Internal Revenue Service ( IRS ) is a revenue service of the United States federal government. The government agency is a bureau of the Ministry of Finance, and is under the direct direction of the Internal Revenue Commissioner, who is appointed for a five-year term by the President of the United States. The IRS is responsible for collecting taxes and administering the Internal Revenue Code, the federal statutory body of major United States federal laws. The IRS's duties include providing taxpayer assistance to taxpayers and pursuing and resolving examples of fraudulent or fraudulent tax filings. The IRS has also overseen various benefits programs, and enacted part of the Affordable Care Act.
The IRS originated with the Internal Revenue Commissioner, a federal office created in 1862 to assess the country's first income tax, which was to raise funds for the American Civil War. Temporary measure provided more than a fifth of Union's war costs and was allowed to expire a decade later. In 1913, the Sixteenth Amendment to the US Constitution was ratified to authorize Congress to impose a tax on income, and the Internal Revenue Bureau was established. In 1953, the institution was renamed the Internal Revenue Service and reorganized significantly. The Tax Reform Act of 1986 modernized the IRS and restructured it throughout the private sector model.
In fiscal year 2015, the IRS processes nearly 240 million returns and collects about $ 3.3 trillion in revenue, spending 35Ã, Â ¢ for every $ 100 it collects.
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History
American Civil War (1861-65)In July 1862, during the American Civil War, President Abraham Lincoln and Congress passed the Revenue Act of 1862, created the office of the Internal Revenue Commissioners and imposed a temporary income tax to pay for war expenses.
The Revenue Act of 1862 was ratified as a temporary and temporary war-time tax. It mimics the relatively new system of UK tax revenue, rather than trade and property taxes. The first income tax was passed in 1862:
- The starting rate is 3% of earnings over $ 800, which frees most of the breadwinners.
- In 1862, the rate was 3% for earnings between $ 600 and $ 10,000, and 5% for revenues above $ 10,000.
- In 1864, the rate was 5% of earnings between $ 600 and $ 5,000; 7.5% of income $ 5,000-10,000; and 10% earning $ 10,000 and up.
By the end of the war, 10% of Union households had paid some form of income tax, and the Union collected 21% of its earnings through income taxes.
Post Civil War, Reconstruction, and popular tax reform (1866-1900)
After the Civil War, Reconstruction, railroads, and transformation of Northern and Southern war machines into peacetime requires public funding. However, in 1872, seven years after the war, MPs allowed the temporary Civil War income tax to expire.
Income taxes evolved, but in 1894 the Supreme Court declared an unconstitutional 1894 Income Tax in Pollock v. Farmers Loans & amp; Trust Co. , conflicting decisions Hylton v. United States . The federal government is rushing to raise money.
In 1906, with the election of President Theodore Roosevelt, and then his successor, William Howard Taft, the United States saw a populist movement for tax reform. This movement culminated during the election of the Woodrow Wilson candidate in 1912 and in February 1913, the ratification of the Sixteenth Amendment to the United States Constitution:
The Congress shall have the power to deposit and collect taxes on income, from any source originating, without sharing among some States, and without regard to any census or enumeration.
This gives Congress the special power to impose income tax regardless of the division among states by population. In February 1913, 36 countries have ratified changes to the Constitution. It was further ratified by six more countries in March. Of 48 countries at the time, 42 ratified it. Connecticut, Rhode Island and Utah rejected the amendment; Pennsylvania, Virginia, and Florida did not raise this issue.
In the first year following the ratification of the Sixteenth Amendment, no taxes are collected. Instead, the taxpayer simply fills out the form and the IRS checks the accuracy of the form. The IRS workload jumped tenfold, triggering a massive restructuring. Professional tax collectors began to replace the "patronage" designation system. The IRS doubled its staff, but still processed the 1917 returns in 1919.
