Future Business Leaders of America (FBLA) Personal Finance Practice Test

If you owe taxes on your annual tax return, who do you need to pay?

1. The Federal Reserve

2. The IRS

3. The Department of the Treasury

4. Your State Tax Authority

The correct answer is: The IRS

When you owe taxes on your annual tax return, the correct entity to which you must make your payment is the IRS, or Internal Revenue Service. The IRS is the federal agency responsible for administering and enforcing the internal revenue laws of the United States. It handles the collection of federal taxes and is the authority that processes your tax return and determines any owed taxes. While the Department of the Treasury oversees the IRS and manages federal finances, it is not the entity that taxpayers directly interact with regarding tax payments. The Federal Reserve is primarily involved with monetary policy and banking systems, not tax collections. Additionally, your state tax authority would only be relevant if you owed state taxes, not federal ones. Therefore, the IRS is the key agency that records your tax liability and processes payments at the federal level.