Letter dated July 3, 1862 from Treasury Secretary Salmon P. Chase to President Lincoln recommending George S. Boutwell for the newly created post of Commissioner of Internal Revenue.

Letter dated July 3, 1862 from Treasury Secretary Salmon P. Chase to President Lincoln recommending George S. Boutwell for the newly created post of Commissioner of Internal Revenue.

Origins of the Internal Revenue Service

7/1/1862
<p>Text of first page of HR 312 also known as the Revenue Act of 1862.</p>

Text of first page of HR 312 also known as the Revenue Act of 1862.

During the American Civil War, on July 1, 1862 President Lincoln and the United States Congress and passed the Revenue Act of 1862, creating the office of Commissioner of Internal Revenue and enacting a progressive rate income tax to pay war expenses.

"Annual income above $600 was taxed at a 3% rate, but those earning over $10,000 per year were taxed at a 5% rate. This Act repealed the flat rate income tax that had been established by the Revenue Act of the previous year."

"To assure timely collection, income tax was 'withheld at the source' by the employer, with the Act specifying that Federal income tax was a temporary measure that would terminate in 'the year eighteen hundred and sixty-six' " (Wikipedia article on Revenue Act of 1862, accessed 12-27-2008).

Timeline Themes