The Internal Revenue Service (IRS) is the revenue service of the United States federal government The federal government of the United States is the central government entity established by the United States Constitution, which shares sovereignty over the United States of America with the governments of the individual U.S. states. For official purposes in U.S. courts, the government is sued as the United States of America, and is referred to. The agency A government agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency[citation needed]. There is a notable variety of types of agency. Although usage differs, a government agency is normally distinct both from a is a bureau of the Department of the Treasury The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue. The Department is administered by the Secretary of the Treasury, who is a member of the Cabinet, and is under the immediate direction of the Commissioner of Internal Revenue The Commissioner of Internal Revenue is the head of the Internal Revenue Service (IRS), a bureau within the United States Department of the Treasury. The IRS is responsible for collecting taxes A tax collector is a person who collects unpaid taxes from other people or corporations. Tax collectors are often portrayed in fiction as being evil, and in the modern world share a somewhat similar stereotype to that of lawyers and the interpretation and enforcement of the IRC (Internal Revenue Code The Internal Revenue Code is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and).
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Summary
The IRS has its National Capital offices in the greater Washington, D.C. Washington, D.C. , formally the District of Columbia and commonly referred to as Washington, the District, or simply D.C., is the capital of the United States, founded on July 16, 1790. The City of Washington was originally a separate municipality within the Territory of Columbia until an act of Congress in 1871 effectively merged the City and the area, and in particular does most of its computer programming Computer programming is the process of writing, testing, debugging/troubleshooting, and maintaining the source code of computer programs. This source code is written in a programming language. The code may be a modification of an existing source or something completely new. The purpose of programming is to create a program that exhibits a certain in Maryland Maryland is a major center for life sciences research and development. With more than 350 biotechnology companies located there, Maryland is the third-largest nexus in this field in the United States. It currently operates ten service centers around the country, to which returns sent by mail The United States Postal Service is an independent agency of the United States government responsible for providing postal service in the United States. It is one of the few government agencies explicitly authorized by the United States Constitution. Within the United States, it is commonly referred to as the "Post Office", "Postal are sent. 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). The IRS also operates three computer A computer is a programmable machine that receives input, stores and manipulates data//information, and provides output in a useful format centers in various locations around the country.
History of the IRS
The IRS has a colorful and interesting history of war, scandal, politics, corruption, and money.
American Civil War (1861–65)
George S. Boutwell George Sewall Boutwell was an American statesman who served as Secretary of the Treasury under President Ulysses S. Grant, the 20th Governor of Massachusetts, a Senator and Representative from Massachusetts and the first Commissioner of Internal Revenue under President Abraham Lincoln was the first Commissioner of Internal Revenue The Commissioner of Internal Revenue is the head of the Internal Revenue Service (IRS), a bureau within the United States Department of the Treasury under President Abraham Lincoln Abraham Lincoln served as the 16th President of the United States from March 1861 until his assassination in April 1865. He successfully led the United States through its greatest internal crisis, the American Civil War, preserving the Union and ending slavery. Before his election in 1860 as the first Republican president, Lincoln, reared in a.In July 1862, during the Civil War Union blockade – Eastern – Western – Lower Seaboard – Trans-Mississippi – Pacific Coast, President The President of the United States is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is one of only two nationally elected federal officers, the other being the Vice President of the United States Lincoln Abraham Lincoln served as the 16th President of the United States from March 1861 until his assassination in April 1865. He successfully led the United States through its greatest internal crisis, the American Civil War, preserving the Union and ending slavery. Before his election in 1860 as the first Republican president, Lincoln, reared in a and Congress The United States Congress is the bicameral legislature of the federal government of the United States of America, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C created the office of Commissioner of Internal Revenue The Commissioner of Internal Revenue is the head of the Internal Revenue Service (IRS), a bureau within the United States Department of the Treasury and enacted an income tax An income tax is a tax levied on the income of individuals or business . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual to pay war expenses (see Revenue Act of 1862 The Revenue Act of 1862 , was passed by the United States Congress to help fund the American Civil War. The Act was signed into law by President Abraham Lincoln, introducing the first progressive rate income tax to the country). The position of Commissioner exists today as the head of the Internal Revenue Service.
