What Is the IRS, and What Do They Do?

Nov 19, 2023 By Triston Martin

The IRS, based in the nation's capital, is in charge of taxation for all individuals and businesses in the United States, no matter how large or small. It processed over 240 million income tax returns and other forms for the fiscal year 2020 (October 1, 2019, through September 30, 2020). The COVID-19 outbreak resulted in $268 billion in economic impact payments and $736 billion in tax refunds issued by the IRS during that period.

Individuals and businesses in the United States can now electronically file their tax returns because of advances in computer technology, software, and reliable internet connections. Most people now file their tax returns electronically, largely thanks to the IRS's implementation of the programme. In the fiscal year 2020, nearly all individual tax returns were filed electronically.

It was used by roughly 40 million of the 131 million tax returns filed in 2001. A total of 112 million taxpayers have switched from paper checks to direct deposits by October 2021, with an average direct deposit amount of $2,851 per. The IRS recommends no platform or tax software, even though it encourages people to file their forms electronically.

The Internal Revenue Service and audits

A random sample of tax returns is audited each year by the Internal Revenue Service as part of its responsibility to ensure compliance. Fiscal 2020 saw the IRS conduct an audit of 509,917 tax returns. One per cent of corporate and 0.63 per cent of individual tax returns are affected. On-site audits accounted for 27.3 per cent of all IRS audits, while mail audits accounted for 72.6% of all audits.

Since 2010, the number of audits has been steadily decreasing. Instead of a 30% decline, there has been a 70% decrease in the amount of money set aside for tax enforcement since 2010. The reasons for an IRS audit can vary greatly, but a few factors can increase the risk of one. The most critical of these is a pay increase.

Audits of individual tax returns will amount to 0.63 per cent in 2020. In contrast, it was 9.8% for individuals making over $10 million. Running your own business is also more dangerous. Those making between $200,000 and $1 million in 2018 must submit Schedule C (the self-employment tax form), and those who fail to do so run a 1.4% risk of being audited.

Any of the following: failure to report the correct amount of income, excessive deductions (especially those tied to a business), substantial donations to charity, or assertions of rental property losses may also trigger an audit.

Ways to Get In Touch With the IRS

There are many ways to get in touch with the IRS. If you're submitting your taxes by mail, your state of residency and whether or not you expect a refund will influence the address you select. You may be able to discover a list on the IRS website. The IRS website provides a list of postal addresses based on whether you're applying or making a payment.

By phone or email, you can get in touch with me at any time.

Call (800) 829-1040 on weekdays between the hours of seven am and seven pm Eastern time for assistance, and there are other toll-free lines accessible for businesses and various other purposes. On the other side, contacting a natural person may take some time and effort. There is a lengthy sequence of automatic questions that you must answer on CPA Amy Northard's site, which she has outlined in detail.

You can get answers to various tax-related questions using the IRS's Interactive Tax Assistant online. In real life, The IRS can also be contacted by phone to set up an in-person meeting at your local branch office. To find the nearest IRS office, enter your ZIP code into the IRS website's locator page.

Residency for Tax Purposes

The IRS accepts your bank account and credit and debit card payments. E-filing your tax return can also be done by a bank wire or a withdrawal of electronic funds on the same day. If you're a business or making a large payment, you must enrol in the Electronic Federal Tax Payment System before utilising it.

It is possible to pay via non-electronic means. Personal checks, money orders, and cashier's checks are all options for payment. The following information should be written on the "U.S. Treasury" check.

How old is the Internal Revenue Service?

As president at the time, Abraham Lincoln established the Internal Revenue Service (IRS) in 1862 as part of his efforts to raise funds for the American Civil War. Following its abolition in 1872, the tax was reinstituted in 1894 before being declared unconstitutional by the U.S. Supreme Court in 1895. Since the 16th Amendment to the United States Constitution was adopted in 1913, federal income taxes have been collected again.

Related articles
blog

What Is An Interest-Only Loan: A Complete Understanding

By Triston Martin / Jan 03, 2024

A loan that requires the mortgagor (the borrower) to pay just the interest on the loan for a specific period is known as an interest-only loan.

blog

Cost comparison: new vs. used car purchases

By Susan Kelly / Nov 03, 2023

While new vehicles are more likely to have up-to-date safety features and are insured at a lower risk, they can be more expensive outright. Used cars are more cost-effective because the initial steep depreciation has already occurred and you might not require full coverage insurance.

blog

A Beginner's Guide to Overriding a Power of Attorney

By Triston Martin / Jan 26, 2024

Are you looking for a guide to find out who can override the power of attorney? Well, if that’s so, then give this article a read to understand it better.

blog

Do You Know: What Is Form 1099-A?

By Triston Martin / Jan 05, 2024

An IRS foreclosure sale must be reported on a 1099-A form. Lenders typically provide homeowners with a copy of IRS Form 1099-A after a foreclosure, and the IRS receives its copy. The details supplied on the form are required to report the transaction on your tax return.

blog

Ways to Negotiate Your Medical Bills Down

By Susan Kelly / Jan 18, 2024

Whether you need immediate care or need to schedule an annual checkup, the cost might be a surprise. This article will discuss how to bargain for a lower medical bill.

blog

How to Buy a House Out of State?

By Susan Kelly / Oct 22, 2023

A massive choice is purchasing a home. It's also an exciting one, but it isn't easy. If you've decided that you want to buy a house but aren't sure where or how, this guide will help!

blog

Everything You Need To Know About Capital One Walmart Rewards Mastercard

By Triston Martin / Feb 21, 2024

If you shop at Walmart regularly, the Capital One Walmart Rewards Mastercard, which does not charge an annual fee, is designed with you in mind.

blog

Successfully Live Within Your Means

By Susan Kelly / Dec 05, 2023

That's good news since it implies you're able to put some cash away each month after paying all of your expenditures. Living below your means can help you save money and develop wealth more quickly.

blog

Deciphering Credit Unions: Unveiling Their Distinctions from Traditional Banks

By Susan Kelly / Nov 25, 2023

Discover the unique world of credit unions and unravel the distinctions that set them apart from traditional banks. Explore the benefits and services they offer, and gain insights into choosing the right financial institution for your needs.

blog

Why Interest Rate Hikes by the Fed Can Hurt: A Comprehensive Analysis

By Triston Martin / Jan 25, 2024

This explores the significant implications of Fed's rate hikes for businesses, consumers, and the global economy; offers strategies to mitigate their impact.

blog

An Overview of Visa Infinite Perks

By Triston Martin / Feb 03, 2024

Visa offers three different types of credit cards to suit the needs of people with diverse incomes and spending habits. Visa Infinite is the highest tier in exclusivity and rewards, with a growing set of perks for cardholders as they progress. Remember that you'll need to invest some money to reap these rewards

blog

A Guide to Understand: Pros and Cons Using Airbnb

By Susan Kelly / Oct 20, 2023

Airbnb has become a huge change agent in the hospitality industry. I won't go into a lot of detail about AirBnB's history, but in short, it was started by two guys in San Francisco who rented out air mattresses and turned that into a popular travel uprising. Airbnb is now worth more than $10 billion, and it is the best place to find one-of-a-kind travel experiences.