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Wars (1900-2000)
The constitutional amendment to allow the Federal government to collect income taxes was proposed by President Taft in 1909, but the 16th Amendment was not ratified until 1913, just before the start of the First World War. In 1913 the first edition of the 1040 form was introduced. The first copy of the IRS 1040 form can be found on the IRS website indicating that only those earning $ 3,000 (adjusted for inflation, equivalent to $ 74,986 in 2017) or more are required to apply. Income taxes raise much of the money needed to finance the war effort; in 1918 the new Revenue Act set the highest tax rate of 77%.
In 1919, the IRS was charged with law enforcement related to the prohibition of the sale and manufacture of alcohol; this was transferred to the jurisdiction of the Department of Justice in 1930. After repeal in 1933, the IRS continued to collect taxes on alcoholic beverages. The activities of alcohol, tobacco, and firearms from the bureau were separated into the Bureau of Alcohol, Tobacco, Firearms, and Explosives in 1972.
The new tax law was passed in 1942 when the United States entered the Second World War. This action includes a special warfare surcharge. The number of Americans who paid income tax increased from about 4 million in 1939 to over 42 million in 1945.
In 1953, President Truman's reform plan was implemented and the "patronage" appointment system came to an end. The organization's name is formally changed from "Internal Revenue Bureau" to "Internal Revenue Service". In 1954 the filing deadline was moved to April 15.
The first electronic computer was employed on the IRS in 1961. In 1986, the submission of limited electronic tax returns was possible.
The 1998 IRS reform transformed organizations from geographical orientation to organizations based on four operating divisions.
Presidential tax return (1973)
From the 1950s to the 1970s, the IRS began using technologies such as microfilm to store and organize records. Access to this information proved controversial, when President Richard Nixon's tax returns leaked publicly. His tax advisor, Edward L. Morgan, became the fourth law-enforcement official accused of crimes during Watergate.
John Requard, Jr., who was accused of divulging Nixon taxes, collected taxes owed in the slums of Washington. In his words: "We are chasing people with pennies and cents, many of them poor and in many cases illiterate people who do not know how to deal with government agencies." Requard admitted that he was looking back, but denied that he was leaking it.
Reporter Jack White of The Providence Journal , won the Pulitzer Prize for reporting on Nixon's tax return. Nixon, with a salary of $ 200,000, paid $ 792.81 in federal income tax in 1970 and $ 878.03 in 1971, with a $ 571,000 deduction to donate "vice presidential letters". This is one of the reasons for his famous statement: "Well, I'm not a liar, I've got everything I have."
So controversial is this leak, that most later US President released their tax return (though sometimes only partially). These returns can be found online in the Tax History Project.
Computerized (1959-present)
At the end of the Second World War, the IRS handled sixty million tax returns annually, using a combination of a mechanical desk calculator, an accounting machine, and a pencil and paper form. In 1948 the punch card equipment was used. The first test of a computer system for income tax processing was in 1955, when an IBM 650 installed in Kansas City processed 1.1 million returns. The IRS was authorized to continue with computerization in 1959, and purchased IBM 1401 and IBM 7070 systems for local and regional data processing centers. Social Security numbers were used for taxpayer identification beginning in 1965. In 1967, all returns were processed by computer and hollow card data entry was deleted.
The processing of information in the IRS system in the late 1960s was in batch mode; microfilm recordings are updated weekly and distributed to regional centers to handle tax requests. A project to implement an interactive, realtime system, "Tax Administration System" was launched, which will provide thousands of local interactive terminals in the IRS office. However, the General Accounting Office prepared a critical report about the lack of privacy protection in TAS, and the project was abandoned in 1978.
In 1995, the IRS began using the public Internet for electronic archiving. Since the introduction of e-filing, the fast-paced online tax service has grown, adding to the work of tax accountants, which are sometimes replaced.
In 2003, the IRS reached an agreement with tax software vendors: The IRS will not develop online archiving software and, in return, software vendors will provide free e-filing to most Americans. In 2009, 70% of complainants were eligible for free electronic federal refund submissions.
