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

The Internal Revenue Service (IRS) is a bureau of the U.S. Department of the Treasury. Its main job is to collect federal income taxes from individuals and businesses, and to enforce the tax code — the rules about who owes what and when. The IRS also administers tax credits and refunds. When you file a tax return, the IRS is the agency that receives it, reviews it, and either approves your refund or contacts you if something doesn't match their records.

The IRS has existed since 1862, though it took its current form in 1913 when the federal income tax began. Today it employs about 80,000 people across the country, with regional offices in every state and a headquarters in Washington, D.C. Most of your interaction with the IRS happens by mail or through their website — you rarely call or visit in person, and the IRS does not knock on doors without warning.

Key Takeaways

  • The IRS is a federal agency under the Treasury Department that collects income taxes and enforces tax law for the entire United States.
  • You interact with the IRS when you file a tax return, claim a refund, or receive a notice about your tax account.
  • The IRS does not initiate contact by phone, email, or text — scammers often impersonate the IRS, so verify any contact through the official IRS website or phone number.
  • The IRS has regional offices in every state, but most routine matters are handled by mail or through IRS.gov, not in person.
  • If you owe back taxes or disagree with an IRS decision, you have formal appeal rights and can request a hearing.

How the IRS processes your tax return

When you file a federal tax return — either on paper or electronically — it goes to an IRS processing center in one of several locations across the country. The IRS scans or uploads your return and checks it against records they already have: W-2 forms from your employer, 1099 forms from banks or investment firms, and prior-year returns. If the numbers match and you claim no unusual deductions, the IRS approves your return and issues a refund or confirms you owe nothing.

If something doesn't match, the IRS sends you a notice by mail. This might mean your employer reported different income than you claimed, or you claimed a credit you don't may have access to for. The notice explains what the discrepancy is and gives you a important date to respond — usually 30 days. You can agree with the IRS, disagree and explain why, or request more time. Most notices are resolved by mail without any further action on your part.

What triggers an IRS audit

An audit is a formal review of your tax return. The IRS selects returns for audit using computer algorithms that flag unusual patterns — for example, very high deductions compared to your income, or business expenses that don't match industry norms. Audits are rare: fewer than 1 in 100 individual returns are audited in any given year, and the rate is even lower for people earning under $200,000.

If the IRS audits your return, they send you a notice by mail explaining which items they want to review and what documents to send. Most audits are handled entirely by mail — you don't meet with an IRS agent in person. You send copies of receipts, invoices, or other proof, and the IRS reviews them. If they find an error, they send you a bill or issue a refund. If you disagree with their findings, you have the right to appeal to an independent IRS office.

IRS contact and scam warnings

The IRS initiates contact by mail only. They do not call, email, or text you first. If someone claiming to be from the IRS calls or emails you, it is a scam. Scammers use threats of arrest or when ready payment to pressure people into sending money or sharing personal information. Hang up, do not click links, and do not give any information.

If you need to contact the IRS, use the phone number on your tax return, on a notice you received, or on IRS.gov. The main IRS customer service line is 1-800-829-1040. You can also create an account on IRS.gov to view your account balance, check the status of a refund, or read copies of prior returns. Wait times on the phone are often long, especially during tax season, so the website is usually faster for routine questions.

What happens if you owe back taxes

If you did not file a return for a past year or filed but did not pay what you owed, the IRS will eventually send you a notice. The notice shows how much you owe, plus penalties and interest. Interest accrues daily at a rate set by law — it varies but is typically between 5 and 8 percent per year. Penalties for not filing or not paying are separate and add to the total.

You have options if you cannot pay in full. You can request a payment plan, where the IRS lets you pay in installments over time. You can also request an Offer in Compromise, which is a settlement for less than you owe — but the IRS only accepts these in specific situations, such as when you genuinely cannot pay and have no assets to seize. You must request these options in writing or through IRS.gov; the IRS will not offer them automatically.

IRS appeals and your rights

If the IRS makes a decision you disagree with — whether it is an audit result, a penalty, or a notice of back taxes — you have the right to appeal. The appeal process is separate from the IRS office that made the original decision. You submit a written request explaining why you disagree, along with any new documents or evidence. The appeal office reviews your case and makes a new decision.

You also have the right to representation. You can hire a tax professional — a CPA, enrolled agent, or tax attorney — to handle your case with the IRS. If you cannot afford representation and meet income limits, some nonprofits and law schools offer free tax help through programs like the Volunteer Income Tax information (VITA) program. The IRS publishes a list of free clinics on IRS.gov.

State taxes and the IRS

The IRS handles only federal taxes. If you live in a state with an income tax, that state has its own tax agency — usually called the Department of Revenue or State Tax Commission — that collects state taxes separately. Your federal return and state return are filed to different agencies and are reviewed independently. A problem with your federal return does not automatically affect your state return, though some states do cross-check information.

If you owe both federal and state taxes, you must resolve them with each agency separately. The IRS cannot collect state taxes, and your state cannot collect federal taxes. However, both the IRS and state agencies can place liens on your property or garnish your wages if you owe and do not pay or make arrangements.

Frequently Asked Questions

Can the IRS really take my house or bank account?

Yes, but only after a formal process. The IRS must send you a notice, give you time to respond, and exhaust other collection methods first. They can place a lien on your property (a legal claim that you owe them) or levy your bank account or wages. However, the IRS cannot seize your primary residence without approval from a federal judge, which is rare.

What is the difference between the IRS and a tax preparer?

The IRS is the government agency that collects taxes and enforces tax law. A tax preparer is a private person or company you hire to fill out your return. Tax preparers do not work for the IRS, though they must follow IRS rules. You are responsible for the accuracy of your return even if someone else prepares it.

How long does the IRS keep records of my taxes?

The IRS typically keeps records for at least three years after you file. If you underreported income by 25 percent or more, they can go back six years. If you did not file at all, there is no time limit — they can pursue you indefinitely. You should keep your own copies of returns and supporting documents for at least three to seven years.

What if I disagree with the IRS but cannot afford a lawyer?

You do not need a lawyer — you can represent yourself. You can also contact the Taxpayer Advocate Service, a free IRS office that helps people who are having trouble resolving disputes. Call 1-877-777-4778 or visit taxpayeradvocate.irs.gov. Some nonprofits and law schools also offer free tax help through VITA clinics.

Is the IRS the same as the Treasury Department?

No. The IRS is a bureau within the Treasury Department, which is a cabinet-level agency of the federal government. The Treasury Department handles all federal finances — borrowing money, managing the national debt, printing currency, and collecting taxes. The IRS is the part that specifically collects income taxes and enforces tax law.