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Understanding the IRS

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Understanding the IRS

Generally we only think about the IRS during Tax Season, but they work hard year round. Here’s more information about the Internal Revenue Service so you can better understand what they do and why.

History

The IRS was created in 1862 during the Civil War. President Abraham Lincoln, along with Congress, formed the office of Commissioner of Internal Revenue. At the time, the commissioner was charged with collecting a temporary income tax that was enacted to help pay for the increasing war expenses. This was the first time income was taxed in the United States.

Declared Unconstitutional

Many of us don’t like sending our hard-earned cash to Uncle Sam, but we participate in the system knowing that it helps pay for our our government and numerous services we utilize every day. While our views on taxation have evolved after a hundred years, it is not surprising that there was initially resistance. Afterall, we’re talking about the country that dumped tea in Boston Harbor to protest taxation without representation.

In 1894, the Supreme Court heard the case of Pollock v. Farmers’ Loan & Trust Co. and declared that the Income Tax of 1894 was unconstitutional because it didn’t apportion taxes, effectively making income tax function more like a direct tax. However, in 1913, the 16th Amendment was enacted as a sort of work around, exempting income tax from certain rules and making it a more permanent part of our lives.

Since then, we’ve seen taxes become a political football. Politicians have argued for a flat income tax, as well as a more progressive system that taxed the rich more heavily. Some candidates base large chunks of their campaigns on their tax stances (everyone read Bush Sr.’s lips: No New Taxes).

Responsibilities

The IRS is charged with collecting taxes from US citizens and those whose primary income is from a US source. It is their responsibility to publish the tax forms we see every January. The IRS also has the distinct responsibility of pursuing those individuals and organizations that don’t pay their taxes or file fraudulent returns. This role of the Internal Revenue Service is part of what makes it an intimidating organization. Not only do they provide us with confusing literature regarding how to fill out what can feel like endless forms, but they are also responsible for sifting through the paperwork and identifying errors and fraud.

What This Means For You

The IRS has a lot of paper to sift through—and they generate even more. If the IRS finds an issue with a tax return, or if they discover they haven’t received a tax return from a citizen in while, they’ll typically send out a letter. This is where knowing of a good tax law attorney or tax relief law firm can come in handy.
There are many different types of letters that the IRS mails out in their attempts to investigate fraud or collect taxes due. It is important that if you receive one of these missives, you read it carefully. There is often a deadline for response that must be adhered to. If any part of the letter seems confusing, contacting a knowledgeable tax law attorney can help you decipher IRS-speak and set you on the right path.

If you find you require legal help due to missed tax returns, issues with offshore holdings, or a large tax bill, it is important that you seek advice from a tax relief law firm immediately. As previously stated, the IRS loves a good deadline.


The IRS is not a paper-only organization, they do have the ability to take their issues to court in order to collect what is due. The best way to protect yourself is garner a deeper understanding of your case with a reputable tax law attorney who specializes in IRS issues.

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