For the purposes of this document consider the IRS to have 3 operating units which are responsible for assessing and collecting taxes. They are: the EXAMINATION DIVISION, the COLLECTION DIVISION, and the CRIMINAL INVESTIGATION DIVISION (CID).
Essentially the tax system of the United States is a VOLUNTARY system. Most taxpayers understand the reasons for fair taxation and will pay their share of legally owed taxes. Each year, or as required by law, we "voluntarily" fill out the required tax forms and send them to the IRS, along with any money we may owe. At that time it's possible that the EXAMINATION DIVISION will review a tax return for accuracy and if we've paid more tax then we actually owed by law, we should get some money back as a refund. And if it's determined that we owe additional taxes, have no doubt, THEY WILL let you know!
Consider the Collection Division as the INVOLUNTARY part of our tax system. The Collection Division's job is to collect the money from taxpayers who haven't filed or paid their taxes as required by law. This is the Division whose policies and procedures few taxpayers understand, until it's too late. This Division of the IRS has the power, the resources, and the time to collect the owed taxes. And this is where the problems start for most taxpayers who can not pay or who haven't filed their taxes.
As Los Angeles TV Channel 9 stated in a recent report, "The IRS will not leave you alone until you pay up. They know where you live. They will bother, harass, nag and pester you until you pay. They will write, call and visit you until they get their money. They may even pursue your family after you die! And if that's not enough, they can nail you with heavy fines, penalties and interest charges.... In one year you could pay 113% in penalties - plus face jail time! Scary, isn't it?"
If there is evidence that the taxpayer has violated any criminal statues, the CID could step in to investigate a case. If that happens, the taxpayer has exposure to criminal prosecution.