Department of the Treasury. The official U.S. Treasury regulations provide (in part):
:
The Internal Revenue Service is a bureau of the Department of the Treasury under the immediate direction of the Commissioner of Internal Revenue. The Commissioner has general superintendence of the assessment and collection of all taxes imposed by any law providing internal revenue. The Internal Revenue Service is the agency by which these functions are performed.26 C.F.R. section 601.101(a) (emphasis added).
In 1862, during the
Civil War,
President Lincoln and
Congress created the office of Commissioner of Internal Revenue and enacted an
income tax to pay war expenses (see
Revenue Act of 1862). The position of Commissioner still exists today. The Commissioner is the head of the Internal Revenue Service.
The organization created to enforce these taxes was named for the internal revenue to be collected (and was formerly called the "Bureau of Internal Revenue"), in contrast to U.S. government institutions that collected external revenue through
duties and
tariffs. (Similarly, the United Kingdom has an
Inland Revenue Commission.) The income tax was repealed 10 years later. In 1894, Congress revived the income tax, but the following year the
United States Supreme Court ruled, in
Pollock v. Farmers' Loan & Trust Co., that taxes on
capital gains,
dividends,
interest,
rents and the like were direct taxes on property, and that the statute in question was unconstitutional because it had not apportioned the direct taxes among the states according to population. In 1913, however, the states ratified the
16th Amendment, which removed the requirement that income taxes (whether considered direct or indirect taxes) be apportioned by population.
In the 1950s, career professional
employees replaced the
patronage system. Currently, only the IRS Commissioner and Chief Counsel are selected by the President and confirmed by the Senate. In 1952 the Bureau of Internal Revenue name was changed to the "Internal Revenue Service" to emphasize "service" to taxpayers.
In addition to collection of revenue and pursuing tax cheaters, the IRS issues administrative rulings such as
revenue rulings and
private letter rulings. In addition the Service publishes the
Internal Revenue Bulletin containing the various IRS pronouncements. The controlling authority of regulations and revenue rulings allows taxpayers to rely on them. A private letter ruling is good for the taxpayer to whom it is issued, and gives some explanation of the Service's position on a particular tax issue. As is the case with all administrative pronouncements, taxpayers sometimes litigate the validity of the pronouncements, and courts sometimes determine a particular rule to be invalid where the agency has exceeded its grant of authority. The IRS also issues formal pronouncements called Revenue Procedures that among other things tell taxpayers how to correct prior tax errors.
More formal rulemaking to give the Service's interpretation of a statute or when the statute itself directs that the
Secretary of the Treasury shall provide, IRS undergoes the formal regulation process with an NPRM (
Notice of proposed rulemaking) published in the
Federal Register announcing the proposed regulation, the date of the in person hearing and the process for interested parties to have their views heard either in person at the hearing in Washington, D.C., or by mail. Following the statutory period provided in the
Administrative Procedure Act (an abiding interest of Justice Scalia's dissenting opinions) the Service decides on the final regulations "as is," or as reflecting changes, or sometimes withdraws the proposed regulations. Generally, taxpayers may rely on proposed regulations until final regulations become effective. For example, human resource professionals are relying on the October 4, 2005
Proposed Regulations (citation 70
F.R. 57930-57984
text ) for the Section 409A on deferred compensation (the so-called
Enron rules on deferred compensation to add teeth to the old rules) because regulations have not been finalized.
As a by-product of hearings on abusive conduct by IRS employees, Congress enacted the
Internal Revenue Service Restructuring and Reform Act of 1998.
[Pub. L. No. 105-206, 112 Stat. 685 (July 22, 1998).] As a result of that Act the IRS now functions under four major operating divisions: Large & Mid-Size Business (LMSB), Small Business / Self-Employed (SB/SE), Wage and Investment (W&I), and Tax Exempt & Government Entities (TE/GE). The IRS also includes a criminal law enforcement division.
The main headquarters building of the IRS is located at 1111
Constitution Avenue, N.W. in
Washington, D.C., near the
Old Post Office. The IRS headquarters building was closed in June 2006 as a result of heavy flooding. According to a July 12, 2006 letter from Senator Max Baucus (Dem.-Montana), a ranking member of the U.S. Senate Finance Committee, the sub-basement of the building was filled with water to a depth of twenty feet, and electrical and maintenance equipment in the sub-basement was about 95% damaged or destroyed. The IRS and the
General Services Administration have announced that the building will remain closed at least through the end of 2006. The employees who worked in the building have been temporarily transferred to other offices in the Washington, D.C. area.
Summary of Collections before Refunds by Type of Return, Fiscal Year 2003:
| Gross Collections (Millions of US$) | | Individual Income Tax | 130,728,360 | 987,209 |
| Corporate Income Tax | 5,890,821 | 194,146 |
| Employment Taxes | 29,916,033 | 695,976 |
| Gift Tax | 287,456 | 1,939 |
| Excise Taxes | 812,483 | 52,771 |
| Estate Tax | 91,679 | 20,888 |
In fiscal year 2004, the IRS collected $43.1 billion in enforcement revenue. This is $5.5 billion or a 15 percent increase from fiscal year 2003.
Recently, the IRS has altered its policies. The current
Service plus Enforcement equals Compliance motto has led to more investigations of abusive tax schemes.
Taxpayers should be aware that the IRS does not initiate communications, or ask for information, by e-mail.
Phishing scammers pretending to be Treasury officials are using this means of communication to steal personal data from individuals.
On its internet web site, the IRS states:
:Some [people] assert that they are not required to file federal tax returns because the filing of a tax return is voluntary. Proponents point to the fact that the IRS itself tells taxpayers in the Form 1040 instruction book that the tax system is voluntary. Additionally, the Supreme Court's opinion in Flora v. United States, 362 U.S. 145, 176 (1960), is often quoted for the proposition that "our system of taxation is based upon voluntary assessment and payment, not upon distraint."
:The Law: The word "voluntary," as used in Flora and in IRS publications, refers to our system of allowing taxpayers to determine the correct amount of tax and complete the appropriate returns, rather than have the government determine tax for them. The requirement to file an income tax return is not voluntary and is clearly set forth in Internal Revenue Code §§ 6011(a) , 6012(a) , et seq., and 6072(a). See also Treas. Reg. § 1.6011-1(a).
:Any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return. Failure to file a tax return could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties. [
1]
See also
tax protester arguments about voluntary taxes.
The current Commissioner of Internal Revenue is
Mark W. Everson, who was confirmed by the U. S. Senate on May 1, 2003.
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Taxation in the United States*
Non-profit corporation*
United States of America non-profit laws*
501(c)(3)*
527 group*
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Internal Revenue Service Official website
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IRS Abuse Reports Claimed accounts of abuses against U.S. citizens by the IRS
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Tax Protester FAQ by Dan Evans rebuts claims of the illegitimacy of the income tax and the IRS
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Americans for Fair Tax argues for the replacement of the income tax with a consumption tax
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NonprofitLegalCenter.com Helpful Resources on 501(c)(3) Tax Exempt Status - Legal Assistance, Helpful Newsletter, and Links.
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IRS tax forms Description
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Internal Revenue Service Fan website for IRS with RSS News, Forums and RSS blogs.
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Tax Information for Nonprofit Corporations Tax rulings and information for Nonprofit Corporations
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IRS costs government $200 million for software error*
Fair Tax ScoreCard List of congressional leaders inclination regarding the Fair Tax
