The Internal Revenue Service (IRS) is the

revenue service A revenue service, revenue agency or taxation authority is a government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. Depending on the jurisdiction, revenue services may be charged with ...

for the

United States federal government The federal government of the United States (U.S. federal government or U.S. government) is the national government of the United States, a federal republic located primarily in North America, composed of 50 states, a city within a fed ...

, which is responsible for collecting U.S. federal taxes and administering the

Internal Revenue Code The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 2 ...

, the main body of the federal statutory tax law. It is an agency of the Department of the Treasury and led by the

Commissioner of Internal Revenue The Commissioner of Internal Revenue is the head of the Internal Revenue Service (IRS), an agency within the United States Department of the Treasury. The office of Commissioner was created by Congress as part of the Revenue Act of 1862. Section ...

, who is appointed to a five-year term by the President of the United States. The duties of the IRS include providing tax assistance to taxpayers; pursuing and resolving instances of erroneous or fraudulent tax filings; and overseeing various benefits programs, including the

Affordable Care Act The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act and colloquially known as Obamacare, is a landmark U.S. federal statute enacted by the 111th United States Congress and signed into law by Pres ...

IRS building on constitution avenue in DC

The IRS originates from the Commissioner of Internal Revenue, a federal office created in 1862 to assess the nation's first

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Ta ...

to fund the

American Civil War The American Civil War (April 12, 1861 – May 26, 1865; also known by Names of the American Civil War, other names) was a civil war in the United States. It was fought between the Union (American Civil War), Union ("the North") and t ...

. The temporary measure provided over a fifth of the Union's war expenses before being allowed to expire a decade later. In 1913, the Sixteenth Amendment to the U.S. Constitution was ratified authorizing Congress to impose a tax on income, and the Bureau of Internal Revenue was established. In 1953, the agency was renamed the Internal Revenue Service, and in subsequent decades underwent numerous reforms and reorganizations, most significantly in the 1990s. Since its establishment, the IRS has been responsible for collecting most of the revenue needed to fund the federal government, albeit while facing periodic controversy and opposition over its methods, constitutionality, and the principle of taxation generally. In recent years the agency has struggled with budget cuts and reduced morale. As of 2018, it saw a 15 percent reduction in its workforce, including a decline of more than 25 percent of its enforcement staff. Nevertheless, during the 2017 fiscal year, the agency processed more than 245 million tax returns.

History

American Civil War (1861–65)

In July 1862, during the

President President most commonly refers to: *President (corporate title) * President (education), a leader of a college or university * President (government title) President may also refer to: Automobiles * Nissan President, a 1966–2010 Japanese ...

Abraham Lincoln Abraham Lincoln ( ; February 12, 1809 – April 15, 1865) was an American lawyer, politician, and statesman who served as the 16th president of the United States from 1861 until his assassination in 1865. Lincoln led the nation throu ...

and

Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...

passed the

Revenue Act of 1862 The Revenue Act of 1862 (July 1, 1862, Ch. 119, ), was a bill the United States Congress passed to help fund the American Civil War. President Abraham Lincoln signed the act into law on July 1, 1862. The act established the office of the Commissio ...

, creating the office of Commissioner of Internal Revenue and enacting a temporary

to pay war expenses. The Revenue Act of 1862 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax was passed in 1862: *The initial rate was 3% on income over $800, which exempted most wage-earners. *In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000. By the end of the war, 10% of Union households had paid some form of income tax, and the Union raised 21% of its war revenue through income taxes.

Post Civil War, Reconstruction, and popular tax reform (1866–1913)

After the Civil War,

Reconstruction Reconstruction may refer to: Politics, history, and sociology * Reconstruction (law), the transfer of a company's (or several companies') business to a new company *''Perestroika'' (Russian for "reconstruction"), a late 20th century Soviet Unio ...

, railroads, and transforming the North and South war machines towards peacetime required public funding. However, in 1872, seven years after the war, lawmakers allowed the temporary Civil War income tax to expire. Income taxes evolved, but in 1894 the

Supreme Court A supreme court is the highest court within the hierarchy of courts in most legal jurisdictions. Other descriptions for such courts include court of last resort, apex court, and high (or final) court of appeal. Broadly speaking, the decisions of ...

declared the Income Tax of 1894 unconstitutional in '' Pollock v. Farmers' Loan & Trust Co.'', a decision that contradicted '' Hylton v. United States''. The federal government scrambled to raise money. In 1906, with the election of President

Theodore Roosevelt Theodore Roosevelt Jr. ( ; October 27, 1858 – January 6, 1919), often referred to as Teddy or by his initials, T. R., was an American politician, statesman, soldier, conservationist, naturalist, historian, and writer who served as the 26t ...

, and later his successor

William Howard Taft William Howard Taft (September 15, 1857March 8, 1930) was the 27th president of the United States (1909–1913) and the tenth chief justice of the United States (1921–1930), the only person to have held both offices. Taft was elected pr ...

, the United States saw a

populist Populism refers to a range of political stances that emphasize the idea of "the people" and often juxtapose this group against " the elite". It is frequently associated with anti-establishment and anti-political sentiment. The term develop ...

movement for tax reform. This movement culminated during then-candidate

Woodrow Wilson Thomas Woodrow Wilson (December 28, 1856February 3, 1924) was an American politician and academic who served as the 28th president of the United States from 1913 to 1921. A member of the Democratic Party, Wilson served as the president of ...

