Internal Revenue Service: Difference between revisions

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 [[File:IRS Sign.JPG|thumb|IRS location sign at Constitution Avenue, Washington, D.C.]]
-The IRS originates from the '''Commissioner of Internal Revenue''', a federal office created in 1862 to assess the nation's first [[income tax]] to fund the [[American Civil War]]. The temporary measure funded over a fifth of the Union's war expenses before being allowed to expire a decade later. In 1913, the [[Sixteenth Amendment to the United States Constitution|Sixteenth Amendment to the U.S. Constitution]] was ratified, authorizing Congress to impose a tax on income and leading to the creation of the '''Bureau of Internal Revenue'''. In 1953, the agency was renamed the Internal Revenue Service, and in subsequent decades underwent numerous reforms and reorganizations, most significantly in the 1990s.
+The IRS originates from the '''Commissioner of Internal Revenue''', a federal office created in 1862 to assess the nation's first [[income tax]] to fund the American Civil War. The temporary measure funded over a fifth of the Union's war expenses before being allowed to expire a decade later. In 1913, the [[Sixteenth Amendment to the United States Constitution|Sixteenth Amendment to the U.S. Constitution]] was ratified, authorizing Congress to impose a tax on income and leading to the creation of the '''Bureau of Internal Revenue'''. In 1953, the agency was renamed the Internal Revenue Service, and in subsequent decades underwent numerous reforms and reorganizations, most significantly in the 1990s.
 Since its establishment, the IRS has been largely responsible for collecting the revenue needed to fund the United States federal government, with the rest being funded either through the [[U.S. Customs and Border Protection]] (collecting [[Duty (tax)|duties]] and [[tariff]]s) or the [[Federal Reserve]] (purchasing [[United States Treasury security|U.S. treasuries]]).<ref>{{Cite web |last1=Faria e Castro |first1=Miguel |last2=Jordan-Wood |first2=Samuel |date=November 21, 2023 |title=The Fed's Remittances to the Treasury: Explaining the 'Deferred Asset' |url=https://www.stlouisfed.org/on-the-economy/2023/nov/fed-remittances-treasury-explaining-deferred-asset |archive-url=https://web.archive.org/web/20240327151852/https://www.stlouisfed.org/on-the-economy/2023/nov/fed-remittances-treasury-explaining-deferred-asset |archive-date=March 27, 2024 |access-date=2024-05-01 |website=www.stlouisfed.org |language=en}}</ref> The IRS faces periodic [[IRS targeting controversy|controversy]] and opposition over its methods, constitutionality, and the [[Taxation as theft|principle of taxation]] generally. In recent years, the agency has struggled with budget cuts, under-staffed workforce, outdated technology and reduced morale, all of which collectively result in the inappropriate enforcement of tax laws against [[Wealth inequality in the United States|high earners]] and large [[corporation]]s, reduced tax collection, rising [[Government budget balance|deficits]], lower [[Government spending|spending]] on important priorities, or further tax increases on compliant [[tax]]payers to compensate for lost [[revenue]].<ref>{{cite web|title=ACTC letter to Congressional-Leadership|url=https://www.actconline.org/wp-content/uploads/2014/05/ACTC-letter-to-Congressional-Leadership.pdf|website=American College Of Tax Counsel |date=July 13, 2016}}</ref><ref>{{Cite web |date=2024-06-24 |title=The Case for a Robust Attack on the Tax Gap |url=https://home.treasury.gov/news/featured-stories/the-case-for-a-robust-attack-on-the-tax-gap |access-date=2024-07-11 |website=U.S. Department of the Treasury |language=en}}</ref> Research shows that IRS audits raise revenue, both through the initial audit and indirectly by deterring future tax cheating.<ref name=":02">{{Cite report |url=http://dx.doi.org/10.3386/w31376 |title=A Welfare Analysis of Tax Audits Across the Income Distribution |last=Boning |first=William |last2=Hendren |first2=Nathaniel |date=2024 |publisher=The Quarterly Journal of Economics |last3=Sprung-Keyser |first3=Ben |last4=Stuart |first4=Ellen}}</ref> According to a 2024 study, "an additional $1 spent auditing taxpayers above the 90th income percentile yields more than $12 in revenue, while audits of below-median income taxpayers yield $5."<ref name=":02" />
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 ==History==
 ===American Civil War (1861–1865)===
-In July 1862, during the [[American Civil War]], [[President of the United States|President]] [[Abraham Lincoln]] and [[United States Congress|Congress]] passed the [[Revenue Act of 1862]], creating the office of Commissioner of Internal Revenue and enacting a temporary [[income tax]] to pay war expenses.
+In July 1862, during the American Civil War, [[President of the United States|President]] [[Abraham Lincoln]] and [[United States Congress|Congress]] passed the [[Revenue Act of 1862]], creating the office of Commissioner of Internal Revenue and enacting a temporary [[income tax]] to pay war expenses.
 The Revenue Act of 1862 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 1862: