DEFINITION of 'Revenue Act Of 1862'
This act increased taxes and implemented the first federal income tax in the United States. The Revenue Act of 1862 was passed by Congress in order to fund the American Civil War, and in the process also created the Bureau of Internal Revenue that managed tax collection duties. The income tax was the best source of income during that period, increasing government coffers by an estimated $340 million during the 10 year period it existed.
BREAKING DOWN 'Revenue Act Of 1862'
The Bureau of Internal Revenue is known today as the Internal Revenue Service (IRS). The name was changed to emphasize a greater focus on serving the public rather than merely collecting taxes. Today the IRS is a massive bureau, in 2004 the agency collected over $2 trillion in revenue processing more that 224 million tax returns.