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October 15, 2018 

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CAPITAL GAINS TAX: A tax on the difference between the sales price of a "capital" asset and it's original purchase price. The capital assets subject to this tax include such things real estate, stocks, and bonds. This tax is frequently a source of controversy between the second and third estates. In that the second estate owns and sells a lot of this sort of capital, they don't like to pay taxes on capital gains. However, because the third estate doesn't have much capital it seems like a pretty good thing to tax. Those who oppose the capital gains tax argue that it takes away funds that would be used for further capital investment, which thus inhibits economic growth. Those who favor it argue that helps equalize unfairly unequal income and wealth distributions.

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INTERNAL REVENUE SERVICE:

A branch of the Department of Treasury that is responsible for collecting federal income taxes and administering the Internal Revenue Code. The Internal Revenue Service (IRS) is the office of the U.S. government that collects the tax revenue needed to purchase goods, pay administrative expenses, and finance assorted government functions. The IRS was established during the Civil War in 1862, but underwent a major overhaul in 1913 when the 16th amendment to the U.S. Constitution gave it the power to collect income taxes.
The Internal Revenue Service (IRS) is the branch of government that administers the Internal Revenue Code. This code is a collection of U.S. laws on income, estate and gift, employment and excise taxes, plus administrative and procedural provisions. Basically, the Internal Revenue Code contains the regulations and procedures through which the government collects taxes to get the revenue needed to finance public goods and pay administrative expenses.

A Bit of History

  • The origins of the IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the Commissioner of Internal Revenue and enacted an income tax to pay war expenses.

  • The states ratified the 16th Amendment in 1913, which gave Congress the authority to enact an income tax. The standard Form 1040 used to report income first appeared that year.

  • The agency went through a major reorganization in the 1950s. The existing name, Bureau of Internal Revenue, was changed at that time to the Internal Revenue Service to emphasize service to taxpayers.

  • The most comprehensive reorganization and modernization of IRS in nearly half a century was prompted by the Restructuring and Reform Act of 1998

Four Major Divisions

The Restructuring and Reform Act of 1998 resulted in the IRS reorganizing itself into four major operating divisions, which correspond to different types of taxpayers:

  • Wage and Investment: This division serves several million taxpayers each year who file individual and joint tax returns. It provides educational material and assistance to taxpayers in understanding and satisfying their tax responsibilities.

  • Small Business and Self-Employed: This division serves millions of small businesses and self-employed taxpayers. It also provides educational services and informs small businesses and self-employed taxpayers of their tax obligations helping them understand and comply with applicable laws.

  • Large and Mid-Size Business: This division serves corporations, subchapter S corporations, and partnerships with assets greater than $10 million. This division assists large and mid-size business in dealing with complicated issues involving tax law and accounting principles.

  • Tax-Exempt and Government Entities: This division serves employee benefit plans, tax-exempt organizations, such as charities and social welfare groups, and governmental entities.

Other offices of the IRS include the Appeals, Communications and Liaison and Criminal Investigation offices. The Office of Chief Counsel provides legal services to the agency.

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Recommended Citation:

INTERNAL REVENUE SERVICE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: October 15, 2018].


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