What Is the Internal Revenue Service (IRS)?
The Internal Revenue Service (IRS) is the federal agency that collects tax revenue from the federal government. It is the entity behind all the deductions from your salary and the quarterly estimated tax payments that you make if you are self-employed.
The IRS has rules that you must follow, and if you decide not to follow them, you could face some pretty severe consequences.
But that's just the big, wide picture. Learn who the IRS really is, what it does, and other important considerations.
What is the IRS?
The IRS is the federal agency that enforces the tax laws passed by Congress. Some of the agency's functions include:
Collect and process tax returns submitted by natural and legal persons.
Make sure you pay all taxes due.
Issue refunds if you paid additional taxes during the year
Supervision of certain retirement plans
Carrying out criminal investigations
Guide you through all these problems in a friendly and helpful way.
What does the IRS do?
The IRS inspection arm may be the busiest. The Fiscal Policy Center reported in May 2020 that the agency dedicated almost 40% of its 2018 budget to enforcement, and 83% of that 40% funded tax audits and investigations. The other 17% paid for the investigations and inspection.
Approximately 21% of the 2018 general budget went to taxpayer services such as process assistance and education.
But the IRS's involvement in the lives of Americans does not begin or end with the collection of taxes. The agency is also responsible for administering various tax credits and subsidies for low- and middle-income families, such as the Earned Income Tax Credit, subsidies under the Affordable Care Act, and the education tax credits that it provides. they will help you or your children go to college.
Who owns the IRS?
The IRS is an agency of the United States Department of the Treasury and is considered a "tax administrator" working under the direction of the Secretary of the Treasury. Therefore, instead of being "owned" by the Treasury, the IRS "works for" the Treasury.
The IRS has repeatedly argued that while Congress did not create the IRS by law, it is a government agency. He cites the 1971 Supreme Court case Donaldson v.
United States, in which the court ruled that the IRS can administer internal revenue laws like an agency would. Additionally, the IRS notes that the US Code gives the Secretary of the Treasury full authority to enforce tax laws and designate an agency to do so.
The president appoints the IRS commissioner, who is the executive director of the IRS. The Senate must approve the appointment, a process that has been in place since the 1950s.
Commissioners serve five-year terms and are responsible for overseeing all IRS operations, from tax return processing to law enforcement. tax, until the collection of taxes.
When did the federal income tax start?
The income tax has its origin in the Civil War. President Abraham Lincoln sanctioned the income tax and created the "Internal Revenue Commissioner" in 1862 to collect revenue for the war effort. The first income tax was 3% on income from $ 600 to $ 10,000 and 5% on income over $ 10,000.
However, this tax did not last long. It was repealed 10 years later, in 1872. Congress recovered the income tax 22 years later through the Wilson Tariff Act of 1894, but that was not permanent either. The Supreme Court ruled a year later that the tax was unconstitutional.
Then the 16th Amendment was ratified in 1913, when three-quarters of Americans formed a majority to amend the Constitution and allow the government to impose an income tax. The first income tax return for Form 1040 appeared a year later.
The first personal income tax was 1% for income over $ 3,000 and 6% for income over $ 500,000
Then came World War I and another war effort. Congress raised the top tax rate to an incredible 77%, where it stayed for 11 years. The rate fell to 24% in 1929, only to rise again in response to the Great Depression.
The maximum rate is 37% in 2020. For fiscal year 2020, this rate applies to taxable income over $ 518,400 for single taxpayers. Increases for fiscal year 2021 to $ 523,600.
Meaning of the IRS logo
The IRS logo features three different images in one:
Eagle: represents the United States (the national bird is the bald eagle)
Olive branch: Represents peace and mediation.
Scale: represents fairness and fairness.
In general, the IRS intends the symbol to express “justice, fairness, honesty, peace, and commitment.
We hope you enjoy watching this video about what is IRS
Source: Ovios Money
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