's election of 1912 and in February 1913, the ratification of the

Sixteenth Amendment to the United States Constitution The Sixteenth Amendment (Amendment XVI) to the United States Constitution allows Congress to levy an income tax without apportioning it among the states on the basis of population. It was passed by Congress in 1909 in response to the 1895 Sup ...

: This granted Congress the specific power to impose an income tax without regard to apportionment among the states by population. By February 1913, 36 states had ratified the change to the Constitution. It was further ratified by six more states by March. Of the 48 states at the time, 42 ratified it. Connecticut, Rhode Island, and Utah rejected the amendment; Pennsylvania, Virginia, and Florida did not take up the issue.

Post 16th Amendment (1913–present)

Though the constitutional amendment to allow the federal government to collect income taxes was proposed by

President Taft William Howard Taft (September 15, 1857March 8, 1930) was the 27th president of the United States (1909–1913) and the tenth chief justice of the United States (1921–1930), the only person to have held both offices. Taft was elected p ...

in 1909, the 16th Amendment was not ratified until 1913, just before the start of the

First World War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...

. In 1913 the first edition of the 1040 form was introduced. A copy of the very first IRS 1040 form, can be found at the IRS website showing that only those with annual incomes of at least $3,000 () were instructed to file the income tax return. In the first year after the ratification of the 16th Amendment, no taxes were collected. Instead, taxpayers simply completed the form and the IRS checked the form for accuracy. The IRS's workload jumped by ten-fold, triggering a massive restructuring. Professional tax collectors began to replace a system of "patronage" appointments. The IRS doubled its staff but was still processing 1917 returns in 1919. Income tax raised much of the money required to finance the war effort; in 1918 a new Revenue Act established a top tax rate of 77%. 1920 tax forms IRS

In 1919 the IRS was tasked with enforcement of laws relating to prohibition of alcohol sales and manufacture; this was transferred to the jurisdiction of the Department of Justice in 1930. After repeal in 1933, the IRS resumed collection of taxes on beverage alcohol. The alcohol, tobacco and firearms activities of the bureau were segregated into the

Bureau of Alcohol, Tobacco, Firearms and Explosives The Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE), commonly referred to as the ATF, is a domestic law enforcement agency within the United States Department of Justice. Its responsibilities include the investigation and preve ...

in 1972. A new tax act was passed in 1942 as the United States entered the

Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...

. This act included a special wartime surcharge. The number of American citizens who paid income tax increased from about four million in 1939 to more than forty-two million by 1945. In 1952, after a series of politically damaging incidents of

tax evasion Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the tax ...

and bribery among its own employees, the Bureau of Internal Revenue was reorganized under a plan put forward by

President Truman Harry S. Truman (May 8, 1884December 26, 1972) was the 33rd president of the United States, serving from 1945 to 1953. A leader of the Democratic Party, he previously served as the 34th vice president from January to April 1945 under Frankli ...

, with the approval of Congress. The reorganization decentralized many functions to new district offices which replaced the collector's offices. Civil service directors were appointed to replace the politically appointed collectors of the Bureau of Internal Revenue. Not long after, the bureau was renamed the Internal Revenue Service. In 1954 the filing deadline was moved from March 15 to April 15. The Tax Reform Act of 1969 created the

Alternative Minimum Tax The alternative minimum tax (AMT) is a tax imposed by the United States federal government in addition to the regular income tax for certain individuals, estates, and trusts. As of tax year 2018, the AMT raises about $5.2 billion, or 0.4% of all ...

. By 1986, limited electronic filing of tax returns was possible. The

Internal Revenue Service Restructuring and Reform Act of 1998 The Internal Revenue Service Restructuring and Reform Act of 1998, also known as Taxpayer Bill of Rights III (), resulted from hearings held by the United States Congress in 1996 and 1997. The Act included numerous amendments to the Internal Reven ...

("RRA 98") changed the organization from geographically oriented to an organization based on four operating divisions. It added "10 deadly sins" that require immediate termination of IRS employees found to have committed certain misconduct. Enforcement activities declined. The

IRS Oversight Board The IRS Oversight Board is a nine-member board established by the Internal Revenue Service Restructuring and Reform Act of 1998 to oversee the Internal Revenue Service. It usually meets four times a year. The board made recommendations such as de ...

noted that the decline in enforcement activities has "rais dquestions about tax compliance and fairness to the vast majority of citizens who pay all their taxes". In June 2012, the IRS Oversight Board recommended to Treasury a fiscal year 2014 budget of $13.074billion for the Internal Revenue Service. On December 20, 2017, Congress passed the

Tax Cuts and Jobs Act of 2017 The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, , is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs A ...

. It was signed into law by President Trump on December 22, 2017. In the 2017 fiscal year, the IRS had 76,832 employees conducting its work, a decrease of 14.9 percent from 2012.

Presidential tax returns (1973)

From the 1950s through the 1970s, the IRS began using technology such as microfilm to keep and organize records. Access to this information proved controversial, when

President Richard Nixon Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party, he previously served as a representative and senator from California and was t ...

