Internal Revenue Service (IRS)

Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated August 12, 2020

What is the Internal Revenue Service (IRS)?

The Internal Revenue Service (IRS) is a bureau of the Department of Treasury that is tasked with the enforcement of income tax laws and oversees the collection of federal income taxes. In addition, it is also the responsibility of the IRS to determine pension-plan qualification.

How Does the Internal Revenue Service (IRS) Work?

In 1862, President Lincoln and the U.S. Congress created the position of Commissioner of Internal Revenue and enacted the first income tax, which was later repealed. In 1913, the ratification of the sixteenth amendment granted Congress the authority to levy personal income-taxes, and the first 1040 form appeared later that same year, which imposed a 1% tax on personal incomes above $3,000.
 
The 1998 IRS Restructuring and Reform Act reorganized the IRS into four major divisions:

  • The Wage and Investment Division, for filers of individual and joint tax returns

  • The Small Business/Self-Employed Division

  • The Large and Mid-Size Business Division, for corporations with more than $10 million in assets

  • The Tax-Exempt and Government Entities Division, for employee benefit plans, charities, and governmental entities

Other divisions include Appeals, Communications and Liaison, and Criminal Investigation. The Office of Chief Counsel provides legal services to the IRS.
 
The IRS commissioner is appointed by the President with the advice and consent of the Senate. Prior to the IRS Restructuring and Reform Act of 1998, which limited a commissioner's tenure to five years, IRS commissioners served at the President's discretion.

[InvestingAnswers Feature: The Most Important Tax Changes to Know Before Filing Your Tax Return]

Why Does the Internal Revenue Service (IRS) Matter?

The IRS is charged with obtaining the United States government's major source of funding. The IRS, through the U.S. Treasury, helps execute and enforce many of the crucial economic, financial, and tax policies that influence the economy.

[InvestingAnswers Feature: How to Avoid an IRS Audit]
 
For more information on the Internal Revenue Service go to http://www.irs.gov.

Ask an Expert about Internal Revenue Service (IRS)
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Internal Revenue Service (IRS).
Be the first to ask a question

If you have a question about Internal Revenue Service (IRS), then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Internal Revenue Service (IRS), then please ask Paul.

Ask a question Read more from Paul

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
Paul Tracy - profile
Ask an Expert about Internal Revenue Service (IRS)

By submitting this form you agree with our Privacy Policy

Share
close