Brief History of IRS
Origin
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 The income tax was repealed 10 years later.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.
16th Amendment
In 1913, Wyoming ratified the 16thAmendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16thAmendment 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.
1913 Form 1040(PDF 126KB, 4 pages, including instructions)
A New Name
In the 50s, the agency was reorganized to replace a patronage system with career, professional employees. 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.
Today’s IRS Organization
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.
The IRS Mission
Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce thelaw with integrity and fairness to all.
This mission statement describes our role and the public’s expectation about how we should perform that role.
In the United States, the Congress passes tax laws and requires taxpayers to comply.
The taxpayer’s role is to understand and meet his or her tax obligations.
The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.
As a seasoned expert and enthusiast in taxation and government revenue systems, I've delved deep into the historical evolution and intricacies of the Internal Revenue Service (IRS). My expertise is not merely theoretical; I have a profound understanding of the practical aspects, policy changes, and the underlying principles that have shaped the IRS throughout its history.
The roots of the IRS trace back to a pivotal moment in American history—the Civil War. In 1862, during this tumultuous period, President Lincoln and Congress created the position of commissioner of Internal Revenue and implemented an income tax to fund the war efforts. However, this tax was repealed a decade later. Notably, in 1894, Congress attempted to reintroduce the income tax, but the Supreme Court deemed it unconstitutional the following year.
The turning point came in 1913 with the ratification of the 16th Amendment, which granted Congress the authority to levy income taxes. This marked the birth of the modern income tax system. The same year saw the introduction of the first Form 1040, with a 1 percent tax on net personal incomes above $3,000 and a 6 percent surtax on incomes exceeding $500,000.
The historical significance of the IRS extends to pivotal moments in American history, such as World War I and II. In 1918, during World War I, the top income tax rate surged to 77 percent to finance the war effort. The agency's role evolved further during World War II, with the introduction of payroll withholding and quarterly tax payments.
In the 1950s, the agency underwent a major reorganization, transitioning from a patronage system to a structure with career professionals. This restructuring included a name change—from the Bureau of Internal Revenue to the Internal Revenue Service. Today, the IRS operates as a modern organization, a transformation catalyzed by the IRS Restructuring and Reform Act of 1998.
The current mission of the IRS, as outlined in the restructuring act, is to provide top-quality service to America's taxpayers. This involves helping taxpayers understand and meet their tax responsibilities while enforcing tax laws with integrity and fairness. The agency aims to balance its role, assisting compliant taxpayers with tax laws while ensuring that those unwilling to comply pay their fair share.
In conclusion, the IRS has a rich and dynamic history, evolving from its Civil War origins to becoming a pivotal institution in modern governance. Its role has adapted to the changing needs of the nation, and its mission emphasizes service, integrity, and fairness in enforcing tax laws for the benefit of all citizens.
