How The IRS Works: Part 1 of 2

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• How The IRS Works Part 1 of 2

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• Even the most enlightened American must wonder
  every year, why am I paying taxes? While
  acknowledging that some taxes are unavoidable,
  the question becomes does federal and state
  income tax fall into this category. It is true
  that every civilized, developed society has taxes
  but loathing the taxman is as inevitable
  aswelltaxation itself.

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• In the U.S., at the federal level, the unenviable
  duty of collecting federal income taxes falls on
  the Internal Revenue Service (IRS). As the United
  States tax collector and only having 3 letters in
  its acronym it is as close to a four-letter word
  could come.

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• It states its mission is
• Provide Americas taxpayers top quality service
  by helping them understand and meet their tax
  responsibilities and by applying the tax law with
  integrity and fairness to all.

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• First, A Little History
• After becoming independent from Britain, America
  was wary of taxation and didnt grant the federal
  government authority to levy taxes right away.
  The federal government, though, had the right to
  ask for tax payment from the states, but states
  were under no obligation to comply. With time,
  the government was given the right to levy taxes,
  but it lacked the agency to do so.

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• The onset of the Civil War changed everything
  or more precisely, the need to pay for that
  conflict. Congress and President Lincoln enacted
  the nations first income tax with the Revenue
  Act of 1862, which created the office of the
  Commissioner of Internal Revenue.

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• The law was temporary, but gave the office the
  right to levy excise taxes on commonly consumed
  and traded goods, as well as the means to collect
  those taxes. It also marked the first progressive
  tax in U.S. history. The need to have an agency
  in place for enforcing and collecting these taxes
  gave birth to the Bureau of Internal Revenue
  (BIR), the predecessor to the IRS.

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• After the war ended and reconstruction was
  underway, the Revenue Act was allowed to expire
  in 1872. Between then and 1894, federal taxes
  remained but evolved. When the government
  attempted to further codify and expand taxation
  with the Income Tax Act of 1894, the Supreme
  Court ruled it unconstitutional. It wasnt until
  the 16th Amendment was passed in 1913 under
  President William Howard Taft that Congress won
  the authority to impose an income tax.

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• Soon after, Form 1040 was born. The tax rate for
  personal incomes more than 3,000 was 1 on
  incomes of more than 500,000 it was 6. Income
  tax rates rose sharply during World War I
  (peaking at 77 for top-earners), and then again
  during the Great Depression (63 rate on
  top-earners).

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• The tax collecting agency was revamped in
  1950s, first by President Truman as a part of his
  reorganization plans. The patronage system of the
  agency was replaced with a career civil service
  system. The move was endorsed by President
  Eisenhower, who in 1953 rechristened the Bureau
  of Internal Revenue the Internal Revenue Service.

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• The federal tax system has always been a mystery
  to nearly all Americans, nevertheless, they
  systematically without question send in one
  fourth to one third or more of their paychecks
  just like clock work without ever stopping to
  question why?

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• Most of us know this system is not right and does
  not apply to us but finding the answers in the
  tax code can be daunting. It is intentionally
  written to be difficult to understand and is
  extremely long winded. This was done by the
  lawyers who work for the IRS to discourage
  American from finding out that most of them do
  not and have never owed federal income tax.

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• We have proof in the form of checks received by
  our happy and satisfied clients proving our
  system works. Are you wondering if you qualify
  for a refund for the last 3 or more years of your
  income taxes paid in? Would you like to find out?

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