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Daily Archives: August 21st, 2022

The uproar over changes in the IRS with increased funding and arming some agents is overblown and driven primarily by the GOP. Let’s look at a bit of history, first most people have a poor image of the IRS because of misinformation and a poor contact with the agency. The job of that agency is to ensure the proper collection of taxes (which are used to run the country). The “horror” stories are in part true, but many are self-inflicted by the people who have had poor to no correct information on filing taxes. The agency has been underfunded for years and that lack of funding precludes the ability to have enough workers to do the job. The paucity of Workers extends time to audit and process tax forms, look carefully at bad actors looking to “cheat” the government (this means more taxes on you and me). The well-off have always pushed the idea that the government is after you, the average taxpayer in pursuit of your support against the agency, this is also why certain laws are in force that allow big businesses and big money donors to donate to their favorite candidates for high elected offices that enact the laws that prevent IRS expansion and limit their power to pursue tax cheats many of which are the same people we elect time after time. The political parties are quite good at making another agency the scapegoat for their purposes while at the same creating divisions between people (taxpayers) much like the events that preceded the “war between the states”. I have attached a brief history of the IRS; it is worth noting that this is a history that can be explored more, and I recommend it.

1862 – President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation’s first income tax. It levied a 3 percent tax on incomes between $600 and $10,000 and a 5 percent tax on incomes of more than $10,000.

1867 – Heeding public opposition to the income tax, Congress cut the tax rate. From 1868 until 1913, 90 percent of all revenue came from taxes on liquor, beer, wine and tobacco.

1872 – Income tax repealed.

1894 – The Wilson Tariff Act revived the income tax and an income tax division within the Bureau of Internal Revenue was created.

1895 – Supreme Court ruled the new income tax unconstitutional on the grounds that it was a direct tax and not apportioned among the states on the basis of population. The income tax division was disbanded.

1909 – President Taft recommended Congress propose a constitutional amendment that would give the government the power to tax incomes without apportioning the burden among the states in line with population. Congress also levied a 1 percent tax on net corporate incomes of more than $5,000.

1913 – As the threat of war loomed, Wyoming became the 36th and last state needed to ratify the 16th Amendment. The amendment stated, “Congress shall have the 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.” Later, Congress adopted a 1 percent tax on net personal income of more than $3,000 with a surtax of 6 percent on incomes of more than $500,000. It also repealed the 1909 corporate income tax. The first Form 1040 was introduced.

1918 – The Revenue Act of 1918 raised even greater sums for the World War I effort. It codified all existing tax laws and imposed a progressive income-tax rate structure of up to 77 percent.

1919 – The states ratified the 18th Amendment, barring the manufacture, sale or transport of intoxicating beverages. Congress passed the Volstead Act, which gave the Commissioner of Internal Revenue the primary responsibility for enforcement of Prohibition. Eleven years later, the Department of Justice assumed primary prohibition enforcement duties.

1931 – The IRS Intelligence Unit used an undercover agent to gather evidence against gangster Al Capone. Capone was convicted of tax evasion and sentenced to 11 years.

1933 – Prohibition repealed. IRS again assumed responsibility for alcohol taxation the following year and for administering the National Firearms Act. Later, tobacco tax enforcement was added.

1942 – The Revenue Act of 1942, hailed by President Roosevelt as “the greatest tax bill in American history,” passed Congress. It increased taxes and the number of Americans subject to the income tax. It also created deductions for medical and investment expenses.

1943 – Congress passed the Current Tax Payment Act, which required employers to withhold taxes from employees’ wages and remit them quarterly.

1944 – Congress passed the Individual Income Tax Act, which created the standard deductions on Form 1040.

1952 – President Truman proposed his Reorganization Plan No. 1, which replaced the patronage system at the IRS with a career civil service system. It also decentralized service to taxpayers and sought to restore public confidence in the agency.

1953 – President Eisenhower endorsed Truman’s reorganization plan and changed the name of the agency from the Bureau of Internal Revenue to the Internal Revenue Service.

1961 – The Computer Age began at IRS with the dedication of the National Computer Center at Martinsburg, W.Va.

1954 – The filing deadline for individual tax returns changed from March 15 to April 15.

1965 – IRS instituted its first toll-free telephone site.

1972 – The Alcohol, Tobacco and Firearms Division separated from the IRS to become the independent Bureau of Alcohol, Tobacco and Firearms.

1974 – Congress passed the Employee Retirement and Income Security Act, which gave regulatory responsibilities for employee benefit plans to the IRS.

1986 – Limited electronic filing began. President Reagan signed the Tax Reform Act, the most significant piece of tax legislation in 30 years. It contained 300 provisions and took three years to implement. The Act codified the federal tax laws for the third time since the Revenue Act of 1918.

1992 – Taxpayers who owed money were allowed to file returns electronically.

1998 – Congress passed the IRS Restructuring and Reform Act, which expanded taxpayer rights and called for reorganizing the agency into four operating divisions aligned according to taxpayer needs.

2000 – IRS enacted reforms, ending its geographic-based structure and instituting four major operating divisions: Wage and Investment, Small Business/Self-Employed, Large and Mid-Size Business and Tax Exempt and Government Entities. It was the most sweeping change at the IRS since the 1953 reorganization.

2001  IRS administered a mid-year tax refund program to provide advance payments of a tax rate reduction.

2003 – IRS administered another mid-year refund program, this time providing an advance payment of an increase in the Child Tax Credit. Electronic filing reached a new high – 52.9 million tax returns, more than 40 percent of all individual returns.

Now the current GOP is raging about the recent bills passed by the house and signed by President Biden. In case you’ve not paid attention or read any of this bill, it provides funding to increase the hiring of IRS personnel and upgrading equipment among other things. The GOP has latched onto the fabricated idea that these taxes will hit the poorest the hardest, this tale has been told before and was untrue then and is untrue now. The tax relief bill put in effect by the former guy took away most of the deductions used by many lower income folks and homeowners while giving tax breaks to the wealthy and big companies (which includes many of our congressional members and their big money backers) with the absurd idea that these tax breaks would allow these companies to give more to the workers, instead these companies took the money and did stock buybacks which increased stock prices while paying stock dividends. How much stock do most people who are at the lower incomes have? The new bill does not increase taxes on the lower income people and the additional IRS personnel will be able to fully examine and find tax cheats while pushing through the simpler returns of the less than wealthy. One thing to know about tax returns: if the numbers work then you are not likely to audited and audits ARE RANDOM unless there is a glaring mistake! Please Do not be pulled into the GOP’s circle of lies.

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