History of

• The federal government started collecting income taxes in 1862. President Lincoln passed and signed the Tax Act of 1862 on July 1, 1862. There were two classes of taxation of incomes imposed: first class and second class. The first class consisted of every person residing in the United States and every person residing abroad who was a citizen and employee of the government. The second class consisted of every person residing abroad who was a United States citizen but not employed by the government. Every person belonging to the first class with income of $600 and higher but less than $10,000 was taxed 3 percent and allowed deductions; 5 percent was the tax rate for those who were earning more than $10,000. Five percent was the tax implemented for the second class, no matter what the incomes and gains were and no deductions allowed. The Civil War funds came mostly from the federal taxes.
  
  

The Facts

• The Internal Revenue Service (IRS) collects federal tax returns. Tax returns are reports include financial information of an individual or a business used to compute tax. Tax returns also include tax liabilities and payments as well as deductions and capital gains. The Internal Revenue Code classifies the federal tax returns either as "tax returns" or "as information returns." The term "tax returns" often describes the two in a broader sense. The IRS requires most people to file a federal income tax return every year. There are requirements used as basis for filing for a given tax year, depending on how much money an individual make and the type of tax filing status.
  
  

Type

• There are five different types of filing status: single, married filing jointly, married filing separately, head of the household and widow or widower with qualifying child. There are extra leniency given to filers who are 65 years or older, or blind. In most cases, they would not have to file or pay income taxes. The IRS provides a list of income thresholds yearly to help individuals determine whether they should file a federal income tax return for that year. The IRS adjusts the amounts based on inflation so that the taxpayers will not automatically pay higher returns as their income grow to keep up with inflation.
  
  

Benefits

• Federal taxes help fund the government's needs. Most of the tax dollars help finance public services. There are percentages assigned for each service, which may change depending on needs or based on decisions made by government officials. Federal tax returns help pay for the following: defense and security, social security, Medicare, Medicaid and SCHIP, safety net programs, interest on national debt, benefits for federal retirees and veterans, education, scientific and medical research, transportation infrastructure, non-security international and some miscellaneous expenses that may arise.
  
  

Risk Factors

• If one does not file federal tax returns there could be legal consequences. Aside from those, an individual would have to pay penalties and fees that accrue until full payment of tax debts. If the government does not impose federal taxation, we will not have the funds to use for important things and needs that make the government function well, pay debts and funding for projects and necessities such as those mentioned under the "Benefits" section.