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EspañolINTERNAL REVENUE SERVICE
(Redirected from U.S. Internal Revenue Service)
The 'Internal Revenue Service' ('IRS') is the United States federal government agency that collects taxes and enforces the internal revenue laws. The official U.S. Treasury regulations provide (in part):
In 1862, during the Civil War, President Lincoln and Congress created the office of Commissioner of Internal Revenue and enacted an income tax to pay war expenses (see Revenue Act of 1862). The position of Commissioner exists today as the head of the Internal Revenue Service.
The organization created to enforce these taxes was named for the internal revenue to be collected (and was formerly called the "Bureau of Internal Revenue"), in contrast to U.S. government institutions that collected external revenue through duties and tariffs. The income tax was repealed 10 years later. In 1894, Congress revived the income tax, but the following year the Supreme Court of the United States ruled, in ''Pollock v. Farmers' Loan & Trust Co.,'' that taxes on capital gains, dividends, interest, rents, and the like were direct taxes on property, and that the statute in question was unconstitutional because it had not apportioned the direct taxes among the states according to population. In 1913, the states ratified the 16th Amendment. In subsequent decisions the U.S. Supreme Court ruled that the Sixteenth Amendment removed the requirement that had been imposed in ''Pollock'' that apportionment — and the source of the income — be considered with respect to income taxes.
The IRS has its National Capital offices in the greater Washington, DC area, and in particular does most of its computer programming in Maryland. It operates various service centers around the country (currently ten; these are the locations to which taxpayers mail their returns); these centers do the actual tax processing; different types of tax processing take place in various centers (such as the distinction between individual and business tax processing). It also operates three computer centers in different locations around the country.
As early as the year 1929, the Bureau of Internal Revenue began using the name "Internal Revenue Service" on at least one tax form.[1] In 1953 the name change to the "Internal Revenue Service" was formalized in Treasury Decision 6038.[2]
In the 1950s, career professional employees replaced the patronage system. Currently, only the IRS Commissioner and Chief Counsel are selected by the President and confirmed by the Senate.
As a by-product of hearings on abusive conduct by IRS employees, Congress enacted the ''Internal Revenue Service Restructuring and Reform Act of 1998''.[3] As a result of that Act the IRS now functions under four major operating divisions: Large & Mid-Size Business (LMSB), Small Business / Self-Employed (SB/SE), Wage and Investment (W&I), and Tax Exempt & Government Entities (TE/GE). The IRS also includes a criminal law enforcement division.
The main headquarters building of the IRS is located at 1111 Constitution Avenue, N.W. in Washington, D.C., near the Old Post Office. The IRS headquarters building was closed in June 2006 as a result of heavy flooding. According to a July 12, 2006 letter from Senator Max Baucus (Dem.-Montana), a ranking member of the U.S. Senate Finance Committee, the sub-basement of the building was filled with water to a depth of twenty feet, and electrical and maintenance equipment in the sub-basement was about 95% damaged or destroyed. The IRS and the General Services Administration announced that the building would remain closed through late 2006. The employees who worked in the building — numbering over two thousand — had been temporarily transferred to other offices at 15 other buildings in the Washington, D.C. area. Computerworld reported that some IRS employees were also allowed to telecommute while the building was closed.[4]
On December 8th, 2006, the IRS said in a press release that "the phased move-in of more than 2,000 IRS employees" had begun.[5] Most staff would have returned by December 19th but "a small number of employees will return after Jan. 1." This IRS press release estimated the total cost of repairs at $25 million, adding that although the building is ready to be reopened now, some repair work will continue until April 2007.
