KF6356.5 C 2:M71 Un ' VerSi,yLibrary Th iHiiV n ' ted states '"come tax law .-(appro 3 1924 017 941 836 (flnnwU iOaui ^rJjflol Cibratg <$tft of ALISON CASAEETT THE UNITED STATES INCOME TAX LAW (Approved October 3, 1913) Introductory Note, Paragraph Headings, Marginal Notes and Index Prepared By BARRY MOHUN COUNSELLOR AT LAW Union Trust Bldg. Washington, D. C. THE C UNITED STATES INCOME TAX LAW (Approved October 3, 1913) Introductory Note, Paragraph Headings, Marginal Notes and Index Prepared By BARRY MOHUN COUNSELLOR AT LAW Union Trust Bldg. Washington, D. C. Copyright, 1914 BY BAREY MOHUN PBB8C OF BYRON 6. ADAMS. WASH. D CONTENTS Page Introductory Note v Sixteenth Amendment of the Constitution 1 Income Tax Law 1 Index 30 The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924017941836 INTRODUCTORY NOTE Pursuant to the provisions of the Sixteenth Amendment of the Federal Constitution the Income Tax Law was enacted by the Con- gress. The law, which constitutes -the second part of the recent tariff law, entitled "An Act to Reduce Tariff Duties and to Provide Revenue for the Government and for Other Purposes" (Public No. 16), was approved by the President on Octobr 3, 1913, and took effect on the following day. Under its terms the net incomes of individuals and of corporations, joint-stock companies, associations and insurance companies are subject to the tax, but upon the latter class there is not imposed the "additional tax" as is the case with individuals. Undoubtedly there will be raised many interesting and impor- tant questions concerning the law and its interpretation by the Treas- ury Department. It would be beyond the purposes of this publica- tion to enter into a discussion even of such questions as may have already suggested themselves ; it would seem suffice to state now that all payments of income taxes should be accompanied by a for- mal protest. So many requests have come to me from attorneys and clients for information concerning the requirements of the law that I con- cluded to issue this edition, with paragraph headings, marginal notes and a fairly copious index in the hope of being able to assist to a better understanding of the duties and liabilities under the law of individuals and corporations receiving taxable incomes. Barry Mohtjn. THE UNITED STATES INCOME TAX LAW. Approved October 3, 1913. THE CONSTITUTIONAL AMENDMENT. The Sixteenth Amendment of the Constitution, which by procla- mation of the Secretary of State of February 25, 1913, was declared to have been ratified by the proper number of States, is as follows : \ "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived with- out apportionment among the several States, and with- out regard to any census or enumeration." THE INCOME TAX LAW. The Income Tax Law contained in "An Act to Reduce Tariff Duties and to provide revenue for the Government and for other purposes" Approved by the President October 3, 1913, is as follows: Section II. [Public No. 16.] The Normal Income Tax and Those Subject Thereio. A. Subdivision 1. That there shall be levied, assessed, collected and paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year to every citizen of the United States, whether residing at home or abroad, and to every person residing, in the United States, though not a citizen thereof, a tax of 1 per centum per annum upon such income, except as hereinafter provided; and a like tax shall be assessed, levied, collected, and paid annually upon the entire net income from all property owned and of every business, trade, or profession carried on in the United States by persons residing elsewhere. Tax of 1% on net income of all persons residing in U. S. and of citizens thereof residing abroad, and like tax upon income from all property, businesses or profes- sions carried on in U. S. by persons re- siding elsewhere. Additional income tax of 1% upon in- comes between $20,000 and $50,000. 2% upon incomes be- tween $50,000 and $75,000. 3% upon in- comes between $75,- 000 and $100,000. 4% upon incomes between $100,000 and $250,- 000. 5% upon in- comes between $250,- 000 and $500,000. 6% upon incomes in excess of $500,000. Provisions relating to normal tax ap- plicable to additional tax. Personal returns required of total net income from all sources, corporate and otherwise. Includes gains and profits of corpora- tions, joint-stock com- panies or associa- tions whether distrib- uted or not, or formed or fraudu- lently availed of for the purpose of eva- ding the tax. The Additional Income Tax and Rates Thereof. Provisions Relating to Normal Tax Applicable. Returns Must Show Income from All Sources. Corporations, Joint Stock Companies or Associations Formed for Fraudu- lent Purposes. Holding Companies. Accumulation of Profits and Surplus. Certification by Secretary of the Treasury. Statements of Profits to be Furnished Com- missioner of Internal Revenue on Request. Subdivision 2. In addition to the income tax provided under this section (herein referred to as the normal income tax) there shall be levied, assessed, and collected upon the net income of every in- dividual an additional income tax, herein referred to as the ad- ditional tax) of 1 per centum per annum upon the amount by which the total net income exceeds $20,000 and does not exceed $50,000, and 2 per centum per annum upon the amount by which the total net income exceeds $50,000 and does not exceed $75,000, 3 per centum per annum upon the amount by which the total net income exceeds $75,000 and does not exceed $100,000, 4 per centum per annum upon the amount by which the total net income exceeds $100,000 and does not exceed $250,000, 5 per centum per annum upon the amount by which the total net income exceeds $250,000 and does not exceed $500,000, and 6 per centum per annum upon the amount by which the total net income exceeds $500,000. All the provisions of this section relating to individuals who are to be chargeable with the normal income tax, so far as they are appli- cable and are not inconsistent with this subdivision of paragraph A, shall apply to the levy, assessment, and collection of the ad- ditional tax imposed under this section. Every person subject to this additional tax shall, for the purpose of its assessment and collection, make a personal return of his total net income from all sources, corporate or otherwise, for the preceding calendar year, under rules and regulations to be prescribed by the Commissioner of Internal Revenue and approved by the Secretary of the Treasury. For the purpose of this additional tax the taxable income of any individual shall embrace the share to which he would be entitled of the gains and profits, if divided or distributed, whether divided or distributed or not, of all corporations, joint-stock companies, or associations however created or organized, formed or fraudulently availed of for the purpose of preventing the imposition of such tax through the medium of permitting such gains and profits to accumulate instead of being divided or distributed; and the fact that any such corporation, joint-stock company, or association, 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 fraudulent purpose to escape such tax; but the fact that the gains and profits are in any case permitted to accumulate and become surplus shall not be construed as evidence of a purpose to escape the said tax in such case unless the Secretary of the Treasury shall certify that in his opinion such accumulation is unreasonable for the purposes of the business. When requested by the Commissioner of Internal Revenue, or any district collector of internal revenue, such corporation, joint-stock company, or associ- ation shall forward to him a correct statement of such profits and the names of the individuals who would be entitled to the same if distributed. If a mere holding company or if gains and profits allowed to accumulate beyond needs of business, deemed prima facie evidence of fraudu- lent purpose. Certification by Secretary of Treas- ury that accumula- tions toward surplus unreasonable. When requested by Commissioner of In- ternal Revenue, must furnish statement showing such profits and names of those who would be enti- tled thereto if dis- tributed. What Net Income Shall Include. Property Inherited Not Included. Proceeds of Life Insurance Policies Received Prior or Subsequent to Death of Insured Not Included. Deductions Allowed in Computing Net Income for Nor- mal Tax. Net Income from Property or Business Con- ducted in United States by Persons Residing Elsewhere Must be Included. Interest Upon Obligations of Any State, the United States or Its Possessions and the Present President's Salary and Those of Federal Judges Now in Office, Excluded. B. That, subject only to such exemptions and deductions as are hereinafter allowed, the net income of a taxable person shall include gains, profits and incomes derived from salaries, wages, or compen- sation for personal service of whatever kind and in whatever form paid, or from professions, vocations, business, trade, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in real or personal property, also from interest, rent, dividends, securities, or the trans- action of any lawful business carried on for gain or profit, or gains or profits and income derived from any source whatever, including the .income from but not the value of property acquired by gift, bequest, devise, or descent: Provided, That the proceeds of life insurance policies paid upon the death of the person insured or payments made by or credited to the insured, on life insurance, endowment, or annuity contracts, upon the return thereof to. the Net income shall include gains, profits and income from sal- aries, wages, compen- sation for personal services, from pro- fessions, business of all kinds, including sales and dealings in real and personal property. Also inter- est, rent, dividends, etc. Inheritances eluded. Proceeds of life insurance policies ex- cluded. Deductions from net income for nor- mal tax. Business expenses, interest on indebted- ness, national, state, county, school and municipal taxes ex- clusive of those for local benefits, losses in trade and from fire, storm and ship- wreck not insured, worthless. debts charged off, deprecia- tioi of property, and 5 •; ? of the value of the output of mines. No deductions for restoring property. No deductions for new buildings. Deductions of divi- dends from taxable corporations. Income, the tax upon which has been paid or withheld at the source, not in- cluded. Computation of net Income on property or business in U. S. conducted by persons residing elsewhere. insured at the. maturity of the term mentioned in the contract, or upon surrender of contract, shall not be included as income. That in computing net income for the purpose of the normal tax there shall be allowed as deductions : First, the necessary expenses actually paid in carrying on any business, not including personal, living, or family expenses; second, all interest paid within the year by a taxable person on indebtedness ; third, all national, State, coun- ty, school and municipal taxes paid within the year, not including those assessed against local benefits ; fourth, losses actually sustained during the year, incurred in trade or arising from fires, storms, or shipwreck, and not compensated for by insurance or otherwise ; fifth, debts due to the taxpayer actually ascertained to be worthless and charged off within the year; sixth, a reasonable allowance for the exhaustion, wear and tear of property arising out of its use or employment in the business, not to exceed, in the case of mines, 5 per centum of the gross value at the mine of the output for the year for which the computation is made, but no deduction shall be made for any amount of expense of restoring property or making good the exhaustion thereof for which an allowance is or has been made : Provided, That no deduction shall be allowed for any amount paid out for new buildings, permanent improvements, or betterments, made to increase the value of any property or estate ; seventh, the amount received as dividends upon the stock or from the net earnings of any corporation, joint stock