Internal Revenue Service

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This is the most common use of IRS. For other uses, see IRS (disambiguation).

Image:IRSSeal.JPG The Internal Revenue Service (IRS) is the United States government agency that collects taxes and enforces the tax laws. The IRS is a bureau of the Department of the Treasury.

Unofficial Mottoes: "Working to put service first," "Service plus enforcement equals compliance."

1 History
2 See also
3 Further reading
4 External links

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History

In 1862, during the Civil War, President Lincoln and Congress created the Commissioner of Internal Revenue and enacted an income tax to pay war expenses. The Commissioner is the head of the Internal Revenue Service.

The agency 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. The income tax was repealed 10 years later.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 1918, to finance World War I, the top rate of the income tax rose to 77%. During the post-war years, the top rate was lowered to 24%, but rose again during the Great Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments, ostensibly as an emergency measure.

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. The Bureau of Internal Revenue name also was changed to the Internal Revenue Service to emphasize "service" to taxpayers.

As a by-product of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, 112 Stat. 685 (July 22, 1998), 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), and also includes Criminal Investigations, its law enforcement division.

Image:IRS building on constitution avenue in DC.jpg The main headquarters of the IRS is located at 1111 Constitution Avenue, N.W. in Washington, D.C.

Summary of Collections before Refunds by Type of Return, Fiscal Year 2003:

Type of Return	Number of Returns	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 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.

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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