The Acting Commissioner of Internal Revenue is Kevin Brown, a deputy commissioner who once served as chief of staff to former commissioner Mark W. Everson, who left the IRS effective May 4, 2007, to become the head of the American Red Cross.[6]
The Internal Revenue Service has announced that Linda Stiff, Deputy Commissioner for Operations Support, will assume the position of Acting Commissioner of Internal Revenue upon the departure, in mid-September 2007, of Kevin M. Brown.[7]
Summary of Collections before Refunds by Type of Return, Fiscal Year 2006:
During Fiscal Year (FY) 2006, the IRS collected more than $2.2 trillion in tax net of refunds, about 44 percent of which was attributable to the individual income tax.
Recently, the IRS has altered its policies. The current ''Service plus Enforcement equals Compliance'' motto has led to more investigations of abusive tax schemes.
As of 2007, the agency estimates it is owed $300 billion more than it collects.[8]
In September 2006, the IRS started to outsource the collection of taxpayers debts to private debt collection agencies. Opponents to this change note that the IRS will be handing over personal information to these debt collection agencies, who are being paid between twenty-two and twenty-four percent of the amount collected. Opponents are also worried about the agencies' being paid on percent collected because it will encourage the collectors to use pressure tactics to collect the maximum amount. IRS spokesman Terry Lemons responds to these critics saying the new system "is a sound, balanced program that respects taxpayers' rights and taxpayer privacy." Other state and local agencies also use private collection agencies.[9]
In addition to collection of revenue and pursuing tax cheaters, the IRS issues administrative rulings such as revenue rulings and private letter rulings. In addition the Service publishes the Internal Revenue Bulletin containing the various IRS pronouncements. The controlling authority of regulations and revenue rulings allows taxpayers to rely on them. A private letter ruling is good for the taxpayer to whom it is issued, and gives some explanation of the Service's position on a particular tax issue. As is the case with all administrative pronouncements, taxpayers sometimes litigate the validity of the pronouncements, and courts sometimes determine a particular rule to be invalid where the agency has exceeded its grant of authority. The IRS also issues formal pronouncements called Revenue Procedures that among other things tell taxpayers how to correct prior tax errors.
More formal rulemaking to give the Service's interpretation of a statute or when the statute itself directs that the Secretary of the Treasury shall provide, IRS undergoes the formal regulation process with an NPRM (Notice of proposed rulemaking) published in the Federal Register announcing the proposed regulation, the date of the in person hearing and the process for interested parties to have their views heard either in person at the hearing in Washington, D.C., or by mail. Following the statutory period provided in the Administrative Procedure Act (an abiding interest of U.S. Supreme Court Justice Antonin Scalia's dissenting opinions) the Service decides on the final regulations "as is," or as reflecting changes, or sometimes withdraws the proposed regulations. Generally, taxpayers may rely on proposed regulations until final regulations become effective. For example, human resource professionals are relying on the October 4, 2005 Proposed Regulations (citation 70 F.R. 57930-57984)[10] for the Section 409A on deferred compensation (the so-called Enron rules on deferred compensation to add teeth to the old rules) because regulations have not been finalized.
The IRS, and in particular the Criminal Investigation Division (CID), has on more than one occasion been accused of abusive behavior.[11][12][13][14] Statements given in hearings before the Senate Finance Committee criticize the IRS:
Congress passed the Taxpayer Bill of Rights III on July 22, 1998, which shifted the burden of proof from the taxpayer to the IRS in certain limited situations. The IRS retains the legal authority to enforce liens and seize assets without obtaining judgment in court.[15]
Many tax protesters claim that because the IRS itself was not created by statute and because the IRS has no legal capacity to sue or be sued,[16] the IRS is not a federal government agency. Some claim it is a Puerto Rican trust.[17] The courts have uniformly rejected such arguments as a basis for not filing a tax return or paying tax.
The IRS is often featured in various conspiracy theories. One of the prominent allegation of IRS's insidious conduct is the movie , directed by Libertarian filmmaker Aaron Russo, that explores the possible plot—in which the IRS is allegedly taking part—to make the United States a police state. See also Tax protester conspiracy arguments and Milton William Cooper.