's tax returns were leaked to the public. His tax advisor, Edward L. Morgan, became the fourth law-enforcement official to be charged with a crime during

Watergate The Watergate scandal was a major political scandal in the United States involving the administration of President Richard Nixon from 1972 to 1974 that led to Nixon's resignation. The scandal stemmed from the Nixon administration's continu ...

. John Requard, Jr., accused of leaking the Nixon tax returns, collected delinquent taxes in the slums of Washington. In his words: "We went after people for nickels and dimes, many of them poor and in many cases illiterate people who didn't know how to deal with a government agency." Requard admitted that he saw the returns, but denied that he leaked them. Reporter

Jack White John Anthony White (; born July 9, 1975), commonly known as Jack White, is an American musician, best known as the lead singer and guitarist of the duo the White Stripes. White has enjoyed consistent critical and popular success and is widely c ...

of ''

The Providence Journal ''The Providence Journal'', colloquially known as the ''ProJo'', is a daily newspaper serving the metropolitan area of Providence, Rhode Island, and is the largest newspaper in Rhode Island. The newspaper was first published in 1829. The newspape ...

'' won the

Pulitzer Prize The Pulitzer Prize () is an award for achievements in newspaper, magazine, online journalism, literature, and musical composition within the United States. It was established in 1917 by provisions in the will of Joseph Pulitzer, who had made ...

for reporting about Nixon's tax returns. Nixon, with a salary of $200,000, paid $792.81 in federal income tax in 1970 and $878.03 in 1971, with deductions of $571,000 for donating "vice-presidential papers". This was one of the reasons for his famous statement: "Well, I'm not a crook. I've earned everything I've got." So controversial was this leak, that most later US presidents released their tax returns (though sometimes only partially). These returns can be found online at the Tax History Project.

Computerization (1959–present)

By the end of the Second World War, the IRS was handling sixty million tax returns each year, using a combination of mechanical desk calculators,

accounting machine An accounting machine, or bookkeeping machine or recording-adder, was generally a calculator and printer combination tailored for a specific commercial activity such as billing, payroll, or ledger. Accounting machines were widespread from the ear ...

s, and pencil and paper forms. In 1948

punch card A punched card (also punch card or punched-card) is a piece of stiff paper that holds digital data represented by the presence or absence of holes in predefined positions. Punched cards were once common in data processing applications or to di ...

equipment was used. The first trial of a computer system for income tax processing was in 1955, when an

IBM 650 The IBM 650 Magnetic Drum Data-Processing Machine is an early digital computer produced by IBM in the mid-1950s. It was the first mass produced computer in the world. Almost 2,000 systems were produced, the last in 1962, and it was the fir ...

installed at

Kansas City The Kansas City metropolitan area is a bi-state metropolitan area anchored by Kansas City, Missouri. Its 14 counties straddle the border between the U.S. states of Missouri (9 counties) and Kansas (5 counties). With and a population of more th ...

processed 1.1 million returns. The IRS was authorized to proceed with computerization in 1959, and purchased

IBM 1401 The IBM 1401 is a variable-wordlength decimal computer that was announced by IBM on October 5, 1959. The first member of the highly successful IBM 1400 series, it was aimed at replacing unit record equipment for processing data stored on pu ...

and

IBM 7070 IBM 7070 was a decimal-architecture intermediate data-processing system that was introduced by IBM in 1958. It was part of the IBM 700/7000 series, and was based on discrete transistors rather than the vacuum tubes of the 1950s. It was the compa ...

systems for local and regional data processing centers. The

Social Security number In the United States, a Social Security number (SSN) is a nine-digit number issued to U.S. citizens, permanent residents, and temporary (working) residents under section 205(c)(2) of the Social Security Act, codified as . The number is issued to ...

was used for taxpayer identification starting in 1965. By 1967, all returns were processed by computer and punched card data entry was phased out.Paul Cenuzi, ''A History of Modern Computing'', MIT Press, 2003. . pp. 119–122. Information processing in the IRS systems of the late 1960s was in batch mode; microfilm records were updated weekly and distributed to regional centers for handling tax inquiries. A project to implement an interactive, realtime system, the "Tax Administration System", was launched, that would provide thousands of local interactive terminals at IRS offices. However, the

General Accounting Office The U.S. Government Accountability Office (GAO) is a legislative branch government agency that provides auditing, evaluative, and investigative services for the United States Congress. It is the supreme audit institution of the federal gover ...

prepared a report critical of the lack of protection of privacy in TAS, and the project was abandoned in 1978. In 1995, the IRS began to use the public Internet for electronic filing. Since the introduction of e-filing, self-paced online tax services have flourished, augmenting the work of tax accountants, who were sometimes replaced. By 2002, more than a third of all tax returns were filed electronically. This led to a decline in the number of paper returns being processed each year. As a result, the IRS implemented a consolidation plan for its paper tax return processing centers, closing five of its ten processing centers between 2003 and 2011. The agency closed two more centers - one in 2019 and another in 2021 - as e-file use continued to expand. E-filed tax returns accounted for 90% of all returns submitted during the 2021 filing season. In 2003, the IRS struck a deal with tax software vendors: The IRS would not develop online filing software and, in return, software vendors would provide free e-filing to most Americans. In 2009, 70% of filers qualified for free electronic filing of federal returns. According to an inspector general's report, released in November 2013, identity theft in the United States is blamed for $4billion worth of fraudulent 2012 tax refunds by the IRS. Fraudulent claims were made with the use of stolen taxpayer identification and Social Security numbers, with returns sent to addresses both in the US and internationally. Following the release of the findings, the IRS stated that it resolved most of the identity theft cases of 2013 within 120 days, while the average time to resolve cases from the 2011/2012 tax period was 312 days. In September 2014, IRS Commissioner

