The Internal Revenue Service (IRS) is estimated to be the largest federal bureaucracy. It employs about 115,000 people [source: Daily]. Although it might seem daunting to understand such a large organization, let’s break down the structure of the IRS.

The IRS falls under the Department of the Treasury. The only two appointed positions in the IRS are the Commissioner of Internal Revenue and the Chief Counsel. The president appoints and the Senate confirms candidates for both of these roles. The Commissioner is the head of the IRS and serves a renewable five-year term. The Chief Counsel advises the IRS on legal matters, including interpreting and enforcing tax laws. A nine-member IRS Oversight Board ensures that the agency is treating taxpayers fairly and reviews IRS plans [source: CCH Incorporated].

Although its national headquarters is in Washington, D.C., much of the collections and auditing of individuals and corporations happens in regional offices [source: Daily]. The nine main regional offices or campuses are located around the country — in Andover, Ma.; Atlanta, Ga., Austin, Texas; Cincinnati, Ohio; Fresno, Calif.; Kansas City, Kan.; Memphis, Tenn.; Ogden, Utah; and Philadelphia, Pa. [source: IRS]. These campuses support the Wage and Investment Operating Division — which we’ll learn more about — by processing tax return forms [source: CCH Incorporated].

Since its reorganization in 2000, the IRS’s responsibilities have been divided into four Main Operating Divisions — rather than by geographic region as they were previously — to promote efficiency. These divisions are:

Wage and Investment: Located in Atlanta, Ga., this is the division most taxpayers — about 88 million filers — deal with [source: Smith]. It handles the 1040 forms that people hand over in April.
Small Business/Self-employed: An office in the D.C. area that addresses self-employed people and small businesses with $10 million or less in assets.
Large and Midsize Business: This division, in central New Jersey, deals with business whose assets total more that $10 million.
Tax-exempt and Government Entities: This office in the D.C. area works with a variety of organizations like universities, state governments and small nonprofit corporations.

The four main divisions of the IRS handle things when all goes relatively smoothly. But, as you may know, this doesn’t always happen. Because the tax code is so complex, confusion and disputes between taxpayers and the IRS happen all the time. For this reason, the IRS also manages the IRS Appeals Office, which attempts to provide an impartial resolution to tax disputes without having to go to court. In addition, the National Taxpayer Advocate Office works within the agency and assists taxpayers in IRS problems.

­And then there’s the Criminal Investigation (CI) unit, which investigates violations of the tax code. It has also become involved in crimes seemingly unrelated to taxes because people must pay taxes on income, even when that income is illegally obtained. Although sly criminals might elude elite detectives, they find it more difficult to hide their riches. Since the IRS is the only agency authorized to investigate crimes related to Internal Revenue Code, investigators from other branches of government can turn to the IRS’s CI unit to obtain hard evidence for a conviction, even if it’s just a conviction of dodging taxes [source: IRS].

Average cases don’t call for the CI unit. So let’s find out how the IRS usually enforces the tax code.

The Organization of the IRS