★ Taxation in the United States
★ Non-profit corporation
★ United States of America non-profit laws
★ 501(c)(3)
★ 527 group
★ IRS reclassification as an employee
★ United States Department of Justice Tax Division
1. Form 1040, Individual Income Tax Return for year 1929, as republished in historical documents section of Publication 1796 (Rev. Feb. 2007), Internal Revenue Service, U.S. Department of the Treasury.
2. 1953-2 C.B. 443 (Aug. 21, 1953), filed with Division of the Federal Register on Aug. 26, 1953. Compare Treas. Dep't Order 150-29 (July 9, 1953).
3. Pub. L. No. 105-206, 112 Stat. 685 (July 22, 1998).
4. IRS flood spurs telecommuting, Computerworld, ''June 30, 2006''
5. IRS Headquarters Reopens; First Employees Return Today, Internal Revenue Service, ''December 8, 2006''
6. ''Everson Departs IRS; Deputy Commissioner is Acting Chief'', Item I.3, May 4, 2007, CCH 2007 Tax Day (online), CCH Tax Research NetWork.
7. ARD 146-4, July 30, 2007, Internal Revenue Service, U.S. Department of the Treasury.
8. IRS Commissioner Assailed on 'Tax Gap' by Jack Speer. Morning Edition, National Public Radio, 21 March 2007.
9. http://news.yahoo.com/s/ap/20060823/ap_on_go_ot/irs_debt_collection_2 D. Caterinicchia, IRS moves ahead on debt-collection plan
10. Federal Register (Volume 70, Number 191), ''October 4, 2005''
11. Prepared Statement Of Witness Before The Senate Finance Committee Oversight Hearing On The Internal Revenue Service
12. Statement before the Senate Committee on Finance
13. Prepared Statement of Robert S. Schrieman Before the Senate Finance Committee
14. Prepared Statement of Shelley L. Davis Before the Senate Finance Committee Oversight Hearing On The Internal Revenue Service
15. See . For case law on section 6331, see ''Brian v. Gugin'', 853 F. Supp. 358, 94-1 U.S. Tax Cas. (CCH) paragr. 50,278 (D. Idaho 1994), ''aff’d'', 95-1 U.S. Tax Cas. (CCH) paragr. 50,067 (9th Cir. 1995).
16. Lawsuits against the U.S. government in the United States Tax Court are generally filed against the "Commissioner of Internal Revenue," not the "Internal Revenue Service". Lawsuits in other federal courts are generally filed against "The United States of America."
17. 31 Questions and Answers about the Internal Revenue Service
★ Unbridled Power: Inside the Secret Culture of the IRS, , Shelley L., Davis, Harper Collins, , ISBN 0-88730-829-5
★ Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else, , David Cay, Johnston, Portfolio, 2003, ISBN 1-59184-019-8
★ Many Unhappy Returns: One Man's Quest To Turn Around The Most Unpopular Organization In America, , Charles O., Rossotti, Harvard Business School Press, 2005, ISBN 1-59139-441-4
★ The Power to Destroy, , William V., Jr., Roth, Atlantic Monthly Press, 1999, ISBN 0-87113-748-8
★ Internal Revenue Service Official website
★ Tax Protester FAQ by Dan Evans rebuts claims of the illegitimacy of the income tax and the IRS
★ IRS Property Auctions How to buy from the IRS
★ Free IRS Tax Forms Free Downloadable and Printable Tax Forms
★ Internal Revenue Service Fan website for IRS with RSS News, Forums and RSS blogs.
Seal of the Internal Revenue Service
The 'Internal Revenue Service' ('IRS') is the United States federal government agency that collects taxes and enforces the internal revenue laws. The official U.S. Treasury regulations provide (in part):
History
Bureau of Internal Revenue
In 1862, during the Civil War, President Lincoln and Congress created the office of Commissioner of Internal Revenue and enacted an income tax to pay war expenses (see Revenue Act of 1862). The position of Commissioner exists today as the head of the Internal Revenue Service.
