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DEPARTMENT OF THE TREASURY – INTERNAL REVENUE SERVICE (IRS)No interaction with the federal government is more certain than US taxpayers’ dealings with the Internal Revenue Service (IRS), whether through voluntary compliance, examinations, or tax enforcement. Leading companies and global market leaders need to know how to interface productively with this powerful governmental agency, including how to:
Latham’s Tax Practice maintains consistent contact with IRS officials to help clients achieve their goals vis-à-vis the agency. For instance, Latham lawyers regularly approach the IRS and the Treasury Department on private letter rulings and regulatory comments, while also maintaining close professional relationships with federal tax officials. The team recognizes the value of understanding the government’s views on current tax issues, and is well positioned to advise clients on related matters. In addition, the firm’s Washington, D.C. Tax Controversy Practice provides critical advice on tax compliance issues, including the astute handling of IRS inquiries, examinations, and administrative appeals, as well as “eggshell” investigations and voluntary correction of non-compliance. When litigation must occur, the team draws on its track record of success in handling complex tax litigation at trial and on appeal. News & InsightsInternal Revenue Service or IRS is a United States Government agency which is responsible for collection of taxes and enforcement of tax laws like the wash sale rule. The primary purpose of this service is to collect individual and employment taxes. This service plays an important role in regulation of taxes in the United States. We will go through the basics of the Internal Revenue Service or IRS in detail to understand its importance and functioning a little better. What is the Internal Revenue Service (IRS)?The Internal Revenue Service or IRS was founded in the year 1862 by the United States President, Abraham Lincoln. It is a U.S federal agency which is responsible for the collection of taxes and enforcement of tax laws in the United States. This agency operates under the authority of the United States Department of the Treasury with the ultimate purpose of collecting individual as well as employment taxes. The Internal Revenue service handles corporate, gift, excise and estate taxes as well which also includes mutual funds and dividends. Nearly 90% of tax returns are filed every year with the Internal Revenue Service or IRS which makes it an important agency for maintaining tax regulations in the United States. Since the establishment of the Internal Revenue Service or IRS, it has been responsible for collecting most of the revenue which is needed to fund the federal government. However, while doing so, the agency has faced a fair share of criticism and controversies over its methods and principles of taxation. The agency in recent times have faced budget cuts and reduced morale, but even then in the year 2021, the Internal Revenue Service or IRS processed nearly 253 million tax returns. How does the Internal Revenue Service or IRS work?The Internal Revenue Service or IRS has its headquarters in the Washington D.C., from where all the main work of the agency is carried. The IRS preserves the taxation of all American individuals and companies. In the financial year of 2019 which is from October 1 2018 to September 30 2019, this agency processed more than 250 million income tax returns and other additional forms. This is also the same time when the Internal Revenue Service or IRS collected a revenue of more than 3.5 trillion dollars and issued tax refunds of more than 452 billion dollars. Thanks to computer technology, software programs and secure internet connections, individuals and corporations have the option and freedom to file for income tax returns electronically. Since the computerisation of the Internal Revenue Service or IRS, the number of income taxes files using the e-file has increased and it has led to a higher number of income tax returns that are filed electronically. During the financial year of 2019 about 89.1% individuals filed income tax returns electronically. This was an overwhelmingly high number as compared to the financial year of 2001 when the electronic option was first introduced by the IRS to the taxpayers. Given this electronic service, nearly 92 million taxpayers received their returns in the form of direct deposits rather than a traditional paper check, in the year 2019. This average directly deposited amount was more than 2000 U.S. dollars. When talking about the electronic tax filing service offered by the Internal Revenue Service or IRS, it is important to note that even though the IRS recommends filing tax returns electronically, there is no particular platform or filing software which is endorsed by the agency. What is the Mission of the Internal Revenue Service or IRS?Like any other agency or service, the Internal Revenue Service or IRS also comes with a certain mission and goals that it needs to fulfill. To understand the workings and importance of the Internal Revenue Service or IRS, it is also important to understand the mission on which it works. The mission of the IRS is as follows:
How can the Internal Revenue Service or IRS be improved?The Internal Revenue Service or IRS like any other service, agency or corporation has its own limitations. There are certain grounds on which the IRS can be improved. As the IRS is a complex and cumbersome agency, you cannot expect for it to change or improve overnight. However, we can expect some measures to be taken to make the whole system a little better. Let us go through some ways in which the Internal Revenue Service or IRS can be improved.
Why would I get a letter from Department of Treasury?If you owe money to a federal agency and you did not pay it on time, you have a delinquent debt. You will receive a letter first from the agency to whom you owe the debt. If you do not pay the agency, the debt then goes to Treasury and we send you a letter about that debt.
What does the Internal Revenue Service collect?One of the most important responsibilities of the IRS is to assess and collect taxes on behalf of the federal government. In 2020, the IRS collected roughly $3.5 trillion in taxes made up of income taxes, employment taxes, business income taxes, excise taxes and estate and gift taxes.
Is the IRS the same as the United States Treasury?The IRS is a bureau of the Department of the Treasury and one of the world's most efficient tax administrators. In fiscal year 2020, the IRS collected almost $3.5 trillion in revenue and processed more than 240 million tax returns. The IRS spent just 35 cents for each $100 it collected in FY 2020.
What does the Treasury Department do?The Department of the Treasury operates and maintains systems that are critical to the nation's financial infrastructure, such as the production of coin and currency, the disbursement of payments to the American public, revenue collection, and the borrowing of funds necessary to run the federal government.
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