According to an inspector general's report, released in November 2013, identity theft in the United States is blamed for a $ 4 billion tax return by the IRS. Fraudulent claims are made using stolen taxpayer identification and Social Security numbers, with returns sent to addresses both in the US and internationally. After the launch of the findings, the IRS stated that it completed most of the identity theft cases of 2013 in 120 days, while the average time to settle cases from the 2011/2012 tax period was 312 days.
In September 2014, IRS Commissioner John Koskinen expressed concern over the organization's ability to handle Obamacare and manage premium tax credits that help people pay for health plans from health insurance law exchanges. It will also uphold the mandate of individual law, which requires most Americans to hold health insurance. In January 2015, Fox News obtained an email that forecast a messy tax season on multiple fronts. The email was sent by IRS Commissioner to the workers. Koskinen forecasts the IRS to close operations for two days later this year which will result in unpaid leave for employees and service deductions for taxpayers. Koskinen also said a delay for an IT investment of more than $ 200 million could delay the protection of new taxpayers against identity theft. Also in January 2015, the editorial board of The New York Times called the IRS budget cuts-wise-and-pound-dumb, where for every dollar cut in the budget, $ 6 is lost in income tax.
History of the IRS name
In early 1918, the Internal Revenue Bureau began using the name "Internal Revenue Service" on at least one tax form. In 1953, the name changed to "Internal Revenue Service" formalized in the 6038 Treasury Decree.
Current organization
The 1980s saw the reorganization of the IRS. The bipartisan commission is created with several mandates, among them to improve customer service and enhance collections. Congress then passed the Internal Revenue Restructuring and Reform Act of 1998.
Therefore the Act, the IRS now functions under four major operating divisions: Large and International Business (LB & I), Small Business/Entrepreneur (SB/SE), Wages and Investment (W & amp; I), and Tax Exclusions & amp; ; Government Entity (TE/GE). Effective October 1, 2010, the name of Big and Medium Business division was changed to Big Business & amp; International (LB & I) division. The IRS also includes criminal law enforcement divisions: IRS's Criminal Investigation Division. While there is some evidence that customer service has improved, the tax revenues lost in 2001 were over $ 323 billion.
The IRS is headquartered in Washington, D.C., and performs most of its computer programming in Maryland. It currently operates five submission processing centers that process mailed returns and returns filed electronically via E-files. Different types of returns are processed in multiple centers with multiple centers processing individual returns and others processing business returns.
Initially, there were ten submission processing centers across the country. In the early 2000s, the IRS closed five centers: Andover, MA; Holtsville, NY; Philadelphia, PA; Atlanta, GA; and Memphis, TN. It currently creates five processing centers for returns: Austin, TX; Covington, KY; Fresno, CA; Kansas City, MO; and Ogden, UT. In October 2016 the IRS announced that three other centers would be closed for a period of six years: Covington, KY by 2019; Fresno, CA in 2021; and Austin, TX in 2024. It will leave Kansas City, MO and Ogden, UT as the two final processing submissions centers after 2024.
The IRS also operates three computer centers throughout the country (in Detroit, Michigan; Martinsburg, West Virginia; and Memphis, Tennessee).
Commissioner
There have been 47 previous commissioners from the Internal Revenue and 26 commissioners acting since the establishment of this body in 1862.
The senior official in the Office of Management and Budget Daniel Werfel was announced as a Commissioner of Internal Revenue. Werfel, who attended law school at the University of North Carolina and obtained a master's degree from Duke University, is preparing the government for potential stoppages in 2011 by determining which services will remain.
There is no IRS commissioner who has served more than five years and one month since Guy Helvering, who served for 10 years until 1943. The most recent commissioner to serve the longest term is Doug Shulman, who was appointed by President George W. Bush and served for five years.
