6 Facts You Might Not Know About Taxes

Founding Father Samuel Adams Once Racked Up a Hefty Tax Bill

Many of America’s Founding Fathers had day jobs, and in Samuel Adams’ case, his was working as a tax collector. Taxes in Revolutionary America looked much different than today; while there was no income tax, colonists paid fees on imported goods such as tobacco, alcohol, and tea. In 1756, Adams was elected tax collector for the city of Boston, though his approach to the job was somewhat unorthodox: He was often lenient with townspeople who couldn’t pay their bills, delaying collection or failing to get payment altogether, and by some accounts didn’t maintain accurate financial records.

After nine years of holding the job, Adams had amassed a large sum of uncollected tax bills totaling 8,000 British pounds, for which he became legally responsible. Despite pursuing payment for some of the debts in court, the substantial bill was eventually settled with help from Adams’ friends. Adams’ role as a tax collector helped pave the way for his eventual political ambitions, allowing him to connect with his fellow colonists, especially as he began to voice opposition against additional taxes levied by Great Britain, such as the Sugar Act of 1764.

President Abraham Lincoln Created the First U.S. Income Tax

The Civil War put a major financial strain on the U.S. budget, saddling Congress with the need to raise money for the Union Army’s wartime expenses. In 1862, President Abraham Lincoln signed the Revenue Act, the first federal income tax, as a way to generate the necessary funds. The law taxed workers who made more than $500 a year at 3% of their income, while workers who took home more than $10,000 were taxed at a rate of 5% (for comparison, the average pay for the lowest-ranking Union soldier was $13 per month). Even Lincoln himself paid a tax bill, though it was discovered in 1873 that the President had overpaid his 1864 taxes by $1,250.

Income Taxes Became Permanent in 1913

Lincoln’s income tax was seen as a wartime necessity and repealed in 1872, seven years after the Civil War ended. However, it wouldn’t be long before legislators pushed to implement another version. By the 1890s, Congress aimed to lower tariffs (aka taxes paid on imported products) that affected the cost of goods for all Americans, but looked to make up the lost revenue by reestablishing the income tax. An unsuccessful attempt to revive the tax cropped up in 1894, only to be rejected by the Supreme Court. The idea was continuously brought before Congress, and by 1913 the 16th Amendment — officially allowing Congress to collect income taxes — was formally ratified.

IRS Agents Once Investigated Prohibition Law Breakers

The 18th Amendment banned the manufacture and sale of alcohol — aka Prohibition — and when the law went into effect in 1920, an unlikely government agency was responsible for its enforcement: the Internal Revenue Service. The financial department established its own Prohibition Unit, employing agents tasked with investigating and busting underground speakeasies, bootleggers, and anyone who was illegally brewing or selling booze. Despite making some major arrests — like that of mob boss Al Capone — the program was ill-fated from the start; the federal government initially only had the funds for 1,500 agents, many of whom were undertrained, overworked, and susceptible to bribery or political pressure. In 1927, Prohibition enforcement shifted from the IRS to the Department of Justice, which carried out investigations until Prohibition was repealed in 1933.

Tax Day Hasn’t Always Been in April

While the deadline for filing a tax return can shift by a day or two each year, the dreaded deadline usually now falls on or around April 15. But it wasn’t always that way; originally, income taxes were due in March. After enacting the 16th Amendment, allowing for the collection of taxes, Congress set March 1 as the cutoff for filing a tax return, though it’s not clear why that date was selected. In 1919, the deadline was moved to March 15 to give taxpayers extra time, and the long-standing date of April 15 emerged in 1955. That year, Congress believed an additional month would help taxpayers who were facing increasingly complicated tax laws, though the biggest perk may have been for IRS employees, who gained an extra month to process a large number of tax returns.

The IRS Experimented With E-Filing for Four Years

Electronically filing your taxes can save you a few stamps and even help your refund process faster. That wouldn’t be possible without four years of IRS experimentation in the 1980s, when citizens in select cities were allowed to try out the first electronic filing system. Hoping to reduce operating costs, the IRS launched its prototype e-filing program in 1986, available to select tax preparers in Cincinnati; Raleigh-Durham, North Carolina; and Phoenix, Arizona. However, there was one major limitation to the earliest system: It could only process returns that were due refunds. The federal e-filing system expanded over the next four years, with electronic filing rolled out nationwide in 1990. It’s been so successful that nearly 203.6 million tax returns were filed electronically in 2021, accounting for almost 78% of all submitted taxes.