John Koskinen John Andrew Koskinen (born June 30, 1939) is an American businessman and public official. He served as the non-executive chairman of Freddie Mac from September 2008 to December 2011, retiring from the board in February 2012. On December 20, 2013, K ...

expressed concern over the organization's ability to handle

Obamacare The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act and colloquially known as Obamacare, is a landmark U.S. federal statute enacted by the 111th United States Congress and signed into law by Pres ...

and administer

premium tax credit The premium tax credit (PTC) is a refundable tax credit in the United States. It is payable by the Internal Revenue Service (IRS) to eligible households that have obtained healthcare insurance by a healthcare exchange (marketplace) in the tax ...

s that help people pay for health plans from the health law's insurance exchanges. It will also enforce the law's

individual mandate An individual mandate is a requirement by law for certain persons to purchase or otherwise obtain a good or service. United States Militia act The Militia Acts of 1792, based on the Constitution's militia clause (in addition to its affirmativ ...

, which requires most Americans to hold health insurance. In January 2015,

Fox News The Fox News Channel, abbreviated FNC, commonly known as Fox News, and stylized in all caps, is an American multinational conservative cable news television channel based in New York City. It is owned by Fox News Media, which itself is o ...

obtained an email which predicted a messy tax season on several fronts. The email was sent by IRS Commissioner Koskinen to workers. Koskinen predicted the IRS would shut down operations for two days later this year which would result in unpaid

furlough A furlough (; from nl, verlof, " leave of absence") is a temporary leave of employees due to special needs of a company or employer, which may be due to economic conditions of a specific employer or in society as a whole. These furloughs may be ...

s for employees and service cuts for

taxpayer A taxpayer is a person or organization (such as a company) subject to pay a tax. Modern taxpayers may have an identification number, a reference number issued by a government to citizens or firms. The term "taxpayer" generally characterizes o ...

s. Koskinen also said delays to IT investments of more than $200million may delay new taxpayer protections against

identity theft Identity theft occurs when someone uses another person's personal identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes. The term ''identity theft'' was c ...

. Also in January 2015, the editorial board of ''

The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...

'' called the IRS budget cuts penny-wise-and-pound-foolish, where for every dollar of cuts in the budget, six were lost in tax revenue. A 2020 Treasury Department audit found the IRS had improved its identity verification system offerings for taxpayers, but was still behind in fully meeting digital identity requirements. The following year, the IRS announced a new login and ID verification process for several of its online tools, including general account access, Identity Protection (IP) PIN setup, and payment plan applications. As part of the agency's Identity, Credential, and Access Management (ICAM) initiative, the process included the use of third-party facial recognition technologies to confirm taxpayer identities. The facial recognition requirement was dropped in 2022, however, following privacy concerns from government officials and the public. Alternative ID verification options have since been introduced with the goal of making IRS online tools accessible to more people.

History of the IRS name

Department of Treasury retirement reception of Beth Tucker 01

As early as the year 1918, the Bureau of Internal Revenue began using the name "Internal Revenue Service" on at least one tax form. In 1953, the name change to the "Internal Revenue Service" was formalized in Treasury Decision 6038.

Current organization

The 1980s saw a reorganization of the IRS. A bipartisan commission was created with several mandates, among them to increase customer service and improve collections. Congress later enacted the

, which mandated that the agency replace its geographic regional divisions with units that serve particular categories of taxpayers. As a result, the IRS now functions under four major operating divisions: *Large Business and International (LB&I) *Small Business/Self-Employed (SB/SE) *Wage and Investment (W&I) *Tax Exempt & Government Entities (TE/GE) The Large Business & International (LB&I) division was known as the Large and Mid-Size Business division prior to a name change on October 1, 2010. The IRS is

headquartered Headquarters (commonly referred to as HQ) denotes the location where most, if not all, of the important functions of an organization are coordinated. In the United States, the corporate headquarters represents the entity at the center or the top ...

in Washington, D.C., and does most of its

computer programming Computer programming is the process of performing a particular computation (or more generally, accomplishing a specific computing result), usually by designing and building an executable computer program. Programming involves tasks such as anal ...

in Maryland. It processes paper tax returns sent by

mail The mail or post is a system for physically transporting postcards, letters, and parcels. A postal service can be private or public, though many governments place restrictions on private systems. Since the mid-19th century, national postal sys ...

and e-filed tax returns at three IRS center locations: Austin, Texas; Kansas City, Missouri; and Ogden, Utah. The IRS also operates computer centers in three locations: Detroit, Michigan; Martinsburg, West Virginia; and Memphis, Tennessee.

