A Brief History of Marriage in the Tax Code: Part 1, In the Beginning

This post is part of a long-term project I’ve been working on regarding the history of marriage in the tax code. wedding-rings-150300_1280

As I finish sections of the research paper I’m working on, I’ll post them here. This is a big project, one that will likely take years to finish, so I can’t guarantee when the next post on this topic will appear.

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Part 1: In the Beginning

The modern-day income tax return has five options for filing status:

  • Single
  • Head of Household
  • Married Filing Jointly
  • Married Filing Separately
  • Qualifying Widow(er)

Each filing status comes with its own tax bracket. Specific pieces of tax law and regulations vary depending on filing status as well.

But in the beginning, in 1913, there were no filing statuses. There was just one tax bracket that applied to all taxpayers.

As Yale Law School Professor Boris Bittker notes, the focus of the original tax code was on the individual:

(T)he tax legislation enacted by Congress  was dominated by an individualistic approach at the outset. This focus on individuals rather than married couples, families, or  households was  implicit as early as 1913, when the introductory words of the first taxing statute based on the sixteenth amendment  imposed a  tax “upon the entire net income  arising or accruing from all sources … to every  citizen  of the United  States … and to every person residing in the  United States, though not a  citizen thereof.” The Revenue Act of 1916 made the point explicit by taxing “the entire net income received … by every individual.”

Bittker, Boris I., “Federal Income Taxation and the Family” (1975). Faculty Scholarship Series. Paper 2291. http://digitalcommons.law.yale.edu/fss_papers/2291

Despite the individualistic focus of the original tax code, married couples had the option of filing a joint return in 1913. But unlike today, a joint return in 1913 was merely a reporting mechanism in which husband and wife could combine their income onto one tax return, rather than each filing their own separate returns. It was not a “filing status” in the modern sense and there was no special tax bracket associated with it.

In Part 2 I’ll go into more detail about how taxes worked in the beginning.

5 Things You Didn’t Know About EAs, #3: Two Ways to the EA

cross-road-425054_1280There are two ways to become an EA.

One: The Special Enrollment Exam

This is the most-common route for becoming an EA. Pass the 3-part Special Enrollment Examination (oftentimes called the “SEE”).

The 3 parts are:

  1. Individual tax law
  2. Business tax law
  3. IRS representation, practices and procedure

The exam is closed-book.

Once you’ve passed all 3 parts, you apply for enrollment and the IRS conducts a background check. The background check is mainly looking for criminal convictions and also to verify that the applicant has been compliant with their personal and business taxes.

Two: The IRS Employee Route

An IRS employee who has worked for at least 5 years in a position that requires technical application of tax law can apply for licensure as an EA. A background check is still required but the applicant isn’t required to take the SEE.

For more information about the EA program and becoming an EA, check out this page on the IRS website.

Image courtesy of user sandid on Pixabay.com

5 Things You Didn’t Know About EAs, #2: We Don’t Work for the IRS

When people hear the term Enrolled Agent, they think one of two things. Either: “What the heck is that?” or “He works for magnifier-389900_1280the IRS! Flee for your lives!”

EAs don’t work for the IRS. But the word “agent” automatically evokes images of an IRS agent.

Dictionary Time

The term “enrolled” means we are recognized by the Treasury Department and IRS, and “agent” means we can act on behalf of others. Thus, “Enrolled Agent.”

The term makes sense when looked at that way.

But it’s still not an ideal name because of the word “agent.”

There have been calls to change the name to something else. But as I wrote about in a 3-part piece 2 years ago, it’s not the name that’s the problem, it’s the lack of recognition. Nearly 90% of the public has never heard of an EA.

EAs have also been woeful about promoting ourselves. So much so that when our national association actually undertook advertising campaigns to promote the EA name, it was a newsworthy event.

There is an IRS Connection

So no, we don’t work for the IRS.

But,  it is correct to say we’re regulated by the IRS. The EA license itself comes from the Treasury Department, and the IRS provides the oversight.

5 Things About EAs: We’ve Been Around Since 1884

IRS EnrolledAgent_Logo2014 marked the 130th anniversary of the Enrolled Agent designation, but the anniversary passed with little fanfare.

On July 7, 1884, President Chester A. Arthur signed into law a bill called the “Enabling Act of 1884,” sometimes informally called the “Horse Act.”

The bill authorized “enrolled agents” to prepare claims against the government relating to Civil War losses.

After the Civil War, Congress allowed citizens to file claims against the government for lost horses and other property damage during the war. The Treasury Department came to realize that more than a few of these claims were fraudulent.

Enter the EA. A person enrolled to act as an agent on behalf of a citizen in matters before the Treasury Department.

EAs could also be sanctioned by the Treasury Department if the EA submitted fraudulent claims.

I have searched for the text of the Horse Act and been unable to find it, but Wikipedia says the following regarding standards for becoming an EA back in 1884:

Unlike enrolled agents of today, the first enrolled agents were appointed with little or no qualifications other than a minimal background in bookkeeping.

After the income tax was created in 1913, EAs became involved in tax preparation and representing taxpayers during disputes with the IRS.