Internal Revenue Service Warning: You are not logged in. Your IP address will be publicly visible if you make any edits. If you log in or create an account, your edits will be attributed to your username, along with other benefits.Anti-spam check. Do not fill this in! ==History== {{see also|Taxation history of the United States}} ===American Civil War (1861–65)=== [[File:George S. Boutwell, the first Commissioner of Internal Revenue Service.jpg|thumb|[[George S. Boutwell]] was the first [[Commissioner of Internal Revenue]] under President [[Abraham Lincoln]].]] In July 1862, during the [[American Civil War]], [[President of the United States|President]] [[Abraham Lincoln]] and [[United States Congress|Congress]] passed the [[Revenue Act of 1862]], creating the office of Commissioner of Internal Revenue and enacting a temporary [[income tax]] to pay war expenses. The Revenue Act of 1862 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax was passed in 1862: *The initial rate was 3% on income over $800, which exempted most wage-earners. *In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000. By the end of the war, 10% of [[Union (American Civil War)|Union]] households had paid some form of income tax, and the Union raised 21% of its war revenue through income taxes.<ref>{{cite web |url=http://www.tax.org/Museum/1861-1865.htm |title=1861–1865: The Civil War |publisher=Tax.org |access-date=August 9, 2010 |archive-date=February 16, 2011 |archive-url=https://web.archive.org/web/20110216062329/http://www.tax.org/Museum/1861-1865.htm }}</ref> ===Post Civil War, Reconstruction, and popular tax reform (1866–1913)=== After the Civil War, [[Reconstruction era|Reconstruction]], railroads, and transforming the North and South war machines towards peacetime required public funding. However, in 1872, seven years after the war, lawmakers allowed the temporary Civil War income tax to expire. Income taxes evolved, but in 1894 the [[Supreme Court of the United States|Supreme Court]] declared the Income Tax of 1894 unconstitutional in ''[[Pollock v. Farmers' Loan & Trust Co.]]'', a decision that contradicted ''[[Hylton v. United States]]''.<ref>3 U.S. 171 (1796).</ref> The federal government scrambled to raise money.<ref>{{cite web |url=http://www.tax.org/Museum/1866-1900.htm |title=1866–1900: Reconstruction to the Spanish–American War |publisher=Tax.org |access-date=August 9, 2010 |archive-url=https://web.archive.org/web/20100814151715/http://www.tax.org/museum/1866-1900.htm |archive-date=August 14, 2010 }}</ref> In 1906, with the election of President [[Theodore Roosevelt]], and later his successor [[William Howard Taft]], the United States saw a [[Populism|populist]] movement for tax reform. This movement culminated during then-candidate [[Woodrow Wilson]]'s election of 1912 and in February 1913, the ratification of the [[Sixteenth Amendment to the United States Constitution]]: {{blockquote|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.}} This granted Congress the specific power to impose an income tax without regard to apportionment among the states by population. By February 1913, 36 states had ratified the change to the Constitution. It was further ratified by six more states by March. Of the 48 states at the time, 42 ratified it. Connecticut, Rhode Island, and Utah rejected the amendment; Pennsylvania, Virginia, and Florida did not take up the issue.<ref>{{cite web|url=http://www.usconstitution.net/constamnotes.html |title=Notes on the Amendments – The U.S. Constitution Online |publisher=USConstitution.net |access-date=August 9, 2010}}</ref> ===Post 16th Amendment (1913–present)=== Though the constitutional amendment to allow the federal government to collect income taxes was proposed by [[William Howard Taft|President Taft]] in 1909, the [[Sixteenth Amendment to the United States Constitution|16th Amendment]] was not ratified until 1913, just before the start of the [[World War I|First World War]]. That same year, the first edition of the 1040 form was introduced. A copy of the 1913 form can be viewed online<ref>{{cite web|url=https://www.irs.gov/pub/irs-utl/1913.pdf |title=The first 1040 with