Internal Revenue Service

Definition

The Internal Revenue Service (IRS) is the U.S. government agency responsible for tax collection and tax law enforcement. It oversees the administration of federal taxes, including income, payroll, and corporate taxes.

5 Must Know Facts For Your Next Test

1. The IRS requires employers to withhold federal income tax from employees' wages.
2. Employers must also withhold Social Security and Medicare taxes, which are reported to the IRS.
3. Form 941 is a quarterly report filed with the IRS summarizing payroll tax liabilities and payments.
4. Failure to properly remit payroll taxes to the IRS can result in penalties and interest charges.
5. The IRS provides guidelines on how to calculate and report payroll taxes accurately.

Related terms

Payroll Taxes: Taxes that employers are required to withhold from employees' wages and pay on behalf of their employees.

Form W-2: A form used by employers to report an employee's annual wages and the amount of taxes withheld from their paycheck.

Social Security Tax: A federal tax that funds Social Security benefits, withheld from employees' wages and matched by employers.