Taxpayer Advocate
The Taxpayer's Advocate Office, also called the Taxpayer Advocacy Service, is an independent office in the IRS responsible for assisting taxpayers in resolving their issues with the IRS and identifying systemic problems that exist within the IRS. The current US Taxpayer Advocate, also known as the National Taxpayer Advocate, is Nina E. Olson.
Program
Voluntary Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) is a voluntary program conducted by the IRS to train volunteers and provide tax and counseling assistance to taxpayers. Volunteers can study the e-course material, take the test, and practice using tax preparation software. Link & amp; Tax Learning (searchable by keywords on the IRS website), is a free e-learning section of the VITA/TCE program to train volunteers.
Tax collection statistics
Summary of Collection Prior to Refund by Return Type, Fiscal Year 2010:
For the fiscal year 2009, the US Congress allocated expenditures of approximately $ 12,624 billion from "discretionary budget authorities" to operate the Treasury, which $ 11,522 billion was allocated to the IRS. Estimated budget estimates for the IRS for fiscal year 2011 were $ 12.633 billion. In contrast, during Fiscal Year (FY) 2006, the IRS collected more than $ 2.2 trillion in taxes (net of refunds), about 44 percent due to individual income taxes. This is partly due to the nature of the individual income tax category, which contains taxes collected from the working class, small business, self-employed, and capital gains. The top 5% of beneficiaries pay 38.284% of federal taxes collected.
In 2007, the agency estimated that the US Treasury owed $ 354 billion more than the amount collected by the IRS.
In 2011, 234 million tax refunds were filed which allowed the IRS to collect $ 2.4 trillion out of which $ 384 billion was attributed to errors or fraud.
Collection and tax assistance abroad
In September 2006, the IRS began to outsource the collection of taxpayer debt to private debt collection agencies. Opponents of this change note that the IRS will submit personal information to this debt collection agency, which is paid between 29% and 39% of the amount collected. Opponents also worry about paid agencies based on percentages collected, as it will encourage collectors to use pressure tactics to collect the maximum amount. IRS spokesman Terry Lemons responded to the criticism by saying the new system "is a healthy and balanced program that respects taxpayers' rights and taxpayer privacy." Other state and local agencies also use private collection agencies.
In March 2009, the IRS announced that it would no longer be able to outsource the collection of taxpayer debt to private debt collection agencies. The IRS decided not to renew contracts to private debt collection agencies, and started a call-in recruitment program and processing center across the country to bring more personnel to process collections internally from taxpayers. As of October 2009, the IRS has stopped using private debt collection agencies.
In September 2009, after disguising the activity videos questioned by staff of one of the IRS volunteer tax relief organizations published, the IRS released ACORN from the voluntary tax assistance program.
Administrative functions
The IRS publishes tax-paying forms to be selected and used to calculate and report their federal tax liability. The IRS also publishes a number of forms for its own internal operations, such as Forms 3471 and 4228 (used during the initial processing of income tax returns).
In addition to revenue collection and the pursuit of fraudsters, the IRS issues administrative decisions such as income decisions and personal letter decisions. In addition, the Service publishes the Internal Revenue Newsletter which contains various IRS statements. The regulatory control authority and income decision allow taxpayers to depend on them. Personal letter decisions are good for the taxpayer to whom the letter was issued, and provide some explanation of the Service's position on certain tax issues. In addition, the ruling personal letter is quite reliable by the taxpayers allowing for a waiver of penalties for underpayment of taxes.
As with all administrative statements, taxpayers sometimes demand the validity of statements, and courts sometimes determine certain unlawful rules in which they have exceeded their authority. The IRS also issued a formal statement called the Income Procedure, which among other things informed the taxpayer how to correct the previous tax error. The IRS internal operating manual itself is the Internal Revenue Manual, which describes the administrative procedures for processing and auditing tax returns in terrible detail. For example, the Internal Revenue Manual contains specific procedures for processing the tax refund of the President and Vice President of the United States.
