The Internal Revenue Service (IRS) is part of the U.S. Department of the Treasury and is responsible for enforcing and administering federal tax laws, processing tax returns, performing audits, and offering assistance for American taxpayers.
What Taxes Does the Internal Revenue Service (IRS) Manage?
Most of the work the IRS does is in relation to the individual income tax and corporate income tax. The IRS collects taxes from all individuals and companies in the U.S. and issues tax returns if and when individuals overpay their income tax bill, usually as a result of an employer withholding too much money from a paycheck.
The IRS was created by President Abraham Lincoln in 1862 to manage the nation’s first federal income tax, which was authorized to fund the Civil War. The tax kicked in at a rate of 3 percent on income earned above $600, increasing to 5 percent on all income earned above $10,000.
The federal income tax was repealed, revived, and repealed again prior to ratification of the 16th Amendment, which gave Congress “the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States….” Through it all, the IRS remains to this day.
The IRS also manages gift taxes, excise taxes, and estate taxes and has been tasked with distributing many “social safety net programs” for health care, education, energy, and more. Some of the larger of these tax benefits include the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Additionally, the agency’s Return Review Program (RRP), was introduced in 2014 to help reduce fraud and close the tax gap.Share