company, association or insurance company which is taxable upon its net income as hereinafter provided; eighth, the amount of income, the tax upon which has been paid or withheld for payment at the source of the income, under the provisions of this section, provided that whenever the tax upon the income of a person is required to be withheld and paid at the source as hereinafter required, if such annual income does not exceed the sum of $3,000 or is not fixed or certain, or is indefinite, or irregular as to amount or time of accrual, the same shall not be deducted in the personal return of such person. The net income from property owned and business carried on in the United States by persons residing elsewhere shall be computed upon the basis prescribed in this paragraph and that part of para- graph G of this section relating to the computation of the net in- come of corporations, joint-stock and insurance companies, or- ganized, created, or existing under the laws of foreign countries in so far as applicable. That in computing net income under this section there shall be excluded the interest upon the obligations of a State or any political subdivision thereof, and upon the obligations of the United States or its possessions also the compensation of the present President of the United States during the term for which he has been elected, and of the judges of the supreme and inferior courts of the United States now in office, and the compensation of all officers and employees of a State or any political subdivision thereof except when such compensation is paid by the United States Government. Exclusion of t in- come from obliga- tions of a State, the U. S. and posses- sions, salary of Pres- ident and Federal Judges. Deductions in Cases of Single and Married Persons. C. That there shall be deducted from the amount of the net in- come of each of said persons, ascertained as provided herein, the sum of $3,000, plus $1,000 additional if the person making the return be a married man with a wife living with him, or plus the sum of $1,000 additional if the person making the return be a married woman with a husband living with her; but in no event shall this additional exemption of $1,000 be deducted by both a husband and a wife : Provided, That only one deduction of $4,000 shall be made from the aggregate income of both husband and wife when living together. (Deduction of $3,000 for single persons and $1,000 additional for married persons. Aggregate deduction not to exceed $4,000. Tax Computed on Remainder of Net Income During Calen- dar Year. Accurate Returns Under Oath to be Filed. What the Returns Must Contain. Guardians, Trus- tees, etc., Must Filed Returns. Returns to be Filed by Those Required to Withhold Income at the Source. Partnerships as Such Not Liable to the Tax. Dividends or Income from Net Earnings of Corporations, etc., Liable to the Tax Need Not be Included in Returns of Persons Liable for Normal Tax Only. Duty of Col- lector Where He Believes Income is Understated Submission of Case to Commissioner of Internal Rev- enue. Sworn Testimony of Witnesses May be Received. D. The said tax shall be computed upon the remainder of said net income of each person subject thereto, accruing during each preceding calendar year ending December thirty-first: Provided, however, That for the year ending December thirty-first, nineteen hundred and thirteen, said tax shall be computed on the net income accruing from March first to December thirty-first, nineteen hun- Tax on remainder of net income for each calendar year. For year 1913 from Mch. 31 to Dec. 31 and 5-6 of specific deductions to be made. Return to be filed by all persons hav- ing net income of $3,000 or over with collector on or be- for Mch. 1st of each year. Form of return. Gross income from all sources to be shown and deductions to be made. Guardians and all persons acting in fi- duciary capacity to make returns. By one of several suffi- cient. All persons, firms, corporations, etc., having the control, receipt or payment of income of another subject to the nor- mal tax, shall make a return and with- hold said tax. dred and thirteen, both dates inclusive, after deducting five-sixths only of the specific exemptions and deductions herein provided for. On or before the first day of March, nineteen hundred and four- teen, and the first day of March in each year thereafter, a true and accurate return, under oath or affirmation, shall be made by each person of lawful age, except as hereinafter provided, subject to the tax imposed by this section, and having a net income of $3,000 or over for the taxable year, to the collector of internal revenue for the district in which such person resides or has his principal place of business, or, in the case of a person residing in a foreign country, in the place where his principal business is carried on within the United States, in such form as the Commissioner of Internal Rev- enue, with the approval of the Secretary of the Treasury, shall prescribe, setting forth specifically the gross amount of income from all separate sources and from the total thereof, deducting the aggregate items or expenses and allowance herein authorized; guardians, trustees, executors, administrators, agents, receivers, conservators, and all persons, corporations, or associations acting in any fiduciary capacity, shall make and render a return of the net income of the person for whom they act, subject to this tax, coming into their custody or control and management, and be sub- ject to all the provisions of this section which apply to individuals : Provided, That a return made by one or two or more joint guar- dians, trustees, executors, administrators, agents, receivers, and conservators, or other persons acting in a fiduciary capacity, filed in the district where such person resides, or in the district where the will or other instrument under which he acts is recorded, under such regulations as the Secretary of the Treasury may prescribe, shall be a sufficient compliance with the requirements of this para- graph ; and also all persons, firms, companies, copartnerships, cor- porations, joint-stock companies or associations, and insurance companies, except as hereinafter provided, in whatever capacity acting, having the control, receipt, disposal, or payment of fixed or determinable annual or periodical gains, profits, and income of another person subject to tax, shall in behalf of such person de- duct and withhold from the payment an amount equivalent to the normal income tax upon the same and make and render a return, as aforesaid, but separate and distinct, of the portion of the in- come of each person from which the normal tax has been thus withheld, and containing also the name and address of such person or stating that the name and address or the address, as the case may be, are unknown: Provided, That the provision requiring the normal tax of individuals to be withheld at the source of the in- come shall not be construed to require any of such tax to be with- held prior to the first day of November, nineteen hundred and thir- teen : Provided further, That in either case above mentioned no return of income not exceeding $3,000 shall be required : Provided further, That any persons carrying on business in partnership shall be liable for income tax only in their individual capacity, and the share of the profits of a partnership to which any taxable partner would be entitled, if the same were divided, whether divided or otherwise, shall be returned for taxation and the tax paid, under the provisions of this section, and any such firm, when requested by the Commissioner of Internal Revenue, or any district collector, shall forward to him a correct statement of such profits and the names of the individuals who would be entitled to the same, if distributed : Provided further, That persons liable for the normal income tax only, on their own account or in behalf of another, shall not be required to make return of the income derived from dividends on the capital stock or from the net earnings of corpora- tions, joint-stock companies or associations, and insurance com- panies taxable upon their net income as hereinafter provided. Any person for whom return has been made and the tax paid, or to be paid as aforesaid, shall not be required to make a return unless such person has other net income, but only one deduction of $3,000 shall be made in the case of any such person. The collector or deputy collector shall require every list to be verified by the oath or affirmation of the party rendering it. If the collector or deputy collector have reason to believe that the amount of any income returned is understated, he shall give due notice to the person making the return to show cause why the amount of the return should not be increased, and upon proof of the amount understated may increase the same accordingly. If dissatisfied with the decision of the collector, such person may submit the case, with all the papers, to the Commissioner of Internal Revenue for his decision, and may furnish sworn testimony of witnesses to prove any rele- vant facts. Normal tax not to be withheld on in- come prior to Nov. 1, 1913. No return required where income less than $3,000. Members of part- nership liable to the tax individually and on profits whether divided or not. Firm to make re- turn when requested by collector or com- missioner. Dividends on stock or from the net earnings of corpo- rations, etc., need not be included in returns of persons liable to normal tax only. Person having no other income and tax withheld at source need not make a re- turn. Return to be veri- fied by oath or affir- mation. Procedure where collector believes in- come is understated. Submission of case to Comr. of Int. Rev. Sworn testimony of witnesses may be furnished. 8 Assessments to be made by Comr. of Int. Rev. and all persons notified of amount for which they are liable on or before June 1. Tax to be paid on or before June 30. Where no return filed or a false or fraudulent one Comr. of Int. Rev. may make same at any time within three years. All Assessments to be Made by Commissioners of Internal Revenue and all Persons Liable to the Tax to be Noti- fied Thereof. Tax Payable June 30, of Each Year. Com- missioner to Make Return When None Made or Fraud- ulent Return Filed. Penalty for Non-Payment of Tax. Those Required to Withhold Tax at Source Made Personally Liable Therefor. Method of Obtain- ing Reduction of $3,000 if Single and of $4,000 if Mar- ried Where Tax Withheld at Source. Penalty for False or Fraudulent Statement for This Purpose. Method of Obtaining Reduction Allowed in Subsection B Where Tax Withheld at Source. When Person Withholding Tax May Make Return for Person Liable Therefor. Normal Tax to be Deducted from Fixed and Determinable Gains from Bonds, Mortgages and Similar Obligations of Corporations, etc., Although Such Income Amount to Less Than $3,000 and the Same With Respect of Interest on Bonds of Foreign Coun- tries, Foreign Mortgages, and Dividends on Stock of Foreign Corporations, etc., Such Deductions to be Made by any Banker, Broker or Other Person Who May Realize on Such Income. In All Such Cases the Pro- vided Exemptions May be Availed of by Compliance With the Provisions of the Paragraph. Persons or Firms Undertaking as a Business or for Profit the Col- lection of Income from Foreign Sources Must Obtain License from Commissioner of Internal Revenue and be Subject to Regulations Made by Him. Penalty for Doing Such Business Without a License. Contracts Pertaining to Federal Income Tax Law Made After it Took Effect Invalid. When Tax to be Assessed by Personal Return. Provisions Respecting Withholding Tax at Source Apply Only to the Normal Tax. E. That all assessments shall be made by the Commissioner of Internal Revenue and all persons shall be notified of the amount for which they are respectively liable on or before the first day of June of each successive year, and said assessments shall be paid on or before the thirtieth day of June, except in cases of refusal or neglect to make such return and in cases of false or fraudu- lent returns, in which cases the Commissioner