IRS (Internal Revenue Service)
The federal agency responsible for collecting taxes and enforcing tax laws in the United States. The IRS processes tax returns, issues refunds, and conducts audits.
The Internal Revenue Service (IRS) is a bureau of the US Department of the Treasury responsible for administering and enforcing federal tax laws. It processes more than 150 million individual tax returns each year, collects over $4 trillion in revenue, and distributes hundreds of billions in refunds.
The IRS performs several key functions: processing tax returns and issuing refunds, collecting unpaid taxes, conducting audits and examinations, providing taxpayer assistance and education, and issuing rulings and regulations that interpret the tax code. The agency operates through multiple divisions, including individual, small business/self-employed, large business, and tax-exempt organizations.
Taxpayers have specific rights when dealing with the IRS, codified in the Taxpayer Bill of Rights. These include the right to be informed, the right to quality service, the right to pay no more than the correct amount of tax, the right to challenge the IRS position, and the right to appeal. If you have a dispute with the IRS, the Taxpayer Advocate Service provides free assistance.
Related Terms
Audit
An IRS review of your tax return to verify that income and deductions are reported accurately. Audits can be conducted by mail, at an IRS office, or at your home or business.
Tax Return
The form(s) you file with the IRS to report income, claim deductions and credits, and calculate your tax liability or refund. For individuals, this is Form 1040.
Penalty
A charge imposed by the IRS for filing late, paying late, or underpaying estimated taxes. Common penalties include failure-to-file (5% per month) and failure-to-pay (0.5% per month).
Tax Refund
Money returned to you by the IRS when your total tax payments (withholding + estimated payments + refundable credits) exceed your tax liability for the year.