All About the IRS

The Internal Revenue Service

The Internal Revenue Service (also known as the IRS) is a division of the United States Department of Treasury. The mission of the IRS is to “provide America’s tax payers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”

History of the IRS

During President Abraham Lincoln’s administration, congress created the office of the Commissioner of Internal Revenue and approved a temporary, emergency war-time tax. The Revenue Act of 1861 was signed into law by the first Republican President Abraham Lincoln and imposed a flat 3% tax on all annual income above $800.00. The Revenue Act of 1862 repealed the Act from 1861 and changed the flat rate tax to a progressive tax of 3-5% on all income above $600.00. After the war, the Revenue Act of 1862 was terminated and the Revenue Act of 1864 was signed into law on June 30. This Act increased tax rates, created a third tax bracket and implemented a stamp tax on matches and photographs. No longer at war congress allowed the Revenue Act of 1864 to expire and die quietly in 1873. In 1894 Congress passed the Wilson-Gorman Tariff Act of 1894 which revived the income tax but a 5-4 ruling by the U.S. Supreme Court declared it unconstitutional. On February 3, 1913, 36 states ratified the 16th Amendment which gave Congress the authority to reinstate the income tax.

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” ~16th Amendment of the Constitution of the United States.

During the 1950s, the agency was reorganized and the name was changed from the Bureau of Internal Revenue to the Internal Revenue Service.

Filing Deadlines

Each year April 15th is the filing deadline for personal income taxes (March 15th for business taxes).  However, this deadline can be extended by one or two days by the IRS.  If April 15th falls on a holiday or a Sunday, then the filing deadline is extended to the 16th.

The deadline for filing a personal income tax was not always April 15th. In 1913 Congress declared March 1st as the filing deadline. In 1918, Congress moved the filing deadline to March 15th until it changed again in 1954, when the date was moved to April 15th.

Ability to Pay

In the United States, the basic principal for income tax is people should be taxed according to their “ability to pay”. The “ability to pay” varies between people with identical income. Taxpayers with high medical bills, mortgage interests, and other allowable expenses can deduct these amounts as “itemized deductions” to reduce their taxable income. By lowering the taxable income this reduces the burden of paying taxes for some families.

Tax Types

The Internal Revenue Service collects taxes on annual income for personal, business, estate, trusts, employment, gift and excise taxes.

Tax Forms

The Internal Revenue Service provides free tax forms and publications on a wide variety of topics.  Tax forms and publications can be found at www.irs.gov/forms-instructions. Tax forms can also be requested by calling 1-800-Tax-Form (1800-829-3676).  Many libraries and post offices also offer free tax forms during the tax filing season.

Tax Revenues

In 2016, the federal government collected a total of 3.25 trillion dollars from 230.4 million tax returns of which 1.8 trillion dollars came from personal income taxes.

Information

Several resources are provided by the IRS for obtaining help for forms, publications and questions. Tax questions can be answered by dialing 1-800-829-1040. Forms and publications can be obtained by dialing 1-800-829-3676 or by visiting www.irs.gov.