Commissioner

The IRS is currently led by

Douglas O’Donnell Douglas may refer to: People * Douglas (given name) * Douglas (surname) Animals *Douglas (parrot), macaw that starred as the parrot ''Rosalinda'' in Pippi Longstocking * Douglas the camel, a camel in the Confederate Army in the American Civil ...

, who became Acting Commissioner of Internal Revenue after

Charles P. Rettig Charles Paul Rettig (born November 18, 1956) is an American attorney who served as the United States Commissioner of Internal Revenue, the head of the U.S. Internal Revenue Service (IRS). On September 12, 2018, the United States Senate confirmed R ...

's term as Commissioner ended on November 12, 2022. There have been 49 previous commissioners of Internal Revenue and 28 acting commissioners since the agency's creation in 1862. From May 22, 2013, to December 23, 2013, senior official at the

Office of Management and Budget The Office of Management and Budget (OMB) is the largest office within the Executive Office of the President of the United States (EOP). OMB's most prominent function is to produce the president's budget, but it also examines agency programs, pol ...

Daniel Werfel was acting Commissioner of Internal Revenue.President Obama Appoints Daniel Werfel as Acting Commissioner of Internal Revenue
May 16, 2013 Werfel, who attended law school at the

University of North Carolina The University of North Carolina is the multi-campus public university system for the state of North Carolina. Overseeing the state's 16 public universities and the NC School of Science and Mathematics, it is commonly referred to as the UNC S ...

and attained a master's degree from

Duke University Duke University is a private research university in Durham, North Carolina. Founded by Methodists and Quakers in the present-day city of Trinity in 1838, the school moved to Durham in 1892. In 1924, tobacco and electric power industrialist Jam ...

, prepared the government for a potential shutdown in 2011 by determining which services that would remain in existence. No IRS commissioner has served more than five years and one month since Guy Helvering, who served 10 years until 1943. The most recent commissioner to serve the longest term was Doug Shulman, who was appointed by President George W. Bush and served for five years.

Deputy commissioners

The Commissioner of Internal Revenue is assisted by two deputy commissioners. The Deputy Commissioner for Operations Support reports directly to the Commissioner and oversees the IRS's integrated support functions, facilitating economy of scale efficiencies and better business practices. The Deputy Commissioner for Operations Support provides executive leadership for customer service, processing, tax law enforcement and financial management operations and is responsible for overseeing IRS operations and providing executive leadership on policies, programs and activities. The Deputy assists and acts on behalf of the IRS Commissioner in directing, coordinating and controlling the policies, programs and activities of the IRS; in establishing tax administration policy, and developing strategic issues and objectives for IRS strategic management. The Deputy Commissioner for Services and Enforcement reports directly to the Commissioner and oversees the four primary operating divisions responsible for the major customer segments and other taxpayer-facing functions. The Deputy Commissioner for Services and Enforcement serves as the IRS Commissioner's essential assistant acting on behalf of the commissioner in establishing and enforcing tax administration policy and upholding IRS's mission to provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities.

Office of the Taxpayer Advocate

The

Office of the Taxpayer Advocate The Office of the Taxpayer Advocate, also called the Taxpayer Advocate Service (TAS), is an office within the Internal Revenue Service (IRS) of the U.S. Department of the Treasury, reporting directly to the Commissioner of Internal Revenue. The o ...

, also called the Taxpayer Advocate Service, is an independent office within the IRS responsible for assisting taxpayers in resolving their problems with the IRS and identifying systemic problems that exist within the IRS. The current head of the organization, known as the ''United States Taxpayer Advocate'', is Erin M. Collins.

Independent Office of Appeals

The Independent Office of Appeals is an independent organization within the IRS that helps taxpayers resolve their tax disputes through an informal, administrative process. Its mission is to resolve tax controversies fairly and impartially, without litigation. Resolution of a case in Appeals "could take anywhere from 90 days to a year". The current chief is Donna C. Hansberry.

Office of Professional Responsibility (OPR)

OPR investigates suspected misconduct by attorneys, CPAs and enrolled agents ("tax practitioners") involving practice before the IRS and has the power to impose various penalties. OPR can also take action against tax practitioners for conviction of a crime or failure to file their own tax returns. According to former OPR director Karen Hawkins, "The focus has been on

roadkill Roadkill is an animal or animals that have been struck and killed by drivers of motor vehicles on highways. Wildlife-vehicle collisions (WVC) have increasingly been the topic of academic research to understand the causes, and how it can be ...

the easy cases of tax practitioners who are non-filers." The current acting director is Elizabeth Kastenberg.

Criminal Investigation (CI)

Internal Revenue Service, Criminal Investigation (IRS-CI) is responsible for investigating potential criminal violations of the U.S.

and related financial crimes, such as money laundering, currency violations, tax-related identity theft fraud, and terrorist financing that adversely affect tax administration. This division is headed by the '' Chief, Criminal Investigation'' appointed by the

IRS Commissioner The Commissioner of Internal Revenue is the head of the Internal Revenue Service (IRS), an agency within the United States Department of the Treasury. The office of Commissioner was created by Congress as part of the Revenue Act of 1862. Section ...

Programs

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) are volunteer programs that the IRS runs to train volunteers and provide tax assistance and counseling to taxpayers. Volunteers can study e-course material, take tests, and practice using tax-preparation software. Link & Learn Taxes (searchable by keyword on the IRS website), is the free e-learning portion of VITA/TCE program for training volunteers.

