Internal Revenue Service (IRS)

Definition: Internal Revenue Service (IRS)

The Internal Revenue Service (IRS) is a U.S. federal agency responsible for the collection of taxes and enforcement of tax laws. Established by Congress, the IRS is an arm of the Department of the Treasury. It administers the tax code, oversees the collection of federal taxes, processes tax returns, issues tax refunds, and enforces tax laws. The agency’s mission is to provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Key Functions of the IRS:

• Tax Collection: Collects individual, corporate, estate, trust, gift, and excise taxes.
• Tax Compliance: Administers rules under the Internal Revenue Code and audits taxpayers to ensure compliance.
• Taxpayer Guidance: Provides publications, tax forms, and customer service to help taxpayers understand their obligations.
• Tax Refunds: Processes returns and issues tax refunds to individuals and businesses.
• Criminal Investigations: Conducts criminal investigations into tax fraud and evasion.

Examples of IRS Activities:

1. Tax Return Processing: For the 2021 tax filing season, the IRS processed over 240 million tax returns, issuing refunds totaling over $736 billion.
2. Economic Impact Payments: During the COVID-19 pandemic, the IRS distributed stimulus payments to millions of Americans under various relief acts.
3. Tax Audits: The IRS conducts audits to verify the accuracy of taxpayers’ returns and imposes penalties if discrepancies are found.

Frequently Asked Questions (FAQs)

1. How do I contact the IRS?

   • You can call the IRS customer service at 1-800-829-1040 for individuals and 1-800-829-4933 for businesses. The IRS also provides assistance through its official website.

2. How can I check the status of my tax refund?

   • You can use the “Where’s My Refund?” tool on the IRS website or the IRS2Go mobile app.

3. What is an IRS audit?

   • An IRS audit is an examination of an individual’s or organization’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify that the reported amount of tax is correct.

4. What should I do if I receive a notice from the IRS?

   • Read the notice carefully as it will explain why the IRS is contacting you and provide instructions on how to resolve any issues.

5. How do I pay my taxes?

   • You can pay your taxes online using IRS Direct Pay, through the Electronic Federal Tax Payment System (EFTPS), or by mail using a check or money order.

Related Terms:

• Taxpayer Identification Number (TIN): A unique identifier used by the IRS to track tax records.
• W-2 Form: A form that employers must send to employees and the IRS at the end of the year, detailing wages and tax withholdings.
• Audit: A comprehensive review of an individual’s or corporation’s tax returns conducted by the IRS.
• Tax Evasion: The illegal non-payment or underpayment of tax, usually by deliberately making a false declaration or no declaration to the tax authorities.
• Tax Code: The body of law governing federal tax obligations.

Online Resources:

• Official IRS Website
• IRS YouTube Channel
• Taxpayer Advocate Service
• Internal Revenue Code

Suggested Books for Further Studies:

1. J.K. Lasser’s Your Income Tax by J.K. Lasser Institute
2. Tax Savvy for Small Business by Frederick W. Daily
3. Principles of Taxation for Business and Investment Planning by Sally Jones and Shelley Rhoades-Catanach
4. IRS Enrolled Agent Exam Study Guide by Rain Hughes
5. The Only Tax Audit Guide You’ll Ever Need by Sandra Block and Henry A. Wrobel

Accounting Basics: “Internal Revenue Service (IRS)” Fundamentals Quiz

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