instructions |access-date=November 8, 2011|archive-url=https://web.archive.org/web/20230523143545/https://www.irs.gov/pub/irs-utl/1913.pdf | archive-date=May 23, 2023}}</ref><ref>{{cite web |title=A scanned copy of the first 1040 form, from the US Library of Congress Blogs |url=https://blogs.loc.gov/law/files/2017/04/Historic-Form-1040-pg1-2.jpg |url-status=live |archive-url=https://web.archive.org/web/20230518090918/https://blogs.loc.gov/law/2017/04/the-first-form-1040/ |archive-date=May 18, 2023 |website=Library Of Congress}}</ref> and shows that only those with annual incomes of at least $3,000 ({{inflation|USD|3000|1913|fmt=eq|r=-2}}) were instructed to file an income tax return. In the first year after the ratification of the 16th Amendment, no taxes were collected. Instead, taxpayers simply completed the form and the IRS checked the form for accuracy. The IRS's workload jumped by ten-fold, triggering a massive restructuring. Professional tax collectors began to replace a system of "patronage" appointments. The IRS doubled its staff but was still processing 1917 returns in 1919.<ref>{{cite web |url=http://www.tax.org/Museum/1901-1932.htm |title=1901–1932: The Income Tax Arrives |publisher=Tax.org |date=April 14, 1906 |access-date=August 9, 2010 |archive-url=https://web.archive.org/web/20100814150842/http://www.tax.org/museum/1901-1932.htm |archive-date=August 14, 2010 }}</ref> Income tax raised much of the money required to finance the war effort; in 1918 a new Revenue Act established a top tax rate of 77%. [[File:1920 tax forms IRS.jpg|thumb|left|People filing tax forms in 1920]] In 1919 the IRS was tasked with enforcement of laws relating to [[Prohibition in the United States|prohibition of alcohol sales and manufacture]]; this was transferred to the jurisdiction of the Department of Justice in 1930. After repeal in 1933, the IRS resumed collection of taxes on beverage alcohol.<ref name=IRSHL>{{cite web|url=https://www.irs.gov/newsroom/historical-highlights-of-the-irs |title=Historical highlights of the IRS|access-date=October 6, 2017}}</ref> The alcohol, tobacco and firearms activities of the bureau were segregated into the [[Bureau of Alcohol, Tobacco, Firearms and Explosives]] in 1972. A [[Revenue Act of 1942|new tax act was passed in 1942]] as the United States entered the [[World War II|Second World War]]. This act included a special wartime surcharge. The number of American citizens who paid income tax increased from about four million in 1939 to more than forty-two million by 1945.<ref>{{cite book |first=JoAnn A. |last=Grote |title=The Internal Revenue Service |publisher=Infobase Publishing |date=2001 |isbn=0-7910-5989-8 |page=43}}</ref> In 1952, after a series of politically damaging incidents of [[tax evasion]] and bribery among its own employees, the Bureau of Internal Revenue was reorganized under a plan put forward by [[Harry S. Truman|President Truman]], with the approval of Congress. The reorganization decentralized many functions to new district offices which replaced the collector's offices. Civil service directors were appointed to replace the politically appointed collectors of the Bureau of Internal Revenue. Not long after, the bureau was renamed the Internal Revenue Service.<ref>{{citation-attribution|1={{cite web|url= https://www.governmentattic.org/5docs/IRS-HistoricalFactBook_1992.pdf |title=IRS Historical Fact Book: A Chronology. 1646–1992. Department of the Treasury, Internal Revenue Service |website=governmentattic.org}} }}</ref> In 1954 the filing deadline was moved from March 15 to April 15. The [[Tax Reform Act of 1969]] created the [[Alternative minimum tax|Alternative Minimum Tax]]. By 1986, limited electronic filing of tax returns was possible. The [[Internal Revenue Service Restructuring and Reform Act of 1998]] ("RRA 98") changed the organization from geographically oriented to an organization based on four operating divisions.<ref>{{cite web|url=https://www.treasury.gov/tigta/iereports/2010reports/2010IER002fr.html|title=Treasury Reports|website=www.treasury.gov}}</ref> It added "10 deadly sins" that require immediate termination of IRS employees found to have committed certain misconduct.