— Ch. 1 · Civil War Origins And Creation —
Internal Revenue Service.
~4 min read · Ch. 1 of 6
In July 1862, President Abraham Lincoln and Congress passed the Revenue Act of 1862. This law created the office of commissioner of internal revenue to assess a temporary income tax. The goal was to fund the American Civil War expenses. The initial rate stood at 3% on income over $800. This exemption protected most wage earners from paying anything. By the end of the war, ten percent of Union households had paid some form of income tax. The Union raised twenty-one percent of its total war revenue through these new taxes. George S. Boutwell became the first Commissioner of Internal Revenue under Lincoln's administration. The measure funded over one fifth of the Union's war expenses before expiring a decade later.
Constitutional Evolution And Reform
February 1913 marked the ratification of the Sixteenth Amendment to the United States Constitution. This amendment granted Congress specific power to impose an income tax without apportionment among states. By that month, thirty-six states had ratified the change. Forty-two of the forty-eight states eventually approved it. Connecticut, Rhode Island, and Utah rejected the amendment while Pennsylvania, Virginia, and Florida did not take up the issue. In 1953, the agency received its current name: Internal Revenue Service. A reorganization plan by President Truman decentralized functions to district offices. Civil service directors replaced politically appointed collectors following scandals involving bribery in 1952. Richard Nixon directed the IRS to audit political opponents in 1969. Commissioner Randolph W. Thrower resisted this request and was fired for his refusal. Johnnie Mac Walters locked the target list in his safe after Watergate broke out.