What Is the IRS and What Does It Do? How Is It Organized?
The Internal Revenue Service (IRS) is a bureau of the United States Department of the Treasury whose mission is twofold:
- To help and serve America’s taxpayers by helping them understand meet their tax responsibilities
- To enforce the tax laws with integrity and fairness to all
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What Is the IRS?
The IRS is the federal agency that administers tax collections in the United States.
What Does the IRS Do?
The IRS’ functions are many; here are some of the agency’s critical duties:
- Designs, collects, and processes tax returns
- Sends tax refunds to taxpayers who have overpaid their tax liability
- Collects the taxes imposed by the federal government — such as income taxes and payroll taxes — through its Automated Collection System (ACS) as well as through revenue officers
- Resolves taxpayers’ balances, such as through payment plans, offers in compromise, and other tax relief options
- Conducts audits and other investigations — including criminal investigations — of tax returns and taxpayers
- Interprets the tax laws and regulations through revenue rulings and other official guidance
- Sends notices, letters, and other communications to taxpayers informing them of various tax-related issues
Who Leads the IRS?
The head of the IRS is the Commissioner of Internal Revenue. The Commissioner is appointed to a five-year term by the President of the United States.
As with most other presidential appointees, the Commissioner must be approved by the Senate before beginning service.
How Is the IRS Organized?
The IRS has four major divisions:
- Large Business and International (LB&I): The IRS LB&I Division deals with large businesses with $10 million or more in assets. It also deals with high-wealth individuals and foreign businesses with a United States tax reporting requirements.
- Small Business / Self-Employed (SB/SE): This IRS SB/SE Division deals with small businesses and self-employed taxpayers with less than $10 million in assets.
- Wage and Investment (W&I): The IRS W&I Division deals with everyday taxpayers.
- Tax-Exempt & Government Entities (TE/GE): The IRS TE/GE Division deals with tax-exempt organization and government entities.
How Can I Contact the IRS?
The IRS’ general phone line is 1-800-829-1040, which is open from 7:00 AM through 7:00 PM (your local time), Monday – Friday (except for federal holidays).
However, if you have received a notice or letter from the IRS with a different number on it — or even a particular person to contact — call that number.
What Should I Do If I Owe the IRS and Can’t Pay?
If you owe the IRS, you have several options available to you.
If you will have the money to pay what you owe within the next six months, you can apply for a short-term payment plan.
There is no fee to set up a short-term plan, and you can pay directly from a checking or savings account (direct debit); pay electronically using the Electronic Federal Tax Payment System (EFTPS); or pay by check, money order, or debit or credit card.
If you need more time to pay, you can set up a long-term payment plan, or installment agreement, with the IRS. There are various kinds of payment plans you can set up, but if you owe $50,000 or less, you can set one up online.
If you can’t afford to pay what you owe, consider obtaining one of these hardship-based tax resolution options:
- Offer in Compromise: This is an agreement with the IRS to settle your tax debt for less than you owe.
- Partial-Payment Installment Agreement: This is a long-term payment plan with the IRS whereby you pay less than you owe over time.
- Currently Not Collectible (CNC) Status: This is a special status with the IRS in which you do not have to pay anything to the IRS.
Do IRS Agents Have Guns?
Most IRS personnel do not have guns.
However, since part of the IRS’ duties is to investigate criminal tax matters, its IRS Criminal Investigation employees are law enforcement officers and are armed as such.