of Internal Revenue shall, upon the discovery thereof, at any time within three years after said return is due, make a return upon information obtained as provided for in this section or by existing law, and the assess- ment made by the Commissioner of Internal Revenue thereon shall be paid by such person or persons immediately upon notification of the amount of such assessment; and to any sum or sums due and unpaid after the thirtieth day of June in any year, and for ten days after notice and demand thereof by the collector, there shall be added the sum of 5 per centum on the amount of tax unpaid, and interest at the rate of 1 per centum per month upon said tax from the time the same became due, except from the estates of insane, deceased, or insolvent persons. All persons, firms, copartnerships, companies, corporations, joint- stock companies or associations, and insurance companies, in what- ever capacity acting, including lessees or mortgagors of real or per- sonal property, trustees acting in any trust, capacity, executors, administrators, agents, receivers, conservators, employers, and all officers and employees of the United States having the control, receipt, custody, disposal, or payment of interest, rent, salaries, wages, premiums, annuities, compensation, remuneration, emolu- ments, or other fixed or determinable annual gains, profits, and in- come of another person, exceeding $3,000 for any taxable year, other than dividends on capital stock, or from the net earnings of corporations and joint-stock companies or associations subject to like tax, who are required to make and render a return in behalf of another, as provided herein, to the collector of his, her, or its district, are hereby authorized and required to deduct and withhold from such annual gains, profits, and income such sum as will be sufficient to pay the normal tax imposed thereon by this section, and shall pay to the officer of the United States Government au- thorized to receive the same ; and they are each hereby made per- sonally liable for such tax. In all cases where the income tax of a person is withheld and deducted and paid or to be paid at the source, as aforesaid, such person shall not receive the benefit of the deduction and exemption allowed in paragraph C of this section except by an application for refund of the tax unless he shall, not less than thirty days prior to the day on which the return of his income is due, file with the person who is required to withhold and pay tax for him, a signed notice in writing claiming the benefit of such exemption and thereupon no tax shall be withheld upon the amount of such exemption: Provided, That if any person for the purpose of obtaining any allowance or reduction by virtue of a claim for such exemption, either for himself or for any other per- Assessment to be paid immediately up- on notification. Penalties, 5% and 1% monthly. Who to withhold income at the source. Provided the in- come exceed $3,000 per annum exclusive of dividends and net earnings of corpora- tions, etc. Required to deduct and withhold normal tax and pay same to United States. Method of ob- taining exemptions in Par. C. Penalty of $300 for false or fraudu- lent representation. 10 Method of obtain- ing exemptions in Par. B. When persons with- holding tax may make return for per- son liable therefor. When normal tax to be withheld al- though annual income less than $3,000. Normal tax to be withheld where in- come received from interest on bonds of foreign countries, for- eign mortgages, etc., not payable in Uni- ted States; also divi- dends or interest from stock of obliga- tions of foreign cor- porations although such income be less than $3,000. son, knowingly makes any false statement or false or fraudulent representation, he shall be liable to a penalty of $300 ; nor shall any person under the foregoing conditions be allowed the benefit of any deduction provided for in subsection B of this section unless he shall, not less than thirty days prior to the day on which the return of his income is due, either file with the person who is required to withhold and pay tax for him a true and correct return of his an- nual gains, profits, and income from all other sources, and also the deductions asked for, and the showing thus made shall then become a part of the return to be made in his behalf by the person required to withhold and pay the tax. or likewise make application for de- ductions to the collector of the district in which return is made or to be made for him: Proznded further, That if such person is a minor or an insane person, or is absent from the United States, or is unable owing to serious illness to make the return and applica- tion above provided for, the return and application may be made for him or her by the person required to withhold and pay the tax, he making oath under the penalties of this Act that he has sufficient knowledge of the affairs and property of his beneficiary to enable him to make a full and complete return for him or her, and that the return and application made by him are full and com- plete : Provided further, That the amount of the normal tax herein- before imposed shall be deducted and withheld from fixed and de- terminable annual gains, profits, and income derived from interest upon bonds and mortgages, or deeds of trust or other similar ob- ligations of corporations, joint-stock companies or associations, and insurance companies, whether payable annually or at shorter or longer periods, although such interest does not amount to $3,000, subject to the provisions of this section requiring the tax to be withheld at the source and deducted from annual income and paid to the Government; and likewise the amount of such tax shall be deducted and withheld from coupons, checks, or bills of exchange for or in payment of interest upon bonds of foreign countries and upon foreign mortgages or like obligations (not payable in the United States), and also from coupons, checks, or bills of exchange for or in payment of any dividends upon the stock or interest upon the obligations of foreign corporations, associations, and insurance companies engaged in business in foreign countries; and the tax in each case shall be withheld and deducted for and in behalf of any person subject to the tax hereinbefore imposed, although such 11 interest, dividends, or other compensation does not exceed $3,000, by any banker or person who shall sell or otherwise realize coupons, checks, or bills of exchange drawn or made in payment of any such interest or dividends (not payable in the United States), and any person who shall obtain payment (not in the United States), in behalf of another of such dividends and interest by means of coupons, checks, or bills of exchange, and also any dealer in such coupons who shall purchase the same for any such dividends or interest (not payable in the United States), otherwise than from a banker or another dealer in such coupons ; but in each case the bene- fit of the exemption and the deduction allowable under this section may be had by complying with the foregoing provisions of this paragraph. All persons, firms, or corporations 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 ex- change shall obtain a license from the Commissioner of Internal Revenue, and shall be subject to such regulations enabling the Government to ascertain and verify the due withholding and pay- ment of the income tax required to be withheld and paid as the Commissioner of Internal Revenue, with the approval of the Sec- retary of the Treasury, shall prescribe; and any person who shall knowingly undertake to collect such payments as aforesaid with- out having obtained a license therefor, or without complying with such regulations, shall be deemed guilty of a misdemeanor and for each offense be fined in a sum not exceeding $5,000, or im- prisoned for a term not exceeding one year, or both, in the dis- cretion of the court. Nothing in this section shall be construed to release a taxable person from liability for income tax, nor shall any contract entered into after this Act takes effect be valid in regard to any Federal income tax imposed upon a person liable to such payment. The tax herein imposed upon annual gains, profits, and income not falling under the foregoing and not returned and paid by virtue of the foregoing shall be assessed by personal return under rules and regulations to be prescribed by the Commissioner of Internal Revenue and approved by the Secretary of the Treasury. The provisions of this section relating to the deduction and pay- ment of the tax at the source of income shall only apply to the normal tax hereinbefore imposed upon individuals. Deduction to be made by any banker or person who real- izes thereon or ob- tains payment thereof on behalf of another. Deductions allowed in paragraph may be obtained by compli- ance therewith. License required for those engaging in business of collecting foreign payments, from Comr. of Int. Rev. Subject to regulations by Comr. Fine of $5,000 for pro- ceeding without a li- cense or violating regulations. Nothing herein to be construed to re- lease a taxable per- son from the tax. No contract pertaining to tax to be valid if made subsequent to act taking effect. Any imposed tax not falling under foregoing to be as- sessed under personal return under rules and regulations of Comr. of Int. Rev. Provisions respect- ing deduction of tax at the source apply only to normal tax. 12 Penalty of from $20 to $1,000 for failure to make the return or pay the tax. Misdemeanor if false or fraudulent return is made. Fine of $2,000, or impris- onment of one year or both. Penalty for Refusal or Neglect to Make the Return or Pay the Tax and for Making a False or Fraudulent Return. F. That if any person, corporation, joint-stock company, associa- tion, or insurance company liable to make the return or pay the tax aforesaid shall refuse or neglect to make a return at the time or times hereinbefore specified in each year, such person shall be liable to a penalty of not less than $20 nor more than $1,000. Any per- son or any officer of any corporation required by law to make, ren- der, sign, or verify any return who makes any false or fraudulent return or statement with intent to defeat or evade the assessment required by this section to be made shall be guilty of a misdemeanor, and shall be fined not exceeding $2,000 or be imprisoned not ex- ceeding one year, or both, at the discretion of the court, with the costs of prosecution. Normal Tax Levied Upon Entire Net Income of Every Cor- poration, Joint-Stock Company or Association and Every Insurance Company Organized in the United States and if Organized Elsewhere Then Upon Income from Business Transacted in the United States. Ex- emption of Labor, Fraternal, Charitable and Similar Corporations, Organizations or Associations. How Such Net Income Ascertained in Cases of Domestic and For- eign Corporations, etc. Tax Imposed Upon Entire Net Income Accrued Within Each Calendar Year. May Designate Last Day of any Month as End of Fiscal Year. Returns Must Be Filed on or Before March First of Each Year, Exceptions. What Must Be Shown in Returns by Foreign Corporations, etc. Notification of Assessment on or Before June First of Each Year and Tax to be Paid on or Before June Thirtieth. Pro- visions Governing Where a Fiscal Year Other Than the Calendar Year is Designated. Penalty for Non- Payment. Returns Only to be Inspected Upon Order of the President. Penalties Provided for Failure to File a Return and for False or Fraudulent Returns. corporations, joint G. (a) That the normal tax hereinbefore imposed upon indi- stock companies or v _ r f '""' associations and in- viduals likewise shall be levied, assessed, and paid annuallv unon surance companies li- t r J i*^.v*i able to normal tax tfie entire net income arising or accruing from all sources during net income. the preceding calendar year to every corporation, joint-stock com- 13 pany or association, and every insurance company, organized in the United States, no matter how created or organized, not including partnerships; but if organized, authorized, or existing under the