The Internal Revenue Service (IRS) and the Department of Revenue are two government agencies that have a lot of similarities, but there are also some key differences. The IRS and the Department of Revenue are two different entities. The IRS is a federal agency in charge of collecting taxes and enforcing tax law, while the Department of Revenue is an agency within each state government that collects taxes on behalf of the IRS. One similarity they share is that they both deal with taxes.
Here are 5 key differences between the IRS and the Department of Revenue:
The IRS has the power to enforce tax law, whereas the Department of Revenue (DOR) is an agency that takes care of collecting taxes on behalf of the IRS. According to Investopedia, “the DOR is responsible for assessing and collecting all state taxes, including individual income, corporate franchise, excise, estate and insurance premium taxes, and much more.”
The Department of Revenue is a state agency, so employees are paid by the state. For example, in 2017 Missouri lawmakers approved a 12 percent raise for Missouri Department of Revenue workers to give them an average salary of about $70,000 at full implementation. But their salaries are paid for by taxpayer dollars. The Internal Revenue Service is a federal agency, so its employees are paid with federal tax dollars.
The Department of Revenue has about 3,400 full-time workers in Missouri (they also have around 2,500 part-time and temporary jobs). The Internal Revenue Service has around 80,000 workers in the United States.
4. Organizational structure
Both agencies are organized similarly with commissioners or directors who set policies and manage their respective employees. But the DOR has one key difference when it comes to its organizational structure. For instance, Missouri’s governor appoints someone to serve as director of the department, and the Commissioner of Internal Revenue is appointed by the President and confirmed by the Senate.
The Department of Revenue is primarily funded through general revenue from tax collection, whereas the IRS uses taxpayer money from collected taxes for its budget. This means that the Department of Revenue is more reliant on tax collection to fund itself and has a little bit more leeway in terms of spending, as opposed to the IRS.
The bottom line
The Internal Revenue Service (IRS) is a federal agency under the Department of Treasury. They are responsible for tax compliance and collection, as well as enforcing IRS policies and regulations. On the other hand, the Department of Revenue (DOR) is also a state government agency that collects taxes from residents and businesses in order to fund programs like education and healthcare.
However, they do not enforce any laws or deal with criminal cases related to taxes – those fall on the shoulders of local law enforcement agencies such as police departments or sheriff’s offices. To be on the safe side on matters regarding taxes, consult with tax return experts.
According to the U.S. government’s official website for federal agencies, “The Internal Revenue Service (IRS) is the nation’s tax collection agency. Since it was created in 1862, the agency has been responsible for collecting taxes to fund the government and also for enforcing tax law.”