Word of the Week 'IRS'

What Is the Internal Revenue Service (IRS)?

The Internal Revenue Service (IRS) is a U.S. government agency responsible for the collection of taxes and enforcement of tax laws. Established in 1862 by President Abraham Lincoln, the agency operates under the authority of the United States Department of the Treasury, and its primary purpose includes the collection of individual income taxes and employment taxes. The IRS also handles corporate, gift, excise and estate taxes. People colloquially refer to the IRS as the "tax man."

  • Founded in 1862, the Internal Revenue Service (IRS) is a U.S. federal agency responsible for the collection of taxes and enforcement of tax laws.

  • Most of the work of the IRS involves income taxes, both corporate and individual; it processed nearly 141 million tax returns in 2018.

  • Nearly 90% of tax returns are filed electronically.

  • After peaking in 2010, IRS audits have been on the decline each year.

How the Internal Revenue Service (IRS) Works

Headquartered in Washington, D.C., the IRS services the taxation of all American individuals and companies. For the 2018 filing season (January 1 through mid-April), it processed more than 140.9 million income tax returns, including both individual and corporate by May 4. During that period the IRS collected more than $3.3 trillion in revenue and issued $282 billion in tax refunds.

Individuals and corporations have the option to file income returns electronically, thanks to computer technology, software programs, and secure internet connections. The overwhelming majority do so. During the 2018 tax-filing season, over 89% of all returns made use of the e-file option.

The number of income taxes that use e-file has grown steadily since the IRS began the program. By comparison, 40 million out of nearly 131 million returns, or nearly 31%, used the e-file option in 2001.

As of April 2017, more than 81.6 million taxpayers received their returns through direct deposit rather than a traditional paper check, and the average direct-deposited amount was $2,932.