laws of any foreign country, then upon the amount of net income accruing from business transacted and capital invested within the United States during such year : Provided, however, That nothing in this section shall apply to labor, agricultural, or horticultural organizations, or to mutual savings banks not having a capital stock represented by shares, or to fraternal beneficiary societies, orders, or associations operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system, and providing for the payment of life, sick, accident, and other benefits to the members of such societies, orders, or as- sociations and dependents of such members, nor to domestic build- ing and loan associations, nor to cemetery companies, organized and operated exclusively for the mutual benefit of their members, nor to any corporation or association organized and operated ex- clusively for religious, charitable, scientific, or educational pur- poses, no part of the net income of which inures to the benefit of any private stockholder or individual, nor to business leagues, nor to chambers of commerce or boards of trade, not organized for profit or no part of the net income of which inures to the benefit of the private stockholder or individual ; nor to any civic league or organ- ization not organized for profit, but operated exclusively for the promotion of social welfare : Provided further, That there shall not be taxed under this section any income derived from any public utility or from the exercise of any essential governmental function accruing to any State, Territory, or the District of Columbia, or any political subdivision of a State, Territory or the District of Columbia, nor any income accruing to the government of the Phil- ippine Islands or Porto Rico, or of any political subdivision of the Philippine Islands or Porto Rico; Provided, That whenever any State, Territory, or the District of Columbia, or any political sub- division of a State or Territory, has, prior to the passage of this Act, entered in good faith into a contract with any person or cor- poration, 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 Act upon the income derived from the opera- tion of such public utility, so far as the 'payment thereof will im- pose a loss or burden upon such State, Territory, or the District of Columbia, or a political subdivision of a State or Territory; but If organized in foreign company then tax on income from business conducted in U. S. Section not applica- ble to labor, agricul- tural, or horticultural organizations, mutual savings banks with- out capital stock rep- resented by shares, fraternal societies, etc., operating under the lodge system and providing for pay- ment of life, sick, ac- cident or other bene- fits, domestic build- ing and loan asso* ciations, certain cem- etery companies, cor- porations operated exclusively for re- ligious, charitable, scientific or educa- tional purposes when no lincome goes to private stockholders, nor to business or civic leagues, etc. Income from public utilities exempt. Also income ac- cruing, to any State, Territory, or the Dis- trict of Columbia, Philippine Islands, Porto ■ Rico, or any subdivision thereof. Contracts respect- ing public utilities, when income from exempt. 14 Method of ascer- taining net income of corporation, j oint- stock company or as- sociation or insurance company (domestic) . Deductions permitted. First. Ordinary and necessary expenses. Second. Losses ac- tually sustained and not compensated by insurance, wear and tear, for depletion of mines, addition to re- serve funds of in- surance companies, provisions respecting mutual fire insur- ance companies, mu- tual marine insurance companies and life insurance companies. Third. Interest ac- crued and paid on account of indebted- ness, proviso. this provision is not intended to confer upon such person or cor- poration any financial gain or exemption or to relieve such person or corporation from the payment of a tax as provided for in this section upon the part or portion of the said income to which such person or corporation shall be entitled under such contract. (b) Such net income shall be ascertained by deducting from the gross amount of the income of such corporation, joint-stock company or association, or insurance company, received within the year from all sources (first) all the ordinary and necessary ex- penses paid within the year in the maintenance and operation of its business and properties, including rentals or other payments re- quired to be made as a condition to the continued use or possession of property; (second) all losses actually sustained within the year and not compensated by insurance or otherwise, including a reason- able allowance for depreciation by use, wear and tear of property; if any; and in the case of mines a reasonable allowance for deple- tion of ores and all other natural deposits, not to exceed 5 per centum of the gross value at the mine of the output for the year for which the computation is made ; and in case of insurance companies the net addition, if any, required by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and annuity contracts : Provided, That mutual fire in- surance companies requiring their members to make premium de- posits to provide for losses and expenses shall not return as income any portion of the premium deposits returned to their policyhold- ers, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are retained by the companies for purposes other than the pay- ment of losses and expenses and reinsurance reserves: Provided further. That mutual marine insurance companies shall include in their return of gross income gross premiums collected and received bv them less amounts paid for reinsurance, but shall be entitled to include in deductions from gross income amounts repaid to policy- holders on account of premiums previously paid by them and inter- est paid unon such amounts between the ascertainment thereof and the payment thereof and life insurance companies shall not include as income in any year such portion of any actual premium received from anv individual policyholder as shall have been paid back or credited to such individual policvholder, or treated as an abatement of premium of such individual policyholder, within such year- (third) the amount of interest accrued and paid within the year on 15 its indebtedness to an amount of such indebtedness not exceeding one-half of the sum of its interest bearing indebtedness and its paid-up capital stock outstanding at the close of the year, or if no capital stock, the amount of interest paid within the year on an amount of its indebtedness not exceeding the amount of capital em- ployed in the business at the close of the year: Provided, That in case of indebtedness wholly secured by collateral the subject of sale in ordinary business of such corporation, joint-stock company, or association, the total interest secured and paid by such company, corporation, or association within the year on any such indebted- ness may be deducted as a part of its expense of doing business: Provided further, That in the case of bonds or other indebtedness, which have been issued with a guaranty that the interest payable thereon shall be free from taxation, no deduction for the payment of the tax herein imposed shall be allowed; and in the case of a bank, banking association, loan, or trust company, interest paid within the year on deposits or on moneys received for investment and secured by interest-bearing certificates of indebtedness issued by such bank, banking association, loan or trust company; (fourth) all sums paid by it within the year for taxes imposed under the au- thority of the United States or of any State or Territory thereof, or imposed by the Government of any foreign country; Provided, That in the case of a corporation, joint-stock com- pany or association, or insurance company, organized, author- ized, or existing under the laws of any foreign country, such net in- come shall be ascertained by deducting from the gross amount of its income accrued within the year from business transacted and capital invested within the United States, (first) all the ordinary and necessary expenses actually paid within the year out of earn- ings in the maintenance and operation of its business and property within the United States, including rentals or other payments re- quired to be made as a condition to the continued use or possession of property; (second) all losses actually sustained within the year in business conducted by it within the United States and not com- pensated by insurance or otherwise, including a reasonable allow- ance for depreciation by use, wear and tear of property, if any, and in the case of mines a reasonable allowance for depletion of ores and all other natural deposits, not to exceed 5 per centum of the gross value at the mine of the output for the year for which the com- putation is made; and in case of insurance companies the net addi- tion, if any, required by law to be made within the year to reserve Fourth. Taxes im- posed by U. S., a State or Territory thereof or any for- eign government, proviso. Method of ascer- taining net income of corporation, joint- stock company or as- sociation, or insur- ance company or- ganized or existing under laws of any foreign country. Deductions per- mitted. First. Ordinary and necessary ex- penses. Second. Losses ac- tually sustained in business in U. S. and not compen- sated by insurance allowance for de- preciation, depletion of mines, addition to reserve fund of in- surance companies, provisions respecting mutual fire insur- ance companies, mu- tual marine in- surance companies and life insurance companies. 16 Third. Interest ac- crued and paid on account of indebted- ness, proviso. Fourth. Taxes paid under authority of U. S. or any State or Territory thereof or the District of Co- lumbia. Payments by as- sessment insurance companies to State or Territorial officers to be regarded as pay- ments required by law to reserve funds. funds and the sums other than dividends paid within the year on policy and annuity contracts: Provided further, That mutual fire insurance companies requiring their members to make premium de- posits to provide for losses and expenses shall not return as income any portion of the premium deposits returned to their policyhold- ers, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are retained by the companies for purposes other than the pay- ment of losses and expenses and reinsurance reserves : Provided fur- ther, That mutual marine insurance companies shall include in their return of gross income gross premiums collected and received by them less amounts paid for reinsurance, but shall be entitled to in- clude in deductions from gross income amounts repaid to policy- holders on account of premiums previously paid by them, and in- terest paid upon such amounts between the ascertainment thereof and the payment thereof and life insurance companies shall not in- clude as income in any year such portion of any actual premium re- ceived from any individual policyholder as shall have been paid back or credited to such individual policyholder, or treated as an abatement of premium of such individual policyholder, within such year; (third) the amount of interest accrued and paid within the year on its indebtedness to an amount of such indebtedness not exceeding the proportion of one-half of the sum of its interest bearing indebtedness and its paid-up capital stock outstanding at the close of the year, or if no capital stock, the capital employed in the business at the close of the year which the gross amount of its in- come for the year from business transacted and capital invested within the United States bears to the gross amount of its income derived from all sources within and without the United States: Provided, That in the case of bonds or other indebtedness which have been issued with a guaranty that the interest payable thereon shall be free from taxation, no deduction for the payment of the tax herein imposed shall be allowed; (fourth) all sums paid by it within the year for taxes imposed under the authority of the United States or of any State or Territory thereof of the District of Co- lumbia. In the case of assessment insurance companies, whether do- mestic or foreign, the actual deposit of sums with State or Territo- rial officers, pursuant to law, as additions to guarantee or reserve funds shall be treated as being payments required by law to reserve funds. 