Founded in 1872, the IRS was a minor section of the Treasury Department until the income tax law was passed in 1913. By the 1920s, the IRS had 6000 employees housed in temporary wood frame "fire traps". They moved into their permanent home in June, 1930. When the 18th Amendment (Prohibition) was repealed in 1933, the IRS workload increased sharply & the new NE extension was built in 1934.

The IRS Building was to be completed on the site of the Old Post Office building, but those plans were shelved because of public pressure to conserve historic properties. The Old Post Office was saved, the Federal Triangle was adapted to include it, & the IRS Building was never "completed".