<ref>{{cite web|url=https://www.govexec.com/federal-news/2002/04/irs-10-deadly-sins-to-remain-deadly/11424/|title=IRS' 10 deadly sins to remain deadly|website=Government Executive}}</ref> Enforcement activities declined. The [[IRS Oversight Board]] noted that the decline in enforcement activities has "rais[ed] questions about tax compliance and fairness to the vast majority of citizens who pay all their taxes".<ref>{{cite web |url=http://www.jct.gov/x-33-01.pdf |title=Report of the Joint Committee on Taxation Relating to the Internal Revenue Service as Required by the IRS Reform and Restructuring Act of 1998 (JCX-33-01) |publisher=Joint Committee on Taxation |date=May 4, 2001 |access-date=October 20, 2018 |archive-date=November 13, 2018 |archive-url=https://web.archive.org/web/20181113041739/http://www.jct.gov/x-33-01.pdf }}</ref> In June 2012, the IRS Oversight Board recommended to Treasury a fiscal year 2014 budget of $13.074{{spaces}}billion for the Internal Revenue Service.<ref>{{cite web |url=https://www.treasury.gov/IRSOB/reports/Documents/IRSOB_FY14%20IRS%20Budget_Web061413.pdf |title=FY2014 IRS Budget Recommendation Special Report |publisher=IRS Oversight Board |date=May 2013 |access-date=March 3, 2022}}</ref> On December 20, 2017, Congress passed the [[Tax Cuts and Jobs Act of 2017]]. It was signed into law by President Trump on December 22, 2017. In the three decades since 1991, the IRS had a substantial decrease in the number of employees per million residents, decreasing from 451 (in 1991) to 237 (in 2021).<ref>{{cite web |title=IRS workforce over time |url=https://www.taxpolicycenter.org/fiscal-fact/irs-workforce-over-time |date=July 4, 2022 |website=[[Tax Policy Center]] |access-date=May 29, 2023 |language=en }}</ref> A decrease of {{Percentage | (451-237) | 451 | 1 | % = percent }}. ===Presidential tax returns (1973)=== From the 1950s through the 1970s, the IRS began using technology such as microfilm to keep and organize records. Access to this information proved controversial, when [[Richard Nixon|President Richard Nixon]]'s tax returns were leaked to the public. His tax advisor, Edward L. Morgan, became the fourth law-enforcement official to be charged with a crime during [[Watergate scandal|Watergate]].<ref>{{cite news|url=http://www.time.com/time/magazine/article/0,9171,945108,00.html |archive-url=https://web.archive.org/web/20081222061726/http://www.time.com/time/magazine/article/0,9171,945108,00.html |archive-date=December 22, 2008 |magazine=Time |title=Investigations: Fraud in Nixon's Taxes |date=November 18, 1974 |access-date=May 5, 2010}}</ref> John Requard Jr., accused of leaking the Nixon tax returns, collected delinquent taxes in the slums of Washington. In his words: "We went after people for nickels and dimes, many of them poor and in many cases illiterate people who didn't know how to deal with a government agency." Requard admitted that he saw the returns but denied that he leaked them.<ref>{{cite web |url=http://articles.baltimoresun.com/2003-12-21/business/0312210282_1_nixon-requard-tax-liability/3 |title=How an IRS leak changed history altered history |work=Baltimore Sun |date=December 21, 2003 |access-date=August 9, 2010 |archive-date=July 11, 2012 |archive-url=https://archive.today/20120711214823/http://articles.baltimoresun.com/2003-12-21/business/0312210282_1_nixon-requard-tax-liability/3 }}</ref> Reporter [[Jack White (reporter)|Jack White]] of ''[[The Providence Journal]]'' won the [[Pulitzer Prize]] for reporting about Nixon's tax returns. Nixon, with a salary of $200,000, paid $792.81 in federal income tax in 1970 and $878.03 in 1971, with deductions of $571,000 for donating "vice-presidential papers".<ref>{{cite web |url=http://articles.baltimoresun.com/2003-12-21/business/0312210282_1_nixon-requard-tax-liability |title=How an IRS leak changed historyaltered history |work=[[The Baltimore Sun]] |date=December 21, 2003 |access-date=August 9, 2010 |archive-date=January 11, 2012 |archive-url=https://web.archive.org/web/20120111131640/http://articles.baltimoresun.com/2003-12-21/business/0312210282_1_nixon-requard-tax-liability }}</ref> This was one of the reasons for his famous statement: "Well, I'm not a crook. I've earned everything I've got." So controversial was this leak, that most later US presidents released their tax returns (though sometimes only partially). These returns can be found online at the Tax History Project.