The Internal Revenue Service is a bureau of the Department of the Treasury under the immediate direction of the Commissioner of Internal Revenue. The Commissioner has general superintendence of the assessment and collection of all taxes imposed by any law providing internal revenue. The Internal Revenue Service is the agency by which these functions are performed.

26 C.F.R. section 601.101(a) (emphasis added).

History: Bureau of Internal Revenue

In 1862, during the Civil War, President Lincoln and Congress created the office of Commissioner of Internal Revenue and enacted an income tax to pay war expenses (see Revenue Act of 1862). The position of Commissioner still exists today. The Commissioner is the head of the Internal Revenue Service.

The organization created to enforce these taxes was named for the internal revenue to be collected (and was formerly called the "Bureau of Internal Revenue"), in contrast to U.S. government institutions that collected external revenue through duties and tariffs. (Similarly, the United Kingdom has an Inland Revenue Commission.) The income tax was repealed 10 years later. In 1894, Congress revived the income tax, but the following year the United States Supreme Court ruled, in Pollock v. Farmers' Loan & Trust Co., that taxes on capital gains, dividends, interest, rents and the like were direct taxes on property, and that the statute in question was unconstitutional because it had not apportioned the direct taxes among the states according to population. In 1913, however, the states ratified the 16th Amendment, which removed the requirement that income taxes (whether considered direct or indirect taxes) be apportioned by population.

History: Name change in the 1950s and reorganization

In the 1950s, career professional employees replaced the patronage system. Currently, only the IRS Commissioner and Chief Counsel are selected by the President and confirmed by the Senate. In 1952 the Bureau of Internal Revenue name was changed to the "Internal Revenue Service" to emphasize "service" to taxpayers.

Administrative functions

More formal rulemaking to give the Service's interpretation of a statute or when the statute itself directs that the Secretary of the Treasury shall provide, IRS undergoes the formal regulation process with an NPRM (Notice of proposed rulemaking) published in the Federal Register announcing the proposed regulation, the date of the in person hearing and the process for interested parties to have their views heard either in person at the hearing in Washington, D.C., or by mail. Following the statutory period provided in the Administrative Procedure Act (an abiding interest of Justice Scalia's dissenting opinions) the Service decides on the final regulations "as is," or as reflecting changes, or sometimes withdraws the proposed regulations. Generally, taxpayers may rely on proposed regulations until final regulations become effective. For example, human resource professionals are relying on the October 4, 2005 Proposed Regulations (citation 70 F.R. 57930-57984text ) for the Section 409A on deferred compensation (the so-called Enron rules on deferred comp) because regulations have not been finalized.

Reorganization of the late 1990s

Flooding at IRS headquarters building

The main headquarters building of the IRS is located at 1111 Constitution Avenue, N.W. in Washington, D.C., near the Old Post Office. The IRS headquarters building was closed in June 2006 as a result of heavy flooding. According to a July 12, 2006 letter from Senator Max Baucus (Dem.-Montana), a ranking member of the U.S. Senate Finance Committee, the sub-basement of the building was filled with water to a depth of twenty feet, and electrical and maintenance equipment in the sub-basement was about 95% damaged or destroyed. The IRS and the General Services Administration have announced that the building will remain closed at least through the end of 2006. The employees who worked in the building -- numbering over two thousand -- have been temporarily transferred to other offices in the Washington, D.C. area.

Tax collections

Summary of Collections before Refunds by Type of Return, Fiscal Year 2003:

Recently, the IRS has altered its policies. The current Service plus Enforcement equals Compliance motto has led to more investigations of abusive tax schemes.

Taxpayers should be aware that the IRS does not initiate communications, or ask for information, by e-mail. Phishing scammers pretending to be Treasury officials are using this means of communication to steal personal data from individuals.

The current Commissioner of Internal Revenue is Mark W. Everson, who was confirmed by the U. S. Senate on May 1, 2003.

See also

• Taxation in the United States
• Non-profit corporation
• United States of America non-profit laws
• 501(c)(3)
• 527 group

Further reading

• Davis, Shelley L., and Mary Matalin. Unbridled Power: Inside the Secret Culture of the IRS. New York: Harper Collins, (ISBN 0887308295)
• Johnston, David Cay. Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else. New York: Portfolio, 2003. (ISBN 1591840198)
• Rossotti, Charles O. Many Unhappy Returns: One Man's Quest To Turn Around The Most Unpopular Organization In America. Cambridge: Harvard Business School Press, 2005. (ISBN 1591394414)
• Roth, William V., Jr., and William H. Nixon. The Power to Destroy. New York: Atlantic Monthly Press, 1999. (ISBN 0871137488)

External links

• Internal Revenue Service Official website
• IRS Abuse Reports Claimed accounts of abuses against U.S. citizens by the IRS
• Tax Protester FAQ by Dan Evans rebuts claims of the illegitimacy of the income tax and the IRS
• Americans for Fair Tax argues for the replacement of the income tax with a consumption tax
• Helpful Resources on Tax Exempt Status Links, Information, and Assistance
• IRS tax forms Description
• Internal Revenue Service Fan website for IRS with RSS News, Forums and RSS blogs.
• Tax Information for Nonprofit Corporations Tax rulings and information for Nonprofit Corporations
• IRS costs government $200 million for software error

Internal Revenue Service

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