The Internal Revenue Service (IRS) is a government agency of the United States tasked with collecting taxes and enforcing tax laws in the entire country. This agency operates under the wing of the United States Department of Treasury. First established by Abraham Lincoln in 1862, the IRS has the primary responsibility of collecting personal income tax and employment taxes as well. In 2020, it was recorded that nearly 240 million tax returns have processed.
Consequently, in that same year, more than 94% of tax returns have been processed electronically as the pandemic has shifted government transactions including paying taxes to the IRS.
How Does the IRS Work?
The IRS has the significant role of processing the taxation of each American individual, company, and corporate business in the entire country. Individuals and companies alike have the choice to file for an income tax return electronically; as do most of the government transactions are done nowadays. As of October 2021, the IRS has been able to process refunds for over 112 million taxpayers in the entire United States. With the emergence of computer technology and software, the IRS has been able to transact and process income taxes electronically. Although the IRS highly recommends electronic transactions, it does not endorse any electronic platform or software for all of the American taxpayers.
IRS and Auditing
Every year, the IRS audits a selected portion of the income tax returns as part of its mission to enforce tighter tax laws among taxpayers. However, since 2010, the number of audits done by the IRS has significantly dropped every year. there are various reasons why an IRS audit is done, but one of these reasons can be traced back to higher income. Essentially, if you are an entrepreneur and you run your own business, there is a higher chance that you might undergo IRS auditing. Also, if you fail to directly state the amount of your personal income, the IRS may audit your account at a moment’s notice.
Paying Your Taxes to the IRS
One of the ways you can pay your taxes to the IRS as a fresh start initiative is to do an electronic transfer from your bank account or you can also do this using your debit or credit card. Conversely, if you choose not to pay electronically, you have the option to mail a personal check or a money order to the IRS. Just make sure that you fill out the necessary details before sending out the money directly to the IRS.