Federal, state and local governments charge different types of income taxes to raise money to maintain and improve their daily operations. These taxes, in most cases, affect the income earned by corporations and individuals. The IRS (Internal Revenue Service) collects these taxes every year. In America, many people consider them as the most aggressive “debt collectors”. Any outstanding taxes on you are debts that you must repay; these debts are not dischargeable even in bankruptcy. In order to ensure that all individuals pay taxes in time, governments have a system, as per which, employers pay salaries and wages to their employees and workers after deducting (which is mandatory deduction) a certain amount of money on the basis of the income level. The total money thus collected is used to pay taxes at the end of the year. If you are eligible to save some taxes by using certain deductions, the IRS returns that much money through tax refund, which is again a time consuming process.