17 (c) The tax herein imposed shall be computed upon its entire net income accrued within each preceding calendar year ending Decem- ber thirty-first: Provided, hozvever, That for the year ending De- cember thirty-first, nineteen hundred and thirteen, said tax shall be imposed upon its entire net income accrued within that portion of said year from March first to December thirty-first, both dates in- clusive, to be ascertained by taking five-sixths of its entire net in- come for said calendar year : Provided further, That any corpora- tion, joint-stock company or association, or insurance company sub- ject to this tax may designate the last day of any month in the year as the day of the closing of its fiscal year and shall be entitled to have the tax payable by it computed upon the basis of the net in- come ascertained as herein provided for the year ending on the day so designated in the year preceding the date of assessment in- stead of upon the basis of the net income for the calendar year pre- ceding the date of assessment ; and it shall give notice of the day it has thus designated as the closing of its fiscal year to the collector of the district in which its principal business office is located at any time not less than thirty days prior to the date upon which its an- nual return shall be filed. All corporations, joint-stock companies or associations, and insurance companies subject to the tax herein imposed, computing taxes upon the income of the calendar year, shall, on or before the first day of March, nineteen hundred and fourteen, and the first day of March in each year thereafter, and all corporations, joint-stock companies or associations, and insurance companies, computing taxes upon the income of a fiscal year which it may designate in the manner hereinbefore provided, shall render a like return within sixty days after the close of its said fiscal year, and within sixty days after the close of its fiscal year in each year thereafter, or in the case of a corporation, joint-stock company or association, or insurance company, organized or existing under the laws of a foreign country, in the place where its principal busi- ness is located within the United States, in such form as the Com- missioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, shall render a true and accurate re- turn under oath or affirmation of its president, vice-president, or other principal officer, and its treasurer or assistant treasurer, to the collector of internal revenue for the district in which it has its principal place of business, setting forth (first) the total amount of its paid-up capital stock outstanding, or if no capital stock, its capi- tal employed in business, at the close of the year; (second) the total Tax to be com- puted upon entire net income accrued dur- ing each calendar year. For year 1913 tax computed for period from March 1 to De- cember 31, how as- certained. Designation of last day of any month as day of closing fiscal year. Notice thereof to collector. Returns to be filed March 1 of each year or sixty days after ending of fis- cal year as desig- nated. What returns by foreign corporations, joint-stock companies, or associations or in- surance companies must show. Total amount of capital. Total amount of bonded or other in- debtedness. 18 Income from all sources and income from business in U. S. Ordinary and nec- essary expenses and cost of maintenance and operation of its business in the U. S. Total of losses ac- tually sustained not compensated by in- surance, depreciation, net addition to re- serve funds of in- surance companies, provisions respecting mutual fire insurance companies, mutual marine insurance companies and life in- surance companies. t Foreign corpora- tions, etc., all losses actually sustained in business in U. S. not compensated by in- surance, depreciation of property and ad- ditions to reserve funds of insurance companies. amount of its bonded and other indebtedness at the close of the year; (third) the gross amount of its income, received during such year from all sources, and if organized under the laws of a foreign country the gross amount of its income received within the year from business transacted and capital invested within the United States; (fourth) the total amount of all its ordinary and necessary expenses paid out of earnings in the maintenance and operation of the business and properties of such corporation, joint-stock com- pany or association, or insurance company within the year, stating separately all rentals or other payments required to be made as a condition to the continued use or possession of property, and if or- ganized under the laws of a foreign country the amount so paid in the maintenance and operation of its business within the United States; (fifth) the total amount of all losses actually sustained dur- ing the year and not compensated by insurance or otherwise, stat- ing separately any amounts allowed for depreciation of property, and in case of insurance companies the net addition, if any, re- quired by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and an- nuity contracts : Provided further, That mutual fire insurance com- panies requiring their members to make premium deposits to pro- vide for losses and expenses shall not return as income any por- tion of the premium deposits returned to their policyholders, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are re- tained by the companies for purposes other than the payments of losses and expenses and reinsurance reserves: Provided further, That mutual marine insurance companies shall include in their re- turn of gross income gross premiums collected and received by. them less amounts paid for reinsurance, but shall be entitled to include in deductions from gross income amounts repaid to policyholders on account of premiums previously paid by them, and interest paid upon such amounts between the ascertainment thereof and the pay- ment thereof and life insurance companies shall not include as in- come in any year such portion of any actual premium received from any individual policyholder as shall have been paid back or credited to such individual policyholder, or treated as an abatement of pre- mium of such individual policyholder, within such year; and in case of a corporation, joint-stock company or association, or insurance company, organized under the laws of a foreign country, all losses actually sustained by it during the year in business conducted by 19 it within the United States, not compensated by insurance or other- wise, stating separately any amounts allowed for depreciation of property, and in case of insurance companies the net addition, if any, required by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and annuity contracts: Provided further, That mutual fire insur- ance companies requiring their members to make premium deposits to provide for losses and expenses shall not return as income any portion of the premium deposits returned to their policyholders, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are retained by the companies for purposes other than the payment of losses and expenses and reinsurance reserves: Provided, further, That mutual marine insurance companies shall include in their re- turn of gross income gross premiums collected and received by them less amounts paid for reinsurance, but shall be entitled to include in deductions from gross income amounts repaid to policyholders on account of premiums previously paid by them and interest paid upon such amounts between the ascertainment thereof and the pay- ment thereof and life insurance companies shall not include as in- come in any year such portion of any actual premium received from any individual policyholder as shall have been paid back or cred- ited to such individual policyholder, or treated as an abatement of premium of such individual policyholder, within such year; (sixth) the amount of interest accrued and paid within the year on its bonded or other indebtedness not exceeding one-half of the sum of its interest bearing indebtedness and its paid-up capital stock, out- standing at the close of the year, or if no capital stock, the amount of interest paid within the year on an amount of indebtedness not exceeding the amount of capital employed in the business at the close of the year, and in the case of a bank, banking association, or trust company, stating separately all interest paid by it within the year on deposits; or in case of a corporation, joint-stock company or asso- ciation, or insurance company, organized under the laws of a for- eign country, interest so paid on its bonded or other indebtedness to an amount of such bonded or other indebtedness not exceeding the proportion of its paid-up capital stock outstanding at the close of the year, or if no capital stock, the amount of cap- ital employed in the business at the close of the year, which the gross amount of its income for the year from business transacted and capital invested within the United States 'Premium deposits of foreign mutual insurance companies not income. Deductions to be made by foreign mu- tual marine insur- ance companies. Premiums credited back to policy-holders in foreign life in- surance companies not included. Interest accrued and paid on indebt- edness, limitations. 20 Taxes imposed by authority of U. S. and by any foreign country. The net income af- ter making author- ized deductions. To be notified of assessments on or before June 1, and tax to be paid on or before June 30. Those selecting fis- cal year to pay tax 120 days after date required to file re- turn. Procedure where failure to make re- turn or false or fraudulent return is made. Penalty of 5% for failure to pay tax when due and 1% monthly. Returns only to be inspected by order of the President. bears to the gross amount of its income derived from all sources within and without the United States; (seventh) the amount paid by it within the year for taxes imposed under the authority of the United States and separately the amount so paid by it for taxes imposed by the Government of any foreign country; (eighth) the net income of such corporation, joint-stock company or association, or insurance company, after making the deductions in this subsec- tion authorized. All such returns shall as received be transmitted forthwith by the collector to the Commissioner of Internal Revenue. All assessments shall be made and the several corporations, joint- stock companies or associations, and insurance companies shall be notified of the amount for which they are respectively liable on or before the first day of June of each successive year, and said assess- ment shall be paid on or before the thirtieth day of June : Provided, That every corporation, joint-stock company or association, and insurance company, computing taxes upon the income of the fiscal year which it may designate in the manner hereinbefore provided, shall pay the taxes due under its assessment within one hundred and twenty days after the date upon which it is required to file its list or return of income for assessment ; except in cases of refusal or neg- lect to make such return, and in cases of false or fraudulent returns, in which cases the Commissioner of Internal Revenue shall, upon the discovery thereof, at any time within three years after said re- turn is due, make a return upon information obtained as provided for in this section or by existing law, and the assessment made by the Commissioner of Internal Revenue thereon shall be paid by such corporation, joint-stock company or association, or insurance com- pany immediately upon notification of the amount of such assess- ment ; and to any sum or sums due and unpaid after the thirtieth day of June in any year, or after one hundred and twenty days from the date on which the return of