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Code · STATUTES-AT-LARGE · Vol. 40 STAT. · February 24, 1919 · Chapter 18

Chapter 18. To provide revenue, and for other purposes

64,942 words·~295 min read·/statutes-at-large/vol-40/chapter-18-4422217·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

CHAP. 18.— An Act To provide revenue, and for other purposes. February 24, 1919. [[H. R. 12863](/us/bill/65/hr/12863).] [[Public, No. 254](/us/pl/65/254).] *Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled*, Revenue Act of 1918. TITLE I.—GENERAL DEFINITIONS.General definitions. Section 1. That when used in this Act— The term “person” includes partnerships and corporations, asGeneral definitions. well as individuals; 1058 General definitions. *revenue act of 1918*.
“Corporation.”The term “corporation” includes associations, joint-stock companies, and insurance companies; “Domestic.”The term “domestic” when applied to a corporation or partnership means created or organized in the United States; “Foreign.”The term “foreign” when applied to a corporation or partnership means created or organized outside the United States; “United States.”The term “United States” when used in a geographical sense includes only the States, the Territories of Alaska and Hawaii, and the District of Columbia;
“Secretary.”The term “Secretary” means the Secretary of the Treasury; “Commissioner”The term “Commissioner” means the Commissioner of Internal Revenue; “Collector.”The term “collector” means collector of internal revenue; “Revenue Act of 1916.” Vol. 39, p. 756.The term “Revenue Act of 1916” means the Act entitled “An Act to increase the revenue, and for other purposes,” approved September 8, 1916; “Revenue Act of 1917.” *Ante*, p. 300.The term “Revenue Act of 1917” means the Act entitled “An Act to provide revenue to defray war expenses, and for other purposes,” approved October 3, 1917;
“Taxpayer.”The term “taxpayer” includes any person, trust or estate subject to a tax imposed by this Act; “Government contract. With United States or agency thereof.The term “Government contract” means
(a)a contract made with the United States, or with any department, bureau, officer, commission, board, or agency, under the United States and acting in its behalf, or with any agency controlled by any of the above if the Subcontracts.contract is for the benefit of the United States, or
(b)a subcontract made with a contractor performing such a contract if the products or services to be furnished under the subcontract are for the benefit During war with Germany subsequently validated. *Post*, p. 1272.of the United States. The term “Government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive” when applied to a contract of the kind referred to in clause
(a)of this paragraph, includes all such contracts which, although entered into during such period, were originally not enforceable, but which have been or may become enforceable by reason of subsequent validation in pursuance of law; “Military or naval forces of the United States.”The term “military or naval forces of the United States” includes the Marine Corps, the Coast Guard, the Army Nurse Corps, Female, and the Navy Nurse Corps, Female, but this shall not be deemed to exclude other units otherwise included within such term; “Present war.”The term “present war” means the war in which the United States is now engaged against the German Government. Termination of war.For the purposes of this Act the date of the termination of the present war shall be fixed by proclamation of the President. TITLE II.—income tax.INCOME TAX. Part I.—General provisions.General Provisions. definitions. Sec. 200. Meaning of terms. That when used in this title— “Taxable year.”The term “taxable year” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the “Fiscal year.”net income is computed under section 212 or section 232. The term “fiscal year” means an accounting period of twelve months ending First taxable year.on the last day of any month other than December. The first taxable year, to be called the taxable year 1918, shall be the calendar year 1918 or any fiscal year ending during the calendar year 1918; “Fiduciary.”The term “fiduciary” means a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity for any person, trust or estate; 1059 The term “withholding agent” means any person required to deductincome tax. “Withholding agent.” and withhold any tax under the provisions of section 221 or section 237: The term “personal service corporation” means a corporation“Personal service corporation.” whose income is to be ascribed primarily to the activities of the principal owners or stockholders who are themselves regularly engaged in the active conduct of the affairs of the corporation and in which capital (whether invested or borrowed) is not a material income-producing factor; but does not include any foreignExclusions. corporation, nor any corporation 50 per centum or more of whose gross income consists either
(1)of gains, profits or income derived from trailing as a principal, or
(2)of gains, profits, commissions, or other income, derived from a Government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive; The term “paid,” for the purposes of the deductions and credits“Paid or incurred,” and “paid or accrued.” Applied to deductions or credits. under this title, means “paid or accrued” or “paid or incurred,” and the terms “paid or incurred” and “paid or accrued” shall be construed according to the method of accounting upon the basis of which the net income is computed under section 212. dividends.Dividends. Sec. 201.
(a)That the term “dividend” when used in this titleDistributions of earnings of corporations accumulated since February 28, 1918. (except in paragraph
(10)of subdivision
(a)of section 234) means
(1)any distribution made by a corporation, other than a personal service corporation, to its shareholders or members, whether in cash or in other property or in stock of the corporation, out of its earnings or profits accumulated since February 28, 1913, or
(2)any such distribution made by a personal service corporation out of its earnings or profits accumulated since February 28, 1913, and prior to January 1, 1918.
(b)Any distribution shall be deemed to have been made fromDeemed from earnings. earnings or profits unless all earnings and profits have first been distributed. Any distribution made in the year 1918 or any year For 1918, and after, from accumulations, since February 28, 1913.thereafter shall be deemed to have been made from earnings or profits accumulated since February 28, 1913, or, in the case of a personal service corporation, from the most recently accumulated earnings or profits; but any earnings or profits accumulated priorTax exemptions if prior thereto. to March 1, 1913, may be distributed in stock dividends or otherwise, exempt from the tax, after the earnings and profits accumulated since February 28, 1913, have been distributed.
(c)A dividend paid in stock of the corporation shall be consideredStock dividends. income to the amount of the earnings or profits distributed. Amounts distributed in the liquidation of a corporation shall beLiquidation distributions. treated as payments in exchange for stock or shares, and any gain or profit realized thereby shall be taxed to the distributee as other gains or profits.
(d)If any stock dividend
(1)is received by a taxpayer betweenDividends of 1918, taxed for year earned. January 1 and November 1, 1918, both dates inclusive, or
(2)is during such period bona fide authorized or declared, and entered on the books of the corporation, and is received by a taxpayer after November 1, 1918, and before the expiration of thirty days after the passage of this Act, then such dividend shall, in the manner provided in section 206, be taxed to the recipient at the rates prescribed by law for the years in which the corporation accumulated the earnings or profits from which such dividend was paid, but the dividend shall be deemed to have been paid from the most recently accumulated earnings or profits. 1060
(e)income tax. Division of earnings of taxable years. Any distribution made during the first sixty days of any taxable year shall be deemed to have been made from earnings or profits accumulated during preceding taxable years; but any distribution made during the remainder of the taxable year shall be deemed to have been made from earnings or profits accumulated between the close of the preceding taxable year and the date of distribution, to the extent of such earnings or profits, and if the books of the corporation do not show the amount of such earnings or profits, the earnings or profits for the accounting period within which the distribution was made shall be deemed to have been accumulated ratably during such period. Gain or loss.basis for determining gain or loss. Sec. 202. Basis on sales, etc., of property.
(a)That for the purpose of ascertaining the gain derived or loss sustained from the sale or other disposition of property, real, personal, or mixed, the basis shall be—
(1)Acquired before March 1, 1913. In the case of property acquired before March 1, 1913, the fair market price or value of such property as of that date; and
(2)Subsequently acquired. In the case of property acquired on or after that date, the cost thereof; or the inventory value, if the inventory is made in accordance with section 203.
(b)On exchanges of property. When property is exchanged for other property, the property received in exchange shall for the purpose of determining gain or loss be treated as the equivalent of cash to the amount of its fair For reorganizations.market value, if any; but when in connection with the reorganization, merger, or consolidation of a corporation a person receives in place of stock or securities owned by him new stock or securities of no greater aggregate par or face value, no gain or loss shall be deemed to occur from the exchange, and the new stock or securities received shall be treated as taking the place of the stock, securities, or property exchanged. Gain when value of new, exceeds that of exchanged stocks, etc.When in the case of any such reorganization, merger or consolidation the aggregate par or face value of the new stock or securities received is in excess of the aggregate par or face value of the stock or securities exchanged, a like amount in par or face value of the new stock or securities received shall be treated as taking the place of the stock or securities exchanged, and the amount of the excess in par or face value shall be treated as a gain to the extent that the air market value of the new stock or securities is greater than the cost (or if acquired prior to March 1, 1913, the fair market value as of that date) of the stock or securities exchanged. Inventories.inventories. Sec. 203. Use of, to determine income. That whenever in the opinion of the Commissioner the use of inventories is necessary in order clearly to determine the income of any taxpayer, inventories shall be taken by such taxpayer upon such basis as the Commissioner, with the approval of the Secretary, may prescribe as conforming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income. Net losses.net losses. Sec. 204. In regular business.
(a)That as used in this section the term “net loss” refers only to net losses resulting from either
(1)the operation of any On sales of plants for war facilities, etc.business regularly carried on by the taxpayer, or
(2)the bona fide sale by the taxpayer of plant, buildings, machinery, equipment or other facilities, constructed, installed or acquired by the taxpayer on or after April 6, 1917, for the production of articles contributing 1061to the prosecution of the present war; and when so resulting meansincome tax. Method of determining. the excess of the deductions allowed by law (excluding in the case of corporations amounts allowed as a deduction under paragraph
(6)of subdivision
(a)of section 234) over the sum of the gross income plus any interest received free from taxation both under this title and under Title III.
(b)If for any taxable year beginning after October 31, 1918,Allowance, If ascertained between October 31, 1918, and January 1, 1920. and ending prior to January 1, 1920, it appears upon the production of evidence satisfactory to the Commissioner that any taxpayer has sustained a net loss, the amount of such net loss shall under regulations prescribed by the Commissioner with the approval of the Secretary be deducted from the net income of the taxpayer for the preceding taxable year; and the taxes imposed by this title and byRedetermination of tax. Title III for such preceding taxable year shall be redetermined accordingly. Any amount found to be due to the taxpayer upon theCredits and refunds. basis of such redetermination shall be credited or refunded to the taxpayer in accordance with the provisions of section 252. If such net loss is in excess of the net income for such preceding taxable year, the amount of such excess shall under regulations prescribed by the Commissioner with the approval of the Secretary be allowed as a deduction in computing the net income for the succeeding taxable year.
(c)The benefit of this section shall be allowed to the membersPartnerships, estates, and trusts included. of a partnership and the beneficiaries of an estate or trust under regulations prescribed by the Commissioner with the approval of the Secretary. fiscal year with different rates.Fiscal year with different rates. Sec. 205.
(a)That if a taxpayer makes return for a fiscal yearReturns, if ending in 1918. beginning in 1917 and ending in 1918, his tax under this title for the first taxable year shall be the sum of:
(1)the same proportion of aProportion of former, and new, tax. tax for the entire period computed under Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917 and under Title I of the Revenue Act of 1917, which the portion of such period falling within the calendar year 1917 is of the entire period, and
(2)the same proportion of a tax for the entire period computed under this title at the rates for the calendar year 1918 which the portion of such period falling within the calendar year 1918 is of the entire period: *Provided*, That in the case of a personal service corporation*Proviso*. Personal service corporations. the amount to be paid shall be only that specified in clause (1). Any amount heretofore or hereafter paid on account of the taxCredit or refund of tax paid in excess. imposed for such fiscal year by Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917, and by Title I of the Revenue Act of 1917, shall be credited towards the payment of the tax imposed for such fiscal year by this act, and if the amount so paid exceeds the amount of such tax imposed by this act, or, in the case of a personal service corporation, the amount specified in clause (1), the excess shall be credited or refunded in accordance with the provisions of section 252.
(b)If a taxpayer makes a return for a fiscal year beginning inIf ending in 1919. 1918 and ending in 1919, the tax under this title for such fiscal year shall be the sum of:
(1)the same proportion of a tax for the entireProportion of tax determined. period computed under this title at the rates specified for the calendar year 1918 which the portion of such period falling within the calendar year 1918 is of the entire period, and
(2)the same proportion of a tax for the entire period computed under this title at the rates specified for the calendar year 1919 which the portion of such period falling within the calendar year 1919 is of the entire period.
(c)If a fiscal year of a partnership begins in 1917 and ends in 1918 or begins in 1918Partnership fiscal years of 1918, or 1919. and ends in 1919, then notwithstanding the pro1062income tax. Rates applicable to partner’s share of income.visions of subdivision
(b)of section 218,
(1)the rates for the calendar year during which such fiscal year begins shall apply to an amount of each partner’s share of such partnership net income (determined under the law applicable to such year) equal to the proportion which the part of such fiscal year falling within such calendar year bears to the full fiscal year, and
(2)the rates for the calendar year during which such fiscal year ends shall apply to an amount of each partner’s share of such partnership net income (determined under the law applicable to such calendar year) equal to the proportion which the part of such fiscal year falling within such calendar year bears to the *Proviso*. Personal service corporations. Exception for 1917.full fiscal year: *Provided*, That in the case of a personal service corporation with respect to a fiscal year beginning in 1917 and ending in 1918, the amount specified in clause
(1)shall not be subject to normal tax. Parts of income at different rates.parts of income subject to rates for different years. Sec. 206. Assignment to year applicable. That whenever parts of a taxpayer’s income are subject to rates for different calendar years, the part subject to the rates for the most recent calendar year shall be placed in the lower brackets of the rate schedule provided in this title, the part subject to the rates for the next preceding calendar year shall be placed in the Application of deductions, etc.next higher brackets of the rate schedule applicable to that year, and so on until the entire net income has been accounted for. In determining the income, any deductions, exemptions or credits of a kind not plainly and properly chargeable against the income taxable at rates for a preceding year shall first be applied against the income subject to rates for the most recent calendar year; but any balance thereof shall be applied against the income subject to the rates of the next preceding year or years until fully allowed. Part II.—Individuals.Individuals. Normal tax.normal tax. Sec. 210. New rates imposed. Vol. 39. p. 756. *Ante*, p. 300. That, in lieu of the taxes imposed by subdivision
(a)of section 1 of the Revenue Act of 1916 and by section 1 of the Revenue Act of 1917, there shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax at the following rates:
(a)For 1918. For the calendar year 1918, 12 per centum of the amount of *Proviso*. First $4,000, of citizens, etc.the net income in excess of the credits provided in section 216: *Provided*, That in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount shall be 6 per centum;
(b)Thereafter. For each calendar year thereafter, 8 per centum of the amount of the net income in excess of the credits provided in section 216: *Proviso*. First $4,000.*Provided*, That in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount shall be 4 per centum. Surtax.surtax. Sec. 211. New rates on incomes over $5,000, in addition to normal tax. Vol. 39. p. 756. *Ante*, p. 301.
(a)That, in lieu of the taxes imposed by subdivision
(b)of section 1 of the Revenue Act of 1916 and by section 2 of the Revenue Act of 1917, but in addition to the normal tax imposed by section 210 of this Act, there shall be levied, collected, and paid for each taxable year upon the net income of every individual, a surtax equal to the sum of the following: Rates.1 per centum of the amount by which the net income exceeds $5,000 and does not exceed $6,000; 1063 2 per centum of the amount by which the net income exceeds $6,000income tax. Surtax—Continued. and does not exceed $8,000; 3 per centum of the amount by which the net income exceeds $8,000 and does not exceed $10,000; 4 per centum of the amount by which the net income exceeds $10,000 and does not exceed $12,000; 5 per centum of the amount by which the net income exceeds $12,000 and does not exceed $14,000; 6 per centum of the amount by which the net income exceeds $14,000 and does not exceed $16,000; 7 per centum of the amount by which the net income exceeds $16,000 and does not exceed $18,000; 8 per centum of the amount by which the net income exceeds $18,000 and docs not exceed $20,000; 9 per centum of the amount by which the net income exceeds $20,000 and does not exceed $22,000; 10 per centum of the amount by which the net income exceeds $22,000 and does not exceed $24,000; 11 per centum of the amount by which the net income exceeds $24,000 and does not exceed $26,000; 12 per centum of the amount by which the net income exceeds $26,000 and does not exceed $28,000; 13 per centum of the amount by which the net income exceeds $28,000 and does not exceed $30,000; 14 per centum of the amount by which the net income exceeds $30,000 and does not exceed $32,000; 15 per centum of the amount by which the net income exceeds $32,000 and does not exceed $34,000; 16 per centum of the amount by which the net income exceeds $34,000 and does not exceed $36,000; 17 per centum of the amount by which the net income exceeds $36,000 and does not exceed $38,000; 18 per centum of the amount by which the net income exceeds $38,000 and does not exceed $40,000; 19 per centum of the amount by which the net income exceeds $40,000 and does not exceed $42,000; 20 per centum of the amount by which the net income exceeds $42,000 and does not exceed $44,000; 21 per centum of the amount by which the net income exceeds $44,000 and docs not exceed $46,000; 22 per centum of the amount by which the net income exceeds $46,000 and does not exceed $48,000; 23 per centum of the amount by which the net income exceeds $48,000 and does not exceed $50,000; 24 per centum of the amount by which the net income exceeds $50,000 and does not exceed $52,000; 25 per centum of the amount by which the net income exceeds $52,000 and does not exceed $54,000; 26 per centum of the amount by which the net income exceeds $54,000 and does not exceed $56,000; 27 per centum of the amount by which the net income exceeds $56,000 and does not exceed $58,000; 28 per centum of the amount by which the net income exceeds $58,000 and does not exceed $60,000; 29 per centum of the amount by which the net income exceeds $60,000 and does not exceed $62,000; 30 per centum of the amount by which the net income exceeds $62,000 and does not exceed $64,000; 31 per centum of the amount by which the net income exceeds $64,000 and does not exceed $66,000; 1064 income tax. Surtax—Continued.32 por centum of the amount by which the net income exceeds $66,000 and does not exceed $68,000; 33 per centum of the amount by which the net income exceeds $68,000 and does not exceed $70,000; 34 per centum of the amount by which the net income exceeds $70,000 and does not exceed $72,000; 35 per centum of the amount by which the net income exceeds $72,000 and does not exceed $74,000; 36 per centum of the amount by which the net income exceeds $74,000 and does not exceed $76,000; 37 per centum of the amount by which the net income exceeds $76,000 and docs not exceed $78,000; 38 per centum of the amount by which the net income exceeds $78,000 and does not exceed $80,000; 39 per centum of the amount by which the net income exceeds $80,000 and does not exceed $82,000; 40 per centum of the amount by which the net income exceeds $82,000 and does not exceed $84,000; 41 per centum of the amount by which the net income exceeds $84,000 and does not exceed $86,000; 42 per centum of the amount by which the net income exceeds $86,000 and does not exceed $88,000; 43 per centum of the amount by which the net income exceeds $88,000 and does not exceed $90,000; 44 per centum of the amount by which the net income exceeds $90,000 and does not exceed $92,000; 45 per centum of the amount by which the net income exceeds $92,000 and does not exceed $94,000; 46 per centum of the amount by which the net income exceeds $94,000 and does not exceed $96,000; 47 per centum of the amount by which the net income exceeds $96,000 and does not exceed $98,000; 48 per centum of the amount by which the net income exceeds $98,000 and does not exceed $100,000; 52 per centum of the amount by which the net income exceeds $100,000 and does not exceed $150,000; 56 per centum of the amount by which the net income exceeds $150,000 and does not exceed $200,000; 60 per centum of the amount by which the net income exceeds $200,000 and does not exceed $300,000; 63 per centum of the amount by which the net income exceeds $300,000 and does not exceed $500,000; 64 per centum of the amount by which the net income exceeds $500,000 and does not exceed $1,000,000; 65 per centum of the amount by which the net income exceeds $1,000,000.
(b)Mines, oil or gas wells. Maximum tax on sales of, developed, etc., by taxpayer. In the case of a bona fide sale of mines, oil or gas wells, or any interest therein, where the principal value of the property has been demonstrated by prospecting or exploration and discovery work done by the taxpayer, the portion of the tax imposed by this section attributable to such sale shall not exceed 20 per centum of the selling price of such property or interest. Net income.net income defined. Sec. 212. Deductions from gross income constituting. *Post*, p. 1066.
(a)Basis of computing. That in the case of an individual the term “net income” means the gross income as defined in section 213, less the deductions allowed by section 214.
(b)The net income shall be computed upon the basis of the taxpayer’s annual accounting period (fiscal year or calendar year, as the case may be) in accordance with the method of accounting regularly 1065employed in keeping the books of such taxpayer; but if no suchincome tax. method of accounting has been so employed, or if the method employed does not clearly reflect the income, the computation shall be made upon such basis and in such manner as in the opinion of the Commissioner does clearly reflect the income. If the taxpayer’s annual accounting period is other than a fiscal year as defined in section 200 or if the taxpayer has no annual accounting period or does not keep books, the net income shall be computed on the basis of the calendar year. If a taxpayer changes his accounting period from fiscal year toIf taxpayer change accounting period. calendar year, from calendar year to fiscal year, or from one fiscal year to another, the net income shall, with the approval of the Commissioner, be computed on the basis of such new accounting period, subject to the provisions of section 226. gross income defined.Gross income. Sec. 213. That for the purposes of this title (except as otherwiseSources included. *Post*, p. 1077. provided in section 233) the term “gross income”—
(a)Includes gains, profits, and income derived from salaries, wages,From personal salaries, etc. Federal officers, etc., included. or compensation for personal service (including in the case of the President of the United States, the judges of the Supreme and inferior courts of the United States, and all other officers and employees, whether elected or appointed, of the United States, Alaska, Hawaii, or any political subdivision thereof, or the District of Columbia, the compensation received as such), of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce,Professions, trades, business, etc. or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction ofInterest, rent, dividends, etc. any business carried on for gain or profit, or gains or profits and income derived from any source whatever. The amount of all suchIncluded in taxable year received. items shall be included in the gross income for the taxable year in which received by the taxpayer, unless, under methods of accounting permitted under subdivision
(b)of section 212, any such amounts are to be properly accounted for as of a different period; but
(b)Does not include the following items, which shall be exemptExclusions. from taxation under this title:
(1)The proceeds of life insurance policies paid upon the deathFrom life insurance policies. of the insured to individual beneficiaries or to the estate of the insured;
(2)The amount received by the insured as a return of premiumReturns from insurance contracts. 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 surrender of the contract;
(3)The value of property acquired by gift, bequest, devise, orGifts, bequests, etc. descent (but the income from such property shall be included in gross income);
(4)Interest upon
(a)the obligations of a State, Territory, or anyInterest on State, etc., debts. Farm loan bonds. Vol. 39, p. 375. political subdivision thereof, or the District of Columbia; or
(b)securities issued under the provisions of the Federal Farm Loan Act of July 17, 1916; or
(c)the obligations of the United StatesGovernment or War Finance Corporation bonds. *Proviso*. Returns required. or its possessions; or
(d)bonds issued by the War Finance Corporation: *Provided*, That every person owning any of the obligations, securities or bonds enumerated in clauses (a), (b),
(c)and
(d)shall, in the return required by this title, submit a statement showing the number and amount of such obligations, securities and bonds owned by him and the income received therefrom, in such form and with such information as the Commissioner may require. In the case of obligations of the United States issued after SeptemberLimitation on Federal securities issued after September 1, 1917, etc. 1, 1917, and in the case of bonds issued by the War Finance 1066income tax.Corporation, the interest shall be exempt only if and to the extent provided in the respective Acts authorizing the issue thereof as amended and supplemented, and shall be excluded from gross income only if and to the extent it is wholly exempt from taxation *Post*, p. 1088.to the taxpayer both under this title and under Title III;
(5)Foreign governments, on amounts from American securities. The income of foreign governments received from investments in the United States in stocks, bonds, or other domestic securities, owned by such foreign governments, or from interest on deposits in banks in the United States of moneys belonging to such foreign governments, or from any other source within the United States;
(6)Personal injury payments. Amounts received, through accident or health insurance or under workmen’s compensation acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness;
(7)By States, etc., from public utilities. Income derived from any public utility or the exercise of any essential governmental function and accruing to any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, or income accruing to the government of any possession of the United States, or any political subdivision thereof. Under prior contract for operation, etc.Whenever any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, prior to September 8, 1916, entered in good faith into a contract with any person, 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 No personal exemption.State, Territory, District of Columbia, or political subdivision; but this provision is not intended to confer upon such person any financial gain or exemption or to relieve such person from the payment of a tax as provided for in this title upon the part or portion of such income to which such person is entitled under such contract;
(8)Persons in war service. So much of the amount received during the present war by a person in the military or naval forces of the United States as salary Limit.or compensation in any form from the United States for active services in such forces, as doos not exceed $3,500.
(c)Nonresident aliens. Only from United States sources. In the case of nonresident alien individuals, gross income includes only the gross income from sources within the United States, including interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, dividends from resident corporations, and including all amounts received (although paid under a contract for the sale of goods or otherwise) representing profits on the manufacture and disposition of goods within the United States. Deductions alloweddeductions allowed. Sec. 214. Objects specified.
(a)That in computing net income there shall be allowed as deductions:
(1)Business expenses. All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered, and including rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity;
(2)Interest on debts. All interest paid or accrued within the taxable year on Exception.indebtedness, except on indebtedness incurred or continued to purchase or carry obligations or securities (other than obligations of the United States issued after September 24, 1917), the interest upon which is 1067wholly exempt from taxation under this title as income to the taxpayer,income tax. or, in the case of a nonresident alien individual, the proportion of such interest which the amount of his gross income from sources within the United States bears to the amount of his gross income from all sources within and without the United States;
(3)Taxes paid or accrued within the taxable year imposed
(a)byDomestic taxes. the authority of the United States, except income, war-profits andExceptions. excess-profits taxes; or
(b)by the authority of any of its possessions, except the amount of income, war-profits and excess-profits taxes allowed as a credit under section 222; or
(c)by the authority of any State or Territory, or any county, school district, municipality, or other taxing subdivision of any State or Territory, not including those assessed against local benefits of a kind tending to increase the value of the property assessed; or
(d)in the case of a citizen or residentForeign taxes. By citizens or residents. of the United States, by the authority of any foreign country, except the amount of income, war-profits and excess-profits taxes allowed as a credit under section 222; or
(e)in the case of a nonresidentBy nonresident aliens. alien individual, by the authority of any foreign country (except income, war-profits and excess-profits taxes, and taxes assessed against local benefits of a kind tending to increase the value of the property assessed), upon property or business;
(4)Losses sustained during the taxable year and not compensatedBusiness losses. for by insurance or otherwise, if incurred in trade or business;
(5)Losses sustained during the taxable year and not compensatedLosses not connected with business. for by insurance or otherwise, if incurred in any transaction entered into for profit, though not connected with the trade or business; but in the case of a nonresident alien individual only as to such transactions within the United States;
(6)Losses sustained during the taxable year of property not connectedCasualty losses not connected with business. with the trade or business (but in the case of a nonresident alien individual only property within the United States) if arising from fires, storms, shipwreck, or other casualty, or from theft, and if not compensated for by insurance or otherwise;
(7)Debts ascertained to be worthless and charged off within theWorthless debts. taxable year;
(8)A reasonable allowance for the exhaustion, wear and tear ofExhaustion of business property. property used in the trade or business, including a reasonable allowance for obsolescence;
(9)In the case of buildings, machinery, equipment, or other facilities,Amortization of cost of plants, vessels, etc., for war uses. constructed, erected, installed, or acquired, on or after April 6, 1917, for the production of articles contributing to the prosecution of the present war, and in the case of vessels constructed or acquired on or after such date for the transportation of articles or men contributing to the prosecution of the present war, there shall be allowed a reasonable deduction for the amortization of such part of the cost of such facilities or vessels as has been borne by the taxpayer,Limit. but not again including any amount otherwise allowed under this title or previous Acts of Congress as a deduction in computing net income. At any time within three years after the termination of the presentRedetermination, etc., of tax within three years. war, the Commissioner may, and at the request of the taxpayer shall, reexamine the return, and if he then finds as a result of an appraisal or from other evidence that the deduction originally allowed was incorrect, the taxes imposed by this title and by Title III for the year or years affected shall be redetermined; and the amount of taxCredit, etc., of overpayments. due upon such redetermination, if any, shall be paid upon notice and demand by the collector, or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the*Post*, p. 1085. provisions of section 252;
(10)In the case of mines, oil and gas wells, other natural deposits,Mines, oil wells, timber, etc. Allowance for depletion, depreciation, etc. and timber, a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case, 1068income tax.based upon cost including cost of development not otherwise *Provisos*. If acquired prior to March 1, 1913.deducted: *Provided*, That in the case of such properties acquired prior to March 1, 1913, the fair market value of the property (or the taxpayer’s interest therein) on that date shall be taken in lieu of cost If discovered by taxpayer after March 1, 1813.up to that date: *Provided further*, That in the case of mines, oil and gas wells, discovered by the taxpayer, on or after March 1, 1913, and not acquired as the result of purchase of a proven tract or lease, where the fair market value of the property is materially disproportionate to the cost, the depletion allowance shall be based upon the fair market value of the property at the date of the discovery, or within thirty days thereafter; such reasonable allowance in all the above cases to be made under rules and regulations to be prescribed Leases.by the Commissioner with the approval of the Secretary. In the case of leases the deductions allowed by this paragraph shall be equitably apportioned between the lessor and lessee;
(11)Gifts to religious, etc., organizations. Contributions or gifts made within the taxable year to corporations organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of Condition.cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to Vocational rehabilitation fund. *Ante*, p. 619.the special fund for vocational rehabilitation authorized by section 7 of the Vocational Rehabilitation Act, to an amount not in excess of 15 per centum of the taxpayer’s net income as computed without Limit.the benefit of this paragraph. Such contributions or gifts shall be allowable as deductions only if verified under rules and regulations prescribed by the Commissioner, with the approval of the Secretary. Nonresident aliens.In the case of a nonresident alien individual this deduction shall be allowed only as to contributions or gifts made to domestic corporations, or to such vocational rehabilitation fund;
(12)Losses from inventory reduction or rebates on contracts. Claims for, to be filed in 1918.
(a)At the time of filing return for the taxable year 1918 a taxpayer may file a claim in abatement based on the fact that he has sustained a substantial loss (whether or not actually realized by sale or other disposition) resulting from any material reduction (not due to temporary fluctuation) of the value of the inventory for such taxable year, or from the actual payment after the close of such Bond required.taxable year of rebates in pursuance of contracts entered into during such year upon sales made during such year. In such case payment of the amount of the tax covered by such claim shall not be required until the claim is decided, but the taxpayer shall accompany his claim with a bond in double the amount of the tax covered by the claim, with sureties satisfactory to the Commissioner, conditioned for the payment of any part of such tax found to be due, with interest. Payment of part disallowed.If any part of such claim is disallowed then the remainder of the tax due shall on notice and demand by the collector be paid by the taxpayer with interest at the rate of 1 per centum per month from the Allowances to be deducted.time the tax would have been due had no such claim been filed. If it is shown to the satisfaction of the Commissioner that such substantial loss has been sustained, then in computing the tax imposed by this title the amount of such loss shall be deducted from the net Deduction for loss if no claim filed.income.
(b)If no such claim is filed, but it is shown to the satisfaction of the Commissioner that during the taxable year 1919 the taxpayer has sustained a substantial loss of the character above described then the amount of such loss shall be deducted from the net income for the taxable year 1918 and the tax imposed by this Credit, etc., therefor.title for such year shall be redetermined accordingly. Any amount found to be due to the taxpayer upon the basis of such rede termina tion shall be credited or refunded to the taxpayer in accordance with the provisions of section 252. 1069
(b)In the case of a nonresident alien individual the deductionsincome tax. Nonresident aliens. Deductions only on business in United States. allowed in paragraphs (1), (4), (7), (8), (9), (10), and (12), and clause
(e)of paragraph (3), of subdivision
(a)shall be allowed only if and to the extent that they are connected with income arising from a source within the United States; and the proper apportionment andApportionment. allocation of the deductions with respect to sources of income within and without the United States shall be determined under rules and regulations prescribed by the Commissioner with the approval of the Secretary. items not deductible.Items not deductible. Sec. 215. That in computing net-income no deduction shall in anyObjects specified. case be allowed in respect of—
(a)Personal, living, or family expenses;Personal, etc., expenses.
(b)Any amount paid out for new buildings or for permanentProperty improvements. improvements or betterments made to increase the value of any property or estate;
(c)Any amount expended in restoring property or in makingRestoring exhausted property. good the exhaustion thereof for which an allowance is or has been made; or
(d)Premiums paid on any life insurance policy covering the lifeLife insurance for employees if taxpayer benefited. of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy. credits allowed.Credits allowed. Sec. 216. That for the purpose of the normal tax only there shallObjects specified. be allowed the following credits:
(a)The amount received as dividends from a corporation which isTaxpaid corporation dividends. taxable under this title upon its net income, and amounts received as dividends from a personal service corporation out of earnings or profits upon which income tax has been imposed by Act of Congress;
(b)The amount received as interest upon obligations of theInterest on Federal securities, etc. United States and bonds issued by the War Finance Corporation, which is included in gross income under section 213;
(c)In the case of a single person, a personal exemption of $1,000,Personal exemptions. or in the case of the head of a family or a married person living with husband or wife, a personal exemption of $2,000. A husband and Limit for husband and wife.wife living together shall receive but one personal exemption of $2,000 against their aggregate net income; and in case they make separate returns, the personal exemption of $2,000 may be taken by either or divided between them;
(d)$200 for each person (other than husband or wife) dependentAllowance for dependents. upon and receiving his chief support from the taxpayer, if such dependent person is under eighteen years of age or is incapable of self-support because mentally or physically defective.