Structure

**Deputy Commissioner for Services and Enforcement ***Assistant Deputy Commissioner for Services and Enforcement ***Large Business and International Divisionadministers tax laws governing businesses with assets greater than $10million **** ***Small Business/Self-Employed Divisionadministers tax laws governing small businesses and self-employed taxpayers ****Collection – collects delinquent taxes and secures filing of delinquent tax return ****Examination – reviews returns to ensure taxpayers have complied with their tax responsibilities ****Operations Support – centralized support services ***Wage and Investment Divisionadministers tax laws governing individual wage earners ****Customer Assistance, Relationships and Educationassist taxpayers in satisfying their tax responsibilities ****Return Integrity and Compliance Servicesdetecting and preventing improper refunds ****Customer Account Servicesprocessing taxpayer returns ****Operations Support – internal management and support services ***Tax Exempt and Government Entities Divisionadministers tax laws governing governmental and tax exempt entities ****Government Entities/Shares Servicesmanages, directs, and executes nationwide activities for government entities as well as provides divisional operational support ****Employee Plans. – administers pension plan tax laws ****Exempt Organizations – determining tax exempt status for organizations and regulating the same through examination and compliance checks ***Criminal Investigation Divisioninvestigates criminal violations of tax laws and other related financial crimes ****International Operations – conducts international investigations of financial crimes and provides special agent attaches in strategic International locations ****Operations, Policy, and Supportplans, develops, directs, and implements criminal investigations through regional field offices ****Refund and Cyber Crimesidentifying criminal tax schemes and conducting cybercrime investigations ****Strategy – internal support services ****Technology Operations and Investigative Servicesmanagement of information technology ***Office of Online Services ***Return Preparer Office ***

Office of Professional Responsibility The Office of Professional Responsibility (OPR), part of the United States Department of Justice (DOJ) and supervised by the FBI, is responsible for investigating lawyers employed by the Department of Justice who have been accused of misconduct ...

***

Whistleblower Office The IRS Whistleblower Office is a branch of the United States Internal Revenue Service that will "process tips received from individuals, who spot tax problems in their workplace, while conducting day-to-day personal business or anywhere else th ...

**Deputy Commissioner for Operations Support ***Assistant Deputy Commissioner for Operations Support ***Chief, Facilities Management and Security Services ***Chief Information Officer ***Chief Privacy Officer ***Chief Procurement Officer ***Chief Financial Officer ***IRS Human Capital Officer ***Chief Risk Officer ***Chief Diversity Officer ***Chief Research and Analytics Officer **Chief of Staff **Chief, Communications and Liaison **

National Taxpayer Advocate The Office of the Taxpayer Advocate, also called the Taxpayer Advocate Service (TAS), is an office within the Internal Revenue Service (IRS) of the U.S. Department of the Treasury, reporting directly to the Commissioner of Internal Revenue. The o ...

**Chief Counsel **Chief, IRS Independent Office of Appeals

Tax collection statistics

Summary of collections before refunds by type of return, fiscal year 2010: For fiscal year 2009, the U.S. Congress appropriated spending of approximately $12.624billion of "discretionary budget authority" to operate the Department of the Treasury, of which $11.522billion was allocated to the IRS. The projected estimate of the budget for the IRS for fiscal year 2011 was $12.633billion. By contrast, during Fiscal Year (FY) 2006, the IRS collected more than $2.2trillion in tax (net of refunds), about 44 percent of which was attributable to the individual income tax. This is partially due to the nature of the individual income tax category, containing taxes collected from working class, small business, self-employed, and capital gains. The top 5% of income earners pay 38.284% of the federal tax collected. As of 2007, the agency estimates that the United States Treasury is owed $354billion more than the amount the IRS collects. This is known as the tax gap. The gross tax gap is the amount of true tax liability that is not paid voluntarily and timely. For years 2008–2010, the estimated gross tax gap was $458billion. The net tax gap is the gross tax gap less tax that will be subsequently collected, either paid voluntarily or as the result of IRS administrative and enforcement activities; it is the portion of the gross tax gap that will not be paid. It is estimated that $52billion of the gross tax gap was eventually collected resulting in a net tax gap of $406billion. In 2011, 234 million tax returns were filed allowing the IRS to collect $2.4trillion out of which $384billion were attributed to mistake or

fraud In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compen ...

Outsourcing collection and tax-assistance

In September 2006, the IRS started to outsource the collection of taxpayers debts to private debt collection agencies. Opponents to this change note that the IRS will be handing over personal information to these debt collection agencies, who are being paid between 29% and 39% of the amount collected. Opponents are also worried about the agencies' being paid on percent collected, because it will encourage the collectors to use pressure tactics to collect the maximum amount. IRS spokesman Terry Lemons responds to these critics saying the new system "is a sound, balanced program that respects taxpayers' rights and taxpayer privacy". Other state and local agencies also use private collection agencies. In March 2009, the IRS announced that it would no longer outsource the collection of taxpayers debts to private debt collection agencies. The IRS decided not to renew contracts to private debt collection agencies, and began a hiring program at its call sites and processing centers across the country to bring on more personnel to process collections internally from taxpayers. As of October 2009, the IRS has ceased using private debt collection agencies. In September 2009, after undercover exposé videos of questionable activities by staff of one of the IRS's volunteer tax-assistance organizations were made public, the IRS removed

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from its volunteer tax-assistance program.