The organization created to enforce these taxes was named for the internal revenue to be collected (and was formerly called the "Bureau of Internal Revenue"), in contrast to U.S. government institutions that collected external revenue through duties and tariffs. The income tax was repealed 10 years later. In 1894, Congress revived the income tax, but the following year the Supreme Court of the United States ruled, in ''Pollock v. Farmers' Loan & Trust Co.,'' that taxes on capital gains, dividends, interest, rents, and the like were direct taxes on property, and that the statute in question was unconstitutional because it had not apportioned the direct taxes among the states according to population. In 1913, the states ratified the 16th Amendment. In subsequent decisions the U.S. Supreme Court ruled that the Sixteenth Amendment removed the requirement that had been imposed in ''Pollock'' that apportionment — and the source of the income — be considered with respect to income taxes.
The IRS has its National Capital offices in the greater Washington, DC area, and in particular does most of its computer programming in Maryland. It operates various service centers around the country (currently ten; these are the locations to which taxpayers mail their returns); these centers do the actual tax processing; different types of tax processing take place in various centers (such as the distinction between individual and business tax processing). It also operates three computer centers in different locations around the country.
Name change and reorganization
As early as the year 1929, the Bureau of Internal Revenue began using the name "Internal Revenue Service" on at least one tax form.[1] In 1953 the name change to the "Internal Revenue Service" was formalized in Treasury Decision 6038.[2]
In the 1950s, career professional employees replaced the patronage system. Currently, only the IRS Commissioner and Chief Counsel are selected by the President and confirmed by the Senate.
Reorganization of the late 1990s
As a by-product of hearings on abusive conduct by IRS employees, Congress enacted the ''Internal Revenue Service Restructuring and Reform Act of 1998''.[3] As a result of that Act the IRS now functions under four major operating divisions: Large & Mid-Size Business (LMSB), Small Business / Self-Employed (SB/SE), Wage and Investment (W&I), and Tax Exempt & Government Entities (TE/GE). The IRS also includes a criminal law enforcement division.
Flooding at IRS headquarters building
IRS building on Constitution Avenue in Washington, D.C..
The main headquarters building of the IRS is located at 1111 Constitution Avenue, N.W. in Washington, D.C., near the Old Post Office. The IRS headquarters building was closed in June 2006 as a result of heavy flooding. According to a July 12, 2006 letter from Senator Max Baucus (Dem.-Montana), a ranking member of the U.S. Senate Finance Committee, the sub-basement of the building was filled with water to a depth of twenty feet, and electrical and maintenance equipment in the sub-basement was about 95% damaged or destroyed. The IRS and the General Services Administration announced that the building would remain closed through late 2006. The employees who worked in the building — numbering over two thousand — had been temporarily transferred to other offices at 15 other buildings in the Washington, D.C. area. Computerworld reported that some IRS employees were also allowed to telecommute while the building was closed.[4]
On December 8th, 2006, the IRS said in a press release that "the phased move-in of more than 2,000 IRS employees" had begun.[5] Most staff would have returned by December 19th but "a small number of employees will return after Jan. 1." This IRS press release estimated the total cost of repairs at $25 million, adding that although the building is ready to be reopened now, some repair work will continue until April 2007.
Commissioner
The Acting Commissioner of Internal Revenue is Kevin Brown, a deputy commissioner who once served as chief of staff to former commissioner Mark W. Everson, who left the IRS effective May 4, 2007, to become the head of the American Red Cross.[6]
The Internal Revenue Service has announced that Linda Stiff, Deputy Commissioner for Operations Support, will assume the position of Acting Commissioner of Internal Revenue upon the departure, in mid-September 2007, of Kevin M. Brown.[7]
Tax collection statistics
Summary of Collections before Refunds by Type of Return, Fiscal Year 2006:
| Type of Return | Number of Returns | Gross Collections (Millions of US$) |
|---|---|---|
| Individual Income Tax | 133,917,068 | 1,236,259 |
| Corporate Income Tax | 2,453,741 | 380,925 |
| Employment Taxes | 31,182,071 | 814,819 |
| Gift Tax | 255,651 | 1,970 |
| Excise Taxes | 942,145 | 57,990 |
| Estate Tax | 58,279 | 26,717 |
| Total | 168,808,955 | 2,518,680 |
During Fiscal Year (FY) 2006, the IRS collected more than $2.2 trillion in tax net of refunds, about 44 percent of which was attributable to the individual income tax.
