In almost all areas of the world, taxes are going to be collected by the government in some way or another to pay for everything from highway infrastructure to military defense. The same is also true in the United States and the federal government has established the Internal Revenue Service (IRS) to collect those taxes. They also have other responsibilities that we will outlined in this article.
The Internal Revenue Service is a part of the Treasury Department and the Commissioner of Internal Revenue is the one who provides direction for the agency. The following are some of the responsibilities of the IRS:
Collecting Taxes – Perhaps the best known area that the IRS covers is the collection of taxes. They do this on an annual basis, as well as throughout the year, depending upon the circumstances.
Internal Revenue Code – Ask any accountant and they will tell you that the Internal Revenue Code is quite difficult to understand in full. It is a part of the federal statutory tax law and the IRS is responsible for administering it.
Maximizing Tax Revenue Use – This organization is also responsible for ensuring that the collected taxes are used in the best way possible, although they are limited by other government organizations..
Tax Assistance – Part of what the IRS does is to provide tax assistance to those who need it. This is true of both individuals who are filing their taxes and businesses.
Fraudulent Filing – When someone is accused of fraudulent or erroneous tax filing, the IRS will care for that matter.
Affordable Care Act – There are different government agencies responsible for the Affordable Care Act, and the IRS is responsible for enforcing portions of it.
The History of the IRS
During the American Civil War, the Revenue Act of 1862 was passed by Congress and Pres. Lincoln. When that revenue act was passed, the Commissioner of Internal Revenue office was formed and a temporary income tax was enacted in order to pay for some of the expenses associated with the war.
What is interesting is that the revenue act of 1862 was not meant to be a long-term collection process. Rather, it was a temporary and emergency wartime tax that was established for that specific purpose. It is also interesting that the act closely followed a system of taxation that was relatively new in Britain. They were moving from property and trade taxation to taxation of the revenue of individuals.
Taxes continued to be collected, although the original act was allowed to expire. Taxation began to see a resurgence, however, in 1906 and then with the need for finances during World War I and World War II. The first 1040 tax form came into existence in 1913 and a similar form is still being used down to this day.
Today, most individuals are responsible for filing their federal income tax return every year by the deadline, which is typically on April 15. The amount that is paid in taxes varies from one person to another and there are many different factors that can make a difference in how much tax is paid. That includes the number of deductions, the income bracket of the individual and how the person is filing (i.e., single, married filing jointly, etc.).
Admittedly, most people do not look at the IRS as being an organization that is in their corner. Understanding more about the IRS may help to enhance your appreciation of what they are doing behind the scenes, even if you still don’t appreciate the fact that they are taking a chunk of your hard-earned money every year.