Tuesday, April 5, 2011

The Tax Man Cometh

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. (16th Amendment to the U.S. Constitution.)
The era I've been dealing with lately must have been an unsettling time to live through. In the background, we have the slow, massive societal changes — from horse and wagon to steam locomotive and then automobile, from "until death" to socially acceptable divorce, from craftsman to assembly-line worker, from farmer to town- or city-dweller. And then in the space of about twelve months we've seen a rapid series of changes — votes for women, then no votes for women; almost certain prohibition looming; entry into a vast and devastating war, with the draft to draw men into the bloodshed willing or not; and now — the income tax!

Yes, I'd completely forgotten about that one, until suddenly the newspapers started warning people of the new requirement that they would face with the new year: the filing of income tax returns. The papers must have reported on the passage of the 16th Amendment, but it was probably in the small typeface in the interior pages, the pages I usually just skim over. I wonder if the people here in 1917 had also forgotten about that little matter until the year was running out and suddenly they were faced with the unpleasant new reality.

Subject to the income tax were married couples with net incomes during 1917 of $2,000 or more and single people with net incomes of $1,000 or more. In December the local papers told readers that a federal income tax officer would be stationed in Lake County through January 1918, with offices in the postoffice buildings of Hammond, Gary and Whiting. This officer was just one of a "small army of men" dispatched to various locations around Indiana to help people figure out whether they had to file a return, and to complete the return if required. Anyone could come and see these representatives during office hours to get such help at no cost.

Returns had to be filed by March 1, 1918. Failure to file by the deadline could result in a fine or even criminal prosecution. The newspapers carried dark warnings. "[I]f you don't want to take chances on going to jail," said the Gazette, "you better call on the income tax man." The News quoted Peter J. Kruyer, an Indiana tax collector: "The person subject to tax who doesn't make return in the time prescribed is going to regret it. The Government will get after all income tax slackers." Kruyer added that the vast majority of business and professional people as well as farmers would have to file a return.

In mid-February 1918, as the deadline neared, the News warned: "Somebody is going to tell on you if you don't pay your income tax." As the article explained, the War Income Tax Law now required that any person or company who paid $800 or more to any other person or company must file tell-tale paperwork with the Internal Revenue Commissioner — the newly prescribed Form 1099.

♦ "A Small Army of Men Will Be Required to Take Income Tax Returns." Hobart News 27 Dec. 1917.
♦ "How About Your Income?" Hobart Gazette 21 Dec. 1917.
♦ "Somebody Is Going to Tell If You Don't Pay Your Income Tax." Hobart News 14 Feb. 1918.

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