ENROLLED AGENT TRIVIA
The position of Enrolled Agent was created as a reaction to fraudulent war loss claims in the wake of the American Civil War with roots tracing back to the "Horse Act of 1884.”
After the Civil War, many citizens faced difficulties in settling claims with the government for property confiscated for use in the war effort. As a result, Congress endowed Enrolled Agents with the power of advocacy to prepare claims against the government. From 1884 through the early 20th century, this statute remained largely unchanged.
When the Revenue Act of 1913 was passed the scope of the Enrolled Agent was expanded to include claims for monetary relief for citizens whose taxes had become inequitable.
As income, estate, gift and other sources of tax collections became more complex, the role of the Enrolled Agent increased to include the preparation of the many tax forms that were required. As a result of this complexity, audits became more prevalent and the Enrolled Agent role evolved into taxpayer representation.
Unlike enrolled agents of today, the first enrolled agents were appointed with little or no qualifications other than a minimal background in bookkeeping.
Today’s Enrolled Agents have to obtain a Preparer Tax Identification Number (PTIN), pass a 300 question 10.5 hour examination, pass background and tax compliance checks, and take a minimum of 16 hours of Continuing Education each year.
Enrolled Agents are also sometimes called Federally Authorized Tax Practitioners or FATPs. Yes, someone thought it was a good idea to use the initials FATP. That’s “fat” with a “p” on the end. (If you refer to Andrew as a “Fat P” then you will probably be asked to leave.)
The Internal Revenue Service (IRS) has its origins based in the U.S. Civil War.
In July 1862, during the Civil War, President Abraham Lincoln and Congress created the office of Commissioner of Internal Revenue and enacted a temporary income tax to pay war expenses (Revenue Act of 1862). The position of Commissioner exists today as the head of the Internal Revenue Service.
The Revenue Act of 1862 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax rates were as follows:
- The initial rate was 3% on income over $800, which exempted most wage-earners.
- In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000.
- In 1864 the rate was 5% on income between $600 and $5,000; 7.5% on income $5,000–10,000; and 10% on income $10,000 and above.
However, in 1872, seven years after the war, lawmakers allowed the temporary Civil War income tax to expire.
In 1906, with the election of President Theodore Roosevelt, and later his successor William Howard Taft, the United States saw a populist movement for tax reform. This movement culminated during then candidate Woodrow Wilson's election of 1912 and in February, 1913, the ratification of the Sixteenth Amendment to the United States Constitution:
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.