As a taxpayer, understanding the Internal Revenue Service or IRS is essential. The IRS is responsible for enforcing tax laws in the United States. They determine how much tax you owe, what tax benefits you can qualify for, and investigate any tax frauds.
While the subjects of taxes and the IRS might not be the most exciting, understanding the process and how it affects you as a taxpayer is critical. In this article, we will provide an overview of what you should know about the IRS.
What is the IRS?
The IRS is a government agency that public perception usually links to negative connotations. However, their primary role is to ensure that everyone pays their fair share of taxes. The IRS ensures this by performing tax audits, collecting taxes owed, and enforcing tax law.
The IRS is responsible for implementing the United States tax code, which is compiled by the US Congress. The IRS also manages a range of tax forms and publications that the public can use to prepare their tax returns. They have a toll-free hotline that taxpayers can call for clarification on their tax questions.
The IRS can penalize taxpayers for inaccurate tax returns, failure to file tax returns, fraud, or failure to pay taxes owed. The IRS can also seize assets, garnish wages or income, and file liens against property. IRS audits can be complicated and lengthy procedures, so it’s essential to understand how the IRS works and what you can expect during an investigation.
The IRS also provides resources to help taxpayers understand the tax code, making tax filing less daunting. These resources include a database of frequently asked questions, articles, tutorials, and webinars.
What Does the IRS Do?
The IRS’s primary duties are enforcing tax laws and collecting taxes. The agency collects taxes through taxes withheld from wages, self-employed income, and estimated taxes. They are also responsible for overseeing tax-exempt organizations such as nonprofit organizations, charities, and churches.
The IRS also regulates the tax industry, including tax professionals such as accountants, tax preparers, and tax lawyers. The agency ensures that these professionals meet ethical and technical standards, and they are up to date with current tax laws.
Taxpayers can also use the IRS’s resources to understand complex tax codes, file their tax returns electronically, and apply for tax refunds.
How Does the IRS Collect Taxes?
The IRS mainly collects income taxes. They collect taxes through a prescribed payroll system, which requires employers to withhold a percentage of employees’ wages for taxes. Taxes due on self-employment income are paid through quarterly estimated tax payments.
If you fail to pay your taxes, the IRS can use several methods to collect them. These include placing a tax lien on your property, seizing your assets, garnishing your wages, or filing a public record of your tax debt in court. If you refuse to comply, the IRS can initiate legal proceedings, which can lead to criminal charges.
The IRS offers payment plans to taxpayers struggling financially to pay their taxes. The payment plan option may permit taxpayers to pay their taxes owed in monthly installments.
Types of IRS audits
IRS audits are examinations of a taxpayer’s tax returns. The IRS may perform various types of tax audits, depending on the scope, complexity, and severity of the suspected errors.
Correspondence Audit
A correspondence audit is the lightest type of IRS audit. It involves the agency sending a letter requesting additional information or clarification on a specific claim or deduction. Correspondence audits are completed through mail.
Office Audit
An in-person audit at an IRS office is called an office audit. During an office audit, a taxpayer is asked to bring their financial and tax records to an IRS office to examine specific parts of their tax return.
Field Audit
A field audit is an in-person audit where an IRS officer comes to the taxpayer’s premises, such as their place of employment or home. Field audits are suitable for taxpayers who have complex tax returns.
Computer System Notices
IRS computer system notices are tax audits that involve the IRS detecting a discrepancy on a tax return through its computer system. If the computer system identifies an error on a taxpayer’s tax return, the IRS will send a notice of the discrepancy, resulting in an audit.
Criminal Investigation
IRS Criminal Investigation (CI) is responsible for investigating taxpayers suspected of breaking tax laws. CI is responsible for investigating all types of criminal violations of the Internal Revenue Code and related financial crimes. CI’s primary role is to ensure that taxpayers avoid tax fraud, theft of identity, and laundering proceeds illegally.
How to Avoid an IRS Audit
Taxpayers can do several things to avoid an IRS audit. These measures include:
1. Keeping accurate and complete financial records.
2. Filing tax returns by the due date.
3. Ensuring all tax forms are filed and documented, such as W-2s, 1099s, and K-1s.
4. Hiring an experienced tax professional to file the tax return.
5. Ensuring that all deductions claimed on a tax return are valid and documented.
Conclusion
This article is meant to provide a broad overview of the IRS, its role in enforcing tax laws, and what you can expect if the IRS audits your tax returns. Understanding how the IRS works is critically important as the failure to comply with tax regulations can have severe consequences, including hefty fines and legal actions.
Taxpayers must file their tax returns and pay taxes timely to avoid penalties and potential tax audits. If you need further information on tax law, the IRS website provides resources to help you file your taxes or answer any tax-related questions you may have. For more complex or unique tax issues, it is recommended to consult a qualified tax professional.
The IRS is a governmental organization that deals with taxing of both individuals as well as businesses. The IRS uses stimulus programs, tax codes, and auctions to help individuals pay their taxes.
IRS Background
The IRS or the Internal Revenue Service is a section of the Department of Treasury. The IRS takes a certain portion of an individual’s pay check to go towards taxes. If too much has been taken, after filing taxes, a person can receive a refund. The Internal Revenue Service can also be owed money if they take too little out of one’s pay check.
Stimulus Information
A stimulus is money given by the government to individuals to help boost the economy. An individual may receive a stimulus from the IRS if they meet the right qualifications. Qualifications can vary and can include different benefits, or a low wage job. Stimulus amounts can vary also based of these qualifications.
Tax Codes
Tax codes are used by an employer to help calculate the proper amount of taxes to take from ones pay check. Tax codes typically consist of numbers and letters and can determine many different things. Â If a person is coded with the wrong tax code money could be owed to them or they may owe money to the IRS.
IRS forms information
IRS forms can be found online at the irs.gov website. All forms can be either printed or viewed electronically. These forms allow tax filers to submit their files through the internet or print them out and mail them into the government after completing them. Â The irs.gov website also features directions on how to properly fill out the many forms.
IRS Auction
An IRS Auction is an auction that is hosted by the IRS. IRS auctions may occur after some sort of property was seized from an individual who failed to pay the money they owed to the IRS. IRS auctions generally are done online. Popular items can range from automobiles to real estate.
IRS refund Schedule
An IRS refund schedule is the schedule that allows people a general guess of when to expect their return. Although there is no set day, or time period, one can assume to receive their refund based on the IRS refund schedule. Preferred payment option and submission date can alter the refund schedule.
