QandAs: Legal

What is the IRS?

Answer:
The IRS, or Internal Revenue Service, is the US federal agency responsible for taxes.

The precursor to the modern IRS, the Bureau of Internal Revenue, was founded by President Lincoln during the Civil War with the mission of collecting taxes, or internal revenue. A number of changes, including the name Internal Revenue Service, were made official in 1953. Additional structural changes were made in the late 1990s.

The majority of work done by the IRS involves collecting income taxes from four main categories of taxpayers: medium and large corporations, small businesses and those who are self-employed, regular employees or wage earners, and tax-exempt or government entities. For many Americans, a percentage of each paycheck is held out in anticipation of their tax liability at the end of the year.

Each year by April 15th most Americans submit a series of IRS forms to show what their tax liability is and if more taxes were withheld than they ended up owing, they receive a tax refund from the IRS. If they owe more taxes than they paid, then they must pay the IRS the difference. The IRS also investigates tax fraud and any other area related to taxation.