Internal Revenue Service
Overview
 
The Internal Revenue Service (IRS) is the revenue service
Revenue service
A revenue service is a government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. Depending on the jurisdiction, revenue services may be charged with tax collection, investigation of tax evasion, or carrying out audits.-Revenue services by...

 of the United States federal government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

. The agency
Government agency
A government or state agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency. There is a notable variety of agency types...

 is a bureau of the Department of the Treasury
United States Department of the Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue...

, and is under the immediate direction of the Commissioner of Internal Revenue
Commissioner of Internal Revenue
The Commissioner of Internal Revenue is the head of the Internal Revenue Service , a bureau within the United States Department of the Treasury.The office of Commissioner was created by Congress by the Revenue Act of 1862...

. The IRS is responsible for collecting taxes and the interpretation and enforcement of the Internal Revenue Code
Internal Revenue Code
The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...

.
The IRS has its Headquarters office in the greater Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

 area, and in particular does most of its computer programming
Computer programming
Computer programming is the process of designing, writing, testing, debugging, and maintaining the source code of computer programs. This source code is written in one or more programming languages. The purpose of programming is to create a program that performs specific operations or exhibits a...

 in Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...

. It currently operates five service centers around the country (in Austin, TX; Cincinnati, OH; Fresno, CA; Kansas City, MO; and Ogden, UT), at which returns
Tax return (United States)
Tax returns in the United States are reports filed with the Internal Revenue Service or with the state or local tax collection agency containing information used to calculate income tax or other taxes...

 sent by mail
United States Postal Service
The United States Postal Service is an independent agency of the United States government responsible for providing postal service in the United States...

 are received.
Encyclopedia
The Internal Revenue Service (IRS) is the revenue service
Revenue service
A revenue service is a government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. Depending on the jurisdiction, revenue services may be charged with tax collection, investigation of tax evasion, or carrying out audits.-Revenue services by...

 of the United States federal government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

. The agency
Government agency
A government or state agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency. There is a notable variety of agency types...

 is a bureau of the Department of the Treasury
United States Department of the Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue...

, and is under the immediate direction of the Commissioner of Internal Revenue
Commissioner of Internal Revenue
The Commissioner of Internal Revenue is the head of the Internal Revenue Service , a bureau within the United States Department of the Treasury.The office of Commissioner was created by Congress by the Revenue Act of 1862...

. The IRS is responsible for collecting taxes and the interpretation and enforcement of the Internal Revenue Code
Internal Revenue Code
The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...

.

Summary

The IRS has its Headquarters office in the greater Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

 area, and in particular does most of its computer programming
Computer programming
Computer programming is the process of designing, writing, testing, debugging, and maintaining the source code of computer programs. This source code is written in one or more programming languages. The purpose of programming is to create a program that performs specific operations or exhibits a...

 in Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...

. It currently operates five service centers around the country (in Austin, TX; Cincinnati, OH; Fresno, CA; Kansas City, MO; and Ogden, UT), at which returns
Tax return (United States)
Tax returns in the United States are reports filed with the Internal Revenue Service or with the state or local tax collection agency containing information used to calculate income tax or other taxes...

 sent by mail
United States Postal Service
The United States Postal Service is an independent agency of the United States government responsible for providing postal service in the United States...

 are received. These centers do the actual tax processing; different types of tax processing take place in various centers (such as the distinction between individual and business tax processing). The IRS also operates three computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...

 centers around the country (in Detroit, Michigan; Martinsburg, West Virginia; and Memphis, Tennessee).

American Civil War (1861–65)

In July 1862, during the Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...

, President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

 Abraham Lincoln
Abraham Lincoln
Abraham Lincoln was the 16th President of the United States, serving from March 1861 until his assassination in April 1865. He successfully led his country through a great constitutional, military and moral crisis – the American Civil War – preserving the Union, while ending slavery, and...

 and Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

 created the office of Commissioner of Internal Revenue
Commissioner of Internal Revenue
The Commissioner of Internal Revenue is the head of the Internal Revenue Service , a bureau within the United States Department of the Treasury.The office of Commissioner was created by Congress by the Revenue Act of 1862...

 and enacted an income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

 to pay war expenses (see Revenue Act of 1862
Revenue Act of 1862
The Revenue Act of 1862 , was passed by the United States Congress to help fund the American Civil War. The Act was signed into law by President Abraham Lincoln, introducing the first progressive rate income tax to the country....

). The position of Commissioner exists today as the head of the Internal Revenue Service.