income is required to be made by the taxpayer, and after ten days' notice and demand thereof by the collector, there shall be added the sum of 5 per centum on the amount of tax unpaid and interest at the rate of 1 per centum per month upon said tax from the time the same becomes due. (d) When the assessment shall be made, as provided in this sec- tion, the returns, together with any corrections therecrf which may have been made by the commissioner, shall be filed in the office of the Commissioner of Internal Revenue and shall constitute public records and be open to inspection as such : Provided, That any and all such returns shall be open to inspection only upon the order of 21 the President, under rules and regulations to be prescribed by the Secretary of the Treasury and approved by the President : Provided further, That the proper officers of any State imposing a general income tax may, upon the request of the governor thereof, have access to said returns or to an abstract thereof, showing the name and income of each such corporation, joint-stock company, asso- ciation or insurance company, at such times and in such manner as the Secretary of the Treasury may prescribe. If any of the corporations, joint-stock companies or associations, or insurance companies aforesaid, shall refuse or neglect to make a return at the time or times hereinbefore specified in each year, or shall render a false or fraudulent return, such corporation, joint- stock company or association, or insurance company shall be liable to a penalty of not exceeding $10,000. Access to by State when. return officers Penalty for failure to make return or for making a false or fraudulent return, a sum not exceeding $10,000. What the Words "State" or "United States" Include. H. That the word "State" or "United States" when used in this section shall be construed to include any Territory, Alaska, the District of Columbia, Porto Rico, and the Philippine Islands, when such construction is necessary to carry out its provisions. Sections 3167, 3172, 3173 and 3176 of the Revised Statutes of the United States Amended. Unlawful for Inter- nal Revenue Employees to Divulge Information, Pen- alty, Punishment. Lists of Persons and Objects Liable to Tax to be Prepared by Collectors. When Returns Must be Made in Cases of Special Taxes and of Income Tax. When Duty of Collector to Make the Return. Notice Requiring Filing of Return, How Given. Power of Collector to Require the Production of Witnesses, Books of Account, etc., Where no Return Has Been Made or There Has Been a False or Fraudulent Re- turn. Penalties for Making Intentionally! False or Fraudulent Return and for Failure to Make Any Re- turn. Collector May Extend Time in Cases of Sick- ness or Absence. I. That sections thirty-one hundred and sixty-seven, thirty-one hundred and seventy-two, thirty-one hundred and seventy-three and thirty-one hundred and seventy-six of the Revised Statutes of the 22 Unlawful for any internal revenue em- ployee to divulge any information ac- quired in discharge of his duties. Unlawful to print any information con- tained in a return. Violation a mis- demeanor, $1,000 fine, or imprisonment one year or both. Dis- qualification against holding office. Collectors to make lists of persons and objects liable to the tax. Return for special tax to be made on or before July 31. Return for in- come tax to be made on or before March 1. Return in other cases before tax ac- crues. What the returns must contain. United States as amended are hereby amended so as to read as follows : "Sec. 3167. It shall be unlawful for any collector, deputy col- lector, agent, clerk, or other officer or employee of the United States to divulge or to make known in any manner whatever not provided by law to any person the operations, style of work, or apparatus of any manufacturer or producer visited by him in the discharge of his official duties, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any income return by any person or corporation, or to permit any in- come return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law ; and it shall 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 the amount or source 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 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 and be incapable therafter of holding any office under the Government. "Sec. 3172. 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. 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, in case of a special tax, on or before the thirty-first day of July in each year, in case of income tax on or before the frst day of March in each year, and in other cases before the day on which the taxes accrue, to make a list or return, verified by oath or affirmation, to the collector or a deputy collector of the district where located, of the articles or objects, including the amount of annual income charged with a duty or tax, the quantity of goods, wares, and mer- chandise 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 ap- 23 proval of the Secretary of the Treasury, for which such person, partnership, firm, association, or corporation is liable: Provided, That if any person liable to pay any duty or tax, or owning, pos- sessing, or having the care or management of property; goods, wares, and merchandise, articles or objects liable to pay any duty, tax, or license, shall fail to make and exhibit a list or return required by law, but shall consent to disclose the particulars of any and all the property, goods, wares, and merchandise, articles, and objects liable to pay any duty or tax, or any business or occupation liable to pay any tax as aforesaid, then, and in that case, it shall be the duty of the collector or deputy collector to make such list or return, which, being distinctly read, consented to, and signed and verified by oath or affirmation 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, That in case no annual list or return has been rendered by such person to the collector or deputy collector as required by law, and the person shall be absent from his or her residence or place of business at the time the col- lector 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, re- quiring 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 or affirmation. And if any person, on being notified or required as aforesaid, shall refuse or neglect to render such list or return within the time required as aforesaid, or whenever any person who is required to deliver a monthly or other return of objects subject to tax fails to do so at the time required, or delivers any return which, in the opinion of the collector, is false or fraudulent, or contains any undervaluation or understatement, it shall be lawful for the collector to summon such person, or any other person having possession, custody, are 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 liable to tax or the returns thereof. The collector may summon any person residing or found within the State in which his district lies ; and when the person intended to Failure to make the return. Volun- tary disclosure to collector who shall prepare the return. Duty of collector when no return made and person absent. Leaving .notice and sending same by mail. Failure to make the return or making false or fraudulent return. Collector may sum- mons witnesses and require production of books of account, etc. Collector may sum- mons any person in the State where his district lies. May obtain wit- nesses in other States. 24 After obtaining necessary informa- tion collector shall make the return and Comr. of Int. Rev. shall assess the taxes. For intentionally false or fraudulent return penalty of 100%. For refusal or neglect to file return, except where sick or absent, penalty of 50%. Collector may al- low further time in cases of sickness or absence. Collection of afore- said penalties. be summoned does not reside and can not be found within such State, 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. "Sec. 3176. When any person, corporation, company, or asso- ciation refuses or neglects to render any return or list required by law, or renders a false or fraudulent return or list, the collector or any deputy collector shall make, according to the best information which he can obtain, including that derived from the evidence elicited by the examination of the collector, and on his own view and information, such list or return, according to the form pre- scribed, of the income, property, and objects liable to tax owned or possessed or under the care or management of such person or cor- poration, company or association, and the Commissioner of Internal Revenue shall assess all taxes not paid by stamps, including the amount, if any, due for special tax, income or other tax, and in case of any return of a false or fraudulent list or valuation inten- tionally he shall add 100 per centum to such tax; and in case of a refusal or neglect, except in cases of sickness or absence, to make a list or return, or to verify the same as aforesaid, he shall add 50 per centum to such tax. In case of neglect occasioned by sick- ness or absence as aforesaid the collector may allow such further time for making and delivering such list or return as he may deem necessary, not exceeding thirty days. The amount so added to the tax shall be collected at the same time and in the same manner as the tax unless the neglect or falsity is discovered after the .tax has been paid, in which case the amount so added shall be collected in the same manner as the tax; and the list or return so made and subscribed by such collector or deputy collector shall be held prima facie good and sufficient for all legal purposes." Collector must give receipt for all payments except for stamp taxes. Separate receipts for different taxes. Duty of Collector to Give Receipt Whenever Taxes, Ex- cept Stamp Taxes, Are Paid. When Separate Receipts Must be Given. Receipts Sufficient Evidence to Jus- tify Debtor in Withholding Such Amount from Next Payment to His Creditor. How Creditor May Require Surrender of Receipt to Him. J. That it shall be the duty of every collector of internal revenue, to whom any payment of any taxes other than the tax represented by an adhesive stamp or other engraved stamp is made under the 25 provisions of this section, to give to the person making such pay- ment a full written or printed receipt, expressing the amount paid and the particular account for which such payment was made ; and whenever such payment is made such collector shall, if required, give a separate receipt for each tax paid by any debtor, on account of payments made to or to be made by him to separate creditors in such form that such debtor can conveniently produce the same sep- arately to his several creditors in satisfaction of their respective demands to the amounts specified in such receipts; and such re- ceipts shall be sufficient evidence in favor of such debtor to justify him in withholding the amount therein expressed from his next payment to his creditor ; but such creditor may, upon giving to his debtor a full written receipt, acknowledging the payment to him of whatever sum may be actually paid, and accepting the amount of tax paid as aforesaid (specifying the same) as a further satisfac- tion of the debt to that amount, require the surrender to him of such collector's receipt. Debtor paying credi- tor's taxes. Debtor by giving receipt in full to creditor may obtain collector's receipt for taxes. Jurisdiction Conferred Upon U. S. District Courts to Com- pel Attendance of Witnesses, the Production of Books and Testimony. K. That jurisdiction is hereby conferred upon the district courts of the United States for the district within which any person sum- moned under this section to appear to testify or to produce books shall reside, to compel such attendance, production of books, and testimony by appropriate process. Provisions of Existinc Law Relating to Assessment, Remis- sion, Collection and Refundment of Internal Revenue Taxes Made Applicable. L. That all administrative, special, and general provisions of law, including the laws in relation to the assessment, remission, collec- tion, and refund of internal-revenue taxes not heretofore specifically repealed and not inconsistent with the provisions of this section, are hereby extended and made applicable to all the provisions of this section and to the tax herein imposed. 