Internal Revenue Service

Internal Revenue Service

Agency overview
Formed	July 1, 1862; 162 years ago (1862-07-01)[1] (as Office of Commissioner of Internal Revenue)
Type	Revenue service
Jurisdiction	Federal government of the United States
Headquarters	Internal Revenue Service Building 1111 Constitution Ave., NW Washington, D.C. 20224 United States[2]
Employees	93,654 (2022)[3] (79,070 FTE) (2022)[4]
Annual budget	$14.3 billion (2022)[4]
Agency executives	Daniel Werfel, Commissioner Douglas O'Donnell, Deputy Commissioner
Parent agency	Department of the Treasury
Website	www.irs.gov

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The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax law. It is an agency of the Department of the Treasury and led by the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States. The duties of the IRS include providing tax assistance to taxpayers; pursuing and resolving instances of erroneous or fraudulent tax filings; and overseeing various benefits programs, including the Affordable Care Act.^[5]

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 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 duties and tariffs) or the Federal Reserve (purchasing U.S. treasuries).^[6] The IRS faces periodic controversy and opposition over its methods, constitutionality, and the 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 In recent years, the agency has struggled with budget cuts, under-staffed workforce, outdated technology and reduced morale, all of which collectively result in the inappropriate enforcement of tax laws against high earners and large corporations, reduced tax collection, rising deficits, lower spending on important priorities, or further tax increases on compliant taxpayers to compensate for lost revenue.^[7][8] Research shows that IRS audits raise revenue, both through the initial audit and indirectly by deterring future tax cheating.^[9] 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."^[9]

As of 2018,^[update] it saw a 15 percent reduction in its workforce, including a decline of more than 25 percent of its enforcement staff.^[10] Nevertheless, during the 2023 fiscal year, the agency processed more than 271.4 million tax returns including more than 163.1 million individual income tax returns.^[11] For FY 2023, the IRS collected approximately $4.7 trillion, which is approximately 96 percent of the operational funding for the federal government; funding widely throughout to different aspects of American society, from education and healthcare to national defense and infrastructure.^[11]