You might be fascinated by the following information about the IRS. Yes…fascinated!
The roots of the Internal Revenue Service (IRS) go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.
In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000, and a 6 percent surtax on incomes of more than $500,000. Back then, Form 1040 was 4 pages including instructions. Imagine that.
In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. (And we thought current rates were bad.) It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Great Depression, when Congress introduced payroll withholding and quarterly tax payments.
In the 50s, the Bureau of Internal Revenue name was changed to the Internal Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate. Finally, the IRS Restructuring and Reform Act of 1998 prompted the most comprehensive reorganization and modernization of the IRS in nearly half a century—to closely resemble the private sector model of organizing around customers with similar needs.
Source: www.irs.gov.
Quick Tip: What to Do If You Get an IRS Notice
First and most important—don’t panic. Then, don’t respond to the IRS. Just call us and send us the notice. We’ll help you figure it out.
Our financial articles are presented by Honeck O’Toole, Maine-based certified public accountants. If you ever have questions about your finances, please email us or call 207-774-0882.