Background

The Internal Revenue Service (IRS) has ties to the Civil War and Abraham Lincoln. Income taxes were collected in order to fund the Civil War in 1862. In 1872 the income tax was repealed but returned in 1894 before it was deemed unconstitutional in 1895. The income tax as it is now known was created by the 16th Amendment to the United States Constitution in 1913. The first tax rates approved by Congress required that income over $3,000 be taxed one percent with an additional surtax of six percent on any income over $500,000. During World War I, tax rates increased dramatically. The highest income tax ever was in 1918 as the highest income bracket was taxed 77 percent. The post war era saw a drastic decrease in income tax percentages as war funding was no longer a primary national concern, but rose once again as the Great Depression hit.

Evolution

During the 1950s the Bureau of Internal Revenue changed its name to the Internal Revenue Service, as it is know today, and began to use employees from the professional realm. This resulted in the IRS Commissioner and Chief Council being chosen by the President and approved by Congress while other employees were not subject to government appointment or approval.

The IRS Now

Today, the IRS is a bureau of the Department of Treasury and is divided into four divisions. The Wage and Investment Division handles joint and individual tax returns for approximately 116 million taxpayers. The Small Business/Self-Employed Division assists 45 million small business operators and self-employed taxpayers. The Large and Mid-Size Business Division has jurisdiction over corporations with over $10 million in assets. The Tax-Exempt and Government Entities Division serves charities and other organizations with tax exempt status. The IRS employed over 99,000 individuals in these four divisions in the year 2004 and had a budget of $10.185 billion.

Statistics and Information

In 2004, the IRS collected more than $2 trillion from the 224 million tax returns it received. The IRS is open Monday through Friday from 7 a.m. until 10 p.m. and can be reached via the toll free number 1-800-829-1040.