Chapter 463. To increase the revenue, and for other purposes
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CHAP. 463.— An Act To increase the revenue, and for other purposes. September 8, 1916.[[H. R. 16763](/us/bill/64/hr/16763).][[Public, No. 271](/us/pl/64/271).] *Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, * Revenue Act, 1916. TITLE I.—Income tax. INCOME TAX. Part I.—On individuals. On Individuals. Sec. 1. Two per cent levied on net incomes.Vol. 38, p. 166.
(a)That there shall be levied, assessed, collected, and paid annually upon the entire net income received in the preceding calendar year from all sources by every individual, a citizen or resident of the Nonresident aliens, from United States sources.United States, a tax of two per centum upon such income; and a like tax shall be levied, assessed, collected, and paid annually upon the entire net income received in the preceding calendar year from all sources within the United States by every individual, a nonresident alien, including interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise.
(b)Additional tax if exceeding 820,000. In addition to the income tax imposed by subdivision
(a)of this section (herein referred to as the normal tax) there shall be levied, assessed, collected, and paid upon the total net income of every individual, or, in the case of a nonresident alien, the total net income Rates.received from all sources within the United States, an additional income tax (herein referred to as the additional tax) of one per centum per annum upon the amount by which such total net income exceeds $20,000 and does not exceed $40,000, two per centum per annum upon the amount by which such total net income exceeds $40,000 and does not exceed $60,000, three per centum per annum upon the amount by which such total net income exceeds $60,000 and does not exceed $80,000, four per centum per annum upon the amount by which such total net income exceeds $80,000 and does 757not exceed $100,000, five per centum per annum upon the amountincome tax. by which such total net income exceeds $100,000 and does not exceed $150,000, six per centum per annum upon the amount by which such total net income exceeds $150,000 and does not exceed $200,000, seven per centum per annum upon the amount by which such total net income exceeds $200,000 and does not exceed $250,000, eight per centum per annum upon the amount by which such total net income exceeds $250,000 and does not exceed $300,000, nine per centum per annum upon the amount by which such total net income exceeds $300,000 and does not exceed $500,000, ten per centum per annum upon the amount by which such total net income exceeds $500,000, and does not exceed $1,000,000, eleven per centum per annum upon the amount by which such total net income exceeds $1,000,000 and does not exceed $1,500,000, twelve per centum per annum upon the amount by which such total net income exceeds $1,500,000 and does not exceed $2,000,000, and thirteen per centum per annum upon the amount by which such total net income exceeds $2,000,000. For the purpose of the additional tax there shall be included asDividends from corporations, etc., included. income the income derived from dividends on the capital stock or from the net earnings of any corporation, joint-stock company or association, or insurance company, except that in the case of nonresidentNonresident aliens. aliens such income derived from sources without the United States shall not be included. All the provisions of this title relating to the normal tax on individuals,General normal tax provisions applicable. so far as they are applicable and are not inconsistent with this subdivision and section three, shall apply to the imposition, levy, assessment, and collection of the additional tax imposed under this subdivision.
(c)The foregoing normal and additional tax rates shall apply toTaxes based on calendar year. the entire net income, except as hereinafter provided, received by every taxable person in the calendar year nineteen hundred and sixteen and in each calendar year thereafter. income defined.Income defined. Sec. 2.
(a)That, subject only to such exemptions and deductionsSources included. as are hereinafter allowed, the net income of a taxable person shall include gains, profits, and income derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, or from professions, vocations, businesses, trade, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in real or personal property, also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever: *Provided,* That the*Proviso*.Dividends accruing since March 1, 1913. term “dividends” as used in this title shall be held to mean any distribution made or ordered to be made by a corporation, joint-stock company, association, or insurance company, out of its earnings or profits accrued since March first, nineteen hundred and thirteen, and payable to its shareholders, whether in cash or in stock of the corporation, joint-stock company, association, or insurance company, which stock dividend shall be considered income, to the amount of its cash value.
(b)Income received by estates of deceased persons during theEstates of deceased persons. period of administration or settlement of the estate, shall be subject to the normal and additional tax and taxed to their estates, and also such income of estates or any kind of property held in trust,Trusts, etc. including such income accumulated in trust for the benefit of unborn or unascertained persons, or persons with contingent interests, and income held for future distribution under the terms of the will or trust shall be likewise taxed, the tax in each instance, except when 758income tax.the income is returned for the purpose of the tax by the beneficiary, to be assessed to the executor, administrator, or trustee, as the case *Proviso*.Tax on annual distributions.may be: *Provided,* That where the income is to be distributed annually or regularly between existing heirs or legatees, or beneficiaries the rate of tax and method of computing the same shall be based in each case upon the amount of the individual share to be distributed. Trustees and other fiduciaries indemnified for payments.Such trustees, executors, administrators, and other fiduciaries are hereby identified against the claims or demands of every beneficiary for all payments of taxes which they shall be required to make under the provisions of this title, and they shall have credit for the amount of such payments against the beneficiary or principal in any accounting which they make as such trustees or other fiduciaries.
(c)Gains from property acquired before March 1, 1913. For the purpose of ascertaining the gain derived from the sale or other disposition of property, real, personal, or mixed, acquired before March first, nineteen hundred and thirteen, the fair market price or value of such property as of March first, nineteen hundred and thirteen, shall be the basis for determining the amount of such gain derived. additional tax includes undistributed profits.Undistributed profits. Sec. 3. Share of individuals in, subject to additional tax. For the purpose of the additional tax, the taxable income of any individual shall include the share to which he would be entitled of the gains and profits, if divided or distributed, whether divided or distributed or not, of all corporations, joint-stock companies or associations, or insurance companies, however created or organized, formed or fraudulently availed of for the purpose of preventing the imposition of such tax through the medium of permitting such gains and profits to accumulate instead of being divided or Holding companies.Evidence of purpose to avoid tax.distributed; and the fact that any such corporation, joint-stock company or association, or insurance company is a mere holding company, or that the gains and profits are permitted to accumulate Permissible accumulations.beyond the reasonable needs of the business, shall be prima facie evidence of a fraudulent purpose to escape such tax; but the fact that the gains and profits are in any case permitted to accumulate and become surplus shall not be construed as evidence of a purpose to escape the said tax in such case unless the Secretary of the Treasury shall certify that in his opinion such accumulation is unreasonable Statements from companies.for the purposes of the business. When requested by the Commissioner of Internal Revenue, or any district collector of internal revenue, such corporation, joint-stock company or association, or insurance company shall forward to him a correct statement of such gains and profits and the names and addresses of the individuals or shareholders who would be entitled to the same if divided or distributed. income exempt from law.Exemptions. Sec. 4. Sources specified. Life insurance policies.The following income shall be exempt from the provisions of this title: The proceeds of life insurance policies paid to individual beneficiaries upon the death of the insured; the amount received by the insured, as a return of premium or premiums paid by him under life insurance, endowment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon Gifts, etc.the surrender of the contract; the value of property acquired by gift, bequest, devise, or descent (but the income from such property shall Interest on Stare, Federal, etc., obligations.*Ante*, p. 360.be included as income); interest upon the obligations of a State or any political subdivision thereof or upon the obligations of the United States or its possessions or securities issued under the provisions of the Federal farm loan Act of July seventeenth, nineteen hundred and President during present term.sixteen; the compensation of the present President of the United 759States during the term for which he has been elected, and the judgesincome tax.Judges, State officials, etc. of the Supreme and inferior courts of the United States now in office, and the compensation of all officers and employees of a State, or any political subdivision thereof, except when such compensation is paid by the United States Government. deduction’s allowed.Deductions allowed. Sec. 5. That in computing net income in the case of a citizen orCitizens or residents. resident of the United States—
(a)For the purpose of the tax there shall be allowed as deductions—Objects specified. First. The necessary expenses actually paid in carrying on anyBusiness expenses. business or trade, not including personal, living, or family expenses; Second. All interest paid within the year on his indebtedness;Interest on debts. Third. Taxes paid within the year imposed by the authority of theGeneral taxes. United States, or its Territories, or possessions, or any foreign country, or under the authority of any State, county, school district, or municipality, or other taxing subdivision of any State, not including those assessed against local benefits; Fourth. Losses actually sustained during the year, incurred in hisLosses. business or trade, or arising from fires, storms, shipwreck, or other casualty, and from theft, when such losses are not compensated for by insurance or otherwise: *Provided,* That for the purpose of ascertaining*Proviso*.On property acquired before March 1, 1913. the loss sustained from the sale or other disposition of property, real, personal, or mixed, acquired before March first, nineteen hundred and thirteen, the fair market price or value of such property as of March first, nineteen hundred and thirteen, shall be the basis for determining the amount of such loss sustained; Fifth. In transactions entered into for profit but not connectedNot connected with trade. with his business or trade, the losses actually sustained therein during the year to an amount not exceeding the profits arising therefrom; Sixth. Debts due to the taxpayer actually ascertained to be worthlessWorthless debts. and charged off within the year; Seventh. A reasonable allowance for the exhaustion, wear and tearDeterioration of property. of property arising out of its use or employment in the business or trade; Eighth.
(a)In the case of oil and gas wells a reasonable allowanceAllowance for oil and gas wells. for actual reduction in flow and production to be ascertained not by the flush flow, but by the settled production or regular flow;
(b)inMine depletion. the case of mines a reasonable allowance for depletion thereof not to exceed the market value in the mine of the product thereof, which has been mined and sold during the year for which the return and computation are made, such reasonable allowance to be made in the case of both
(a)and
(b)under rules and regulations to be prescribed by the Secretary of the Treasury: *Provided*, That when the allowances*Proviso*.Acquired before March 1, 1913. authorized in
(a)and
(b)shall equal the capital originally invested, or in case of purchase made prior to March first, nineteen hundred and thirteen, the fair market value as of that date, no further allowance shall be made. No deduction shall be allowed for any amountBetterments, etc., excluded. paid out for new buildings, permanent improvements, or betterments, made to increase the value of any property or estate, and no deduction shall be made for any amount of expense of restoring property or making good the exhaustion thereof for which an allowance is or has been made. credits allowed.Credits allowed.
(b)For the purpose of the normal tax only, the income embracedIncomes from corporations, etc., paying tax. in a personal return shall be credited with the amount received as dividends upon the stock or from the net earnings of any corporation, 760income tax.joint-stock company or association, trustee, or insurance company, which is taxable upon its net income as hereinafter provided;
(c)Tax paid at source. A like credit shall be allowed as to the amount of income, the normal tax upon which has been paid or withheld for payment at the source of the income under the provisions of this title. nonresident aliens.Nonresident aliens. Sec. 6. Deductions allowed. That in computing net income in the case of a nonresident alien—
(a)Objects specified.Business expenses in United States. For the purpose of the tax there shall be allowed as deductions— First. The necessary expenses actually paid in carrying on any business or trade conducted by him within the United States, not including personal, living, or family expenses; Second. Share of interest on debts. The proportion of all interest paid within the year by such person on his indebtedness which the gross amount of his income for the year derived from sources within the United States bears to the gross amount of his income for the year derived from all sources within and without the United States, but this deduction shall be allowed only if such person includes in the return required by section eight all the information necessary for its calculation; Third. Taxes paid in United States. Taxes paid within the year imposed by the authority of the United States, or its Territories, or possessions, or under the authority of any State, county, school district, or municipality, or other taxing subdivision of any State, paid within the United States, not including those assessed against local benefits; Fourth. Business losses in United States. Losses actually sustained during the year, incurred in business or trade conducted by him within the United States, and losses of property within the United States arising from fires, storms, shipwreck, or other casualty, and from theft, when such losses are not *Proviso*.On property acquiree before March 1, 1913.compensated for by insurance or otherwise: *Provided,* That for the purpose of ascertaining the amount of such loss or losses sustained in trade, or speculative transactions not in trade, from the same or any kind of property acquired before March first, nineteen hundred and thirteen, the fair market price or value of such property as of March first, nineteen hundred and thirteen, shall be the basis for determining the amount of such loss or losses sustained; Fifth. Not connected with trade. In transactions entered into for profit but not connected with his business or trade, the losses actually sustained therein during the year to an amount not exceeding the profits arising therefrom in the United States; Sixth. Worthless debts. Debts arising in the course of business or trade conducted by him within the United States due to the taxpayer actually ascertained to be worthless and charged off within the year; Seventh. Deterioration of property in United States. A reasonable allowance for the exhaustion, wear and tear of property within the United States arising out of its use or employmentOil and gas wells. in the business or trade;
(a)in the case of oil and gas wells a reasonable allowance for actual reduction in flow and production to be ascertained not by the flush flow, but by the settled production Mine depletion.or regular flow;
(b)in the case of mines a reasonable allowance for depletion thereof not to exceed the market value in the mine of the product thereof which has been mined and sold during the year for which the return and computation are made, such reasonable allowance to be made in the case of both
(a)and
(b)under rules and *Proviso*.Property acquired before March 1, 1913.regulations to be prescribed by the Secretary of the Treasury: *Provided,* That when the allowance authorized in
(a)and
(b)shall equal the capital originally invested, or in case of purchase made prior to March first, nineteen hundred and thirteen, the fair market value as Betterments, etc., excluded.of that date, no further allowance shall be made. No deduction shall be allowed for any amount paid out for new buildings, permanent 761improvements, or betterments, made to increase the value of anyincome tax property or estate, and no deduction shall be made for any amount of expense of restoring property or making good the exhaustion thereof for which an allowance is or has been made.
(b)There shall also be allowed the credits specified by subdivisionsTax paid at source.*Ante*, p. 759.
(b)and
(c)of section five. personal exemption.Personal exemption. Sec. 7.
(a)That for the purpose of the normal tax only, thereDeduction of $3,000. shall be allowed as an exemption in the nature of a deduction from the amount of the net income of each of said persons, ascertained as provided herein, the sum of $3,000, plus $1,000 additional if theAdditional $1,000, if head of family. person making the return be a head of a family or a married man with a wife living with him, or plus the sum of $1,000 additional if the person making the return be a married woman with a husband living with her; but in no event shall this additional exemption of $1,000 be deducted by both a husband and a wife: *Provided,* That*Provisos*.Limitations. only one deduction of $4,000 shall be made from the aggregate income of both husband and wife when living together: *Provided further,* That guardians or trustees shall be allowed to make thisGuardians or trustees. personal exemption as to income derived from the property of which such guardian or trustee has charge in favor of each ward or cestuiRestriction. que trust: *Provided further,* That in no event shall a ward or cestui que trust be allowed a greater personal exemption than $3,000, or, if married, $4,000, as provided in this paragraph, from the amount of net income received from all sources. There shall also be allowedEstates of deceased persons. an exemption from the amount of the net income of estates of deceased persons during the period of administration or settlement, and of trust or other estates the income of which is not distributed annually or regularly under the provisions of paragraph (b), section*Ante*, pp. 757, 759. two, the sum of $3,000, including such deductions as are allowed under section live.
(b)A nonresident alien individual may receive the benefit of theNonresident aliens.Returns required. exemption provided for in this section only by filing or causing to be filed with the collector of internal revenue a true and accurate return of his total income, received from all sources, corporate or otherwise, in the United States, in the manner prescribed by this title; and in case of his failure to file such return the collector shallLiability for failure. collect the tax on such income, and all property belonging to such nonresident alien individual shall be liable to distraint for the tax. returns.Returns. Sec. 8.
(a)The tax shall be computed upon the net income, asComputed on preceding calendar year. thus ascertained, of each person subject thereto, received in each preceding calendar year ending December thirty-first.
(b)On or before the first day of March, nineteen hundred andFrom persons having over $3,000, to district collector March 1, each year. seventeen, and the first day of March in each year thereafter, a true and accurate return under oath shall be made by each person of lawful age, except as hereinafter provided, having a net income of $3,000 or over for the taxable year to the collector of internal revenue for the district in which such person has his legal residence or principal place of business, or if there be no legal residence or place of business in the United States, then with the collector of internal revenue at Baltimore, Maryland, in such form as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, setting forth specifically the gross amount of income from all separate sources, and from the total thereof deducting the aggregate items of allowances herein authorized: *Provided,* That the Commissioner of Internal Revenue*Provisos*.Extension of time. 762income tax.shall have authority to grant a reasonable extension of time, in meritorious cases, for filing returns of income by persons residing or traveling abroad who are required to make and file returns of income and who are unable to file said returns on or before March first of By agents in case of illness, etc.each year: *Provided further,* That the aforesaid return may be made by an agent when by reason of illness, absence, or nonresidence the person liable for said return is unable to make and render the same, the agent assuming the responsibility of making the return and incurring penalties provided for erroneous, false, or fraudulent return.
(c)Guardians and other fiduciaries. Guardians, trustees, executors, administrators, receivers, conservators, and all persons, corporations, or associations acting in any fiduciary capacity, shall make and render a return of the income of the person, trust, or estate for whom or which they act, and be subject to all the provisions of this title which apply to individuals. Oath required.Such fiduciary shall make oath that he has sufficient knowledge of the affairs of such person, trust, or estate to enable him to make such return and that the same is, to the best of his knowledge and belief, true and correct, and be subject to all the provisions of this title *Proviso*.Joint fiduciaries.which apply to individuals: *Provided,* That a return made by one of two or more joint fiduciaries filed in the district where such fiduciary resides, under such regulations as the Secretary of the Treasury may prescribe, shall be a sufficient compliance with the requirements of this paragraph.
