Internal Revenue Service
The Internal Revenue Service (IRS) is the United States government agency that collects taxes and enforces the tax laws. It is a part of the Department of the Treasury.
In 1862, during the American Civil War, President Lincoln and Congress created the Commissioner of Internal Revenue and enacted an income tax to pay war expenses. The agency created to enforce these taxes was named for the internal revenue they would collect in contrast to U.S. government institutions that collected external revenue through duties and tariffs. The income tax was repealed 10 years later. In 1894, Congress revived the income tax, but the following year the United States Supreme Court ruled, in Pollock v. Farmers' Loan & Trust Co., that taxes on capital gains, dividends, interest, rents and the like were unapportioned direct taxes on property, and therefore unconstitutional.
In 1913, however, the states ratified the 16th Amendment, which removed the restrictions on income taxes. In 1918, to finance World War I, the top rate of the income tax rose to 77%. During the post-war years, the top rate was lowered to 24%, but rose again during the Great Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments, ostensibly as an emergency measure.
In the 1950s, career professional employees replaced the patronage system. Currently, only the IRS Commissioner and Chief Counsel are selected by the President and confirmed by the Senate. The Bureau of Internal Revenue name also was changed to the Internal Revenue Service to emphasize service to taxpayers.
