Internal Revenue Service - IRS

  

Categories: Tax

IRS might be the three most hated letters in the alphabet.

Well, maybe after DMV, PMS, and, uh...STD.

The IRS is the Internal Revenue Service. They’re internal, i.e. inside the government.They’re in charge of collecting revenue, a.k.a. they take money from your pocket in the form of taxes and deliver it to Uncle Sam…and they, uh, service you. And it doesn’t feel good.

So yeah, these are the guys from the U.S. Treasury Department who check to make sure you filled out your income tax forms correctly, and submitted the proper amount. And if you screwed up in any way, they will let you know about it. In the form of angry letters, phone calls, knocks on your front door, rocks through your back window. Whatever it takes to get you to pay up.

Or they can do you even worse and audit you. With an audit, the IRS will request extensive and very specific information and records from you, forcing you to spend hours upon hours at your Public Storage unit, digging through boxes you hoped and prayed you’d never see again.

After the third solid week of having your financial history poked and prodded like it’s getting a prostate exam, you, uh…might actually be ready and willing to trade it in for one of those STDs.

Related or Semi-related Video

Finance: What is a tax haven?1 Views

00:00

Finance allah shmoop What is a tax haven Well it's

00:07

this kindly loving wonderful place just past the gates of

00:10

st peter you know maybe that's attacks heaven If you

00:13

tilt your telescope at just the right angle you'll see

00:16

the cayman islands of the bahamas You might see somalia

00:20

although it always seems to be storming therein And lately

00:23

you'll see ireland Yeah another tax haven Well how on

00:26

earth are all these countries linked Well they all offer

00:30

special tax incentives for corporations doing profitable business there such

00:35

that those corporations more or less pay little tax if

00:39

any Why was this even a thing Well in america

00:42

at least before trump became president there was a severe

00:45

hit against corporations who had divisions outside of the united

00:49

states selling printers or search links or purple leather handbags

00:53

for nine hundred ninety nine dollars each such that those

00:56

corporations were taxed once by the country in which they

01:00

did business Think france that was ah high tax rate

01:03

And then if those companies wanted to bring their cash

01:05

back to america to be held in an american bank

01:09

well then those companies were taxed again turning a dollar

01:13

Of profit into something like an thirty or forty cents

01:16

since it made no sense for companies to lose so

01:18

much hard earned profits so quickly to tax dollars Well

01:22

a mini industry in tax havens grew up all around

01:26

those unfair government dealings Well some of the schemes behind

01:29

these processes included something called a dutch sandwich and no

01:34

not the one with the raw hearing No in this

01:38

one the product is deemed as having been shipped by

01:41

an irish company but then booked or accounted for through

01:45

a shell or quays I fake company or holding company

01:49

in the netherlands sometimes remaining profits or then shipped to

01:52

the caymans or bermuda otherwise known as the bermuda black

01:55

hole Which leads the way for us to make a

01:57

joke here But we won't I say we do ever

02:00

strength There are three basic types of tax havens in

02:03

a dutch sandwich Primary tax havens Yeah those are the

02:07

ones with the shell corpse Then he have semi tax

02:10

havens where a country will produce goods for sale primarily

02:13

outside of their boundaries and have flexible regulations to encourage

02:17

you No job growth for themselves and third kind is

02:20

a conduit tax haven where income from sales mainly sales

02:24

made elsewhere is collected and then distributed back inside the

02:27

country Well over time the legal structure of tax havens

02:30

has shifted But in the new post obama era which

02:33

actively lowered corporate tax rates and defended american companies rights

02:38

to bring american cash back home to america While the

02:40

need for tax havens feels like it is slowly fading 00:02:43.803 --> [endTime] away But there's still more popular than tax heaven

Up Next

Finance: What is the IRS?
19 Views

Time to learn about the IRS. On the bright side, it'll be less painful than an STD, less emotionally manipulating than PMS, and less time-consuming...

Finance: What are the Types of Income Tax?
65 Views

What are the types of income tax? Federal income tax. State income tax. Real estate tax. Value Added Tax (VAT). Some tax is progressive, some tax i...

Finance: What is a Consumption Tax?
10 Views

What is a Consumption Tax? A consumption tax is one that is charged at the time of purchase for a product or service. Consumption taxes can include...

Find other enlightening terms in Shmoop Finance Genius Bar(f)