Recently, the IRS has altered its policies. The current ''Service plus Enforcement equals Compliance'' motto has led to more investigations of abusive tax schemes.
As of 2007, the agency estimates it is owed $300 billion more than it collects.[8]
Outsourcing collections
In September 2006, the IRS started to outsource the collection of taxpayers debts to private debt collection agencies. Opponents to this change note that the IRS will be handing over personal information to these debt collection agencies, who are being paid between twenty-two and twenty-four percent of the amount collected. Opponents are also worried about the agencies' being paid on percent collected because it will encourage the collectors to use pressure tactics to collect the maximum amount. IRS spokesman Terry Lemons responds to these critics saying the new system "is a sound, balanced program that respects taxpayers' rights and taxpayer privacy." Other state and local agencies also use private collection agencies.[9]
Administrative functions
In addition to collection of revenue and pursuing tax cheaters, the IRS issues administrative rulings such as revenue rulings and private letter rulings. In addition the Service publishes the Internal Revenue Bulletin containing the various IRS pronouncements. The controlling authority of regulations and revenue rulings allows taxpayers to rely on them. A private letter ruling is good for the taxpayer to whom it is issued, and gives some explanation of the Service's position on a particular tax issue. As is the case with all administrative pronouncements, taxpayers sometimes litigate the validity of the pronouncements, and courts sometimes determine a particular rule to be invalid where the agency has exceeded its grant of authority. The IRS also issues formal pronouncements called Revenue Procedures that among other things tell taxpayers how to correct prior tax errors.
More formal rulemaking to give the Service's interpretation of a statute or when the statute itself directs that the Secretary of the Treasury shall provide, IRS undergoes the formal regulation process with an NPRM (Notice of proposed rulemaking) published in the Federal Register announcing the proposed regulation, the date of the in person hearing and the process for interested parties to have their views heard either in person at the hearing in Washington, D.C., or by mail. Following the statutory period provided in the Administrative Procedure Act (an abiding interest of U.S. Supreme Court Justice Antonin Scalia's dissenting opinions) the Service decides on the final regulations "as is," or as reflecting changes, or sometimes withdraws the proposed regulations. Generally, taxpayers may rely on proposed regulations until final regulations become effective. For example, human resource professionals are relying on the October 4, 2005 Proposed Regulations (citation 70 F.R. 57930-57984)[10] for the Section 409A on deferred compensation (the so-called Enron rules on deferred compensation to add teeth to the old rules) because regulations have not been finalized.
Criticism
Allegations of abuse
The IRS, and in particular the Criminal Investigation Division (CID), has on more than one occasion been accused of abusive behavior.[11][12][13][14] Statements given in hearings before the Senate Finance Committee criticize the IRS:
Congress passed the Taxpayer Bill of Rights III on July 22, 1998, which shifted the burden of proof from the taxpayer to the IRS in certain limited situations. The IRS retains the legal authority to enforce liens and seize assets without obtaining judgment in court.[15]
Legal status and authority
Many tax protesters claim that because the IRS itself was not created by statute and because the IRS has no legal capacity to sue or be sued,[16] the IRS is not a federal government agency. Some claim it is a Puerto Rican trust.[17] The courts have uniformly rejected such arguments as a basis for not filing a tax return or paying tax.
Conspiracy theories and allegations
IRS building on Constitution Avenue in Washington, D.C..
