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If any corporation shall refuse or neglect to make a return at the times required or shall render a false and fraudulent return, it shall be liable to a penalty of not less than $1,000, and not more than $10,000.

1909

Officers of a state imposing a general income tax upon request of the governor may have access to returns or an abstract showing the name and income of each corporation at such times and in such manner as the secretary of the treasury shall prescribe.

If any corporation shall refuse or neglect to make a return at the times required or shall render a false or fraudulent return, it shall be liable to a penalty of not exceeding $10,000.

The word State or United States shall be construed to include any territory, Alaska, the Dist. of Col., Porto Rico and the Philippine Islands when such construction is necessary to carry out the provisions of the act.

PROTECTION OF RETURN.

It shall be unlawful for any United States officer or employee to give any information obtained from reports, documents or examinations in any manner not provided for by law, except upon special direction of the president.

Violation is a dismeanor. Punishment, fine not exceeding $1,000, imprisonment for one year, or both.

1913

It shall be unlawful for any United States officer or employee to give to any person in any manner not provided by law the operations, style of work, or apparatus of any manufacturer or producer visited by him in the discharge of his duty, or the amount or sources of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any income return, or to permit any book containing a return or abstract thereof to be seen or examined by any person except as provided by law, and it

Any person authorized by law to make a return who makes a false of fraudulent return shall be guilty of a misdemeanor. Penalty, a fine not exceeding $1,000, imprisonment not exceeding one year, or both, at the discretion of the court with costs of prosecution.

All laws relating to the collection, remission, or refund of taxes, so far as applicable, are extended to the corporation tax.

Jurisdiction is conferred upon the circuit or district courts in which any person summoned to produce books or to testify resides, to compel such attendance and production of books and testimony by appropriate process.

shall be unlawful to print or publish in any manner not provided by law any return or part thereof or the amount or source of income, profits, losses or expenditures appearing.

Violation. Misdemeanor.

Penalty, fine not exceeding $1,000, or imprisonment for one year, or both, dismissal of a government officer or employee from office and disqualification from subsequently holding office.

All administrative, special, and general provisions of law, including the laws in relation to the assessment, remission, collection and refund of internal revenue taxes not heretofore specifically repealed and not inconsistent, are hereby extended and made applicable to all the provisions of this section.

Jurisdiction is conferred upon district courts of residence of witness to compel production of books and attendance of witness.

The provisions of the act extend to Porto Rico and the Philippine Islands.

DIGEST OF FEDERAL CORPORATION TAX DECISIONS UNDER THE ACT OF 1909

Under the 1913 act it is immaterial whether a corporation is or is not engaged in business. Any corporation having an income and not exempt under the statute, is taxable, hence cases turning upon this point are deprived of their force by the present statute. The cases holding such corporations not taxable under the Act of 1909, are, therefore, no longer applicable. Neither are the cases applicable holding taxes on real estate and on the income from real estate direct taxes. The sixteenth amendment to the Constitution ratified in 1913, provided as follows:

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

Prior to the ratification of the sixteenth amendment, Article 1, Section 9 provided: "No capitation or other direct tax shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken" and under the Income Tax Law of 1909, it was held that taxes on real estate being direct taxes, taxes on rents or income thereof were also direct taxes. Emery, etc. Co. v. U. S. 198 Fed. 242.

The ratification of the sixteenth amendment to the Constitution of the United States has now disposed of this question.

CORPORATIONS ENGAGED IN BUSINESS AND SUBJECT TO THE TAX UNDER THE ACT OF 1909

Corporations engaged in leasing property, collecting rents, managing office buildings, making investments of profits or leasing ore lands and collecting royalties, managing wharves, dividing profits, and in some cases investing the surplus, are

engaged in business within the meaning of the Corporation Tax Law. Flint v. Stone Tracy Co., 202 U. S. 107.

A corporation owning and leasing taxicabs and collecting rents therefrom is engaged in business within the meaning of the Corporation Tax Law. Flint v. Stone Tracy Co., 220 U. S. 107.

Public-service corporations, such as street railway companies created under state laws, are subject to the Corporation Tax Law. Flint v. Stone Tracy Co., 220 U. S. 107.

Corporations acting as trustees, guardians, etc., under the authority of the laws or courts of a state, are not the agents of the state government in such a sense as to be exempt from the imposition under the Corporation Tax Law. Flint v. Stone Tracy Co., 220 U. S. 107.

Exemptions under the Act of 1909.

Receivers appointed by the court and administering corporate property for the benefit of creditors are not liable for the corporation tax. Penn. Steel Co. v. N. Y. City Ry. Co., 193 Fed. 286. See also U. S. v. Whitridge, Receiver, U. S. Sup. Ct., Oct. Term, 1913. It is to be noted in connection with the two last-named cases that the present Income Tax Law is levied on corporations deriving an income, whether engaged in business

or not.

Associations held to be exempt as mutual associations.

A building and loan association organized solely for the purpose of making loans to its members, who were entitled to a vote by virtue of membership and not by reason of holding stock is an association for the mutual benefit of its members, although the returns to the members might be unequal, the word "mutual" not being anonymous with equal, as such it is exempt from the corporation tax under Sec. 38. Parkview B. & L. Assn. v. Herold, 203 Fed. 876; Dist. C. N. J.

Associations held not to be exempt as mutual associations.

A building and loan association which loaned funds to nonmembers, issued guaranteed interest paying stock, etc., is not a building and loan association organized exclusively for the benefit of its members and entitled to exemption from the corporation tax. Pacific B. & L. Assn. v. Harison, 201 Fed. 1011, Wash.

Return-penalty for failure to make it.—

A corporation engaged in business during a calendar year cannot evade the corporation tax by dissolving before the time when it is required to make a return.

Where under a state statute dissolved corporations are authorized to continue as such for the purpose of winding up their affairs, their officers should make a return. U. S. v. Gen. Inspection, etc., 192 Fed. 223.

All corporations of the kind specified in the corporation tax act are required to file annual returns even though their net profits are insufficient to render them liable to the tax.

U. S. v. Military Construction Co., 204 Fed. 153.

U. S. v. Acorn Roofing Co., 204 Fed. 157, D.C.E.D. N. Y.

The corporation tax act prescribes that any corporation failing to make a return or presenting a false and fraudulent one shall be subject to a penalty of not less than $1,000, nor more than $10,000. Where a civil action was brought before a jury to recover the penalty, held that the jury must fix the amount of the penalty not less than the minimum, the only remedy of the corporation being appeal or an application to the commissioner of internal revenue or the secretary of the Treasury for a compromise, a motion to set aside the verdict must accordingly be denied.

U. S. v. Acorn Roofing Co., 204 Fed. 157.

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