The Revenue Act of 1862
Revenue Act of 1862
The Revenue Act of 1862 , was passed by the United States Congress to help fund the American Civil War. The Act was signed into law by President Abraham Lincoln, introducing the first progressive rate income tax to the country....

 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax was passed in 1861:
  • The initial rate was 3% on income over $800, which exempted most wage-earners.
  • In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000.
  • In 1864 the rate was 5% on income between $600 and $5,000; 7.5% on income $5,000–$10,000; and 10% on income $10,000 and above.

By the end of the war, 10% of Union
Union (American Civil War)
During the American Civil War, the Union was a name used to refer to the federal government of the United States, which was supported by the twenty free states and five border slave states. It was opposed by 11 southern slave states that had declared a secession to join together to form the...

 households had paid some form of income tax, and the Union raised 21% of its war revenue through income taxes.

Post Civil War, Reconstruction, and popular tax reform (1866–1900)

After the Civil War, Reconstruction, railroads, and transforming the North and South war machines towards peacetime required public funding. However, in 1872, seven years after the war, lawmakers allowed the temporary Civil War income tax to expire.

Income taxes evolved, but in 1894 the Supreme Court declared the Income Tax of 1894 unconstitutional in Pollock v. Farmers' Loan & Trust Co.
Pollock v. Farmers' Loan & Trust Co.
Pollock v. Farmers' Loan & Trust Company, , aff'd on reh'g, , with a ruling of 5–4, was a landmark case in which the Supreme Court of the United States ruled that the unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and...

. The federal government scrambled to raise money.

In 1906, with the election of President Theodore Roosevelt
Theodore Roosevelt
Theodore "Teddy" Roosevelt was the 26th President of the United States . He is noted for his exuberant personality, range of interests and achievements, and his leadership of the Progressive Movement, as well as his "cowboy" persona and robust masculinity...

, and later his successor William Howard Taft
William Howard Taft
William Howard Taft was the 27th President of the United States and later the tenth Chief Justice of the United States...

, the United States saw a populous movement for tax reform. This movement culminated in February 1913 with the ratification of the Sixteenth Amendment to the United States Constitution
Sixteenth Amendment to the United States Constitution
The Sixteenth Amendment to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results...

:
This granted Congress the specific power to create a direct income tax. By February 1913, 36 states had ratified the change to the Constitution. It was further ratified by six more states by March. Of the 48 states at the time, 42 ratified. Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...

, Rhode Island
Rhode Island
The state of Rhode Island and Providence Plantations, more commonly referred to as Rhode Island , is a state in the New England region of the United States. It is the smallest U.S. state by area...

, and Utah
Utah
Utah is a state in the Western United States. It was the 45th state to join the Union, on January 4, 1896. Approximately 80% of Utah's 2,763,885 people live along the Wasatch Front, centering on Salt Lake City. This leaves vast expanses of the state nearly uninhabited, making the population the...

 rejected the amendment; Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...

, Virginia
Virginia
The Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...

, and Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

 did not take up the issue.

A copy of the very first IRS 1040 form, dated 1913, can be found at the IRS website showing that only those with incomes of $3,000 or more were instructed to file (the equivalent of $68,612 in 2011 adjusted for inflation).

The IRS reinvents itself (1913–1970)

In the first year after ratification of the Sixteenth Amendment, no taxes were collected--instead, taxpayers simply completed the form and the IRS checked it for accuracy. The IRS's workload jumped by ten-fold, triggering a massive restructuring. Professional tax collectors began to replace a system of "patronage" appointments. The IRS doubled its staff, but was still processing 1917 returns in 1919.

Currently, only the IRS Commissioner and Chief Counsel are political appointees selected by the President and confirmed by the United States Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...

.

The agency continued to re-invent itself both organizationally, and technologically.

Presidential tax returns (1973)

From the 1950s through the 1970s, the IRS began using cutting-edge technology such as microfilm to keep and organize records. Easy access to this information proved controversial, when President Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...

's tax returns were leaked to the public. His tax advisor, Edward L. Morgan, became the fourth law-enforcement official to be charged with a crime during Watergate.

John Requard Jr., accused of leaking the documents, collected delinquent taxes in the slums of Washington. In his words:
He admits he saw the returns, but denies he leaked them. When asked if he would have leaked the documents, he said: "I probably would have said, 'Yes, I'm in'."

Reporter Jack White
Jack White (reporter)
Jack White was a veteran Rhode Island journalist who won a Pulitzer Prize for his coverage of President Richard Nixon's underpayment of income taxes...

 of The Providence Journal
The Providence Journal
The Providence Journal, nicknamed the ProJo, is a daily newspaper serving the metropolitan area of Providence, Rhode Island and is the largest newspaper in Rhode Island. The newspaper, first published in 1829 and the oldest continuously-published daily newspaper in the United States, was purchased...

