Hide

The History of Income Tax Pt. 4

Al Capone's 1930 mugshot With another tax season rapidly approaching, we thought it a good time to take a look at the organization that is all things taxes, the Internal Revenue Service. What follows will better inform you of the organization that we all must interact with, year in and year out. It’s a history of the income tax, and a rocky one at that.

As the opening of tax season is January 19, 2016, be sure to begin gathering all of your relevant documents and information. With a successful tax season, preparedness is key. Questions? Contact your Enrolled Agent for all things IRS.

As if the nation wasn’t already dealing with a full plate with World War I, following the states ratifying the 18th amendment, congress passed the Volstead Act in 1919. The 18th amendment barred the manufacture, sale, and transport of intoxicating drinks. The Volstead Act put the burden of enforcing the 18th amendment on the shoulders of the Commissioner of Internal Revenue. Prohibition was in full effect.

By 1930, eleven years after the implementation of Prohibition, the duties of enforcing the Volstead Act was switched from the Commissioner of Internal Revenue to the Department of Justice. A year later, famed bootlegger Al Capone would be brought down not by charges of murder, racketeering, or violation of the Volstead Act, but tax evasion. In 1931, it was an IRS Intelligence Unit which brought down Capone. He would be convicted of tax evasion and sentenced to 11 years in federal prison.

In 1933, the 18th amendment and Prohibition would be officially repealed, once again allowing the IRS to tax alcohol, once one of the largest sums of revenue for the United States government. It would later add tobacco tax enforcement to its duties.

Photo by Recuerdos de Pandora 

Do you have the support you need to manage your small business bookkeeping? Schedule a 30-minute appointment to speak with a local small business adviser.

Categories