(d)Corporations, etc., to deduct tax from profits, etc., to individuals. All persons, firms, companies, copartnerships, corporations, joint-stock companies, or associations, and insurance companies, except as hereinafter provided, in whatever capacity acting, having the control, receipt, disposal, or payment of fixed or determinable annual or periodical gains, profits, and income of another individual subject to tax, shall in behalf of such person deduct and withhold from the payment an amount equivalent to the normal tax upon the same Separate returns to be made.and make and render a return, as aforesaid, but separate and distinct, of the portion of the income of each person from which the normal tax has been thus withheld, and containing also the name and address of such person or stating that the name and address or *Proviso*.Application to present year.the address, as the case may be, are unknown: *Provided,* That the provision requiring the normal tax of individuals to be deducted and withheld at the source of the income shall not be construed to require the withholding of such tax according to the two per centum normal tax rate herein prescribed until on and after January first, nineteen hundred and seventeen, and the law existing at the time of the passage of this Act shall govern the amount withheld or to be withheld at the source until January first, nineteen hundred and seventeen. No returns if $3,000 and under.That in either case mentioned in subdivisions
(c)and
(d)of this section no return of income not exceeding $3,000 shall be required, except as in this title provided.
(e)Partnerships. Persons carrying on business in partnership shall be liable for Returns of individual interests.income tax only in their individual capacity, and the share of the profits of the partnership to which any taxable partner would be entitled if the same were divided, whether divided or otherwise, shall be returned for taxation and the tax paid under the provisions of this *Proviso*.Deductions allowed members.title: *Provided,* That from the net distributive interests on which the individual members shall be liable for tax, normal and additional, there shall be excluded their proportionate shares received from interest on the obligations of a State or any political or taxing subdivision thereof, and upon the obligations of the United States and its possessions, and all taxes paid to the United States or to any possession thereof, or to any State, county, or taxing subdivision of a State, and that for the purpose of computing the normal tax there shall be allowed Tax paid at source.*Ante*, p. 759.a credit, as provided by section five, subdivision (b), for their proportionate share of the profits derived from dividends. And such partnership, when requested by the Commissioner of Internal Revenue, or 763any district collector, shall render a correct return of the earnings,income tax.Contents of returns. profits, and income of the partnership, except income exempt under section four of this Act, setting forth the item of the gross income and the deductions and credits allowed by this title, and the names and addresses of the individuals who would be entitled to the net earnings, profits, and income, if distributed.
(f)In every return shall be included the income derived from dividendsBasis of other income accounts. on the capital stock or from the net earnings of any corporation, joint-stock company or association, or insurance company, except that m the case of nonresident aliens such income derived from sources without the United States shall not be included.
(g)An individual keeping accounts upon any basis other than thatBasis of other income accounts. of actual receipts and disbursements, unless such other basis does not clearly reflect his income, may, subject to regulations made by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, make his return upon the basis upon which his accounts are kept, in which case the tax shall be computed upon his income as so returned. assessment and administration.Assessment and administration. Sec. 9.
(a)That all assessments shall be made by the CommissionerNotification. of Internal Revenue and all persons shall be notified of the amount for which they are respectively liable on or before the first day of June of each successive year, and said amounts shall be paidNotification. on or before the fifteenth day of June, except in cases of refusal or neglect to make such return and in cases of erroneous, false, or fraudulent returns, in which cases the Commissioner of Internal RevenueAssessment, etc., by Commissioner if no return. shall, upon the discovery thereof, at any time within three years after said return is due, or has been made, make a return upon information obtained as provided for in this title or by existing law, or require the necessary corrections to be made, and the assessment made by the Commissioner of Internal Revenue thereon shall be paid by such person or persons immediately upon notification of the amount of such assessment; and to any sum or sums due and unpaidSurtax for nonpayment. after the fifteenth day of June in any year, and for ten days after notice and demand thereof by the collector, there shall be added the sum of five per centum on the amount of tax unpaid, and interest at the rate of one per centum per month upon said tax from the time the same became due, except from the estates of insane, deceased, or insolvent persons.
(b)All persons, firms, copartnerships, companies, corporations,Deduction of normal tax at source of income. joint-stock companies, or associations, and insurance companies, in whatever capacity acting, including lessees or mortgagors of real or personal property, trustees acting in any trust capacity, executors, administrators, receivers, conservators, employers, and all officers and employees of the United States having the control, receipt, custody, disposal, or payment of interest, rent, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable annual or periodical gains, profits, and income of another person, exceeding $3,000 for any taxable year, other than income derived from dividends on capital stock, or fromDividends not included. the net earnings of corporations and joint-stock companies or associations, or insurance companies, the income of which is taxable under this title, who are required to make and render a return in behalf of another, as provided herein, to the collector of his, her, or its district, are hereby authorized and required to deduct and withhold from such annual or periodical gains, profits, and income such sum as will be sufficient to pay the normal tax imposed thereon by this title, and shall pay the amount withheld to the officer of thePayment.Indemnity for paying. United States Government authorized to receive the same; and 764income tax.they are each hereby made personally liable for such tax, and they are each hereby indemnified against every person, corporation, association, or demand whatsoever for all payments which they shall make in pursuance and by virtue of this title. Personal claims for exemption.In all cases where the income tax of a person is withheld and deducted and paid or to be paid at the source, such person shall not *Ante*, p. 761.receive the benefit of the personal exemption allowed in section seven of this title except by an application for refund of the tax unless he shall, not less than thirty days prior to the day on which the return of his income is due, file with the person who is required to withhold and pay tax for him a signed notice in writing claiming the benefit of such exemption, and thereupon no tax shall be withheld upon the *Proviso*.Penalty for false statements.amount of such exemption: *Provided,* That if any person for the purpose of obtaining any allowance or reduction by virtue of a claim for such exemption, either for himself or for any other person, knowingly makes any false statement or false or fraudulent representation, he shall be liable to a penalty of not exceeding $300. Claims for further deductions.Requirements for allowing.And where the income tax is paid or to be paid at the source, no person shall be allowed the benefit of any deduction provided for in sections five or six of this title unless he shall, not less than thirty days To be filed at source.prior to the day on which the return of his income is due, either
(1)file with the person who is required to withhold and pay tax for him a true and correct return of his gains, profits, and income from all other sources, and also the deductions asked for, and the showing With collector.thus made shall then become a part of the return to be made in his behalf by the person required to withhold and pay the tax, or
(2)likewise make application for deductions to the collector of the district *Proviso*.Certificate of known deductions.in which return is made or to be made for him: *Provided,* That when any amount allowable as a deduction is known at the time of receipt of fixed annual or periodical income by an individual subject to tax, he may file with the person, firm, or corporation making the payment a certificate, under penalty for false claim, and in such form as shall be prescribed by the Commissioner of Internal Revenue, stating the amount of such deduction and making a claim for an allowance of the same against the amount of tax otherwise required to be deducted and withheld at the source of the income, and such certificate shall likewise become a part of the return to be made in his behalf. Returns, etc., by agents.If such person is absent from the United States, or is unable owing to serious illness to make the return and application above provided for, the return and application may be made by an agent, he making oath that he has sufficient knowledge of the affairs and property of his principal to enable him to make a full and complete return, and that the return and application made by him are full and complete.
(c)Tax to be withheld from interest on bonds, etc. The amount of the normal tax hereinbefore imposed shall be deducted and withheld from fixed or determinable annual or periodical gains, profits, and income derived from interest upon bonds and mortgages, or deeds of trust or other similar obligations of corporations, joint-stock companies, associations, and insurance companies, whether payable annually or at shorter or longer periods, although such interest does not amount to $3,000, subject to the provisions of this title requiring the tax to be withheld at the source and deducted from annual income and returned and paid to the Government.
(d)By bankers, etc., from interest on foreign obligations, dividends, etc. And likewise the amount of such tax shall be deducted and withheld from coupons, checks, or bills of exchange for or in payment of interest upon bonds of foreign countries and upon foreign mortgages or like obligations (not payable in the United States), and also from coupons, checks, or bills of exchange for or in payment of any dividends upon the stock or interest upon the obligations of foreign corporations, associations, and insurance companies engaged in business in foreign countries. 765 And the tax in such cases shall be withheld, deducted, and returnedincome tax. for and in behalf of any person subject to the tax hereinbefore imposed,Persons affected.Persons affected. although such interest or dividends do not exceed $3,000, by
(1)any banker or person who shall sell or otherwise realize coupons, checks, or bills of exchange drawn or made in payment of any such interest or dividends (not payable in the United States), and
(2)any personReceivers of payment abroad. who shall obtain payment (not in the United States), in behalf of another of such dividends and interest by means of coupons, checks, or bills of exchange, and also
(3)any dealer in such coupons who shallDealers in coupons. purchase the same for any such dividends or interest (not payable in the United States), otherwise than from a banker or another dealer in such coupons.
(e)Where the tax is withheld at the source, the benefit of theAllowance of exemptions. exemption and the deductions allowable under this title may be had by complying with the foregoing provisions of this section.
(f)All persons, firms, or corporations undertaking as a matter ofLicense required for collecting foreign payments. business or for profit the collection of foreign payments of such interest or dividends by means of coupons, checks, or bills of exchange shall obtain a license from the Commissioner of Internal Revenue, and shall be subject to such regulations enabling the Government to ascertain and verify the due withholding and payment of the income tax required to be withheld and paid as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe; and any person who shall knowingly undertake to collectPunishment for collecting without license. such payments as aforesaid without having obtained a license therefor, or without complying with such regulations, shall be deemed guilty of a misdemeanor and for each offense be fined in a sum not exceeding $5,000, or imprisoned for a term not exceeding one year, or both, m the discretion of the court.
(g)The tax herein imposed upon gains, profits, and income notPersonal returns of other income. falling under the foregoing and not returned and paid by virtue of the foregoing shall be assessed by personal return under rules and regulations to be prescribed by the Commissioner of Internal Revenue and approved by the Secretary of the Treasury. The intent andNo taxable liability released. purpose of this title is that all gains, profits, and income of a taxable class, as defined by this title, shall be charged and assessed with the corresponding tax, normal and additional, prescribed by this title, and said tax shall be paid by the owner of such income, or the proper representative having the receipt, custody, control, or disposal of the same. For the purpose of this title ownership or liabilityOwnership determined. shall be determined as of the year for which a return is required to be rendered. The provisions of this title relating to the deduction and paymentPayment of tax at source limited. of the tax at the source of income shall only apply to the normal tax hereinbefore imposed upon individuals. Part II.— On Corporations.Corporations. Sec. 10. That there shall be levied, assessed, collected, and paidNormal tax on net incomes.Domestic.*Post*, p. 1000. annually upon the total net income received in the preceding calendar year from all sources by every corporation, joint-stock company or association, or insurance company, organized in the United States, no matter how created or organized but not including partnerships, a tax of two per centum upon such income; and a like tax shall beForeign, from United States sources. levied, assessed, collected, and paid annually upon the total net income received in the preceding calendar year from all sources within the United States by every corporation, joint-stock company or association, or insurance company organized, authorized, or existing under the laws of any foreign country, including interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, and including the income derived from dividends on 766income tax.capital stock or from net earnings of resident corporations, joint-stock companies or associations, or insurance companies whose net *Proviso*.Dividends defined.income is taxable under this title: *Provided,* That the term “dividends” as used in this title shall be held to mean any distribution made or ordered to be made by a corporation, joint-stock company, association, or insurance company, out of its earnings or profits accrued since March first, nineteen hundred and thirteen, and payable to its shareholders, whether in cash or in stock of the corporation, joint-stock company, association, or insurance company, which stock dividend shall be considered income, to the amount of its cash value. Based on calendar year.The foregoing tax rate shall apply to the total net income received by every taxable corporation, joint-stock company or association, or insurance company in the calendar year nineteen hundred and sixteenFiscal year. and in each year thereafter, except that if it has fixed its own fiscal year under the provisions of existing law, the foregoing rate For 1916, at former rate, etc.shall apply to the proportion of the total net income returned for the fiscal year ending prior to December thirty-first, nineteen hundred and sixteen, which the period between January first, nineteen hundred and sixteen, and the end of such fiscal year bears to the whole of Vol. 38, p. 172.such fiscal year, and the rate fixed in Section II of the Act approved October third, nineteen hundred and thirteen, entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” shall apply to the remaining portion of the total net income returned for such fiscal year. Property acquired before March 1, 1913.For the purpose of ascertaining the gain derived or loss sustained from the sale or other disposition by a corporation, joint-stock company or association, or insurance company, of property, real, personal, or mixed, acquired before March first, nineteen hundred and thirteen, the fair market price or value of such property as of March first, nineteen hundred and thirteen, shall be the basis for determining the amount of such gain derived or loss sustained. conditional and other exemptions.Exemptions. Sec. 11. Designated organizations.
(a)That there shall not be taxed under this title any income received by any— First. Labor, etc. Labor, agricultural, or horticultural organization; Second. Mutual savings banks. Mutual savings bank not having a capital stock represented by shares; Third. Fraternal beneficiary societies, etc. Fraternal beneficiary society, order, or association, operaing under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system, and providing for the payment of life, sick, accident, or other benefits to the members of such society, order, or association or their dependents; Fourth. Building and loan associations, etc. Domestic building and loan association and cooperative banks without capital stock organized and operated for mutual purposes and without profit; Fifth. Mutual cemeteries. Cemetery company owned and operated exclusively for the benefit of its members; Sixth. Religious, etc., associations. Corporation or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual; Seventh. Business leagues, etc. Business league, chamber of commerce, or board of trade, not organized for profit and no part of the net income of which inures to the benefit of any private stockholder or individual; Eighth. Civic leagues, etc. Civic league or organization not organized for profit but operated exclusively for the promotion of social welfare; 767 Ninth. Club organized and operated exclusively for pleasure, recreation,income tax.Pleasure clubs, etc. and other nonprofitable purposes, no part of the net income of which inures to the benefit of any private stockholder or member; Tenth. Farmers’ or other mutual hail, cyclone, or fire insuranceFarmers’ local associations. company, mutual ditch or irrigation company, mutual or cooperative telephone company, or like organization of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting its expenses; Eleventh. Farmers’, fruit growers’, or like association, organizedAssociations for marketing farm products. and operated as a sales agent for the purpose of marketing the products of its members and turning back to them the proceeds of sales, less the necessary selling expenses, on the basis of the quantity of produce furnished by them; Twelfth. Corporation or association organized for the exclusiveTrustees for exempt organizations. purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization which itself is exempt from the tax imposed by this title; or Thirteenth. Federal land banks and national farm-loan associationsFederal land banks and farm loan associations.*Ante*, p. 380. as provided in section twenty-six of the Act approved July seventeenth, nineteen hundred and sixteen, entitled “An Act to provide capital for agricultural development, to create standard forms of investment based upon farm mortgage, to equalize rates of interest upon farm loans, to furnish a market for United States bonds, to create Governemnt depositaries and financial agents for the United States, and for other purposes.” Fourteenth. Joint stock land banks as to income derived fromJoint stock land banks.*Ante*, p. 374. bonds or debentures of other joint stock land banks or any Federal land bank belonging to such joint stock land bank.
(b)There shall not be taxed under this title any income derivedIncome of States, etc., from public utilities. from any public utility or from the exercise of any essential governmental function accruing to any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, nor any income accruing to the government of the Philippine Islands or Porto Rico, or of any political subdivision of the Philippine Islands or Porto Rico: *Provided,* That whenever any State, Territory, or the*Proviso*.Operated under prior contracts. District of Columbia, or any political subdivision of a State or Territory, has, prior to the passage of this title, entered in good faith into a contract with any person or corporation, the object and purpose of which is to acquire, construct, operate, or maintain a public utility, no tax shall be levied under the provisions of this title upon the income derived from the operation of such public utility, so far as the payment thereof will impose a loss or burden upon such State, Territory, or the District of Columbia, or a political subdivision of a State or Territory; but this provision is not intended to confer uponLimitations. such person or corporation any financial gain or exemption or to relieve such person or corporation from the payment of a tax as provided for in this title upon the part or portion of the said income to which such person or corporation shall be entitled under such contract. deductions.Deductions. Sec. 12.