(e)In the case of a nonresident alien individual who is a citizenNonresident aliens. Personal exemptions restricted. or subject of a country which imposes an income tax, the credits allowed in subdivisions
(c)and
(d)shall be allowed only if such country allows a similar credit to citizens of the United States not residing in such country. nonresident aliens—allowance of deductions and credits.Nonresident aliens. Sec. 217. That a nonresident alien individual shall receive theReturns required from, to receive deductions. benefit of the deductions and credits allowed in this title only by filing or causing to be filed with the collector 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, including therein all the information which the Commissioner 1070income tax.may deem necessary for the calculation of such deductions and *Proviso*. Claims may be filed with withholding agent.credits: *Provided*, That the benefit of the credits allowed in subdivisions
(c)and
(d)of section 216 may, in the discretion of the Commissioner, and except as otherwise provided in subdivision
(e)of that section, be received by filing a claim therefor with the Collection, etc., if no returns filed.withholding agent. In case of failure to file a return, the collector shall collect the tax on such income, and all property belonging to such nonresident alien individual shall be liable to distraint for the tax. Partnerships.partnerships and personal service corporations. Sec. 218. Partners taxed as individuals.
(a)That individuals carrying on business in partnership shall be liable for income tax only in their individual capacity. Computing share of income.There shall be included in computing the net income of each partner his distributive share, whether distributed or not, of the net income of the partnership for the taxable year, or, if his net income for such taxable year is computed upon the basis of a period different from that upon the basis of which the net income of the partnership is computed, then his distributive share of the net income of the partnership for any accounting period of the partnership ending within the fiscal or calendar year upon the basis of which the partner’s net income is computed. Additional credits from partnership exemptions.The partner shall, for the purpose of the normal tax, be allowed as credits, in addition to the credits allowed to him under section 216, his proportionate share of such amounts specified in subdivisions
(a)and
(b)of section 216 as are received by the partnership.
(b)Rates applied for partnership fiscal year. If a fiscal year of a partnership ends during a calendar year for which the rates of tax differ from those for the preceding calendar year, then (1 ) the rates for such preceding calendar year shall apply to an amount of each partner’s share of such partnership net income equal to the proportion which the part of such fiscal year falling within such calendar year bears to the full fiscal year, and
(2)the rates for the calendar year during which such fiscal year ends shall apply to the remainder.
(c)Credit for 1918 of share of partnerships excess-profits tax in 1917. In the case of an individual member of a partnership which makes return for a fiscal year beginning in 1917 and ending in 1918, his proportionate share of any excess-profits tax imposed upon the partnership under the Revenue Act of 1917 with respect to that part of such fiscal year falling in 1917, shall, for the purpose of determining the tax imposed by this title, be credited against that portion of the net income embraced in his personal return for the taxable year 1918 to which the rates for 1917 apply.
(d)Net income computed. The net income of the partnership shall be computed in the same manner and on the same basis as provided in section 212, Charities not deducted.except that the deduction provided in paragraph
(11)of subdivision
(a)of section 214 shall not be allowed.
(e)Personal service corporation. Personal service corporations shall not be subject to taxation Only stockholders taxed. Partnership provisions applied.under this title, but the individual stockholders thereof shall be taxed in the same manner as the members of partnerships. All the provisions of this title relating to partnerships and the members thereof shall so far as practicable apply to personal service *Proviso*. Accounting for distributions.corporations and the stockholders thereof: *Provided*, That for the purpose of this subdivision amounts distributed by a personal service corporation during its taxable year shall be accounted for by the Undistributed income.distributees; and any portion of the net income remaining undistributed at the close of its taxable year shall be accounted for by the stockholders of such corporation at the close of its taxable year in proportion to their respective shares. 1071 estates and trusts.income tax. Estates and trusts. Sec. 219.
(a)That the tax imposed by sections 210 and 211 shallIncome taxable. apply to the income of estates or of any kind of property held in trust, including—
(1)Income received by estates of deceased persons during theReceived during administration. period of administration or settlement of the estate;
(2)Income accumulated in trust for the benefit of unborn orTrust accumulations. unascertained persons or persons with contingent interests;
(3)Income held for future distribution under the terms of theHeld for future distribution. will or trust; and
(4)Income which is to be distributed to the beneficiaries periodically,Periodical distributions, etc. whether or not at regular intervals, and the income collected by a guardian of an infant to be held or distributed as the court may direct.
(b)The fiduciary shall be responsible for making the return ofResponsibility for returns. Net income computed. income for the estate or trust for which he acts. The net income of the estate or trust shall be computed in the same manner and on the same basis as provided in section 212, except that there shall also be allowed as a deduction (in lieu of the deduction authorizedAllowance for gifts to the public, charities, etc. by paragraph
(11)of subdivision
(a)of section 214) any part of the gross income which, pursuant to the terms of the will or deed creating the trust, is during the taxable year paid to or permanently set aside for the United States, any State, Territory, or any political subdivision thereof, or the District of Columbia, or any corporation organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual; and in cases underStatement of shares of distributees. paragraph
(4)of subdivision
(a)of this section the fiduciary shall include in the return a statement of each beneficiary’s distributive share of such net income, whether or not distributed before the close of the taxable year for which the return is made,
(c)In cases under paragraph (1), (2), or
(3)of subdivision (a)Payment by fiduciary. the tax shall be imposed upon the net income of the estate or trust and shall be paid by the fiduciary, except that in determining theDeductions and credits allowed. net income of the estate of any deceased person during the period of administration or settlement there may be deducted the amount of any income properly paid or credited to any legatee, heir or other beneficiary. In such cases the estate or trust shall, for the purpose of the normal tax, be allowed the same credits as are allowed to single persons under section 216.
(d)In cases under paragraph
(4)of subdivision (a), and in theIncome of beneficiaries of distributive shares, etc. Tax not paid by fiduciary. case of any income of an estate during the period of administration or settlement permitted by subdivision
(c)to be deducted from the net income upon which tax is to be paid by the fiduciary, the tax shall not be paid by the fiduciary, but there shall be included in computingIncluded in beneficiary’s income. the net income of each beneficiary his distributive share, whether distributed or not, of the net income of the estate or trust for the taxable year, or, if his net income for such taxable year is computed upon the basis of a period different from that upon the basis of which the net income of the estate or trust is computed, then his distributive share of the net income of the estate or trust for any accounting period of such estate or trust ending within the fiscal or calendar year upon the basis of which such beneficiary’s net income is computed. In such cases the beneficiary shall, for the purpose of the normal tax,Additional credits, etc. be allowed as credits in addition to the credits allowed to him under section 216, his proportionate share of such amounts specified in subdivisions
(a)and
(b)of section 216 as are received by the estate or trust. 1072 income tax. Corporation profits.profits of corporations taxable to stockholders. Sec. 220. No income tax on corporations accumulating gains to prevent surtax on stockholders. individuals taxed. War and excess prof its deduction in computing income of members. That if any corporation, however created or organized, is formed or availed of for the purpose of preventing the imposition of the surtax upon its stockholders or members through the medium of permitting its gains and profits to accumulate instead of being divided or distributed, such corporation shall not be subject to the tax imposed by section 230, but the stockholders or members thereof shall be subject to taxation under this title in the same manner as provided in subdivision
(e)of section 218 in the case of stockholders of a personal service corporation, except that the tax imposed by Title III shall be deducted from the net income of the corporation before the computation of the proportionate share of each stockholder Evidence of purpose, etc.or member. The fact that any corporation is a mere holding company, or that the gains and profits are permitted to accumulate beyond the reasonable needs of the business, shall be prima facie evidence of a purpose to escape the surtax; but the fact that the gains and profits are m any case permitted to accumulate and become surplus shall not be construed as evidence of a purpose to escape the tax in such case unless the Commissioner certifies that in his opinion such accumulation is unreasonable for the purposes of the business. Detailed statement required.When requested by the Commissioner, or any collector, every corporation 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, and of the amounts that would be payable to each. Payment of tax at source.payment of tax at source. Sec. 221. Nonresident aliens. Normal income tax of, payable thereat.
(a)That all individuals, corporations and partnerships, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, 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, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, of any nonresident alien individual (other than income received as dividends from a corporation which is taxable under this title upon Exceptions.its net income) shall (except in the cases provided for in subdivision
(b)and except as otherwise provided in regulations prescribed by the Commissioner under section 217) deduct and withhold from such annual or periodical gains, profits, and income a tax equal to 8 *Proviso*. Interest of unknown owners.per centum thereof: *Provided*, That the Commissioner may authorize such tax to be deducted and withheld from the interest upon any securities the owners of which are not known to the withholding agent.
(b)Corporations agreeing to pay interest free from tax. In any case where bonds, mortgages, or deeds of trust, or other similar obligations of a corporation contain a contract or provision by which the obligor agrees to pay any portion of the tax imposed by this title upon the obligee, or to reimburse the obligee for any portion of the tax, or to pay the interest without deduction for any tax which the obligor may be required or permitted to pay thereon or to retain therefrom under any law of the United States, the Tax to be withheld.obligor shall deduct and withhold a tax equal to 2 per centum of the interest upon such bonds, mortgages, deeds of trust, or other obligations, whether such interest is payable annually or at shorter or longer periods and whether payable to a nonresident alien individualNonresident aliens. or to an individual citizen or resident of the United States or *Proviso*. Of unknown owners.to a partnership: *Provided*, That the Commissioner may authorize such tax to be deducted and withheld in the case of interest upon 1073any such bonds, mortgages, deeds of trust or other obligations, theincome tax. owners of which are not known to the withholding agent. SuchExceptions where claim for credits filed by individual deduction and withholding shall not be required in the case of a citizen or resident entitled to receive such interest, if he files with the withholding agent on or before February 1, a signed notice in writing claiming the benefit of the credits provided in subdivisions
(c)and
(d)of section 216; nor in the case of a nonresident alien individual if so provided for in regulations prescribed by the Commissioner under section 217.
(c)Every individual, corporation, or partnership required to deductReturns from withholding agent. and withhold any tax under this section shall make return thereof on or before March first of each year and shall on or before JunePayment. fifteenth pay the tax to the official of the United States Government authorized to receive it. Every such individual, corporation, or partnership is hereby made liable for such tax and is hereby indemnified against the claims and demands of any individual, corporation, orIndemnity for payment, etc. partnership for the amount of any payments made in accordance with the provisions of this section.
(d)Income upon which any tax is required to be withheld at theRecipient to make return of tax withheld. source under this section shall be included in the return of the recipient of such income, but any amount of tax so withheld shall be credited against the amount of income tax as computed in such return.
(e)If any tax required under this section to be deducted and withheldTax paid by recipient not re-collectible, etc. is paid by the recipient of the income, it shall not be re-collected from the withholding agent; nor in cases in which the tax is so paid shall any penalty be imposed upon or collected from the recipient of the income or the withholding agent for failure to return or pay the same, unless such failure was fraudulent and for the purpose of evading payment. credit for taxes.Credit for taxes. Sec. 222.
(a)That the tax computed under Part II of this titleAllowances. shall be credited with:
(1)In the case of a citizen of the United States, the amount ofCitizens, for taxes paid to foreign countries, etc. any income, war-profits and excess-profits taxes paid during the taxable year to any foreign country, upon income derived from sources therein, or to any possession of the United States; and
(2)In the case of a resident of the United States, the amount ofResidents, to United States possessions. any such taxes paid during the taxable year to any possession of the United States; and
(3)In the case of an alien resident of the United States who is aAlien residents, if similar credit allowed in their country. citizen or subject of a foreign country, the amount of any such taxes paid during the taxable year to such country, upon income derived rom sources therein, if such country, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country; and
(4)In the case of any such individual who is a member of a partnershipIf partner, trust, beneficiary, etc. or a beneficiary of an estate or trust, his proportionate share of such taxes of the partnership or the estate or trust paid during the taxable year to a foreign country or to any possession of the United States, as the case may be.
(b)If accrued taxes when paid differ from the amounts claimed asRedetermination if paid taxes differ from credit claimed, etc. credits by the taxpayer, or if any tax paid is refunded in whole or in part, the taxpayer shall notify the Commissioner who shall redetermine the amount of the tax due under Part II of this title for the year or years affected, and the amount of tax due upon such redetermination, if any, shall be paid by the taxpayer upon notice and demand by the collector, or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the pro1074income tax. Accrued, but not paid, tax. Bond required.visions of section 252. In the case of such a tax accrued but not paid, the Commissioner as a condition precedent to the allowance of this credit may require the taxpayer to give a bond with sureties satisfactory to and to be approved by the Commissioner in such penal sum as the Commissioner may require, conditioned for the payment by the taxpayer of any amount of tax found due upon any such redetermination; and the bond herein prescribed shall contain such further conditions as the Commissioner may require.
(c)Evidence of foreign income, etc., required. These credits shall be allowed only if the taxpayer furnishes evidence satisfactory to the Commissioner showing the amount of income derived from sources within such foreign country or such possession of the United States, and all other information necessary for the computation of such credits. Individual returns.individual returns. Sec. 223. Itemized statements of gross income to be made by taxpayer. That every individual having a net income for the taxable year of $1,000 or over if single or if married and not living with husband or wife, or of $2,000 or over if married and living with husband or wife, shall make under oath a return stating specifically the items of his gross income and the deductions and credits allowed by this title. If a husband and wife living together have an aggregate net income of $2,000 or over, each shall make such a return unless the income of each is included in a single joint return. By agent.If the taxpayer is unable to make his own return, the return shall be made by a duly authorized agent or by the guardian or other person charged with the care of the person or property of such taxpayer. Partnership returns.partnership returns. Sec. 224. Itemized statement of gross income. Details. That every partnership shall make a return for each taxable year, stating specifically the items of its gross income and the deductions allowed by this title, and shall include in the return the names and addresses of the individuals who would be entitled to share in the net income if distributed and the amount of the distributive share of each individual. The return shall be sworn to by any one of the partners. Fiduciary returns.fiduciary returns. Sec. 225. Statement of gross income of estate, etc. That every fiduciary (except receivers appointed by authority of law in possession of part only of the property of an individual) shall make under oath a return for the individual, estate or trust for which he acts
(1)if the net income of such individual is $1,000 or over if single or if married and not living with husband or wife, or $2,000 or over if married and living with husband or wife, or
(2)if the net income of such estate or trust is $1,000 or over or if any beneficiary of such estate or trust is a nonresident alien, stating specifically the items of the gross income and the deductions and Joint fiduciaries.credits allowed by this title. Under such regulations as the Commissioner with the approval of the Secretary may prescribe, a return made by one of two or more joint fiduciaries and filed in the office of the collector of the district where such fiduciary resides shall be a Oath, etc.sufficient compliance with the above requirement. The fiduciary shall make oath that he has sufficient knowledge of the affairs of such individual, estate or trust to enable him to make the return, and that the same is, to the best of his knowledge and belief, true and correct. Provisions applicable.Fiduciaries required to make returns under this Act shall be subject to all the provisions of this Act which apply to individuals. 1075 returns when accounting period changed.income tax. Change of accounting periods. Basis of returns for. Sec. 226. That if a taxpayer, with the approval of the Commissioner, changes the basis of computing net income from fiscal year to calendar year a separate return shall be made for the period between the close of the last fiscal year for which return was made and the following December thirty-first. If the change is from calendar year to fiscal year, a separate return shall be made for the period between the close of the last calendar year for which return was made and the date designated as the close of the fiscal year. If the change is from one fiscal year to another fiscal year a separate return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. If a taxpayer making his first return for income tax keeps hisAccounting. accounts on the basis of a fiscal year he shall make a separate return for the period between the beginning of the calendar year in which such fiscal year ends and the end of such fiscal year. In all of the above cases the net income shall be computed on theComputation of net income. basis of such period for which separate return is made, and the tax shall be paid thereon at the rate for the calendar year in which such period is included; and the credits provided in subdivisions
(c)and
(d)of section 216 shall be reduced respectively to amounts which bear the same ratio to the full credits provided in such subdivisions as the number of months in such period bears to twelve months. time and place for filing returns.Returns. Sec 227.
(a)That returns shall be made on or before theTime for filing. fifteenth day of the third month following the close of the fiscal year, or, if the return is made on the basis of the calendar year, then the return shall be made on or before the fifteenth day of March. TheExtensions. Commissioner may grant a reasonable extension of time for filing returns whenever in his judgment good cause exists and shall keep a record of every such extension and the reason therefor. ExceptLimit. in the case of taxpayers who are abroad, no such extension shall be for more than six months.
(b)Returns shall be made to the collector for the district in whichTo collector of district, etc. is located the legal residence or principal place of business of the person making the return, or, if he has no legal residence or principal place of business in the United States, then to the collector at Baltimore, Maryland. understatement in returns.Understatement of returns. Sec. 228. That if the collector or deputy collector has reason toIncrease by collector on notice. believe that the amount of any income returned is understated, he shall give due notice to the taxpayer 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 taxpayer may furnish sworn testimony to prove any relevantAppeal to Commissioner, etc. facts and if dissatisfied with the decision of the collector may appeal to the Commissioner for his decision, under such rules of procedure as may be prescribed by the Commissioner with the approval of the Secretary. PartIII.—Corporations.Corporations. tax on corporations.Tax. Sec. 230.
(a)That, in lieu of the taxes imposed by section 10 ofLevied on net incomes. Vol. 39, p. 765. *Ante*, p. 302. the Revenue Act of 1916, as amended by the Revenue Act of 1917, and by section 4 of the Revenue Act of 1917, there shall be levied, 1076income tax.collected, and paid for each taxable year upon the net income of every corporation a tax at the following rates:
(1)For 1918. For the calendar year 1918, 12 per centum of the amount of the net income in excess of the credits provided in section 236; and
(2)Thereafter. For each calendar year thereafter, 10 per centum of such excess amount.
(b)By transportation Systems. *Ante*, p. 451. For the purposes of the Act approved March 21, 1918, entitled “An Act to provide for the operation of transportation systems while under Federal control, for the just compensation of their owners, and for other purposes,” five-sixths of the tax imposed by paragraph
(1)of subdivision
(a)and four-fifths of the tax imposed by paragraph
(2)of subdivision
(a)shall be treated as levied by an Act in amendment of Title I of the Revenue Act of 1917. Exemptions.conditional and other exemptions. Sec. 231. Designated organizations. That the following organizations shall be exempt from taxation under this title—
(1)Labor, etc. Labor, agricultural, or horticultural organizations;
(2)Mutual savings banks. Mutual savings banks not having a capital stock represented by shares;
(3)Fraternal beneficiary societies, etc. Fraternal beneficiary societies, orders, or associations,
(a)operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system, and
(b)providing for the payment of life, sick, accident, or other benefits to the members of such society, order, or association or their dependents;
(4)Building and loan associations, etc. Domestic building and loan associations and cooperative banks without capital stock organized and operated for mutual purposes and without profit;
(5)Mutual cemeteries. Cemetery companies owned and operated exclusively for the benefit of their members;
(6)Religious, scientific, etc., organizations. Corporations organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual;
(7)Business leagues, etc. Business leagues, chambers of commerce, or boards of trade, not organized for profit and no part of the net earnings of which inures to the benefit of any private stockholder or individual;
(8)Civic leagues, etc. Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare;
(9)Pleasure, etc., clubs. Clubs organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes, no part of the net earnings of which inures to the benefit of any private stockholder or member;
(10)Farmers local mutual associations. Farmers’ or other mutual hail, cyclone, or fire insurance companies, mutual ditch or irrigation companies, mutual or cooperative telephone companies, or like organizations 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 expenses;
(11)Marketing farm products, etc., associations. Farmers’, fruit growers’, or like associations, organized and operated as sales agents for the purpose of marketing the products of 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;
(12)Trustees for exempted organizations. Corporations organized for the exclusive 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;
(13)Federal land banks and farm-loan associations. Vol. 39, p. 380. Federal land banks and national farm-loan associations as provided in section 26 of the Act approved July 17, 1916, entitled “An Act to provide capital for agricultural development, to create 1077standard forms of investment based upon farm mortgage, to equalizeincome tax. rates of interest upon farm loans, to furnish a market for United States bonds, to create Government depositaries and financial agents for the United States, and for other purposes”;
(14)Personal service corporations.Personal service corporations. net income defined.Net income. Sec. 232. That in the case of a corporation subject to the taxComputation of corporation taxable. imposed by section 230 the term “net income” means the gross income as defined in section 233 less the deductions allowed by section 234, and the net income shall be computed on the same basis as is provided in subdivision
(b)of section 212 or in section 226. gross income defined.Gross income. Sec. 233.
(a)That in the case of a corporation subject to the taxSources. *Ante*, pp. 1065, 1075. imposed by section 230 the term “gross income” means the gross income as defined in section 213, except that:
(1)In the case of life insurance companies there shall not be includedLife insurance companies. in gross income such portion of any actual premium received from any individual policyholder as is paid back or credited to or treated as an abatement of premium of such policyholder within the taxable year.
(2)Mutual marine insurance companies shall include in grossMutual marine insurance companies. income the gross premiums collected and received by them less amounts paid for reinsurance.
(b)In the case of a foreign corporation gross income includesForeign corporations. only the gross income from sources within the United States, includingFrom United States sources only. the interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, dividends from resident corporations, and including all amounts received (although paid under a contract for the sale of goods or otherwise) representing profits on the manufacture and disposition of goods within the United States. deductions allowed.Deductions. Sec. 234.
(a)That in computing the net income of a corporationDesignation of. subject to the tax imposed by section 230 there shall be allowed as deductions:
(1)All the ordinary and necessary expenses paid or incurred duringBusiness expenses. the taxable year m carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered, and 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;
(2)All interest paid or accrued within the taxable year on itsInterest on debts. indebtedness, except on indebtedness incurred or continued to purchaseExceptions. or carry obligations or securities (other than obligations of the United States issued after September 24, 1917) the interest upon which is wholly exempt from taxation under this title as income to the taxpayer, or, in the case of a foreign corporation, the proportion of such interest which the amount of its gross income from sources within the United States bears to the amount of its gross income from all sources within and without the United States;
(3)Taxes paid or accrued within the taxable year imposed (a)Domestic taxes. by the authority of the United States, except income, war-profitsExceptions. and excess-profits taxes; or
(b)by the authority of any of its posses1078income tax.sions, except the amount of income, war-profits and excess-profits taxes allowed as a credit under section 238; or
(c)by the authority of any State or Territory, or any county, school district, municipality, or other taxing subdivision of any State or Territory, not including those assessed against local benefits of a kind tending to increase Foreign taxes. Domestic corporations.the value of the property assessed, or
(d)in the case of a domestic corporation, by the authority of any foreign country, except the amount of income, war-profits and excess-profits taxes allowed Foreign corporations.as a credit under section 238; or
(e)in the case of a foreign corporation, by the authority of any foreign country (except income, war-profits and excess-profits taxes, and taxes assessed against local benefits of a kind tending to increase the value of the property *Proviso*. Exception. *Ante*, p. 1072.assessed), upon the property or business: *Provided*, That in the case of obligors specified in subdivision
(b)of section 221 no deduction for the payment of the tax imposed by this title or any other tax paid pursuant to the contract or provision referred to in that subdivision, shall be allowed;
(4)Losses. Losses sustained during the taxable year and not compensated for by insurance or otherwise;
(5)Worthless debts. Debts ascertained to be worthless and charged off within the taxable year;
(6)Tax-paid dividends, etc. Amounts received as dividends from a corporation which is taxable under this title upon its net income, and amounts received as dividends from a personal service corporation out of earnings or profits upon which income tax has been imposed by Act of Congress;
(7)Exhaustion, etc., of property. A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence;
(8)Amortization of cost of plants, vessels, etc., for war uses. In the case of buildings, machinery, equipment, or other facilities, constructed, erected, installed, or acquired, on or after April 6, 1917, for the production of articles contributing to the prosecution of the present war, and in the case of vessels constructed or acquired on or after such date for the transportation of articles or men contributing to the prosecution of the present war, there shall be allowed a reasonable deduction for the amortization of such part Limit.of the cost of such facilities or vessels as has been borne by the taxpayer, but not again including any amount otherwise allowed under this title or previous Acts of Congress as a deduction in computing Redetermination, etc., of tax within three years.net income. At any time within three years after the termination of the present war the Commissioner may, and at the request of the taxpayer shall, reexamine the return, and if he then finds as a result of an appraisal or from other evidence that the deduction originally allowed was incorrect, the taxes imposed by this title and by Title III for the year or years affected shall be redetermined and the amount Credit, etc., for overpayments.of tax due upon such redetermination, if any, shall be paid upon notice and demand by the collector, or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the provisions of section 252;
(9)Mines, oil wells, timber, etc. Allowance for depletion, depreciation, etc. In the case of mines, oil and gas wells, other natural deposits, and timber, a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case, based upon cost including cost of development not otherwise deducted: *Provisos*. If acquired prior to March 1, 1913.*Provided*, That in the case of such properties acquired prior to March 1, 1913, the fair market value of the property (or the taxpayer’s interest therein) on that date shall be taken in lieu of cost up to that If discovered by taxpayer after March 1, 1913.date: *Provided further*, That in the case of mines, oil and gas wells, discovered by the taxpayer, on or after March 1, 1913, and not acquired as the result of purchase of a proven tract or lease, where the fair market value of the property is materially disproportionate to the cost, the depletion allowance shall be based upon the fair market 1079value of the property at the date of the discovery, or within thirtyincome tax. days thereafter; such reasonable allowance in all the above cases to be made under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary. In the caseLeases. of leases the deductions allowed by this paragraph shall be equitably apportioned between the lessor and lessee;
(10)In the case of insurance companies, in addition to the above:Insurance companies. Additional for reserve fund, etc.
(a)The net addition required by law to be made within the taxable year to reserve funds (including in the case of assessment insurance companies the actual deposit of sums with State or Territorial officers pursuant to law as additions to guarantee or reserve funds); and
(b)the sums other than dividends paid within the taxable year on policy and annuity contracts;
(11)In the case of corporations issuing policies covering life,Policy payments. Reserve for weekly payment policies. health, and accident insurance combined in one policy issued on the weekly premium payment plan continuing for life and not subject to cancellation, in addition to the above, such portion of the net addition (not required by law) made within the taxable year to reserve funds as the Commissioner finds to be required for the protection of the holders of such policies only;
(12)In the case of mutual marine insurance companies, there shallMutual marine companies. be allowed, in addition to the deductions allowed in paragraphs
(1)to (10), inclusive, amounts repaid to policyholders on account of premiumsPremium repayments. previously paid by them, and interest paid upon such amounts between the ascertainment and the payment thereof;
(13)In the case of mutual insurance companies (other than mutualOther mutual insurance companies. life or mutual marine insurance companies) requiring their members to make premium deposits to provide for losses and expenses, there shall be allowed, in addition to the deductions allowed in paragraphs
(1)to (10), inclusive, (unless otherwise allowed under such paragraphs) the amount of premium deposits returned to theirPremium deposits returned. policyholders and the amount of premium deposits retained for the payment of losses, expenses, and reinsurance reserves;
(a)At the time of filing return for the taxable year 1918 a taxpayerLosses from inventory reduction or rebates paid on contracts. Claims to be filed in 1918. may file a claim in abatement based on the fact that he has sustained a substantial loss (whether or not actually realized by sale or other disposition) resulting from any material reduction (not due to temporary fluctuation) of the value of the inventory for such taxable year, or from the actual payment after the close of such taxable year of rebates in pursuance of contracts entered into during such year upon sales made during such year. In such case payment ofBond required. the amount of the tax covered by such claim shall not be required until the claim is decided, but the taxpayer shall accompany his claim with a bond in double the amount of the tax covered by the claim, with sureties satisfactory to the Commissioner, conditioned for the payment of any part of such tax found to be due, with interest. If any part of such claim is disallowed then the remainder of the taxPayment of part disallowed. due shall on notice and demand by the collector be paid by the taxpayer with interest at the rate of 1 per centum per month from the time the tax would have been due had no such claim been filed. IfAllowances to be deducted. it is shown to the satisfaction of the Commissioner that such substantial loss has been sustained, then in computing the taxes imposed by this title and by Title III the amount of such loss shall be deducted from the net income,
(b)If no such claim is filed, but it is shown toDeduction for loss if no claim filed. the satisfaction of the Commissioner that during the taxable year 1919 the taxpayer has sustained a substantial loss of the character above described then the amount of such loss shall be deducted from the net income for the taxable year 1918 and the taxes imposed by this title and by Title III for such year shall be redetermined accordingly.Credit, etc., therefor. Any amount found to be due to the taxpayer upon the basis 1080income tax.of such redetermination shall be credited or refunded to the taxpayer in accordance with the provisions of section 252.
(b)Foreign corporations. Deductions only on business in United States. In the case of a foreign corporation the deductions allowed in subdivision (a), except those allowed in paragraph
(2)and in clauses (a), (b), and
(c)of paragraph (3), shall be allowed only if and to the extent that they are connected with income arising from a source within the United States; and the proper apportionment and allocation of the deductions with respect to sources of income within and without the United States shall be determined under rules and regulations prescribed by the Commissioner with the approval of the Secretary. Items not deductible.items not deductible. Sec. 235. Same as individuals. *Ante*, 1069. That in computing net income no deduction shall in any case be allowed in respect of any of the items specified in section 215. Credits allowed.credits allowed. Sec. 236. Designation of. That for the purpose only of the tax imposed by section 230 there shall be allowed the following credits:
(a)Interest on Federal, etc., obligations. The amount received as interest upon obligations of the United States and bonds issued by the War Corporation, which is included in gross income under section 233;
(b)War and excess profits tax. *Proviso*. Fiscal year ending 1918. Computation. The amount of any taxes imposed by Title III for the same taxable year: *Provided*, That in the case of a corporation which makes return for a fiscal year beginning in 1917 and ending in 1918, in computing the tax as provided in subdivision
(a)of section 205, the tax computed for the entire period under Title II of the Revenue Act of 1917 shall be credited against the net income computed for the entire period under Title I of the Revenue Act of 1916 as amended by the Revenue Act Allowance.of 1917 and under Title I of the Revenue Act of 1917, and the tax computed for the entire period under Title III of this Act at the rates prescribed for the calendar year 1918 shall be credited against the net income computed for the entire period under this title; and
(c)Domestic corporations, $2,000. In the case of a domestic corporation, $2,000. Payment at source.payment of tax at source. Sec. 237. Of foreign corporations not in business in United States. That in the case of foreign corporations subject to taxation under this title not engaged in trade or business within the United States and not having any office or place of business therein, there shall be deducted and withheld at the source in the same manner and upon the same items of income as is provided in section 221 *Ante*, p. 1072.a tax equal to 10 per centum thereof, and such tax shall be returned and paid in the same manner and subject to the same conditions as *Proviso*. Interest free from tax.provided in that section: *Provided*, That in the case of interest described in subdivision
(b)of that section the deduction and withholding shall be at the rate of 2 per centum. Credit for taxes.credit for taxes. Sec. 238. Domestic corporations. Paid to foreign country or United States possession.
(a)That in the case of a domestic corporation the total taxes imposed for the taxable year by this title and by Title III shall be credited with the amount of any income, war-profits and excess-profits taxes paid during the taxable year to any foreign country, upon income derived from sources therein, or to any possession of the United States. Redetermination if paid taxes differ from credit claimed, etc.If accrued taxes when paid differ from the amounts claimed as credits by the corporation, or if any tax paid is refunded in whole 1081or in part, the corporation shall at once notify the Commissionerincome tax. who shall redetermine the amount of the taxes due under this title and under Title III for the year or years affected, and the amount of taxes due upon such redetermination, if any, shall be paid by the corporation upon notice and demand by the collector, or the amount of taxes overpaid, if any, shall be credited or refunded to the corporation in accordance with the provisions of section 252. In the case ofTax accrued but not paid. Bond required. such a tax accrued but not paid, the Commissioner as a condition precedent to the allowance of this credit may require the corporation to give a bond with sureties satisfactory to and to be approved by him in such penal sum as he may require, conditioned for the payment by the taxpayer of any amount of taxes found due upon any such redetermination; and the bond herein prescribed shall contain such further conditions as the Commissioner may require.
(b)This credit shall be allowed only if the taxpayer furnishesEvidence of foreign income required. evidence satisfactory to the Commissioner showing the amount of income derived from sources within such foreign country or such possession of the United States, as the case may be, and all other information necessary for the computation of such credit.
(c)If a domestic corporation makes a return for a fiscal year beginningDomestic corporation fiscal year ending in 1918. in 1917 and ending in 1918, only that proportion of this credit shall be allowed which the part of such period within the calendar year 1918 bears to the entire period. corporation returns.Returns. Sec. 239. That every corporation subject to taxation under thisSpecific requirements. title and every personal service corporation shall make a return, stating specifically the items of its gross income and the deductions and credits allowed by this title. The return shall be sworn to by the president, vice president, or other principal officer and by the treasurer or assistant treasurer. If any foreign corporation has noBy agent of foreign corporation. office or place of business in the United States but has an agent in the United States, the return shall be made by the agent. In casesReceivers, etc. where receivers, trustees in bankruptcy, or assignees are operating the property or business of corporations, such receivers, trustees,Collection. or assignees shall make returns for such corporations in the same manner and form as corporations are required to make returns. Any tax due on the basis of such returns made by receivers, trustees, or assignees shall be collected in the same manner as if collected from the corporations of whose business or property they have custody and control. Returns made under this section shall be subject to the provisionsAccounting. of sections 226 and 228. When return is made under section 226Reduction of specific reduction for part of year. the credit provided in subdivision
(c)of section 236 shall be reduced to an amount which bears the same ratio to the full credit therein provided as the number of months in the period for which such return is made beam to twelve months. consolidated returns.Consolidated returns. Sec. 240.