<ref>[http://www.taxhistory.org/www/website.nsf/Web/PresidentialTaxReturns/ Tax History Project{{snd}}Presidential Tax Returns]. Taxhistory.org. Retrieved on August 10, 2013.</ref> ===Computerization (1959–present)=== By the end of the Second World War, the IRS was handling sixty million tax returns each year, using a combination of mechanical desk calculators, [[accounting machine]]s, and pencil and paper forms. In 1948 [[Punched card|punch card]] equipment was used. The first trial of a computer system for income tax processing was in 1955, when an [[IBM 650]] installed at [[Kansas City metropolitan area|Kansas City]] processed 1.1 million returns. The IRS was authorized to proceed with computerization in 1959 and purchased [[IBM 1401]] and [[IBM 7070]] systems for local and regional data processing centers. The [[Social Security number]] was used for taxpayer identification starting in 1965. By 1967, all returns were processed by computer and punched card data entry was phased out.<ref name=PC03>Paul Cenuzi, ''A History of Modern Computing'', MIT Press, 2003. {{ISBN|0-262-53203-4}}. pp. 119–122.</ref> Information processing in the IRS systems of the late 1960s was in batch mode; microfilm records were updated weekly and distributed to regional centers for handling tax inquiries. A project to implement an interactive, realtime system, the "Tax Administration System", was launched, that would provide thousands of local interactive terminals at IRS offices. However, the [[Government Accountability Office|General Accounting Office]] prepared a report critical of the lack of protection of privacy in TAS, and the project was abandoned in 1978.<ref name=PC03 /> In 1995, the IRS began to use the public Internet for electronic filing. Since the introduction of [[IRS e-file|e-filing]], self-paced online tax services have flourished, augmenting the work of tax accountants, who were sometimes replaced. By 2002, more than a third of all tax returns were filed electronically. This led to a decline in the number of paper returns being processed each year.<ref>{{cite web |title=Another Record-Breaking Number of Taxpayers Choose to Electronically File |url=https://www.irs.gov/pub/irs-news/ir-07-185.pdf |publisher=United States Internal Revenue Service |access-date=15 October 2022 |date=Nov 7, 2007}}</ref> As a result, the IRS implemented a consolidation plan for its paper tax return processing centers, closing five of its ten processing centers between 2003 and 2011.<ref>{{cite web |title=Further Consolidation of Processing Centers Is Underway in Response to Continued Increases in Electronic Filing |url=https://www.treasury.gov/tigta/auditreports/2018reports/201840038fr.pdf |publisher=United States Internal Revenue Service |access-date=15 October 2022 |date=31 May 2018 |archive-date=15 October 2022 |archive-url=https://web.archive.org/web/20221015032238/https://www.treasury.gov/tigta/auditreports/2018reports/201840038fr.pdf |website=Department of the Treasury }}</ref> The agency closed two more centers - one in 2019 and another in 2021 - as e-file use continued to expand.<ref>{{cite web |title=A Strategy Is Needed to Address Hiring Shortages As Efforts Continue to Close Tax Processing Centers |url=https://www.treasury.gov/tigta/auditreports/2020reports/202040019fr.pdf |publisher=United States Treasury Inspector General for Tax Administration |access-date=15 October 2022 |date=11 March 2020 |archive-date=15 October 2022 |archive-url=https://web.archive.org/web/20221015032240/https://www.treasury.gov/tigta/auditreports/2020reports/202040019fr.pdf}}</ref><ref>{{cite web |title=Plans to Close the Austin Tax Processing Center Should Be Halted |url=https://www.treasury.gov/tigta/auditreports/2022reports/202240015fr.pdf |publisher=United States Treasury Inspector General for Tax Administration |access-date=15 October 2022 |date=7 February 2022 |archive-url=https://web.archive.org/web/20221015032239/https://www.treasury.gov/tigta/auditreports/2022reports/202240015fr.pdf |archive-date=15 October 2022 }}</ref> E-filed tax returns accounted for 90% of all returns submitted during the 2021 filing season.