Every year about this time we have to mentally prepare ourselves for tax season. For some, a refund is in your future; for others, a chunk of change is doled out to the dreaded IRS. This got me thinking, when did this yearly chore begin, and why?
So I went to IRS.gov and researched a little history about this annual affair. Maybe with these tidbits of information, April 15th won’t be such a stressful event.
A Brief History
The roots of 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 The income tax was repealed 10 years later.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 with a 6 percent surtax on incomes of more than $500,000.
In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.
The IRS Today
The IRS Restructuring and Reform Act of 1998 prompted the most comprehensive reorganization and modernization of IRS in nearly half a century. The IRS reorganized itself to closely resemble the private sector model of organizing around customers with similar needs.
Well, there you have it in a nutshell. Income taxes are still a stress factor in our lives, but to be an upstanding citizen (and not go to jail) we must do our parts to participate in this event. And maybe this was interesting to the history buffs out there.