Introduction
The History and Job of the IRS President Abraham Lincoln and Congress created the Internal Revenue Service (IRS) in 1862. President Lincoln and Congress created the Internal Revenue Service (IRS) because they wanted to create a source of revenue from income taxes to pay for the war expenses from the Civil War. Ten years later, the income tax law was revoked, but was eventually revived by congress in 1894. The next year, “the Supreme Court ruled that the income tax was unconstitutional. In 1913, the 16th Amendment was ratified, meaning that Congress had the authority to enact income taxes” (irs.gov, 215). The same year, the 1040 (the first tax form) was created for individuals. Also, “Congress levied a one percent tax on net …show more content…
First, the IRS sets a primary investigation for possible tax evasion and tax fraud claims that are received from family members, friends, and associates. Also, if your tax return statement looks skeptical, the IRS will check your social media to see how the person is living. Once the IRS decides to go ahead with the criminal investigation, they gather the financial documents and affidavits from third parties. The IRS also uses warrants, bank records, and other financial document to detect fraud. Another technique the IRS uses to detect fraud is to look for multiple years of tax evasion and tax fraud. The IRS will conduct a criminal investigation if they find that the taxpayer has “omitted their entire source of income, substantial unexplained their increase of net worth, especially of a period of years, large amounts of personal expenditures claimed as business expenses, keeping two sets of books, and amounts on return different from book” (Schlesser, 2011). The IRS criminal investigations begin as civil examinations. The IRS looks for “red flags” from the omission of income and the use of large personal expenditures claimed as business expenses. The IRS also conduct interviews for their criminal investigation. The improvement of the IRS theft filters and the expansion of its account locks is another way the IRS detects fraud. The IRS filters are used to identify potentially fraudulent tax returns and to prevent them from issuing tax refunds from fraudulent claims. The filters are used to identify the taxpayer’s identity. If the IRS can’t determine the taxpayer’s identity, they will waive the tax return from processing (Mckenney, 2013). “The results of the filters helped identify 325,000 tax returns, which prevented the issuance of about $2.2 billion in fraudulent returns. The improved filters also helped stop $12 billion in fraudulent claims of identity theft in 2013” (Holtfreter, McLeod, and Harrington,
The History and Job of the IRS President Abraham Lincoln and Congress created the Internal Revenue Service (IRS) in 1862. President Lincoln and Congress created the Internal Revenue Service (IRS) because they wanted to create a source of revenue from income taxes to pay for the war expenses from the Civil War. Ten years later, the income tax law was revoked, but was eventually revived by congress in 1894. The next year, “the Supreme Court ruled that the income tax was unconstitutional. In 1913, the 16th Amendment was ratified, meaning that Congress had the authority to enact income taxes” (irs.gov, 215). The same year, the 1040 (the first tax form) was created for individuals. Also, “Congress levied a one percent tax on net …show more content…
First, the IRS sets a primary investigation for possible tax evasion and tax fraud claims that are received from family members, friends, and associates. Also, if your tax return statement looks skeptical, the IRS will check your social media to see how the person is living. Once the IRS decides to go ahead with the criminal investigation, they gather the financial documents and affidavits from third parties. The IRS also uses warrants, bank records, and other financial document to detect fraud. Another technique the IRS uses to detect fraud is to look for multiple years of tax evasion and tax fraud. The IRS will conduct a criminal investigation if they find that the taxpayer has “omitted their entire source of income, substantial unexplained their increase of net worth, especially of a period of years, large amounts of personal expenditures claimed as business expenses, keeping two sets of books, and amounts on return different from book” (Schlesser, 2011). The IRS criminal investigations begin as civil examinations. The IRS looks for “red flags” from the omission of income and the use of large personal expenditures claimed as business expenses. The IRS also conduct interviews for their criminal investigation. The improvement of the IRS theft filters and the expansion of its account locks is another way the IRS detects fraud. The IRS filters are used to identify potentially fraudulent tax returns and to prevent them from issuing tax refunds from fraudulent claims. The filters are used to identify the taxpayer’s identity. If the IRS can’t determine the taxpayer’s identity, they will waive the tax return from processing (Mckenney, 2013). “The results of the filters helped identify 325,000 tax returns, which prevented the issuance of about $2.2 billion in fraudulent returns. The improved filters also helped stop $12 billion in fraudulent claims of identity theft in 2013” (Holtfreter, McLeod, and Harrington,