The Revenue Act of 1862 The Revenue Act of 1862 , was passed by the United States Congress to help fund the American Civil War. The Act was signed into law by President Abraham Lincoln, introducing the first progressive rate income tax to the country was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax was passed in 1861:
- The initial rate was 3% on income over $800, which exempted most wage-earners.
- In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000.
- In 1864 the rate was 5% on income between $600 and $5,000; 7.5% on income $5,000–$10,000; and 10% on income $10,000 and above.
By the end of the war, 10% of Union During the American Civil War, the Union was a name used to refer to the federal government of the United States, which was supported by the twenty free states and five border slave states. It was opposed by 11 Southern slave states that had declared a secession to join together to form the Confederacy. Although the Union states included the households had paid some form of income tax, and the Union raised 21% of its war revenue through income taxes.[1]
Post Civil War, Reconstruction, and popular tax reform (1866–1900)
After the Civil War, Reconstruction In the history of the United States, the Reconstruction era has two definitions, the first in reference to the entire nation in the period 1865-1877 following the Civil War, and the second to the transformation of the Southern United States from 1863 to 1877, with the reconstruction of state and society in the former Confederacy and the addition, railroads, and transforming the North and South war machines towards peacetime required public funding. However, in 1872, seven years after the war, lawmakers allowed the temporary Civil War income tax to expire. The Panic of 1873 The Panic of 1873 was the start of the Long Depression, a severe nationwide economic depression in the United States that lasted until 1879. It was precipitated by the bankruptcy of the Philadelphia banking firm Jay Cooke & Company on September 18, 1873. It was one of a series of economic crises in the 19th and early 20th centuries happened a year later.
Income taxes evolved, but eventually in 1894, in the midst of a 30-year post-civil-war depression, the Supreme Court declared the Income Tax of 1894 unconstitutional in Pollock v. Farmers' Loan & Trust Co. Pollock v. Farmers' Loan & Trust Company, 157 U.S. 429 , aff'd on reh'g, 158 U.S. 601 (1895), was an important case in which the Supreme Court of the United States ruled that the unapportioned income taxes on interest, dividends, and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and were unconstitutional because. The federal government scrambled to raise money.[2]
In 1906, with the election of President Theodore Roosevelt Theodore "Teddy" Roosevelt pronounced /ˈroʊzəvɛlt/ ROE-zə-velt) was the 26th President of the United States. He is famous for his energetic personality, range of interests and achievements, leadership of the Progressive Movement, model of masculinity, and his "cowboy" image. He was a leader of the Republican Party and, and later his successor William Howard Taft William Howard Taft was the 27th President of the United States and later the 10th Chief Justice of the United States. He is the only person to have served in both offices, the United States saw a populous movement for tax reform. This movement culminated in February 1913 with the ratification of the Sixteenth Amendment to the United States Constitution The Sixteenth Amendment to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results. This amendment exempted income taxes from the constitutional requirements regarding direct taxes, after income taxes on rents, dividends, and interest were ruled to be direct:
| “ | The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. | ” |
This granted Congress the specific power to create a direct income tax. By February 1913, 36 states had ratified the change to the Constitution. It was further ratified by six more states by March. Of the 48 states at the time, 42 ratified. Connecticut Southwestern Connecticut is part of the New York metropolitan area; three of Connecticut's eight counties, including most of the state's population, are in the New York City combined statistical area, commonly called the Tri-State Region. Connecticut's center of population is in Cheshire, New Haven County, Rhode Island The State of Rhode Island and Providence Plantations, more commonly referred to as Rhode Island ( /ˌroʊd ˈaɪlɨnd/ or /rɵˈdaɪlɨnd/), is a state in the New England region of the United States. It is the smallest U.S. state by area. Rhode Island borders Connecticut to the west and Massachusetts to the north and east, and it shares a water, and Utah Utah is one of the most religiously homogeneous states in the Union. Between 41% and 60% of Utahns are reported to be members of The Church of Jesus Christ of Latter-day Saints , which greatly influences Utah culture and daily life rejected the