We all know that, taxation and the related laws and regulations are administered and overseen by the Internal Revenue Service (IRS). But what exactly is the IRS? What role does it play in one of the most important parts of our financial life – tax refund?
The IRS is the revenue agency of the federal government, founded in 1862. It is a bureau within the Department of the Treasury. And it is in the charge of the Commissioner of Internal Revenue, who is appointed by the president for a five-year term.
The main duties of the IRS include collecting taxes, administering and enforcing the U.S. federal tax laws. The IRS also offers taxpayers assistance in tax payments and traces then resolves cases of erroneous or fraudulent tax filings. Besides, the IRS also participates in various benefits programs. And it is responsible for enforcing portions of health care such as the Patient Protection and Affordable Care Act.
Meanwhile, the IRS offers tax refunds, which is the part that taxpayers overpay compared to the actual tax liability. To get refunds, taxpayers need to first file the tax return document in order to let the IRS assess the ultimate tax liability. If the taxpayer does not submit the document or submits false information, it could lead to criminal prosecution.
The IRS also charges taxpayers penalties when they fails to pay federal, state, or local taxes. Although the IRS is not a court, it can still impose certain penalties under the federal tax laws. But the IRS usually does not impose penalties when cases happen in state or local levels. Because state and local rules vary widely, and they are usually administered by state and local authorities instead of the federal government.