(a)In the case of a corporation, joint-stock company orDomestic corporations, from gross revenue. association, or insurance company, organized in the United States, such net income shall be ascertained by deducting from the gross amount of its income received within the year from all sources— First. All the ordinary and necessary expenses paid within the yearBusiness expenses. in the maintenance and operation of its business and properties, including rentals or other payments required to be made as a condition to the continued use or possession of property to which the corporation has not taken or is not taking title, or in which it has no equity. 768 Second. income tax.Losses and deterioration. All losses actually sustained and charged off within the year and not compensated by insurance or otherwise, including a reasonable allowance for the exhaustion, wear and tear of property Oil and gas wells.arising out of its use or employment in the business or trade;
(a)in the case of oil and gas wells a reasonable allowance for actual reduction in flow and production to be ascertained not by the flush flow, Mine depletion.but by the settled production or regular flow;
(b)in the case of mines a reasonable allowance for depletion thereof not to exceed the market value in the mine of the product thereof which has been mined and sold during the year for which the return and computation are made, such reasonable allowance to be made in the case of both
(a)and
(b)under rules and regulations to be prescribed by the Secretary of the *Provisos*.Property acquired prior to March. 1, 1913.Treasury: *Provided,* That when the allowance authorized in
(a)and
(b)shall equal the capital originally invested, or in case of purchase made prior to March first, nineteen hundred and thirteen, the fair market value as of that date, no further allowance shall be made; Insurance reserves.and
(c)in the case of insurance companies, the net addition, if any, required by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and annuity Betterments, etc., excluded.contracts: *Provided,* That no deduction shall be allowed for any amount paid out for new buildings, permanent improvements, or betterments made to increase the value of any property or estate, and no deduction shall be made for any amount of expense of restoring property or making good the exhaustion thereof for which an allowance Mutual fire insurance, casualty, compensation, etc., companies.is or has been made: *Provided further,* That mutual fire and mutual employers’ liability and mutual workmen’s compensation and mutual casualty insurance companies requiring their members to make premium deposits to provide for losses and expenses shall not return as income any portion of the premium deposits returned to Returns required.their policyholders, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are retained by the companies for purposes other than the payment of losses and expenses and reinsurance Mutual marine insurance companies.reserves: *Provided further,* That mutual marine insurance companies shall include in their return of gross income gross premiums collected and received by them less amounts paid for reinsurance, but shall be entitled to include in deductions from gross income amounts repaid to policyholders on account of premiums previously paid by them and interest paid upon such amounts between the ascertainment Life insurance companies.thereof and the payment thereof, and life insurance companies shall not include as income in any year such portion of any actual premium received from any individual policyholder as shall have been paid back or credited to such individual policyholder, or treated as an abatement of premium of such individual policyholder, within such year; Third. Interest on indebtedness.Limitations. The amount of interest paid within the year on its indebtedness to an amount of such indebtedness not in excess of the sum of
(a)the entire amount of the paid-up capital stock outstanding at the close of the year, or, if no capital stock, the entire amount of capital employed in the business at the close of the year, and
(b)one-half of *Provisos*.Preferred stock not included.its interest-bearing indebtedness then outstanding: *Provided,* That for the purpose of this title preferred capital stock shall not be considered interest-bearing indebtedness, and interest or dividends paid upon this stock shall not be deductible from gross income: *Provided further,*Shares without nominal value. That in cases wherein shares of capital stock are issued without par or nominal value, the amount of paid-up capital stock, within the meaning of this section, as represented by such shares, will be the amount of cash, or its equivalent, paid or transferred to the corporation Secured by collateral.as a consideration for such shares: *Provided further,* That in the case of indebtedness wholly secured by property collateral, tangible or intangible, the subject of sale or hypothecation in the ordinary 769business of such corporation, joint-stock company or association as aincome tax. dealer only in the property constituting such collateral, or in loaning the funds thereby procured, the total interest paid by such corporation, company, or association within the year on any such indebtedness may be deducted as a part of its expenses of doing business, butLimitation. interest on such indebtedness shall only be deductible on an amount of such indebtedness not in excess of the actual value of such property collateral: *Provided further,* That in the case of bonds or other indebtedness,Bonds guaranteed free from tax. which have been issued with a guaranty that the interest payable thereon shall be free from taxation, no deduction for the payment of the tax herein imposed, or any other tax paid pursuant to such guaranty, shall be allowed; and in the case of a bank, bankingInterest on bank deposits. association, loan or trust company, interest paid within the year on deposits or on moneys received for investment and secured by interest bearing certificates of indebtedness issued by such bank, banking association, loan or trust company; Fourth. Taxes paid within the year imposed by the authority of theGeneral taxes. United States, or its Territories, or possessions, or any foreign country, or under the authority of any State, county, school district, or municipality, or other taxing subdivision of any State, not including those assessed against local benefits.
(b)In the case of a corporation, joint-stock company or association,Foreign corporations, from gross revenue in United States. or insurance company, organized, authorized, or existing under the laws of any foreign country, such net income shall be ascertained by deducting from the gross amount of its income received within the year from all sources within the United States— First. All the ordinary and necessary expenses actually paid withinBusiness expenses. the year out of earnings in the maintenance and operation of its business and property within the United States, including rentals or other payments required to be made as a condition to the continued use or possession of property to which the corporation has not taken or is not taking title, or in which it has no equity. Second. All losses actually sustained within the year in businessBusiness losses and deterioration. or trade conducted by it within the United States and not compensated by insurance or otherwise, including a reasonable allowance for the exhaustion, wear and tear of property arising out of its use or employment in the business or trade;
(a)and in the case
(a)ofOil and gas wells. oil and gas wells a reasonable allowance for actual reduction in flow and production to be ascertained not by the flush flow, but by the settled production or regular flow;
(b)in the case of mines a reasonableMine depletion. allowance for depletion thereof not to exceed the market value in the mine of the product thereof which has been mined and sold during the year for which the return and computation are made, such reasonable allowance to be made in the case of both
(a)and
(b)under rules and regulations to be prescribed by the Secretary of the Treasury: *Provided,* That when the allowance authorized in (a)*Provisos*.Property acquired prior to March 1, 1913. and
(b)shall equal the capital originally invested, or in case of purchase made prior to March first, nineteen hundred and thirteen, the fair market value as of that date, no further allowance shall be made; and
(c)in the case of insurance companies, the net addition, if any,Insurance reserves. required by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and annuity contracts: *Provided,* That no deduction shall be allowed for anyBetterments, excluded. amount paid out for new buildings, permanent improvements, or betterments, made to increase the value of any property or estate, and no deduction shall be made for any amount of expense of restoring property or making good the exhaustion thereof for which an allowance is or has been made: *Provided, further,* That mutualMutual fire insurance, casualty, compensation, etc., companies. fire and mutual employers’ liability and mutual workmen’s compensation and mutual casualty insurance companies requiring their members to make premium deposits to provide for losses and expenses 770income tax.Returns required.shall not return as income any portion of the premium deposits returned to their policyholders, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are retained by the companies for purposes other than the payment of losses and expenses and reinsurance Mutual marine insurance companies.reserves: *Provided further,* That mutual marine insurance companies shall include in their return of gross income gross premiums collected and received by them less amounts paid for reinsurance, but shall be entitled to include in deductions from gross income amounts repaid to policyholders on account of premiums previously paid by them, and interest paid upon such amounts between the ascertainment thereof and the payment thereof, and life insurance companies shall not include as income in any year such portion of any actual premium received from any individual policyholder as shall have been paid back or credited to such individual policyholder, or treated as an abatement of premium of such individual policyholder, within such year; Third. Interest on indebtedness.Limitations. The amount of interest paid within the year on its indebtedness to an amount of such indebtedness not in excess of the proportion of the sum of
(a)the entire amount of the paid-up capital stock outstanding at the close of the year, or, if no capital stock, the entire amount of the capital employed in the business at the close of the year, and
(b)one-half of its interest-bearing indebtedness then outstanding, which the gross amount of its income for the year from business transacted and capital invested within the United States bears to the gross amount of its income derived from all sources within *Proviso*.Bonds guaranteed free from tax.and without the United States: *Provided,* That in the case of bonds or other indebtedness which have been issued with a guaranty that the interest payable thereon shall be free from taxation, no deduction for the payment of the tax herein imposed or any other tax paid pursuant Interest on bank deposits.to such guaranty shall be allowed; and in case of a bank, banking association, loan or trust company, or branch thereof, interest paid within the year on deposits by or on moneys received for investment from either citizens or residents of the United States and secured by interest-bearing certificates of indebtedness issued by such bank, banking association, loan or trust company, or branch thereof; Fourth. General taxes. Taxes paid within the year imposed by the authority of the United States, or its Territories, or possessions, or under the authority of any State, county, school district, or municipality, or other taxing subdivision of any State, paid within the United States, not including those assessed against local benefits;
(c)Assessment insurance companies. In the case of assessment insurance companies, whether Additions to reserves.domestic or foreign, the actual deposit of sums with State or Territorial officers, pursuant to law, as additions to guarantee or reserve funds shall be treated as being payments required by law to reserve funds. returns.Returns. Sec. 13. Tax computed for calendar year.
(a)The tax shall be computed upon the net income, as thus ascertained, received within each preceding calendar year ending *Proviso*.Designated fiscal year.December thirty-first: *Provided,* That any corporation, joint-stock company or association, or insurance company, subject to this tax, may designate the last day of any month in the year as the day of the closing of its fiscal year and shall be entitled to have the tax payable by it computed upon the basis of the net income ascertained as herein provided for the year ending on the day so designated in the year preceding the date of assessment instead of upon the basis Notice of, to collector.of the net income for the calendar year preceding the date of assessment; and it shall give notice of the day it has thus designated as the closing of its fiscal year to the collector of the district in which its principal business office is located at any time not less than thirty 771days prior to the first day of March of the year in which its returnincome tax. would be filed if made upon the basis of the calendar year;
(b)Every corporation, joint-stock company or association, or insuranceTime for rendering returns. company, subject to the tax herein imposed, shall, on or before the first day of March, nineteen hundred and seventeen, and the first day of March in each year thereafter, or, if it has designated a fiscal year for the computation of its tax, then within sixty days after the close of such fiscal year ending prior to December thirty-first, nineteen hundred and sixteen, and the close of each such fiscal year thereafter, render a true and accurate return of its annual net income in the mannerForm. and form to be prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, and containing such facts, data, and information as are appropriate and in the opinion of the commissioner necessary to determine the correctness of the net income returned and to carry out the provisions of this title. The return shall be sworn to by the president, vice president,Verification. or other principal officer, and by the treasurer or assistant treasurer. The return shall be made to the collector of the district in which isTo district collector. located the principal office of the corporation, company, or association, where are kept its books of account and other data from which the return is prepared, or in the case of a foreign corporation, company,Foreign corporations. or association, to the collector of the district in which is located its principal place of business in the United States, or if it have no principal place of business, office, or agency in the United States, then to the collector of internal revenue at Baltimore, Maryland. All suchTransmittal to Commissioner. returns shall as received be transmitted forthwith by the collector to the Commissioner of Internal Revenue;
(c)In cases wherein receivers, trustees in bankruptcy, or assigneesBy receivers, trustees in bankruptcy, or assignees. are operating the property or business of corporations, joint-stock companies or associations, or insurance companies, subject to tax imposed by this title, such receivers, trustees, or assignees shall make returns of net income as and for such corporations, joint-stock companies or associations, and insurance companies, in the same manner and form as such organizations are hereinbefore required to make returns, and any income tax due on the basis of such returns made by receivers, trustees, or assingees shall be assessed and collected in the same manner as if assessed directly against the organizations of whose businesses or properties they have custody and control;
(d)A corporation, joint-stock company or association, or insuranceBasis of other income accounts. company, keeping accounts upon any basis other than that of actual receipts and disbursements, unless such other basis does not clearly reflect its income, may, subject to regulations made by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, make its return upon the basis upon which its accounts are kept, in which case the tax shall be computed upon its income as so returned;
(e)All the provisions of this title relating to the tax authorizedForeign corporations.Provisions of nonresident aliens, applicable to tax-paid dividends, etc., of.*Ante*, p. 760. and required to be deducted and withheld and paid to the officer of the United States Government authorized to receive the same from the income of nonresident alien individuals from sources within the United States shall be made applicable to incomes derived from interest upon bonds and mortgages or deeds of trust or similar obligations of domestic or other resident corporations, joint-stock companies or associations, and insurance companies by nonresident alien firms, copartnerships, companies, corporations, joint-stock companies or associations, and insurance companies not engaged in business or trade within the United States and not having any office or place of business therein;
(f)Likewise, all the provisions of this title relating to the taxTax paid at source.*Ante*, p. 759. authorized and required to be deducted and withheld and paid to 772income tax.the officer of the United States Government authorized to receive the same from the income of nonresident alien individuals from sources within the United States shall be made applicable to income derived from dividends upon the capital stock or from the net earnings of domestic or other resident corporations, joint-stock companies or associations, and insurance companies by nonresident alien companies, corporations, joint-stock companies or associations, and insurance companies not engaged in business or trade within the United States and not having any office or place of business therein. assessment and administration.Assessment and administration. Sec. 14. Notification.
(a)All assessments shall be made and the several corporations, joint-stock companies or associations, and insurance companies shall be notified of the amount for which they are respectively liable on or before the first day of June of each successive year, and Payment.said assessment shall be paid on or before the fifteenth day of June: *Provisos*.Designated fiscal year.*Provided*, That every corporation, joint-stock company or association, and insurance company, computing taxes upon the income of the fiscal year which it may designate in the manner hereinbefore provided, shall pay the taxes due under its assessment within one hundred and five days after the date upon which it is required to file Assessment, etc., by Commissioner if no return made, etc.its list or return of income for assessment; except in cases of refusal or neglect to make such return, and in cases of erroneous, false, or fraudulent returns, in which cases the Commissioner of Internal Revenue shall, upon the discovery thereof, at any time within three years after said return is due, make a return upon information Payment.obtained as provided for in this title or by existing law; and the assessment made by the Commissioner of Internal Revenue thereon shall be paid by such corporation, joint-stock company or association, or insurance company immediately upon notification of the amount Surtax for nonpayment.of such assessment; and to any sum or sums due and unpaid after the fifteenth day of June in any year, or after one hundred and five days from the date on which the return of income is required to be made by the taxpayer, and after ten days’ notice and demand thereof by the collector, there shall be added the sum of five per centum on the amount of tax unpaid and interest at the rate of one per centum per month upon said tax from the time the same becomes Refund of excess.Vol. 36, p. 112.due: *Provided,* That upon the examination of any return of income made pursuant to this title, the Act of August fifth, nineteen hundred and nine, entitled, “An Act to provide revenue, equalize duties and encourage the industries of the United States, and for other purposes”,Vol. 38, p. 172. and the Act of October third, nineteen hundred and thirteen, entitled, “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes”, if it shall appear that [R. S., sec. 3228, p. 620](/us/rs/s3228/p620).amounts of tax have been paid in excess of those properly due, the taxpayer shall be permitted to present a claim for refund thereof notwithstanding the provisions of section thirty-two hundred and twenty-eight of the Revised Statutes;
(b)Returns to be public records. When the assessment shall be made, as provided in this title, the returns, together with any corrections thereof which may have been made by the commissioner, shall be filed in the office of the Commissioner of Internal Revenue and shall constitute public records *Provisos*.Inspection restricted.and be open to inspection as such: *Provided,* That any and all such returns shall be open to inspection only upon the order of the President, under rules and regulations to be prescribed by the Secretary Access by State officers.of the Treasury and approved by the President: *Provided further,* That the proper officers of any State imposing a general income tax may, upon the request of the governor thereof, have access to said returns or to an abstract thereof, showing the name and income of each such corporation, joint-stock company or association, or insur-773ance company, at such, times and in such manner as the Secretary ofincome tax. the Treasury may prescribe;
(c)If any of the corporations, joint-stock companies or associations,Penalty for no, or false, returns. or insurance companies aforesaid shall refuse or neglect to make a return at the time or times hereinbefore specified in each year, or shall render a false or fraudulent return, such corporation, joint-stock company or association, or insurance company shall be liable to a penalty of not exceeding $10,000: *Provided,* That the Commissioner*Proviso*.Extension of time. of Internal Revenue shall have authority, in the case of either corporations or individuals, to grant a reasonable extension of time in meritorious cases, as he may deem proper.