amendment; Pennsylvania Pennsylvania has 51 miles of coastline along Lake Erie and 57 miles (92 km) of shoreline along the Delaware Estuary, Virginia The area's history begins with several indigenous groups, including the Powhatan. In 1607 the London Company established the Colony of Virginia as the first permanent New World English colony. Land from displaced Native American tribes and slave labor each played a significant role in the colony's early politics and plantation economy. Virginia, and Florida With an area of 65,758 square miles , it is ranked 22nd in size among the 50 U.S. states. Florida has the longest coastline in the Contiguous United States encompassing approximately 1,350 miles (2,170 km). The state has four large urban areas, a number of smaller industrial cities, and many small towns did not take up the issue.[3]
A copy of the very first IRS 1040 form, dated 1913, can be found at the IRS website[4] showing that only those with incomes of $3,000 or more were instructed to file (the equivalent of about $65,000 in 2010 adjusted for inflation).
The IRS reinvents itself (1913–1970)
In the first year after ratification of the Sixteenth Amendment, no taxes were collected--instead, taxpayers simply completed the form and the IRS checked it for accuracy. The IRS's workload jumped by ten-fold, triggering a massive restructuring. Professional tax collectors began to replace a system of "patronage" appointments. The IRS doubled its staff, but was still processing 1917 returns in 1919. [5]
Currently, only the IRS Commissioner and Chief Counsel are political appointees selected by the President and confirmed by the United States Senate The United States Senate is the upper house of the bicameral United States Congress, the lower house being the House of Representatives. The composition and powers of the Senate and the House are established in Article One of the U.S. Constitution . Each U.S state is represented by two senators, regardless of population. Senators serve staggered.
The agency continued to re-invent itself both organizationally, and technologically.
Presidential tax returns (1973)
From the 1950s through the 1970s, the IRS began using cutting-edge technology such as microfilm to keep and organize records. Easy access to this information proved controversial, when President Richard Nixon Richard Milhous Nixon was the 37th President of the United States from 1969–1974 and was also the 36th Vice President of the United States (1953–1961). Nixon was the only President to resign the office and also the only person to be elected twice to both the Presidency and the Vice Presidency's tax returns were leaked to the public. His tax advisor became the fourth law-enforcement official to be charged with a crime during Watergate The Watergate scandal was a political scandal in the United States in the 1970s, resulting from the break-in to the Democratic National Committee headquarters at the Watergate office complex in Washington, D.C. Effects of the scandal ultimately led to the resignation of the President of the United States Richard Nixon on August 9, 1974, the first.[6]
John Requard Jr., accused of leaking the documents, collected delinquent taxes in the slums of Washington. In his words:
| “ | We went after people for nickels and dimes, many of them poor and in many cases illiterate people who didn't know how to deal with a government agency. | ” |
He admits he saw the returns, but denies he leaked them. When asked if he would have leaked the documents, he said: "I probably would have said, 'Yes, I'm in'."[7]
Reporter Jack White Jack White was a veteran Rhode Island journalist who won a Pulitzer Prize for his coverage of President Richard Nixon's underpayment of income taxes. White's investigative article prompted Nixon to utter his famous line, "I am not a crook." White also won Emmy Awards for his reporting on fugitive banker Joe Mollicone and Providence tax of The Providence Journal The Providence Journal, nicknamed the ProJo, is a daily newspaper serving the metropolitan area of Providence, Rhode Island and is the largest newspaper in Rhode Island. The newspaper, first published in 1829, is the oldest continually published daily newspaper in the United States. It was purchased in 1996 by the Belo Corporation. The newspaper, won the Pulitzer Prize The Pulitzer Prize is a U.S. award for achievements in newspaper and online journalism, literature and musical composition. It was established by Hungarian-American publisher Joseph Pulitzer and is administered by Columbia University in New York City. According to the administrators of the Pulitzer Prize the correct pronunciation of the name for reporting about Nixon's tax returns. Nixon, with a salary of $200,000, paid only $792.81 in federal income tax in 1970 and $878.03 in 1971, with deductions of $571,000 for donating "vice presidential papers".[8] This was one of the reasons for his famous statement: "Well, I'm not a crook. I've earned everything I've got."
