9 Astonishing but True Facts about the IRS

When tax time rolls around each year, and you start to organize your paperwork to file your taxes, you might think about the task and the IRS with a vague sense of dread. If so, you are not alone. A Gallup poll confirmed that Americans rated the federal agency their least favorite. That should come as little surprise to most people even glancingly familiar with U.S. tax politics. (Republican Presidential nominee, Ted Cruz, has even gone as far as pledging to dissolve the IRS if he gets into office.)

Even so, the following nine astonishing but true facts might help you see the IRS in a more nuanced light.

  1. IRS history – President Lincoln first established the IRS in 1862 with a 3 percent tax rate for people who earned between $600 and $10,000. The tax, which helped pay for the Civil War, was repealed a decade later. Our current income tax system was established in 1913 with a tax rate of 1 percent for anyone earning more than $3,000 annually. At the time, only 1 out of 271 citizens paid taxes. Instructions for 1040 tax forms were three pages long in 1914; they are now 101 pages long.
  2. Presidents and the IRS – Several U.S. Presidents, including Franklin Roosevelt, John F. Kennedy and Richard Nixon, used the IRS for their purposes to harass groups who opposed them. After President Nixon’s impeachment, Congress passed laws to reduce the political connections between the IRS and the president.
  3. Collection rate – The IRS collected more than $3.1 trillion in revenue in 2014, or more than 30 times what it collected in 1960.
  4. Tax code length – The U.S. tax code is about the length of 58 novels – 3.7 million words in total.
  5. Tax-exempt organizations – The IRS recognizes almost 1.5 million tax-exempt organizations nationally.
  6. Avoiding tax errors – More than 80 percent of individuals e-filed in 2012. Your odds of filing a correct tax form increase by 41 times if you e-file as opposed to filing electronically, which also means that e-filing greatly reduces your risk of an audit.
  7. Number of processed returns – In 2012, the IRS processed more than 237 million returns, including 146 million individual returns.
  8. Failure to collect – The IRS has not collected about $450 billion or 20 percent of the taxes that people owe. Enforcement narrows this gap considerably.
  9. Costs of collection – It cost the IRS 38 cents to collect $100 in 2014.

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Contact Our Tax Firm for Help

You might easily be one of the 15 percent of Americans who owes back taxes. If you need professional tax help working with the IRS, call us at 720-398-6088.