The Sixteenth Amendment (Amendment XVI) of the United States Constitution was ratified on February 3, 1913. This Amendment overruled " Pollock v. Farmers' Loan & Trust Co. " (1895), which greatly limited the Congress's authority to levy an income tax . This Amendment allows the Congress to levy an income tax without regard to the States or the Census.
The Constitution provides:
:"The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excise s [ . . . ] but all Duties, Imposts and Excises shall be uniform throughout the United States" [ . . . ] [U.S. Const., art. I, § 8, cl. 1.]
:"Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers" [ . . . . ] [U.S. Const., art. I, § 2, cl. 3.]
:"No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken." [U.S. Const., art. I, § 9, cl. 4.]
Article I, Section 8, Clause 1 grants to the Congress the power to impose taxes, but requires excise taxes to be geographically uniform. [see "Knowlton v. Moore" ussc|178|41|1900 and " Flint v. Stone Tracy Co. " ussc|220|107|1911]
The Constitution states that all direct taxes are required to be apportioned among the states according to population. [Article I, Section 2, Clause 3 and Article I, Section 9, Clause 4] This basically refers to a tax on property as well as a capitation.
Treatment of income taxes pre-"Pollock"
Prior to the U.S. Supreme Court's decision in " Pollock v. Farmers' Loan & Trust Co. ",ussc|157|429|1895, "aff'd on reh'g", ussc|158|601|1895 all income taxes had been considered to be excise s (indirect taxes) required to be imposed with geographical uniformity; such taxes were not required to be apportioned by state according to population (as are direct taxes). [Commentary, James W. Ely, Jr., on the case of "Springer v. United States", in answers.com, at [http://www.answers.com/topic/springer-v-united-states] ]
The Wilson-Gorman Tariff Act of 1894 attempted to impose a federal tax of 2% on incomes over $4,000. Derided as "un-Democratic, inquisitorial, and wrong in principle," [cite news|first=|last=|authorlink=|coauthors=|title=Mr. Cockran's Final Effort|url=http://query.nytimes.com/mem/archive-free/pdf?res=9907E7D81638E233A25752C3A9679C94659ED7CF|work=New York Times|publisher=|date=1894-01-31|accessdate=] it was challenged in federal court. Until that time, direct taxes had been deemed to include only capitations, or poll taxes (taxes directly on persons) and taxes imposed on property by reason of its ownership (generally, ordinary ad valorem tax es on property). Until 1895, all income taxes — regardless of the sources of the incomes — had been considered indirect taxes ("excises"). ["Again the situation is aptly illustrated by the various acts taxing incomes derived from property of every kind and nature which were enacted beginning in 1861, and lasting during what may be termed the Civil War period. It is not disputable that these latter taxing laws were classed under the head of excises, duties, and imposts because it was assumed that they were of that character inasmuch as, although putting a tax burden on income of every kind, including that derived from property real or personal, they were not taxes directly on property because of its ownership.” "Brushaber v. Union Pac. Railroad", ussc|240|1|1916, at 15]
In the case of " Pollock v. Farmers' Loan & Trust Co. " the Supreme Court declared certain income taxes — taxes on income from property under the 1894 Act — to be unconstitutionally unapportioned direct tax es. The Court reasoned that a tax on "income from property" should be treated as a tax on "property by reason of its ownership," and should therefore be required to be apportioned. The reasoning was that taxes on the rents from land, the dividends from stocks and so on burdened the property generating the income in the same way that a tax on "property by reason of its ownership" burdened that property.
How to file a tax amendment with the IRS
Do you need to file a tax amendment with the IRS?
Many people file an amendment to respond to an IRS letter in order to dispute proposed changes. Some people file amendments because they forgot to include information on their original tax return or because they simply made errors on the tax return. Whatever the reason may be, a 1040X is is used to amend your tax return.
The 1040X is a tax form where you state the original amounts reported, the new figures that you are presenting as an amendment, the differences between the original and new figures, and an explanation for the changes.
With a tax amendment, you would provide supporting documentation to support your changes when the new amended results decrease your taxes. For example, if you forgot to include “charitable donations” as a deduction and you are amending that item, the IRS would like to see some supporting documentation to support the adjustment. In this example, you would want to either show a receipt or some form of supporting documentation from the charitable organization.
Once you submit the tax amendment, you can expect a response in 8-12 weeks. If your amendment is approved and you are due a refund, the IRS will mail you a check. The IRS will even pay you interest on the adjusted amount. Therefore, if your amendment refund check is larger than what you requested on the amendment, look at the memo of the check as it states how much interest was earned.
Most common reasons to file an amendment with the IRS include:
Are you a taxpayer that needs help with your tax amendment with the IRS? If so, we are happy to assist. We provide amendments for an affordable price, communicate responsively, and give you peace of mind. We are an independent CPA tax practice located in Chicago, IL and all work is completed in our Chicago office. Because an IRS federal amendment is at the federal level, it does not matter what state you live in. We communicate via secure online-portal, phone, email, and fax.