It all started with the big bills the U.S. was running up fighting the Civil
War. To help pay for the war, Congress established the
Bureau of Internal Revenue on this day in 1862.
President Abraham Lincoln signed the bill into law, making it possible for
the feds to collect a three percent tax on incomes ranging from $600 to
$10,000, and five percent on incomes over $10,000. Several precursors to the
law were never officially enacted or enforced, and this law was just a
temporary one...
The Bureau became the Internal Revenue Service in 1913. It was then that a
16th amendment was added to the U.S. Constitution permitting the Federal
Government to once again collect a tax on income. Through a complicated
system of rules, the Internal Revenue Service became the official collection
agency and the reason why U.S. citizens all shudder and shake annually on
April 15.
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