(d)That section thirty-two hundred and twenty-five of the RevisedSecond assessments.[R. S., sec. 3225, p, 619](/us/rs/s3225/p619), amended. Statutes of the United States be, and the same is hereby, amended so as to read as follows: " “Sec. 3225. When a second assessment is made in case of any fist,No recovery under, unless proven not false, etc. statement, or return, which in the opinion of the collector or deputy collector was false or fraudulent, or contained any understatement or undervaluation, no tax collected under such assessment shall be recovered by any suit unless it is proved that the said fist, statement, or return was not false nor fraudulent and did not contain any understatementStatements of oil or gas wells and mines. or undervaluation; but this section shall not apply to statements or returns made or to be made in good faith under the laws of the United States regarding annual depreciation of oil or gas wells and mines.” " Part III.— General Administrative Provisions.General provisions- Sec. 15. That the word “State” or “United States” when used in“State” and “United States” construed. this title shall be construed to include any Territory, the District of Columbia, Porto Rico, and the Philippine Islands, when such construction is necessary to carry out its provisions. Sec. 16. That sections thirty-one hundred and sixtv-seven, thirty-oneSections of Revised Statutes amended. hundred and seventy-two, thirty-one hundred and seventy-three, and thirty-one hundred and seventy-six of the Revised Statutes of the United States as amended are hereby amended so as to read as follows: " “Sec. 3167. It shall be unlawful for any collector, deputy collector,Internal revenue.Divulging information received by officials unlawful.[R. S., sec. 3167, p. 606](/us/rs/s3167/p606), amended.Vol. 38, p. 177, amended. agent, clerk, or other officer or employee of the United States to divulge or to make known in any manner whatever not provided by law to any person the operations, style of work, or apparatus of any manufacturer or producer visited by him in the discharge of his official duties, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in anyIncome returns.s income return, or to permit any income return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law; and it shall beUnauthorized publication. unlawful for any person to print or publish in any manner whatever not provided by law any income return or any part thereof or source of income, profits, losses, or expenditures appearing in any incomePunishment. return; and any offense against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding $1,000 or by imprisonment not exceeding one year, or both, at the discretion of the court; and if the offender be an officer or employee of the UnitedDismissal of offender. States he shall be dismissed from office or discharged from employment. “Sec. 3172. Every collector shall, from time to time, cause hisInquiries by deputy collectors.[R. S., sec. 3172, p. 608](/us/rs/s3172/p608), amended.Vol. 38, p. 178, amended. deputies to proceed through every part of his district and inquire after and concerning all persons therein who are liable to pay any internal-revenue tax, and all persons owning or having the care and management of any objects liable to pay any tax, and to make a list of such persons and enumerate said objects. 774 “Sec. 3173. income tax.Yearly tax returns.[R. S., sec. 3173, p. 609](/us/rs/s3173/p609), amended.Vol. 38, p. 178, amended.Special.Income. It shall be the duty of any person, partnership, firm, association, or corporation, made liable to any duty, special tax, or other tax imposed by law, when not otherwise provided for,
(1)in case of a special tax, on or before the thirty-first day of July in each year,
(2)in case of income tax on or before the first day of March in each year, or on or before the last day of the sixty-day period next following the closing date of the fiscal year for which it makes a Other cases.return of its income, and
(3)in other cases before the day on which the taxes accrue, to make a list or return, verified by oath, to the collector or a deputy collector of the district where located, of the articles or objects, including the amount of annual income charged with a duty or tax, the quantity of goods, wares, and merchandise, made or sold and charged with a tax, the several rates and aggregate amount, according to the forms and regulations to be prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, for which such person, partnership, firm, *Provisos*.By revenue officer on failure of party.association, or corporation is liable: *Provided,* That if any person liable to pay any duty or tax, or owning, possessing, or having the care or management of property, goods, wares, and merchandise, articles or objects liable to pay any duty, tax, or license, shall fail to make and exhibit a list or return required by law, but shall consent to disclose the particulars of any and all the property, goods, wares, and merchandise, articles, and objects liable to pay any duty or tax, or any business or occupation liable to pay any tax as aforesaid, then, and in that case, it shall be the duty of the collector or deputy collector to make such list or return, which, being distinctly read, consented to, and signed and verified by oath by the person so owning, possessing, or having the care and management as aforesaid, Notice if no return made.may be received as the list of such person: *Provided further,* That in case no annual list or return has been rendered by such person to the collector or deputy collector as required by law, and the person shall be absent from his or her residence or place of business at the time the collector or a deputy collector shall call for the annual list or return, it shall be the duty of such collector or deputy collector to leave at such place of residence or business, with some one of suitable age and discretion, if such be present, otherwise to deposit in the nearest post office, a note or memorandum addressed to such person, requiring him or her to render to such collector or deputy collector the list or return required by law within ten days from the Summons, etc., on no, or false, return by party.date of such note or memorandum, verified by oath. And if any person, on being notified or required as aforesaid, shall refuse or neglect to render such list or return within the time required as aforesaid, or whenever any person who is required to deliver a monthly or other return of objects subject to tax fails to do so at the time required, or delivers any return which, in the opinion of the collector, is erroneous, false, or fraudulent, or contains any undervaluation or understatement, or refuses to allow any regularly authorized Government officer to examine the books of such person, firm, or corporation, it shall be lawful for the collector to summon such person, or any other person having possession, custody, or care of books of account containing entries relating to the business of such person, or any other person he may deem proper, to appear before him and produce such books at a time and place named in the summons, and to give testimony or answer interrogatories, under oath, respecting Authority of collector outside of district.any objects or income liable to tax or the returns thereof. The collector may summon any person residing or found within the State or Territory in which his district lies and when the person intended to be summoned does not reside and can not be found within such State or Territory, he may enter any collection district where such person may be found and there make the examination herein authorized. And to this end he may there exercise all the authority which 775he might lawfully exercise in the district for which he was commissioned:income tax. *Provided,* That ‘person as used in this section, shall be construed to include any corporation, joint-stock company or association,Corporations included.Vol. 38, p. 179, amended. or insurance company when such construction is necessary to carry out its provisions. “Sec. 3176. If any person, corporation, company, or associationReturn by official if no, or false, return made.[R. S., sec. 3176, p. 610](/us/rs/s3176/p610), amended.Vol. 38, p. 179, amended. fails to make and file a return or list at the time prescribed by law, or makes, willfully or otherwise, a false or fraudulent return or list, the collector or deputy collector shall make the return or list from his own knowledge and from such information as he can obtain through testimony or otherwise. Any return or list so made and subscribedLegal effect. by a collector or deputy collector shall be prima facie good and sufficient for all legal purposes. “If the failure to file a return or list is due to sickness or absenceExtension permitted.s the collector may allow such further time, not exceeding thirty days, for making and filing the return or list as he deems proper. “The Commissioner of Internal Revenue shall assess all taxes, otherAssessment by Commissioner. than stamp taxes, as to which returns or lists are so made by a collector or deputy ‘collector. In case of any failure to make and file aSurtax for failure. return or list within the time prescribed by law or by the collector, the Commissioner of Internal Revenue shall add to the tax fifty per centum of its amount except that, when a return is voluntarily andException. without notice from the collector filed after such time and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addition shall be made to the tax. In case aFor fraudulent list. false or fraudulent return or list is willfully made, the Commissioner of Internal Revenue shall add to the tax one hundred per centum of its amount. “The amount so added to any tax shall be collected at the sameCollection. time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the neglect, falsity, or fraud, in which case the amount so added shall be collected in the same manner as the tax.” " Sec. 17. That it shall be the duty of every collector of internalReceipts to be given for other than stamp taxes.Vol. 38, p. 179, amended. revenue, to whom any payment of any taxes is made under the provisions of this title, to give to the person making such payment a full written or printed receipt, expressing the amount paid and the particular account for which such payment was made; and whenever such payment is made such collector shall, if required, give a separate receipt for each tax paid by any debtor, on account of payments made to or to be made by him to separate creditors in such form that such debtor can conveniently produce the same separately to his several creditors in satisfaction of their respective demands to the amountsAcceptance of receipt by creditor, etc. specified in such receipts; and such receipts shall be sufficient evidence in favor of such debtor to justify him in withholding the amount therein expressed from his next payment to his creditor; but such creditor may, upon giving to his debtor a full written receipt, acknowledging the payment to him of whatever sum . may be actually paid, and accepting the amount of tax paid as aforesaid (specifying the same) as a further satisfaction of the debt to that amount, require the surrender to him of such collector’s receipt. Sec. 18. That if any individual liable to make the return or payPenalty for no returns, etc. the tax aforesaid shall refuse or neglect to make such return at the time or times hereinbefore specified m each year, he shall be liable to a penalty of not less than $20 nor more than $1,000. Any individualPunishment for fraudulent returns. or any officer of any corporation, joint-stock company or association, or insurance company required by law to make, render, sign, or verify any return who makes any false or fraudulent return or statement with intent to defeat or evade the assessment required by this title to be made shall be guilty of a misdemeanor, and shall be fined not exceeding $2,000 or be imprisoned not exceeding one year, or 776income tax.both, in the discretion of the court, with the costs of prosecution: *Proviso*.Tax paid by party, not to be re-collected at source, etc.*Provided,* That where any tax heretofore due and payable has been duly paid by the taxpayer, it shall not be re-collected from any person or corporation required to retain it at its source, nor shall any penalty be imposed or collected in such cases from the taxpayer, or such person or corporation whose duty it was to retain it, for failure to return or pay the same, unless such failure was fraudulent and for the purpose of evading payment. Sec. 19. Sworn returns. The collector or deputy collector shall require every return to be verified by the oath of the party rendering it. If the collector or deputy collector have reason to believe that the amount of any income returned is understated, he shall give due notice to the Increased if understated.person making the return to show cause why the amount of the return should not be increased, and upon proof of the amount understated may increase the same accordingly. Such person may furnish sworn testimony to prove any relevant facts, and, if dissatisfied with the Appeal to Commissioner.decision of the collector, may appeal to the Commissioner of Internal Revenue for his decision under such rules of procedure as may be prescribed by regulation. Sec. 20. Jurisdiction of district courts. That jurisdiction is hereby conferred upon the district courts of the United States for the district within which any person summoned under this title to appear to testify or to produce books shall reside, to compel such attendance, production of books, and testimony by appropriate process. Sec. 21. Yearly statistical statement of incomes, etc., to be made. That the preparation and publication of statistics reasonably available with respect to the operation of the income tax law and containing classifications of taxpayers and of income, the amounts allowed as deductions and exemptions, and any other facts deemed pertinent and valuable, shall be made annually by the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury. Sec. 22. General laws applicable. That all administrative, special, and general provisions of law, including the laws in relation to the assessment, remission, collection, and refund of internal-revenue taxes not heretofore specifically repealed and not inconsistent with the provisions of this title, are hereby extended and made applicable to all the provisions of this title and to the tax herein imposed. Sec. 23. Porto Rico and Philippines. That the provisions of this title shall extend to Porto Rico *Provisos*.Collection by insular officers for use thereof.and the Philippine Islands: *Provided,* That the administration of the law and the collection of the taxes imposed in Porto Rico and the Philippine Islands shall be by the appropriate internal-revenue officers of those governments, and all revenues collected in Porto Rico and the Philippine Islands thereunder shall accrue intact to the general Governments Jurisdiction of Philippine courts.thereof, respectively: *Provided further,* That the jurisdiction in this title conferred upon the district courts of the United States shall, so far as the Philippine Islands are concerned, be vested in the Pay of insular and District of Columbia officials taxable.courts of the first instance of said islands: *And provided further,* That nothing in this title shall be held to exclude from the computation of the net income the compensation paid any official by the governments of the District of Columbia, Porto Rico, and the Philippine Islands, or the political subdivisions thereof. Sec. 24. Former income tax provisions repealed.Vol. 38, pp. 166–181, repealed. That Section II of the Act approved October third, nineteen hundred and thirteen, entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” is hereby repealed, except as herein otherwise provided, and except that Continued for collection, etc., of accrued taxes.it shall remain in force for the assessment and collection of all taxes which have accrued thereunder, and for the imposition and collection of all penalties or forfeitures which have accrued or may accrue in relationAppropriations available. to any of such taxes, and except that the unexpended balance of any appropriation heretofore made and now available for the administration of such section or any provision thereof shall be available for the administration of this title or the corresponding provision thereof. 777 Sec. 25. That income on which has been assessed the tax imposedincome tax. by Section II of the Act entitled “An Act to reduce tariff duties and toIncome under former law not applicable hereto. provide revenue for the Government, and for other purposes,” approved October third, nineteen hundred and thirteen, shall not be considered as income within the meaning of this title: *Provided,* That*Proviso*.Designated fiscal year.*Ante*, p. 766.*Post*, p. 1004. this section shall not conflict with that portion of section ten, of this title, under which a taxpayer has fixed its own fiscal year. TITLE II.— ESTATE TAX.Estate tax. Sec. 200. That when used in this title—Construction of terms.“Person.” The term “person” includes partnerships, corporations, and associations;“United States.” The term “United States” means only the States, the Territories“Executor.” of Alaska and Hawaii, and the District of Columbia; The term “executor” means the executor or administrator of the“Collector.” decedent, or, if there is no executor or administrator, any person who takes possession of any property of the decedent; and The term “collector” means the collector of internal revenue of the district in which was the domicile of the decedent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue at Baltimore, Maryland. Sec. 201. That a tax (hereinafter in this title referred to as theTax on transfers of estates of decedents hereafter.*Post*, p. 1002. tax), equal to the following percentages of the value of the net estate, to be determined as provided in section two hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or nonresident of the United States: One per centum of the amount of such net estate not in excess ofRates. $50,000; Two per centum of the amount by which such net estate exceeds $50,000 and does not exceed $150,000; Three per centum of the amount by which such net estate exceeds $150,000 and does not exceed $250,000; Four per centum of the amount by which such net estate exceeds $250,000 and does not exceed $450,000; Five per centum of the amount by which such net estate exceeds $450,000 and does not exceed $1,000,000; Six per centum of the amount by which such net estate exceeds $1,000,000 and does nor exceed $2,000,000; Seven per centum of the amount by which such net estate exceeds $2,000,000 and does not exceed $3,000,000; Eight per centum of the amount by which such net estate exceeds $3,000,000 and does not exceed $4,000,000; Nine per centum of the amount by which such net estate exceeds $4,000,000 and does not exceed $5,000,000; and Ten per centum of the amount by which such net estate exceeds $5,000,000. Sec. 202. That the value of the gross estate of the decedent shallValue of gross estate. be determined by including the. value at the time of his death of all property, real or personal, tangible or intangible, wherever situated:Property included.Subject to administration.
(a)To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate.
(b)To the extent of any interest therein of which the decedent hasGifts, etc., in anticipation of death. at any time made a transfer, or with respect to which he has created 778estate tax.a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona fide sale for Prior transiers within two years.a fair consideration in money or money’s worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title; and
(c)Extent of joint interests. To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent. Domestic stock, etc., held by nonresidents, etc.For the purpose of this title stock in a domestic corporation owned and held by a nonresident decedent shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivision
(b)of this section, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent’s death. Sec. 203. Value of net estate.Deductions to determine.Residents. That for the purpose of the tax the value of the net estate shall be determined—
(a)In the case of a resident, by deducting from the value of the gross estate—
(1)Funeral, administration, etc., expenses and charges. Such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, and from theft, when such losses are not compensated for by insurance or otherwise, support during the settlement of the estate of those dependent upon the decedent, and such other charges against the estate, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered; and
(2)$50,000. An exemption of $50,000;
(b)Nonresidents. In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated Proportional amount of expenses.in the United States that proportion of the deductions specified in paragraph
(1)of subdivision
(a)of this section which the value of such part bears to the value of his entire gross estate, wherever Returns required.situated. But no deductions shall be allowed in the case of a nonresident unless the executor includes in the return required to be *Infra*.filed under section two hundred and five the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. Sec. 204. Payment.Discount allowed. That the tax shall be due one year after the decedent’s death. If the tax is paid before it is due a discount at the rate of five per centum per annum, calculated from the time payment is Interest if delayed.made to the date when the tax is due, shall be deducted. If the tax is not paid within ninety days after it is due interest at the rate of ten per centum per annum from the time of the decedent’s death shall Allowance for unavoidable delays, etc.be added as part of the tax, unless because of claims against the estate, necessary litigation, or other unavoidable delay the collector finds that the tax can not be determined, in which case the interest shall be at the rate of six per centum per annum from the time of the decedent’s death until the cause of such delay is removed, and thereafter at the rate of ten per centum per annum. Litigation to defeat Litigation.the payment of the tax shall not be deemed necessary litigation. Sec. 205. Notice to collector. That the executor, within thirty days after qualifying as such, or after coming into possession of any property of the dece-779dent, whichever event first occurs, shall give written notice thereofestate tax. to the collector. The executor shall also, at such times and in suchReturns by executor. manner as may be required by the regulations made under this title, file with the collector a return under oath in duplicate, setting forth
(a)the value of the gross estate of the decedent at the time of hisContents. death, or, in case of a nonresident, of that part of his gross estate situated in the United States;
(b)the deductions allowed under section*Ante*, p. 778. two hundred and three;
(c)the value of the net estate of the decedent as defined in section two hundred and three; and
(d)the tax paid or payable thereon; or such part of such information as may at the time be ascertainable and such supplemental data as may be necessary to establish the correct tax. Return shall be made in all cases of estates subject to the tax orReturns required if gross estate exceeds $60,000. where the gross estate at the death of the decedent exceeds $60,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor isPartial returns. unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The CommissionerAssessments. of Internal Revenue shall make all assessments of the tax under the authority of existing administrative special and general provisions of law relating to the assessment and collection of taxes. Sec. 206. That if no administration is granted upon the estate of aReturns by collector if no administration, etc. decedent, or if no return is filed as provided in section two hundred and five, or if a return contains a false or incorrect statement of a material fact, the collector or deputy collector shall make a return andAssessment. the Commissioner of Internal Revenue shall assess the tax thereon. Sec. 207. That the executor shall pay the tax to the collector orPayment. deputy collector. If for any reason the amount of the tax can notIf amount not determinable. be determined, the payment of a sum of money sufficient, in the opinion of the collector, to discharge the tax shall be deemed payment in full of the tax, except as in this section otherwise provided. If theRefund of excess. amount so paid exceeds the amount of the tax as finally determined, the Commissioner of Internal Revenue shall refund such excess to the executor. If the amount of the tax as finally determined exceedsPayment if insufficient. the amount so paid the commissioner shall notify the executor of the amount of such excess. From the time of such notification to theInterest. time of the final payment of such excess part of the tax, interest shall be added thereto at the rate of ten per centum per annum, and the amount of such excess shall be a hen upon the entire gross estate, except such part thereof as may have been sold to a bona fide purchaser for a fair consideration in money or money’s worth. The collector shall grant to the person paying the tax duplicateIssue of duplicate receipts. receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdiction to audit or settle his accounts. Sec. 208. That if the tax herein imposed is not paid within sixtySale of property for nonpayment. days after it is due, the collector shall, unless there is reasonable cause for further delay, commence appropriate proceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax,Disposal of proceeds. together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his 780estate tax.Reimbursement if paid by other than executor.capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable contribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. Sec. 209. Unpaid tax a lien on gross estate. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. Lien on transfers in anticipation of death.If the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money’s worth) and if the tax in respect thereto is not paid when due, the transferee or trustee shall be personally liable for such tax, and such property, to the extent of the decedent’s interest therein at the time of such transfer, shall be subject to a like lien equal to the amount of such Innocent purchasers for value exempted.tax. Any part of such property sold by such transferee or trustee to a bona fide purchaser for a fair consideration in money or money’s worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money’s worth. Sec. 210. Punishment for false statements. That whoever knowingly makes any false statement in any notice or return required to be filed by this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both, in the discretion of the court. Penalty for not making returns, etc.*Ante*, p. 778.Whoever fails to comply with any duty imposed upon him by section two hundred and five, or, having in his possession or control any record, file, or paper, containing or supposed to contain any information concerning the estate of the decedent, fails to exhibit the same upon request to the Commissioner of Internal Revenue or any collector or law officer of the United States, or his duly authorized deputy or agent, who desires to examine the same in the performance of his duties under this title, shall be liable to a penalty of not exceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. Sec. 211. Application of general laws. That all administrative, special, and general provisions of law, including the laws in relation to the assessment and collection of taxes, not heretofore specifically repealed are hereby made to apply to this title so far as applicable and not inconsistent with its provisions. Sec. 212. Regulations to be made. That the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall make such regulations, and prescribe and require the use of such books and forms, as he may deem necessary to carry out the provisions of this title. TITLE III.— MUNITION MANUFACTURER’S TAX.Munition manufacturer’s tax. Sec. 300. Construction of terms. That when used in this title— “Person.”The term “person” includes partnerships, corporations, and associations; “Taxable year.”The term “taxable year” means the twelve months ending December thirty-first. The first taxable year shall be the twelve months ending December thirty-first, nineteen hundred and sixteen; and “United States.”The term “United States” means only the States, the Territories of Alaska and Hawaii, and the District of Columbia. 781 Sec. 301.
