<P> The Revenue Act of 1862 was passed as an emergency and temporary war - time tax . It copied a relatively new British system of income taxation, instead of trade and property taxation . The first income tax was passed in 1862: </P> <Ul> <Li> The initial rate was 3% on income over $800, which exempted most wage - earners . </Li> <Li> In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000 . </Li> <Li> In 1864 the rate was 5% on income between $600 and $5,000; 7.5% on income $5,000--10,000; and 10% on income $10,000 and above . </Li> </Ul> <Li> The initial rate was 3% on income over $800, which exempted most wage - earners . </Li> <Li> In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000 . </Li>

This department acts as the in court attorney for the internal revenue service