What does IRS stand for?


Quick Answer

IRS stands for "Internal Revenue Service." In the United States, the IRS is the federal agency that collects income taxes. "Revenue" in this instance refers to the income the government collects from taxes.

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Full Answer

"Internal" indicates that the taxes are for income within the United States, as opposed to tax revenue from external sources, such as tariffs and customs duties. Income taxes can be levied against individuals and businesses alike, and apply to both earned and unearned income. Earned income comes from salaries, tips, wages and commissions, while unearned income comes from interest and dividends. The first federal income tax was started in 1862, to help cover the costs of the Civil War.

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