IRS (United States)

IRS (United States)
Agency name	Internal Revenue Service
Abbreviation	IRS
Formed	1862
Preceding1	Internal Revenue Bureau
Jurisdiction	United States
Headquarters	Washington, D.C.
Chief1 name	Commissioner of Internal Revenue
Parent agency	Department of the Treasury

Contents

IRS (United States) is the federal bureau responsible for administering federal Taxation in the United States, enforcing tax laws, and collecting revenue for the United States federal government. It operates under the United States Department of the Treasury and interacts with legislative, judicial, and executive institutions such as the United States Congress, the United States Supreme Court, and the Office of Management and Budget. The agency's activities affect individuals, corporations, and nonprofit entities across the United States and its territories, shaping fiscal policy set by landmark statutes like the Revenue Act of 1862 and the Internal Revenue Code.

History

The agency traces origins to the Revenue Act of 1862 enacted during the American Civil War to fund Union operations and federal programs under Abraham Lincoln. It evolved from the Internal Revenue Bureau into the modern corps following reforms under the 16th Amendment to the United States Constitution and the Revenue Act of 1913. Landmark judicial decisions from the United States Supreme Court and legislative changes, including the Internal Revenue Code of 1954 and the Tax Reform Act of 1986, repeatedly reshaped duties and procedures. Tensions between the agency and political actors appeared during the Watergate scandal, the Iran–Contra affair, and investigations involving figures such as Richard Nixon, Ronald Reagan, and congressional committees like the House Ways and Means Committee. Administrative modernization efforts accelerated after scandals and GAO reports by the Government Accountability Office and audits by the Treasury Inspector General for Tax Administration (TIGTA).

Primary responsibilities encompass taxpayer filing, processing returns, issuing refunds, and administering credits such as the Earned Income Tax Credit. The agency enforces compliance with the Internal Revenue Code and implements provisions from acts like the Affordable Care Act and the Coronavirus Aid, Relief, and Economic Security Act. It oversees tax-exempt status determinations for organizations under Section 501(c)(3) and pension rules under the Employee Retirement Income Security Act of 1974. The IRS administers international tax rules under treaties such as the Convention Between Canada and the United States and exchange frameworks like the Foreign Account Tax Compliance Act. It also manages information reporting regimes tied to entities including Wells Fargo, JPMorgan Chase, Goldman Sachs, and multinational corporations like Apple Inc. and Google LLC.

Enforcement tools range from audits and administrative summonses to civil penalties and criminal referrals prosecuted by the Department of Justice Tax Division. Criminal investigations are conducted by the Criminal Investigation Division and have led to prosecutions involving individuals like Leona Helmsley and cases connected to organizations such as Enron and WorldCom. The IRS uses data-matching programs with institutions like the Internal Revenue Service Data Book and shares information under agreements with the Internal Revenue Service Whistleblower Office and international partners via Multilateral Competent Authority Agreement. Tax administration responds to guidance from the Office of Tax Policy and rulemaking processes influenced by the Joint Committee on Taxation and precedent from cases such as Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc..

The bureau has faced controversy over alleged political targeting revealed in investigations by committees such as the House Committee on Oversight and Government Reform and reports from TIGTA. High-profile disputes include the IRS targeting controversy involving nonprofit applications tied to organizations like Tea Party movement groups and scrutiny over enforcement against entities including ExxonMobil and American Crossroads. Criticism also stems from mismanagement of taxpayer data highlighted after incidents affecting systems used by contractors like Equifax and audits by the Government Accountability Office. Debates over funding levels have engaged policymakers including Nancy Pelosi, Mitch McConnell, Chuck Grassley, and Maxine Waters and influenced legislation such as the IRS Restructuring and Reform Act of 1998.

Modernization initiatives include transitioning to digital services, secure electronic filing systems developed with vendors like IBM and Oracle Corporation, and implementing cybersecurity standards influenced by agencies such as the National Institute of Standards and Technology and the Department of Homeland Security. Projects encompass e-file expansion, modernization of taxpayer accounts, and adoption of analytics platforms similar to those used by Amazon Web Services and Microsoft Azure. Efforts to enhance transparency and taxpayer service coordinate with programs under the Office of Management and Budget and are subject to audit by TIGTA and the Government Accountability Office. Ongoing modernization addresses challenges evidenced during crises involving legislation like the American Rescue Plan Act of 2021.