Definition
The Internal Revenue Service (IRS), an agency of the federal government, is responsible for the administration and collection of federal income taxes in the United States. Formed in 1862, the IRS manages various tasks, including collecting taxes, distributing tax forms, processing tax returns, conducting audits, and enforcing tax laws.
Examples
Example 1: Individual Tax Return Filing
John is a freelance graphic designer who must file his federal income tax return annually with the IRS. He uses Form 1040 to report his income, deductions, and credits.
Example 2: Corporate Tax Filing
Tech Innovations Inc. is a corporation that must report its earnings, expenses, and deductions by filing Form 1120 with the IRS. The IRS uses this information to determine the corporation’s federal tax liability.
Example 3: Tax Audit
Mary receives a notice from the IRS that her tax return for the previous year is under audit. The IRS requires documentation to verify her claimed income and deductions. After a thorough review, the IRS determines that all information provided by Mary is accurate.
Frequently Asked Questions
What is the purpose of the IRS?
The IRS is tasked with administering and enforcing the federal tax laws set forth by the government, ensuring that all individuals and entities pay their required federal taxes.
How can I contact the IRS for support?
You can contact the IRS by visiting their official website at www.irs.gov or by calling their main contact number: 202-622-5000.
What forms are necessary for filing individual income tax returns?
Most U.S. individuals file their income taxes using Form 1040. Other forms may be required depending on specific circumstances, such as Form 1040-SR for seniors or Form 1040-NR for nonresident aliens.
How does the IRS enforce tax laws?
The IRS enforces tax laws through audits, identifying discrepancies in tax returns, and issuing penalties or taking legal action against non-compliant taxpayers.
What should I do if I’ve received an audit notice?
If you receive an audit notice from the IRS, you should follow the instructions provided in the notice, gather all necessary documentation, and understand your rights as a taxpayer. Consider seeking advice from a tax professional.
Related Terms
Tax Return
A tax return is a form filed with the IRS that reports income, expenses, and other tax-related details. Individual taxpayers usually file Form 1040, while corporations file Form 1120.
Taxable Income
Taxable income is the portion of income that is subject to federal taxes after all allowable deductions and exemptions have been applied.
Audit
An audit is a formal examination of an individual’s or entity’s financial accounts and tax returns by the IRS to verify accuracy and compliance with tax laws.
Federal Income Tax
Federal income tax is the tax levied by the government on the annual earnings of individuals, corporations, trusts, and other legal entities.
Online Resources
- IRS Official Website
- Where’s My Refund?
- IRS Tax Forms and Publications
- IRS Free File
- IRS Telephone Assistance
References
- Internal Revenue Service. “IRS History Timeline.” IRS.gov.
- Internal Revenue Service. “Understanding Your IRS Notice or Letter.” IRS.gov.
Suggested Books for Further Studies
- “The Best Damn Tax Relief Book Ever!” by Sloan Robinson, CPA
- “IRS Audits: Discover How to Ace Them” by Scott T. Hamburg, CPA
- “Taxation of Individual Income” by J. Martin Burke and Michael K. Friel