(a)That corporations which are affiliated within theFrom affiliated corporations. meaning of this section shall, under regulations to be prescribed by the Commissioner with the approval of the Secretary, make a consolidated return of net income and invested capital for the purposes of this title and Title III, and the taxes thereunder shall be computed and determined upon the basis of such return: *Provided*,*Proviso*. Assessment, if organized after August 1, 1914, on income from Government’s contracts during the war. That there shall be taken out of such consolidated net income and invested capital, the net income and invested capital of any such affiliated corporation organized after August 1, 1914, and not successor to a then existing business, 50 per centum or more of whose 1082income tax.gross income consists of gains, profits, commissions, or other income, derived from a Government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive. In such case the corporation so taken out shall be separately assessed on the basis of its own invested capital and net income and the remainder of such affiliated group shall be assessed on the basis of the remaining consolidated invested capital and net income. Computed of proportionate assessments.In any case in which a tax is assessed upon the basis of a consolidated return, the total tax shall be computed in the first instance as a unit and shall then be assessed upon the respective affiliated corporations in such proportions as may be agreed upon among them, or, in the absence of any such agreement, then on the basis of the net Limit of credits and exemptions.income properly assignable to each. There shall be allowed in computing tue income tax only one specific credit of $2,000 (as provided in section 236); in computing the war-profits credit (as provided in section 311) only one specific exemption of $3,000; and in computing the excess-profits credit (as provided in section 312) only one specific exemption of $3,000.
(b)Affiliated corporations defined. For the purpose of this section two or more domestic corporations shall be deemed to be affiliated
(1)if one corporation owns directly or controls through closely affiliated interests or by a nominee or nominees substantially all the stock of the other or others, or
(2)if substantially all the stock of two or more corporations is owned or controlled by the same interests.
(c)Credit of foreign taxes if foreign corporation is owned, etc., by domestic. For the purposes of section 238 a domestic corporation which owns a majority of the voting stock of a foreign corporation shall be deemed to have paid the same proportion of any income, war-profits and excess-profits taxes paid (but not including taxes accrued) by such foreign corporation during the taxable year to any foreign country or to any possession of the United States upon income derived from sources without the United States, which the amount of any dividends (not deductible under section 234) received by such domestic corporation from such foreign corporation during the taxable year bears to the total taxable income of such foreign *Proviso*. Limit.corporation upon or with respect to which such taxes were paid: *Provided*, That in no such case shall the amount of the credit for such taxes exceed the amount of such dividends (not deductible under section 234) received by such domestic corporation during the taxable year. Returns.time and place for filing returns. Sec. 241. Time of filing. *Ante*, p. 1075.
(a)That returns of corporations shall be made at the same time as is provided in subdivision
(a)of section 227.
(b)To collector of district, etc. Returns shall be made to the collector of the district in which is located the principal place of business or principal office or agency of the corporation, or, if it has no principal place of business or principal office or agency in the United States, then to the collector at Baltimore, Maryland. Part IV.—Administrative provisions.Administrative Provisions. Payment of taxes.payment of taxes. Sec. 250. In four installments, except at source.
(a)That except as otherwise provided in this section and sections 221 and 237 the tax shall be paid in four installments, Periods.each consisting of one-fourth of the total amount of the tax. The first installment shall be paid at the time fixed by law for filing the return, and the second installment shall be paid on the fifteenth day of the third month, the third installment on the fifteenth day of the sixth month, and the fourth installment on the fifteenth day of the 1083ninth month, after the time fixed by law for filing the return. Whereincome tax. an extension of time for filing a return is granted the time for paymentExtension of first payment. of the first installment shall be postponed until the date of the expiration of the period of the extension, but the time for payment of the other installments shall not be postponed unless the Commissioner so provides in granting the extension. In any case in whichInterest added if unpaid, when due. the time for the payment of any installment is at the request of the taxpayer thus postponed, there shall be added as part of such installment interest thereon at the rate of ½ of 1 per centum per month from the time it would have been due if no extension had been granted, until paid. If any installment is not paid when due, theWhole amount on default. whole amount of the tax unpaid shall become due and payable upon notice and demand by the collector. The tax may at the option of the taxpayer be paid in a single Optional single payment on filing return, etc.payment instead of in installments, in which case the total amount shall be paid on or before the time fixed by law for filing the return, or, where an extension of time for filing the return has been granted, on or before the expiration of the period of such extension.
(b)As soon as practicable after the return is filed, the CommissionerExamination, etc., by Commissioner. shall examine it. If it then appears that the correct amount of the tax is greater or less than that shown in the return, the installments shall be recomputed. If the amount already paid exceedsCredit, etc., of excess. that which should have been paid on the basis of the installments as recomputed, the excess so paid shall be credited against the subsequent installments; and if the amount already paid exceeds the correct amount of the tax, the excess shall be credited or refunded to the taxpayer in accordance with the provisions of section 252. If the amount already paid is less than that which should have beenPayment of deficiency. paid, the difference shall, to the extent not covered by any credits then due to the taxpayer under section 252, be paid upon notice and demand by the collector. In such case if the return is made in good faith and the understatement of the amount in the return is not due to any fault of the taxpayer, there shall be no penalty because of such understatement. If the understatement is due to negligence onAdditional tax for negligence. the part of the taxpayer, but without intent to defraud, there shall be added as part of the tax 5 per centum of the total amount of the deficiency, plus interest at the rate of 1 per centum per month on the amount of the deficiency of each installment from the time the installment was due. If the understatement is false or fraudulent with intent to evadePenalty tax for false returns. [R. S., sec. 3176, p. 610](/us/rs/s3176/p610). *Post*, p. 1147. the tax, then, in lieu of the penalty provided by section 3176 of the Revised Statutes, as amended, for false or fraudulent returns willfully made, but in addition to other penalties provided by law for false or fraudulent returns, there shall be added as part of the tax 50 per centum of the amount of the deficiency.
(c)If the return is made pursuant to section 3176 of the RevisedReturns by revenue officer. *Post*, p. 1147. Statutes as amended, the amount of tax determined to be due under such return shall be paid upon notice and demand by the collector.
(d)Except in the case of false or fraudulent returns with intentTime limit on suits for recoveries, etc. to evade the tax, the amount of tax due under any return shall be determined and assessed by the Commissioner within five years after the return was due or was made, and no suit or proceeding for the collection of any tax shall be begun after the expiration of five years after the date when the return was due or was made. In the case ofFalse returns excepted. such false or fraudulent returns, the amount of tax due may be determined at any time after the return is filed, and the tax may be collected at any time after it becomes due.
(e)If any tax remains unpaid after the date when it is due, andAdditional tax if unpaid when due. for ten days after notice and demand by the collector, then, except in the case of estates of insane, deceased, or insolvent persons, there 1084income tax.shall be added as part of the tax the sum of 5 per centum on the amount due but unpaid, plus interest at the rate of 1 per centum per *Proviso*. Reduced on claims for abatement.month upon such amount from the time it became due: *Provided*, That as to any such amount which is the subject of a bona fide claim for abatement such sum of 5 per centum shall not be added and the interest from the time the amount was due until the claim is decided shall be at the rate of ½ of 1 per centum per month. Notice, etc., inferred.In the case of the first installment provided for in subdivision
(a)the instructions printed on the return shall be deemed sufficient notice of the date when the tax is due and sufficient demand, and the taxpayer’s computation of the tax on the return shall be deemed sufficient notice of the amount due.
(f)Enforcement expenses. In any case in which in order to enforce payment of a tax it is necessary for a collector to cause a warrant of distraint to be served, there shall also be added as part of the tax the sum of $5.
(g)Immediate payment if acts of taxpayer prejudice collection, etc. If the Commissioner finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his property therein, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the tax for the taxable year then last past or the taxable year then current unless such proceedings be brought without delay, the Commissioner shall declare the taxable period for such taxpayer terminated at the end of the calendar month then last past and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable year or so much of said tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paring the tax has expired; and such taxes shall thereupon Finding of Commissioner presumption of intent.become immediately due and payable. In any action or suit brought to enforce payment of taxes made due and payable by virtue of the provisions of this subdivision the finding of the Commissioner, made as herein provided, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of the taxpayer’s Bond, if not in default.design. A taxpayer who is not in default in making any return or paying income, war-profits, or excess-profits tax under any Act of Congress may furnish to the United States, under regulations to be prescribed by the Commissioner with the approval of the Secretary, security approved by the Commissioner that he will duly make the return next thereafter required to be filed and pay the tax next thereafterConditions of acceptance. required to be paid. The Commissioner may approve and accept in like manner security for return and payment of taxes made due and payable by virtue of the provisions of this subdivision, provided the taxpayer has paid in full all other income, war-profits, Suspension of enforcement proceedings.or excess-profits taxes due from him under any Act of Congress. If security is approved and accepted pursuant to the provisions of this subdivision and such further or other security with respect to the tax or taxes covered thereby is given as the Commissioner shall from time to time find necessary and require, payment of such taxes shall not be enforced by any proceedings under the provisions of this subdivision prior to the expiration of the time otherwise allowed for paying such respective taxes. Receipts for taxes.receipts for taxes. Sec. 251. To be given on request. That every collector to whom any payment of any tax is made under the provisions of this title shall upon request give to the person making such payment a full written or printed receipt, stating the amount paid and the particular account for which such payment was made; and whenever any debtor pays taxes on account of “payments made or to be made by him to separate creditors the collector shall, if requested by such debtor, give a separate receipt for 1085the tax paid on account of each creditor in such form that the debtorincome tax. can conveniently produce such receipts separately to his several creditors in satisfaction of their respective demands up to the amounts stated in the receipts; and such receipt shall be sufficient evidenceEvidence of tax paid, by a debtor, etc. in favor of such debtor to justify him in withholding from his next payment to his creditor the amount therein stated; but the creditor may, upon giving to his debtor a full written receipt acknowledging the payment to him of any sum 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. refunds.Refunds. Sec. 252. That if, upon examination of any return of incomeCredits for excess payments under previous laws. Vol. 36, p. 112. Vol. 38, p. 166. made pursuant to this Act, the Act of August 5, 1909, entitled “An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,” the Act of October 3, 1913, entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” the Revenue Act ofVol. 39, pp. 756, 1004. 1916, as amended, or the Revenue Act of 1917, it appears*Ante*, pp. 300, 326. that an amount of income, war-profits or excess-profits tax has been paid in excess of that properly due, then, notwithstanding the provisions of section 3228 of the Revised Statutes, the amount of the excess[R. S., sec. 3228, p. 620](/us/rs/s3228/p620). shall be credited against any income, war-profits or excess-profits taxes, or installment thereof, then due from the taxpayer under any other return, and any balance of such excess shall be immediately refundedRefund of balance. to the taxpayer: *Provided*, That no such credit or refund shall be*Proviso*. Time limit. allowed or made after five years from the date when the return was due, unless before the expiration of such five years a claim therefor is filed by the taxpayer. penalties.Penalties. Sec. 253. That any individual, corporation, or partnership requiredFor failing to pay tax, make returns, etc. under this title to pay or collect any tax, to make a return or to supply information, who fails to pay or collect such tax, to make such return, or to supply such information at the time or times required under this title, shall be liable to a penalty of not more than $1,000. Any individual, corporation, or partnership, or any officerWillful refusals, evasions, etc. or employee of any corporation or member or employee of a partnership, who willfully refuses to pay or collect such tax, to make such return, or to supply such information at the time or times required under this title, or who willfully attempts in any manner to defeat or evade the tax imposed by this title, shall be guilty of a misdemeanor and shall be fined not more than $10,000 or imprisonedPunishment. for not more than one year, or both, together with the costs of prosecution. returns of payments of dividends.Dividend payments. Sec. 254. That every corporation subject to the tax imposed bySpecific sworn re returns of, by corporations. this title and every personal service corporation shall, when required by the Commissioner, render a correct return duly verified under oath, of its payments of dividends, stating the name and address of each stockholder, the number of shares owned by him, and the amount of dividends paid to him. returns of brokers.Brokers. Sec. 255. That every individual, corporation, or partnershipSworn returns of business transacted by. Details. doing business as a broker shall, when required by the Commissioner, Tender a correct return duly verified under oath, under such rules and 1086income tax.regulations as the Commissioner, with the approval of the Secretary, may prescribe, showing the names of customers for whom such individual, corporation, or partnership has transacted any business, with such details as to the profits, losses, or other information which the Commissioner may require, as to each of such customers, as will enable the Commissioner to determine whether all income tax due on profits or gains of such customers has been paid. Information at source.information at source. Sec. 256. Required from all persons making fixed payments to others of $1,000. *Ante*, p. 337. That all individuals, corporations, and partnerships, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, and employers, making payment to another individual, corporation, or partnership, of interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income (other than payments described in sections 254 and 255), of By United States officers.$1,000 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Commissioner, under such regulations and in such form and manner and to such extent as may be prescribed by him with the approval of the Secretary, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment. Interest on corporation obligations.Such returns may be required, regardless of amounts,
(1)in the case of payments of interest upon bonds, mortgages, deeds of trust, or Collecting foreign coupons, etc.other similar obligations of corporations, and
(2)in the case of collections of items (not payable in the United States) of interest upon the bonds of foreign countries and interest upon the bonds of and dividends from foreign corporations by individuals, corporations, or partnerships, undertaking as a matter of business or for profit the collection of foreign payments of such interest or dividends by means of coupons, checks, or bills of exchange. Names and addresses.When necessary to make effective the provisions of this section the name and address of the recipient of income shall be furnished upon demand of the individual, corporation, or partnership paying the income. To be made each year.The provisions of this section shall apply to the calendar year 1918 and each calendar year thereafter, but shall not apply to the payment of interest on obligations of the United States. Publicity.returns to be public records. Sec. 257. Returns made public records. Inspection restricted. Vol. 39, p. 772, amended. That returns upon which the tax has been determined by the Commissioner shall constitute public records; but they shall be open to inspection only upon order of the President and under rules and regulations prescribed by the Secretary and approved by *Provisos*. Access by State officers.the President: *Provided*, That the proper officers of any State imposing an income tax may, upon the request of the governor thereof, have access to the returns of any corporation, or to an abstract thereof showing the name and income of the corporation, at such times and Stockholders of corporation income returns.in such manner as the Secretary may prescribe: *Provided further*, That all bona fide stockholders of record owning 1 per centum or more of the outstanding stock of any corporation shall, upon making request of the Commissioner, be allowed to examine the annual income Punishment for unauthorized divulging.returns of such corporation and of its subsidiaries. Any stockholder who pursuant to the provisions of this section is allowed to examine 1087the return of any corporation, and who makes known in any mannerincome tax. whatever not provided by law the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any such return, shall be guilty of a misdemeanor and be punished by a fine not exceeding $1,000, or by imprisonment not exceeding one year, or both. The Commissioner shall as soon as practicable in each year causeList of income taxpayers to be prepared. to be prepared and made available to public inspection in such manner as he may determine, in the office of the collector in each internal-revenue district and in such other places as he may determine, lists containing the names and the post-office addresses of all individuals making income-tax returns in such district. publication of statistics.Statistics. Sec 258. That the Commissioner, with the approval of the Secretary,Annual publication directed of income tax laws, etc. shall prepare and publish annually statistics reasonably available with respect to the operation of the income, war-profits and excess profits-tax laws, including classifications of taxpayers and of income, the amounts allowed as deductions, exemptions, and credits, and any other facts deemed pertinent and valuable. collection of foreign items.Collection of foreign items. Sec 259. That all individuals, corporations, or partnershipsLicenses required for collecting foreign coupons, etc. undertaking as a matter of business or for profit the collection of foreign payments of interest or dividends by means of coupons, checks, or bills of exchange shall obtain a license from the Commissioner and shall be subject to such regulations enabling the Government to obtain the information required under this title as the Commissioner, with the approval of the Secretary, shall prescribe; and whoever knowingly undertakes to collect such payments withoutPunishment for unlicensed collections. having obtained a license therefor, or without complying with such regulations, shall be guilty of a misdemeanor and shall be fined not more than $5,000, or imprisoned for not more than one year, or both. citizens of united states possessions.Citizens of United States possessions. Sec. 260. That any individual who is a citizen of any possessionIf not of United States, taxable there only on income from United States sources. of the United States (but not otherwise a citizen of the United States) and who is not a resident of the United States, shall be subject to taxation under this title only as to income derived from sources within the United States, and in such case the tax shall be computed and paid in the same manner and subject to the same conditions as in the case of other persons who are taxable only as to income derived from such sources. porto rico and philippine islands.Porto Rico and Philippines. Sec. 261. That in Porto Rico and the Philippine Islands theTax collection by insular officials. Vol. 38, p. 180; Vol. 39, p. 776. income tax shall be levied, assessed, collected, and paid in accordance with the provisions of the Revenue Act of 1916 as amended. Returns shall be made and taxes shall be paid under Title I of Returns and payments. Citizens and residents.such Act in Porto Rico orCorporations. the Philippine Islands, as the case may be, by
(1)every individual who is a citizen or resident of Porto Rico or the Philippine Islands or derives income from sources therein, and
(2)every corporation created or organized in Porto Rico or the Philippine Islands or deriving income from sources therein. An individual who is neither a citizen nor a resident of Porto RicoNonresidents from insular sources. or the Philippine Islands but derives income from sources therein, 1088income tax.shall be taxed in Porto Rico or the Philippine Islands as a nonresident alien individual, and a corporation created or organized outside Porto Rico or the Philippine Islands and deriving income from sources therein shall be taxed in Porto Rico or the Philippine Islands No credit or deduction for insular corporation tax.as a foreign corporation. For the purposes of section 216 and of paragraph
(6)of subdivision
(a)of section 234 a tax imposed in Porto Rico or the Philippine Islands upon the net income of a corporation shall not be deemed to be a tax under this title. Authority of insular legislatures.The Porto Rican or Philippine Legislature shall have power by due enactment to amend, alter, modify, or repeal the income tax laws in force in Porto Rico or the Philippine Islands, respectively. TITLE III.—war and excess profits tax.WAR-PROFITS AND EXCESS-PROFITS TAX. Part I.—General definitions.General Definitions. Sec 300. Terms used in this title. That when used in this title the terms “taxable year,” “fiscal year,” “personal service corporation,” “paid or accrued,” and “dividends” shall have the same meaning as provided for the purposes of income tax in sections 200 and 201. The first taxable year for the purposes of this title shall be the same as the first taxable year for the purposes of the income tax under Title II. Part II.—Tax.Imposition of Tax. Sec. 301. Additional tax on corporation net incomes. *Ante*, p. 302.
(a)That in lieu of the tax imposed by Title II of the Revenue Act of 1917, but in addition to the other taxes imposed by this Act, there shall be levied, collected, and paid for the taxable year 1918 upon the net income of every corporation a tax equal to the sum of the following: For 1918.first bracket. Not in excess of 20 per cent of capital.30 per centum of the amount of the net income in excess of the excess-profits credit (determined under section 312) and not in excess of 20 per centum of the invested capital; second bracket. In excess thereof.65 per centum of the amount of the net income in excess of 20 per centum of the invested capital; third bracket. For higher income.The sum, if any, by which $0 per centum of the amount of the net income in excess of the war-profits credit (determined under section 311) exceeds the amount of the tax computed under the first and second brackets.
(b)For 1919, and thereafter. For the taxable year 1919 and each taxable year thereafter there shall be levied, collected, and paid upon the net income of Exception.every corporation (except corporations taxable under subdivision
(c)of this section) a tax equal to the sum of the following: first bracket. Not in excess of 20 per cent of capital.20 per centum of the amount of the net income in excess of the excess-profits credit (determined under section 312) and not in excess of 20 per centum of the invested capital; second bracket. In excess thereof.40 per centum of the amount of the net income in excess of 20 per centum of the invested capital. 1089
(c)For the taxable year 1919 and each taxable year thereafter therewar and excess profits tax. From Government contracts during the war. shall be levied, collected, and paid upon the net income of every corporation which derives in such year a net income of more than $10,000 from any Government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive, a tax equal to the sum of the following:
(1)Such a portion of a tax computed at the rates specified in subdivisionComputation for 1918.
(a)as the part of the net income attributable to such Government contract or contracts bears to the entire net income. In computing such tax the excess-profits credit and the war-profits credit applicable to the taxable year shall be used;
(2)Such a portion of a tax computed at the rates specified inFor 1919, and after. subdivision
(b)as the part of the net income not attributable to such Government contract or contracts bears to the entire net income. For the purpose of determining the part of the net income attributableDetermination of taxable income due to contracts. to such Government contract or contracts, the proper apportionment and allocation of the deductions with respect to gross income derived from such Government contract or contracts and from other sources, respectively, shall be determined under rules and regulations prescribed by the Commissioner with the approval of the Secretary.
(d)In any case where the full amount of the excess-profits creditDeductions. is not allowed under the first bracket of subdivision
(a)or (b), by reason of the fact that such credit is in excess of 20 per centum of the invested capital, the part not so allowed shall be deducted from the amount in the second bracket.
(e)For the purposes of the Act approved March 21, 1918, entitledOn railroads construed as levied by Revenue Act of 1917. *Ante*, p. 451. “An Act to provide for the operation of transportation systems while under Federal control, for the just compensation of their owners, and for other purposes,” the tax imposed by this title shall*Ante*, p. 302. be treated as levied by an Act in amendment of Title II of the Revenue Act of 1917. Sec. 302. That the tax imposed by subdivision
(a)of section 301Limitations for 1918. shall in no case be more than 30 per centum of the amount of the net income in excess of $3,000 and not in excess of $20,000, plus 80 per centum of the amount of the net income in excess of $20,000; the tax imposed by subdivision
(b)of section 301 shall in no caseFor 1919, and after. be more than 20 per centum of the amount of the net income in excess of $3,000 and not in excess of $20,000, plus 40 per centum of the amount of the net income in excess of $20,000; and the aboveGovernment contracts. limitations shall apply to the taxes computed under subdivisions
(a)and
(b)of section 301, respectively, when used in subdivision
(c)of that section. Nothing in this section shall be construed in suchNo increase authorized. manner as to increase the tax imposed by section 301. Sec. 303. That if part of the net income of a corporation is derivedSeparation of tax if part of income from personal service corporation.
(1)from a trade or business (or a branch of a trade or business) in which the employment of capital is necessary and
(2)a part (constituting not less than 30 per centum of its total net income) is derived from a separate trade or business (or a distinctly separate branch of the trade or business) which if constituting the sole trade or business would bring it within the class of “personal service corporations,” then (under regulations prescribed by the Commissioner with the approval of the Secretary) the tax upon the first part of such net income shall be separately computed (allowing in such computation only the same proportionate part of the credits authorized in sections 311 and 312), and the tax upon the second part shall be the same percentage thereof as the tax so computed upon the first part is of such first part: *Provided*, That the tax upon such second part*Proviso*. Minimum. shall in no case be less than 20 per centum thereof, unless the tax upon the entire net income, if computed without benefit of this sec1090war and excess profits tax.tion, would constitute less than 20 per centum of such entire Limit.net income, in which event the tax shall be determined upon the entire net income, without reference to this section, as other taxes are determined under this title. The total tax computed under this section shall be subject to the limitations provided in section 302. Sec. 304. Exempted corporations. *Ante*, p. 1076.
(a)That the corporations enumerated in section 231 shall, to the extent that they are exempt from income tax under Title II, be exempt from taxation under this title.
(b)Exemption of $3,000. Any corporation whose net income for the taxable year is less than $3,000 shall be exempt from taxation under this title.
(c)Income from gold mining exempt. In the case of any corporation engaged in the mining of gold, the portion of the net income derived from the mining of gold shall be exempt from the tax imposed by this title, and the tax on the remaining portion of the net income shall be the proportion of a tax computed without the benefit of this subdivision which such remaining portion of the net income bears to the entire net income. Sec. 305. For less than a year. That if a tax is computed under this title for a period of less than twelve months, the specific exemption of $3,000, wherever referred to in this title, shall be reduced to an amount which is the same proportion of $3,000 as the number of months in the period is of twelve months. Part III.—Credits.Credits. Sec. 310. Prewar period defined. That as used in this title the term “prewar period” means the calendar years 1911, 1912, and 1913, or, if a corporation was not in existence during the whole of such period, then as many of such years during the whole of which the corporation was in existence. Sec. 311. War-profits credits.
(a)That the war-profits credit shall consist of the sum of:
(1)$3,000 exemption. A specific exemption of $3,000; and
(2)Ten per cent of difference between income and average prewar and taxable year capital. An amount equal to the average net income of the corporation for the Less than a year.prewar period, plus or minus, as the case may be, 10 per centum of the difference between the average invested capital for the prewar period and the invested capital for the taxable year. If the tax is computed for a period of less than twelve months such amount shall be reduced to the same proportion thereof as the number of months in the period is of twelve months.
(b)Further, if no prewar income, etc. If the corporation had no net income for the prewar period, or if the amount computed under paragraph
(2)of subdivision
(a)is less than 10 per centum of its invested capital for the taxable year, then the war-profits credit shall be the sum of:
(1)$3,000. A specific exemption of $3,000; and
(2)Ten per cent of invested capital. An amount equal to 10 per centum of the invested capital for the taxable year.
(c)No prewar existence. If the corporation was not in existence during the whole of at least one calendar year during the prewar period, then, except as provided in subdivision (d), the war-profits credit shall be the sum of:
(1)$3,000. A specific exemption of $3,000; and
(2)Same percentage as similar business An amount equal to the same percentage of the invested capital of the taxpayer for the taxable year as the average percentage of net income to invested capital, for the prewar period, of corporations engaged in a trade or business of the same general class as that conducted by the taxpayer; but such amount shall in no case be less than 10 per centum of the invested capital of the taxpayer for the Determination by Commissioner.taxable year. Such average percentage shall be determined by the Commissioner on the basis of data contained in returns made under *Ante*, p. 302.Title II of the Revenue Act of 1917, and the average known as the median shall be used. If such average percentage has not been If average not determined.determined and published at least 30 days prior to the time when the return of the taxpayer is due, then for purposes of such return 109110 per centum shall be used in lieu thereof; but such average percentagewar and excess profits tax. when determined shall be used for the purposes of section 250 in determining the correct amount of the tax.
(d)The war-profits credit shall be determined in the mannerCorporation owned by one having prewar existence. provided in subdivision
(b)instead of in the manner provided in subdivision (c), in the case of any corporation which was not in existence during the whole of at least one calendar year during the prewar period, if
(1)a majority of its stock at any time during the taxable year is owned or controlled, directly or indirectly, by a corporation which was in existence during the whole of at least one calendar year during the prewar period, or if
(2)50 per centum orIf greater part of in come from Government or war contracts. more of its gross income (as computed under section 233 for income tax purposes) consists of gains, profits, commissions, or other income, derived from a government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive.
(e)A foreign corporation shall not be entitled to a specific exemption$3,000 not allowed foreign corporations. of $3,000. Sec. 312. That the excess-profits credit shall consist of a specificExcess-profits credit exemption of $3,000 plus an amount equal to 8 per centum of the invested capital for the taxable year. A foreign corporation shall not be entitled to the specific exemptionForeign corporations. of $3,000. Part IV.—Net income.Net Income. Sec. 320.
(a)That for the purpose of this title the net income of aAscertainment. corporation shall he ascertained and returned—
(1)For the calendar years 1911 and 1912 upon the same basisBasis for 1911 and 1912. Vol. 36, p. 112. and in the same manner as provided in section 38 of the Act entitled “An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,” approvedDeductions allowed. August 5, 1909, except that taxes imposed by such section and paid by the corporation within the year shall be included;
(2)For the calendar year 1913 upon the same basis and in the sameFor 1913. Vol. 38, p. 172. manner as provided in Section II of the Act entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” approved October 3, 1913, except that taxes imposed by section 38 of such Act of August 5, 1909, and paid by the corporation within the year shall be included, and except that the amounts receivedDeductions. by it as dividends upon the stock or from the net earnings of other corporations subject to the tax imposed by Section II of such Act of October 3, 1913, shall be deducted; and
(3)For the taxable year upon the same basis and in the sameTaxable year. manner as provided for income tax purposes in Title II of this Act.
(b)The average net income for the prewar period shall be determinedAverage for prewar period. by dividing the number of years within that period during the whole of which the corporation was in existence into the sum of the net income for such years, even though there may have been no net income for one or more of such years. Part V.—Invested Capital.Invested capital. Sec. 325.
(a)That as used in this title—Items included. The term “intangible property” means patents, copyrights,“Intangible property.” secret processes and formulæ, good will, trade-marks, trade-brands, franchises, and other like property; The term “tangible property” means stocks, bonds, notes, and“Tangible property.” other evidences of indebtedness, bills and accounts receivable, leaseholds, and other property other than intangible property; The term “borrowed capital” means money or other property “Borrowed capital”borrowed, whether represented by bonds, notes, open accounts, or otherwise; 1092 war and excess profits tax. “Inadmissible assets.” Sources excluded.The term “inadmissible assets” means stocks, bonds, and other obligations (other than obligations of the United States), the dividends or interest from which is not included in computing net income, but where the income derived from such assets consists in part of gain or profit derived from the sale or other disposition thereof, or where all or part of the interest derived from such assets is in effect included in the net income because of the limitation on the deduction of interest under paragraph
(2)of subdivision
(a)of section 234, a corresponding part of the capital invested in such assets shall not be deemed to be inadmissible assets; “Admissible assets.”The term “admissible assets” means all assets other than inadmissible assets, valued in accordance with the provisions of subdivision
(a)of section 326, section 330, and section 331.
(b)Value of stock with no par, etc. For the purposes of this title, the par value of stock or shares shall, in the case of stock or shares issued at a nominal value or having no par value, be deemed to be the fair market value as of the date or dates of issue of such stock or shares. Sec. 326. Invested capital construed.
(a)That as used in this title the term “invested capital” for any year means (except as provided in subdivisions
(b)and
(c)of this section);
(1)Cash paid in. Actual cash bona fide paid in for stock or shares;
(2)Value of other tangible property. Actual cash value of tangible property, other than cash, bona fide paid in for stock or shares, at the time of such payment, Limitation.but in no case to exceed the par value of the original stock or shares specifically issued therefor, unless the actual cash value of such tangible property at the time paid in is shown to the satisfaction of the Commissioner to have been clearly and substantially in excess of such par value, in which case such excess shall be treated as paid-in surplus: *Proviso*. Record to be kept where included in excess of stock issued therefor.*Provided*, That the Commissioner shall keep a record of all cases in which tangible property is included in invested capital at a value in excess of the stock or shares issued therefor, containing the name and address of each taxpayer, the business in which engaged, the amount of invested capital and net income shown by the return, the value of the tangible property at the time paid in, the par value of the stock or shares specifically issued therefor, and the amount Copy, etc., to Congress.included under this paragraph as paid-in surplus. The Commissioner shall furnish a copy of such record and other detailed information with respect to such cases when required by resolution of either House of Congress, without regard to the restrictions contained in *Ante*, p. 1086.section 257;
(3)Surplus and undivided profits. Paid-in or earned surplus and undivided profits; not including surplus and undivided profits earned during the year;
(4)Intangible property paid for stock before March 3, 1917. Intangible property bona fide paid in for stock or shares prior to March 3, 1917, in an amount not exceeding
(a)the actual cash value of such property at the time paid in,
(b)the par value of the stock or shares issued therefor, or
(c)in the aggregate 25 per centum After March 3, 1917.of the par value of the total stock or shares of the corporation outstanding on March 3, 1917, whichever is lowest;
(5)Intangible property bona fide paid in for stock or shares on or after March 3, 1917, in an amount not exceeding
(a)the actual cash value of such property at the time paid in,
(b)the par value of the stock or shares issued therefor, or
(c)in the aggregate 25 per centum of the par value of the total stock or shares of the corporation outstanding at the beginning of the taxable year, whichever is lowest: *Proviso*. Maximum.*Provided*, That in no case shall the total amount included under paragraphs
(4)and
(5)exceed in the aggregate 25 per centum of the par value of the total stock or shares of the corporation outstanding at the beginning of the taxable year; but
(b)Borrowed capital not included. As used in this title the term “invested capital” does not include borrowed capital. 1093
(c)There shall be deducted from invested capital as above definedwar and excess profits tax. Percentage of inadmissible assets deducted. a percentage thereof equal to the percentage which the amount of inadmissible assets is of the amount of admissible and inadmissible assets held during the taxable year.
(d)The invested capital for any period shall be the averageAverage invested capital determined. invested capital for such period, but in the case of a corporation making a return for a fractional part of a year, it shall (except for the purpose of paragraph
(2)of subdivision
(a)of section 311) be the same fractional part of such average invested capital. The average invested capital for the prewar period shall be deter minedFor prewar period. by dividing the number of years within that period during the whole of which the corporation was in existence into the sum of the average invested capital for such years. Sec. 327. That in the following cases the tax shall be determined asDetermination of tax from average similar business. provided in section 328:
(a)Where the Commissioner is unable to determine the investedInvested capital not determined. capital as provided in section 326;
(b)In the case of a foreign corporation;Foreign corporations.
(c)Where a mixed aggregate of tangible property and intangibleProperty for stock not separable. property has been paid in for stock or for stock and bonds and the Commissioner is unable satisfactorily to determine the respective values of the several classes of property at the time of payment, or to distinguish the classes of property paid in for stock and for bonds, respectively;
(d)Where upon application by the corporation the CommissionerUpon application to prevent hardship from abnormal conditions. finds and so declares of record that the tax if determined without benefit of this section would, owing to abnormal conditions affecting the capital or income of the corporation, work upon the corporation an exceptional hardship evidenced by gross disproportion between the tax computed without benefit of this section and the tax computed by reference to the representative corporations specified in section 328. This subdivision shall not apply to any case
(1)inExceptions. which the tax (computed without benefit of this section) is highHigh earnings on normal capital. merely because the corporation earned within the taxable year a high rate of profit upon a normal invested capital, nor
(2)in which 50 perIncomes from cost-plus Government war contracts, etc. centum or more of the gross income of the corporation for the taxable year (computed under section 233 of Title II) consists of gains, profits, commissions, or other income, derived on a cost-plus basis from a Government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive. Sec. 328.
