What the IRS Is and What It Does

The IRS is the federal agency that collects income taxes and enforces tax law

The Internal Revenue Service (IRS) is a bureau of the U.S. Department of the Treasury. Its job is to collect federal income taxes from individuals and businesses, and to enforce the tax code — the rules about what you owe and when you owe it. When you file a tax return, you are sending information to the IRS. When the IRS sends you a letter about your taxes, it is communicating as the agency responsible for your account.

The IRS does not set tax rates or write tax law. Congress does that. The IRS interprets the law Congress passes and administers the system that collects the money. If you disagree with how much tax you owe, you are disagreeing with the IRS's reading of the law — and you have the right to challenge it, though the process is formal and can take time.

Key Takeaways

• The IRS is a federal agency under the Treasury Department that collects income taxes and enforces tax rules for individuals and businesses.
• The IRS processes tax returns, issues refunds, sends notices about unpaid taxes or discrepancies, and investigates tax fraud.
• You can contact the IRS by phone, mail, or through your online account at IRS.gov, though phone wait times are often long.
• If you owe taxes you cannot pay, the IRS offers payment plans and hardship programs, though you must contact them to set these up.
• The IRS has the authority to place liens on property, garnish wages, and seize assets if taxes go unpaid for years, but these actions follow formal notice and opportunity to respond.

What the IRS actually does day to day

The IRS receives and processes millions of tax returns each year. It matches the information on your return — your income, deductions, credits — against what employers, banks, and other institutions report about you. If something does not match, the IRS may send you a notice asking for clarification or proposing a change to what you owe.

The IRS also issues refunds when you have overpaid taxes during the year. It administers tax credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit. It investigates cases where it suspects someone has not reported income or has claimed false deductions. And it manages payment plans for people who owe taxes but cannot pay in full.

The IRS maintains records on every taxpayer and every return filed. These records are what the agency uses to track whether you have filed, what you reported, and whether what you reported matches what third parties reported about you.

How the IRS contacts you

The IRS communicates by mail, not by phone or email. If the IRS needs to reach you, it will send a letter to the address on file with your return. The letter will explain what the IRS found, what it is asking you to do, and how long you have to respond. These letters are called notices.

Common notices include a notice that your return was selected for examination (audit), a notice proposing a change to your tax bill, or a notice that you owe back taxes. Each notice includes a important date for your response and instructions for how to respond — usually by mail, though some allow you to respond online through IRS.gov.

Be cautious of unsolicited calls or emails claiming to be from the IRS. The IRS does not initiate contact by phone or email. If you receive a call or email claiming to be from the IRS, do not provide personal information. You can report it to the IRS at phishing@irs.gov.

How to reach the IRS yourself

You can contact the IRS by phone, mail, or through your account on IRS.gov. The main IRS phone line is 1-800-829-1040. Wait times are often long, especially during tax season (January through April). If you call, have your Social Security number, filing status, and the tax year in question ready.

You can also mail questions or documents to the IRS address listed on any notice you received, or to the address for your region, which is available on IRS.gov. Mail is slower — responses can take weeks or months — but it creates a paper record of what you sent and when.

If you have an IRS.gov account, you can view your tax account online, see notices the IRS has sent you, and in some cases respond to them without calling or mailing. To create an account, go to IRS.gov and select "View your tax account."

What happens if you owe taxes and cannot pay

If you owe taxes, the IRS will send you a bill. You have the right to pay in full, or to request a payment plan. A payment plan (also called an installment agreement) lets you pay what you owe in monthly installments instead of a lump sum. You can request a plan by phone, mail, or online through IRS.gov.

If you are in financial hardship and cannot pay even in installments, you can request Currently Not Collectible (CNC) status. This temporarily pauses collection action while you work to improve your financial situation. Interest and penalties continue to accrue, but the IRS stops sending notices and taking enforcement action. CNC status is not permanent — the IRS will review your case periodically.

If you do not respond to notices or set up a plan, the IRS can take enforcement action. This includes placing a tax lien on your property (a legal claim against your assets), garnishing your wages, or seizing bank accounts or other property. These actions are serious and can affect your credit and ability to borrow, but they do not happen when ready — the IRS must send notices and give you time to respond first.

The difference between the IRS and a tax preparer or accountant

The IRS is a government agency. A tax preparer or accountant is a private professional you hire to help you file your return or understand your tax situation. The IRS does not recommend specific preparers, though it does maintain a directory of tax professionals who have passed a test and are authorized to represent you before the IRS. These professionals are called Enrolled Agents, Certified Public Accountants (CPAs), or tax attorneys.

If you are in a dispute with the IRS or facing collection action, hiring a professional can help. They can communicate with the IRS on your behalf, represent you in appeals, and help you understand your options. However, a professional cannot change what you actually owe — only the IRS (or a court) can do that.

Frequently Asked Questions

Can the IRS call me on the phone?

No. The IRS initiates contact only by mail. If someone calls claiming to be from the IRS and threatening arrest or when ready payment, it is a scam. Hang up and report it to the IRS at phishing@irs.gov or to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.

What does it mean if I get a notice from the IRS?

A notice means the IRS has found something on your return that needs attention — a discrepancy with what an employer or bank reported, a missing signature, or a proposed change to what you owe. Read the notice carefully, follow the instructions, and respond by the important date. If you disagree, the notice will explain how to appeal.

How long does the IRS have to audit my return?

Generally, the IRS has three years from the date you file to examine your return. If the IRS suspects substantial underreporting of income, it may have six years. If you did not file a return, there is no time limit. If the IRS sends you a notice, you will have time to respond — usually 30 days, though this varies.

What if I cannot find a notice the IRS sent me?

You can view notices and your tax account online at IRS.gov if you have created an account. You can also call the IRS at 1-800-829-1040 and ask them to mail a copy. Keep all IRS notices — they contain important important date and instructions for responding.

Does the IRS charge interest on unpaid taxes?

Yes. The IRS charges interest on any unpaid tax balance. The interest rate changes quarterly and is set by law. The IRS also charges penalties for filing late, paying late, or underpaying estimated taxes. Interest and penalties are added to what you owe, so the longer you wait to pay or set up a plan, the more you will owe.