(1)That every person manufacturing
(a)gunpowdermunition tax.Excise tax on profits of sales in United States of designated products. and other explosives, excepting blasting powder and dynamite used for industrial purposes;
(b)cartridges, loaded and unloaded, caps or primers, exclusive of those used for industrial purposes;
(c)projectiles, shells, or torpedoes of any kind, including shrapnel, loaded or unloaded, or fuses, or complete rounds of ammunition;
(d)firearms of any kind and appendages, including small arms, cannon, machine guns, rifles, and bayonets;
(e)electric motor boats, submarine or submersible vessels or boats; or
(f)any part of any of the articles mentioned in (b), (c), (d), or (e); shall pay for each taxable year, in addition to the income tax imposed by Title I, an exciseAdditional to income tax.*Ante*, p. 765. tax of twelve and one-half per centum upon the entire net profits actually received or accrued for said year from the sale or disposition of such articles manufactured within the United States: *Provided, however,* That no person shall pay such tax upon net profits*Proviso*.Contracts prior to January 1, 1916, exempt. received during the year nineteen hundred and sixteen derived from the sale and delivery of the articles enumerated in this section under contracts executed and fully performed by such person prior to January first, nineteen hundred and sixteen.
(2)This section shall cease to be of effect at the end of one yearTermination five years after present war ceases. after the termination of the present European war, which shall be evidenced by the proclamation of the President of the United States declaring such war to have ended. Sec. 302. That in computing net profits under the provisions ofComputation of net profits.Deductions. this title, for the purpose of the tax there shall be allowed as deductions from the gross amount received or accrued for the taxable year from the sale or disposition of such articles manufactured within the United States, the following items:
(a)The cost of raw materials entering into the manufacture;Raw materials.
(b)Running expenses, including rentals, cost of repairs and maintenance,Running expenses. heat, power, insurance, management, salaries, and wages;
(c)Interest paid within the taxable year on debts or loans contractedInterest. to meet the needs of the business, and the proceeds of which have been actually used to meet such needs;
(d)Taxes of all kinds paid during the taxable year with respect toTaxes on business, etc. the business or property relating to the manufacture;
(e)Losses actually sustained within the taxable year in connectionLosses. with the business of manufacturing such articles, including losses from fire, flood, storm, or other casualty, and not compensated for by insurance or otherwise; and
(f)A reasonable allowance according to the conditions peculiar toDepreciation. each concern, for amortization of the values of buildings and machinery, account being taken of the exceptional depreciation of special plants. Sec. 303. If any person manufactures any article specified in sectionSales at less than market price for personal benefit. three hundred and one and, during any taxable year or part thereof, whether under any agreement, arrangement, or understanding, or otherwise, sells or disposes of any such article at less than the fair market price obtainable therefor, either
(a)in such manner as directly or indirectly to benefit such person or any person directly or indirectly interested in the business of such person, or
(b)with intent to cause such benefit, the gross amount received or accrued forDetermination of fair price. such year or part thereof from the sale or disposition of such article shall be taken to be the amount which would have been received or accrued from the sale or disposition of such article if sold at the fair market price. Sec. 304. On or before the first day of March, nineteen hundredSworn returns of gross income from products manufactured. and seventeen, and the first day of March in each year thereafter, a true and accurate return under oath shall be made by each person manufacturing articles specified in section three hundred and one to the collector of internal revenue for the district in which such person 782munition tax.has his principal office or place of business, in such form as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, setting forth specifically the gross amount of income received or accrued from the sale or disposition of the articles specified in section three hundred and one, and from the total thereof deducting the aggregate items of allowance authorized in section three hundred and two, and such other particulars as to the gross receipts and items of allowance as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may require. Sec. 305. Assessment of tax. All such returns shall be transmitted forthwith by the collector to the Commissioner of Internal Revenue, who shall, as soon as practicable, assess the tax found due and notify the person making such return of the amount of tax for which such person is Payment.liable, and such person shall pay the tax to the collector on or before thirty days from the date of such notice. Sec. 306. Assessment by Commissioner if returns unsatisfactory. If the Secretary of the Treasury or the Commissioner of Internal Revenue shall have reason to be dissatisfied with the return as made, or if no return is made, the commissioner is authorized to make an investigation and to determine the amount of net profits Collection on notice to party.and may assess the proper tax accordingly. He shall notify the person making, or who should have made, such return and shall proceed to collect the tax in the same manner as provided in this title, Hearings.unless the person so notified shall file a written request for a hearing with the commissioner within thirty days after the date of such Party to prove incorrectness.notice; and on such hearing the burden of establishing to the satisfaction of the commissioner that the gross amount received or accrued or the amount of net profits, as determined by the commissioner, is incorrect, shall devolve upon such person. Sec. 307. Person liable for tax. The tax may be assessed on any person for the time being owning or carrying on the business, or on any person acting as agent for that person in carrying on the business, or where a business has ceased, on the person who owned or carried on the business, or acted as agent in carrying on the business immediately before the time at which the business ceased. Sec. 308. Examinations of books, etc. For the purpose of carrying out the provisions of this title the Commissioner of Internal Revenue is authorized, personally or by his agent, to examine the books, accounts, and records of any person subject to this tax. Sec. 309. Unauthorized divulging of information unlawful. No person employed by the United States shall communicate, or allow to be communicated to any person not legally entitled thereto, any information obtained under the provisions of this title, or allow any such person to inspect or have access to any return furnished under the provisions of this title. Sec. 310. Punishment for violations, etc. Whoever violates any of the provisions of this title or the regulations made thereunder, or who knowingly makes false statements in any return, or refuses to give such information as may be called for, is guilty of a misdemeanor, and upon conviction shall, in addition to paying any tax to which he is liable, be fined not more than $10,000, or imprisoned not exceeding one year, or both, in the discretion of the court. Sec. 311. General laws applicable. All administrative, special, and general provisions of law, relating to the assessment and collection of taxes not specifically repealed, are hereby made to apply to this title so far as applicable and not inconsistent with its provisions. Sec. 312. Regulations, etc., to be made. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall make all necessary regulations for carrying out the provisions of this title, and may require any person subject to such provisions to furnish him with further information whenever in his judgment the same is necessary to collect the tax provided for herein. 783 TITLE IV.— MISCELLANEOUS TAXES.Miscellaneous taxes. Sec. 400. That there shall be levied, collected, and paid a tax ofInternal revenue.Fermented liquors.Vol. 38, p. 745, amended. $1.50 on all beer, lager beer, ale, porter, and other similar fermented liquor, brewed or manufactured and sold, or stored in warehouse, or removed for consumption or sale, within the United States, by whatever name such liquors may be called, for every barrel containing not more than thirty-one gallons; and at a like rate for any other quantity or for the fractional parts of a barrel authorized and defined by law. And section thirty-three hundred and thirty-nine of the Revised[R. S., sec. 3339, p. 651](/us/rs/s3339/p651), amended. Statutes is hereby amended accordingly. Sec. 401. That natural wine within the meaning of this Act shallNatural wine.Product defined. be deemed to be the product made from the normal alcoholic fermentation of the juice of sound, ripe grapes, without addition or abstraction, except such as may occur in the usual cellar treatment of clarifying and aging: *Provided, however,* That the product made from the*Provisos*.Addition of water and sugar permitted. juice of sound, ripe grapes by complete fermentation of the must under proper cellar treatment and corrected by the addition (under the supervision of a gauger or storekeeper-gauger in the capacity of gauger) of a solution of water and pure cane, beet, or dextrose sugar (containing, respectively, not less than ninety-five per centum of actual sugar, calculated on a dry basis) to the must or to the wine, to correct natural deficiencies, when such addition shall not increase the volume of the resultant product more than thirty-five per centum, and the resultant product does not contain less than five parts per thousand of acid before fermentation and not more than thirteen per centum of alcohol after complete fermentation, shall be deemed to be wine within the meaning of this Act, and may be labeled, transported,Designation allowed. and sold as “wine,” qualified by the name of the locality where produced, and may be further qualified by the name of its own particular type or variety: *And provided further,* That wine as defined in thisSweet wine defined. section may be sweetened with cane sugar or beet sugar or pure condensed grape must and fortified under the provisions of this Act, and wines so sweetened or fortified shall be considered sweet wine within the meaning of this Act. Sec. 402.
(a)That upon all still wines, including vermuth, andTax on still wines, etc. upon all artificial or imitation wines or compound sold as wine hereafter produced in or imported into the United States, and upon all like wines which on the date this section takes effect shall be in the possession or under the control of the producer, holder, dealer, or compounder there shall be levied, collected, and paid taxes at rates as follows:Rates. On wines containing not more than fourteen per centum of absoluteAlcoholic strengths. alcohol, 4 cents per wine gallon, the per centum of alcohol taxable under this section to be reckoned by volume and not by weight. On wines containing more than fourteen per centum and not exceeding twenty-one per centum of absolute alcohol, 10 cents per wine gallon. On wines containing more than twenty-one per centum and not exceeding twenty-four per centum of absolute alcohol, 25 cents per wine gallon. All such wines containing more than twenty-four per centum ofTaxed as spirits if of higher strength. absolute alcohol by volume shall be classed as distilled spirits and shall pay tax accordingly: *Provided,* That on all unsold still wines in*Proviso*.Abatement of former tax on unsold wines.Vol. 38, p. 746. the actual possession of the producer at the time this title takes effect, upon which the tax imposed by the Act approved October twenty-second, nineteen hundred and fourteen, entitled “An Act to increase the internal revenue and for other purposes,” and the joint resolution*Ante*, p. 2. approved December seventeenth, nineteen hundred and fifteen, entitled “Joint resolution extending the provisions of the Act entitled ‘An Act to increase the internal revenue, and for other purposes,’ 784miscellaneous taxes.approved October twenty-second, nineteen hundred and fourteen, to December thirty-first, nineteen hundred and sixteen,” has been assessed,Refund if paid. the tax so assessed shall be abated, or, if paid, refunded under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe.
(b)Stamps to be affixed on removal from bonded premises. That the taxes imposed by this section shall be paid by stamp on removal of the wines from the customshouse, winery, or other bonded place of storage for consumption or sale, and every person hereafter producing, or having in his possession or under his control when this section takes effect, any wines subject to the tax imposed in this section shall file such notice, describing the premises on which such wines are produced or stored; shall execute a bond in such form; shall make such inventories under oath; and shall, prior to sale or removal for consumption, affix to each cask or vessel containing such wine such marks, labels, or stamps as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may from time to time prescribe; and the premises described in such notice shall, for the purpose of this section, be regarded as bonded Exceptions.Wines held by retail dealers.[R. S., sec. 3244, p. 623](/us/rs/s3244/p623).premises. But the provisions of this subdivision of this section, except as to payment of tax and the affixing of the required stamps or labels, shall not apply to wines held by retail dealers, as defined in section thirty-two hundred and forty-four of the Revised Statutes Produced for family use.of the United States, nor, subject to regulations prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall the tax imposed by this section apply to wines produced for the family use of the producer thereof and not sold or otherwise removed from the place of manufacture and not exceeding Stamps to be prepared.in any case two hundred gallons per year. The Commissioner of Internal Revenue is hereby authorized to have prepared and issue such stamps denoting payment of the tax imposed by this section Temporary provisions.as he may deem requisite and necessary; and until such stamps are provided the taxes imposed by this section shall be assessed and collected as other taxes are assessed and collected, and all provisions of aw relating to assessment and collection of taxes, so far as applicable, are hereby extended to the taxes imposed by this section.
