What Does the IRS Do?

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The role of the Internal Revenue Service is to collect taxes and enforce the Internal Revenue Code. The IRS is a branch of the U.S. Department of the Treasury, and it collected more than $2.5 trillion in tax revenue during the fiscal year 2012. The IRS processed more than 237 million tax returns in 2012.

In addition to collecting tax revenue from American taxpayers, businesses and corporations, the IRS also processes income tax returns and issues refunds for overpayment of payroll income tax. The IRS is authorized under section 7801 of the Internal Revenue Code to carry out its duties.

The origin of the IRS dates to the Civil War era, when President Lincoln enacted a tax on income in 1862 in order to offset the cost of the war and created a position for the first commissioner of Internal Revenue. The tax on income was repealed a decade later but revived again in 1894. In 1895, the Supreme Court declared the income tax unconstitutional, and it remained defunct until the passage of the 16th Amendment to the Constitution in 1913. Notably, the top income tax bracket topped out at 77 percent in 1918 when the tax was used to help pay for World War I.