26 Law to Embrace Philippines and Porto Rico. Revenues There Collected to be Used for Benefit of Governments of Those Islands. Jurisdiction of Courts of First In- stance. Compensation Paid Officials of Those Islands and of the District of Columbia, by the Governments Thereof Not Exempt from Inclusion in Net Income. Tax law applies to Philippine Islands and Porto Rico. Revenues collected there to be used there. Jurisdiction of courts of the first instance. Compensation paid officials there and of District of Columbia by governments there- of to be included in net income. M. That the provisions of this section shall extend to Porto Rico and the Philippine Islands: Provided, That the administration of the law and the collection of the taxes imposed in Porto Rico and the Philippine Islands shall be by the appropriate internal-revenue officers of those governments, and all" revenues collected in Porto Rico and the Philippine Islands thereunder shall accrue intact to the general governments thereof, respectively: And provided fur- ther, That the jurisdiction in this section conferred upon the dis- trict courts of the United States shall, so far as the Philippine Islands are concerned, be vested in the courts of the first instance of said islands : And provided further, That nothing in this section shall be held to exclude from the computation of the net income the compensation paid any official by the governments of the District of Columbia, Porto Rico and the Philippine Islands or the political subdivisions thereof. Appropriation for Purpose of Carrying Act Into Effect. Appointments and Compensation of Officers, Agents, Inspectors, etc. Additional Deputy Commissioner of Internal Revenue and Heads of Divisions. Rules and Regulations Governing Employees to be Fixed by Secre- tary of the Treasury. Appropriation of $800,000 to carry act into effect including expenses of collect- ing the tax and de- tection and punish- ment of violations thereof. N. That for the purpose of carrying into effect the provisions of Section II of this Act, and to pay the expenses of assessing and col- lecting the income tax therein imposed, and to pay such sums as the Commissioner of Internal Revenue, with the approval of the Secre- tary of the Treasury, may deem necessary, for information, detection and bringing to trial and punishment persons guilty of violating the provisions of this section, or conniving at the same, in cases where such expenses are not otherwise provided for by law, there is hereby appropriated out of any money in the Treasury not otherwise ap- propriated for the fiscal year ending June thirtieth, nineteen hun- dred and fourteen, the sum of $800,000, and the Commissioner of 27 Internal Revenue, with the approval of the Secretary of the Treas- ury, is authorized to appoint and pay from this appropriation all necessary officers, agents, inspectors, deputy collectors, clerks, mes- sengers and janitors, and to rent such quarters, purchase such sup- plies, equipment, mechanical devices, and other articles as may be necessary for employment or use in the District of Columbia or any collection district in the United States, or any of the Territories thereof : Provided, That no agent paid from this appropriation shall receive compensation at a rate higher than that now received by traveling agents on accounts in the Internal Revenue Service, and no inspector shall receive a compensation higher than $5 a day and $3 additional in lieu of subsistence, and no deputy collector, clerk, messenger, or other employee shall be paid at a rate of compensa- tion higher than the rate now being paid for the same or similar work in the Internal Revenue Service. In the office of the Commissioner of Internal Revenue at Wash- ington, District of Columbia, there shall be appointed by the Com- missioner of Internal Revenue, with the approval of the Secretary of the Treasury, one additional deputy commissioner, at a salary of $4,000 per annum ; two heads of divisions, whose compensation shall not exceed $2,500 per annum ; and such other clerks, mes- sengers, and employees, and to rent such quarters and to purchase such supplies as may be necessary: Provided, That for a period of two years from and after the passage of this Act the force of agents, deputy collectors, inspectors, and other employees not in- cluding the clerical force below the grade of chief of division em- ployed in the Bureau of Internal Revenue in the city of Washing- ton, District of Columbia, authorized by this section of this Act shall be appointed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, under such rules and regulations as may be fixed by the Secretary of the Treasury to insure faithful and competent service, and with such compensa- tion as the Commissioner of Internal Revenue may fix, with the approval of the Secretary of the Treasury, within the limitations herein prescribed : Provided further, That the force authorized to carry out the provisions of Section II of this Act, when not em- ployed as herein provided, shall be employed on general internal- revenue work. Comr. of Int. Rev. may appoint neces- sary officers, agents, inspectors, etc., rent quarters, purchase supplies; limitations as to salaries. Appointment of ad- ditional Deputy Comr. of Int. Rev. and two heads of divisions, compensation of, and other employees. Provisions for quar- ters and supplies. For two years af- ter passage of Act, Comr. of Int. Rev. with approval of Secretary of the Treasury to appoint agents, deputy collec- tors, inspectors and other employees au- thorized by the act, proviso. To fix compensa- tion and prescribe duties. 28 All Excise Taxes Under Corporation Tax Law of August 5, 1909, for Year Ending December 31, 1912, to be Col- lected. A Special Excise Tax of One Per Cent Levied Upon Net Income of Corporations, etc., for Period from January 1, 1913, to February 28, 1913. Computed Upon Basis of One-Sixth of Income for Entire Year. Method of Computing Net Income. Provisions of Cor- poration Tax Law to Remain in Force for Purpose of Collection of Taxes Due Thereunder. Only One Re- turn Necessary. Effect of Repeal or Modification of Existing Laws. Acts of Limitation Not Affected. Excise taxes im- posed upon corpora- tions to be collected for year ending De- cember 31, 1912. Special excise tax of 1% of income to corporations, etc., from Jan. 1, 1913, to Feb. 28, 1913, incl. To be computed on one-sixth of income for entire year. To be ascertained in manner required in subsection G. Provisions of cor- poration tax law rel- ative to collections to remain in force. Only one return necessary. Section IV. S. * * * Provided further, That all excise taxes upon cor- porations imposed by section thirty-eight, that have accrued or have been imposed for the year ending December thirty-first, nineteen hundred and twelve, shall be returned, assessed, and collected in the same manner, and under the same provisions, liens, and penalties as if section thirty-eight continued in full force and effect: And provided further, That a special excise tax with respect to the car- rying on or doing of business equivalent to 1 per centum upon their entire net income, shall be levied, assessed, and collected upon cor- porations, joint-stock companies or associations, and insurance com- panies, of the character described in section thirty-eight of the Act of August fifth, nineteen hundred and nine, for the period from January first to February twenty-eighth, nineteen hundred and thir- teen, both dates inclusive, which said tax shall be computed upon one-sixth of the entire net income of said corporations, joint-stock companies or associations, and insurance companies, for said year, said net income to be ascertained in accordance with the provisions of subsection G of section two of this Act : Provided further, That the provisions of said section thirty-eight of the Act of August fifth, nineteen hundred and nine, relative to the collection of the tax therein imposed shall remain in force for the collection of the ex- cise tax herein provided, but for the year nineteen hundred and thirteen it shall not be necessary to make more than one return and assessment for all the taxes imposed herein upon said corporations, joint-stock companies or associations, and insurance companies, either by way of income or excise, which return and assessment shall be made at the times and in the manner provided in this Act; but the repeal of existing laws or modifications thereof embraced 29 in this Act shall not affect any act done, or any right accruing or accrued, or any suit or proceeding had or commenced in any civil case before the said repeal or modification ; but all rights and liabil- ities under said laws shall continue and may be enforced in the same manner as if said repeal or modifications had not been made. Any offenses committed and all penalties or forfeitures or liabilities in- curred prior to the passage of this Act under any statute embraced in or changed, modified, or repealed by this Act may be prosecuted or punished in the same manner and with the same effect as if this Act had not been passed. No Acts of limitation now in force, whether applicable to civil causes and proceedings or to the prose- cution of offenses or for the recovery of penalties or forfeitures embraced in or modified, changed, or repealed by this Act shall be affected thereby so far as they affect any suits, proceedings, or prosecutions, whether civil or criminal, for causes arising or acts done or committed prior to the passage of this Act, which may be commenced and prosecuted within the same time and with the same effect as if this Act had not been passed. Accrued rights and , liabilities under ex- isting laws not af- fected. Offenses, penalties and forfeitures com- mitted or incurred prior to passage of act may be prosecu- ted and punished, same as though act had not been passed. Acts of limitation whether civil or criminal in force at time of passage of act not affected thereby. When Act Shall Take Effect. U. That unless otherwise herein specially provided, this Act shall take effect on the day after its passage. INDEX Par. Page. Absent — who to make returns for persons absent from U. S E 10 Accruing — income, taxable A(l) 1 Accumulation — of gains and profits of corporations of no avail to escape additional tax A (2) 2 Acts of Limitations — in force prior to passage of act, not af- fected by S 29 Additional Tax — imposed upon net incomes exceeding $20,000. . . A (2) 2 income to include gains and profits from corporations, etc., whether distributed or not A (2) 2 not evaded by accumulation of gains and profits by cor- porations, etc f A (2) 2 provisions respecting normal tax applicable to A (2) 2 provisions respecting payment at the source not applicable to E 11 rates of, on incomes exceeding $20,000 A (2) 2 return must show net income from all sources A (2) 2 Addresses — and names of persons to be in returns where tax with- held at the source D 6 Administrative Laws — made applicable L 25 Administrators — must file returns D 6 Agents — compensation of, limited N 27 must file returns D 6 Agricultural Organizations — law not applicable to G (a) 13 Alaska — included in words "State" or "United States" if neces- sary H 21 Annuity Contracts — See, also, Endowment Contracts, Life In- surance Policies, deduction by foreign insurance companies of sums, other than dividends, paid on G (b) 16 deductions by insurance companies of sums, other than divi- dends, paid on G (b) 14 returns to show sums other than dividends paid on G (c) 18 sums paid on, other than dividends, by foreign insurance companies to be shown in returns G (c) 19 what payments are not included in net income B 3 Application — for deductions when may be made by persons paying tax at the source E 10 Appropriation — for carrying act into effect N 26 Assessment Insurance Companies — sums deposited by with State or territorial officers treated as payments to