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Well, a new tax filing season is upon us. Off we go about the burdensome business of gathering our receipts, W2s and 1099s, contributions, interest paid and received, deductions, bank statements, and everything else we need to figure our tax forms or give to an accountant or tax preparer for assistance. Rarely do we stop to consider why or when the whole process began. Or why the dreaded deadline is set to April 15. Or a myriad of other facts pertaining to the yearly task, of which has been said; “The only thing certain in life is death and taxes”.

Interesting facts about taxes, income tax and the IRS:

1. Firstly, where did the expression about the unavoidability of taxes originate?

The expression is mostly attributed to one of our founding fathers, Benjamin Franklin (1706-90). He used the term that we are more familiar with in a letter to Jean-Baptiste Leroy in 1789 in which he stated: “In this world nothing can be said to be certain, except death and taxes.”

Though this expression is popularly attributed to Ben, other variations on this theme have been published as well. For instance, Daniel Defoe, in his The Political History of the Devil from 1726 stated: “Things as certain as death and taxes, can be more firmly believed.”

Further variations have been uttered many times since. Another is by Margaret Mitchell from her 1936 book Gone With the Wind: “Death, taxes and childbirth! There’s never any convenient time for any of them.”

2. Why do we have to pay income tax?

Our current version of federal income tax came from the Sixteenth Amendment to the United States Constitution, ratified in 1913, which allows the Congress to levy an income tax. The text of which reads: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

This was not the first federal income tax levied in America. Congress introduced an income tax through the Revenue Act of 1861 to fund the Civil War. This tax ended in 1866. There were other attempts to levy various types of income taxes after this, but the 16th Amendment gave rise to our current tax system.

3. What were the very first income taxes?

The first income tax was collected in 1404 in England. Exact records don’t exist, because the tax was so unpopular that all records were burned. In 1798 the next income tax was implemented in England to pay for weapons and equipment in preparation for the Napoleonic Wars.

4. Has April 15th always been the income tax deadline?

The date was originally March 1st when the 16th Amendment was introduced. It was changed to March 15th in 1918, and was finally set to April 15th in 1955. Some say this was to give the government more time to hold on to your refund. But on the other hand, the government must give you a refund within 45 days or pay interest.

The income tax filing deadline for the 2010 tax year has been extended to April 18, 2011 due to the Emancipation Day holiday on Friday, April 15 in the District of Columbia.

5. Exactly what is the federal income tax?

In 1913 the federal tax code was 400 pages, which has grown to more than 70,000 pages. Enforcing this complex set of tax law are approximately 106,000 Internal Revenue Service employees, and it’s no wonder that more than 80 percent of taxpayers use an accountant or tax software for help.

6. How do we prepare our taxes?

Americans spend 7.6 billion hours every year preparing taxes and spend approximately $27.7 billion a year on tax preparation. Even the head of the IRS, Douglas Shulman, gets his taxes done by a professional.

7. Does everyone cheat on their taxes?

According to the IRS Oversight Board 2008 Taxpayer Attitude Survey, the response to their question “How much, if any, do you think is an acceptable amount to cheat on your income taxes?” was 89 percent saying “not at all”, with 6 percent responding “a little here and there”. Only 3 percent answered “as much as possible”.

My advise is to be completely truthful on your tax return while lobbying your Senator and Representative to simplify the tax code and reduce spending so that tax rates can be lowered. Wouldn’t that be a nice tax fact?

Until next time,
Jeff Fouts

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