(c)Withdrawal of brandy or spirits for fortification by wine producer. That under such regulations and official supervision and upon the giving of such notices, entries, bonds, and other security as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe, any producer of wines defined under the provisions of this section or section four hundred and one of this Act, may withdraw from any fruit distillery or special bonded warehouse grape brandy, or wine spirits, for the fortification of such *Proviso*.Tax levied for.wines on the premises where actually made: *Provided,* That there shall be levied and assessed against the producer of such wines a tax of 10 cents per proof gallon of grape brandy or wine spirits so used by him in the fortification of such wines during the preceding month, which assessment shall be paid by him within six months No exemptions from tax.from the date of notice thereof: *Provided further,* That nothing herein contained shall be construed as exempting any wines, cordials, liqueurs, or similar compounds from the payment of any tax provided for in this section. Fortifying puresweet wines.Vol. 26, pp. 621–623; Vol. 28, p. 568; Vol. 34, p. 215.That sections forty-two, forty-three, and forty-five of the Act of October first, eighteen hundred and ninety, as amended by section sixty-eight of the Act of August twenty-seventh, eighteen hundred and ninety-four, are further amended to read as follows: " “Sec. 42. Use of wine spirits by producer.Regulations, etc.Vol. 38, p. 747, amended. That any producer of pure sweet wines may use in the preparation of such sweet wines, under such regulations and after the filing of such notices and bonds, together with the keeping of such records and the rendition of such reports as to materials and products as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe, wine spirits produced 785by any duly authorized distiller, and the Commissioner of Internalmiscellaneous taxes.Allowance to distiller for spirits withdrawn.[R. S., sec. 3309. p. 641](/us/rs/s3309/p641). Revenue, in determining the liability of any distiller of wine spirits to assessment under section thirty-three hundred and nine of the Revised Statutes, is authorized to allow such distiller credit in his computations for the wine spirits withdrawn to be used in fortifying sweet wines under this Act. “Sec. 43. That the wine spirits mentioned in section forty-twoWine spirits defined.Vol. 38, p. 747, amended.*Ante*, p. 784. herein mentioned is the product resulting from the distillation of fermented grape juice, to which water may have been added prior to, during, or after fermentation, for the sole purpose of facilitating the fermentation and economical distillation thereof, and shall be heldBrandy included. to include the product from grapes or their residues commonly known as grape brandy, and shall include commercial grape brandy which may have -been colored with burnt sugar or caramel; and thePure sweet wine defined. pure sweet wine which may be fortified with wine spirits under the provisions of this Act is fermented or partially fermented grape juice only, with the usual cellar treatment, and shall contain no other substance whatever introduced before, at the time of, or after fermentation, except as herein expressly provided: *Provided,* That the*Provisos*.Additions of sugar, etc., allowed. addition of pure boiled or condensed grape must or pure crystallized cane or beet sugar, or pure dextrose sugar containing, respectively, not less than ninety-five per centum of actual sugar, calculated on a dry basis, or water, or any or all of them, to the pure grape juice before fermentation, or to the fermented product of such grape juice, or to both, prior to the fortification herein provided for, either for the purpose of perfecting sweet wines according to commercial standards or for mechanical purposes, shall not be excluded by the definition of pure sweet wine aforesaid: *Provided, however,*Sugar limitation. That the cane or beet sugar, or pure dextrose sugar added for sweetening purposes shall not be in excess of eleven per centum of the weight of the wine to be fortified: *And provided further,* That the addition ofAddition of water. water herein authorized shall be under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may from time to time prescribe: *Provided, however,*Regulations and inspection. That records kept in accordance with such regulations as to the percentage of saccharine, acid, alcoholic, and added water content of the wine offered for fortification shall be open to inspection by any official of the Department of Agriculture thereto duly authorized by the Secretary of Agriculture; but in no case shall such wines to whichMinimum alcoholic strength. water has been added be eligible for fortification under the provisions of this Act, where the same, after fermentation and before fortification, have an alcoholic strength of less than five per centum of their volume. “Sec. 45. That under such regulations and official supervision, andWithdrawal of wine spirits by producer of pure sweet wines.Vol. 38, p. 748, amended. upon the execution of such entries and the giving of such bonds, bills of lading, and other security as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, any producer of pure sweet wines as defined by this Act may withdraw wine spirits from any special bonded warehouse in original packages or from any registered distillery in any quantity not less than eighty wine gallons, and may use so much of the same as may be required by him under such regulations, and after the fifing of such notices and bondsRegulations, etc. and the keeping of such records and the rendition of such reports as to materials and products and the disposition of the same as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, in fortifying the pure sweet wines made by him, and for no other purpose, in accordance with the foregoing limitations and provisions; and the Commissioner of Internal Revenue,Restriction on place of withdrawal, etc. with the approval of the Secretary of the Treasury, is authorized whenever he shall deem it to be necessary for the prevention of violations of this law to prescribe that wine spirits withdrawn under this section 786miscellaneous taxes.shall not be used to fortify wines except at a certain distance prescribed by him from any distillery, rectifying house, winery, or other establishment used for producing or storing distilled spirits, or for making or storing wines other than wines which are so fortified, and that in the building in which such fortification of wines is practiced no wines or spirits other than those permitted by this regulation shall be stored in any room or part of the building in which fortification of Supervision by internal revenue officers.wines is practiced. The use of wine spirits for the fortification of sweet wines under this Act shall be under the immediate supervision of an officer of internal revenue, who shall make returns describing the kinds and quantities of wine so fortified, and shall affix such stamps and seals to the packages containing such wines as may be prescribed by the Commissioner of Internal Revenue, with the approvalRegulation and inspection. of the Secretary of the Treasury; and the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall provide by regulations the time within which wines so fortified with the wine spirits so withdrawn may be subject to inspection, and for final accounting for the use of such wine spirits and for rewarehousing or for payment of the tax on any portion of such wine spirits which remain not used in fortifying pure sweet wines.” "
(d)Withdrawal of domestic wines for storage. That under such regulations and upon the execution of such notices, entries, bonds, and other security as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe, domestic wines subject to the tax imposed by this section may be removed from the winery where produced, free of tax, for storage on other bonded premises or from said premises to *Provisos*.Limitation.For export, etc.other bonded premises: *Provided,* That not more than one such additional removal shall be allowed, or for exportation from the United States or for use as distilling material at any regularly registered distillery:Tax when used for material, by distiller.[R. S., sec. 3309, p. 641](/us/rs/s3309/p641). *Provided, however,* That the distiller using any such wine as material shall, subject to the provisions of section thirty-three hundred and nine of the Revised Statutes of the United States, as amended, be held to pay the tax on the product of such wines as will include both the alcoholic strength therein produced by fermentation and that obtained from the brandy or wine spirits added to such wines at the time of fortification.
(e)Tax on sparkling wines, etc. That upon all domestic and imported sparkling wines, liqueurs, Vol. 38, p. 746, amend ed.cordials, and similar compounds remaining in the hands of dealers when this section takes effect, or thereafter removed from the place of manufacture or storage for sale or consumption, there shall be levied and paid, by stamp, taxes as follows: Champagne.On each bottle or other container of champagne or sparkling wine, 3 cents on each one-half pint or fraction thereof. Artificially carbonated.On each bottle or other container of artificially carbonated wine, 112 cents on each one-half pint or fraction thereof. Liqueurs, cordials, etc.On each bottle or other container of liqueurs, cordials, or similar compounds, by whatever name sold or offered for sale, containing sweet wine, fortified with grape brandy under the provisions of paragraph
(c)of this section, 112 cents on each one-half pint or fraction thereof. Not applicable if tax paid under emergency Act.Vol. 38, p. 746.*Ante*, p. 2.The taxes imposed by this section shall not apply to wines, liqueurs, or cordials on which the tax imposed by the Act approved October twenty-second, nineteen hundred and fourteen, entitled “An Act to increase the internal revenue, and for other purposes,” and the joint resolution approved December seventeenth, nineteen hundred and fifteen, entitled “Joint resolution extending the provisions of the Act entitled ‘An Act to increase the internal revenue, and for other purposes,’ approved October twenty-second, nineteen hundred and fourteen, to December thirty-first, nineteen hundred and sixteen,” has been paid by stamp. 787 The Commissioner of Internal Revenue, with the approval of themiscellaneous taxes.Special stamps to be prepared. Secretary of the Treasury, is hereby authorized to have prepared suitable revenue stamps denoting the payment of the taxes imposed by this section; and all provisions of law relating to internal-revenue stamps, so far as applicable, are hereby extended to the taxes imposed by this section: *Provided,* That the collection of the tax herein prescribed*Proviso*.Collection by assessment. on imported still wines, including vermouth, and sparkling wines, including champagne, and on imported liqueurs, cordials, and similar compounds, may be made within the discretion of the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, by assessment instead of by stamps.
(f)That any person who shall evade or attempt to evade the taxPunishment for evading tax. imposed by this section, or any requirement of this section or regulation issued pursuant thereof, or who shall, otherwise than providedIllegal recovery of spirits. in this section, recover or attempt to recover any spirits from domestic or imported wine, or who shall rectify, mix, or compound withOther rectifying, etc. distilled spirits any domestic wines, other than in the manufacture of liqueurs, cordials, or similar compounds taxable under the provisions of this section, shall, on conviction, be punished for each such offense by a fine of not exceeding $5,000, or imprisonment for not more than five years, or both, and all wines, spirits, liqueurs, cordials, or similar compounds as to which such violation occurs shall be forfeited to the United States. But the provision of this subdivisionRectifying and blending permitted.[R. S., sec. 3244, p. 623](/us/rs/s3244/p623). of this section and the provision of section thirty-two hundred and forty-four of the Revised Statutes of the United States, as amended, relating to rectification, or other internal-revenue laws of the United States, shall not be held to apply to or prohibit the mixing or blending of wines subject to tax under the provisions of this section with each other or with other wines for the sole purpose of perfecting such wines according to commercial standards: *Provided,* That nothing*Proviso*.Use of grain alcohol. herein contained shall be construed as prohibiting the use of tax-paid grain or other ethyl alcohol in the fortification of sweet wines as defined in section fifty-three of this Act.
(g)That the Commissioner of Internal Revenue, by regulationsSpecial meters, locks, seals, etc., for fruit distilleries. to be approved by the Secretary of the Treasury, may require the use at each fruit distillery of such spirit meters, and such locks and seals to be affixed to fermenters, tanks, or other vessels and to such pipe connections as may in his judgment be necessary or expedient; and the said commissioner is hereby authorized to assign to anyAssignment of gaugers, etc. such distillery and to each winery where wines are to be fortified such number of gaugers or storekeeper-gaugers in the capacity of gaugers as may be necessary for the proper supervision of the manufacture of brandy or the making or fortifying of wines subject to tax imposed by this section; and the compensation of such officers shallPay, etc. not exceed $5 per diem while so assigned, together with their actual and necessary traveling expenses, and also a reasonable allowance for their board bills, to be fixed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, but not to exceed $2.50 per diem for said board bills.
(h)That the Commissioner of Internal Revenue, with the approvalAllowance for unavoidable loss. of the Secretary of the Treasury, is hereby authorized to make such allowances for unavoidable loss of wines while on storage or during cellar treatment as in his judgment may be just and proper, and to prepare all necessary regulations for carrying into effect the provisions of this section.
(i)That the second paragraph of section thirty-two hundred andDistilleries.[R. S., sec. 3264, p. 630](/us/rs/s3264/p630), amended.Vol. 20, p. 335. sixty-four, Revised Statutes of the United States of America, as amended by section five of the Act of March first, eighteen hundred and seventy-nine, and as further amended by the Act of Congress 788miscellaneous taxes.approved June twenty-second, nineteen hundred and ten, be amended so as to read as follows: " Surveys.Basis of capacity.Vol. 36, p. 590. amended.“In all surveys forty-five gallons of mash or beer brewed or fermented from grain shall represent not less than one bushel of grain, and seven gallons of mash or beer brewed or fermented from molasses Sour mash.shall represent not less than one gallon of molasses, except in distilleries operated on the sour-mash principle, in which distilleries sixty gallons of beer brewed or fermented from grain shall represent not Filtration - aeration process.less than one bushel of grain, and except that in distilleries where the filtration-aeration process is used, with the approval of the Commissioner of Internal Revenue; that is, where the mash after it leaves the mash tub is passed through a filtering machine before it is run into the fermenting tub, and only the filtered liquor passes into the No water limit here after.fermenting tub, there shall hereafter be no limitation upon the number of gallons of water which may be used in the process of mashing or filtration for fermentation; but the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, in order to protect the revenue, shall be authorized to prescribe by regulation, to be made by him, such character of survey as he may find suitable Sweet mash.for distilleries using such filtration-aeration process. The provisions hereof relating to filtration-aeration process shall apply only to sweet-mash distilleries.” " Sec. 403. Withdrawal in tank cars, etc., for export. That under such regulations as the Commissioner of [R. S., sec. 3287, p. 636](/us/rs/s3287/p636), amended.Vol. 21, p. 147.Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe, alcohol or other distilled spirits of a proof strength of not less than one hundred and eighty degrees intended for export free of tax may be drawn from receiving cisterns at any distillery, or from storage tanks in any distillery warehouse, for transfer to tanks or tank cars for export from the United States, and all provisions of existing law relating to the exportation of distilled spirits not inconsistent herewith shall apply to spirits removed for export under the provisions of this Act. Sec. 404. Fruit brandies.[R. S., sec. 3255, p. 627](/us/rs/s3255/p627), amended.Vol. 29, p. 195. That section thirty-two hundred and fifty-five of the Revised Statutes as amended by Act of June third, eighteen hundred and ninety-six, and as further amended by Act of March second, nineteen hundred and eleven, be further amended so as to read as follows: " “Sec. 3255. Distillers exempt from general spirit regulations.Vol. 36, p. 1014, amended. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may exempt distillers of brandy made exclusively from apples, peaches, grapes, pears, pineapples, oranges, apricots, berries, plums, pawpaws, persimmons, prunes, figs, or cherries from any provision of this title relating to the manufacture of spirits, except as to the tax thereon, when in his *Proviso*.Use of pomace from artificially sweetened wines.judgment it may seem, expedient to do so: *Provided,* That where, in manufacture of wine, artificial sweetening has been used the wine or the fruit pomace residuum may be used in the distillation of brandy, as such use shall not prevent the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, from exempting such distiller from any provision of this title relating to the manufacture of spirits, except as to the tax thereon, when in his judgment Additions to grape cheese.it may seem expedient to do so: *And provided further,* That the distillers mentioned in this section may add to not less than five hundred gallons (or ten barrels) of grape cheese not more than five hundred gallons of a sugar solution made from cane, beet, starch, or corn sugar, ninety-five per centum pure, such solution to have a saccharine strength of not to exceed ten per centum, and may ferment the resultant mixture on a winery or distillery premises, and such fermented product shall be regarded as distilling material.” " Sec. 405. Gin.Bottling in bond for export. That distilled spirits known commercially as gin of not less than eighty per centum proof may at any time within eight years 789after entry in bond at any distillery be bottled in bond at such distillerymiscellaneous taxes. for export without the payment of tax, under such rules and regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe. Sec. 406. That section thirty-three hundred and fifty-four of theFermented liquors.[R. S., sec. 3354, p. 654](/us/rs/s3354/p654), amended. Revised Statutes of the United States as amended by the Act approved June eighteenth, eighteen hundred and ninety, be, and is hereby, amended to read as follows: " “Sec. 3354. Every person who withdraws any fermented liquorPenalty for withdrawing, from unstamped vessels for bottling.Vol. 26, p. 161, amended. from any hogshead, barrel, keg, or other vessel upon which the proper stamp has not been affixed for the purpose of bottling the same, or who carries on or attempts to carry on the business of bottling fermented liquor in any brewery or other place in which fermented liquor is made, or upon any premises having communication with such brewery, or any warehouse, shall be liable to a fine of $500, and the property used in such bottling or business shall be liable to forfeiture: *Provided, however,* That this section shall not be construed*Provisos*.Transfers by pipe line, etc., to other buildings for bottling.Unfermented and partially fermented liquors included. to prevent the withdrawal and transfer of unfermented, partially fermented, or fermented liquors from any of the vats in any brewery by way of a pipe line or other conduit to another building or place for the sole purpose of bottling the same, such pipe line or conduit to be constructed and operated in such manner and with such cisterns, vats, tanks, valves, cocks, faucets, and gauges, or other utensils or apparatus, either on the premises of the brewery or the bottling house, and with such changes of or additions thereto, and such locks, seals, or other fastenings, and under such rules and regulations as shall beRegulations, etc. from time to time prescribed by the Commissioner of Internal Revenue, subject to the approval of the Secretary of the Treasury, and all locks and seals prescribed shall be provided by the Commissioner of Internal Revenue at the expense of the United States: *Provided further,*Payment of tax by stamps. That the tax imposed in section thirty-three hundred and thirty-nine of the Revised Statutes of the United States shall be paid on ah fermented liquor removed from a brewery to a bottling house by means of a pipe or conduit, at the time of such removal, by the cancellation and defacement, by the collector of the district or his deputy, in the presence of the brewer, of the number of stamps denoting the tax on the fermented liquor thus removed. TheDisposal after cancellation. stamps thus canceled and defaced shall be disposed of and accounted for in the manner directed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury. And any violationPenalty for violations. of the rules and regulations hereafter prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, in pursuance of these provisions, shall be subject to the penalties above provided by this section. Every owner, agent, or superintendent of any brewery or bottling house who removes, or connives at the removal of, any fermented liquor through a pipe line or conduit, without payment of the tax thereon, or who attempts in any manner to defraud the revenue as above, shall forfeit all the liquors made by and for him, and all the vessels, utensils, and apparatus used in making the same.” " special taxes.Special taxes. Sec. 407. That on and after January first, nineteen hundred andImposed annually.Vol. 38, p. 750. seventeen, special taxes shall be, and hereby are, imposed annually, as follows, that is to say: Every corporation, joint-stock company or association, now orExcise tax on capital of domestic corporations, etc. hereafter organized in the United States for profit and having a capital stock represented by shares, and every insurance company, now or hereafter organized under the laws of the United States, or any State or Territory of the United States, shall pay annually a special excise 790special taxes.tax with, respect to the carrying on or doing business by such corporation, joint-stock company or association, or insurance company, equivalent to 50 cents for each $1,000 of the fair value of its capital stock and in estimating the value of capital stock the surplus and undivided *Provisos*.Insurance companies.profits shall be included: *Provided,* That in the case of insurance companies such deposits and reserve funds as they are required by law or contract to maintain or hold for the protection of or payment to or apportionment among policyholders shall not be included. Basis.The amount of such annual tax shall in all cases be computed on the basis of the fair average value of the capital stock for the preceding Exemption of $99,000.year: *Provided,* That for the purpose of this tax an exemption of $99,000 shall be allowed from the capital stock as defined in this paragraph of each corporation, joint-stock company or association, or Credit for munition tax.