Enforcing US tax laws and collecting federal taxes are the responsibilities of the Internal Revenue Service, a federal agency. The IRS handles individual and corporate income tax matters to a large extent. Taxpayers have three options for filing and paying their taxes: online, via mail, or in person.
One government body that enforces tax laws and collects federal taxes from individual and business taxpayers in the United States is the Internal Revenue Service (IRS). As a branch of the U.S. Treasury Department, the Internal Revenue Service makes sure that the Treasury Secretary’s duties under the Internal Revenue Code (IRC) are carried out.
The agency, which was founded in 1862, also manages estate, gift, and excise taxes.
The IRS audits taxpayers regularly to make sure they follow tax regulations.
History of Internal Revenue Service in US- Summary
1862- A measure aimed at generating revenue to aid in the payment of Civil War expenses was signed into law by President Lincoln. Along with the first income tax in the country, the act also established a Commissioner of Internal Revenue.
1867- Congress lowered the tax rate in response to popular resistance to the income tax. Between 1868 and 1913, taxes on wine, beer, spirits, and tobacco accounted for ninety percent of total revenue.
1894- The income tax was brought back into existence by the Wilson Tariff Act, which also established an income tax section under the Bureau of Internal Revenue.
1895- Because the new income tax was a direct levy and was not distributed among the states according to population, the Supreme Court declared it to be unconstitutional. The division of income taxes disbanded.
1909- To grant the government the authority to tax revenues without allocating the burden to the states according to population, President Taft advised Congress to seek a constitutional amendment.
1918- Even more money was gathered for the World War I effort by the Revenue Act of 1918. It established a progressive income-tax rate system with a top rate of 77 percent and codified all currently in effect tax regulations.
1919- The 18th Amendment, which prohibits the production, distribution, and transportation of alcoholic drinks, was ratified by the states. The Volstead Act, approved by Congress, placed principal authority for enforcing Prohibition on the Commissioner of Internal Revenue.
1933- Prohibition was lifted. The next year, the IRS once more took over the management of the National Firearms Act and the taxes of alcohol. Enforcement of tobacco taxes was added later.
1942- President Roosevelt praised the Revenue Act of 1942 as “the greatest tax bill in American history,” and it was approved by Congress. Taxes were raised, and more Americans became subject to income tax. Deductions for investments and medical costs were also established.
1943- The Current Tax Payment Act, passed by Congress, mandated that companies withhold taxes from their workers’ wages and submit them every quarter.
1944- The Individual Income Tax Act, passed by Congress, established the Form 1040 standard deductions.
1952- With the introduction of his Reorganization Plan No. 1, President Truman replaced the IRS’s patronage structure with a career civil service system. Additionally, it decentralized taxpayer services and worked to rebuild public trust in the organization.
1953- The Internal Revenue Service replaced the Bureau of Internal Revenue as the agency’s new name when President Eisenhower approved Truman’s reform proposal.
1954- Individual tax return filing deadlines were shifted from March 15 to April 15.
1961- With the opening of the National Computer Center in Martinsburg, West Virginia, IRS entered the Computer Age.
1965- IRS launched its initial toll-free phone number.
1972- Upon its separation from the IRS, the Alcohol, Tobacco, and Firearms Division became the autonomous Bureau of Alcohol, Tobacco, and Firearms.
1974- With the passage of the Employee Retirement and Income Security Act by Congress, the IRS gained regulatory authority over employee benefit plans.
1986- Limited electronic filing commenced. The most major tax law in thirty years was signed into law by President Reagan when he signed the Tax Reform Act. It took three years to implement and had 300 provisions. For the third time since the Revenue Act of 1918, the Act codified federal tax laws.
1992- Taxpayers with outstanding balances could electronically file their returns.
1998- The IRS Restructuring and Reform Act, passed by Congress, increased taxpayer rights and mandated the organization of the agency into four operational divisions that would be in line with the needs of the taxpayers.
2000- Four main operating divisions were established by the IRS when reforms were implemented, replacing the agency’s geographic-based structure: Wage and Investment, Small Business/Self-Employed, Large and Mid-Size Business, and Tax Exempt and Government Entities. Since the IRS’s 1953 restructuring, this was the most significant alteration.
2001- IRS offered advance payments of a tax rate reduction through a mid-year tax refund program.
2003- Another mid-year refund program was run by the IRS; this time, an increase in the Child Tax Credit was paid in advance. 52.9 million tax returns, or more than 40% of all individual returns, were filed electronically, setting a new record.
The Internal Revenue Service in US (IRS) Operation
President Abraham Lincoln established the Commissioner of Internal Revenue in 1862 to gather taxes for the war effort. This is when the IRS first got its start. The Bureau of Internal Revenue was established in 1913 when Congress was granted the authority to pass income tax laws. The institution underwent several alterations and reorganizations before becoming the Internal Revenue Service in the 1950s.
The organization, which has its headquarters in Washington, D.C., is tasked with upholding tax laws and collecting federal taxes from all American taxpayers, both people and businesses. Tax filers’ annual tax returns are gathered and processed to do this. The organization seeks to educate individuals about the ins and outs of federal tax rules, particularly as they relate to estates, gifts, and excise taxes.
One of the IRS’s primary responsibilities is to process federal tax returns and collect money from both individual and corporate taxpayers. Tax refunds are given by the IRS to those who owe money.
Congress authorizes the IRS’s operating budget. Taxpayer Services, Enforcement, Operations Support, and Business Systems Modernization are the four accounts that make up this. The money allotted to each cannot be reallocated to other sections.
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