Administrative functions

The IRS publishes

tax forms Internal Revenue Service (IRS) tax forms are forms used for taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service of the United States. They are used to report income, calculate taxes to be paid t ...

which taxpayers are required to choose from and use for calculating and reporting their federal tax obligations. The IRS also publishes a number of forms for its own internal operations, such as Forms 3471 and 4228 (which are used during the initial processing of income tax returns). In addition to collection of revenue and pursuing tax cheaters, the IRS issues administrative rulings such as

revenue ruling Revenue rulings are public administrative rulings by the Internal Revenue Service (IRS) in the United States Department of the Treasury of the United States federal government that apply the law to particular factual situations. A revenue ruling ...

s and

private letter ruling Private letter rulings (PLRs), in the United States, are written decisions by the Internal Revenue Service (IRS) in response to taxpayer requests for guidance. A letter ruling is "a written statement issued to a taxpayer by an Associate Chief Counse ...

s. In addition, the Service publishes the

Internal Revenue Bulletin The ''Internal Revenue Bulletin'' (also known as the ''IRB''), is a weekly publication of the U.S. Internal Revenue Service that announces "official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Execu ...

containing the various IRS pronouncements. The controlling authority of regulations and revenue rulings allows taxpayers to rely on them. A 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.Internal Revenue Manual Section 3.28.3
Additionally, a letter ruling reasonably relied upon by a taxpayer allows for the waiver of penalties for underpayment of tax. 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 authority. The IRS also issues formal pronouncements called Revenue Procedures. These guide taxpayers through different processes, such as correcting prior tax errors. The IRS's own internal operations manual is the

Internal Revenue Manual The Internal Revenue Manual (IRM) is an official compendium of internal guidelines for personnel of the United States Internal Revenue Service (IRS). History The IRM was made publicly available through the Freedom of Information Act Freedom of Info ...

, which describes the clerical procedures for processing and auditing tax returns for almost any circumstance. For example, the Internal Revenue Manual includes special procedures for processing tax returns from the President and

Vice President of the United States The vice president of the United States (VPOTUS) is the second-highest officer in the executive branch of the U.S. federal government, after the president of the United States, and ranks first in the presidential line of succession. The vice p ...

. In addition to the foregoing procedures, the IRS also engages in formal rulemaking in order to provide its own formal interpretation of a statute, or when the statute itself directs that the

Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...

shall provide for such rulemaking. The IRS initiates the formal regulation process by publishing a notice of proposed rulemaking (NPRM) in the

Federal Register The ''Federal Register'' (FR or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains government agency rules, proposed rules, and public notices. It is published every weekday, except on fede ...

which announces 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 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) for the Section 409A on deferred compensation (the so-called

Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional compani ...

rules on deferred compensation to add teeth to the old rules) because regulations have not been finalized. The IRS oversaw the Homebuyer Credit and First Time Homebuyer Credit programs instituted by the federal government from 2008 to 2010. Those programs provided United States citizens with money toward the purchase of homes, regardless of income tax filings.

Labor union

Most non-supervisory employees at the IRS are represented by a labor union. The exclusive labor union at the IRS is the National Treasury Employees Union (NTEU). Employees are not required to join the union or pay dues. The IRS and NTEU have a national

collective bargaining agreement A collective agreement, collective labour agreement (CLA) or collective bargaining agreement (CBA) is a written contract negotiated through collective bargaining for employees by one or more trade unions with the management of a company (or with an ...

. In pursuing administrative remedies against the IRS for certain unfair or illegal personnel actions, under federal law an IRS employee may choose only one of the three forums below: *NTEU, or *

United States Merit Systems Protection Board The Merit Systems Protection Board (MSPB) is an independent quasi-judicial agency established in 1979 to protect federal merit systems against partisan political and other prohibited personnel practices and to ensure adequate protection for federa ...

(MSPB), or *

United States Office of Special Counsel The United States Office of Special Counsel (OSC) is a permanent independent federal investigative and prosecutorial agency whose basic legislative authority comes from four federal statutes: the Civil Service Reform Act, the Whistleblower Prot ...

(OSC). Employees are also required to report certain misconduct to TIGTA. Federal law prohibits reprisal or retaliation against an employee who reports wrongdoing.