So controversial was this leak, that most later US Presidents released their tax returns (though sometimes only partially). These returns can be found online at the Tax History Project.
Modernization and the Internet (1970–present)
After microfilm, the 1960s onward saw massive computerization efforts.
In 1990, the IRS began to use the public Internet The Internet is a global system of interconnected computer networks that use the standard Internet Protocol Suite to serve billions of users worldwide. It is a network of networks that consists of millions of private, public, academic, business, and government networks of local to global scope that are linked by a broad array of electronic and for electronic filing. Since the introduction of e-filing, self-paced online tax services have flourished, augmenting and sometimes replacing tax accountants to prepare returns.
In 2003, the IRS stuck a deal with tax software vendors:
- The IRS would not develop online filing software.
- In return, software vendors would provide free e-filing to most Americans.[9]
In 2009, 70% of filers qualified for free electronic filing of federal returns.[10]
In 2010, more than 66% (98 million) of tax returns are expected to be filed electronically.
History of the IRS name
As early as the year 1918, the Bureau of Internal Revenue began using the name "Internal Revenue Service" on at least one tax form.[11] In 1953, the name change to the "Internal Revenue Service" was formalized in Treasury Decision 6038.[12]
Current organization
The 1980s saw a reorganization of the IRS. A bipartisan commission was created with several mandates, among them to increase customer service and improve collections.[13] Congress later enacted the Internal Revenue Service Restructuring and Reform Act of 1998 The Internal Revenue Service Restructuring and Reform Act of 1998, also known as Taxpayer Bill of Rights III, , resulted from hearings held by the United States Congress in 1996 and 1997. The Act included numerous amendments to the Internal Revenue Code of 1986.[14] 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 (IRS Criminal Investigation Division Internal Revenue Service, Criminal Investigation investigates potential criminal violations of the U.S. Internal Revenue Code and related financial crimes in a manner intended to foster confidence in the tax system and compliance with the law. While other federal agencies also have investigative jurisdiction for money laundering and some bank). While there is some evidence that customer service has improved, lost tax revenues in 2001 were over $323 billion.[15]
Commissioner
Douglas H. Shulman Douglas H. Shulman is the Commissioner of Internal Revenue. His nomination was confirmed by the full U.S. Senate on March 14, 2008 and he was sworn in on March 24, 2008. He formerly served as vice chairman of the Financial Industry Regulatory Authority (successor to NASD) and sat on the board at the Depository Trust & Clearing Corporation ( is the current Commissioner of Internal Revenue The Commissioner of Internal Revenue is the head of the Internal Revenue Service (IRS), a bureau within the United States Department of the Treasury.
Mon, 16 Aug 2010 19:33:04 GMT+00:00
BusinessWeek 16 (Bloomberg) -- Two Miami area hotel developers pleaded not guilty to hiding more than $150 million in assets from the Internal Revenue Service and ...
JR
ue, 24 Aug 2010 04:18:54 GM
You discover that the . Internal Revenue Service. has placed a wage garnishment, also known as a wage levy, against your income. Most detrimental of all is that it cost more than half of your pay check. ...