<ref name="IRS 2021">{{cite web | title=Filing Season Statistics for Week Ending December 3, 2021 | website=Internal Revenue Service | date=2021-12-03 | url=https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-december-3-2021 | access-date=2022-10-15}}</ref> In 2003, the IRS struck a deal with tax software vendors: The IRS would not develop online filing software and, in return, software vendors would provide free e-filing to most Americans.<ref>{{cite web|url=https://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free |title=Free File: Do Your Federal Taxes for Free |publisher=Irs.gov |date=January 29, 2013 |access-date=February 4, 2013}}</ref> In 2009, 70% of filers qualified for free electronic filing of federal returns.<ref>{{cite news |last=Murray Dixon |first=Teresa |date=February 21, 2010 |title=As e-filing turns 20, IRS trying to win over remaining third of taxpayers from paper returns |url=http://www.cleveland.com/business/index.ssf/2010/02/as_e-filing_turns_20_irs_tryin.html |work=[[The Plain Dealer]] |location=Cleveland |access-date=August 9, 2010}}</ref> According to an inspector general's report, released in November 2013, identity theft in the United States is blamed for $4{{spaces}}billion worth of fraudulent 2012 tax refunds by the IRS. Fraudulent claims were made with the use of stolen taxpayer identification and Social Security numbers, with returns sent to addresses both in the US and internationally. Following the release of the findings, the IRS stated that it resolved most of the identity theft cases of 2013 within 120 days, while the average time to resolve cases from the 2011/2012 tax period was 312 days.<ref>{{cite news|title=IRS refunded $4 billion to identity thieves last year, inspector general's report says|url=https://www.cbsnews.com/8301-201_162-57611384/irs-refunded-$4-billion-to-identity-thieves-last-year-inspector-generals-report-says/|access-date=November 10, 2013|publisher=CBS News|date=November 7, 2013}}</ref><ref name="foxnews.com">{{cite web|url=http://www.foxnews.com/politics/2015/01/15/irs-chief-warns-refund-delays-poor-customer-service-this-tax-year/|title=IRS chief warns of refund delays, poor customer service this tax year|publisher=Fox News|date=January 15, 2015}}</ref> In September 2014, IRS Commissioner [[John Koskinen]] expressed concern over the organization's ability to handle [[Patient Protection and Affordable Care Act|Obamacare]] and administer [[premium tax credit]]s that help people pay for health plans from the health law's insurance exchanges. It will also enforce the law's [[Individual shared responsibility provision|individual mandate]], which requires most Americans to hold health insurance.<ref>{{cite web|last1=Howell|first1=Tom|title=Bipartisan doubts emerge on IRS ability to handle Obamacare |website=[[The Washington Times]]|url=http://www.washingtontimes.com/news/2014/sep/10/irs-cant-escape-lerner-scandals-obamacare-hearing/|access-date=September 11, 2014}}</ref> In January 2015, [[Fox News]] obtained an email which predicted a messy tax season on several fronts. The email was sent by IRS Commissioner Koskinen to workers. Koskinen predicted the IRS would shut down operations for two days later that year which would result in unpaid [[furlough]]s for employees and [[Fan service|service cuts]] for [[taxpayer]]s. Koskinen also said delays to [[IT]] investments of more than $200{{spaces}}million may delay new taxpayer protections against [[Identity theft in the United States|identity theft]].<ref name="foxnews.com" /> Also in January 2015, the editorial board of ''[[The New York Times]]'' called the IRS budget cuts penny-wise-and-pound-foolish, where for every dollar of cuts in the budget, six were lost in tax revenue.