This Day in History: 1936-02-07
An official ruling of the Internal Revenue Service forbade New Jersey residents from deducting sales tax paid between July 1 and October 26, 1935. The ruling was based on a technicality as all IRS rulings seem to be. The wording of the 2% sales tax indicated that it was paid by the retailer, not the customer, even though the store owner was required to pass the tax on to the consumer. Apparently the retailers could deduct the tax but not his customers.