(a)In the cases specified in section 327 the tax shall beTax determined by comparison with average similar business. the amount which bears the same ratio to the net income of the taxpayer (in excess of the specific exemption of $3,000) for the taxable year, as the average tax of representative corporations engaged in a like or similar trade or business, bears to their average net income (in excess of the specific exemption of $3,000) for such year. In the case of a foreign corporation the tax shall be computedForeign corporations without deducting the specific exemption of $3,000 either for the taxpayer or the representative corporations. In computing the tax under this section the Commissioner shall Method directed.compare the taxpayer only with representative corporations whose invested capital can be satisfactorily determined under section 326 and which are, as nearly as may be, similarly circumstanced with respect to gross income, net income, profits per unit of business transacted and capital employed, the amount and rate of war profits or excess profits, and all other relevant facts and circumstances.
(b)For the purposes of subdivision
(a)the ratios between theRegulations for determining averages. average tax and the average net income of representative corporations shall be determined by the Commissioner in accordance with regulations prescribed by him with the approval of the Secretary. 1094 war and excess profits tax. Computation if tax less than hall of income.In cases in which the tax is to be computed under this section, if the tax as computed without the benefit of this section is less than 50 per centum of the net income of the taxpayer, the installments shall If more.in the first instance be computed upon the basis of such tax; but if the tax so computed is 50 per centum or more of the net income, the installments shall in the first instance be computed upon the basis of a tax equal to 50 per centum of the net income. In any case, the Determination of correct amount.actual ratio when ascertained shall be used in determining the Subsequent payment.correct amount of the tax. If the correct amount of the tax when determined exceeds 50 per centum of the net income, any excess of the correct installments over the amounts actually paid shall on notice and demand be paid together with interest at the rate of ½ of 1 per centum per month on such excess from the time the installment was due.
(c)Record of determined cases. The Commissioner shall keep a record of all cases in which the tax is determined in the manner prescribed in subdivision (a), containing the name and address of each taxpayer, the business in which engaged, the amount of invested capital and net income shown by the Information to Congress.return, and the amount of invested capital as determined under such subdivision. The Commissioner shall furnish a copy of such record and other detailed information with respect to such cases when required by resolution of either House of Congress, without regard to *Ante*, p. 1086.the restrictions contained in section 257. Part VI.—Reorganizations.Reorganizations. Sec. 330. After January 1, 1911, deemed continuance of same business for pre war period. That in the case of the reorganization, consolidation, or change of ownership after January 1, 1911, of a trade or business now carried on by a corporation, the corporation shall for the purposes of this title be deemed to have been in existence prior to that date, and the net income and invested capital of such predecessor trade or business for all or any part of the prewar period prior to the organization of the corporation now carrying on such trade or business shall be deemed to have been the net income and invested capital of such corporation. Income of prewar partnership or individual business.If such predecessor trade or business was carried on by a partnership or individual the net income for the prewar period shall, under regulations prescribed by the Commissioner with the approval of the Secretary, be ascertained and returned as nearly as may be upon the same basis and in the same manner as provided for corporations in Deductions allowed.Title II, including a reasonable deduction for salary or compensation to each partner or the individual for personal services actually rendered. Organization before July 1, 1919, if a previous partnership, etc., may be taxed as corporation from January 1, 1918.In the case of the organization as a corporation before July 1, 1919, of any trade or business in which capital is a material income-producing factor and which was previously owned by a partnership or individual, the net income of such trade or business from January 1, 1918, to the date of such reorganization may at the option of the individual or partnership be taxed as the net income of a corporation is taxed under Titles II and III; in which event the net income and invested capital of such trade or business shall be computed as if such corporation had been in existence on and after January 1, Undistributed earnings may be taxed to recipients, etc.1918, and the undistributed profits or earnings of such trade or business shall not be subject to the surtax imposed in section 211, but amounts distributed on or after January 1, 1918, from the earnings of such trade or business shall be taxed to the recipients as dividends, and all the provisions of Titles II and III relating to corporations shall so far as practicable apply to such trade or business: *Provisos*. Minimum income exception.*Provided*, That this paragraph shall not apply to any trade or business 1095the net income of which for the taxable year 1918 was less than 20war and excess profits tax. per centum of its invested capital for such year: *Provided further*, That any taxpayer who takes advantage of this paragraph shall payCorporation special tax to be paid. *Post*,, p. 1100. the tax imposed by section 1000 of this Act and by the first subdivision of section 407 of the Revenue Act of 1916, as if such taxpayer had been a corporation on and after January 1, 1918, with a capital stock having no par value. If any asset of the trade or business in existence both during theIf assets not included in prewar capital. taxable year and any prewar year is included in the invested capital for the taxable year but is not included in the invested capital for such prewar year, or is valued on a different basis in computing the invested capital for the taxable year and such prewar year, respectively, then under rules and regulations to be prescribed by theReadjustments authorized. Commissioner with the approval of the Secretary such readjustments shall be made as are necessary to place the computation of the invested capital for such prewar year on the basis employed in determining the invested capital for the taxable year. Sec. 331. In the case of the reorganization, consolidation, orValuation of assets transferred after March 3, 1917. change of ownership of a trade or business, or change of ownership of property, after March 3, 1917, if an interest or control in such trade or business or property of 50 per centum or more remains in the same persons, or any of them, then no asset transferred or received from the previous owner shall, for the purpose of determining invested capital, be allowed a greater value than would have been allowed under this title in computing the invested capital of such previous owner if such asset had not been so transferred or received: *Provided*, That*Proviso*. If previous owner not a corporation. if such previous owner was not a corporation, then the value of any asset so transferred or received shall be taken at its cost of acquisition (at the date when acquired by such previous owner) with proper allowance for depreciation, impairment, betterment or development, but no addition to the original cost shall be made for any charge or expenditure deducted as expense or otherwise on or after March 1, 1913, in computing the net income of such previous owner for purposes of taxation. Part VII.—Miscellaneous.Miscellaneous. Sec. 335.
(a)That if a corporation (other than a personal serviceTax for fiscal year ending in 1918. corporation) makes return for a fiscal year beginning in 1917 and ending in 1918, the tax for the first taxable year under this title shall be the sum of:
(1)the same proportion of a tax for the entire periodProportions computed. computed under Title II of the Revenue Act of 1917 which the portion of such period falling within the calendar year 1917 is of the entire period, and
(2)the same proportion of a tax for the entire period computed under this title at the rates specified in subdivision
(a)of section 301 which the portion of such period falling within the calendar year 1918 is of the entire period. Any amount heretoforeCredits for former taxes paid. or hereafter paid on account of the tax imposed for such fiscal year by Title II of the Revenue Act of 1917 shall be credited toward the payment of the tax imposed for such fiscal year by this title, and if the amountRefund, etc., of excess. so paid exceeds the amount of the tax imposed by this title, the excess shall be credited or refunded to the corporation in accordance with the provisions of section 252.
(b)If a corporation makes return for a fiscal year beginning in 1918For fiscal year ending in 1919. Proportions. and ending in 1919, the tax for such fiscal year under this title shall be the sum of:
(1)the same proportion of a tax for the entire period computed under subdivision
(a)of section 301 which the portion of such period falling within the calendar year 1918 is of the entire period, and
(2)the same proportion of a tax for the entire period computed under subdivision
(b)or
(c)of section 301 which the por1096war and excess profits tax.tion of such period falling within the calendar year 1919 is of the entire period.
(c)Partnership or personal service corporation for fiscal year ending in 1918. If a partnership or a personal service corporation makes return for a fiscal year beginning in 1917 and ending in 1918, it shall pay the same proportion of a tax for the entire period computed under Title II of the Revenue Act of 1917 which the portion of such period falling within the calendar year 1917 is of the entire period. Refund of tax for period after January 1, 1918.Any tax paid by a partnership or personal service corporation for any period beginning on or after January 1, 1918, shall be immediately refunded to the partnership or corporation as a tax erroneously or illegally collected. Sec. 336. Returns required. That every corporation, not exempt under section 304, shall make a return for the purposes of this title. Such returns shall Payment of tax. *Ante*, p. 1081.be made, and the taxes imposed by this title shall be paid, at the same times and places, in the same manner, and subject to the same conditions, as is provided in the case of returns and payment of income tax by corporations for the purposes of Title II, and all the provisions of that title not inapplicable, including penalties, are hereby made applicable to the taxes imposed by this title. Sec. 337. Mines, oil wells, etc. Maximum of tax on sales, etc., if discovered by taxpayer. That in the case of a bona fide sale of mines, oil or gas wells, or any interest therein, where the principal value of the property has been demonstrated by prospecting or exploration and discovery work done by the taxpayer, the portion of the tax imposed by this title attributable to such sale shall not exceed 20 per centum of the selling price of such property or interest. TITLE IV.—estate tax.ESTATE TAX. Sec. 400. Construction of terms. That when used in this title— “Executor.”The term “executor” moans the executor or administrator of the decedent, or, if there is no executor or administrator, any person who takes possession of any property of the decedent; and “Collector.”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 of such district as may be designated by the Commissioner. Sec. 401. Tax on transfers of estates of decedents hereafter. That (in lieu of the tax imposed by Title II of the Revenue Act of 1916, as amended, and in lieu of the tax imposed Vol. 39, pp. 777, 1002. *Ante*, p. 324.by Title IX of the Revenue Act of 1917) a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 403) 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: Rates.1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the not estate exceeds $50,000 and does not exceed $150,000; 3 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 4 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; 6 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000; 8 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; 1097 10 per centum of the amount by which the not estate exceedsestate tax. $1,000,000 and does not exceed $1,500,000; 12 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 14 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000; 16 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000; 18 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 20 per centum of the amount by which the not estate exceeds $5,000,000 and does not exceed $8,000,000; 22 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $10,000,000; and 25 per centum of the amount by which the net estate exceeds $10,000,000. The taxes imposed by this title or by Title II of the Revenue Act Not applicable if decedent in armed war service. Vol. 39, p. 1002. *Ante*, p. 324.of 1916 (as amended by the Act entitled “An Act to provide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes,” approved March 3, 1917) or by Title IX of the Revenue Act of 1917, shall not apply to the transfer of the net estate of any decedent who has died or may die while serving in the military or naval forces of the United States in the present war or from injuriesRefund of previous collections. received or disease contracted while in such service, and any such tax collected upon such transfer shall be refunded to the executor. Sec. 402. That the value of the gross estate of the decedent shallGross estate. Property included. be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated—
(a)To the extent of the interest therein of the decedent at theSubject to administration. 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 the surviving spouse,Dower or courtesy interests. existing at the time of the decedent’s death as dower, courtesy, or by virtue of a statute creating an estate in lieu of dower or courtesy;
(c)To the extent of any interest therein of which the decedentGifts, etc., in anticipation of death. has at any time made a transfer, or with respect to which ho has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money’s worth. Any transfer of a material part of hisPrior transfers within two years included. 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;
(d)To the extent of the interest therein held jointly or as tenantsExtent of joint interests, etc. 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;
(e)To the extent of any property passing under a general powerProperty under general power of appointment. of appointment exercised by the decedent
(1)by will, or
(2)by deed executed 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 a fair consideration in money or money’s worth; and 1098
(f)estate tax. Received on insurance policies. Excess of beneficiaries. To the extent of the amount receivable by the executor as insurance tinder policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life. Sec. 403. Net value determined. That for the purpose of the tax the value of the net estate shall be determined—
(a)Residents. Deductions. In the case of a resident, by deducting from the value of the gross estate—
(1)Funeral, administration, etc., expenses. 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, or from theft, when such losses are not compensated for by insurance or otherwise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or without the United Exceptions.States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes;
(2)Estate taxed property. An amount equal to the value at the time of the decedent’s death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within five years prior to the death of the *Ante*, p. 324.decedent, or which can be identified as having been acquired by the decedent in exchange for property so received, if an estate tax under the Revenue Act of 1917 or under this Act was collected from such estate, and if such property is included in the decedent’s gross estate;
(3)Requests to public, charitable, etc., uses. The amount of all bequests,legacies,devises,orgifts, to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, Prior application.literary, or educational purposes. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917; and
(4)$50,000 exemption. An exemption of $50,000;
(b)Nonresidents, from property in United States. 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 in the United States—
(1)Proportion of administration, etc., expenses. 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 situated, but in no case shall the amount so deducted exceed 10 per centum of the value of that part of his gross estate which at the time of his death is Value of estate tax paid property.situated in the United States;
(2)An amount equal to the value at the time of the decedent’s death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within five years prior to the death of the decedent, or which can be identified as having been acquired by the *Ante*, p. 324.decedent in exchange for property so received, if an estate tax under the Revenue Act of 1917 or under this Act was collected from such estate, and if such property is included in that part of the decedent’s gross estate which at the time of his death is situated in the United States; and 1099
(3)The amount of all bequests, legacies, devises, or gifts, to orestate tax. Gifts to public, charitable, etc., uses within United States. for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes within the United States. This deduction shall be made in case of the estatesPrior application. of all decedents who have died since December 31, 1917; and No deduction shall be allowed in the case of a nonresident unlessReturns required. the executor includes in the return required to be filed under section 404 the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States. For the purpose of this title stock in a domestic corporation ownedProperty included as within the United States. and held by a nonresident decedent, and the amount receivable as insurance upon the life of a nonresident decedent where the insurer is a domestic corporation, 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
(c)of section 402, 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. In the case of any estate in respect to which the tax under existingRefund tax paid on gifts, etc. law has been paid, if necessary to allow the benefit of the deduction under paragraph
(3)of subdivision
(a)or
(b)the tax shall be redetermined and any excess of tax paid shall be refunded to the executor. Sec. 404. That the executor, within sixty days after qualifying asNotice of administration to collector. such, or after coming into possession of any property of the decedent, whichever event first occurs, shall give written notice thereof to the collector. The executor shall also, at such times and in such mannerReturns to be filed. Contents. as may be required by regulations made pursuant to law, 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 his 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 403;
(c)the value of the net estate of the decedent as defined in section 403; 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 where the gross estate at theReturns to be made if estate exceeds $50,000, etc. death of the decedent exceeds $50,000, 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 is unable to make a complete returnPartial returns. 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 Commissioner shall make all assessmentsAssessment of tax. of the tax under the authority of existing administrative special and general provisions of law relating to the assessment and collection of taxes. Sec. 405. That if no administration is granted upon the estate of aReturns and assessment if no administration, etc. decedent, or if no return is filed as provided in section 404, or if a return contains a false or incorrect statement of a material fact, the collector or deputy collector shall make a return and the Commissioner shall assess the tax thereon. Sec. 406. That the tax shall be due one year after the decedent’sTime of payment. Extension. death; but in any case where the Commissioner finds that payment 1100estate tax.of the tax within one year after the decedent’s death would impose undue hardship upon the estate, he may grant an extension of time for the payment of the tax for a period not to exceed three years from the due date. If the tax is not paid within one year and 180 days Interest if delayed.after the decedent’s death, interest at the rate of 6 per centum per annum from the expiration of one year after the decedent’s death shall be added as part of the tax. Sec. 407. Payment. That the executor shall pay the tax to the collector or Partial, if amount not determined.deputy collector. If the amount of the tax can not 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 the amount so paid exceeds the amount of the tax as finally determined, the Refund of excess.Commissioner shall refund such excess to the executor. If the amount of the tax as finally determined exceeds the amount so paid, the collector shall notify the executor of the amount of such excess and demand payment thereof. If such excess part of the tax is not paid Payment if deficient. Interest, etc., if unpaid.within thirty days after such notification, interest shall be added thereto at the rate of 10 per centum per annum from the expiration of such thirty days’ period until paid, and the amount of such excess shall be a lien 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. Duplicate receipts for payments.The collector shall grant to the person paying the tax duplicate 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. 408. Collection of unpaid taxes. That if the tax herein imposed is not paid within 180 days after it is due, the collector shall, unless there is reasonable cause for further delay, proceed to collect the tax under the provisions of general law, or commence appropriate proceedings in any court of the United States, in the name of the United States, to Use of proceeds if property sold.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, 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. Reimbursement from estate if tax paid by other than executor.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 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 From life insurance.estate before its distribution. If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate. If there is more than one such beneficiary the executor shall be entitled to recover from such beneficiaries in the same ratio. Sec. 409. 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 1101against the estate and expenses of its administration, allowed by anyestate tax. court having jurisdiction thereof, shall be divested of such lien. IfRelease on payment, etc. the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regulations prescribed by him with the approval of the Secretary, issue his certificate releasing any or all property of such estate from the lien herein imposed. If
(a)the decedent makes a transfer of, or creates a trust with Lien on transfers in anticipation of death.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) or
(b)if insurance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary 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, or to the extent of such beneficiary’s interest under such contract of insurance, shall be subject to a like lien equal to the amount of such tax. Any part of such property sold by suchInnocent purchasers for value excepted. 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. 410. That whoever knowingly makes any false statement inPunishment for false returns, etc. any notice or return required to be filed under this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both. Whoever fails to comply with any duty imposed upon him by sectionPenalty for making no returns, concealing information, etc. 404, 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, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request to the Commissioner 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. TITLE V.—TAX ON TRANSPORTATION AND OTHER FACILITIES, AND ON INSURANCE.transportation tax. Sec. 500. That from and after April 1, 1919, there shall be levied,Levied after April 1, 1919. *Ante*, p. 314. assessed, collected, and paid, in lieu of the taxes imposed by section 500 of the Revenue Act of 1917—
(a)A tax equivalent to 3 per centum of the amount paid for theInterstate, etc., freight. transportation on or after such date, by rail or water or by any form of mechanical motor power when in competition with carriers by rail or water, of property by freight transported from one point in the United States to another; and a like tax on the amount paid for such transportation within the United States of property transported from a point without the United States to a point within the United States;
(b)A tax of 1 cent for each 20 cents or fraction thereof of theExpress shipments. amount paid to any person for the transportation on or after such date, by rail or water or by any form of mechanical motor power when in competition with express by rail or water, of any package, parcel, or shipment, by express, transported from one point in the United States to another; and a like tax on the amount paid for such transportation within the United States of property transported from a point without the United States to a point within the United States; 1102
(c)transportation tax. Passenger travel. A tax equivalent to 8 per centum of the amount paid for the transportation on or after such date of persons by rail or water, or by any form of mechanical motor power on a regular established line when in competition with carriers by rail or water, from one point in the United States to another or to any point in Canada or Mexico, where the ticket or order therefor is sold or issued in the United Minimum.States, not including the amount paid for commutation or season tickets for trips less than thirty miles, or for transportation the fare *Proviso*. Limit if competing with foreign water lines.for which does not exceed 42 cents: *Provided*, That where such water transportation lines are in competition between American ports with foreign water transportation lines from adjacent foreign ports, the tax imposed under this subdivision on amounts paid for water transportation between American ports shall not exceed the amount of the transportation tax to which such foreign water transportation lines are subjected by their government corresponding to this tax;
(d)Seats, berths, and staterooms. A tax equivalent to 8 per centum of the amount paid for seats, berths, and staterooms in parlor cars, sleeping cars, or on vessels, used on or after such date in connection with transportation upon which tax is imposed by subdivision (c);
(e)Oil by pipe lines. A tax equivalent to 8 per centum of the amount paid for the transportation on or after such date of oil by pipe line;
(f)Telegraph, telephone, etc., messages. In the case of each telegraph, telephone, cable, or radio, dis patch, message, or conversation, which originates on or after such ate within the United States, and for the transmission of which the charge is more than 14 cents and not more than 50 cents, a tax of 5 cents; and if the charge is more than 50 cents, a tax of 10 cents: *Proviso*. Limit.*Provided*, That only one payment of such tax shall be required, notwithstanding the lines or stations of one or more persons are used for the transmission of such dispatch, message, or conversation; and
(g)Leased wire service. A tax equivalent to 10 per centum of the amount paid after such date to any telegraph or telephone company for any leased wire or talking circuit special service furnished after such date. News, etc., exception.This subdivision shall not apply to the amount paid for so much of such service as is utilized
(1)in the collection and dissemination of news through the public press, or
(2)in the conduct, by a common carrier or telegraph or telephone company, of its business as such;
(h)Public service exemption. No tax shall be imposed under this section upon any payment received for services rendered to the United States or to any State or Territory or the District of Columbia. The right to exemption under this subdivision shall be evidenced in such manner as the Commissioner, with the approval of the Secretary, may by regulation prescribe. Sec. 501. Payment by user.
(a)That the taxes imposed by section 500 shall be paid by the person paying for the services or facilities rendered.
(b)Collection from mileage books bought before November 1, 1917, or cash fares. If a mileage book used for transportation or accommodation was purchased before November 1, 1917, or if cash fare is paid, the tax imposed by section 500 shall be collected from the person presenting the mileage book, or paying the cash fare, by the conductor or other agent, when presented for such transportation or accommodation, and the amount so collected shall be paid to the United States in such manner and at such times as the Commissioner, with Partially used ticket conditions.the approval of the Secretary, may prescribe; if a ticket (other than a mileage book) was bought and partially used before November 1, 1917, it shall not be taxed, but if bought but not so used before section 500 takes effect, it shall not be valid for passage until the tax has been paid and such payment evidenced on the ticket in such manner as the Commissioner, with the approval of the Secretary, may by regulation prescribe.
(c)All services for hire included. The taxes imposed by section 500 shall apply to all services or facilities specified in such section when rendered for hire, whether 1103or not the agency rendering them is a common carrier. In case atransportation tax. Commodities owned by carrier. carrier (other than a pipe line) principally engaged in rendering transportation services or facilities for hire does not, because of its ownership of the goods transported, or for any other reason, receive the amount which as a carrier it would otherwise charge, such carrier shall pay a tax equivalent to the tax which would be imposed upon the transportation of such goods if the carrier received payment for such transportation, such tax, if it can not be computed from actual rates or tariffs of the carrier, to be computed on the basis of the rates or tariffs of other carriers for like services as determined by the Commissioner. In the case of any carrier (other than a pipe line)Incidental services. the principal business of which is to transport goods belonging to it on its own account and which only incidentally renders services for hire, the tax shall apply to such services or facilities only as are actually rendered by it for hire. Nothing in this or the precedingExemption if for business of carrier, etc. section shall be construed as imposing a tax
(1)upon the transportation of any commodity which is necessary for the use of the carrier in the conduct of its business as such and is intended to be so used or has been so used; or
(2)upon the transportation of company material transported by one carrier, which constitutes a part of a railroad system, for another carrier which is also a part of the same system.
(d)The tax imposed by subdivision
(e)of section 500 shall applyOil by pipe line. to all transportation of oil by pipe line. In case no charge for transportationBasis if owned by carrier. is made, by reason of ownership of the commodity transported, or for any other reason, the person transporting by pipe line shall pay a tax equivalent to the tax which would be imposed if such person received payment for such transportation, and it the tax can not be computed from actual bona fide rates or tariffs, it shall be computed
(1)on the basis of the rates or tariffs of other pipe lines for like services, as determined by the Commissioner, or
(2)if no such rates or tariffs exist, on the basis of a reasonable charge for such transportation, as determined by the Commissioner. Sec. 502. That each person receiving any payments referred to inCollections, returns, and payment by carrier. section 500 shall collect the amount of the tax, if any, imposed by such section from the person making such payments, and shall make monthly returns under oath, in duplicate, and pay the taxes so collected and the taxes imposed upon it under subdivision
(c)or
(d)of section 501 to the collector of the district in which the principal office or place of business is located. No carrier collecting the taxes imposed by subdivision
(a)or
(b)ofFreight and express returns. section 500 shall be required to list the amount of such tax separately in any bill of lading, freight or express receipt, or other similar document, if the total amount of the transportation charge and the tax is stated therein. Any person making a refund of any payment upon which tax isPayment of refunds from receipts. collected under this section may repay therewith the amount of the tax collected on such payment; and the amount so repaid may be credited against amounts included in any subsequent monthly return. The returns required under this section shall contain such information,Contents of returns. and be made at such times and in such manner, as the Commissioner, with the approval of the Secretary, may by regulation prescribe. The tax shall, without assessment by the Commissioner or noticePayment of tax. from the collector, be due and payable to the collector at the time so fixed for filing the return. If the tax is not paid when due, therePenalty tax if deferred. shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. 1104 insurance tax.INSURANCE. Sec. 503. Levied on policies issued after April 1, 1919. *Ante*, p. 315. That from and after April 1, 1919, there shall be levied, assessed, collected, and paid, in lieu of the taxes imposed by section 504 of the Revenue Act of 1917, the following taxes on the issuance Exception. *Post*, p. 1138.of insurance policies, including, in the case of policies issued outside the United States (except those taxable under subdivision 15 of Schedule A of Title XI), their delivery within the United States by any agent or broker, whether acting for the insurer or the insured; such taxes to be paid by the insurer, or by such agent or broker:
(a)Life. Life insurance: A tax equivalent to 8 cents on each $100 or fractional part thereof of the amount for which any life is insured *Provisos*. Small weekly or monthly payments.under any policy of insurance, or other instrument, by whatever name the same is called: *Provided*, That oh all policies for life insurance only by which a life is insured not in excess of $500, issued on the industrial or weekly or monthly payment plan of insurance, the tax shall be 40 per centum of the amount of the first weekly premium or 20 per centum of the amount of the first monthly premium, as the Group insurance of employees.case may be: *Provided further*, Combination life, health, and accident policies.That on policies of group life insurance, covering groups of not less than 25 lives in the employ of the same person, for the benefit of persons other than the employer, the tax shall be equivalent to 4 cents on each $100 of the aggregate amount for which the group policy is issued and of any net increase in the amount of the insurance under such policy: *And provided further*, That on all policies covering life, health, and accident insurance combined in one policy by which a life is insured not in excess of $500, issued on the industrial, or weekly or monthly payment plan of insurance, the tax shall be 40 per centum of the amount of the first weekly premium or 20 per centum of the amount of the first monthly premium, as the case may be;
(b)Marine, inland, and fire. Marine, inland, and fire insurance: A tax equivalent to 1 cent on each dollar or fractional part thereof of the premium charged under each policy of insurance or other instrument by whatever name the same is called whereby insurance is made or renewed upon property of any description (including rents or profits), whether against peril by sea or inland waters, or by fire or lightning, or other peril;
(c)Casualty. Casualty insurance: A tax equivalent to 1 cent on each dollar or fractional part thereof of the premium charged under each policy of insurance or obligation of the nature of indemnity for loss, damage, Exceptions. *Post*, p. 1135.or liability (except bonds and policies taxable under subdivision 2 of schedule A of Title XI) issued or executed or renewed by any person transacting the business of employer’s liability, workmen’s compensation, accident, health, tornado, plate glass, steam boiler, elevator, burglary, automatic sprinkler, automobile, or other branch of insurance (except life insurance, and insurance described and taxed in *Proviso*. Industrial, etc., policies.the preceding subdivision): *Provided*, That in case of policies of insurance issued on the industrial or weekly or monthly payment plan the tax shall be 40 per centum of the amount of the first weekly premium or 20 per centum of the amount of the first monthly premium, as the case may be;
(d)Exemptions. *Ante*, p. 1076. Policies issued by any corporation enumerated in section 231, and policies of reinsurance, shall be exempt from the taxes imposed by this section. Sec. 504. Returns by insurers. That every person issuing policies of insurance upon the issuance of which a tax is imposed by section 503 shall make monthly returns under oath, in duplicate, and pay such tax to the collector of Contents.the district in which the principal office or place of business of such person is located. Such returns shall contain such information and be made at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulation prescribe. Payment, etc.The tax shall, without assessment by the Commissioner or notice 1105from the collector, be due and payable to the collector at the time soinsurance tax. Penalty for failure. fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. TITLE VI.—TAX ON BEVERAGES.tax on beverages. Sec. 600.
(a)That there shall be levied and collected on allDistilled spirits. Levied on, in bond, produced or imported. [R. S., sec, 3251, p. 627](/us/rs/s3251/p627), amended. *Ante*, p. 308. distilled spirits now in bond or that have been or that may be hereafter produced in or imported into the United States, except such distilled spirits as are subject to the tax provided in section 604, in lieu of the internal-revenue taxes now imposed thereon by law, a tax of $2.20 (or, if withdrawn for beverage purposes or for use in theFor beverages. manufacture or production of any article used or intended for use as a beverage, a tax of $6.40) on each proof gallon, or wine gallon when below proof, and a proportionate tax at a like rate on all fractional parts of such proof or wine gallon, to be paid by the distiller or importer when withdrawn, and collected under the provisions of existing law.
(b)That the tax imposed by subdivision
(a)on distilled spiritsTax not payable during prohibition. intended for beverage purposes shall not be due or payable on such spirits while stored in any distillery, bonded warehouse, or special or general bonded warehouse, and which, pursuant to any Act of Congress or proclamation of the President of the United States, can not be lawfully sold or removed from any such warehouse during the period of prohibition fixed by such Act or proclamation; and all warehousing Present bonds to be canceled.bonds or transportation and warehousing bonds conditioned for the payment of tax on any such spirits so stored on the date such prohibition takes effect shall as to all such spirits actually so stored be canceled and discharged, provided the distiller of such spiritsNew bond for preservation, etc. shall in lieu of such bonds and prior to their cancellation execute a bond in a penal sum of not less than $10,000, with sureties satisfactory to the collector of the district, conditioned that the principal shall, during the period of such prohibition, safely keep or cause to be kept in good condition all such spirits and the warehouse in which the same are stored, and shall not remove or suffer to be removed from warehouse, contrary to law, any such spirits during the period of such prohibition; and the bond herein prescribed shall be in such further sum and shall contain such further conditions as the Commissioner, with the approval of the Secretary, may by regulations require. TheRetention in warehouse on expiration of distiller’s bond. distiller may, subject to the provisions of this section, be permitted to retain in any such bonded warehouse distilled spirits on which, under the terms of any existing bond, the tax imposed thereon becomes due and payable prior to the date such prohibition takes effect: *Provided*, That on the removal of such prohibition the distiller shall,*Proviso*. New bond on removal of prohibition. as to all spirits as to which the bonded period fixed by law has not expired and which remain stored in warehouse, execute new and satisfactory bond in the form required by existing law, conditioned for the payment of the tax on all such spirits; and all provisions ofExisting laws applicable. existing law relating to such bonded warehouses, or the storage of spirits therein, or to the execution of new or additional bonds, so far as applicable, shall continue in force as to all distilled spirits rebonded under the provisions of this section. Upon the withdrawal of distilled spirits from bonded warehouse,Leakage allowance on withdrawals. Vol. 28, p. 564. after the period of prohibition has ended, and under the conditions imposed by section 50 of an Act entitled “An Act to reduce taxation, to provide revenue for the support of the Government, and for other purposes,” approved August 28, 1894, an allowance for loss by leakage or other unavoidable cause, not exceeding one proof gallon as to pack 1106tax on beverages.ages of a capacity of not less than 40 wine gallons, may be made in addition to that provided in said section 50, as amended; and a like additional allowance of one proof gallon as to each package withdrawn may be made for each period of four months, or fraction thereof, for such spirits as shall have remained in warehouse during the period of prohibition and after the expiration of the maximum leakage period fixed by that section. Imported liquors may remain In warehouse during prohibition.Under regulations prescribed by the Secretary, any imported dis tilled spirits, wines or other liquors which may be in any customs bonded warehouse under the customs laws on the date such prohibition takes effect shall be permitted to remain therein without payment of any taxes or duties thereon, beyond the three-year period [R. S., sec. 2971, p. 573](/us/rs/s2971/p573).provided in section 2971 of the Revised Statutes, during such period of prohibition; and may be exported at any time during such Exports allowed prior to prohibition date.extended period. Any imported spirits, wines or other liquors as to which the three-year bonded period may expire after the passage of this Act and prior to the date such prohibition takes effect may at the option of the owner remain in bond during such period of prohibition.