A more formal adoption of the rules to provide a Service interpretation of a law, or when the law itself directs that the Minister of Finance will provide, the IRS undergoes a formal regulatory process with the proposed Rulemaking Notice (NPRM) published in the Federal Register announcing the proposal rules, dates of proceedings, and processes for interested parties to have their views heard either directly at a session in Washington, DC, or by mail. After the period of law provided in the Service Administration Procedure Act decides the final rule "as is," or as reflecting changes, or sometimes withdraws the proposed rules. Generally, taxpayers may rely on proposed rules until the final rule becomes effective. For example, human resource professionals rely on the 4 October 2005 Approval Rule (quotation 70 FR 57930-57984) for Section 409A on deferred compensation (called Enron rules on deferred compensation for adding tooth to old rule) because the rules have not been resolved.
The IRS oversees the Homebuyer Credit and First Time Homebuyer Credit programs instituted by the federal government from 2008-2010. These programs give money to US citizens for home purchases, regardless of income tax filing.
Controversy
The IRS has been accused of rough behavior on many occasions. The testimony was given before the Senate subcommittee focused on IRS aggregate collection tactics cases in considering the need for legislation to provide greater protection to taxpayers in disputes with agencies.
Congress passed the Human Rights Taxpayer Bill III on July 22, 1998, which shifted the burden of proof from taxpayers to the IRS in certain limited circumstances. The IRS retains the legal authority to enforce liens and seize assets without obtaining a decision in court.
In 2002, the IRS accused James and Pamela Moran, as well as several others, conspiracy, filing of fake tax returns and letter fraud as part of Anderson Ark's investment scheme. Moran was finally released, and their lawyers claimed that the government should have realized that the couple was only deceived by those who ran the scheme.
In 2004, the legal license of two former IRS lawyers was suspended after a federal court ruled that they cheated the court so the IRS could win the amount in tax protection cases.
In 2013, the IRS became embroiled in a political scandal where it was found that agents were subject to conservative or conservative groups who filed tax-exempt status for extra checks.
On September 5, 2014, 16 months after the scandal first erupted, the Senate Subcommittee released a report confirming that the Internal Revenue Service used inappropriate criteria to target the Tea Party group, but found no evidence of political bias. The Chairman of the Permanent Subcommittee on the Investigation stressed that while the action was "inappropriate, annoying, and burdensome," Democrats often experience similar treatment. Republicans noted that 83% of the groups held by the IRS were right; and the Subcommittee Minority staff, who did not join the Majority staff report, filed a disagreeing report entitled, "IRS Targeted Tea Group."
On May 25, 2015, the agency announced that the criminal has illegally accessed personal tax information from over 100,000 taxpayers for several months. By providing Social Security Numbers and other information obtained from previous computer crimes, criminals can use the IRS online "Get Transcript" function to ask the IRS to provide them with tax refunds and other personal information from US tax filers. On August 17, 2015, the IRS revealed that the offense had compromised an additional 220,000 taxpayer records. On February 27, 2016, the IRS revealed that over 700,000 social security numbers and other sensitive information had been stolen.
See also
- Tax evasion in the United States
Note
Further reading
- Davis, Shelley L.; Matalin, Mary (1997). Uncontrollable Power: In â € <â €
. New York: Harper Collins. ISBNÃ, 0-88730-829-5. - Johnston, David Cay (2003). Perfectly Legal: Covert Campaigns to Summarize Our Tax System for Getting Super Rich - and Cheat Everybody Else . New York: Portfolio. ISBNÃ, 1-59184-019-8.
- Rossotti, Charles O. (2005). Many Unreasonable Returns: One Person Quest To Reverse The Most Unpopular Organization In America . Cambridge: Harvard Business School Press. ISBNÃ, 1-59139-441-4.
- Roth, William V., Jr.; Nixon, William H. (1999). Power to Destroy . New York: Atlantic Monthly Press. ISBN 0-87113-748-8.
External links
- Official website
- Internal Revenue Service in the Federal List
Source of the article : Wikipedia
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