*Ante*, p. 781.insurance company: *Provided further,* That a corporation, joint-stock company or association, or insurance company or actually paying the tax imposed by section three hundred and one of Title III of this Act shall be entitled to a credit as against the tax imposed by this paragraph equal to the amount of the tax so actually paid: *And provided further,*Exemptions. That this tax shall not be imposed upon any corporation, joint-stock company or association, or insurance company not engaged*Ante*, p. 766. in business during the preceding taxable year, or which is exempt under the provisions of section eleven, Title I, of this Act. Foreign corporations for business in United States.Every corporation, joint-stock company or association, or insurance company, now or hereafter organized for profit under the laws of any foreign country and engaged in business in the United States shall pay annually a special excise tax with respect to the carrying on or doing business in the United States by such corporation, joint-stock company or association, or insurance company, equivalent to 50 cents for each $1,000 of the capital actually invested in the transaction *Provisos*.Insurance companies.of its business in the United States: *Provided,* That in the case of insurance companies such deposits or reserve funds as they are required by law or contract to maintain or hold in the United States for the protection of or payment to or apportionment among Basis.policyholders, shall not be included. The amount of such annual tax shall in all cases be computed on the basis of the average amount Exemption of $99,000.of capital so invested during the preceding year: *Provided,* That for the purpose of this tax an exemption from the amount of capital so invested shall be allowed equal to such proportion of $99,000 as the amount so invested bears to the total amount invested in the transaction Return required.of business in the United States or elsewhere: *Provided, further,* That this exemption shall be allowed only if such corporation, joint-stock company or association, or insurance company makes return to the Commissioner of Internal Revenue, under regulations prescribed by him, with the approval of the Secretary of the Treasury, of the amount of capital invested in the transaction of business Credit for munition tax.outside the United States: *And provided further,* That a corporation, joint-stock company or association, or insurance company actually *Ante*, p. 781.paying the tax imposed by section three hundred and one of Title III of this act, shall be entitled to a credit as against the tax imposed by this paragraph equal to the amount of the tax so actually paid: Exemptions.*And provided further,* That this tax shall not be imposed upon any corporation, joint-stock company or association, or insurance company not engaged in business during the preceding taxable year, or *Ante*, p. 766.which is exempt under the provisions of section eleven, Title I, of this Act. Second. Brokers.Business defined. Brokers shall pay $30. Every person, firm, or company, whose business it is to negotiate purchases or sales of stocks, bonds, exchange, bullion, coined money, bank notes, promissory notes, or other securities, for others, shall be regarded as a broker. Third. Pawnbrokers.Business defined. Pawnbrokers shall pay $50. Every person, firm, or company whose business or occupation it is to take or receive, by way of 791pledge, pawn, or exchange, any goods, wares, or merchandise, or anyspecial taxes. kind of personal property whatever, as security for the repayment of money loaned thereon, shall be deemed a pawnbroker. Fourth. Ship brokers shall pay $20. Every person, firm, or companyShip brokers.Business defined. whose business it is as a broker to negotiate freights and other business for the owners of vessels, or for the shippers or consignors or consignees of freight carried by vessels, shall be regarded as a ship broker under this section. Fifth. Customhouse brokers shall pay $10. Every person, firm,Customhouse brokers.Business defined. or company whose occupation it is, as the agent of others, to arrange entries and other customhouse papers, or transact business at any port of entry relating to the importation or exportation of goods, wares, or merchandise, shall be regarded as a customhouse broker. Sixth. Proprietors of theaters, museums, and concert halls, whereProprietors of theaters, etc. a charge for admission is made, having a seating capacity of not more than two hundred and fifty, shall pay $25; having a seating capacity of more than two hundred and fifty and not exceeding five hundred, shall pay $50; having a seating capacity exceeding five hundred and not exceeding eight hundred, shall pay $75; having a seating capacity of more than eight hundred, shall pay $100. Every edificeBuildings included. used for the purpose of dramatic or operatic or other representations, plays, or performances, for admission to which entrance money is received, not including halls or armories rented or used occasionally for concerts or theatrical representations, shall be regarded as a theater: *Provided,* That in cities, towns, or villages of five thousand*Provisos*.Small communities. inhabitants or less the amount of such payment shall be one-half of that above stated: *Provided further,* That whenever any such edificePayable by lessee. is under lease at the passage of this Act, the tax shall be paid by the lessee, unless otherwise stipulated between the parties to said lease. Seventh. The proprietor or proprietors of circuses shall pay $100.Circus proprietors.Description. Every building, space, tent, or area where feats of horsemanship or acrobatic sports or theatrical performances not otherwise provided for in this section are exhibited shall be regarded as a circus: *Provided,**Proviso*.State, etc., requirements. That no special tax paid in one State, Territory, or the District of Columbia shall exempt exhibitions from the tax in another State, Territory, or the District of Columbia, and but one special tax shall be imposed for exhibitions within any one State, Territory, or District. Eighth. Proprietors or agents of all other public exhibitions orOther exhibitions. shows for money not enumerated in this section shall pay $10: *Provided,**Provisos*.Separate State, etc., requirements. That a special tax paid in one State, Territory, or the District of Columbia shall not exempt exhibitions from the tax in another State, Territory, or the District of Columbia, and but one special tax shall be required for exhibitions within any one State, Territory, or the District of Columbia: *Provided further,* That this paragraphChautauquas, etc., exempt. shall not apply to Chautauquas, lecture lyceums, agricultural or industrial fairs, or exhibitions held under the auspices of religious or charitable associations: *Provided further,* That an aggregation ofStreet fairs. entertainments, known as a street fair, shall not pay a larger tax than $100 in any State, Territory, or in the District of Columbia. Ninth. Proprietors of bowling alleys and billiard rooms shall payBowling alleys and billiard rooms.Description. $5 for each alley or table. Every building or place where bowls are thrown or where games of billiards or pool are played, except in private homes, shall be regarded as a bowling alley or a billiard room, respectively. Sec. 408. That on and after January first, nineteen hundred andTobacco, cigar, and cigarette manufacturers.[R. S., sec. 3244, p. 624](/us/rs/s3244/p624), amended. seventeen, special taxes on tobacco, cigar, and cigarette manufacturers shall be, and hereby are, imposed annually as follows, the amount of such annual taxes to be computed in all cases on the basis of the annual sales for the preceding fiscal year: Manufacturers of tobacco whose annual sales do not exceed fiftyTobacco. thousand pounds shall each pay $3; 792 special taxes.Manufacturers of tobacco whose annual sales exceed fifty thousand and do not exceed one hundred thousand pounds shall each pay $6; Manufacturers of tobacco whose annual sales exceed one hundred thousand and do not exceed two hundred thousand pounds shall each pay $12; Manufacturers of tobacco whose annual sales exceed two hundred thousand pounds shall each pay at the rate of 8 cents per thousand pounds, or fraction thereof; Cigars.Manufacturers of cigars whose annual sales do not exceed fifty thousand cigars shall each pay $2; Manufacturers of cigars whose annual sales exceed fifty thousand and do not exceed one hundred thousand cigars shall each pay $3; Manufacturers of cigars whose annual sales exceed one hundred thousand and do not exceed two hundred thousand cigars shall each pay $6; Manufacturers of cigars whose annual sales exceed two hundred thousand and do not exceed four hundred thousand cigars shall each pay $12; Manufacturers of cigars whose annual sales exceed four hundred thousand cigars shall each pay at the rate of 5 cents per thousand cigars, or fraction thereof; Cigarettes.Manufacturers of cigarettes, including small cigars weighing not more than three pounds per thousand, shall each pay at the rate of 3 cents for every ten thousand cigarettes, or fraction thereof. Tax levied on each class.In arriving at the amount of special tax to be paid under this section, and in the levy and collection of such tax, each person, firm, or corporation engaged in the manufacture of more than one of the classes of articles specified in this section shall be considered and deemed a manufacturer of each class separately. Punishment for nonpayment.Every person who carries on any business or occupation for which special taxes are imposed by this title, without having paid the special tax therein provided, shall, besides being liable to the payment of such special tax, be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not more than $500, or be imprisoned not more than six months, or both, in the discretion of the court. Sec. 409. General laws applicable. That all administrative or special provisions of law, including the law relating to the assessment of taxes, so far as applicable,Records, etc., required. are hereby extended to and made a part of this title, and every person, firm, company, corporation, or association liable to any tax imposed by this title, shall keep such records and render, under oath, such statements and returns, and shall comply with such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may from time to time prescribe. Sec. 410. Emergency internal revenue tax Act repealed.Vol. 38, p. 745.*Ante*, p. 2. That the Act approved October twenty-second, nineteen hundred and fourteen, entitled “An Act to increase the internal revenue, and for other purposes,” and the joint resolution approved December seventeenth, nineteen hundred and fifteen, entitled “Joint resolution extending the provisions of the Act entitled ‘An Act to increase the internal revenue, and for other purposes,’ approved October twenty-second, nineteen hundred and fourteen, to December thirty-first, nineteen hundred and sixteen,” are hereby Sections continued until January 1, 1917.repealed, except sections three and four of such Act as so extended, which sections shall remain in force till January first, nineteen Provisions continued for collection of special taxes, etc.hundred and seventeen, and except that the provisions of the said Act shall remain in force for the assessment and collection of all special taxes imposed by sections three and four thereof, or by such sections as extended by said joint resolution, for any year or part thereof ending prior to January first, nineteen hundred and seventeen, and of all other taxes imposed by such Act, or by such Act as so extended, accrued prior to the taking effect of this title, and for 793the imposition and collection of all penalties or forfeitures whichspecial taxes. have accrued or may accrue in relation to any of such taxes. Sec. 411. That the Commissioner of Internal Revenue, subject toAllowance for, or redemption of, unused stamps.Vol. 38, p. 745.*Ante*, p. 2. regulation prescribed by the Secretary of the Treasury, may make allowance for or redeem stamps, issued, under authority of the Act approved October twenty-second, nineteen hundred and fourteen, entitled “An Act to increase the internal revenue, and for other purposes,” and the joint resolution approved December seventeenth, nineteen hundred and fifteen, entitled “Joint resolution extending the provisions of the Act entitled ‘An Act to increase the internal revenue, and for other purposes,’ approved October twenty-second, nineteen hundred and fourteen, to December thirty-first, nineteen hundred and sixteen,” to denote the payment of internal revenue tax, and which have not been used, if presented within two years after the purchase of such stamps. Sec. 412. That the provisions of this title shall take effect on theIn effect day following passage. day following the passage of this Act, except where otherwise in this title provided. Sec. 413. That all internal revenue agents and inspectors beLeaves of absence allowed agents and inspectors. granted leave of absence with pay, which shall not be cumulative, not to exceed thirty days in any calendar year, under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe. TITLE V.— DYESTUFFS.Dyestuffs.Customs. Sec. 500. That on and after the day following the passage of thisDuties imposed on specified imports. Act, except as otherwise specially provided for in this title, there shall be levied, collected, and paid upon the articles named in this section when imported from any foreign country into the United States or into any of its possessions, except the Philippine Islands and the islands of Guam and Tutuila, the rates of duties which are prescribed in this title, namely: free list.Free list. Group I. Acenaphthene, anthracene having a purity of less thanCoal tar products, etc. twenty-five per centum, benzol, carbazol having a purity of less than twenty-five per centum, cresol, cumol, fluorene, metacresol having a purity of less than ninety per centum, methylanthracene, methylnaphthalene, naphthalene having a solidifying point less than seventy-nine degrees centigrade, orthocresol having a purity of less than ninety per centum, paracresol having a purity of less than ninety per centum, pyridin, quinolin, toluol, xylol, crude coal tar, pitch of coal tar, dead or creosote oil, anthracene oil, all other distillates which on being subjected to distillation yield in the portion distilling below two hundred degrees centigrade a quantity of tar acids less than five per centum of the original distillate, and all other products that are found naturally in coal tar, whether produced or obtained from coal tar or other source, and not otherwise specially provided for in this title, shall be exempt from duty. dutiable list.Dutiable list. Group II. Amidonaphthol, amidophenol, amidosalicylic acid, anilinCoal tar products, etc. oil, anilin salts, anthracene having a purity of twenty-five per centum or more, anthraquinone, benzoic acid, benzaldehyde, benzylchloride, benzidin, binitrobenzol, binitrochlorobenzol, binitronaphthalene, binitrotoluol, carbazol having a purity of twenty-five per centum or more, chlorophthalic acid, cumidin, dimethylanihn, dianisidin, dioxynaph-794dyestuffs.thalene, diphenylaimin, metacresol having a purity of ninety per centum or more, methylanthraquinone, metanilic acid, naphthalene having a solidifying point of seventy-nine degrees centigrade or above, naphtnylamin, naphthol, naphthylenediamin, nitrobenzol, nitrotoluol, nitronaphthalene, nitranilin, nitrophenylenediamin, nitrotoluylenediamin, orthocresol having a purity of ninety per centum or more, paracresol having a purity of ninety per centum or more, phenol, phthalic acid, phthalic anhydride, phenylenediamin, phenylnaphthylamin, resorcin, salicvlic acid, sulphanilic acid, toluidin, tolidin, toluylenediamin, xylidin, or any sulphoacid or sulphoacid salt of any of the foregoing, all similar products obtained, derived, or manufactured in whole or in part from the products provided for Exceptions.in Group I, and all distillates which on being subjected to distillation yield in the portion distilling below two hundred degrees centigrade a quantity of tar acids equal to or more than five per centum of the original distillate, all the foregoing not colors, dyes, or stains, photographic chemicals, medicinals, flavors, or explosives, and not otherwise provided for in this title, and provided for in the paragraphs of the Act of October third, nineteen hundred and thirteen, which are hereinafter specifically repealed by section five hundred and two, fifteen per centum ad valorem. Group III. Derivative colors, medicinals, explosives, etc. All colors, dyes, or stains, whether soluble or not in water, color acids, color bases, color lakes, photographic chemicals, medicinals, flavors, synthetic phenolic resin, or explosives, not otherwise specially provided for in this title, when obtained, derived, or manufactured in whole or in part from any of the products provided for in Groups I and II, natural alizarin and indigo, and colors, dyes, or color lakes obtained, derived, or manufactured therefrom, thirty per centum ad valorem. Sec. 501. Additional specific duties. That on and after the day following the passage of this Act, in addition to the duties provided in section five hundred, there shall be levied, collected, and paid upon all articles contained in Group II a special duty of 212 cents per pound, and upon all articles contained in Group III (except natural and synthetic alizarin, and dyes obtained from alizarin, anthracene, and carbazol; natural and synthetic indigo and all indigoids, whether or not obtained from indigo; and medicinals and flavors), a special duty of 5 cents per pound. Annual reduction of special duties after five years.During the period of five years beginning five years after the passage of this Act such special duties shall be annually reduced by twenty per centum of the rate imposed by this section, so that at the end of such period such special duties shall no longer be assessed, Abolition after five years if not designated quantity of domestic production.levied, or collected; but if, at the expiration of five years from the date of the passage of this Act, the President finds that there is not being manufactured or produced within the United States as much as sixty per centum in value of the domestic consumption of the articles mentioned in Groups II and HI of section five hundred, he shall by proclamation so declare, whereupon the special duties imposed by this section on such articles shall no longer be assessed, levied, or collected. Sec. 502. Coal-tar products, etc., in Tariff of 1913, repealed.Vol. 38, pp. 115, 116, 114. That paragraphs twenty, twenty-one, twenty-two, and twenty-three and the words “salicylic acid” in paragraph one of Schedule A of section one of an Act entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other Vol. 38, pp. 153, 156, 158.purposes,” approved October third, nineteen hundred and thirteen, and paragraphs three hundred and ninety-four, four hundred and Vol. 38, p. 152.fifty-two, and five hundred and fourteen, and the words “carbolic” and “phthalic,” in paragraph three hundred and eighty-seven of the Other inconsistent provisions.“free list” of section one of said Act, and so much of said Act or any existing law or parts of law as may be inconsistent with this title are hereby repealed. 795 TITLE VI.— PRINTING PAPER.Printing paper. Sec. 600. That paragraph three hundred and twenty-two, ScheduleTariff provisions amended.Vol. 38, pp. 144, 160. M, and paragraph five hundred and sixty-seven of the free list of the Act entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” approved October third, nineteen hundred and thirteen, be amended so that the same shall read as follows: " “322. Printing paper (other than paper commercially known asPrinting paper.Duty on.Vol. 38, p. 144, amended. handmade or machine handmade paper, japan paper, and imitation japan paper by whatever name known), unsized, sized, or glued, suitable for the printing of books and newspapers, but not for covers or bindings, not specially provided for in this section, valued above 5Minimum value increased.*Proviso*.Countervailing duty if export duty, etc., imposed. cents per pound, twelve per centum ad valorem: *Provided, however,* That if any country, dependency, province, or other subdivision of government shall impose any export duty, export license fee, or other charge of any kind whatsoever (whether in the form of additional charge or license fee or otherwise) upon printing paper, wood pulp, or wood for use in the manufacture of wood pulp, there shall be imposed upon printing paper, values above 5 cents per pound, when imported either directly or indirectly from such country, dependency, province, or other subdivision of government, an additional duty equal to the amount of the highest export duty or other export charge imposed by such country, dependency, province, or other subdivision of government, upon either printing paper or upon an amount of wood pulp, or wood for use in the manufacture of wood pulp necessary to manufacture such printing paper. “567. Printing paper (other than paper commercially known asFree of duty.Vol. 38, p. 160, amended. handmade or machine handmade paper, japan paper, and imitation japan paper by whatever name known), unsized, sized, or glued, suitable for the printing of books and newspapers, but not for covers or bindings, not specially provided for in this section, valued at notMaximum value increased. above 5 cents per pound, decalcomania paper not printed.” " TITLE VII.