(c)On imported perfumes containing spirits. *Ante*, p. 308. In lieu of the internal-revenue tax now imposed thereon by law there shall be levied and collected upon all perfumes hereafter imported into the United States containing distilled spirits, a tax of $1.10 per wine gallon, and a proportionate tax at a like rate on all Collection at customhouse.fractional parts of such wine gallon. Such tax shall be collected by the collector of customs and deposited as internal-revenue collections, under such rules and regulations as the Commissioner, with the approval of the Secretary, may prescribe. Sec. 601. Importing spirits produced after October 3, 1917, forbidden. That no distilled spirits produced after October 3, 1917, shall be imported into the United States from any foreign country, or from the Virgin Islands (unless produced from products the growth of such islands, and not then into any State or Territory or District of the United States in which the manufacture or sale of intoxicating liquor is prohibited), or from Porto Rico, or the Philippine Islands. For other than beverages allowed.Under such rules, regulations, and bonds as the Secretary may prescribe, the provisions of this section shall not apply to distilled spirits imported for other than
(1)beverage purposes or
(2)use in the manufacture or production of any article used or intended for use as a beverage. Sec. 602. Filling packages at distilleries. *Ante*, p. 303. That at registered distilleries producing alcohol, or other high-proof spirits, packages may be filled with such spirits reduced to not less than one hundred proof from the receiving cisterns and tax paid without being entered into bonded warehouse. Transfers by pipe lines, tanks, etc., to warehouses, etc.Such spirits may be also transferred from the receiving cisterns at such distilleries, by means of pipe lines, direct to storage tanks in the bonded warehouse and may be warehoused in such storage tanks. Such spirits may be also transferred in tanks or tank cars to general bonded warehouses for storage therein, either in storage tanks in such warehouses or in the tanks in which they were For export, etc.transferred. Such spirits may also be transferred from receiving cisterns or warehouse storage tanks to barrels, drums, tanks, tank cars, or other approved containers, and may be transported in such Regulations to be made.containers for exportation or other lawful purposes. The Commissioner, with the approval of the Secretary, is hereby empowered to prescribe all necessary regulations relating to the drawing off, transferring, gauging, storing, and transporting of such spirits; the records to be kept and returns to be made; the size and kind of packages and tanks to be used; the marking, branding, numbering, and stamping of such packages and tanks; the kinds of stamps, if any, to he used; and the time and manner of paying the tax; the Payment of tax before removal.kind of bond and the penal sum of same. The tax prescribed by 1107law must be paid before such spirits are removed from the distillerytax on beverages. premises, or from general bonded warehouse in the case of spirits transferred thereto, except as otherwise provided by law. Under such regulations as the Commissioner, with the approval of Withdrawals without warehouse stamps.the Secretary, may prescribe, distilled spirits may hereafter be drawn from receiving cisterns and deposited in distillery warehouses without having affixed to the packages containing the same, distillery warehouse stamps, and such packages, when so deposited in warehouse, may be withdrawn therefrom on the original gauge where the same have remained in such warehouse for a period not exceeding thirty days from the date of deposit. Under such regulations as the Commissioner, with the approvalAlcohol for other than beverages exempted from time restrictions. of the Secretary, may prescribe, the manufacture, warehousing, withdrawal, and shipment, under the provisions of existing law, of ethyl alcohol for other than
(1)beverage purposes or
(2)use in the manufacture or production of any article used or intended for use as a beverage, and denatured alcohol, may be exempted from the[R. S., sec. 3283, p. 635](/us/rs/s3283/p635). provisions of section 3283 of the Revised Statutes. The Commissioner, with the approval of the Secretary, may byExemptions for war uses, nonbeverages, etc. regulations exempt distillers of ethyl alcohol, for use in the production of munitions of war, or for other nonbeverage purposes, from so much of the provisions of sections 3264, 3285, or 3309 of the[R. S., secs. 3264, 3285, 3309. pp, 630, 635, 641](/us/rs/s3264/3285/3309/pp630/635/641). Vol. 39, p. 787. Revised Statutes, and Acts amendatory thereof, respecting the survey of distilleries, the period of fermentation, the filling and emptying of fermenting tubs, and assessments, as, in his judgment, may be expedient: *Provided*, That the bond prescribed in section*Proviso*. Distiller’s bond. [R. S., sec. 3260, p. 629](/us/rs/s3260/p629). 3260 of the Revised Statutes shall, in the cases herein provided, be in such sum and contain such further conditions as the Commissioner may require. Sec. 603. That under such regulations as the Commissioner,Ethyl alcohol. Removal free of tax from denaturing plant, for war uses, etc. with the approval of the Secretary, may prescribe, ethyl alcohol of not less than 180 degrees proof, produced at any central distilling and denaturing plant established under the provisions of subsection 2, paragraph N, of section IV of the Act entitled “An Act to reduceVol. 38, p. 199. tariff duties and to provide revenue for the Government, and for other purposes,” approved October 3, 1913, may be removed from such plant to any central denaturing bonded warehouse for denaturation, or may, before or after denaturation, be removed from such plant or from such denaturing bonded warehouse, free of tax, for use of the United States or for shipment to any nation while engaged against the German Government in the present war, and the removal herein authorized may be made in such tank vessels, tank cars, drums, casks, or other containers as may be approved by theLeakage allowance. Commissioner. It shall be lawful, under regulations prescribed by the Commissioner, with the approval of the Secretary, for an allowance to be made for leakage or loss by unavoidable accident and without fault or negligence of the distiller, owner, carrier, or his agents or employees, which may occur during the transportation of such spirits or while the same are lawfully stored on either of the premises herein described. Sec. 604. That upon all distilled spirits produced in or importedFloor tax on tax paid stock on hand, if for beverage uses. into the United States upon which the internal-revenue tax now imposed by law has been paid, and which, on the day after the passage of this Act, are held by any person and intended for sale or for use in the manufacture or production of any article intended for sale, there shall be levied, assessed, collected, and paid a floor tax of $.20 (if intended for sale for beverage purposes or for use in the manufacture or production of any article used or intended for use as a beverage) on each proof gallon, and a proportionate tax at a like rate on all fractional parts of such proof gallon. 1108 Sec. 605. tax on beverages. Rectified spirits. Additional tax levied on. *Ante*, p. 310. That in addition to the tax imposed by this Act on distilled spirits and wines, there shall be levied, assessed, collected, and paid, in lieu of the tax imposed by section 304 of the Revenue Act of 1917, a tax of 30 cents on each proof gallon and a proportionate tax at a like rate on all fractional parts of such proof gallon on all distilled spirits or wines hereafter rectified, purified, or refined in such manner, and on all mixtures hereafter produced in such manner, that the person so rectifying, purifying, refining, or mixing the same [R. S., sec. 3244, p. 623](/us/rs/s3244/p623).is a rectifier within the meaning of section 3244 of the Revised *Proviso*. Gin excepted.Statutes, as amended: *Provided*, That this tax shall not apply to gin produced by the redistillation of a pure spirit over juniper berries and other aromatics. Floor tax for stock on hand.Upon all such articles heretofore produced, and which on the day after the passage of this Act are held by any person and intended for sale, there shall be levied, assessed, collected, and paid a floor tax of 15 cents on each proof gallon, and a proportionate tax at a Spirits included.like rate on all fractional parts of each proof gallon; and all such distilled spirits so held and not contained in the distillers’ original stamped packages, or in bottles or other containers bearing the distillers’ original labels, shall for the purpose of this section be regarded as rectified spirits. Reduction of proof after rectifying, unlawful.When the process of rectification is completed and the taxes prescribed by this section have been paid, it shall be unlawful for the rectifier or other dealer to reduce in proof or increase in volume such spirits or wine by the addition of water or other substance; Reuse permitted.nothing herein contained shall, however, prevent a rectifier from using again in the process of rectification spirits already rectified and upon which the taxes have theretofore been paid. Tax paid cordials, liqueurs, etc., not included.The taxes imposed by this section shall not attach to cordials or liqueurs on which a tax is imposed and paid under section 611 or Blending permitted.613, nor to the mixing and blending of wines, where such blending is for the sole purpose of perfecting such wines according to commercial standards, nor to blends made exclusively of two or more pure straight whiskies aged in wood for a period not less than four years and without the addition of coloring or flavoring matter or any other substance than pure water and if not reduced below ninety proof: *Provided*,*Proviso*. Whisky restriction. That such blended whiskies shall be exempt from tax under this section only when compounded under the immediate supervision of a revenue officer, in such tanks and under such conditions and supervision as the Commissioner, with the approval of the Secretary, may prescribe. Uniform regulations to govern use, etc.All distilled spirits or wines taxable under this section shall be subject to uniform regulations concerning the use thereof in the manufacture, blending compounding, mixing, marking, branding, and sale of whisky and rectified spirits, and no discrimination whatsoever shall be made by reason of a difference in the character of the material from which same may have been produced. Rectifiers. Rules for business of.The business of a rectifier of spirits shall be carried on, and the tax on rectified spirits shall be paid, under such rules, regulations, and bonds as may be prescribed by the Commissioner, with the approval of the Secretary. Punishment for violations.Whoever violates any of the provisions of this section shall be deemed to be guilty of a misdemeanor and, upon conviction, shall be fined not more than $1,000 or imprisoned not more than two Penalty tax.years, and shall, in addition, be liable to double the tax evaded, together with the tax, to be collected by assessment or on any bond given. Sec. 606. Exchange of stamps restricted. That hereafter collectors shall not furnish wholesale liquor dealer’s stamps in lieu of and in exchange for stamps for rectified spirits unless the package covered by stamp for rectified spirits is to be broken into smaller packages. 1109 The Commissioner, with the approval of the Secretary, is authorizedtax on beverages. Stamps discontinued. to discontinue the use of the following stamps whenever in his judgment the interests of the Government will be subserved thereby: Distillery warehouse, special bondedDesignated. warehouse, special bonded rewarehouse, general bonded warehouse, general bonded retransfer, transfer brandy, export tobacco, export cigars, export oleomargarine, and export fermented-liquor stamps. Sec. 607. That the Commissioner, with the approval of the Secretary,Meters, tanks, etc., to be established. is hereby authorized to require at distilleries, breweries, rectifying houses, and wherever else in his judgment such action may be deemed advisable, the installation of meters, tanks, pipes, or any other apparatus for the purpose of protecting the revenue, and suchExpenses. meters, tanks, and pipes and all necessary labor incident thereto shall be at the expense of the person on whose premises the installation is required. Any such person refusing or neglecting to install suchBusiness refused for nonconapliance. apparatus when so required by the Commissioner shall not be permitted to conduct business on such premises. Sec. 608. That there shall be levied and collected on all beer, lagerFermented liquors. Tax imposed. [R. S., sec. 3339, p. 651](/us/rs/s3339/p651), amended. *Ante*, p. 311. beer, ale, porter, and other similar fermented liquor, containing one-half of one per centum, or more, of alcohol, brewed or manufactured and hereafter sold, or removed for consumption or sale, within the United States, by whatever name such liquors may be called, in lieu of the internal-revenue taxes now imposed thereon by law, a tax of $6.00 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, to be collected under the provisionsCollection. of existing law. Sec. 609. That from and after the passage of this Act taxable fermentedRemoval from breweries to industrial distilleries without tax. liquors may be conveyed without payment of tax from the brewery premises where produced to a contiguous industrial distillery of either class established under the Act entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” approved October 3, 1913, to be used as distillingUses. material, and the residue from such distillation, containing less than one-half of 1 per centum of alcohol by volume, which is to be used in making beverages, may be manipulated by cooling, flavoring, carbonating, settling, and filtering on the distillery premises or elsewhere. The removal of the taxable fermented liquor from the brewery toRegulations to be made. the distillery and the operation of the distillery and removal of the residue therefrom shall be under the supervision of such officer or officers as the Commissioner shall deem proper, and the Commissioner, with the approval of the Secretary, is hereby authorized to make such regulations from time to time as may be necessary to give force and effect to this section and to safeguard the revenue. Sec. 610. That natural wine within the meaning of this Act shallNatural wine. Product defined. Vol, 39, p. 783. 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*Provisos*. Addition of water and sugar permitted. from the 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 95 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 35 per centum, andDesignations allowed. the resultant product does not contain less than five parts per thousand of acid before fermentation and not more than 13 per centum 1110tax on beverages.of alcohol after complete fermentation, shall be deemed to he wine within the meaning of this Act, and may be labeled, transported, 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 Sweet wine defined.or variety: *And provided further*, That wine as defined in this section may be sweetened with cane sugar or beet sugar or pure condensed *Post*, p. 1111.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. 611. Tax on still wines. That upon all still wines, including vermuth, and all artificial or imitation wines or compounds sold as still wine, which are hereafter produced in or imported into the United States, or which on the day after the passage of this Act are on any winery premises or other bonded premises or in transit thereto or at any Vol. 39, p. 783. Rates.customhouse, there shall be levied, collected, and paid, in lieu of the internal-revenue taxes now imposed thereon by law, taxes at rates as follows, when sold, or removed for consumption or sale: Alcoholic strength.On wines containing not more than 14 per centum of absolute alcohol, 16 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 14 per centum and not exceeding 21 per centum of absolute alcohol, 40 cents per wine gallon; On wines containing more than 21 per centum and not exceeding 24 per centum of absolute alcohol, $1 per wine gallon; Higher strength classed as spirits.All such wines containing more than 24 per centum of absolute alcohol by volume shall be classed as distilled spirits and shall pay tax accordingly. Sec. 612. Brandy may be withdrawn by any producer for fortifying wines. That under such regulations and official supervision and upon the giving of such notices, entries, bonds, and other security as the Commissioner, with the approval of the Secretary, may prescribe, any producer of wines denned under the provisions of this title, may withdraw from any fruit distillery or special bonded warehouse grape brandy, or wine spirits, for the fortification of such *Provisos*. Tax levied on.wines on the premises where actually made: *Provided*, That there shall be levied and assessed against the producer of such wines a tax (in lieu of the internal-revenue tax now imposed thereon by law) of 60 cents per proof gallon of grape brandy or wine spirits whenever withdrawn and hereafter so used by him in the fortification of such wines during the preceding month, which assessment shall be paid by him within ten months from the date of notice No tax exemption.thereof: *Provided further*, That nothing contained in this section shall be construed as exempting any wines, cordials, liqueurs, or similar compounds from the payment of any tax provided for in this title. Sec. 613. Tax on sparkling wines, etc. That upon the following articles which are hereafter produced in or imported into the United States, or which on the day after the passage of this Act are on any winery premises or other bonded premises or in transit thereto or at any customhouse, there shall be levied, collected, and paid taxes at rates as follows, when sold, or removed for consumption or sale: Champagne, etc.On each bottle or other container of champagne or sparkling wine, 12 cents on each one-half pint or fraction thereof; Artificially carbonated wines.On each bottle or other container of artificially carbonated wine, 6 cents on each one-half pint or fraction thereof; Liqueurs, etc., fortified.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, 6 cents on each one-half pint or fraction thereof. In lieu of present tax. Vol. 39, p. 786.The tax imposed by this section shall, in the case of any article upon which a corresponding internal-revenue tax is now imposed by law, be in lieu of such tax. 1111 Sec. 614. That upon all articles specified in section 611 or 613tax on beverages. Floor tax on taxpaid stock on band. upon which the internal-revenue tax now imposed by law has been paid and which are on the day after the passage of this Act held by any person and intended for sale, there shall be levied, collected, and paid a floor tax equal to the difference between the tax imposed by this Act and the tax so paid. Sec. 615. That upon all sweet wines held for sale by the producerOn spirits used for fortifying. thereof upon the day after the passage of this Act there shall be levied, assessed, collected, and paid a floor tax equivalent to 30 cents per proof gallon upon the grape brandy or wine spirits used in the fortification of such wine. Sec. 616. That the taxes imposed by section 611 or 613 shall beStamps to be affixed on removal from premises. Notice, etc., from producer. paid by stamp on removal of the wines from the customhouse, 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 title takes effect, any wines subject to the tax imposed in section 611 or 613 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 finder 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, with the approval of the Secretary, may from time to time prescribe; and the premises described in such notice shall, for the purpose of this Act, be regarded as bonded premises. But theExceptions. Retail dealers. [R. S., sec. 3244, p. 632](/us/rs/s3244/p632). provisions 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 m section 3244 of the Revised Statutes, nor, subject to regulations prescribed by the Commissioner, with theWines for family use exempt. approval of the Secretary, snail the tax imposed by section 611 apply to wines produced for the family use of the duly registered producer thereof and not sold or otherwise removed from the place of manufacture and not exceeding in any case two hundred gallons per year. Sec. 617. That sections 42, 43, and 45 of the Act entitled “An Act to reduce the revenue and equalize duties on imports, and for other purposes,” approved October 1, 1890, as amended by section 68 of the Act entitled “An ActFortifying pure sweet wines. Vol. 26, pp. 621–623. VoL 28, p. 368; Vol. 34, p. 215. to reduce taxation, to provide revenue for the Government, and for other purposes,” approved August 27, 1894, are further amended to read as follows: " “Sec. 42. That any producer of pure sweet wines may use in theUse of spirits by pure sweet wine producer. Vol. 39, p. 784. 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 by any duly authorized distiller, and the Commissioner of InternalAllowance for spirits withdrawn. Revenue, in determining the liability of any distiller of wine spirits to assessment under section 3309 of the Revised Statutes, is authorized[R. S., sec. 3309, p. 641](/us/rs/s3309/p641). 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 42 is theWine spirits defined. Vol. 39, p. 785. 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 held to include the product from grapes or their residues commonly known as grape brandy, and shall include commercial grape brandy which may haveBrandy included. been colored with burnt sugar or caramel; and the pure sweet winePure sweet wine defined. 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 what 1112tax on beverages.ever introduced before, at the time of, or after fermentation, except as herein expressly provided: *Provided*, That the addition of pure *Provisos*. Additions of sugar, etc., allowed.boiled or condensed grape must or pure crystallized cane or beet sugar, or pure dextrose sugar containing, respectively, not less than 95 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 Sugar restriction.aforesaid: *Provided, however*, That the cane or beet sugar, or pure dextrose sugar added for sweetening purposes shall not be in excess of 11 per centum of the weight of the wine to be fortified: *And provided further*,Water addition. That the addition of 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 Records to be kept, inspection, etc.to time prescribe: *Provided, however*, 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; Alcoholic strength limited.but in no case shall such wines to which 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 5 per centum of their volume. “Sec. 45. Withdrawal of wine spirits by producer of pure sweet wines. Vol. 39, p. 785. That under such regulations and official supervision, and 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 Records, etc.him under such regulations, and after the filing of such notices and bonds 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 Restriction on place of withdrawal.foregoing limitations and provisions; and the Commissioner of Internal Revenue, 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 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 Supervision by officials.fortification of 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 approval of the Secretary of the Treasury; and the Commissioner of Internal Revenue, with the approval of theRegulations for inspection, etc.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 1113accounting for the use of such wine spirits and for rewarehousing ortax on beverages. for payment of the tax on any portion of such wine spirits which remain not used in fortifying pure sweet wines.” " Sec. 618.
(a)That under such regulations and upon the executionDomestic wines. of such notices, entries, bonds, and other security as the Commissioner,Removal for storage, export, etc., free of tax. Vol. 39, p. 786, amended. *Ante*, p. 1110. with the approval of the Secretary, may prescribe, domestic wines subject to the tax imposed by section 611 may be removed from the winery where produced, free of tax, for storage on other bonded premises or from such premises to other bonded premises (but 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: *Provided, however*, That the*Proviso*. Tax when used by distiller for material. [R. S., sec. 3309, p. 641](/us/rs/s3309/p641). distiller using any such wine as material shall, subject to the provisions of section 3309 of the Revised Statutes, 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.
(b)Under regulations prescribed by the Commissioner with theUse for nonbeverage spirits. approval of the Secretary, it shall be lawful to produce grape wines on bonded winery premises by the usual method, and to transport and use the same, and like wines heretofore produced and now stored on bonded winery premises, as distilling material for the production of nonbeverage spirits in the production of nonalcoholic wines, containing less than of 1 per centum of alcohol by volume, in any fruit brandy or industrial distillery: *Provided*, That all alcoholic spirits*Proviso*. Denaturing, etc. so obtained at any industrial distillery shall be denatured, and all spirits so obtained at any fruit distillery shall be removed and used only for nonbeverage purposes or for denaturation. Sec. 619. That the collection of the tax on imported still wines,Collection by assessment allowed. Vol. 39, p. 786. including vermuth, and sparkling wines, including champagne, and on imported liqueurs, cordials, and similar compounds, may be made within the discretion of the Commissioner, with the approval of the Secretary, by assessment instead of by stamps. Sec. 620. That whoever evades or attempts to evade any taxPunishment for evading tax, etc. Vol. 39, p. 787. imposed by sections 611 to 615, both inclusive, or any requirement of sections 610 to 621, both inclusive, or regulation issued pursuant thereto, or whoever, otherwise than as provided in such sections, recovers or attempts to recover any spirits from domestic or imported wine,Illegally recovering spirits. Other rectifying. or whoever rectifies, mixes, or compounds with distilled spirits any domestic wines, other than in the manufacture of liqueurs, cordials, or similar compounds, 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, ana in addition thereto by a penalty of double the tax evaded, or attempted to be evaded,Penalty tax for evasions. to be assessed and collected in the same manner as taxes are assessed and collected, and all wines, spirits, liqueurs, cordials, or similar compounds as to which such violation occurs shall be forfeited to the United States. But the provisions of this section and the provisionsRectifying and blending permitted. [R. S., sec. 3244, p. 623](/us/rs/s3244/p623). of section 3244 of the Revised Statutes, 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 sections 611 to 615, both inclusive, with each other or with other wines for the sole purpose of perfecting such wines according to commercial standards: *Provided*,*Proviso*. Use of tax-paid ethyl alcohol. *Ante*, p. 1109. Vol. 26, p. 621. That nothing 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 610 of this Act and section 43 of the Act entitled “An Act to reduce the revenue and equalize duties on imports, and for other purposes,” approved October 1, 1890, as amended by this Act. 1114 Sec. 621. tax on beverages. Fruit distilleries. Special meters, etc., for. Vol. 39, p. 787. That the Commissioner, by regulations to be approved by the Secretary, 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 is hereby authorized to Assignment of gaugers, etc.assign to any 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 shall 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, with the approval of the Secretary, but not to exceed $2.50 per diem for such board bills. Sec. 622. Allowance tor unavoidable loss. Vol. 39, p. 787. That the Commissioner, with the approval of the Secretary, 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. Sec. 623. Distilleries. [R. S., sec. 3264, p. 630](/us/rs/s3264/p630), amended. Vol. 20, p. 335; Vol. 36, p. 590. That the second paragraph of section 3264 of the Revised Statutes, as amended by section 5 of the Act of March 1, 1879, and as further amended by the Act of June 22, 1910, be amended so as to Surveys. Basis of capacity. Vol. 39, p. 788.read as follows: " “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 less than one bushel of grain, and except that in distilleries Filtration-aeration process.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 No water limitation.into the fermenting tub, and only the filtered liquor passes into the 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 Application.find suitable for distilleries using such filtration-aeration process. The provisions hereof relating to filtration-aeration process shall apply only to sweet-mash distilleries.” " Sec. 624.Withdrawals for export. Use of tank cars, etc. Vol. 39, p. 788. That under such regulations as the Commissioner, with the approval of the Secretary, 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. 625. Fruit brandies. [R. S., sec. 3255, p. 627](/us/rs/s3255/p627), amended. That section 3255 of the Revised Statutes as amended by the Act of June 3, 1896, and as further amended by the Act of March 2, 1911, be further amended so as to read as follows: " “Sec. 3255. Distillers of, exempt from general spirits provisions. Vol. 39, p. 788. 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 1115his judgment it may seem expedient to do so: *Provided*, That where,tax on beverages. *Provisos*. Use of pomace from artificially sweetened wines. in the manufacture of wine, artificial sweetening has been used the wine or the fruit pomace residuum may be used in the distillation of brandy, and 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 it may seem expedient to do so: *And provided further*,Addition of sugar solutions, etc. 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, 95 per centum pure, such solution to have a saccharine strength of not to exceed 10 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. 626. That distilled spirits known commercially as gin ofGin. Bottling in bond for export. Vol. 39, p. 788. not less than 80 per centum proof may at any time within eight years after entry in bond at any distillery be bottled in bond at such distillery for export without the payment of tax, under such rules and regulations as the Commissioner, with the approval of the Secretary, may prescribe. Sec. 627. That section 3354 of the Revised Statutes as amendedFermented liquors. [R. S., sec. 3354, p. 854](/us/rs/s3354/p854), amended. Vol. 26, p. 161. by the Act approved June 18, 1890, be, and is hereby, amended to read as follows: " “Sec. 3354. Every person who withdraws any fermented liquorPunishment for bottling from unstamped containers at breweries, etc. Vol. 39, p. 789. from any hogshead, barrel, keg, or other vessel upon which the proper stump 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*. Pipe line, etc., transfers to other buildings, for bottling, allowed. 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,Regulations, etc. and such locks, seals, or other fastenings, and under such rules and regulations as shall be 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*, That the tax imposed in section*Proviso*. Payment of stamp tax. [R. S., sec, 3339, p. 651](/us/rs/s3339/p651). *Ante*, p. 1109. Disposal of canceled stamps. 3339 of the Revised Statutes shall be paid on all 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. The 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 violation of the rules and regulations hereafter prescribed by the Commissioner of Internal Revenue, with the approval of thePenalty for violations. Secretary of the Treasury, in pursuance of these provisions, shall be subject to the penalties above provided by this section. Every owner, agent, or superin1116tax on beverages.tendent 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.” " Sec. 628. Tax on soft drinks. *Ante*, p. 312. That there shall be levied, assessed, collected, and paid in lieu of the taxes imposed by sections 313 and 315 of the Revenue Act of 1917—
(a)Sold by producer. Bottled cereal beverages. Upon all beverages derived wholly or in part from cereals or substitutes therefor, and containing less than one-half of one per centum of alcohol, sold by the manufacture, producer, or importer, Other soft drinks.in bottles or other closed containers, a tax equivalent to 15 per centum of the price for which so sold; and upon all unfermented grape juice, ginger ale, root beer, sarsaparilla, pop, artificial mineral waters (carbonated or not carbonated), other carbonated waters or beverages, and other soft drinks, sold by the manufacturer, producer, or importer, in bottles or other closed containers, a tax equivalent to 10 per centum of the price for which so sold; and
(b)Natural mineral or table waters. Upon all natural mineral waters or table waters, sold by the producer, bottler, or importer thereof, in bottles or other closed containers, at over 10 cents per gallon, a tax of 2 cents per gallon. Sec. 629. Monthly returns to be made. That each manufacturer, producer, bottler, or importer of any of the articles enumerated in section 628 shall make monthly returns under oath in duplicate and pay the taxes imposed in respect to such articles by such section to the collector for the district in which is located the principal place of business, containing such information necessary for the assessment of the tax, and at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulation prescribe. Payment.The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the collector at the time so fixed Penalty tax for violations.for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. Sec. 630. Sales at soda fountains, Ice-cream parlors, etc. That on and after May 1, 1919, there shall be levied, assessed, collected, and paid a tax of 1 cent for each 10 cents or fraction thereof of the amount paid to any person conducting a soda fountain, ice-cream parlor, or other similar place of business, for drinks commonly known as soft drinks, compounded or mixed at such place of business, or for ice cream, ice-cream sodas, sundaes, or other similar articles of food or drink, when any of the above are sold on or after such date for consumption in or in proximity to such Payable by purchaser.place of business. Such tax shall be paid by the purchaser to the vendor at the time of the sale and shall be collected, returned, and paid to the United States by such vendor in the same manner as *Ante*, p, 1103.provided in section 502. TITLE VII.—tax on cigars and tobacco.TAX ON CIGARS, TOBACCO, AND MANUFACTURES THEREOF. Sec. 700. Payable on sales by manufacturer or importer.
(a)That upon cigars and cigarettes manufactured in or imported into the United States, and hereafter sold by the manufacturer or importer, or removed for consumption or sale, there shall [R. S., sec. 3394, p. 665](/us/rs/s3394/), amended. *Ante*, p. 312.be levied, collected, and paid under the provisions of existing law, in lieu of the internal-revenue taxes now imposed thereon by law, the following taxes, to be paid by the manufacturer or importer thereof— Rates. Cigars. Small.On cigars of all descriptions made of tobacco, or any substitute therefor, and weighing not more than three pounds per thousand, $1.50 per thousand; 1117 On cigars made of tobacco, or any substitute therefor, and weighingtax on cigars and tobacco. Based on retail price. more than three pounds per thousand, if manufactured or imported to retail at not more than 5 cents each, $4 per thousand; If manufactured or imported to retail at more than 5 cents each and not more than 8 cents each, $6 per thousand; If manufactured or imported to retail at more than 8 cents each and not more than 15 cents each, $9 per thousand; If manufactured or imported to retail at more than 15 cents each and not more than 20 cents each, $12 per thousand; If manufactured or imported to retail at more than 20 cents each, $15 per thousand; On cigarettes made of tobacco, or any substitute therefor, andCigarettes. weighing not more than three pounds per thousand, $3 per thousand; Weighing more than three pounds per thousand, $7.20 per thousand.
(b)Whenever in this section reference is made to cigars manufacturedRetail price defined. or imported to retail at not over a certain price each, then in determining the tax to be paid regard shall be had to the ordinary retail price of a single cigar.
(c)The Commissioner may, by regulation, require the manufacturerLabel requirements. or importer to affix to each box, package, or container a conspicuous label indicating the clause of this section under which the cigars therein contained have been tax-paid, which must correspond with the tax-paid stamp on such box or container.
(d)Every manufacturer of cigarettes (including small cigarsCigarettes etc., packages required. Domestic. weighing not more than three pounds per thousand) shall put up all the cigarettes and such small cigars that he manufactures or has R. S., sec. 3392, p. 665, amended. Vol. 361 p. 109. *Ante*, p. 313.manufactured for him, and sells or removes for consumption or sale, in packages or parcels containing five, eight, ten, twelve, fifteen, sixteen, twenty, twenty-four, forty, fifty, eighty, or one hundredStamps. cigarettes each, and shall securely affix to each of such packages or parcels a suitable stamp denoting the tax thereon and shall properly cancel the same prior to such sale or removal for consumption or sale under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe; and all cigarettes imported from a foreignImported. country shall be packed, stamped, and the stamps canceled in a like manner, in addition to the import stamp indicating inspection of the customhouse before they are withdrawn therefrom. Sec. 701.
(a)That upon all tobacco and snuff manufactured in orManufactured tobacco and snuff. Tax payable on sales by manufacturer or importer. [R. S., sec. 3368, p. 658](/us/rs/s3368/p658), amended. *Ante*, p. 313. imported into the United States, and hereafter sold by the manufacturer or importer, or removed for consumption or sale, there shall be levied, collected, and paid, in lieu of the internal-revenue taxes now imposed thereon by law, a tax of 18 cents per pound, to be paid by the manufacturer or importer thereof.
(b)Section 3362 of the Revised Statutes, as amended, is herebyPackages. amended to read as follows: " “Sec. 3362. All manufactured tobacco shall be put up and preparedRequirements. [R. S., sec. 3362, p. 658](/us/rs/s3362/p658), amended. by the manufacturer for sale, or removal for sale or consumption, in packages of the following description and in no other manner: “All smoking tobacco, snuff, line-cut chewing tobacco, all cut andSizes allowed. Vol. 36, p. 108, amended. granulated tobacco, all shorts, the refuse of fine-cut chewing, which has passed through a riddle of thirty-six meshes to the square inch, and all refuse scraps, clippings, cuttings, and sweepings of tobacco, and all other kinds of tobacco not otherwise provided for, in packages containing one-eighth of an ounce, three-eightlis of an ounce, and further packages with a difference between each package and the one next smaller of one-eighth of an ounce up to and including two ounces, and further packages with a difference between each package and the one next smaller of one-fourth of an ounce up to and including four ounces, and packages of five ounces, six ounces, 1118tax on cigars and tobacco.seven ounces, eight ounces, ten ounces, twelve ounces, fourteen ounces, and sixteen ounces: *Provided*, That snuff may, at the *Proviso*. Additional for snuff.option of the manufacturer, be put up in bladders and in jars containing not exceeding twenty pounds. Wooden packages.“All cavendish, plug, and twist tobacco, in wooden packages not exceeding two hundred pounds net weight. Marking, etc.“And every such wooden package shall have printed or marked thereon the manufacturer’s name and place of manufacture, the registered number of the manufactory, and the gross weight, the *Provisos*. Exports excepted.tare, and the net weight of the tobacco in each package: *Provided*, That these limitations and descriptions of packages shall not apply to tobacco and snuff transported in bond for exportation and Bulk sales of perique, etc., without tax to other manufacturers.actually exported: *And provided further*, That perique tobacco, snuff flour, fine-cut shorts, the refuse of fine-cut chewing tobacco, refuse scraps, clippings, cuttings, and sweepings of tobacco, may be sold in bulk as material, and without the payment of tax, by one manufacturer directly to another manufacturer, or for export, under such restrictions, rules, and regulations as the Commissioner of Internal Material for containers.Revenue may prescribe: *And provided further*, That wood, metal, paper, or other materials may ’be used separately or in combination for packing tobacco, snuff, and cigars, under such regulations as the Commissioner of Internal Revenue may establish.” " Sec. 702. Cigarette papers and tubes. Tax on sales to others than manufacturers. Floor tax on tax-paid stock on hand. That upon all the articles enumerated in section 700 or 701, which were manufactured or imported, and removed from factory or customhouse on or prior to the date of the passage of this Act, and upon which the tax imposed by existing law has been paid, and which are, on the day after the passage of this Act, held by any person and intended for sale, there shall be levied, assessed, collected, and Exception.paid a floor tax equal to the difference between
(a)the tax imposed by this Act upon such articles according to the class in which they *Ante*, p. 313.are placed by this title, and
(b)the tax imposed upon such articles by existing law other than section 403 of the Revenue Act of 1917. Sec. 703. That there shall be levied, collected, and paid, in lieu of the taxes imposed by section 404 of the Revenue Act of 1917, upon cigarette paper made up into packages, books, sets, or tubes, made up in or imported into the United States and hereafter sold by the manufacturer or importer to any person (other than to a manufacturer of cigarettes for use by him in the manufacture of cigarettes) the following taxes, to be paid by the manufacturer or importer: On each package, book, or set, containing more than twenty-five but Rates.not more than fifty papers, ½ cent; containing more than fifty but not more than one hundred papers, 1 cent; containing more than one hundred papers, ½ cent for each fifty papers or fractional part thereof; and upon tubes, 1 cent for each fifty tubes or fractional part thereof. Use of tubes by manufacturers. Bond required, etc.Every manufacturer of cigarettes purchasing any cigarette paper made up into tubes
(a)shall give bond in an amount and with sureties satisfactory to the Commissioner that he will use such tubes in the manufacture of cigarettes or pay thereon a tax equivalent to the tax imposed by this section, and
(b)shall keep such records and render under oath such returns as the Commissioner finds necessary to show the disposition of all tubes purchased or imported by such manufacturer of cigarettes. Sec. 704. Leaf tobacco. Vol. 36, p. 110, repealed. That section 35 of the Act entitled “An Act to provide revenue, equalize duties and encourage the industries of the United States, and for other purposes,” approved August 5, 1909, be, and is hereby, repealed, to take effect April 1, 1919. Dealers. [R. S., sec. 3360, p. 657](/us/rs/s3360/p657), amended.That section 3360 of the Revised Statutes be, and is hereby, amended to read as follows: 1119 " “Sec. 3360.