, won the Pulitzer Prize
Pulitzer Prize
The Pulitzer Prize is a U.S. award for achievements in newspaper and online journalism, literature and musical composition. It was established by American publisher Joseph Pulitzer and is administered by Columbia University in New York City...

 for reporting about Nixon's tax returns. Nixon, with a salary of $200,000, paid only $792.81 in federal income tax in 1970 and $878.03 in 1971, with deductions of $571,000 for donating "vice presidential papers". This was one of the reasons for his famous statement: "Well, I'm not a crook. I've earned everything I've got."

So controversial was this leak, that most later US Presidents released their tax returns (though sometimes only partially). These returns can be found online at the Tax History Project.

Modernization and the Internet (1970–present)

After microfilm, the 1960s onward saw massive computerization efforts.

In 1995, the IRS began to use the public Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...

 for electronic filing. Since the introduction of e-filing, self-paced online tax services have flourished, augmenting and sometimes replacing tax accountants to prepare returns.

In 2003, the IRS struck a deal with tax software vendors:
  • The IRS would not develop online filing software.
  • In return, software vendors would provide free e-filing to most Americans.

In 2009, 70% of filers qualified for free electronic filing of federal returns.

In 2010, more than 66% (98 million) of tax returns are expected to be filed electronically.

History of the IRS name

As early as the year 1918, the Bureau of Internal Revenue began using the name "Internal Revenue Service" on at least one tax form. In 1953, the name change to the "Internal Revenue Service" was formalized in Treasury Decision 6038.

Current organization

The 1980s saw a reorganization of the IRS. A bipartisan commission was created with several mandates, among them to increase customer service and improve collections. Congress later enacted the Internal Revenue Service Restructuring and Reform Act of 1998
Internal Revenue Service Restructuring and Reform Act of 1998
The Internal Revenue Service Restructuring and Reform Act of 1998, also known as Taxpayer Bill of Rights III, , resulted from hearings held by the United States Congress in 1996 and 1997...

. As a result of that Act, the IRS now functions under four major operating divisions: Large Business and International division (LB&I), the Small Business/Self-Employed (SB/SE) division, the Wage and Investment (W&I) division, and Tax Exempt & Government Entities (TE/GE) division. Effective October 1, 2010, the name of the Large and Mid-Size Business division changed to the Large Business & International (LB&I) division. The IRS also includes a criminal law enforcement division (IRS Criminal Investigation Division
IRS Criminal Investigation Division
Internal Revenue Service, Criminal Investigation investigates potential criminal violations of the U.S. Internal Revenue Code and related financial crimes in a manner intended to foster confidence in the tax system and compliance with the law...

). While there is some evidence that customer service has improved, lost tax revenues in 2001 were over $323 billion.

Commissioner

Douglas H. Shulman is the current Commissioner of Internal Revenue
Commissioner of Internal Revenue
The Commissioner of Internal Revenue is the head of the Internal Revenue Service , a bureau within the United States Department of the Treasury.The office of Commissioner was created by Congress by the Revenue Act of 1862...

.

Taxpayer Advocates

The Office of the Taxpayer Advocate, also called the Taxpayer Advocate Service, is an independent office within the IRS responsible for assisting taxpayers in resolving their problems with the IRS, as well as identifying systemic problems that exist within the IRS. The current United States Taxpayer Advocate
United States Taxpayer Advocate
The United States Taxpayer Advocate, also known as the National Taxpayer Advocate, is the head of the Office of the Taxpayer Advocate within the Internal Revenue Service, and is appointed by and reports directly to the Commissioner of Internal Revenue...

, also known as the National Taxpayer Advocate, is Nina E. Olson
Nina E. Olson
Nina E. Olson is the current United States Taxpayer Advocate, and as such head of the Office of the Taxpayer Advocate, a government office dedicated to helping taxpayers solve their problems with the Internal Revenue Service. Olson is the only IRS employee authorized to make legislative proposals...

.

Tax collection statistics

Summary of Collections before Refunds by Type of Return
Return
-In business, economics, and finance:* Rate of return, the financial term for the profit or loss derived from an investment* Tax return , various meanings relating to taxation...

, Fiscal Year 2007
Type of Return Number of Returns Gross Collections
to the nearest million US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

Individual Income Tax
Income tax in the United States
In the United States, a tax is imposed on income by the Federal, most states, and many local governments. The income tax is determined by applying a tax rate, which may increase as income increases, to taxable income as defined. Individuals and corporations are directly taxable, and estates and...

