The IRS (Internal Revenue Service) is the tax agency of the U.S. government.

It collects money (taxes) from people and businesses to help fund public services such as roads, schools, the military, and healthcare.

It’s a bureau of the U.S. Department of the Treasury and plays a crucial role in the financial operations of the country. In short, the IRS is responsible for,

  • Collecting federal taxes
  • Enforcing tax laws
  • Helping people file their taxes
  • Giving tax refunds to people who paid too much

Who Collects Federal Tax?– The Internal Revenue Service (IRS), on behalf of the U.S. federal government.

How Does Federal Tax Is Used?– The U.S. federal government uses these collected tax money to fund things like,

  • Social Security and Medicare
  • National defence (military)
  • Education and infrastructure
  • Scientific research and disaster relief

Types Of Federal Taxes

  • 💸 Income tax (taken from your pay-check or paid annually)
  • 💳 Corporate tax (paid by businesses)
  • 🔬 Payroll taxes (for Social Security and Medicare)
  • 🍻 Excise taxes (on goods like fuel, tobacco, or alcohol)

So, when you hear “federal tax” think of it as your contribution to the running of the entire country.

Historical Background of IRS

The IRS began in 1862 when President Abraham Lincoln created the office of the Commissioner of Internal Revenue to help fund the American Civil War by introducing the country’s first income tax.

Over the years, it went through many changes and updates. One major reform happened in the 1990s. In 1953, it officially became known as the Internal Revenue Service (IRS).

Here’s a simple historical background of the IRS (Internal Revenue Service) in the United States:

1862

Born During the Civil War

  • The IRS began during the American Civil War.
  • President Abraham Lincoln and Congress created the first income tax in 1862 to help pay for the war.
  • A new department called the Commissioner of Internal Revenue was formed — this was the early version of today’s IRS.

The first income tax was 3% on income over $800/year. It helped the government raise money quickly.

1862

First Income Tax Ends

The war ended, and so did the temporary income tax. The government stopped collecting income tax for a while.

1913

Income Tax Becomes Permanent

  • The U.S. passed the 16th Amendment to the Constitution in 1913.
  • This gave the government the power to collect income tax from all citizens.
  • The modern IRS system started after this law.
1953

IRS Gets Its Name

The agency was officially renamed to Internal Revenue Service (IRS) in 1953. It became more organized and started using machines to help with taxes.

1998

Reforms In IRS

In 1998, the IRS was restructured to become more customer-friendly. It focused on helping taxpayers, reducing mistakes, and digitising tax returns (like e-filing).

2000s – Now

Technology & E-Filing

The IRS handles hundreds of millions of tax returns every year.

It runs systems like,

  • Direct Deposit (for refunds)
  • IRS Free File,and
  • Online Payment portals.

It also fights tax fraud, helps during natural disasters, and supports people with stimulus payments (like during COVID-19).

Summary in Simple Points

Year What Happened
1862 First U.S. income tax created
1872 First U.S. income tax ended
1913 16th Amendment – permanent income tax starts
1953 Name officially changed to IRS
1998 IRS restructured to help people more
Today First U.S. income tax created

Structure and Oversight

The IRS is led by the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States.

The IRS is organised into four main operating divisions to serve different groups of taxpayers:

Irs (internal revenue service) - four main divisions: wage and investment, large business and international, small business or self-employed, tax-exempt and government entities

Each one is created to support specific groups of taxpayers, offering customized services and focused compliance efforts. Here’s a breakdown of each,

1.
2.
3.
4.

These four divisions allow the IRS to categorise and manage its vast taxpayer base more effectively, providing specialised services and enforcement efforts where they are most needed.

Also, a group called the IRS Oversight Board, made up of nine independent members, helps make sure the IRS is doing its job well and serving the public properly.

This board acts like a watchdog. It checks how the IRS is working, gives advice, and makes sure the agency stays focused on helping taxpayers and running efficiently.

Functions of IRS

  1. ① Tax Collection

    It collects taxes from individuals and businesses. This includes income tax, corporate tax, estate tax and many more.

    Whether you use tax software, a professional, or file directly with the IRS (e.g., through IRS Direct File), your tax return ultimately goes to the IRS.

  2. ② Tax Returns

    People and companies file tax returns every year to report their income. The IRS checks if they paid the right amount of tax.

    You might make payments for taxes owed, estimated taxes, or payment plans directly to the IRS.

  3. ③ Refunds

    If someone paid more tax than needed by mistake, then the IRS has a criteria of giving that person or entity a refund of the extra amount received by them.

  4. ④ Audits

    The IRS can check (audit) your tax return to make sure it’s correct. While not common for most taxpayers, the IRS does conduct audits to verify the accuracy of tax returns.

  5. ⑤ Online account

    The IRS offers an online account for individuals to access tax records, view payment history, and manage payment plans.

  6. ⑥ Support

    The IRS sends notices and letters for various reasons, such as inquiries about your tax return or a balance due.

    The IRS also helps people in understanding taxes by offering tools, guides, and services on their official website.

Key Dates: April 15 is usually considered the deadline to file income tax returns, every year.

How Do People Pay Taxes?

Once a year, usually before April 15, people fills out a form known as tax return to tell the IRS, how much money they earned and paid in the transactions.

  • If any person or entity paid too much, the IRS sends them a refund.
  • If any person or entity paid too little, the IRS have to pay the difference.

What If You Don’t Pay Taxes?

If you don’t pay your taxes on time or tries to commit any kind of tax fraud, then IRS can

  • Send letters asking for payment
  • Add extra penalties or interest
  • Take money from your bank if needed (this is rare but legal)

Website and Help

You can go through the direct link given below, to visit the official website of Internal Revenue Service (IRS)

Official Websiteirs.gov

Also, from this website you can:

  • Get Your Refunds Status
  • File Tax Returns
  • Get Extension Dates
  • Explore Free Filing Options
  • Ask Questions about Amended Returns
  • Get an Identity Protection Pin
  • Get your Tax Records
  • Apply for an Employer ID Number (EIN)
  • Find Forms and Instructions
  • Resolve an Issue

You can also access this website in different languages and can also visit the related websites from the links available in the website