does the fed collect taxes 
no the fed is responsible only for monetary policy and banking system oversight federal taxes are approved and collected exclusively by congress via the internal revenue service irs a federal agency which is an instance of fiscal policy 22 state and local taxes are collected by individual states or municipalities the bottom linethe federal reserve system is the central banking system of the united states the fed uses the system and the tools it has to set interest rates and regulate the money supply to accomplish its mandate of price stability and maximum employment 