Internal revenue service

- Internal revenue service -

The formation of the IRS goes back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and created an income tax to pay for the civil war between the confederates and the States. The agency created to enforce these taxes was named for the internal revenue to be collected (and was formerly called the "Bureau of Internal Revenue"), in contrast to U.S. government institutions that collected external revenue through duties and tariffs. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but a Supreme Court ruling decreed it unconstitutional the following year.
In 1913, Wyoming ratified a 16th Amendment, providing a 3 quarter majority of states necessary for amendment of the Constitution. The 16th Amendment gave Congress the authority to create the income tax again. That year, the first Form 1040 appeared after Congress levied a 1 % tax on net personal incomes above $3,000 with a 6 % surtax on incomes of more than $500,000.

In 1918, during ther first World War , the top rate of the income tax rose to 77 percent to help finance the war. It dropped sharply in post war years, down to 24 percent in 29, and rose again during the Depression as FDR needed money to pay for the economic programmes. During World War II, Congress innovated payroll withholding and quarterly tax payments.

In the 1950s, 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 of the USA and then confirmed by the Senate.

The IRS Restructuring and Reform Act of 98 prompted the most comprehensive reorganization and modernization of IRS in nearly half a century. The IRS reorganized itself to closely resemble a private sector model of organizing around customers.

. In 1894, Congress revived the income tax, but the following year the United States Supreme Court ruled, in Pollock v. Farmers' Loan & Trust Co., that taxes on capital gains, dividends, interest, rents and the like were direct taxes on property, and that the statute in question was unconstitutional because it had not apportioned the direct taxes among the states according to population. In 1913, however, the states ratified the 16th Amendment, which removed the requirement that income taxes (whether considered direct or indirect taxes) be apportioned by population.

In 1918, to finance World War I, the top rate of the income tax rose to 77%. During the post-war years, the top rate was lowered to 24%, but rose again during the Great Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments, ostensibly as an emergency measure.

In the 1950s, career professional employees replaced the patronage system. Currently, only the IRS Commissioner and Chief Counsel are selected by the President and confirmed by the Senate. The Bureau of Internal Revenue name also was changed to the Internal Revenue Service to emphasize "service" to taxpayers.

Summary of Collections before Refunds by Type of Return, Fiscal Year 2003:

Type of Return Number of Returns Gross Collections (Millions of US$)
Individual Income Tax 130,728,360 987,209
Corporate Income Tax 5,890,821 194,146
Employment Taxes 29,916,033 695,976
Gift Tax 287,456 1,939
Excise Taxes 812,483 52,771
Estate Tax 91,679 20,888

In fiscal year 2004, the IRS collected $43.1 billion in enforcement revenue. This is $5.5 billion or a 15 percent increase from fiscal 2003.

USA: Taxpayers can consult the Internal Revenue Service (IRS) website to see if they qualify for payment arrangements and can calculate monthly instalments to pay off debt

Taxpayers should be aware the IRS does not initiate communications, or ask for information, by e-mail. Phishing scammers pretending to be Treasury officials are using this method of communication to steal personal data away from individuals.

The current Commissioner of Internal Revenue is Mark W. Everson, who was confirmed by the U. S. Senate on May 1, 2003.

Links

http://www.irs.gov/ Inland revenue service

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