Federal Income Tax

In 1913, the 16th Amendment to the Constitution was adopted. It permits Congress to collect income tax for the federal government. The first income tax was levied when the Civil War began in 1861. Congress felt it was necessary to help raise money to pay for the war. Congress later repealed the tax in 1872 but that did not end discussions that the country needed some type of federal income tax. Not everyone was in agreement, though. Conservatives who did not want the tax suggested that an amendment calling for the tax be created, thinking that it would never be ratified. They were quite surprised when the 16th Amendment was ratified on February 25, 1913.

Income tax is a tax on money workers earn. Just about all American workers pay income tax. Some of it is taken out of their paychecks before they even get a chance to pocket the money. If at the end of the year a worker has not paid enough money to the government out of the amount withheld from their paychecks, he or she has to send the government more money to make up the difference. If a worker paid more than necessary through the withholding from his or her paycheck, that person will receive a refund from the government. The Internal Revenue Service, the government agency that is responsible for collecting income tax, knows how much tax every worker should pay because employers are required to report to the IRS how much money each employee earned in the year. Whether a worker still owes taxes or will be receiving a refund, filing an income tax return is still required. Unless it falls on a weekend or a holiday, income tax returns are always due on April 15. Failure to file a return or lying to the IRS about taxes is a federal crime and can result in a large fine or even a prison sentence.

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