Tax Analysts Blog

Filing Your Tax Return Is Terrible -- But It Was Worse 100 Years Ago

Posted on Mar 5, 2014

Filing season is never easy for anyone -- not for taxpayers and not for the IRS. This year, we've already heard a round of complaints about poor IRS service. The agency is struggling, taxpayers are frustrated, and Congress is outraged.

Which makes 2014 just like every other year.

But some tax years really are worse than others. And one particularly bad season came at the very start. Exactly 100 years ago this week, Americans struggled to meet the nation's first deadline for filing income tax returns. And they were not happy.

Congress enacted the modern income tax as part of the Revenue Act of 1913, which became law on October 3, 1913. In their wisdom, lawmakers established March 1 as the filing deadline (Congress later changed the date to March 15 and then to April 15). That gave the Bureau of Internal Revenue (BIR), as the IRS was then known, just five months to get ready.

It was not enough time. As the filing deadline drew near, BIR offices were flooded with inquiries from anxious filers. In Los Angeles, the local office had been packed since mid-February. "The present income tax law is so confusing to the ordinary taxpayer that assistance in the preparation of the income statement is almost necessary," the Los Angeles Times observed. "Scores of prospective taxpayers are in quest of information, and an elucidation of the enigma furnished by the various 'rulings' of the Treasury Department."

Among the confused Californians was the local collector of internal revenue. "John P. Carter, in the role of private citizen, writhed in his chair in the Federal Building yesterday," the Times reported, "an expression of anguish on his face as he labored over the income tax return he is to make to himself as John P. Carter, Collector of Internal Revenue." Carter was at least avoiding the last-minute rush, completing his return with weeks to spare. But he was having a tough time of it. "Carter's brow was knit and corrugated -- the mental process incident to discovering 'the original source' of his wealth required about all the mathematics the citizen could master in making his report to himself as collector." Eventually, however, Carter beat his tax form into submission. "When last seen, he was sleeping soundly," the paper reported. "His physician said he would recover."

As a result of all the confusion (and, no doubt, procrastination), many taxpayers were running late. Returns started to pile up quickly as February drew to a close. In New York, the collector got special permission from Washington to keep his office open late on the final evening. And he wasn't the only one burning the midnight oil. "The returns have come in so fast in the last few days that most of the Collectors have found it impossible to do more than stack them up and stow them away until the rush is over," The New York Times reported.

Returns were arriving late in Los Angeles and Chicago, too. The Los Angeles Times estimated that only half of all required returns had been filed by the deadline. "The impression prevails that there will be a big delinquent list for someone to handle after the flag drops on the slow ones tomorrow," the paper reported.

Wealthy taxpayers seemed especially slow to file. In Chicago, roughly 4,000 returns had been filed by February 28. But according to The Chicago Daily Tribune, "not a single return of the first magnitude was received." BIR officials disclosed that two or three taxpayers with incomes greater than $1 million were resident in the district. But none had yet filed their returns. "It is believed that lawyers in charge of preparing the schedules for Chicago's wealthiest men are holding back until tomorrow as a precaution against possible leaks," the paper reported.

The worst problems, however, seemed to unfold overseas, where expatriate Americans faced a single, but crucial, question: Where could they get their hands on a tax form?

Blank tax forms had been slow to make their way across the ocean. The first arrived not through official channels but in the personal mail of an American banker. His New York colleagues had written to remind him that returns were coming due. "Do not forget to file your blank for the income tax," they told him. "You must do it personally. We cannot do it for you here." The bankers' colleagues assured him that the U.S. consulate would have "about a ton of the necessary forms."

In fact, the consulate had no forms on hand -- nor any knowledge of them, for that matter. The consul general, Alexander M. Thackara, was completely in the dark. "Blank 1040: what is that? I never saw one," he told a reporter. Thackara -- who was married to the daughter of William Tecumseh Sherman and known to his intimates as "Mont" -- soon grew worried about his own tax responsibilities. "I want one quick," he said. "I am a government employe [sic], so it is simply out of the question for me to be a single day late in filing my blank."

Officials at the U.S. Embassy were just as clueless as their colleagues at the consulate. "In fact, no person, bureau, or society in any way in touch with the American Government had received any Government notification concerning the existence or the necessity for filing 'Blank 1,040,' although the first paragraph of the income tax statute says that a return shall be made by citizens of the United States, whether residing at home or abroad," The New York Times reported.

Thackara eventually wheedled a blank out of a friend who happened to have an extra one. The ambassador got one from his bank. But for most Americans in Paris, the best they could do was wait. The official stock of forms did not arrive until mid-February, giving taxpayers little time to make the March deadline. "Practically all business other than filling out the blanks is at a standstill," the Times reported in mid-February. Nervous expatriates were apparently thronging bank lobbies "to the point of frenzy."

The entire experience was trying, to say the least. "The American Government probably never before had such cruel criticisms from its sons who reside elsewhere," the Times concluded.

The problems in Paris were symptomatic of larger issues plaguing that first filing season. Congress had given the country precious little time to get ready for its new income tax -- either mentally or practically. These days, the IRS complains about lead time whenever Congress dallies over tax legislation late into the year. But in 1913, Congress waited until October to declare that an entirely new tax system would be in operation just five months down the road.

That decree struck many observers as unwise. And the problems that surfaced in February 1914 confirmed the critics' worst fears. The BIR was not fully ready for the income tax when it made its March 2 debut. And neither was a nation of confused taxpayers.

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