The IRS is responsible for enforcing the INTERNAL REVENUE CODE (U.S.C.A. tit. 26), which codifies all U.S. tax laws. Basic IRS activities include serving and educating taxpayers; determining, assessing, and collecting taxes; investigating individuals and organizations that violate tax laws; determining PENSION plan qualifications and exempt organization status; and issuing rulings and regulations to supplement the Internal Revenue Code.
Historically, Congress has given the IRS unique and wide-ranging powers for administering the U.S. tax system and enforcing its laws. For example, while in a criminal proceeding the government has the burden to prove that the defendant is guilty. Therefore, BEYOND A REASONABLE DOUBT. In a tax proceeding, the burden is on the taxpayer to prove. That he or she does not owe the amount claimed by the IRS. The IRS also has the power to impose civil penalties for any of a number of violations of tax law. These penalties are seldom employed, however, and with respect to penalties, the IRS bears the burden of proving that the penalty is justified.
Internal Revenue Service (IRS), Agency of the U.S. Division of the Treasury accused of regulating and authorizing government charge laws, aside from those identifying with liquor, tobacco, guns, and explosives. It issues decisions and guidelines to enhance the arrangements of the Internal Revenue Code; decides, surveys, and gathers internal revenue burdens; and decides excluded association status.
Understanding Internal Revenue Service (IRS)
Headquartered in Washington, D.C., the IRS preserves the taxation of all American individuals and companies. For the 2019 financial year (October 1, 2018, through September 30, 2019), it prepared more than 250 million income tax returns and additional forms. During that time, the IRS collected more than $3.5 trillion in revenue and issued more than $452 billion in tax refunds.
Individuals and corporations have the benefit to file income returns electronically, thanks to computer technology, software programs, and reliable internet connections. The amount of income taxes that use e-file has increased steadily since the IRS began the program, and now the remarkable majority are filed this way.
The Mission Of the IRS
Provide America’s taxpayers top-quality service by making them understand and meet their tax obligations and enforce the law with integrity. This mission statement defines our role and the public’s expectation about how we should perform that role. In the U.S., the Congress passes the tax laws and expects taxpayers to comply. The taxpayer’s role is to learn and meet his or her tax obligations. The IRS role is to support the large majority of compliant taxpayers with the tax law while assuring that the minority is unwilling to pay their fair share.
How Can the IRS Be Improved?
The IRS is a complex and cumbersome bureaucracy that cannot quickly convert into a modern high-tech organization. Some measures, however, could develop tax administration. Congress could establish legislation to simplify the tax law, as the National Taxpayer Advocate and any reform commissions have proposed. Congress could raise funding to reverse recent budget cuts and avoid an abrupt drop in the agency’s enforcement presence. More funds for execution could more than pay for themselves in increased revenue collections. Congress could also provide the agency more flexibility in personnel management and extra resources to help renew their information technology, including relaxing existing pay ceilings for top technology personnel.
The IRS and Audits
As part of its enforcement mission, the IRS audits a select portion of income tax returns every year. For the 2019 fiscal year, the agency audited 771,095 tax returns. This number breaks down to 0.60% of individual income tax returns and 0.97% of corporate tax returns. Around 73.8% of IRS audits occurred through correspondence, while 26.2% happened in the field. After rising to a peak in 2010, the number of audits has steadily dropped each year.10 The amount of funding set aside for tax enforcement has declined 15% from 2010 to 2018, which indicates even fewer audits should occur.11 12
Reasons for an IRS audit vary, but some factors may increase the odds of an examination. Chief among them: higher income.13 In 2018, the audit rate for all individual income tax returns was 0.6%, but for someone who made more than $1 million in income, it was 3.2%.14 And running your own business carries greater risks too. Individuals making between $200,000 and $1 million in one tax year who don’t file Schedule C (the form for the self-employed) have a .6% chance of being audited, vs. 1.4%—basically double—for those who do.14 Other red flags for an audit include failing to declare the right amount of income, claiming a higher-than-normal amount of deductions (especially business-related ones), making disproportionately large charitable donations compared to income, and claiming rental real estate losses. No single factor determines who does or does not face an IRS audit each year.
How the Internal Revenue Service Works
Headquartered in Washington, D.C., the IRS services the taxation of all American individuals and companies. For the 2019 fiscal year (Oct. 1, 2018, through Sept. 30, 2019), it processed more than 250 million income tax returns and other forms. During that period the IRS collected more than $3.5 trillion in revenue and issued more than $452 billion in tax refunds.
Individuals and corporations have the option to file income returns electronically, thanks to computer technology, software programs, and secure internet connections. The number of income taxes that use e-file has grown steadily since the IRS began the program, and now the overwhelming majority are filed this way. During fiscal year 2019, nearly 89.1% of all individual returns made use of the e-file option. By comparison, 40 million out of nearly 131 million returns, or nearly 31%, used the e-file option in 2001.