The IRS is often featured in various conspiracy theories. One of the prominent allegation of IRS's insidious conduct is the movie , directed by Libertarian filmmaker Aaron Russo, that explores the possible plot—in which the IRS is allegedly taking part—to make the United States a police state. See also Tax protester conspiracy arguments and Milton William Cooper.
See also
★ Taxation in the United States
★ Non-profit corporation
★ United States of America non-profit laws
★ 501(c)(3)
★ 527 group
★ IRS reclassification as an employee
★ United States Department of Justice Tax Division
Notes
1. Form 1040, Individual Income Tax Return for year 1929, as republished in historical documents section of Publication 1796 (Rev. Feb. 2007), Internal Revenue Service, U.S. Department of the Treasury.
2. 1953-2 C.B. 443 (Aug. 21, 1953), filed with Division of the Federal Register on Aug. 26, 1953. Compare Treas. Dep't Order 150-29 (July 9, 1953).
3. Pub. L. No. 105-206, 112 Stat. 685 (July 22, 1998).
4. IRS flood spurs telecommuting, Computerworld, ''June 30, 2006''
5. IRS Headquarters Reopens; First Employees Return Today, Internal Revenue Service, ''December 8, 2006''
6. ''Everson Departs IRS; Deputy Commissioner is Acting Chief'', Item I.3, May 4, 2007, CCH 2007 Tax Day (online), CCH Tax Research NetWork.
7. ARD 146-4, July 30, 2007, Internal Revenue Service, U.S. Department of the Treasury.
8. IRS Commissioner Assailed on 'Tax Gap' by Jack Speer. Morning Edition, National Public Radio, 21 March 2007.
9. http://news.yahoo.com/s/ap/20060823/ap_on_go_ot/irs_debt_collection_2 D. Caterinicchia, IRS moves ahead on debt-collection plan
10. Federal Register (Volume 70, Number 191), ''October 4, 2005''
11. Prepared Statement Of Witness Before The Senate Finance Committee Oversight Hearing On The Internal Revenue Service
12. Statement before the Senate Committee on Finance
13. Prepared Statement of Robert S. Schrieman Before the Senate Finance Committee
14. Prepared Statement of Shelley L. Davis Before the Senate Finance Committee Oversight Hearing On The Internal Revenue Service
15. See . For case law on section 6331, see ''Brian v. Gugin'', 853 F. Supp. 358, 94-1 U.S. Tax Cas. (CCH) paragr. 50,278 (D. Idaho 1994), ''aff’d'', 95-1 U.S. Tax Cas. (CCH) paragr. 50,067 (9th Cir. 1995).
16. Lawsuits against the U.S. government in the United States Tax Court are generally filed against the "Commissioner of Internal Revenue," not the "Internal Revenue Service". Lawsuits in other federal courts are generally filed against "The United States of America."
17. 31 Questions and Answers about the Internal Revenue Service
Further reading
★ Unbridled Power: Inside the Secret Culture of the IRS, , Shelley L., Davis, Harper Collins, , ISBN 0-88730-829-5
★ Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else, , David Cay, Johnston, Portfolio, 2003, ISBN 1-59184-019-8
★ Many Unhappy Returns: One Man's Quest To Turn Around The Most Unpopular Organization In America, , Charles O., Rossotti, Harvard Business School Press, 2005, ISBN 1-59139-441-4
★ The Power to Destroy, , William V., Jr., Roth, Atlantic Monthly Press, 1999, ISBN 0-87113-748-8
External links
★ Internal Revenue Service Official website
★ Tax Protester FAQ by Dan Evans rebuts claims of the illegitimacy of the income tax and the IRS
★ IRS Property Auctions How to buy from the IRS
★ Free IRS Tax Forms Free Downloadable and Printable Tax Forms
★ Internal Revenue Service Fan website for IRS with RSS News, Forums and RSS blogs.
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