Tax Administration and Tax Planning

Tax Administration and Tax Planning

Learning Objective 12.1 The Internal Revenue Service

The Internal Revenue Service (IRS) helps administer the tax laws in the United States. The IRS has the responsibility to determine, assess and collect internal revenue taxes and enforces other provisions of the tax law. The IRS is a division of the U.S. Treasury Department, an administrative branch of the federal government. The IRS is headquartered in Washington, D.C., has seven processing sites and various operational offices throughout the United States. The head of the IRS, the Commissioner of Internal Revenue, is appointed by the President of the United States and must be approved by the Senate.

The IRS Restructuring and Reform Act of 1998 called for a complete reorganization of the IRS. The act required the IRS to reorganize based on taxpayer needs rather than geographical location.

Office | Responsibility |

Large Business and International (LB&I) | Taxpayers with assets of $10 million or more and the International Program |

Small Business/Self-Employed (SB/SE) | Small business taxpayers including individuals who file business forms with their tax returns |

Wage and Investment (W & I) | Taxpayers whose primary income is derived from wages and investments and who do not file business forms with their tax returns |

Tax Exempt & Government Entities (TE/GE) | Tax exempt and government entities |

Criminal Investigation | Law enforcement activities |

Office of Professional Responsibility (OPR) | Regulating enrolled agents, attorneys, and CPAs who practice before the Service |

Whistleblower Office (WO) | Handling information that helps uncover tax cheating and providing appropriate rewards to whistleblowers |

Of these IRS divisions, the most significant to individual and small business taxpayers are the Small Business/Self-Employed (SB/SE) and the Wage and Investment (W & I) offices.

The IRS has the authority to examine a...