(a)Every dealer in leaf tobacco shall file with thetax on cigars and tobacco. collector of the district in which his business is carried on, a statementNotice of business, etc., to be filed with collector. in duplicate, subscribed under oath, setting forth the place, and, if in a city, the street and number of the street, where his business is to be carried on, and the exact location of each place whore leaf tobacco is held by him on storage, and, whenever he adds to or discontinues any of his loaf tobacco storage places, he shall give immediate notice to the collector of the district in which he is registered. “Every such dealer shall give a bond with surety, satisfactory to,Bond required. and to be approved by, the collector of the district, in such penal sum as the collector may require, not less than $500; and a new bond may be required in the discretion of the collector or under instructions of the Commissioner. “Every such dealer shall be assigned a number by the collector ofDistrict number to be assigned, etc. the district, which number shall appear in every inventory, invoice and report rendered by the dealer, who shall also obtain certificates from the collector of the district setting forth the place where his business is carried on and the places designated by the dealer as the places of storage of his tobacco, which certificates shall be posted conspicuously within the dealer’s registered place of business, and within each designated place of storage. “(b) Every dealer in leaf tobacco shall make and deliver to theAnnual inventory to be filed. collector of the district a true inventory of the quantity of the different kinds of tobacco held or owned, and where stored by him, on the first day of January of each year, or at the time of commencing and at the time of concluding business, if before or after the first day of January, such inventory to be made under oath and rendered in such form as may be prescribed by the Commissioner. “Every dealer in leaf tobacco shall render such invoices and keepDaily records to be kept, etc. Details. such records as shall be prescribed by the Commissioner, and shall enter therein, day by day, and upon the same day on which the circumstance, thing or act to be recorded is done or occurs, an accurate account of the number of hogsheads, tierces, cases and bales, and quantity of leaf tobacco contained therein, purchased or received by him, on assignment, consignment, for storage, by transfer or otherwise, and of whom purchased or received, and the number of hogsheads, tierces, cases and bales, and the quantity of leaf tobacco contained therein, sold by him, with the name and residence in each instance of the person to whom sold, and if shipped, to whom shipped, and to what district; such records shall be kept at his place of business at all times and preserved for a period of two years, and the same shall be open at all hours for the inspection of any internal-revenue officer or agent. “Every dealer in leaf tobacco on or before the tenth day of eachMonthly reports of transactions. month, shall furnish to the collector of the district a true and complete report of all purchases, receipts, sales and shipments of leaf tobacco made by him during the month next preceding, which report shall be verified and rendered in such form as the Commissioner, with the approval of the Secretary, shall prescribe. “(c) Sales or shipments of leaf tobacco by a dealer in leaf tobaccoSales or shipment restrictions. shall be in quantities of not less than a hogshead, tierce, case, or bale, except loose leaf tobacco comprising the breaks on warehouse floors, and except to a duly registered manufacturer of cigars for use in his own manufactory exclusively. “Dealers in leaf tobacco shall make shipments of leaf tobacco onlyShipments limited. to other dealers in leaf tobacco, to registered manufacturers of tobacco, snuff, cigars or cigarettes, or for export. “(d) Upon all leaf tobacco sold, removed or shipped by any dealerPenalty tax for violations. in leaf tobacco in violation of the provisions of subdivision (c), or in respect to which no report has been made by such dealer in accordance with the provisions of subdivision (b), there shall be levied, assessed, 1120tax on cigars and tobacco.collected and paid a tax equal to the tax then in force upon manufactured tobacco, such tax to be assessed and collected in the same manner as the tax on manufactured tobacco. “(e) Designated offenses. Every dealer in leaf tobacco “(1) Failure to give bond, make returns, etc. who neglects or refuses to furnish the statement, to give bond, to keep books, to file inventory or to render the invoices, returns or reports required by the Commissioner, or to notify the collector of the district of additions to his places of storage; or “(2) Illegal shipments. who ships or delivers leaf tobacco, except as herein provided; or “(3) Fraudulent omissions. who fraudulently omits to account for tobacco purchased, received, sold, or shipped; Punishment.shall be fined not less than $100 or more than $500, or imprisoned not more than one year, or both. “(f) Farmers or growers not included. For the purposes of this section a farmer or grower of tobacco shall not be regarded as a dealer in leaf tobacco in respect to the leaf tobacco produced by him.” " TITLE VIII.—TAX ON ADMISSIONS AND DUES. Sec. 800. Tax on admissions. *Ante*, p. 318.
(a)That from and after April 1, 1919, there shall be levied, assessed, collected, and paid, in lieu of the taxes imposed by section 700 of the Revenue Act of 1917—
(1)Rates. A tax of 1 cent for each 10 cents or fraction thereof of the amount paid for admission to any place on or after such date, including admission by season ticket or subscription, to be paid by the person paying for such admission;
(2)On tree admissions. Exceptions. In the case of persons (except bona fide employees, municipal officers on official business, persons in the military or naval forces of the United States when in uniform, and children under twelve years of age) admitted free or at reduced rates to any place at a time when and under circumstances under which an admission charge is made to other persons, a tax of 1 cent for each 10 cents or fraction thereof of the price so charged to such other persons for the same or similar accommodations, to be paid by the person so admitted;
(3)Additional onsales at other than box office. Upon tickets or cards of admission to theaters, operas, and other places of amusement, sold at news stands, hotels, and places other than the ticket offices of such theaters, operas, or other places of amusement, at not to exceed 50 cents in excess of the sum of the established price therefor at such ticket offices plus the amount of any tax imposed under paragraph (1), a tax equivalent to 5 per centum of the amount of such excess; and if sold for more than 50 cents in excess of the sum of such established price plus the amount of any tax imposed under paragraph (1), a tax equivalent to 50 per centum of the whole amount of such excess, such taxes to be returned and paid, in the manner provided in section 903, by the person selling such tickets;
(4)Sales by proprietors, etc., in excess of regular rates. A tax equivalent to 50 per centum of the amount for which the proprietors, managers, or employees of any opera house, theater, or other place of amusement sell or dispose of tickets or cards of admission in excess of the regular or established price or charge therefor, such tax to be returned and paid, in the manner provided in section 903, by the person selling such tickets;
(5)Box holders, etc. In the case of persons having the permanent use of boxes or seats in an opera house or any place of amusement or a lease for the use of such box or seat in such opera house or place of amusement (in lieu of the tax imposed by paragraph
(1)), a tax equivalent to 10 per centum of the amount for which a similar box or seat is sold for each performance or exhibition at which the box or seat is used or reserved by or for the lessee or holder, such tax to be paid by the lessee or holder; and 1121
(6)A tax of 1½ cents for each 10 cents or fraction thereof of theadmissions and dues. amount paid for admission to any public performance for profit at any roof garden, cabaret, or other similar entertainment, to whichRoof gardens, cabarets, etc. the charge for admission is wholly or in part included in the price paid for refreshment, service, or merchandise; the amount paid for such admission to he deemed to be 20 per centum of the amount paid for refreshment, service, and merchandise; such tax to be paid by the person paying for such refreshment, service, or merchandise.
(b)No tax shall be levied under this title in respect to any admissionsExemptions of religious, educational, etc., entertainments. all the proceeds of which inure exclusively to the benefit of religious, educational, or charitable institutions, societies, or organizations, societies for the prevention of cruelty to children or animals, or exclusively to the benefit of organizations conducted for the sole purpose of maintaining symphony orchestras and receiving substantial support from voluntary contributions, none of the profits of which are distributed to members of such organizations, or exclusively to the benefit of persons in the military or naval forces of the United States, or admissions to agricultural fairs none of theAgricultural fairs, etc. profits of which are distributed to stockholders or members of the association conducting the same.
(c)The term “admission” as used in this title includes seats andCharges included. tables, reserved or otherwise, and other similar accommodations, and the charges made therefor.
(d)The price (exclusive of the tax to be paid by the person payingPrice, etc., to be printed on tickets. for admission) at which every admission ticket or card is sold shall be conspicuously and indelibly printed, stamped, or written on the face or back thereof, together with the name of the vendor if sold other than at the ticket office of the theater, opera, or other place of amusement. Whoever sells an admission ticket or card on which thePenalty tor evasions. name of the vendor and price is not so printed, stamped, or written, or at a price in excess of the price so printed, stamped, or written thereon, is guilty of a misdemeanor, and upon conviction thereof shall be fined not more than $100. Sec. 801. That from and after April 1, 1919, there shall be levied,Tax on club dues, etc *Ante*, p. 319. assessed, collected, and paid, in lieu of the taxes imposed by section 701 of the Revenue Act of 1917, a tax equivalent to 10 per centum of any amount paid on or after such date, for any period after such date,
(a)as dues or membership fees (where the dues or fees of an active resident annual member are in excess of $10 per year) to any social, athletic, or sporting club or organization; or
(b)as initiationInitiation fees. fees to such a club or organization, if such fees amount to more than $10, or if the dues or membership fees (not including initiation fees) of an active resident annual member are in excess of $10 per year; such taxes to be paid by the person paying such dues or fees: *Provided*,*Proviso*. Fraternal lodges, etc., exempted. That there shall be exempted from the provisions of this section all amounts paid as dues or fees to a fraternal society, order, or association, operating under the lodge system. In the case of life membershipsLite memberships. a life member shall pay annually, at the time for the payment of dues by active resident annual members, a tax equivalent to the tax upon the amount paid by such a member, but shall pay no tax upon the amount paid for life membership. Sec. 802. That every person
(a)receiving any payments for suchCollection by receivers, etc. admission, dues, or fees shall collect the amount of the tax imposed by section 800 or 801 from the person making such payments, or
(b)admitting any person free to any place for admission to which a charge is made, shall collect the amount of the tax imposed by section 800 from the person so admitted. Every club or organization having life members, shall collect from such members the amountReturns and payments. of the tax imposed by section 801. In all the above cases returns 1122tax on cigars and tobacco.and payments of the amount so collected shall be made at the same *Ante*, p. 1103.time and in the same manner as provided in section 502. TITLE IX.—excise taxes.EXCISE TAXES. Sec. 900. Tax on sales by manufacturers, etc. That there shall be levied, assessed, collected, and paid upon the following articles sold or leased by the manufacturer, producer, or importer, a tax equivalent to the following percentages of the price for which so sold or leased—
(1)Automobile trucks, etc. Automobile trucks and automobile wagons, (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), 3 per centum;
(2)Automobiles, motorcycles, etc. Other automobiles and motorcycles, (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), except tractors, 5 per centum;
(3)Accessories to other than manufacturer. Tires, inner tubes, parts, or accessories, for any of the articles enumerated in subdivision
(1)or (2), sold to any person other than a manufacturer or producer of any of the articles enumerated in subdivision
(1)or (2), 5 per centum;
(4)Pianos, phonographs, records, etc. Pianos, organs (other than pipe organs), piano players, graphophones, phonographs, talking machines, music boxes, and records used in connection with any musical instrument, piano player, graphophone, phonograph, or talking machine, 5 per centum;
(5)Sporting goods, games, etc. Tennis rackets, nets, racket covers and presses, skates, snowshoes, skis, toboggans, canoe paddles and cushions, polo mallets, baseball bats, gloves, masks, protectors, shoes and uniforms, football helmets, harness and goals, basketball goals and uniforms, golf bags and clubs, lacrosse sticks, balls of all kinds, including baseballs, footballs, tennis, golf, lacrosse, billard and pool bulls, fishing rods and reels, billiard and pool tables, chess and checker boards and pieces, Exception.dice, games and parts of games (except playing cards and children’s toys and games), and all similar articles commonly or commercially known as sporting goods, 10 per centum;
(6)Chewing gum. Chewing gum or substitutes therefor, 3 per centum;
(7)Cameras. Cameras, weighing not more than 100 pounds, 10 per centum;
(8)Photographic films and plates. Photographic films and plates, other than moving-picture films, 5 per centum;
(9)Candy. Candy, 5 per centum;
(10)Firearms, etc. Firearms, shells, and cartridges, except those sold for the use of the For war use excepted.United States, any State, Territory, or possession of the United States, any political subdivision thereof, the District of Columbia, or any foreign country while engaged against the German Government in the present war, 10 per centum;
(11)Hunting and bowie knives. Hunting and bowie knives, 10 per centum;
(12)Dirks, daggers, etc. Dirk knives, daggers, sword canes, stillettos, and brass or metallic knuckles, 100 per centum;
(13)Electric fans. Portable electric fans, 5 per centum;
(14)Thermos bottles, etc. Thermos and thermostatic bottles, carafes, jugs, or other thermostatic containers, 5 per centum;
(15)Smokers’ articles. Cigar or cigarette holders and pipes, composed wholly or in part of meerschaum or amber, humidors, and smoking stands, 10 per centum;
(16)Slot machines. Automatic slot-device vending machines, 5 per centum, and When operated by manufacturer, etc.automatic slot-device weighing machines, 10 per centum; if the manufacturer, producer, or importer of any such machine operates it for profit, he shall pay a tax in respect to each such machine put into operation equivalent to 5 per centum of its fair market value in the case of a vending machine, and 10 per centum of its fair market value in the case of a weighing machine;
(17)Liveries. Liveries and livery boots and hats, 10 per centum; 1123
(18)Hunting and shooting garments and riding habits, 10 perexcise taxes. Hunting garments, etc. centum;
(19)Articles made of fur on the hide or pelt, or of which any suchFur articles on the hide. fur is the component material of chief value, 10 per centum;
(20)Yachts and motor boats not designed for trade, fishing, orYachts, etc. national defense; and pleasure boats and pleasure canoes if sold for more than $15, 10 per centum; and
(21)Toilet soaps and toilet soap powders, 3 per centum.Toilet soaps, etc. If any manufacturer, producer, or importer of any of the articlesRetail sales by manufacturer, etc. enumerated in this section customarily sells such articles both at wholesale and at retail, the tax in the case of any article sold by him at retail shall be computed on the price for which like articles are sold by him at wholesale. The taxes imposed by this section shall, in the case of any articleIn lieu of former tax. in respect to which a corresponding tax is imposed by section 600 of*Ante*, p. 316. the Revenue Act of 1917, be in lieu of such tax. Sec. 901. That if any person manufactures, produces or importsComputation of tax if sold or leased at less than market price to benefit manufacturers, etc. any article enumerated in section 900, or leases or licenses for exhibition any positive motion-picture film containing a picture ready for projection, and, whether through any agreement, arrangement, or understanding, or otherwise, sells, leases or licenses 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 amount for which such article is sold, leased or licensed shall be taken to be the amount which would have been received from the sale, lease or license of such article if sold, leased or licensed at the fair market price. Sec. 902. That there shall be levied, assessed, collected, and paidTax on works of art sold by other than artist. upon sculpture, paintings, statuary, art porcelains, and bronzes, sold by any person other than the artist, a tax equivalent to 10 per centum of the price for which so sold. This section shall not apply to the saleException. of any such article to an educational institution or public art museum. Sec. 903. That every person liable for any tax unposed by sectionMonthly returns and payments. 900, 902, or 906, shall make monthly returns under oath in duplicate and pay the taxes imposed by such sections to the collector for the district in which is located the principal place of business. Such returns shall contain such information and be made at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulations prescribe. The tax shall, without assessment by the Commissioner or noticeTime of payment. from the collector, be due and payable to the collector at the time so fixed for filing the return. If the tax is not paid when due, therePenalty tax for failure. shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. Sec. 904.
(a)That on and after May 1, 1919, there shall be levied,Taxes on sales by dealers of articles above specified price. assessed, collected, and paid a tax equivalent to 10 per centum of so much of the amount paid for any of the following articles as is in excess of the price hereinafter specified as to each such article, when such article is sold by or for a dealer or his estate on or after such date for consumption or use—
(1)Carpets and rugs, including fiber, except imported andCarpets and rugs. American rugs made principally of wool, on the amount in excess of $ per square yard;
(2)Picture frames, on the amount in excess of $10 each;Picture frames.
(3)Trunks, on the amount in excess of $50 each;Trunks.
(4)Valises, traveling bags, suit cases, hat boxes used by travelers,Valises, etc. and fitted toilet cases, on the amount in excess of $25 each; 1124
(5)excise taxes. Purses, etc. Purses, pocketbooks, shopping and hand bags, on the amount in excess of $7.50 each;
(6)Portable lighting fixtures, etc. Portable lighting fixtures, including lamps of all kinds and lamp shades, on the amount in excess of $25 each;
(7)Umbrellas, etc. Umbrellas, parasols, and sun shades, on the amount in excess of $4 each;
(8)Fans. Fans, on the amount in excess of $1 each;
(9)House coats, etc. House or smoking coats or jackets, and bath or lounging robes, on the amount in excess of $7.50 each;
(10)Vests sold separately. Men’s waistcoats, sold separately from suits, on the amount in excess of $5 each;
(11)Women’s hats, etc. Women’s and misses’ hats, bonnets, and hoods, on the amount in excess of $15 each;
(12)Men’s hats, etc. Men’s and boys’ hats, on the amount in excess of $5 each;
(13)Men’s caps, etc. Men’s and boys’ caps, on the amount in excess of $2 each;
(14)Boots, shoes, etc. Exception. Men’s, women’s, misses’, and boys’ boots, shoes, pumps, and slippers, not including shoes or appliances made to order for any person having a crippled or deformed foot or ankle, on the amount in excess of $10 per pair;
(15)Men’s neckties, etc. Men’s and boys’ neckties and neckwear, on the amount in excess of $2 each;
(16)Men’s silk hose, etc. Men’s and boys’ silk stockings or hose, on the amount in excess of $1 per pair;
(17)Women’s silk stockings, etc. Women’s and misses’ silk stockings or hose, on the amount in excess of $2 per pair;
(18)Men’s shirts. Men’s shirts, on the amount in excess of $3 each;
(19)Pajamas, underwear, etc. Men’s, women’s, misses’, and boys’ pajamas, night gowns, and underwear, on the amount in excess of $5 each; and
(20)Kimonos, etc. Kimonos, petticoats, and waists, on the amount in excess of $15 each.
(b)Exceptions. The tax imposed by this section shall not apply
(1)to any article enumerated in paragraphs
(2)to (8), both inclusive, of subdivision (a), if such article is made of, or ornamented, mounted, or fitted with, precious metals or imitations thereof or ivory, or
(2)to any article made of fur on the hide or pelt, or of which any such fur is the component material of chief value, or to
(3)any article enumerated in subdivision
(17)or
(18)of section 900.
(c)Collection, etc., by vendor. The taxes imposed by this section shall be paid by the purchaser to the vendor at the time of the sale and shall be collected, *Ante*, p. 1103.returned, and paid to the United States by such vendor in the same manner as provided in section 502. Sec. 905. Tax on sales by dealer, of jewelry, timepieces, etc. That on and after April 1, 1919, there shall be levied, assessed, collected, and paid (in lieu of the tax imposed by subdivision
(e)of section 600 of the Revenue Act of 1917) upon all articles commonly or commercially known as jewelry, whether real or imitation; pearls, precious and semiprecious stones, and imitations thereof; articles made of, or ornamented, mounted or fitted with, precious metals or imitations thereof or ivory (not including surgical instruments); watches; clocks; opera glasses; lorgnettes; marine glasses; field glasses; and binoculars; upon any of the above when sold by or for a dealer or his estate for consumption or use, a tax equivalent to 5 per centum of the price for which so sold. Returns to be made, etc.Every person selling any of the articles enumerated in this section shall make returns under oath in duplicate (monthly or quarterly as the Commissioner, with the approval of the Secretary, may prescribe) and pay the taxes imposed in respect to such articles by this section to the collector for the district in which is located the Details.principal place of business. Such returns shall contain such information and be made at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulations prescribe. 1125 The tax shall, without assessment by the Commissioner or notice excise taxes. Time of payment. Penalty tax for failure.from the collector, be due and payable to the collector at the time so fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. Sec. 906. That on and after the 1st day of May, 1919, any personMotion-picture exhibitions. Monthly tax on rentals from leases for. engaged in the business of leasing or licensing for exhibition positive motion-picture films containing pictures ready for projection shall pay monthly an excise tax in respect to carrying on such business equal to 5 per centum of the total rentals earned from each such lease or license during the preceding month. If a person owningIf operated by owners. such a film exhibits it for profit he shall pay a tax equivalent to 5 per centum of the fair rental or license value of such film at the time and place where and for the period during which exhibited. If anyBy lessee, if contract prevents addition to rents. such person has, prior to December 6, 1918, made a bona fide contract with any person for the lease or licensing, after the tax imposed by this section takes effect, of such a film for exhibition for profit, and if such contract does not permit the adding of the whole of the tax imposed by this section to the amount to be paid under such contract, then the lessee or licensee shall, in lieu of the lessor or licensor, pay so much of such tax as is not so permitted to be added to the contract price. The tax imposed by this section shall be in lieuIn lieu of former tax. *Ante*, p. 316. of the tax imposed by subdivisions
(c)and
(d)of section 600 of the Revenue Act of 1917. Sec. 907.
(a)That on and after May 1, 1919, there shall be levied,Tax on sales of articles by dealers, etc. *Ante*, p. 317. assessed, collected and paid (in lieu of the taxes imposed by subdivisions
(g)and
(h)of section 600 of the Revenue Act of 1917) a tax of 1 cent for each 25 cents or fraction thereof of the amount paid for any of the following articles when sold by or for a dealer or his estate on or after such date for consumption or use:
(1)Perfumes, essences, extracts, toilet waters, cosmetics, petroleumToilet articles, etc. jellies, hair oils, pomades, hair dressings, hair restoratives, hair dyes, tooth and mouth washes, dentifrices, tooth pastes, aromatic cachous, toilet powders (other than soap powders), or any similar substance, article, or preparation by whatsoever name known or distinguished, any of the above which are used or applied or intended to be used or applied for toilet purposes;
(2)Pills, tablets, powders, tinctures, troches or lozenges, sirups,Proprietary medicines, etc. medicinal cordials or bitters, anodynes, tonics, plasters, liniments, salves, ointments, pastes, drops, waters (except those taxed under section 628 of this Act), essences, spirits, oils, and other medicinal*Ante*, p. 1116.preparations, compounds, or compositions (not including serums and antitoxins), upon the amount paid for any of the above as to which the manufacturer or producer claims to have any private formula, secret, or occult art for making or preparing the same, or has or claims to have any exclusive right or title to the making or preparing the same, or which are prepared, uttered, vended, or exposed for sale under any letters patent, or trade-mark, or which (if prepared by any formula, published or unpublished) are held out or recommended to the public by the makers, vendors, or proprietors thereof as proprietary medicines or medicinal proprietary articles or preparations, or as remedies or specifics for any disease, diseases, or affection whatever affecting the human or animal body: *Provided*, That the provisions*Proviso*. Exceptions. of this section shall not apply to the sale of vaccines and bacterines which are not advertised to the general lay public, nor to the sale by a physician in personal attendance upon a patient of medicinal preparations not so advertised. 1126
(b)excise taxes. Method of collection. The taxes imposed by this section shall be collected by whichever of the following methods the Commissioner may deem expedient:
(1)by stamp affixed to such article by the vendor, the cost of which shall be reimbursed to the vendor by the purchaser; or
(2)by payment to the vendor by the purchaser at the time of the sale, the taxes so collected being returned and paid to the United States by such vendor in the same manner as provided in section 502. TITLE X.—special taxes.SPECIAL TAXES. Sec. 1000. Tax in lieu of former. Vol. 39, p. 789.
(a)That on and after July 1, 1918, in lieu of the tax imposed by the first subdivision of section 407 of the Revenue Act of 1916—
(1)Domestic corporations. On capital stock. Every domestic corporation shall pay annually a special excise tax with respect to carrying on or doing business, equivalent to $1 for each $1,000 of so much of the fair average value of its capital stock for the preceding year ending June 30 as is in excess of $5,000. In estimating the value of capital stock the surplus and undivided profits shall be included;
(2)Foreign corporations. On business in United States. Every foreign corporation shall pay annually a special excise tax with respect to carrying on or doing business in the United States, equivalent to $1 for each $1,000 of the average amount of capital employed in the transaction of its business in the United States during the preceding year ending June thirtieth.
(b)Insurance reserves not included. In computing the tax 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.
(c)Exemptions. The taxes imposed by this section shall not apply in any year *Ante*, p. 1076.to any corporation which was not engaged in business (or in the case of a foreign corporation not engaged in business in the United States) Mutual insurance companies.during the preceding year ending June 30, nor to any corporation enumerated in section 231. The taxes imposed by this section shall Basis of tax.apply to mutual insurance companies, and in the case of every such domestic company the tax shall be equivalent to $1 for each $1,000 of the excess over $5,000 of the sum of its surplus or contingent reserves maintained for the general use of the business and any reserves the net additions to which are included in net income under the provisions of Title II, as of the close of the preceding accounting period used by such company for purposes of making its income tax *Proviso*. Foreign companies.return: *Provided*, That in the case of a foreign mutual insurance company the tax shall be equivalent to $1 for each $1,000 of the same proportion of the sum of such surplus and reserves, which the reserve fund upon business transacted within the United States is of the total reserve upon all business transacted, as of the close of the preceding accounting period used by such company for purposes of making its income tax return.
(d)Returns public. *Ante*, p. 1086. Section 257 shall apply to all returns filed with the Commissioner for purposes of the tax imposed by this section. Sec. 1001. Designated business, etc. That on and after January 1, 1919, there shall be levied, collected, and paid annually the following special taxes—
(1)Brokers. Business defined. Brokers shall pay $50. Every person whose business it is to negotiate purchases or sales of stocks, bonds, exchange, bullion, coined money, bank notes, promissory notes, other securities, Exchange members.produce or merchandise, for others, shall be regarded as a broker. If a broker is a member of a stock exchange, or if he is a member of any produce exchange, board of trade, or similar organization, where produce or merchandise is sold, he shall pay an additional amount as follows: If the average value, during the preceding year ending June 30, of a seat or membership in such exchange or organization 1127was $2,000 or more but not more than $5,000, $100; if such value wasspecial taxes. more than $5,000, $150.
(2)Pawnbrokers shall pay $100. Every person whose business orPawnbrokers. Business defined. occupation it is to take or receive, by way of pledge, pawn, or exchange, any goods, wares, or merchandise, or any kind of personal property whatever, as security for the repayment of money loaned thereon, shall be regarded as a pawnbroker.
(3)Ship brokers shall pay 850. Every person whose business itShip brokers. Business defined. 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.
(4)Customhouse brokers shall pay $50. Every person whose occupationCustomhouse brokers. Businessdefined. 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.
(5)Proprietors of theaters, museums, and concert halls, where aTheater, etc., proprietors. Basis of. charge for admission is made, having a seating capacity of not more than two hundred and fifty, shall pay $50; having a seating capacity of more than two hundred and fifty and not exceeding five hundred, shall pay $100; having a seating capacity exceeding five hundred and not exceeding eight hundred, shall pay $150; having a seating capacity of more than eight hundred, shall pay $200. 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 occasionallyExceptions. for concerts or theatrical representations, and not including edifices owned by religious, educational or charitable institutions, societies or organizations where all the proceeds from admissions inure exclusively to the benefit of such institutions, societies or organizations or exclusively to the benefit of persons in the military or naval forces of the United States, shall be regarded as a theater: *Provided*, That in*Provisos*. In small cities, etc. cities, towns, or villages of five thousand inhabitants or less the amount of such payment shall be one-half of that above stated: *Provided further*, That whenever any such edifice is under lease atLeased buildings. the time the tax is due, the tax shall be paid by the lessee, unless otherwise stipulated between the parties to the lease.
(6)The proprietor or proprietors of circuses shall pay $100.Circus proprietors. Every building, space, tent, or area, where feats of horsemanshipBusiness defined. or acrobatic sports or theatrical performances not otherwise provided for in this section are exhibited shall be regarded as a circus: *Provided*,*Proviso*. State 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.
(7)Proprietors or agents of all other public exhibitions or showsAll other exhibitions. for money not enumerated in this section shall pay $15: *Provided*,*Provisos*. State 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 paragraphExemptions. 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.
(8)Proprietors of bowling alleys and billiard rooms shall pay $10Bowling alleys, etc.Description. for each alley or table. Every building or place where bowls are 1128special taxes.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.
(9)Shooting galleries. Proprietors of shooting galleries shall pay $20. Every Description.building, space, tent, or area, where a charge is made for the discharge of firearms at any form of target shall be regarded as a shooting gallery.
(10)Riding academies. Proprietors of riding academies shall pay $100. Every Description.building, space, tent, or area, where a charge is made for instruction in horsemanship or for facilities for the practice of horsemanship shall be regarded as a riding academy.
(11)Automobile operators, etc. Persons carrying on the business of operating or renting passenger automobiles for hire shall pay $10 for each such automobile having a seating capacity of more than two and not more than seven, and $20 for each such automobile having a seating capacity of more than seven.