 
138,893,908 1,366,241,000,000
Employment Taxes
Federal Insurance Contributions Act tax
Federal Insurance Contributions Act tax is a United States payroll tax imposed by the federal government on both employees and employers to fund Social Security and Medicare —federal programs that provide benefits for retirees, the disabled, and children of deceased workers...

 
30,740,592 849,733,000,000
Corporate Income Tax
Corporate tax in the United States
Corporate tax is imposed in the United States at the Federal, most state, and some local levels on the income of entities treated for tax purposes as corporations. Federal tax rates on corporate taxable income vary from 15% to 35%. State and local taxes and rules vary by jurisdiction, though many...

 
2,507,728 395,536,000,000
Excise Taxes  989,165 53,050,000,000
Estate Tax
Estate tax in the United States
The estate tax in the United States is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred via a will, according to the state laws of intestacy or otherwise made as an incident of the death of the owner, such as a transfer of property...

 
55,924 24,558,000,000
Gift Tax  286,522 2,420,000,000
Total 173,351,839 2,691,538,000,000


For fiscal year 2009 the U.S. Congress appropriated spending of approximately $12.624 billion of "discretionary budget authority" to operate the Department of the Treasury, of which $11.522 billion was allocated to the IRS. The projected estimate of the budget for the IRS for fiscal year 2011 was $12.633 billion. By contrast, during Fiscal Year (FY) 2006, the IRS collected more than $2.2 trillion in tax (net of refunds), about 44 percent of which was attributable to the individual income tax. This is partially due to the nature of the individual income tax category, containing taxes collected from working class, small business, self employed, and capital gains. The top 5% of income earners pay 38.284% of the federal tax collected.

Recently, the IRS has altered its policies. The current Service plus Enforcement equals Compliance motto mirrors its recent increase in investigations of abusive tax schemes.

As of 2007, the agency estimates that the United States Treasury is owed $354 billion more than the amount the IRS collects.

Outsourcing collection and tax-assistance

In September 2006, the IRS started to outsource the collection of taxpayers debts to private debt collection agencies. Opponents to this change note that the IRS will be handing over personal information to these debt collection agencies, who are being paid between 29% and 39% of the amount collected. Opponents are also worried about the agencies' being paid on percent collected, because it will encourage the collectors to use pressure tactics to collect the maximum amount. IRS spokesman Terry Lemons responds to these critics saying the new system "is a sound, balanced program that respects taxpayers' rights and taxpayer privacy." Other state and local agencies also use private collection agencies.

In March 2009, the IRS announced that it would no longer outsource the collection of taxpayers debts to private debt collection agencies. The IRS decided not to renew contracts to private debt collection agencies, and began a hiring program at its call sites and processing centers across the country to bring on more personnel to process collections internally from taxpayers. As of October 2009, the IRS has ceased using private debt collection agencies.

In September 2009, after undercover exposé videos
ACORN 2009 undercover videos controversy
The ACORN 2009 undercover videos controversy refers to the news media and political uproar following the release of videos in 2009 purporting to show encounters between a young couple and workers in several offices of the Association of Community Organizations for Reform Now , where the ACORN...

 of questionable activities by staff of one of the IRS's volunteer tax-assistance organizations were made public, the IRS removed ACORN
Association of Community Organizations for Reform Now
The Association of Community Organizations for Reform Now was a collection of community-based organizations in the United States that advocated for low- and moderate-income families by working on neighborhood safety, voter registration, health care, affordable housing, and other social issues...

 from its volunteer tax-assistance program.

Administrative functions

The IRS publishes a huge number of tax forms
IRS tax forms
IRS tax forms are used for taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service of the United States. They are used to report income, calculate taxes to be paid to the federal government of the United States, and disclose other information as...

 which taxpayers are required to choose from and use for calculating and reporting their federal tax obligations. The IRS also publishes a number of forms for its own internal operations, such as Forms 3471 and 4228 (which are used during the initial processing of income tax returns).