<ref>{{cite news |url=https://www.nytimes.com/2015/01/18/opinion/sunday/irs-already-hobbled-likely-to-be-further-damaged.html |title=The Dangerous Erosion of Taxation |author=The Editorial Board |date=January 17, 2015 |work=[[The New York Times]] |access-date=March 6, 2017}}</ref> A 2020 Treasury Department audit found the IRS had improved its [[Identity verification service|identity verification]] system offerings for taxpayers, but was still behind in fully meeting digital identity requirements.<ref name="Treasury-2022">{{cite web |title=While Progress Is Being Made on Digital Identity Requirements, Completion Dates to Achieve Compliance With Identity Proofing Standards Have Not Been Established |url=https://www.treasury.gov/tigta/auditreports/2020reports/202020012fr.pdf |website=www.treasury.gov |publisher=US Treasury Inspector General for Tax Administration |access-date=17 October 2022}}</ref> The following year, the IRS announced a new login and ID verification process for several of its online tools, including general account access, Identity Protection (IP) [[Personal identification number|PIN]] setup, and payment plan applications.<ref name="IRS ID 2021">{{cite web | title=New identity verification process to access certain IRS online tools and services | website=Internal Revenue Service | date=2021-11-17 | url=https://www.irs.gov/newsroom/new-identity-verification-process-to-access-certain-irs-online-tools-and-services | access-date=2022-10-17}}</ref><ref name="SADI 2022">{{cite web | last=Houston | first=Chamille | title=Tax Tip: Verifying your identity to access certain IRS systems | website=Taxpayer Advocate Service | date=2022-01-19 | url=https://www.taxpayeradvocate.irs.gov/news/tas-tax-tip-verifying-your-identity-to-access-certain-irs-systems/ | access-date=2022-10-17}}</ref> As part of the agency's Identity, Credential, and Access Management (ICAM) initiative, the process included the use of third-party [[Facial recognition system|facial recognition technologies]] to confirm taxpayer identities. The facial recognition requirement was dropped in 2022, however, following privacy concerns from government officials and the public.<ref name="IRS-Face-ID-2022">{{cite web | title=IRS announces transition away from use of third-party verification involving facial recognition | website=Internal Revenue Service | date=2022-02-07 | url=https://www.irs.gov/newsroom/irs-announces-transition-away-from-use-of-third-party-verification-involving-facial-recognition | access-date=2022-10-17}}</ref> Alternative ID verification options have since been introduced with the goal of making IRS online tools accessible to more people.<ref>{{cite news |last1=Singletary |first1=Michelle |title=Despite privacy concerns, ID.me nearly doubled the number of people able to create an IRS account |url=https://www.washingtonpost.com/business/2022/02/25/irs-idme-account-success-rate/ |access-date=17 October 2022 |newspaper=The Washington Post |date=25 February 2022}}</ref> ===History of the IRS name=== [[File:Department of Treasury retirement reception of Beth Tucker 01.JPG|thumb|right|IRS and Department of the Treasury seal on lectern]] As early as the year 1918, the Bureau of Internal Revenue began using the name "Internal Revenue Service" on at least one tax form.<ref>Form 1040, Individual Income Tax Return for year 1918, as republished in historical documents section of Publication 1796 (Rev. February 2007), Internal Revenue Service, [[U.S. Department of the Treasury]]. Form 1040s for years 1918, 1919, and 1920 bore the name "Internal Revenue Service". For the 1921 tax year, the name was dropped, then was re-added for the 1929 tax year.</ref> In 1953, the name change to the "Internal Revenue Service" was formalized in Treasury Decision 6038.<ref>1953-2 C.B. 657 (August 21, 1953), filed with Division of the Federal Register on August 26, 1967, 18 Fed. Reg. 5120. Compare Treas. Department Order 150-29 (July 9, 1953).</ref> Summary: Please note that all contributions to Christianpedia may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here. You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see Christianpedia:Copyrights for details). Do not submit copyrighted work without permission! 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