(12)Distilleries, brewers, liquor dealers, etc. [R. S., secs. 3244, 3247, pp. 622, 626](/us/rs/s3244/3247/pp622/626). Every person carrying on the business of a brewer, distiller, wholesale liquor dealer, retail liquor dealer, wholesale dealer in malt liquor, retail dealer in malt liquor, or manufacturer of stills, as Additional tax for business where prohibited by State, etc., laws.defined in section 3244 as amended and section 3247 of the Revised Statutes, in any State, Territory, or District of the United States contrary to the laws of such State, Territory, or District, or in any place therein in which carrying on such business is prohibited by local or municipal law, shall pay, in addition to all other taxes, special or otherwise, imposed by existing law or by this Act, $1,000. Payment of tax no exemption from punishment, etc., under local laws.The payment of the tax imposed by this subdivision shall not be held to exempt any person from any penalty or punishment provided for by the laws of any State, Territory, or District for carrying on such business in such State, Territory, or District, or in any manner to authorize the. commencement of continuance of such business contrary to the laws of such State, Territory, or District, or in places prohibited by local or municipal law. In lieu of former taxes. Vol. 39, p. 789.The taxes imposed by this section shall, in the case of persons upon whom a. corresponding tax is imposed by section 407 of the Revenue Act of 1916, be in lieu of such tax. Sec. 1002. Tax on annual sales by manufacturers. Vol. 39, p. 791, amended. That on and after January 1, 1919, there shall be levied, collected, and paid annually, in lieu of the taxes imposed by section 408 of the Revenue Act of 1916, the following special taxes, the amount of such taxes to be computed on the basis of the sales for the preceding year ending June 30— Tobacco. [R. S., sec. 3244, p. 624](/us/rs/s3244/p624), amended.Manufacturers of tobacco whose annual sales do not exceed fifty thousand pounds shall each pay $6; Manufacturers of tobacco whose annual sales exceed fifty thousand and do not exceed one hundred thousand pounds shall each pay $12; Manufacturers of tobacco whose annual sales exceed one hundred thousand and do not exceed two hundred thousand pounds shall each pay $24; Manufacturers of tobacco whose annual sales exceed two hundred thousand pounds shall each pay $24, and at the rate of 16 cents per thousand pounds, or fraction thereof, in respect to the excess over two hundred thousand pounds; Cigars. [R. S., sec. 3244, p. 624](/us/rs/s3244/p624), amended.Manufacturers of cigars whose annual sales do not exceed fifty thousand cigars shall each pay $4; Manufacturers of cigars whose annual sales exceed fifty thousand and do not exceed one hundred thousand cigars shall each pay $6; Manufacturers of cigars whose annual sales exceed one hundred thousand and do not exceed two hundred thousand cigars shall each pay $12; Manufacturers of cigars whose annual sales exceed two hundred thousand and do not exceed four hundred thousand cigars shall each pay $24; 1129 Manufacturers of cigars whose annual sales exceed four hundredspecial taxes. thousand cigars shall each pay $24, and at the rate of 10 cents per thousand cigars, or fraction thereof, in respect to the excess over four hundred thousand cigars; Manufacturers of cigarettes, including small cigars weighing not Cigarettes.more than three pounds per thousand shall each pay at the rate of 6 cents for every ten thousand cigarettes, or fraction thereof. In arriving at the amount of special tax to be paid under thisEach class separately taxed. section, and in the levy and collection of such tax, each person 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. Sec. 1003. That sixty days after the passage of this Act, and thereafterPleasure boats, etc. Annual tax on users of specified. *Ante*, p. 318. on July 1 in each year, and also at the time of the original purchase of a new boat by a user, if on any other date than July 1, there shall be levied, assessed, collected, and paid in lieu of the tax imposed by section 603 of the Revenue Act of 1917, upon the use of yachts, pleasure boats, power boats, and sailing boats, of over five net tons, and motor boats with fixed engines, not used exclusivelyConditions. for trade, fishing, or national defense, or not built according to plans and specifications approved by the Navy Department, a special excise tax to be based on each yacht or boat, at rates as follows: Yachts, pleasure boats, power boats, motor boats with fixed engines,Rates. and sailing boats, of over five net tons, length not over fifty feet, $1 for each loot; length over fifty feet and not over one hundred feet, $2 for each foot; length over one hundred feet, $4 for each foot; motor boats of not over five net tons with fixed engines, $10. In determining the length of such yachts, pleasure boats, power Measurement.boats, motor boats with fixed engines, and sailing boats, the measurement of overall length shall govern. In the case of a tax imposed at the time of the original purchase ofFor part of year on new purchases. a new boat on any other date than July 1, and in the case of the tax taking effect sixty days after the passage of this Act, the amount to be paid shall be the same-number of twelfths of the amount of the tax as the number of calendar months (including the month of sale, or the month in which is included the sixty-first day after the passage of this Act, as the case may be) remaining prior to the following July 1. If the tax imposed by section 603 of the Revenue Act of 1917, forAllowance for payment of former tax. the fiscal year ending June 30, 1919, has been paid in respect to the use of any boat, the amount so paid shall under such regulations as the Commissioner, with the approval of the Secretary, may prescribe, be credited upon the first tax due under this section in respect to the use of such boat, or be refunded to the person paying the first tax imposed by this section in respect to the use of such boat. Sec. 1004. That if the tax imposed by section 407 or 408 of theReceipts for stamp taxes paid in excess of new rates. Vol. 39, pp. 789–792. Revenue Act of 1916, for the fiscal year ending June 30, 1919, has been paid by any person subject to the corresponding tax imposed by this title, collectors may issue a receipt in lieu of special tax stamp for the amount by which the tax under this title is m excess of that paid or payable and evidenced by stamp under the Revenue Act of 1916. Such receipt shall be posted as in the case of the special tax stamp, as provided by law, and with it, within the place of business of the taxpayer. If the corresponding tax imposed by section 407 of the RevenueCredit if not a stamp tax. Act of 1916 was not payable by stamp, the amount paid under such section for any period for which a tax is also imposed by this title may be credited against the tax imposed by this title. Sec. 1005. That any person who carries on any business or occupationPunishment for conducting business without paying tax. for which a special tax is imposed by sections 1000, 1001, or 1002, without having paid the special tax therein provided, shall, besides being liable for the payment of such special tax, be subject 1130special taxes.to a penalty of not more than $1,000 or to imprisonment for not more than one year, or both. Sec. 1006. Narcotics. That section 1 of the Act of Congress approved December 17, 1914, is hereby amended to read as follows: " “Section 1. Opium, coca leaves, etc. Importers, manufacturers, dealers, etc., required to register. Vol. 38, p. 785, amended. That on or before July 1 of each year every person who imports, manufactures, produces, compounds, sells, deals in, dispenses, or gives away opium or coca leaves, or any compound, manu facture, salt, derivative, or preparation thereof, shall register with the collector of internal revenue of the district his name or style, place of business and place or places where such business is to be carried on, and pay the special taxes hereinafter provided; Registration of persons in business January 1, 1919.“Every person who on January 1, 1919, is engaged in any of the activities above enumerated, or who between such date and the passage of this Act first engages in any of such activities, shall within 30 days after the passage of this Act make like registration, and shall pay the proportionate part of the tax for the period ending June 30, 1919; and Engaging in business thereafter.“Every person who first engages in any of such activities after the passage of this Act shall immediately make like registration and pay the proportionate part of the tax for the period ending on the following June 30th; Rates of tax.“Importers, manufacturers, producers, or compounders, $24 per annum; wholesale dealers, $12 per annum; retail dealers, $6 per annum; physicians, dentists, veterinary surgeons, and other practitioners lawfully entitled to distribute, dispense, give away, or administer any of the aforesaid drugs to patients upon whom they in the course of their professional practice are in attendance, shall pay $3 per annum. Classification. Importers, manufacturers, producers.“Every person who imports, manufactures, compounds, or otherwise produces for sale or distribution any of the aforesaid drugs shall be deemed to be an importer, manufacturer, or producer. Wholesale dealer.“Every person who sells or offers for sale any of said drugs in the original stamped packages, as hereinafter provided, shall be deemed a wholesale dealer. Retail dealer.“Every person who sells or dispenses from original stamped packages, as hereinafter provided, shall be deemed a retail dealer: *Provisos*. Place of business.*Provided*, That the office, or if none, the residence, of any person shall be considered for the purpose of this Act his place of business; Employees exempt.but no employee of any person who has registered and paid special tax as herein required, acting within the scope of his employment, shall be required to register and pay special tax provided by this Officials not taxed.section: *Provided further*, That officials of the United States, Territorial, District of Columbia, or insular possessions, State or municipal governments, who in the exercise of their official duties engage in any of the business herein described, shall not be required to register, nor pay special tax, nor stamp the aforesaid drugs as hereinafter Evidence required.prescribed, but their right to this exemption shall be evidenced in such manner as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulations prescribe. Importing, etc., without registration, unlawful.“It shall be unlawful for any person required to register under the provisions of this Act to import, manufacture, produce, compound, sell, deal in, dispense, distribute, administer, or give away any of the aforesaid drugs without having registered and paid the special tax as imposed by this section. “Person.” construed. General laws applicable.“That the word ‘person’ as used in this Act shall be construed to mean and include a partnership, association, company, or corporation, as well as a natural person; and all provisions of existing law relating to special taxes, as far as necessary, are hereby extended and made applicable to this section. 1131 “That there shall be levied, assessed, collected, and paid uponnarcotics. opium, coca leaves, any compound, salt, derivative, or preparationInternal-revenue stamp on product. thereof, produced in or imported into the United States, and sold, or removed for consumption or sale, an internal-revenue tax at the rate of 1 cent per ounce, and any fraction of an ounce in a package shall be taxed as an ounce, such tax to be paid by the importer, manufacturer, producer, or compounder thereof, and to be represented by appropriate stamps, to be provided by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury; and the stamps herein provided shall be so affixed to the bottle or other container as to securely seal the stopper, covering, or wrapper thereof. “The tax imposed by this section shall be in addition to anyAdditional to duty. import duty imposed on the aforesaid drugs. “It shall be unlawful for any person to purchase, sell, dispense, orDisposal of unstamped drugs unlawful. distribute any of the aforesaid drugs except in the original stamped package or from the original stamped package; and the absence ofAbsence, evidence of violation. appropriate tax-paid stamps from any of the aforesaid drugs shall be prima facie evidence of a violation of this section by the person in whose possession same may be found; and the possession of anyUnlawful possession. original stamped package containing any of the aforesaid drugs by any person who has not registered and paid special taxes as required by this section shall be prima facie evidence of liability to such special tax: *Provided*, That the provisions of this paragraph shall not*Proviso*. Not applicable to valid prescriptions, etc. apply to any person having in his or her possession any of the aforesaid drugs which have been obtained from a registered dealer in pursuance of a prescription, written for legitimate medical uses, issued by a physician, dentist, veterinary surgeon, or other practitioner registered under this Act; and where the bottle or other container in which such drug may be put up by the dealer upon said prescription Container requirements.bears the name and registry number of the druggist, serial number of prescription, name and address of the patient, and name, address, and registry number of the person writing said prescription; or toProfessional administration, etc. the dispensing, or administration, or giving away of any of the aforesaid drugs to a patient by a registered physician, dentist, veterinary surgeon, or other practitioner in the course of his professional practice, and where said drugs are dispensed or administered to the patient for legitimate medical purposes, and the record kept as required by this Act of the drugs so dispensed, administered, distributed, or given away. “And all the provisions of existing laws relating to the engraving,Stamp regulations applicable. issuance, sale, accountability, cancellation, and destruction of tax-paid stamps provided for in the internal-revenue laws are, in so far as necessary, hereby extended and made to apply to stamps provided by this section. “That all unstamped packages of the aforesaid drugs found in theSeizure of unstamped packages. possession of any person, except as herein provided, shall be subject to seizure and forfeiture, and all the provisions of existing internal-revenue laws relating to searches, seizures, and forfeitures of unstamped articles are hereby extended to and made to apply to the articles taxed under this Act and the persons upon whom these taxes are imposed. “Importers, manufacturers, and wholesale dealers shall keepRecords, returns, etc. such books and records and render such monthly returns in relation to the transactions in the aforesaid drugs as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulations require. “The Commissioner of Internal Revenue, with the approval ofRegulations. the Secretary of the Treasury, shall make all needful rules and regulations for carrying the provisions of this Act into effect.” " 1132 Sec. 1007. narcotics. That section 6 of such Act of December 17, 1914, is hereby amended to read as follows: " “Sec. 6. Drugs not affected by Act. Vol. 38, p. 789, amended. That the provisions of this Act shall not be construed to apply to the manufacture, sale, distribution, giving away, dispensing, or possession of preparations and remedies which do not contain more than two grams of opium, or more than one-fourth of a gram of morphine, or more than one-eighth of a grain of heroin, or more than one grain of codeine, or any salt or derivative of any of them in one fluid ounce, or, if a solid or semisolid preparation, in one avoirdupois ounce; or to liniments, ointments, or other preparations which are prepared for external use only, except liniments, ointments, and other preparations which contain cocaine or any of its salts or alpha or beta eucaine or any of their salts or any synthetic *Provisos*. If used as medicines.substitute for them: *Provided*, That such remedies and preparations are manufactured, sold, distributed, given away, dispensed, or possessed as medicines and not for the purpose of evading the intentions Record of sales, etc., to be kept.and provisions of this Act: *Provided further*, That any manufacturer, producer, compounder, or vendor (including dispensing physicians) of the preparations and remedies mentioned in this section shall keep a record of all sales, exchanges, or gifts of such preparations and remedies in such manner as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall direct. Preservation for inspection.Such record shall be preserved for a period of two years in such a way as to be readily accessible to inspection by any officer, agent or employee of the Treasury Department duly authorized for that purpose, Vol. 38. p. 788. Registry and payment of tax required.and the State, Territorial, District, municipal, and insular officers named in section 5 of this Act, and every such person so possessing or disposing of such preparations and remedies shall register as required in section 1 of this Act and, if he is not paying a tax under this Act, he shall pay a special tax of $1 for each year, or fractional part thereof, in which he is engaged in such occupation, to the collector of internal revenue of the district in which he carries on such Decocainized preparations, etc., not affected.occupation as provided in this Act. (The provisions of this Act as amended shall not apply to decocainized coca leaves or preparations made therefrom, or to other preparations of coca leaves which do not contain cocaine.”) " Sec. 1008. Confiscation of seized narcotics. That all opium, its salts, derivatives, and compounds, and coca leaves, salts, derivatives, and compounds thereof, which may now be under seizure or which may hereafter be seized by the Vol. 26, p. 621. Vol. 29, p. 695; Vol. 35, p. 614; Vol. 38, pp. 275, 785.United States Government from any person or persons charged with any violation of the Act of October 1, 1890, as amended by the Acts of March 3, 1897, February 9, 1909, and January 17, 1914, or the Act of December 17, 1914, shall upon conviction of the person or persons from whom seized be confiscated by and forfeited to the Delivery for Government uses.United States; and the Secretary is hereby authorized to deliver for medical or scientific purposes to any department, bureau, or other agency of the United States Government, upon proper application therefor under such regulation as may be prescribed by the Commissioner, with the approval of the Secretary, any of the drugs so seized, confiscated, and forfeited to the United States. Applicable to seizures from unknown owners.The provisions of this section shall also apply to any of the aforesaid drugs seized or coming into the possession of the United States in the enforcement of any of the above-mentioned Acts where the Destruction restricted.owner or owners thereof are unknown. None of the aforesaid drugs coming into possession of the United States under the operation of said Acts, or the provisions of this section, shall be destroyed without certification by a committee appointed by the Commissioner, with the approval of the Secretary, that they are of no value for medical or scientific purposes. Sec. 1009. Emergency revenue Act repealed. Vol. 38, p. 745; Vol. 39, pp. 2, 792. That the Act approved October 22, 1914, entitled “An Act to increase the internal revenue, and for other purposes,” and the joint resolution approved December 17, 1915, entitled “Joint 1133resolution extending the provisions of the Act entitled ‘An Act tonarcotics. 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 repealed, except that the provisions of such Act shall remain in force for theProvisions continued for collecting special taxes, etc. assessment and collection of all special taxes imposed by sections 3 and 4 thereof, or by such sections as extended by such joint resolution, for any year or part thereof ending prior to January 1, 1917, and of all other taxes imposed by such Act, or by such Act as so extended, accrued prior to September 8, 1916, and for the imposition and collection of all penalties or forfeitures which have accrued or may accrue in relation to any of such taxes. TITLE XI.—STAMP TAXES.stamp taxes. Sec. 1100. That on and after April 1, 1919, there shall be levied,On bonds, written documents, etc., in Schedule A. collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, matters, and things mentioned and described in Schedule A of this title, or for or in respect of the vellum, parchment,*Post*, p. 1135. or paper upon which such instruments, matters, or things, or any of them, are written or printed, by any person who makes, signs, issues, sells, removes, consigns, or ships the same, or for whose use or benefit the same are made, signed, issued, sold, removed, consigned, or shipped, the several taxes specified in such schedule. The taxesIn lieu of present tax. Vol. 39, p. 753. imposed by this section shall, in the case of any article upon which a corresponding stamp tax is now imposed by law, be in lieu of such tax. Sec. 1101. That there shall not be taxed under this title anyExceptions. Government, State, etc., securities. bond, note, or other instrument, issued by the United States, or by any foreign Government, or by any State, Territory, or the District of Columbia, or local subdivision thereof, or municipal or other corporation exercising the taxing power; or any bond of indemnity requiredBonds of indemnity to United States. to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States; or stocks and bonds issued by cooperative building and loan associationsBy mutual building and loan associations. which are organized and operated exclusively for the benefit of their members and make loans only to their shareholders, or by mutual ditch or irrigating companies. Sec. 1102. That who ever—
(a)Makes, signs, issues, or accepts, or causes to be made, signed,Offenses designated. Issuing unstamped papers, etc. issued, or accepted, any instrument, document, or paper of any kind or description whatsoever without the full amount of tax thereon being duly paid;
(b)Consigns or ships, or causes to be consigned or shipped, byParcel post shipments not fully taxed. parcel post any parcel, package, or article without the full amount of tax being duly paid;
(c)Manufactures or imports and sells, or offers for sale, or causesDealing in articles not fully stamped. to be manufactured or imported and sold, or offered for sale, any playing cards, package, or other article without the full amount of tax being duly paid;
(d)Makes use of any adhesive stamp to denote any tax imposed byUsing uncanceled stamps. this title without canceling or obliterating such stamp as prescribed in section 1104; Is guilty of a misdemeanor and upon conviction thereof shall payPenalty. a fine of not more than $100 for each offense. Sec. 1103. That whoever—
(a)Fraudulently cuts, tears, or removes from any vellum, parchment,Fraudulently removing, etc., stamps. paper, instrument, writing, package, or article, upon which any tax is imposed by this title, any adhesive stamp or the impression of any stamp, die, plate, or other article provided, made, or used in pursuance of this title; 1134
(b)stamp taxes. Reusing stamps. Fraudulently uses, joins, fixes, or places to, with, or upon any vellum, parchment, paper, instrument, writing, package, or article, upon which any tax is imposed by this title,
(1)any adhesive stamp, or the impression of any stamp, die, plate, or other article, which has been cut, torn, or removed from any other vellum, parchment, paper, instrument, writing, package, or article, upon which any tax is Using insufficient stamps. Counterfeits.imposed by this title; or
(2)any adhesive stamp or the impression of any stamp, die, plate, or other article of insufficient value; or
(3)any forged or counterfeit stamp, or the impression of any forged or counterfeited stamp, die, plate, or other article;
(c)Removing, etc., stamps for unlawful uses. Willfully removes, or alters the cancellation, or defacing marks of, or otherwise prepares, any adhesive stamp, with intent to use, or cause the same to be used, after it has been already used, or knowingly or willfully buys, sells, offers for sale, or gives away, any such washed or restored stamp to any person for use, or knowingly uses the same;
(d)Possessing washed, etc., stamps, knowingly. Knowingly and without lawful excuse (the burden of proof of such excuse being on the accused) has in possession any washed, restored, or altered stamp, which has been removed from any vellum, parchment, paper, instrument, writing, package, or article; Punishment.Is guilty of a misdemeanor, and upon conviction shall be punished by a fine of not more than $1,000, or by imprisonment for not more Forfeiture of articles, etc.than five years, or both, and any such reused, canceled, or counterfeit stamp and the vellum, parchment, document, paper, package, or article upon which it is placed or impressed shall be forfeited to the United States. Sec. 1104. Method of cancellation. That whenever an adhesive stamp is used for denoting any tax imposed by this title, except as hereinafter provided, the person using or affixing the same shall write or stamp or cause to be written or stamped thereupon the initials of his or its name and the date upon which the same is attached or used, so that the same may *Proviso*. Use of other methods.not again be used: *Provided*, That the Commissioner may prescribe such other method for the cancellation of such stamps as he may deem expedient. Sec. 1105. Preparation, etc., of stamps.
(a)That the Commissioner shall cause to be prepared and distributed for the payment of the taxes prescribed in this title suitable stamps denoting the tax on the document, articles, or thing Method of affixing.to which the same may be affixed, and shall prescribe such method for the affixing of said stamps in substitution for or in addition to the method provided in this title, as he may deem expedient.
(b)Outside stamp contracts authorized. The Commissioner, with the approval of the Secretary, is authorized to procure any of the stamps provided for in this title by contract whenever such stamps can not be speedily prepared by the Time limit.Bureau of Engraving and Printing; but this authority shall expire on January 1, 1920, except as to imprinted stamps furnished under contract, authorized by the Commissioner.
(c)General laws applicable for mistakes, etc. All internal-revenue laws relating to the assessment and collection of taxes are hereby extended to and made a part of this title, so far as applicable, for the purpose of collecting stamp taxes omitted through mistake or fraud from any instrument, document, paper, writing, parcel, package, or article named herein. Sec. 1106. Sales of stamps by postmasters. That the Commissioner shall furnish to the Postmaster General without prepayment a suitable quantity of adhesive stamps to be distributed to and kept on sale by the various postmasters in Accountability.the United States. The Postmaster General may require each such postmaster to give additional or increased bond as postmaster for the value of the stamps so furnished, and each such postmaster shall deposit the receipts from the sale of such stamps to the credit of and render accounts to the Postmaster General at such times and in such Transfer of collections.form as he may by regulations prescribe. The Postmaster General shall at least once monthly transfer all collections from this source to the Treasury as internal-revenue collections. 1135 Sec. 1107. That the collectors of the several districts shall furnishstamp taxes. Sales by assistant treasurers, etc. without prepayment to any assistant treasurer or designated depositary of the United States located in their respective collection districts a suitable quantity of adhesive stamps for sale. In such cases theSurety bond for. collector may require a bond, with sufficient sureties, to an amount equal to the value of the adhesive stamps so furnished, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of, and for the payment monthly of all quantities or amounts sold or not remaining on hand. The Secretary may from timeRegulations. to time make such regulations as he may find necessary to insure the safekeeping or prevent the illegal use of all such adhesive stamps. Schedule A.—Stamp Taxes.Schedule A. 1. Bonds of indebtedness: On all bonds, debentures, or certificatesBonds of indebtedness, etc. of indebtedness issued by any person, and all instruments, however termed, issued by any corporation with interest coupons or in registered form, known generally as corporate securities, on each $100 of face value or fraction thereof, 5 cents: *Provided*, That every renewal*Provisos*. Renewals. Basis of tax. of the foregoing shall be taxed as a new issue: *Provided further*, That when a bond conditioned for the repayment or payment of money is given in a penal sum greater than the debt secured, the tax shall be based upon the amount secured. 2. Bonds, indemnity and surety: On all bonds executed for indemnifyingIndemnity and surety bonds. any person who shall have become bound or engaged as surety, and on all bonds executed for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, and on all policies of guaranty and fidelity insurance, including policies guaranteeing titles to real estate and mortgage guarantee policies, and on all other bonds of any description, made, issued, or executed, not otherwise provided for in this schedule, except such as may be required in legal proceedings, 50 cents: Exception.*Provided*, That where a premium is charged for the issuance, execution,*Provisos*. On premiums for issuing, etc. renewal or continuance of such bond the tax shall be 1 cent on each dollar or fractional part thereof of the premium charged: *Provided further*, That policies of reinsurance shall be exempt fromReinsurance exempt. the tax imposed by this subdivision. 3. Capital stock, issued: On each original issue, whether on organizationCapital stock. Original issue. or reorganization, of certificates of stock, or of profits, or of interest in property or accumulations, by any corporation, on each $100 of face value or fraction thereof, 5 cents: *Provided*, That where*Proviso*. Without face value. a certificate is issued without face value, the tax shall be 5 cents per share, unless the actual value is in excess of $100 per share, in which case the tax shall be 5 cents on each $100 of actual value or fraction thereof. The stamps representing the tax imposed by this subdivision shallAttached to stock book. be attached to the stock books and not to the certificates issued. 4. Capital stock, sales or transfers: On all sales, or agreements toSales or transfers of stock, etc. sell, or memoranda of sales or deliveries of, or transfers of legal title to shares or certificates of stock or of profits or of interest in property or accumulations in any corporation, or to rights to subscribe for or to receive such shares or certificates, whether made upon or shown by the books of the corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale, whether entitling the holder in any manner to the benefit of such stock, interest, or rights, or not, on each $100 of face value or fraction thereof, 2 cents and where such shares are without par or face value, the tax shall be 2 cents on the transfer or sale or agreement to sell on each share, unless the actual 1136stamp taxes.value thereof is in excess of $100 per share, in which case the tax shall *Provisos*. Collateral deposits exempt.be 2 cents on each $100 of actual value or fraction thereof: *Provided*, That it is not intended by this title to impose a tax upon an agreement evidencing a deposit of certificates as collateral security for money loaned thereon, which certificates are not actually sold, nor upon the delivery or transfer for such purpose of certificates so deposited: *Provided further*, That the tax shall not be imposed upon Brokers’ deliveries, etc., exempt.deliveries or transfers to a broker for sale, nor upon deliveries or transfers by a broker to a customer for whom and upon whose order he has purchased same, but such deliveries or transfers shall be accompanied by a certificate setting forth the facts: *Provided further*, That Affixing stamps. In books.in case of sale where the evidence of transfer is shown only by the books of the corporation the stamp shall be placed upon such books; and where the change of ownership is by transfer of the certificate the stamp shall be placed upon the certificate; and in cases of an On certificates.agreement to sell or where the transfer is by delivery of the certificate assigned in blank there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp On bills of sale, etc.shall be affixed; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it Punishment for sales, etc., without stamps.refers. Any person liable to pay the tax as herein provided, or anyone who acts in the matter as agent or broker for such person, who makes any such sale, or who in pursuance of any such sale delivers any certificate or evidence of the sale of any stock, interest or right, or bill or memorandum thereof, as herein required, without having the proper stamps affixed thereto with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not exceeding $1,000, or be imprisoned not more than six months, or both. 5. Produce sales for future delivery, etc., on exchange. Produce, sales of, on exchange: Upon each sale, agreement of sale, or agreement to sell (not including so-called transferred or scratch sales), any products or merchandise at, or under the rules or usages of, any exchange, or board of trade, or other similar place, for future delivery, for each $100 in value of the merchandise covered by said sale or agreement of sale or agreement to sell, 2 cents, and for *Provisos*. Stamped bills of sale required.each additional $100 or fractional part thereof in excess of $100, 2 cents: *Provided*, That on every sale or agreement of sale or agreement to sell as aforesaid there shall be made and delivered by the seller to the buyer a bill, memorandum, agreement, or other evidence of such sale, agreement of sale, or agreement to sell, to which there shall be affixed a lawful stamp or stamps in value equal to the Clearing house transfers not again stamped.amount of the tax on such sale: *Provided further*, That sellers of commodities described herein, having paid the tax provided by this subdivision, may transfer such contracts to a clearing-house corporation or association, and such transfer shall not be deemed to be a sale, or agreement of sale, or an agreement to sell within the provisions of this Act, provided that such transfer shall not vest any beneficial interest in such clearing-house association but shall be made for the sole purpose of enabling such clearing-house association to adjust and Contents of bills of sale.balance the accounts of the members of such clearing-house association on their several contracts. Every such bill, memorandum, or other evidence of sale or agreement to sell shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to Punishment for delivery, etc., without stamped bill.which it refers; and any person liable to pay the tax as herein provided, or anyone who acts in the matter as agent or broker for such person, who makes any such sale or agreement of sale, or agreement to sell, or who, in pursuance of any such sale, agreement of sale, or agreement to sell, delivers any such products or merchandise without a bill, memorandum, or other evidence thereof as herein required, or who delivers such bill, memorandum, or other evidence of sale, or 1137agreement to sell, without having the proper stamps affixed thereto,stamp taxes. with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not exceeding $1,000 or be imprisoned not more than six months, or both. No bill, memorandum, agreement, or other evidence of such sale,Cash immediate sales not taxable. or agreement of sale, or agreement to sell, in case of cash sales of products or merchandise for immediate or prompt delivery which in good faith are actually intended to be delivered shall be subject to this tax. 6. Drafts or checks (payable otherwise than at sight or on demand)Drafts, promissory notes, etc. upon their acceptance or delivery within the United States whichever is prior, promissory notes, except bank notes issued for circulation, and for each renewal of the same, for a sum not exceeding $100, 2 cents; and for each additional $100 or fractional part thereof, 2 cents. This subdivision shall not apply to a promissory note secured byNot taxed if with liberty bonds for collateral. the pledge of bonds or obligations of the United States issued after April 24, 1917, or secured by the pledge of a promissory note which itself is secured by the pledge of such bonds or obligations: *Provided*,*Proviso*. Condition. That in either case the par value of such bonds or obligations shall be not less than the amount of such note. 7. Conveyances: Deed, instrument, or writing, whereby any lands,Conveyances of realty. tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, her, or their direction, when the consideration or value of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of sale, exceeds $100 and does not exceed $500, 50 cents; and for each additional $500 or fractional part thereof, 50 cents. This subdivisionTrust deeds exempt. shall not apply to any instrument or writing given to secure a debt. 8. Entry of any goods, wares, or merchandise at any customhouse,Customhouse entries. either for consumption or warehousing, not exceeding $100 in value, 25 cents; exceeding $100 and not exceeding $500 in value, 50 cents; exceeding $500 in value, $1. 9. Entry for the withdrawal of any goods or merchandise from customsWarehouse withdrawals. bonded warehouse, 50 cents. 10. Passage ticket, one way or round trip, for each passenger, soldForeign passage tickets. or issued in the United States for passage by any vessel to a port or place not in the United States, Canada, or Mexico, if costing not exceeding $30, $1; costing more than $30 and not exceeding $60, $3; costing more than $60, $5. This subdivision shall not apply toExemption. passage tickets costing $10 or less. 11. Proxy for voting at any election for officers, or meeting for the*Proviso*. Exceptions. transaction of business, of any corporation, except religious, educational, charitable, fraternal, or literary societies, or public cemeteries, 10 cents. 12. Power of attorney granting authority to do or perform somePowers of attorney. act for or in behalf of the grantor, which authority is not otherwise vested in the grantee, 25 cents. This subdivision shall not applyIn pension claims, bankruptcy, etc., exempt. to any papers necessary to be used for the collection of claims from the United States or from any State for pensions, back pay, bounty, or for property lost in the military or naval service, or to powers of attorney required in bankruptcy cases. 13. Playing cards: Upon every pack of playing cards containingPlaying cards. not more than fifty-four cards, manufactured or imported, and sold, or removed for consumption or sale, a tax of 8 cents per pack. 14. Parcel-post packages: Upon every parcel or package transportedParcel-post packages. from one point in the United States to another by parcel post on which the postage amounts to 25 cents or more, a tax of 1 cent for 1138stamp taxes.each 25 cents or fractional part thereof charged for such transportation, to be paid by the consignor. Not transported unstamped.No such parcel or package shall be transported until a stamp or stamps representing the tax due shall have been affixed thereto. 15. Insurance on property by foreign corporations without agent in United States. On each policy of insurance, or certificate, binder, covering note, memorandum, cablegram, letter, or other instrument by whatever name called whereby insurance is made or renewed upon property within the United States (including rents and profits) against peril by sea or on inland waters or in transit on land (including transshipments and storage at termini or way points) or by fire, lightning, tornado, wind-storm, bombardment, invasion, insurrection or riot, issued to or for or in the name of a domestic corporation or partnership or an individual resident of the United States by any foreign corporation or partnership or any individual not a resident of the United States, when such policy or other instrument is not signed or countersigned by an officer or agent of the insurer in a State, Territory, or district of the United States within which such insurer is authorized to do business, a tax of 3 cents on each dollar, *Proviso*. Reinsurance exempt.or fractional part thereof of the premium charged: *Provided*, That policies of re-insurance shall be exempt from the tax imposed by this subdivision. Affixing of stamps.Any person to or for whom or in whose name any such policy or other instrument is issued, or any solicitor or broker acting for or on behalf of such person in the procurement of any such policy or other instrument, shall affix the proper stamps to such policy or Penalty for failure.other instrument, and for failure to affix such stamps with intent to evade the tax shall, in addition to other penalties provided therefor, pay a fine of double the amount of the tax. TITLE XII.—child labor tax.TAX ON EMPLOYMENT OF CHILD LABOR. Sec. 1200. That every person (other than a bona fide boys’ or girls’ canning club recognized by the Agricultural Department of a State and of the United States) operating
(a)any mine or quarry situated in the United States in which children under the age of sixteen years have been employed or permitted to work during any portion of the taxable year; or
(b)any mill, cannery, workshop, factory, or manufacturing establishment situated in the United States in which children under the age of fourteen years have been employed or permitted to work, or children between the ages of fourteen and sixteen have been employed or permitted to work more than eight hours in any day or more than six days in any week, or after the hour of seven o’clock post meridian, or before the hour of six o’clock ante meridian, during any portion of the taxable year, shall pay for each taxable year, in addition to all other taxes imposed by law, an excise tax equivalent to 10 per centum of the entire net profits received or accrued for such year from the sale or disposition of the product of such mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment. Sec. 1201. Net profits computed. Deductions allowed. Excise tax on net profits of business using prohibited labor. Ages, etc., designated. Vol. 39, p. 675. That in computing net profits under the provisions of 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 products manufactured within the United States the following items:
(a)Raw materials. The cost of raw materials entering into the production;
(b)Operating expenses. Running expenses, including rentals, cost of repairs, and maintenance, heat, power, insurance, management, and a reasonable allowance for salaries or other compensations for personal services actually rendered, and for depreciation; 1139
(c)Interest paid within the taxable year on debts or loans contractedchildhood labor tax. Interest on business debts. 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 toBusiness taxes. the business or property relating to the production; and
(e)Losses actually sustained within the taxable year in connectionLosses. with the business of producing such products, including losses from fire, flood, storm, or other casualties, and not compensated for by insurance or otherwise. Sec. 1202. That if any such person during any taxable year orSales for personal benefit at less than market price. Computation of gross amount from. part thereof, whether under any agreement, arrangement, or understanding or otherwise, sells or disposes of any product of such mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment 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 for such year or part thereof from the sale or disposition of such product shall be taken to be the amount which would have been received or accrued from the sale or disposition of such product if sold at the fair market price. Sec. 1203.
(a)That no person subject to the provisions of thisNo liability if employer has certificate permitting child to work, etc. title shall be liable for the tax herein imposed if the only employment or permission to work which but for this section would subject him to the tax, has been of a child as to whom such person has in good faith procured at the time of employing such child or permitting him to work, and has since in good faith relied upon and kept on file a certificate, issued in such form, under such conditions and by such persons as may be prescribed by a board consisting of the Secretary, the Commissioner, and the Secretary of Labor, showing the child to be of such age as not to subject such person to the tax imposed by this title. Any person who knowingly makes a false statement or presents falsePunishment for false statement as to certificates, etc. evidence in or in relation to any such certificate or application therefor shall be punished by a fine of not less than $100, nor more than $1,000, or by imprisonment for not more than three months, or by both such fine and imprisonment, in the discretion of the court. In any State designated by such board an employment certificateState certificates effective. or other similar paper as to the age of the child, issued under the laws of that State, and not inconsistent with the provisions of this title, shall have the same force and effect as a certificate herein provided for.
(b)The tax imposed by this title shall not be imposed in the caseAllowance for unintentional mistakes, etc. of any person who proves to the satisfaction of the Secretary that the only employment or permission to work which but for this section would subject him to the tax, has been of a child employed or permitted to work under a mistake of fact as to the age of such child, and without intention to evade the tax. Sec. 1204. That on or before the first day of the third month followingYearly returns to collector. the close of each taxable year, a true and accurate return under oath shall be made by each person subject to the provisions of this title to the collector for the district in which such person has his principal office or place of business, in such form as the Commissioner, with the approval of the Secretary, shall prescribe, settingContents. forth specifically the gross amount of income received or accrued during such year from the sale or disposition of the product of any mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment, in which children have been employed subjecting him to the tax imposed by this title, and from the total thereof deducting the aggregate items of allowance authorized by this title, 1140child labor tax.and such other particulars as to the gross receipts and items of allowance as the Commissioner, with the approval of the Secretary may require. Sec. 1205. Assessment and payment of tax. That all such returns shall be transmitted forthwith by the collector to the Commissioner, 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 liable, and such person shall pay the tax to the collector on or before thirty days from the date of such notice. Sec. 1206. Inspection of promises. That for the purposes of this Act the Commissioner, or any other person duly authorized by him, shall have authority to enter and inspect at any time any mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment. The Secretary of Labor, or any person duly authorized by him, shall, for the Form of report.purpose of complying with a request of the Commissioner to make such an inspection, have like authority, and shall make report to the Commissioner of inspections made under such authority in such form as may be prescribed by the Commissioner with the approval of the Secretary of the Treasury. Punishment for obstructing inspection.Any person who refuses or obstructs entry or inspection authorized by this section shall be punished by a fine of not more than $1,000, or by imprisonment for not more than one year, or both such fine and imprisonment. Sec. 1207. Taxable year” defined. *Ante*, p. 1058. First taxable year. That as used in this title the term “taxable year” shall have the same meaning as provided for the purposes of income tax in section 200. The first taxable year for the purposes of this title shall be the period between sixty days after the passage of this Act and December 31, 1919, both inclusive, or such portion of such period as is included within the fiscal year (as defined in section 200) of the taxpayer. TITLE XIII.—Administrative provisions.GENERAL ADMINISTRATIVE PROVISIONS. Sec. 1300. Pay of Commissioner increased. [R. S., sec. 319, p. 53](/us/rs/s319/p53), amended. Payment for rest of fiscal year. That hereafter the salary of the Commissioner shall be $10,000 a year. The difference between the amount appropriated under existing law and the salary herein established shall, for the period between the passage of this Act and July 1, 1919, be paid out of the appropriations for collecting internal revenue. Sec. 1301. Five deputy commissioners and an assistant authorized.
(a)That hereafter there may be employed in the Bureau of Internal Revenue, in lieu of the deputy commissioners whose salaries are now fixed by law, five deputy commissioners and an assistant to the Commissioner, who shall each receive a salary of Salary. Duties of the assistant.$5,000 a year, payable monthly. The assistant to the Commissioner may be authorized by the Commissioner to perform any duties which the deputy commissioners may perform under existing law.
(b)Collectors. Pay increased, etc. [R. S., sec. 3145, p. 602](/us/rs/s3145/p602), amended. The salaries of collectors may be readjusted and increased under such regulations as may be prescribed by the Commissioner, subject to the approval of the Secretary, but no collector shall receive a salary in excess of $6,000 a year.
