Key Takeaways
- Congress writes federal tax laws: The IRS administers those laws; it does not independently create the tax code.
- Its role is broader than audits: Return processing, refunds, taxpayer accounts, guidance, payment arrangements, enforcement, and appeals are all part of federal tax administration.
- Taxpayers have formal rights: The Taxpayer Bill of Rights groups core protections into 10 categories.
- Appeals is independent from examination and collection: Many disputes can be reviewed administratively without immediately going to court.
What the IRS Does
The IRS carries out responsibilities assigned to the Treasury Department under the Internal Revenue Code. Its mission combines two functions: helping taxpayers understand and meet their obligations and enforcing the law with integrity and fairness.
Day-to-day work includes processing individual and business tax returns, collecting federal taxes, issuing refunds, maintaining taxpayer records, answering tax-administration questions, and administering many credits and other provisions enacted by Congress.
Enforcement is only one part of the agency. Examination teams review selected returns, collection functions address unpaid assessed taxes, and Criminal Investigation examines potential criminal violations of the tax code and related financial crimes.
Tax Returns, Accounts, and Payments
Most taxpayers interact with the IRS through filing, refunds, notices, and payments rather than through an audit. An IRS Individual Online Account can provide access to balances, payment history, transcripts, certain notices, refund or amended-return status, and other account information.
People who cannot pay a balance in full may have payment options depending on their circumstances. Installment agreements allow qualifying taxpayers to pay over time, while other collection alternatives have their own eligibility rules.
Audits and Examinations
An IRS audit, formally called an examination, is a review used to determine whether information on a tax return is accurate and whether the correct tax was reported. Examinations can occur through correspondence or through other examination procedures depending on the issue.
Being selected for an audit does not by itself mean fraud occurred. Possible outcomes include no change, an agreed adjustment, or a disputed adjustment that may carry appeal rights.
Your Rights When Dealing With the IRS
The Taxpayer Bill of Rights organizes existing legal protections into 10 fundamental categories. Among them are the rights to be informed, receive quality service, pay no more than the correct amount of tax, challenge the IRS’s position, appeal many decisions in an independent forum, retain representation, and expect privacy and confidentiality.
Those rights matter during routine correspondence as well as audits and collection cases. Notices should explain the issue and usually provide instructions, deadlines, and contact information relevant to the next step.
IRS Appeals and Taxpayer Advocate Service
IRS Independent Office of Appeals is separate from the examination and collection functions that make many compliance determinations. Its role is to resolve qualifying tax controversies fairly and impartially without litigation when possible.
TAS is also an independent organization within the IRS. It can assist eligible taxpayers whose IRS problems are causing financial difficulty, have not been resolved through normal channels, or involve a process that is not working as intended.
Criminal Investigation
IRS Criminal Investigation (IRS-CI) investigates potential criminal violations of the Internal Revenue Code and related financial crimes. Criminal tax cases are distinct from ordinary return processing, civil audits, or routine collection activity.
Potential criminal cases focus on conduct that may meet criminal standards, such as deliberate tax evasion, certain fraud schemes, money laundering, or other offenses within IRS-CI jurisdiction.
Frequently Asked Questions (FAQs)
Is the IRS part of the Treasury Department?
Yes. IRS is a bureau of the U.S. Department of the Treasury.
Does the IRS make tax laws?
No. Congress enacts federal tax laws. Administration and enforcement fall to the IRS, which also issues guidance within the authority provided by law.
Can you appeal an IRS decision?
Many examination and collection decisions have administrative appeal procedures, although the available process depends on the type of decision and applicable deadlines.
What is the Taxpayer Advocate Service?
TAS is an independent organization within the IRS that helps eligible taxpayers resolve certain problems and advocates for improvements in tax administration.