The IRS is a bureau of the U.S. Department of the Treasury, not a private company or independent agency

The Internal Revenue Service is a federal agency owned and operated by the U.S. government. It sits inside the Department of the Treasury, which is one of 15 cabinet departments. The Treasury Secretary — a position appointed by the President and confirmed by the Senate — oversees the IRS along with other Treasury bureaus like the Bureau of Engraving and Printing and the Financial Crimes Enforcement Network.

The IRS does not have a CEO, a board of directors, or shareholders. It has a Commissioner of Internal Revenue, who is appointed by the President and confirmed by the Senate. The Commissioner reports to the Treasury Secretary. Below the Commissioner are regional offices, district offices, and service centers spread across the country. These offices employ roughly 75,000 people who process tax returns, conduct audits, and collect taxes owed.

Congress controls the IRS's budget and its legal authority. Every year, Congress votes on how much money the IRS receives to operate. Congress also passes the tax code itself — the rules about what income is taxable, what deductions exist, and what the tax rates are. The IRS enforces the code Congress writes, but does not create it.

Key Takeaways

  • The IRS is a federal agency owned by the U.S. government and housed within the Department of the Treasury.
  • A Commissioner appointed by the President and confirmed by the Senate leads the IRS, not a private executive or board.
  • Congress controls the IRS's budget, staffing levels, and the tax laws the IRS enforces.
  • The IRS is funded by taxpayer money through annual congressional appropriations, not by private investors or fees.

How the IRS fits into the federal government structure

The IRS operates as one of several bureaus under the Treasury Department. The Treasury Secretary is a cabinet-level official who reports directly to the President. The Secretary's job includes managing federal finances, overseeing the nation's banking system, and collecting taxes through the IRS.

Below the Treasury Secretary is the Deputy Secretary, and below that are several Assistant Secretaries who oversee different areas. The IRS Commissioner is one of the senior officials in this chain. The Commissioner manages the day-to-day operations of the agency, sets enforcement priorities, and represents the IRS to Congress and the public.

This structure means the IRS is ultimately accountable to the President and Congress. If Congress is unhappy with how the IRS is run, it can hold hearings, reduce the budget, or pass new laws. The President can replace the Commissioner (though the Commissioner serves a five-year term and cannot be removed without cause).

Congress's role in controlling the IRS

Congress does not run the IRS day-to-day, but it controls the agency's power and resources. Congress writes the Internal Revenue Code — the 4,000-plus pages of tax law that define what is taxable income, what deductions are allowed, and what the tax rates are. When Congress changes the tax code, the IRS must enforce the new rules.

Congress also votes on the IRS's annual budget. In recent years, the IRS budget has been roughly $12 to $15 billion per year, though this varies. A smaller budget means fewer auditors, slower processing of returns, and longer wait times for taxpayers calling the IRS. A larger budget means more staff and faster service. Congress uses the budget process to signal priorities to the IRS.

Additionally, Congress holds oversight hearings where the IRS Commissioner testifies about the agency's performance, enforcement actions, and plans. These hearings are public and are often contentious, especially when Congress members believe the IRS has overstepped or treated taxpayers unfairly.

The IRS Commissioner and senior leadership

The IRS Commissioner is the top official at the agency. The President nominates the Commissioner, and the Senate votes to confirm the appointment. Once confirmed, the Commissioner serves a five-year term. The President can remove the Commissioner only for cause — meaning the Commissioner must have done something seriously wrong, not simply because the President disagrees with policy.

The current Commissioner (as of 2024) is Daniel Werfel, who was confirmed in 2023. Before becoming IRS Commissioner, Werfel worked in budget and management roles in federal agencies. The Commissioner's job includes setting the IRS's strategic direction, managing the budget, and deciding how aggressively to pursue tax enforcement.

Under the Commissioner are several Deputy Commissioners and senior executives who run different divisions: the Wage and Investment Division (which handles individual tax returns), the Business and International Division (which handles business taxes), the Criminal Investigation Division, and others. These leaders are career civil servants or political appointees, depending on the role.

Funding and how the IRS pays for operations

The IRS is funded entirely through the federal budget, which comes from tax revenue. Congress appropriates money to the IRS each year as part of the broader Treasury Department budget. The IRS does not charge fees to file taxes or to process returns — those services are funded by the appropriation.

The IRS does collect fees in limited situations. For example, if you request a transcript of your tax return or ask for a copy of a return you filed years ago, the IRS may charge a small fee. But these fees are minimal and do not fund the agency's operations.

The IRS also does not keep money it collects from taxpayers. When you pay taxes, that money goes into the U.S. Treasury's general fund. Congress then decides how to spend that money on federal programs, defense, interest on the national debt, and other priorities. The IRS's operating budget is separate from the tax revenue it collects.

Private companies and the IRS: what they do and do not own

Private companies do work for the IRS, but they do not own it. The IRS contracts with private firms to provide services like data processing, software development, and facilities management. For example, a private company might process paper tax returns or maintain the IRS's computer systems. But these contractors work under IRS supervision and follow IRS rules.

The IRS also uses private debt collection agencies to pursue certain tax debts, particularly old debts that the IRS has not been able to collect. However, these agencies are hired by the IRS and work on behalf of the government. They do not own the IRS or have a say in how it operates.

Some people mistakenly believe the IRS is owned by the Federal Reserve or by private banks. This is not accurate. The Federal Reserve is a separate entity that manages the nation's money supply and banking system. While the Treasury Department and the Federal Reserve work together on some financial matters, the IRS is not owned or controlled by the Federal Reserve.

Frequently Asked Questions

Is the IRS a private company?

No. The IRS is a federal agency owned and operated by the U.S. government. It is part of the Department of the Treasury and is funded through the federal budget. It has no private shareholders, no CEO, and no board of directors.

Can the President fire the IRS Commissioner?

The President can remove the Commissioner only for cause — meaning the Commissioner must have committed misconduct or violated the law. The President cannot simply fire the Commissioner because of disagreement over policy. The Commissioner serves a five-year term.

Does the IRS keep the money it collects from taxes?

No. All tax revenue collected by the IRS goes into the U.S. Treasury's general fund. Congress then decides how to spend that money on federal programs and services. The IRS's operating budget is separate and is appropriated by Congress each year.

Who decides what the tax laws are?

Congress writes the tax code through legislation. The IRS enforces the code Congress passes but does not create the tax laws. If you disagree with a tax law, you can contact your elected representatives in Congress.

Does a private bank or the Federal Reserve own the IRS?

No. The IRS is owned by the U.S. government, not by any private bank or the Federal Reserve. The Federal Reserve is a separate agency that manages the nation's money supply. While Treasury and the Federal Reserve coordinate on some matters, the IRS is a government agency independent of the Fed.