IRS — Internal Revenue Service (USA)

The Internal Revenue Service (IRS) is the US federal government's tax authority, responsible for collecting federal taxes and enforcing US tax law (Internal Revenue Code). In the international context, the IRS is the central authority for FATCA reporting and the exchange of tax information with foreign jurisdictions.

• Department: US Department of the Treasury
• Leadership: Commissioner of Internal Revenue, appointed by the US President with Senate confirmation (5-year term)
• Headquarters: Washington, D.C.
• FATCA: Recipient of US account data from abroad, sender of reciprocal data to IGA partners
• CRS/AEOI: The US does not participate in the OECD Common Reporting Standard (CRS) and instead uses FATCA as its own system for international tax data exchange
• Qualified Intermediary: IRS accredits and audits QI agreements with foreign banks
• FBAR enforcement: IRS audits and enforces FBAR reporting obligations (FinCEN Form 114) on behalf of FinCEN

The IRS was founded in 1862 under President Abraham Lincoln to collect income tax to finance the Civil War. The temporary Civil War income tax expired in 1872 (Revenue Act of 1870). A renewed attempt at income tax in 1894 (Wilson-Gorman Tariff Act) was struck down as unconstitutional by the Supreme Court in 1895 (Pollock v. Farmers' Loan & Trust Co.). Only with the ratification of the 16th Amendment (1913) was the federal income tax permanently established constitutionally, and the IRS developed into today's federal tax authority.

In 1998, the IRS Restructuring and Reform Act (RRA 98) led to a fundamental reorganization of the IRS into four operational divisions and significantly strengthened taxpayer rights.

In the 21st century, the IRS became the central interface in global tax information exchange. With FATCA (2010), the US Congress created an instrument enabling the IRS to require foreign financial institutions to report US-taxable accounts. Through bilateral IGA agreements, the IRS exchanges information with over 100 countries.

The IRS is responsible for:

• US federal taxes: Income tax (individual and corporate), estate tax, gift tax, excise taxes
• International tax compliance: FATCA enforcement, transfer pricing, PFIC taxation
• Information exchange: FATCA IGAs with over 100 countries, TIEAs, tax treaty information exchange (the US does not participate in the OECD CRS)
• Withholding tax: US withholding tax on payments to foreigners (Chapters 3 and 4 IRC)
• Enforcement: Audits, penalties, FBAR penalties (on behalf of FinCEN)

Key IRS requirements in the international context:

• FATCA Form 8966: Foreign financial institutions without IGA report US accounts directly to IRS via Form 8966
• W-8 Forms: Foreign persons and institutions must file W-8BEN or W-8BEN-E
• QI Programme: Foreign banks with QI status subject to annual compliance reviews
• Chapter 4 Withholding: 30% withholding tax on US payments to non-compliant institutions
• FATCA Registration: Foreign financial institutions must register in the FATCA Registration System and obtain a GIIN

3 corrections:
- Renaming to IRS was in 1952, exact date January 1 unverified
- IRS rename dated to 1952, correct year is 1953
- Geographic coordinates completely wrong: South Atlantic instead of Washington D.C.
1 update:
- IRA funding of USD 80 billion partially reduced by subsequent legislation
3 clarifications.
6 notes.