Controversies

The IRS has been accused of abusive behavior on multiple occasions. Testimony was given before a Senate subcommittee that focused on cases of overly aggressive IRS collection tactics in considering a need for legislation to give taxpayers greater protection in disputes with the agency. Congress passed the Taxpayer Bill of Rights III on July 22, 1998, which shifted the burden of proof from the taxpayer to the IRS in certain limited situations. The IRS retains the legal authority to enforce liens and seize assets without obtaining judgment in court. In 2002, the IRS accused James and Pamela Moran, as well as several others, of conspiracy, filing false tax returns and mail fraud as part of the Anderson Ark investment scheme. The Morans were eventually acquitted, and their attorney stated that the government should have realized that the couple was merely duped by those running the scheme. In 2004, the law licenses of two former IRS lawyers were suspended after a federal court ruled that they defrauded the courts so the IRS could win a sum in tax shelter cases. In 2013, the Internal Revenue Service became embroiled in a

political scandal In politics, a political scandal is an action or event regarded as morally or legally wrong and causing general public outrage. Politicians, government officials, party officials and lobbyists can be accused of various illegal, corrupt, unet ...

in which it was discovered that the agency subjected

conservative Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...

or conservative-sounding groups filing for tax-exempt status to extra scrutiny. On September 5, 2014, 16 months after the scandal first erupted, a Senate Subcommittee released a report that confirmed that Internal Revenue Service used inappropriate criteria to target Tea Party groups, but found no evidence of political bias. The chairman of the Senate Permanent Subcommittee on Investigations confirmed that while the actions were "inappropriate, intrusive, and burdensome", the Democrats have often experienced similar treatment. Republicans noted that 83% of the groups being held up by the IRS were right-leaning; and the Subcommittee Minority staff, which did not join the Majority staff report, filed a dissenting report entitled, "IRS Targeting Tea Party Groups". On May 25, 2015, the agency announced that over several months criminals had accessed the private tax information of more than 100,000 taxpayers and stolen about $50million in fraudulent returns. By providing Social Security numbers and other information obtained from prior computer crimes, the criminals were able to use the IRS's online "Get Transcript" function to have the IRS provide them with the tax returns and other private information of American tax filers. On August 17, 2015, IRS disclosed that the breach had compromised an additional 220,000 taxpayer records. On February 27, 2016, the IRS disclosed that more than 700,000 Social Security numbers and other sensitive information had been stolen. The Internal Revenue Service has been the subject of frequent criticism by many elected officials and candidates for political office, including some who have called to abolish the IRS. Among them were

Ted Cruz Rafael Edward "Ted" Cruz (; born December 22, 1970) is an American politician and attorney serving as the junior United States Senator from Texas since 2013. A member of the Republican Party, Cruz served as Solicitor General of Texas fro ...

Rand Paul Randal Howard Paul (born January 7, 1963) is an American physician and politician serving as the Seniority in the United States Senate, junior United States Senate, U.S. senator from Kentucky since 2011. A member of the Republican Party (Un ...

Ben Carson Benjamin Solomon Carson Sr. (born September 18, 1951) is an American retired neurosurgeon and politician who served as the 17th United States Secretary of Housing and Urban Development from 2017 to 2021. A pioneer in the field of neurosurgery, he ...

Mike Huckabee Michael Dale Huckabee (born August 24, 1955) is an American politician, Baptist minister, and political commentator who served as the 44th governor of Arkansas from 1996 to 2007. He was a candidate for the Republican Party presidential nominati ...

, and

Richard Lugar Richard Green Lugar (April 4, 1932 – April 28, 2019) was an American politician who served as a United States Senator from Indiana from 1977 to 2013. He was a member of the Republican Party. Born in Indianapolis, Lugar graduated from Den ...

. In 1998, a Republican congressman introduced a bill to repeal the Internal Revenue Code by 2002. In 2016, The

Republican Study Committee The Republican Study Committee (RSC) is a study group of conservative members of the Republican Party in the United States House of Representatives. As of 2021, the Chairman of the RSC is Representative Jim Banks of Indiana. Although the prima ...

, which counts over two-thirds of House of Representatives Republicans as its members, called for "the complete elimination of the IRS", and Republican Representative

Rob Woodall William Robert Woodall III (born February 11, 1970) is an American attorney and politician who was the U.S. representative for from 2011 to 2021. The district included most of Gwinnett County, a suburban county northeast of Atlanta. A Republica ...

of Georgia has introduced a bill every year since he entered Congress in 2011 to eliminate income taxes and abolish the IRS. In 2022 Representative

Matt Gaetz Matthew Louis Gaetz II ( ; born May 7, 1982) is an American lawyer and politician who has served as the U.S. representative for since 2017. A Republican, he has been described as an ally of former president Donald Trump, as well as a proponen ...

of Florida introduced a bill to disarm the IRS after the agency had drawn public attention for a $700,000 purchase of ammunition. The IRS has been criticized for its reliance on

legacy software In computing, a legacy system is an old method, technology, computer system, or application program, "of, relating to, or being a previous or outdated computer system", yet still in use. Often referencing a system as "legacy" means that it paved ...

. Systems such as the

Individual Master File The Individual Master File (IMF) is the system currently used by the United States Internal Revenue Service (IRS) to store and process tax submissions and used as the main data input to process the IRS's transactions. It is a running record of al ...

are more than 50 years old and have been identified by the

Government Accountability Office The U.S. Government Accountability Office (GAO) is a legislative branch government agency that provides auditing, evaluative, and investigative services for the United States Congress. It is the supreme audit institution of the federal gover ...

as "facing significant risks due to their reliance on legacy programming languages, outdated hardware, and a shortage of human resources with critical skills".

References

* *

External links

Internal Revenue Service Official websiteInternal Revenue Service
in the ''

'' {{Authority control 1862 establishments in the United States Financial regulatory authorities of the United States Government agencies established in 1953 Revenue services Tax investigation Tax terms Taxation in the United States