In addition to collection of revenue and pursuing tax cheaters, the IRS issues administrative rulings such as revenue ruling
Revenue Ruling
Revenue Rulings are public administrative rulings by the Internal Revenue Service of the United States federal government that apply the law to particular factual situations. A revenue ruling can be relied upon as precedent by all taxpayers....

s and private letter ruling
Private letter ruling
Private letter rulings , in the United States, are written decisions by the Internal Revenue Service in response to taxpayer requests for guidance. A private letter ruling binds only the IRS and the requesting taxpayer. Thus, a private ruling may not be cited or relied upon as precedent...

s. In addition the Service publishes the Internal Revenue Bulletin containing the various IRS pronouncements. The controlling authority of regulations and revenue rulings allows taxpayers to rely on them. A private letter ruling is good for the taxpayer to whom it is issued, and gives some explanation of the Service's position on a particular tax issue. As is the case with all administrative pronouncements, taxpayers sometimes litigate the validity of the pronouncements, and courts sometimes determine a particular rule to be invalid where the agency has exceeded its grant of authority. The IRS also issues formal pronouncements called Revenue Procedures, that among other things tell taxpayers how to correct prior tax errors. The IRS's own internal operations manual is the Internal Revenue Manual, which describes the clerical procedures for processing and auditing tax returns in excruciating detail. For example, the IRM contains a special procedure for processing the tax returns of the President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

 and Vice President of the United States
Vice President of the United States
The Vice President of the United States is the holder of a public office created by the United States Constitution. The Vice President, together with the President of the United States, is indirectly elected by the people, through the Electoral College, to a four-year term...

.

More formal rulemaking to give the Service's interpretation of a statute, or when the statute itself directs that the Secretary of the Treasury shall provide, IRS undergoes the formal regulation process with a Notice of proposed rulemaking
Notice of proposed rulemaking
A notice of proposed rulemaking is a public notice issued by law when one of the independent agencies of the United States government wishes to add, remove, or change a rule or regulation as part of the rulemaking process. It is an important part of United States administrative law which...

 (NPRM) published in the Federal Register
Federal Register
The Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...

 announcing the proposed regulation, the date of the in-person hearing, and the process for interested parties to have their views heard either in person at the hearing in Washington, D.C., or by mail. Following the statutory period provided in the Administrative Procedure Act
Administrative Procedure Act
The Administrative Procedure Act , , is the United States federal law that governs the way in which administrative agencies of the federal government of the United States may propose and establish regulations. The APA also sets up a process for the United States federal courts to directly review...

 the Service decides on the final regulations "as is," or as reflecting changes, or sometimes withdraws the proposed regulations. Generally, taxpayers may rely on proposed regulations until final regulations become effective. For example, human resource professionals are relying on the October 4, 2005 Proposed Regulations (citation 70 F.R.
Federal Register
The Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...

 57930-57984) for the Section 409A on deferred compensation (the so-called Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...

 rules on deferred compensation to add teeth to the old rules) because regulations have not been finalized.

Allegations of abuse

The IRS has on more than one occasion been accused of abusive behavior. Testimony was given before a Senate subcommittee that focused on cases of overly aggressive IRS collection tactics in considering a need for legislation to give taxpayers greater protection in disputes with the agency.

A statement given in hearings before the Senate Finance Committee criticized the IRS:
Congress passed the Taxpayer Bill of Rights III on July 22, 1998, which shifted the burden of proof from the taxpayer to the IRS in certain limited situations. The IRS retains the legal authority to enforce liens and seize assets without obtaining judgment in court.

Michael Minns was the defense lawyer in a case against the IRS on behalf of James and Pamela Moran, after an initial indictment in what Minns asserts was an IRS smear campaign
Smear campaign
A smear campaign, smear tactic or simply smear is a metaphor for activity that can harm an individual or group's reputation by conflation with a stigmatized group...

 that virtually canvassed the taxpayers' own hometown and surrounding area. The original indictment was associated with the Morans' involvement with a tax shelter
Tax shelter
Tax shelters are any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments...

 provider, Anderson's Ark & Associates. The Morans were eventually acquitted in the case.

Minns also had previously asserted that the behavior of two IRS attorneys at law
Attorney at law
An attorney at law in the United States is a practitioner in a court of law who is legally qualified to prosecute and defend actions in such court on the retainer of clients. Alternative terms include counselor and lawyer...

, Kenneth McWade and William A. Sims, constituted legal misconduct and recommended them for disbarment
Disbarment
Disbarment is the removal of a lawyer from a bar association or the practice of law, thus revoking his or her law license or admission to practice law...

. Following an investigation, the law licenses of the IRS attorneys were duly suspended for a two-year period after a federal court ruling found that the two had indeed defrauded the courts in connection with 1,300 tax shelter cases. In 2003, the United States Court of Appeals for the Ninth Circuit
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...

concluded that the IRS lawyers had corruptly agreed with certain taxpayers that no tax collection actions would be taken against them—in return for testimony against other taxpayers. The court also asked why the IRS had not punished the two.

External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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