The Republican. [volume] (Oakland, Md.) 1877-current, 1943-01-07
Explanation Made on
What Income Tax Is
Is First of Series of Articles
Prepared BY Bureau Of
Internal Revenue

The Treasury department, Bureau
of Internal Revenue, Washington d.
G., has prepared a series Of articles
on Federal income tax, for the mfor-
nation of the general public
The first of the series follows:
What Is Income Tax?
The federal income tax is, as the
name implies, tax levied upon in
comes, and it is payable in relation
to the amount of income. Income, for
Federal income tax purposes, means
in general any compensation for ones
services. whether the compensation he
in money or in goods or other serv-
ices; it includes also the net value re-
ceivcd for the product of ones labor
as farm produce in the case of
farmer; income from Investments;
profit from business operations; and
other gains from sales and exchanges
of goods and property. Certain limited
categories of income are, however,
tax exempt, and to the extent of such
exemption are excluded in computing
the tax.
Because of exemptions from the tax
given to persons having less than GER
tain stated amounts of income, as well
as because of various deductions and
credits allowable, only a small pro-
portion of the number Of persons re-
ceiving income have until recently
been subject to the tax Thus, Of the
estimated So million persons in this
country who received income in one
form or another during the calendar
year 1911, only some 26 million per
sons We're required to file Federal in
come tax returns for that year, while
Of these same 26 million, more than
20 million were not taxable due to
credits and deductions allowable
As a result of the lowering of eX-
emptions, many more persons are now
subject to the Federal income tax
than before, and for the calendar year
1912 it is estimated that more than
35 million persons will file Federal
income tax returns To the large num-
Der Of persons now subject to the
Federal income tax. who have never
reported income before for Federal
tax purposes, an understanding Of the
law and applicable regulations is Of
prime importance.
An income tax return is a dcclara-
ton on the part Of the taxpayer of
his total taxable income for the year,
together with the various deductions,
exemptions, and credits to which he
is entitled. 1t is in reliance upon vol
untary disclosure, and the integrity of
taxpayers generally, that the cost of
administration Of the income tax can
be kept at a minimum. Though the
return is d voluntary statement, any
person who willfully makes a return
which he does not believe to be true
and correct in every material matter
is subject to the penalties provided by
law.
The first requirement of the law is
the filing Of an appropriate return
For individuals generally, this must
be done by March Is following the en-
of the calendar year The return must
be filed with the appropriate Collec-
tor Of Internal Revenue for the dis
trict in which is located the legal
residence or principal place Of bust
ness of the person making the return
Under the present law every single
person, and every married person not
living with husband or wife, having
a total income earnings, together
with other income) Of $500 or more,
and married persons living with hus-
band or wife throughout the taxable
year, who have an aggregate income
(total earnings of both husband and
wife, together with other income) of
$1,000 or more, regardless Of the
amount of net income, must file a re-
turn.