(c)Appropriation for expenses under this Act until Juno 30, 1919. There is hereby appropriated, out of any money in the Treasury not otherwise appropriated, for the fiscal year ending June 30, 1919, the sum of $7,500,000 for the expenses of assessing and collecting the internal-revenue taxes as provided in this Act, Officers, employees, etc.including the employment of necessary officers, attorneys, experts, agents, inspectors, deputy collectors, clerks, janitors, and messengers, in the District of Columbia and the several collection districts, to be appointed as provided by law, telegraph and telephone service, Supplies, etc.rental and repair of quarters, postage, and the purchase of such supplies, equipment, furniture, mechanical devices, printing, stationery, law books and books of reference, not to exceed $500 for 1141street car fares in the District of Columbia, and such other articlesrevenue act of 1918. as may be necessary for use in the District of Columbia and the several collection districts: *Provided*, That not more than $2,750,000*Proviso*. Limit for Bureau in the district. of the total amount appropriated by this section may be expended in the Bureau of Internal Revenue, in the District of Columbia.
(1)There is hereby created a board to be known as the “AdvisoryAdvisory Tax Board. Creation and composition. Tax Board,” hereinafter called the Board, and to be composed of not to exceed six members to be appointed by the Commissioner with the approval of the Secretary. The Board shall cease to existDuration. at the expiration of two years after the passage of this Act, or at such earlier time as the Commissioner with the approval of the Secretary may designate. Vacancies in the membership of the Board shall be filled in the sameFilling vacancies, etc. manner as an original appointment. Any member shall be subject to removal by the Commissioner with the approval of the Secretary. The Commissioner with the approval of the Secretary shall designate the chairman of the Board. Each member shall receive an annualPay, etc. salary of $9,000, payable monthly, together with actual necessary expenses when absent from the District of Columbia on official business.
(2)The Commissioner may, and on the request of any taxpayerQuestion of interpretation, etc., to be submitted to. directly interested shall, submit to the Board any question relating to the interpretation or administration of the income, war-profits or excess-profits tax laws, and the Board shall report its findings and recommendations to the Commissioner.
(3)The Board shall have its office in the Bureau of InternalOffice expenses, etc. Revenue in the District of Columbia. The expenses and salaries of members of the Board shall be audited, allowed, and paid out of appropriations for collecting internal revenue, in the same manner as expenses and salaries of employees of the Bureau of Internal Revenue are audited, allowed, and paid.
(4)The Board shall have the power to summon witnesses, takePower to take testimony, etc. Issue of subpoenas, etc. testimony, administer oaths, and to require any person to produce books, papers, documents, or other data relating to any matter under investigation by the Board. Any member of the Board may sign subpoenas and members and employees of the Bureau of Internal Revenue designated to assist the Board, when authorized by the Board, may administer oaths, examine witnesses, take testimony and receive evidence. Sec. 1302. That all internal-revenue agents and inspectors shall beLeaves of absence for 30 days granted to 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, with the approval of the Secretary, may prescribe. Sec. 1303.
(a)That there is hereby created a Legislative DraftingLegislative Drafting Service. Creation and composition. Service under the direction of two draftsmen, one of whom shall be appointed by the President of the Senate, and one by the Speaker of the House of Representatives, without reference to political affiliations and solely on the ground of fitness to perform the duties of the office. Each draftsman shall receive a salary of $5,000 a year, payable monthly. The draftsmen shall, subject to the approval ofAssistants, office supplies, etc. the President of the Senate and the Speaker of the House of Representatives, employ and fix the compensation of such assistant draftsmen, clerks, and other employees, and purchase such furniture, office equipment, books, stationery, and other supplies, as may be necessary for the proper performance of the duties of the service and as may be appropriated for by Congress.
(b)The Drafting Service shall aid in drafting public bills andDuties in aid of committees of Congress. resolutions or amendments thereto on the request of any committee of either House of Congress, but the Library Committee of the Senate and the Library Committee of the House of Representatives, 1142revenue act of 1918.respectively, may determine the preference, if any, to be given to Rules, etc.,subject to Library Committees.such requests of the committees of either House, respectively. The draftsmen shall, from time to time, prescribe rules and regulations for the conduct of the work of the service for the committees of each House, subject to the approval of the Library Committee of each House, respectively.
(c)Appropriation for current year. For the remainder of the current fiscal year there is hereby appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $25,000, or so much thereof as may be necessary, for the purpose of defraying the expenses of the establishment and maintenance of the service, including the payment of salaries herein Disbursements.authorized. One-half of all appropriations for the service shall be disbursed by the Secretary of the Senate and one-half by the Clerk of the House of Representatives. Sec. 1304. Virgin Islands. Articles from, to pay United States tax. Exempt from insular tax. That there shall be levied, collected, and paid in the United States, upon articles coining into the United States from the Virgin Islands, a tax equal to the internal-revenue tax imposed in. the United States upon like articles of domestic manufacture; such articles shipped from such islands to the United States shall be exempt from the payment of any tax imposed by the internal-revenue *Proviso*. Articles from United States to pay insular tax.laws of such islands: *Provided*, That there shall be levied, collected, and paid in such islands, upon articles imported from the United States, a tax equal to the internal-revenue tax imposed in such Exempt from United States tax.islands upon like articles there manufactured; and such articles going into such islands from the United States shall be exempt from payment of any tax imposed by the internal-revenue laws of the United States. Sec. 1305. General revenue laws applicable hereto. That all administrative, special, or stamp provisions of law, including the law relating to the assessment of taxes, so far as applicable, are hereby extended to and made a part of this Act, and every person liable to any tax imposed by this Act, or for the collection thereof, shall keep such records and render, under oath, such statements and returns, and shall comply with such regulations as the Commissioner, with the approval of the Secretary, may from time to time prescribe. Returns may be required from any person.Whenever in the judgment of the Commissioner necessary he may require any person, by notice served upon him, to make a return or such statements as he deems sufficient to show whether or not such person is liable to tax. Examination, etc., to determine correctness. Powers conferred.The Commissioner, for the purpose of ascertaining the correctness of any return or for the purpose of making a return where none has been made, is hereby authorized, by any revenue agent or inspector designated by him for that purpose, to examine any books, papers, records or memoranda bearing upon the matters required to be included in the return, and may require the attendance of the person rendering the return or of any officer or employee of such person, or the attendance of any other person having knowledge in the premises, and may take his testimony with reference to the matter required by law to be included in such return, with power to administer oaths to such person or persons. Sec. 1306. Floor tax returns to be filed in 30 days. That where floor taxes are imposed by this Act in respect to articles or commodities, in respect to which the tax imposed by existing law has been paid, the person required by this Act to pay the tax shall, within thirty days after its passage, make return under oath in such form and under such regulations as the Commissioner, Extension of payment on filing bond.with the approval of the Secretary, shall prescribe. Payment of the tax shown to be due may be extended to a date not exceeding seven months from the passage of this Act, upon the filing of a bond for payment in such form and amount and with such sureties as the Commissioner, with the approval of the Secretary, may prescribe. 1143 Sec. 1307. That in all cases where the method of collecting the taxrevenue act of 1918. imposed by this Act is not specifically provided in this Act, the taxOther methods of collection authorized. shall be collected in such manner as the Commissioner, with the approval of the Secretary, may prescribe. All administrative and Application of stamp tax penalties. *Ante*, p. 1133.penalty provisions of Title XI of this Act, in so far as applicable, shall apply to the collection of any tax which the Commissioner determines or prescribes shall be paid by stamp. Sec. 1308.
(a)That any person required under Titles V, VI, VII,Penalty for failure to pay tax, make returns, etc., other than income or stamp taxes. VIII, IX, X, or XII, to pay, or to collect, account for and pay over any tax, or required by law or regulations made under authority thereof to make a return or supply any information for the purposes of the computation, assessment or collection of any such tax, who fails to pay, collect, or truly account for and pay over any such tax, make any such return or supply any such information at the time or times required by law or regulation shall in addition to other penalties provided by law be subject to a penalty of not more than $1,000.
(b)Any person who willfully refuses to pay, collect, or trulyPunishment for willful refusals, evasions, etc. account for and pay over any such tax, make such return or supply such information at the time or times required by law or regulation, or who willfully attempts in any manner to evade such tax shall be guilty of a misdemeanor and in addition to other penalties provided by law shall be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution.
(c)Any person who willfully refuses to pay, collect, or truly account for and pay over any such tax shall in addition to other penalties providedAdditional tax penalty for refusal to pay tax, etc. by law be liable to a penalty of the amount of the tax evaded, or not paid, collected, or accounted for and paid over, to be assessed and collected in the same manner as taxes are assessed and collected: *Provided, however*, That no penalty shall be assessed under this subdivision*Proviso*. Exceptions. for any offense for which a penalty may be assessed under*Post*, p. 1147. authority of section 3176 of the Revised Statutes, as amended, or of section 605 or 620 of this Act, or for any offense for which a penalty*Ante*, pp. 1108, 1113. [R. S., sec. 3256, p. 627](/us/rs/s3256/p627). has been recovered under section 3256 of the Revised Statutes.
(d)The term “person” as used in this section includes an officer“Person” liable for acts. or employee of a corporation or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs. Sec. 1309. That the Commissioner, with the approval of the Secretary,Enforcement rules authorized. is hereby authorized to make all needful rules and regulations for the enforcement of the provisions of this Act. The Commissioner with such approval may by regulation provideAcknowledgments without oath. that any return required by Titles V, VI, VII, VIII, IX, or X to be under oath may, if the amount of the tax covered thereby is not in excess of $10, be signed or acknowledged before two witnesses instead of under oath. Sec. 1310.
(a)That in the case of any overpayment or overcollectionOverpayments or collections. Credits or refunds allowed. of any tax imposed by section 628 or 630 or by Title V, Title VIII, or Title IX, the person making such overpayment or overcollection may take credit therefor against taxes due upon any monthly return, and shall make refund of any excessive amount collected by him upon proper application by the person entitled thereto.
(b)Wherever in this Act a tax is required to be paid by thePayment of tax on sales on credit, at option of vendor. purchaser to the vendor at the time of a sale, and such sale is made on credit, then, under regulations prescribed by the Commissioner, with the approval of the Secretary, the tax may, at the option of the vendor, be returned and paid by him to the United States as if paid to him by the purchaser at the time of the sale, and in such case the vendor shall have a right of action in any court of competentAction allowed against purchaser. jurisdiction against the purchaser for the amount of the tax so returned and paid to the United States. 1144
(c)revenue act of 1918. Under such rules and regulations as the Commissioner with Exports of beverages, tobacco, etc., not taxed hereunder.the approval of the Secretary may prescribe, the taxes imposed under the provisions of Titles Vl, VII or IX shall not apply in respect to articles sold or leased for export and in due course so exported. Under such rules and regulations the amount of any internal-revenue tax erroneously or illegally collected in respect to exported Refund to exporter if collected.articles may be refunded to the exporter of the article, instead of to the manufacturer, if the manufacturer waives any claim for the amount so to be refunded. Sec. 1311. Temporary use of existing stamps for new rate. That where the rate of tax imposed by this Act, payable by stamps, is an increase over previously existing rates, stamps on hand in the collectors’ offices and in the Bureau of Internal Revenue may continue to be used until the supply on hand is exhausted, but shall be sold and accounted for at the rates Assessments for stamps on hand.provided by this Act, and assessment shall be made against manufacturers and other taxpayers having such stamps on hand on the day this Act takes effect for the difference between the amount paid for such stamps and the tax due at the rates provided by this Act. Sec. 1312. Payment of tax by vendee under contract prior to May 9, 1917, not permitting addition by vendor.
(1)That
(a)if any person has prior to May 9, 1917, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI, or under this subdivision, and
(b)if such contract does not permit the adding of the whole of such tax to the amount to he paid under such contract, then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of such tax as is not so With other than dealer, at former rate.permitted to be added to the contract price. If a contract of the character above described was made with any person other than a dealer, the tax collected under this Act shall be the tax in force on May 9, 1917.
(2)By vendee under contracts prior to September 3, 1918, if tax then levied. If
(a)any person has prior to September 3, 1918, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI, or under this subdivision, and in respect to which no corresponding tax was imposed by the Revenue Act of 1917, and
(b)such contract does not permit the adding, to the amount to be paid under such contract, of the whole of the tax imposed by this Act, then the vendee or lessee shall, in lieu of the vendor or lessor, nay so much of the tax imposed by this Act as is not so permitted to ne added to the No tax If with other than dealer.contract price. If a contract of the character above described was made with any person other than a dealer, no tax shall be collected under this Act.
(3)By vendee, if increased hereunder, of added tax. If
(a)any person has prior to September 3, 1918, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI, or under this subdivision, and in respect to which a corresponding tax was imposed by the Revenue Act of 1917, and
(b)such contract does not permit the adding, to the amount to be paid under such contract, of the whole of the difference between such tax and the corresponding tax imposed by the Revenue Act of 1917, then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of such difference as is not so permitted to be added to the Former tax if with other than dealer.contract price. If a contract of the character above described was made with any person other than a dealer, the tax collected under this Act shall be the tax in force on September 3, 1918.
(4)Time of payment, etc. The taxes payable by the vendee or lessee under this section shall be paid to the vendor or lessor at the time the sale or lease is 1145consummated, and collected, returned, and paid to the Unitedrevenue act of 1918. States by such vendor or lessor in the same manner as provided in section 502.
(5)The term “dealer” as used in this section includes a vendee“Dealer” construed. who purchases any article with intent to use it in the manufacture or production of another article intended for sale.
(6)This section shall not apply to any tax imposed by section 906.Motion pictures excluded. Sec. 1313. That in the payment of any tax under this Act not payable by stamp a fractional part of a cent shall be disregardedFractions of a cent. unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent. Sec. 1314. That collectors may receive, at par with an adjustmentCertificates of indebtedness and uncertified checks receivable for taxes other than stamp. for accrued interest, certificates of indebtedness issued by the United States and uncertified checks in payment of income, war-profits and excess-profits taxes and any other taxes payable other than by stamp, during such time and under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe; but if a check soLiability for unpaid checks. received is not paid by the bank on which it is drawn the person by whom such check has been tendered shall remain liable for the payment of the tax and for all legal penalties and additions the same as if such check had not been tendered. Sec. 1315. That section 3315 of the Revised Statutes, as amended,Lost, etc., stamps. is hereby amended to read as follows: " “Sec. 3315. The Commissioner of Internal Revenue may, underReplacing stamps accidentally lost from unstamped packages. [R. S., sec. 3315, p. 643](/us/rs/s3315/p643), amended. regulations prescribed by him with the approval of the Secretary of the Treasury, issue stamps for restamping packages of distilled spirits, tobacco, cigars, snuff, cigarettes, fermented liquors, and wines which have been duly stamped but from which the stamps have been lost or destroyed by unavoidable accident.” " Sec. 1316.
(a)That section 3220 of the Revised Statutes is herebyRefund of tax. amended to read as follows: " “Sec. 3220. The Commissioner of Internal Revenue, subject toErroneously collected taxes, penalties, etc., to be refunded. [R. S., sec. 3220, p. 618](/us/rs/s3220/p618), amended. regulations prescribed by the Secretary of the Treasury, is authorized to remit, refund, and pay back all taxes erroneously or illegally assessed or collected, all penalties collected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or in any manner wrongfully collected; also to repay to any collectorRepayment of judgments against collectors. or deputy collector the full amount of such sums of money as may be recovered against him in any court, for any internal revenue taxes collected by him, with the cost and expenses of suit; also all damagesDamages against officials and costs recovered against any assessor, assistant assessor, collector, deputy collector, agent, or inspector, in any suit brought against him by reason of anything done in the due performance of his official duty, and shall make report to Congress at the beginning of eachReport to Congress. regular session of Congress of all transactions under this section.” "
(b)Section 3225 of the Revised Statutes of the United States isSecond assessments. hereby amended to read as follows: " “Sec. 3225. When a second assessment is made in case of anyNo remission or recovery under, unless statement proven not willfully false, etc. [R. S., sec. 3225, p. 619](/us/rs/s3225/p619), amended. Vol. 39, p. 773. list, statement, or return, which in the opinion of the collector or deputy collector was false or fraudulent, or contained any understatement or undervaluation, such assessment shall not be remitted, nor shall taxes collected under such assessment be refunded, or paid back, or recovered by any suit, unless it is proved that such list, statement, or return was not willfully false or fraudulent and did not contain any willful understatement or undervaluation.” "
(c)That the paragraph of section 3689 of the Revised Statutes, as amended,Permanent appropriations. For refunding taxes illegally collected, repealed. [R. S., sec. 3689, p. 725](/us/rs/s3689/p725), amended. Estimates required for refund of erroneously collected taxes, etc. reading as follows: " “Refunding taxes illegally collected (internal revenue): To refund and pay back duties erroneously or illegally assessed or collected under the internal-revenue laws,” is repealed from and after June 30, 1920; and the Secretary of the Treasury shall submit for the fiscal year 1921, and annually thereafter, an 1146revenue act of 1918.estimate of appropriations to refund and pay back duties or taxes erroneously or illegally assessed or collected under the internal-revenue laws, and to pay judgments, including interest and costs, rendered for taxes or penalties erroneously or illegally assessed or collected under the internal-revenue laws. " Sec. 1317. Sections of Revised Statutes amended. That sections 3164, 3165, 3167, 3172,3173, and 3176 of the Revised Statutes as amended are hereby amended to read as follows: " “Sec. 3164. Collectors to report violations of revenue laws to district attorneys in 30 days. [R. S., sec. 3104, p. 606](/us/rs/s3104/p606), amended. It shall be the duty of every collector of internal revenue having knowledge of any willful violation of any law of the United States relating to the revenue, within thirty days’ after coming into possession of such knowledge, to file with the district attorney of the district in which any fine, penalty, or forfeiture may be incurred, a statement of all the facts and circumstances of the case within his knowledge, together with the names of the witnesses, setting forth the provisions of law believed to be so violated on which reliance may be had for condemnation or conviction. “Sec. 3165. Revenue officials authorized to administer oaths, etc. [R. S., sec. 3165, p. 606](/us/rs/s3165/p606), amended. Every collector, deputy collector, internal-revenue agent, and internal-revenue officer assigned to duty under an internal-revenue agent, is authorized to administer oaths and to take evidence touching any part of the administration of the internal-revenue laws with which he is charged, or where such oaths and evidence are authorized by law or regulation authorized by law to be taken. “Sec. 3167. Divulging information received by revenue officials, unlawful. [R. S., sec. 3167, p. 608](/us/rs/s3167/p608), amended. Vol. 39, p. 773. It shall be unlawful for any collector, deputy collector, 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 From income returns, etc.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 any income return, or to permit any income return or copy thereof or any Unauthorized publication of incomes, etc.book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law; and it shall be 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 Punishment.of income, profits, losses, or expenditures appearing in any income return; and any offense against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding $1,000 or by Dismissal of offender.imprisonment not exceeding one year, or both, at the discretion of the court; and if the offender be an officer or employee of the United States he shall be dismissed from office or discharged from employment. “Sec. 3172. Inquiries by deputy collectors. [R. S., sec. 3172, p. 608](/us/rs/s3172/p608), amended. Vol. 39, p. 773. Every collector shall, from time to time, cause his 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. “Sec. 3173. Yearly returns required from taxpayers. [R. S., sec. 3173, p. 609](/us/rs/s3173/p609), amended. Vol. 39, p. 774. Details specified. 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, and
(2)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 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, 1147partnership, firm, association, or corporation is liable: *Provided*,revenue act of 1918. *Provisos*. By revenue officer by consent of party in default. 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, article 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, may be received as the list of such person: *Provided further*, ThatNotice to taxpayer not making returns. 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 date of such note or memorandum, verified by oath. And if any person, on beingSummons, etc., if no, or false, returns made. 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 any objects or income liable to tax or the returns thereof. The collector may summon any person residing or foundAuthority of district collector, etc. 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 he might lawfully exercise in the district for which he was commissioned: *Provided*, That ‘person,’ as used in this section, shall be construed to include any corporation, joint-stock companyCorporations, etc., included. or association, or insurance company when such construction is necessary to carry out its provisions. “Sec. 3176. If any person, corporation, company, or associationReturns by collector if no, or false, returns made. [R. S., sec. 3176, p. 610](/us/rs/s3176/p610), amended. Vol. 39, p. 775. fails to make and file a return or list at the time prescribed by law or by regulation made under authority of 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 andBy Commissioner. from such information as he can obtain through testimony or otherwise. In any such case the Commissioner may, from his own knowledge and from such information as he can obtain through testimony or otherwise, make a return or amend any return made by a collector or deputy collector. Any return or list so made and subscribed by the Commissioner,Legal effect. or by a collector or deputy collector and approved by the 1148revenue act of 1918.Commissioner, shall be prima facie good and sufficient for all legal purposes. Time extended for sickness.“If the failure to file a return or list is due to sickness or absence, the collector may allow such further time, not exceeding thirty days, for making and filing the return or list as he deems proper. Assessment of tax by Commissioner.“The Commissioner of Internal Revenue shall determine and assess all taxes, other than stamp taxes, as to which returns or lists Additional tax imposed.are so made under the provisions of this section. In case of any failure to make and file a return or list within the time prescribed by law, or prescribed by the Commissioner of Internal Revenue or the collector in pursuance of law, the Commissioner of Internal Revenue Exception.shall add to the tax 25 per centum of its amount, except that when a return is 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 Rate if return false, etc.addition shall be made to the tax. In case a false or fraudulent return or list is willfully made, the Commissioner of Internal Revenue shall add to the tax 50 per centum of its amount. Collection of added tax.“The amount so added to any tax shall be collected at the same 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. 1318. Jurisdiction of district courts. That if any person is summoned under this Act to appear, to testify, or to produce books, papers or other data, the district court of the United States for the district in which such person resilles shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, or other data. Issue of process, etc.The district courts of the United States at the instance of the United States are hereby invested with such jurisdiction to make and issue, both in actions at law and suits in equity, writs and orders of injunction, and of ne exeat republica, orders appointing receivers, anil such other orders and process, and to render such judgments and decrees, granting in proper cases both legal and equitable relief together, as may be necessary or appropriate for the enforcement of Additional to other enforcement remedies.the provisions of this Act. The remedies hereby provided are in addition to and not exclusive of any and all other remedies of the United States in such courts or otherwise to enforce such provisions. Sec. 1319. False statements as to sales, etc. That whoever in connection with the sale or lease, or offer for sale or lease, of any article, or for the purpose of making That tax is included in price.such sale or lease, makes any statement, written or oral,
(1)intended or calculated to lead any person to believe that any part of the price at which such article is sold or leased, or offered for sale or lease, consists of a tax imposed under the authority of the. United States, That part of price is due to tax.or
(2)ascribing a particular part of such price to a tax imposed under the authority of the United States, knowing that such statement is false or that the tax is not so great as the portion of such Punishment.price ascribed to such tax, shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not more than $1,000 or by imprisonment not exceeding one year, or both. Sec. 1320. Liberty bonds, etc., accepted in lieu of personal sureties, etc That wherever by the laws of the United States or regulations made pursuant thereto, any person is required to furnish any recognizance, stipulation, bond, guaranty, or undertaking, hereinafter called “penal bond”, with surety or sureties, such person may, in lieu of such surety or sureties, deposit as security with the official having authority to approve such penal bond, United States Liberty bonds or other bonds of the United States in a sum equal at their par value to the amount of such penal bond required to be furnished, together with an agreement authorizing such official to collect or sell such bonds so deposited in case of any default in the performance of any of the conditions or stipulations of such penal bond. 1149 The acceptance of such United States bonds in lieu of surety or suretiesrevenue act of 1918. Effect thereof. required by law shall have the same force and effect as individual or corporate sureties, or certified checks, bank drafts, post-office money orders, or cash, for the penalty or amount of such penal bond. The bonds deposited hereunder, and such other United States bondsSubstitution permitted. as may be substituted therefor from time to time as such security, may be deposited with the Treasurer, or an Assistant Treasurer of theUnited States, a Government depository. Federal Reserve bank, or member bank, which shall issue receipt therefor, describing such bonds so deposited. As soon as security for the performance of suchReturn to depositor. penal bond is no longer necessary, such bonds so deposited, shall be returned to the depositor: *Provided*, That in case a person or *Provisos*. Retention of bond of defaulting contractor for public works. Vol. 33, p. 811.persons supplying a contractor with labor or material as provided y the Act of Congress, approved February 24, 1905 (33 Stat., 811), entitled “An Act to amend an Act approved August thirteenth, eighteen hundred and ninety-four, entitled ‘An Act for the protection of persons furnishing materials and labor for the construction of public works,’” shall file with the obligee, at any time after a Application by subcontractor, etc.default in the performance of any contract subject to said Acts, the application and affidavit therein provided, the obligee shall not deliver to the obligor the deposited bonds nor any surplus proceeds thereof until the expiration of the time limited by said Acts for the institution of suit by such person or persons, and, in case suit shall be instituted within such time, shall hold said bonds or proceeds subject to the order of the court having jurisdiction thereof: *Provided further*, That nothing herein contained shall affect or impair thePriority of United States not affected. priority of the claim of the United States against the bonds deposited or any right or remedy granted by said Acts or by this section to the United States for default upon any obligation of said penal bond: *Provided further*, That all laws inconsistent with this section areModification of inconsistent laws. hereby so modified as to conform to the provisions hereof: *And provided further*, That nothing contained herein shall affect theJudicial, etc., securities not affected. authority of courts over the security, where such bonds are taken as security in judicial proceedings, or the authority of any administrative officer of the United States to receive United States bonds for security in cases authorized by existing laws. The Secretary mayEnforcement. prescribe rules and regulations necessary and proper for carrying this section into effect. TITLE XIV.—GENERAL PROVISIONS.General provisions. Sec. 1400.
(a)That the following parts of Acts are hereby repealed,Laws repealed. subject to the limitations provided in subdivision (b):
(1)The following titles of the Revenue Act of 1916:Revenue Act of 1916. Title I (called “Income Tax”);Vol. 39. pp. 756–793. Title II (called “Estate Tax”); Title III (called “Munitions Manufacturers’ Tax”), as amended; Title IV (called “Miscellaneous Taxes”).
(2)The following parts of the Act entitled “An Act to provideAct of March 3, 1917. Vol. 39, pp. 1002, 1003. increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes,” approved March 3, 1917: Title III (called “ Estate Tax”);Estate tax. Section 402 (called “Returns of Dividends”).Dividends.
(3)The following titles of the Revenue Act of 1917:War Revenue Act of 1917. *Ante*, pp. 300–337. Title I (called “War Income Tax”); Title II (called “War Excess-Profits Tax”); Title III (called “War Tax on Beverages”); Title IV (called “War Tax on Cigars, Tobacco, and Manufactures Thereof”);1150 revenue act of 1918.Title V (called “War Tax on Facilities Furnished by Public Utilities, and Insurance”); Title VI (called “War Excise Taxes”); Title VII (called “War Tax on Admissions and Dues”); Title VIII (called “War Stamp Taxes”); Title IX (called “War Estate Tax”); Title X (called “Administrative Provisions”); Title XII (called “Income-Tax Amendments”).
(b)Continuance for collecting accrued taxes, etc. Such parts of Acts 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 and may accrue in relation to any such taxes, and except that the unexpended balance of any appropriation heretofore made and now available for the administration of any such part of an Act shall be available for the administration of this Act or the *Provisos*. Former income, war income and excess profits tax limited.corresponding provision thereof: *Provided*, That, except as otherwise provided in this Act, no taxes shall be collected under Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917, or Title I or II of the Revenue Act of 1917, in respect to any period Accrued estate taxes. Vol. 39. pp. 777, 1002.after December 31, 1917: *Provided further*, That the assessment and collection of all estate taxes, and the imposition and collection of all penalties or forfeitures, which have accrued under Title II of the Revenue Act of 1916 as amended by the Act entitled “An Act to provide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of *Ante*, p. 324. *Ante*, p. 1096.fortifications, and for other purposes,” approved March 3, 1917, or Title IX of the Revenue Act of 1917, shall be according to the provisions For collecting tax repealed herein.of Title IV of this Act. In the case of any tax imposed by any part of an Act herein repealed, if there is a tax imposed by this Act in lieu thereof, the provision imposing such tax shall remain in force until the corresponding tax under this Act takes effect under the provisions of this Act. Porto Rico and Philippines. Collecting 1916 income tax.Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917 shall remain in force for the assessment and collection of the income tax in Porto Rico and the Philippine Islands, except as may be otherwise provided by their respective legislatures. Sec 1401. Postal matter. Former first class rates restored July 1, 1919. *Ante*, p. 327. That section 1100 of the Revenue Act of 1917 is hereby repealed, to take effect on July 1, 1919, and thereafter the rate of postage on all mail matter of the first class shall be the same as the rate in force on October 2, 1917: *Provided*, That letters written and *Proviso*. Letters from armed force a broad free.mailed by soldiers, sailors, and marines assigned to duty in a foreign country engaged in the present war may be mailed free of postage, subject to such rules and regulations as may be prescribed by the Postmaster General. Payment to Treasury repealed July 11, 1919. *Ante*, p. 328.Section 1107 of such Act is hereby repealed, to take effect July 11, 1919. Sec. 1402. 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 this 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 has been rendered. Sec. 1403. Revenue Act of 1916. Vol. 39, p. 801, amended. That the Revenue Act of 1916 is hereby amended by adding at the end thereof a section to read as follows: " “Sec. 903. Title declared. That this Act may be cited as the “Revenue Act of 1916. ” " Sec. 1404. Revenue Act of 1917. *Ante*, p. 338, amended. That the Revenue Act of 1917 is hereby amended by adding at the end thereof a section to read as follows: 1151 " “Sec. 1303. That this Act may be cited as the “Revenue Act ofrevenue act of 1918. Title declared. 1917. ” " Sec. 1405. That this Act may be cited as the “Revenue Act ofTitle of this Act. 1918. ” Sec. 1406. That all persons serving in the military or naval forcesPayment of $60 to persons in active armed service during the war, and separated there from. of the United States during the present war who have, since April 6, 1917, resigned or been discharged under honorable conditions (or, in the case of reservists, been placed on inactive duty), or who at any time hereafter (but not later than the termination of the current enlistment or term of service) in the case of the enlisted personnel and female nuises, or within one year after the termination of the present war in the case of officers, may resign or be discharged under honorable conditions (or, in the case of reservists, be placed on inactive duty), shall be paid, in addition to all other amounts due them in pursuance of law, $60 each. This amount shall not be paid
(1)to any person who though appointedPersons not entitled. Not reporting for duty. or inducted into the military or naval forces on or prior to November 11, 1918, had not reported for duty at his station on or prior to such date; or
(2)to any person who has already received oneDischarged with one month’s pay. month’s pay under the provisions of section 9 of the Act entitled “An Act to authorize the President to increase temporarily the military establishment of the United States,” approved May 18, 1917;*Ante*, p. 82. Entitled to retired pay. Heirs, etc. or
(3)to any person who is entitled to retired pay; or
(4)to the heirs or legal representatives of any person entitled to any payment under this section who has died or may die before receiving such payment. In the case of any person who subsequent to separation from the serviceLimited to one separation. as above specified has been appointed or inducted into the military or naval forces of the United States and has been or is again separated from the service as above specified, only one payment of $60 shall be made. The above amount, in the case of separation from the service on orEarly payment required. prior to the passage of this Act, shall be paid as soon as practicable after the passage of this Act, and in the case of separation from the service after the passage of this Act shall be paid at the time of such separation. The amounts herein provided for shall be paid out of the appropriationsAppropriations available. for “pay of the Army” and “pay of the Navy,” respectively, by such disbursing officers as may be designated by the Secretary of War and the Secretary of the Navy. The Secretary of War and the Secretary of the Navy respectively Regulations to be made.shall make all regulations necessary tor the enforcement of the provisions of this section. Sec. 1407. That the provisions of section 5 of the Act entitled “AnIntoxicating liquors. Shipping, into District of Columbia made unlawful. Vol. 39, p. 1069. Act making appropriations for the service of the Post Office Department for the fiscal year ending June 30, 1918, and for other purposes,” approved March 3, 1917, relating to intoxicating liquors in interstate commerce, as amended by section 1110 of an Act entitled “An Act to*Ante*, p, 329. provide revenue to defray war expenses, and for other purposes,” approved October 3, 1917, be, and the same are hereby, made applicable to the District of Columbia. Sec. 1408. That every person who on or after April 6, 1917, hasContracts, etc. Copies of all, for Government work, since April 6, 1917. to be filed with Commissioner on his request. entered into any contract, undertaking, or agreement, with the United States, or with any department, bureau, officer, commission, board, or agency under the United States or acting in its behalf, or with any other person having contract relations with the United States, for the performance of any work or the supplying of any materials or property for the use of or for the account of the United States, shall, within thirty days after a request of the Commissioner therefor, file with the Commissioner a true and correct copy of every such contract, undertaking, or agreement. 1152 revenue act of 1918.Whoever fails to comply with such request of the Commissioner Punishment for failure.shall be guilty of a misdemeanor and shall be punished by a fine of not more than $1,000, or by imprisonment for not more than one year, or both. Complete data thereof to be furnished by departments, etc.The Commissioner shall (when not violative of the technical military or naval secrets of the Government) have access to all information and data relating to any such contract, undertaking, or agreement, in the possession, control or custody of any department, bureau, board, agency, officer or commission of the United States, and may call upon any such department, bureau, board, agency, Statement of adjustments. etc.officer or commission for a full statement and description of any allowance for amortization, obsolescence, depreciation or loss, or of any valuation, appraisal, adjustment or final settlement, made in pursuance of any such contract, undertaking, or agreement. Sec. 1409. Effective date of Act. That unless otherwise herein specially provided, this Act shall take effect on the day following its passage. Approved, 6:55 p. m. February 24, 1919.
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