— TARIFF COMMISSION.Tariff Commission. Sec. 700. That a commission is hereby created and established,Created.Composition, appointment, etc. to be known as the United States Tariff Commission (hereinafter in this title referred to as the commission), which shall be composed of six members, who shall be appointed by the President, by and with the advice and consent of the Senate, not more than three of whom shall be members of the same political party. In making said appointments members of different political parties shall alternate as nearly as may be practicable. The first members appointed shallTerms. continue in office for terms of two, four, six, eight, ten, and twelve years, respectively, from the date of the passage of this Act, the term of each to be designated by the President, but their successors shall be appointed for terms of twelve years, except that any person chosen to fill a vacancy shall be appointed only for the unexpired term of the member whom he shall succeed. The President shallChairman and vice chairman. designate annually the chairman and vice chairman of the commission. No member shall engage actively in any other business, function,Other employment forbidden.Removal, etc. or employment. Any member may be removed by the President for inefficiency, neglect of duty, or malfeasance in office. A vacancy shall not impair the right of the remaining members to exercise all the powers of the commission, but no vacancy shall extend beyond any session of Congress. Sec. 701. That each commissioner shall receive a salary of $7,500Salaries. per year, payable monthly. The commission shall appoint a secretary, who shall receive a salary of $5,000 per year, payable in Eke manner, and it shall have authority to employ and fix the compen-796sationstariff commission.Employees, etc. of such special experts, examiners, clerks, and other employees as the commission may from time to time find necessary for the proper performance of its duties. Application of civil service laws.With the exception of the secretary, a clerk to each commissioner, and such special experts as the commission may from time to time find necessary for the conduct of its work, all employees of the commission shall be appointed from lists of eligibles to be supplied by the Civil Service Commission and in accordance with the civil-service law. Payment of expenses.All of the expenses of the commission, including all necessary expenses for transportation incurred by the commissioners or by their employees under their orders in making any investigation or upon official business in any other places than at their respective headquarters, shall be allowed and paid on the presentation of itemized vouchers therefor approved by the commission. Offices, equipment etc.Unless otherwise provided by law, the commission may rent suitable offices for its use, and purchase such furniture, equipment, and supplies as may be necessary. Places of meetings.The principal office of the commission shall be in the city of Washington, but it may meet and exercise all its powers at any other place. The commission may, by one or more of its members, or by such agents as it may designate, prosecute any inquiry necessary to its duties in any part of the United States or in any foreign country. Sec. 702. Investigations to be made.Subjects specified. That it shall be the duty of said commission to investigate the administration and fiscal and industrial effects of the customs laws of this country now in force or which may be hereafter enacted, the relations between the rates of duty on raw materials and finished or partly finished products, the effects of ad valorem and specific duties and of compound specific and ad valorem duties, all questions relative to the arrangement of schedules and classification of articles in the several schedules of the customs law, and, in general, to investigate the operation of customs laws, including their relation to the Federal revenues, their effect upon the industries and labor of the Reports.country, and to submit reports of its investigations as hereafter provided. Sec. 703. Disposal of information. That the commission shall put at the disposal of the President of the United States, the Committee on Ways and Means of the House of Representatives, and the Committee on Finance of the Senate, whenever requested, all information at its command, and shall make such investigations and reports as may be requested by the President or by either of said committees or by either branch of Annual reports.the Congress, and shall report to Congress on the first Monday of December of each year hereafter a statement of the methods adopted and all expenses incurred, and a summary of all reports made during the year. Sec. 704. Investigation of tariff relations with foreign countries, etc. That the commission shall have power to investigate the tariff relations between the United States and foreign countries, commercial treaties, preferential provisions, economic alliances, the effect of export bounties and preferential transportation rates, the volume of importations compared with domestic production and consumption, and conditions, causes, and effects relating to competition of foreign industries with those of the United States, including dumping and cost of production. Sec. 705. Cost of production service in Department of Commerce transferred to Commission. That upon the organization of the commission, the Cost of Production Division in the Bureau of Foreign and Domestic Commerce in the Department of Commerce shall be transferred to said commission, and the clerks and employees of said division shall be transferred to and become clerks and employees of the commission, and all records, papers, and property of the said division and of the former tariff board shall be transferred to and become the records, papers, and property of the commission. 797 Sec. 706. That for the purposes of carrying this title into effect thetariff commission. commission or its duly authorized agent or agents shall have accessAuthority to secure information. to and the right to copy any document, paper, or record, pertinent to the subject matter under investigation, in the possession of any person, firm, copartnership, corporation, or association engaged in the production, importation, or distribution of any article under investigation, and shall have power to summon witnesses, take testimony,Powers to take testimony, etc. administer oaths, and to require any person, firm, copartnership, corporation, or association to produce books or papers relating to any matter pertaining to such investigation. Any member of theSubpoenas, etc. commission may sign subpoenas, and members and agents of the commission, when authorized by the commission, may administer oaths and affirmations, examine witnesses, take testimony, and receive evidence. Such attendance of witnesses and the production of such documentaryAttendance of witnesses. evidence may be required from any place in the United States at any designated place of hearing. And in case of disobedienceEnforced by district courts. to a subpoena the commission may invoke the aid of any district court of the United States in requiring the attendance and testimony of witnesses and the production of documentary evidence, and suchPunishment for contempt. court within the jurisdiction of which such inquiry is carried on may, in case of contumacy or refusal to obey a subpoena issued to any corporation or other person, issue an order requiring such corporation or other person to appear before the commission, or to produce documentary evidence if so ordered, or to give evidence touching the matter in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. Upon the application of the Attorney General of the United States,Writs of mandamus authorized. at the request of the commission, any such court shall have jurisdiction to issue writs of mandamus commanding compliance with the provisions of this title or any order of the commission made in pursuance thereof. The commission may order testimony to be taken by deposition inTestimony by depositions. any proceeding or investigation pending under this title at any stage of such proceeding or investigation. Such depositions may be taken before any person designated by the commission and having power to administer oaths. Such testimony shall be reduced to writing by the person taking the deposition, or under his direction, and shall then be subscribed by the deponent. Any person, firm, copartnership,Documentary evidence. corporation, or association, may be compelled to appear and depose and to produce documentary evidence in the same manner as witnesses may be compelled to appear and testify and produce documentary evidence before the commission, as hereinbefore provided. Witnesses summoned before the commission shall be paid the sameFees and mileage of witnesses. fees and mileage that are paid witnesses in the courts of the United States, and witnesses whose depositions are taken and the persons taking the same, except employees of the commission, shall severally be entitled to the same fees and mileage as are paid for like services in the courts of the United States: *Provided,* That no person shall be*Proviso*.Compulsory testimony. excused, on the ground that it may tend to incriminate him or subject him to a penalty or forfeiture, from attending and testifying, or producing books, papers, documents, and other evidence, in obedience to the subpoena of the commission; but no natural person shallCriminal immunity. be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing as to which, in obedience to a subpoena and under oath, he may so testify or produce evidence, except that no person shall be exempt from prosecution and punishmentPerjury excepted. for perjury committed in so testifying. Sec. 707. That the said commission shall in appropriate mattersCooperation by executive departments, etc. act in conjunction and cooperation with the Treasury Department, the Department of Commerce, the Federal Trade Commission, or any other departments, or independent establishments of the Gov-798ernment,tariff commission. and such departments and independent establishments of the Government shall cooperate fully with the commission for the purposes of aiding and assisting in its work, and, when directed by the President, shall furnish to the commission, on its request, all records, Details of officials.papers, and information in their possession relating to any of the subjects of investigation by said commission and shall detail, from time to time, such officials and employees to said commission as he may direct. Sec. 708. Unauthorized divulging of information, unlawful. It shall be unlawful for any member of the United States Tariff Commission, or for any employee, agent, or clerk of said commission, or any other officer or employee of the United States, to divulge, or to make known in any manner whatever not provided for by law, to any person, the trade secrets or processes of any person, firm, copartnership, corporation, or association embraced m any examination or investigation conducted by said commission, or by Punishment for offenses.order of said commission, or by order of any member thereof. Any offense against the provisions of this section shall be a misdemeanor and be punished by a fine not exceeding $1,000, or by imprisonment not exceeding one year, or both, in the discretion of the court, and such offender shall also be dismissed from office or discharged from employment. The commission shall have power to investigate the Paris Economy Pact, etc., investigation.Paris Economy Pact and similar organizations and arrangements in Europe. Sec. 709. Appropriation for expenses. That there is hereby appropriated, for the purpose of defraying the expense of the establishment and maintenance of the commission, including the payment of salaries herein authorized, out of any money in the Treasury of the United States not otherwise appropriated, the sum of $300,000 for the fiscal year ending June Subsequent authorization.thirtieth, nineteen hundred and seventeen, and for each fiscal year thereafter a like sum is authorized to be appropriated. TITLE VIII.— UNFAIR COMPETITION.Unfair competition. Sec. 800. “Person” construed. That when used in this title the term “person” includes partnerships, corporations, and associations. Sec. 801. Importing and selling articles systematically below market value, unlawful. That it shall be unlawful for any person importing or assisting in importing any articles from any foreign country into the United States, commonly and systematically to import, sell or cause to be imported or sold such articles within the United States at a price substantially less than the actual market value or wholesale price of such articles, at the time of exportation to the United States, in the principal markets of the country of their production, or of other foreign countries to which they are commonly exported, after adding to such market value or wholesale price, freight, duty, and other charges and expenses necessarily incident to the importation *Proviso*.If with intent to injure United States industry, etc.and sale thereof in the United States: *Provided,* That such act or acts be done with the intent of destroying or injuring an industry in the United States, or of preventing the establishment of an industry in the United States, or of restraining or monopolizing any part of trade and commerce in such articles in the United States. Punishment for violations.Any person who violates or combines or conspires with any other person to violate this section is guilty of a misdemeanor, and, on conviction thereof, shall be punished by a fine not exceeding $5,000, or imprisonment not exceeding one year, or both, in the discretion of the court. Party injured may sue, etc.Any person injured in his business or property by reason of any violation of, or combination or conspiracy to violate, this section, may sue therefor in the district court of the United States for the district in which the defendant resides or is found or has an agent, Threefold damages allowed.without respect to the amount in controversy, and shall recover threefold the damages sustained, and the cost of the suit, including a reasonable attorney’s fee. 799 The foregoing provisions shall not be construed to deprive theunfair competition.State jurisdiction unimpaired.Double duty added on articles imported with restriction not to deal with those of other persons. proper State courts of jurisdiction in actions for damages thereunder. Sec. 802. That if any article produced in a foreign country is imported into the United States under any agreement, understanding, or condition that the importer thereof or any other person in the United States shall not use, purchase, or deal in, or shall be restricted in his using, purchasing, or dealing in, the articles of any other person, there shall be levied, collected, and paid thereon, in addition to the duty otherwise imposed by law, a special duty equal to double the amount of such duty: *Provided,* That the above shall not be*Provisos*.Exclusive agencies allowed. interpreted to prevent the establishing in this country on the part of a foreign producer of an exclusive agency for the sale in the United States of the products of said foreign producer or merchant, nor to prevent such exclusive agent from agreeing not to use, purchase, or deal in the article of any other person, but this proviso shall not beCondition. construed to exempt from the provisions of this section any article imported by such exclusive agent if such agent is required by the foreign producer or if it is agreed between such agent and such foreign producer that any agreement, understanding or condition set out in this section shall be imposed by such agent upon the sale or other disposition of such article to any person in the United States. Sec. 803. That the Secretary of the Treasury shall make such rulesRegulations to be made. and regulations as are necessary for the carrying out of the provisions of section eight hundred and two. Sec. 804. That whenever any country, dependency, or colony shallProhibition of importation of articles refused admission in foreign country. prohibit the importation of any article the product of the soil or industry of the United States and not injurious to health or morals, the President shall have power to prohibit, during the period such prohibition is in force, the importation into the United States of similar articles, or in case the United States does not import similarOr similar articles. articles from that country, then other articles, the products of such country, dependency, or colony. And the Secretary of the Treasury, with the approval of the President,Rules, etc., authorized. shall make such rules and regulations as are necessary for the execution of the provisions of this section. Sec. 805. That whenever during the existence of a war in whichProhibition authorized during a foreign war, of imports from country excluding articles from United States contrary to law of nations. the United States is not engaged, the President shall be satisfied that there is reasonable ground to believe that under the laws, regulations, or practices of any country, colony, or dependency contrary to the law and practice of nations, the importation into their own or any other country, dependency, or colony of any article the product of the soil or industry of the United States and not injurious to health or morals is prevented or restricted the President is authorized and empowered to prohibit or restrict during the period such prohibition or restriction is in force, the importation into the United States of similar or other articles, products of such country, dependency, or colony as in his opinion the public interest may require; and in suchProclamation of prohibition. case he shall make proclamation stating the article or articles which are prohibited from importation into the United States; and anyPunishment for violations. person or persons who shall import, or attempt or conspire to import, or be concerned in importing, such article or articles, into the United States contrary to the prohibition in such proclamation, shall be Hable to a fine of not less than $2,000 nor more than $50,000, or to imprisonment not to exceed two years, or both, in the discretion of the court. The President may change, modify, revoke, or renewChanges, etc., authorized. such proclamation in his discretion. Sec. 806. That whenever, during the existence of a war in which theRefusal of clearance, in time of a foreign war, to vessel discriminating unfairly in traffic of American citizens, etc. United States is not engaged, the President shall be satisfied that there is reasonable ground to believe that any vessel, American or foreign, is, on account of the laws, regulations, or practices of a belligerent Government, making or giving any undue or unreasonable preference 800unfair competition.or advantage in any respect whatsoever to any particular person, company, firm, or corporation, or any particular description of traffic in the United States or its possessions or to any citizens of the United States residing in neutral countries abroad, or is subjecting any particular person, company, firm, or corporation or any particular description of traffic in the United States or its possessions, or any citizens of the United States residing in neutral countries abroad to any undue or unreasonable prejudice, disadvantage, injury, or discrimination in regard to accepting, receiving, transporting, or delivering, or refusing to accept, receive, transfer, or deliver any cargo, freight or passengers, or in any other respect whatsoever, he is hereby authorized and empowered to direct the detention of such vessels by withholding clearance or by formal notice forbidding departure, and to revoke, modify, or renew any such direction. Vessels of belligerent country refusing equal facilities to American ships may be withheld, clearance.That whenever, during the existence of a war in which the United States is not engaged, the President shall be satisfied that there is reasonable ground to believe that under the laws, regulations, or practices of any belligerent country or Government, American ships or American citizens are not accorded any of the facilities of commerce which the vessels or citizens of that belligerent country enjoy in the United States or its possessions, or are not accorded by such belligerent equal privileges or facilities of trade with vessels or citizens of any nationality other than that of such belligerent, the President is hereby authorized and empowered to withhold clearance from one or more vessels of such belligerent country until such belligerent shall restore to such American vessels and American citizens reciprocal President may direct refusal of facilities, etc., to vessels or citizens of foreign belligerent, if denied to Americans.liberty of commerce and equal facilities of trade; or the President may direct that similar privileges and facilities, if any, enjoyed by vessels or citizens of such belligerent in the United States or its possessions be refused to vessels or citizens of such belligerent; and in such case he shall make proclamation of his direction, stating the facilities and privileges which shall be refused, and the belligerent to whose vessels or citizens they are to be refused, and thereafter the furnishing of such prohibited privileges and facilities to any vessel or citizen of the belligerent named in such proclamation shall be unlawful; and he may change, modify, revoke, or renew such proclamation; Punishment for furnishing prohibited facilities.and any person or persons who shall furnish or attempt or conspire to furnish or be concerned in furnishing or in the concealment of furnishing facilities or privileges to ships or persons contrary to the prohibition in such proclamation shall be liable to a fine of not less than $2,000 nor more than $50,000 or to imprisonment not to exceed two years, or both, in the discretion of the court. Punishment for attempted illegal departure, etc.In case any vessel which is detained by virtue of this Act shall depart or attempt to depart from the jurisdiction of the United States without clearance or other lawful authority, the owner or master or person or persons having charge or command of such vessel shall be severally liable to a fine of not less than $2,000 nor more than $10,000, or to imprisonment not to exceed two years, or both, and in addition such vessel shall be forfeited to the United States. Land and naval forces authorized to enforce provisions.That the President of the United States is hereby authorized and empowered to employ such part of the land or naval forces of the United States as shall be necessary to carry out the purposes of this Act. TITLE IX. Sec. 900. Invalidity of any clause, etc., not to affect remainder of Act. That if any clause, sentence, paragraph, or part of this Act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of said Act, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered. 801 Sec. 901. The Act approved August twenty-ninth, nineteen hundredSupport of families of drafted enlisted men, etc.*Ante*, p. 649, amended. and sixteen, being an Act making appropriations for the support of the Army for the fiscal year ending June thirtieth, nineteen hundred and seventeen, and for other purposes, is hereby amended as follows: " “The sum of $2,000,000, therein appropriated to be expendedBasis of payment. under the direction of the Secretary of War for the support of the family of each enlisted man of the Organized Militia or National Guard, or of the Regular Army, as therein provided, shall be available to be paid on the basis of and for time subsequent to June eighteenth, nineteen hundred and sixteen, the date of the call by the President, and the time for which such payment shall be made shall correspond with the time of service of the enlisted men, and payment shall beWhether enlisted before or after call. made without reference to the enlisted man having enlisted before or after the call by the President.” " Sec. 902. That unless otherwise herein specially provided, this ActEffect. shall take effect on the day following its passage, and all provisionsInconsistent laws repealed. of any Act or Acts inconsistent with the provisions of this Act are hereby repealed. Approved, September 8, 1916.