reserve funds G (b) 16 Assessment of Taxes — laws relating to, made applicable. L 25 Assessments — all to be made by Comr. Int. Rev E 8 notice of by June 1, to all corporations, etc G (c) 20 to be made by June 30 E 8 Associations — See also Foreign Associations. but one return required for both excise and income tax. . S 28 deductions for interest paid on indebtedness, limitation G (c) 19 deduction of tax at source from interest on bonds, etc., of, although less than $3,000 E 10 excise tax on, during January and February, 1913, com- putation of S 28 gains and profits from, whether distributed or not, taxable under additional tax A (2) 2 may designate fiscal year, procedure G (c) 17 method of ascertaining net income of G (b) 14 must furnish statements of gains and profits upon request of Commissioner or Collector ; A (2) 3 must pay tax by June 30 G (c) 20 normal tax on net income of Q ( a ) 13 penalties for failure to make return and for false return... G (d) 21 returns of, when to be filed, and what to contain G (c) 17 to be notified of assessments by June 1 G (c) 20 31 Bankers — to withhold tax from interest payments by foreign countries, foreign mortgages, foreign corporations, etc., although less than $3,000 E 11 Banking Associations — interest paid on deposits, etc., by, may be deducted from income G (b) IS may deduct interest paid on deposits G (c) 19 Banks — deductions for interest paid on deposits G (c) 19 interest paid by, on deposits, etc., may be deducted from income G (b) IS Bequests — income from, but not value of, included in net income B 3 Betterments — no allowance for, in ascertaining net income for normal tax B 4 Bills of Exchange — .withholding tax from, for interest on for- eign mortgages, etc., although less than $3,000 E 10 Boards of Trade — law not applicable to G (a) - 13 Bonded Indebtedness — of corporations, etc., to be shown on the returns G (c) 18 Bonds — with guaranty against tax, no reduction for interest pay- ments on, by foreign corporations, etc G (b) 16 of corporations, tax at source, although interest less than $3,000 E 10 with guaranty against tax, no deduction from income al- lowed G (b) IS Books— 'production of, by Collector where no return or false re- turn made, Sec. 3173, Rev. Stats I 23 production of, may be compelled by U. S. District Courts.. K ' 25 Building and Loan Associations — law not applicable to domestic G (a) 13 Business — income from in U. S., by persons residing elsewhere taxable A (1) 1 Business Leagues — law not applicable to G (a) 13 Business and Property in U. S. Owned by Persons Residing Elsewhere— method of ascertaining net income from B 4 tax of 1% on net income from A (1) 1 Business Transacted and Capital Invested in the U. S. by Foreign Corporations, etc. — deduction for interest paid on indebtedness, limitation G (c) 19 method of ascertaining net income G (b) IS normal tax on income from G (a) 13 Calendar Year — income arising or apcruing during, taxable A (1) 1 tax computed on remainder of net income received during.. D S tax upon net income accrued during, from corporations, etc. how ascertained G (c) 17 Capital — employed in business to be stated in returns of corpo- rations, etc G. (c) 17 Capital Stock — total, paid up of corporations, etc., to be shown in returns G (c) 17 Certificates of Indebtedness — interest paid on moneys secured by, deducted from income of banks, etc G (b) 15 Cemetery Companies — for mutual benefit of members, not em- braced in the law G (a) 13 Charitable Corporations— law not applicable to G (a) 13 Chambers of Commerce — law not applicable to G (a) 13 Checks— withholding tax from, for interest on foreign mort- gages, bonds, etc., although less than $3,000 E 10 Citizens of U. S.— liable to the tax residing at home or abroad.. A (1) 1 Civic Leagues — law not applicable to G (a) 13 Collateral — where indebtedness secured by, whole interest pay- ments deducted from income G (b) IS Collection — of foreign payments, license required, penalty E 11 Collection of Taxes — general provisions of laws relating to, made applicable L 25 32 Collectors of Internal Revenue — application to, for deductions in subsection B, where payment to be made at the source E 10 authority of, and of deputy, where income understated D 7 corporations, etc., must furnish statements of gains and profits, on request of A (2) 3 deputies to proceed through districts and list persons and objects subject to tax. Sec. 3172, Rev. Stats T 22 duty of, to give receipt when taxes are paid J 24 may cause production of witnesses and books where no re- turn, or false return made. Sec. 3173, Rev. Stats I 23 may require a return from partnerships D 7 notice of designation of fiscal year by corporations, etc., to be given G (c) 17 returns must be filed with D 6 to prepare return when taxable objects exhibited to. Sec. 3173, Rev. Stat I 23 Commissioner of Internal Revenue — all assessments to be made by E 8 authority to assess within three years where no return made or false or fraudulent E 8 Collectors to forward all returns to G (c) 20 corporations, etc., must furnish statement of gains and prof- its, on request of A (2) 3 may require a return from partnerships D 7 to issue license to conduct business of collecting interest on foreign obligations E 11 to make rules and regulations governing returns E 11 to make rules and regulations respecting inspection of re- turns by order of the President G (d) 21 to prepare return for corporations, etc., neglecting to make a return or which make a false return G (c) 20 to prescribe form of returns D 6 to prescribe form of return for corporations, etc G (c) 17 to prescribe rules and regulations governing withholding tax on interest from foreign obligations E 11 submitting case to, where Collector alleges income under- stated D 7 Compensation — of judges of U. S. Supreme and inferior courts now in office excluded from net income B 5 of present President of U. S., excluded from net income. . B S for personal services included in net income B 3 Conservators — must file returns D 6 Constitutional Amendment — authorizing income tax 1 Contracts — by State or Territory for public utility, income to not taxable G (a) 13 in regard to Federal Income Tax, not valid E 11 Corporations — See also Foreign Corporations. but one return required for both excise and income tax S 28 deductions for interest paid on indebtedness limitation . . . . G (c) 19 deduction of tax at source from interest on bonds, etc., of, although less than $3,000 E 10 excise taxes on, for year 1912 to be collected S 28 excise tax on, during January and February, 1913, compu- tation of S 28 for religious, charitable, etc., purposes, not embraced in law G(a) 19 gains and profits from whether distributed or not, taxable under additional tax A (2) 2 may designate fiscal year, procedure G (c) 17 method of ascertaining net income of G (b) 14 must furnish statements of gains and profits upon request of Commissioner or Collector A (2) 3 must pay tax by June 30 G (c) 20 normal tax on net income of G (a) 12 penalties for failure to file return and for false return G (d) 21 returns, when to be filed, and what to contain G (c) 17 tax on entire net income accrued each calendar year G (c) 17 tax on income year 1913 from Mch. 1 to Dec. 31 G (c) 17 to be notified of assessments by June 1 . .1 G (c) 20 33 Coupons— withholding tax from, of foreign countries although less than $3,000 E 10 Creditor— tax of, paid by debtor, when, receipts J 25 Debtor — may pay creditor's tax, when J 25 Debts — See Worthless Debts. Deductions — allowance for depreciations by foreign corporations, etc. . , G(c) 19 application and return for, may be made by person paying tax for minors, insane persons, those seriously ill and those absent from the U. S E 10 cost of reinsurance by foreign mutual marine insurance companies G (c) 19 depletion of mines, of corporations, etc G (b) 14 depletion of mines of foreign corporations, etc G (b) 15 false statement in order to obtain, penalty E 9 five-sixths of those provided, for year 1913 D 6 from gross incomes of corporations, etc., in ascertainment of net income G (b) 14 from gross income of foreign corporations, etc G (b) 15 from gross income to be made in the return by persons . . D 6 in ascertaining net income, for normal tax B 4 in subsection B, how obtained, where tax paid at the source E 10 interest paid on deposits by banks, etc G (b) 15 interest paid on deposits by banks, etc G (c) 19 interest paid on indebtedness by corporations, etc., limita- tion G(b) 14 interest paid on indebtedness by corporations, etc., limitation G (c) 19 interest paid on indebtedness by foreign corporations, etc., limitation G (b) 16 interest payments from income where indebtedness secured by collateral G (b) IS interest payments on moneys received for investment by banks, trust companies, etc G (b) 15 of losses in U. S. by foreign corporations, etc G (b) 15 losses not compensated by insurance, by foreign corpora- tions, etc G (c) 19 losses not compensated by insurance, by corporations, etc... G (b) 14 none for interest payments on bonds with guaranty against tax by foreign corporations, etc G (b) 16 ordinary expenses by corporations, etc G (b) 14 premium deposits repaid policy holders by foreign mutual fire insurance companies G (c) 19 premiums repaid policyholders by foreign life insurance companies G (b) 16 premiums repaid policyholders by foreign life insurance companies , . G(c) 19 premiums and interest repaid policyholders by foreign mu- tual marine insurance companies G (b) 16 premiums and interest repaid policy holders by foreign mu- tual marine insurance companies G (c) 19 premiums and interest repaid policyholders by mutual ma- rine insurance companies G (b) 14 premium deposits repaid policyholders by mutual fire in- surance comlpanies G (b) 14 sums paid for reinsurance by foreign mutual marine insur- ance companies G (b) 16 sums paid for reinsurance by mutual marine companies G (b) 14 taxes paid, from income of corporations, etc G (b) 15 taxes paid U. S., State, Territory or foreign government by corporations, etc G (c) 20 taxes paid U. S., a State, etc., by corporations, etc., from gross income G (b) 16 of $3,000 from net income of single persons and $4,000 if married G 5 of $3,000 if single and $4,000 if married where payment made at the source, how obtained E 9 to be shown in returns of foreign corporations, joint-stock companies, associations and insurance companies G (c) 18 wear and tear on property, from income of corporations, etc. G (b) 14 wear and tear on property of foreign corporations, etc G (b) 15 34 Deeds of Trust — or corporations, etc., tax at source although in- terest less than $3,000 E 10 Deposits — deduction for interest paid on by banks, etc G (c) 19 interest paid on, by banks, trust companies, etc., to be de- ducted from income G (b) IS Depreciation — See also Wear and Tear. of property in U. S. of foreign corporations, etc. to be shown in return G (c) 19 Deputy Collectors of Internal Revenue — to proceed through -districts and list persons and objects subject to tax, Sec. 3172, Rev. Stats I 22 Deputy Commissioner of Internal Revenue — provision for ap- pointment of additional N 27 Descent — income from property by, but not value of, included in net income B 3 Devise — income from, but not value of, included in net income . . B 3 District Collectors — See Collectors of Internal Revenue. District Courts — See United States District Courts. District of Columbia — included in the words "State" or "United States" if necessary H 21 income to, from any public utility not taxable G (a) 13 salaries paid officials of, by government of, not exempt M 26 taxes paid, deducted from gross income of corporations, etc. . , G(b) 16 Dividends — included in net income B 3 upon stock or from net earnings of taxable corporations, etc., may be deducted in ascertaining net income for nor- mal tax B 4 Educational Corporations — law not applicable to G (a) 13 Effect — act took effect the day after its passage U 29 Employee — unlawful for, of U. S. to divulge information. Sec. 3167, Rev. Stats I 22 Endowment Contracts — what payments on, not included in net income B 3 Excise Tax — imposed upon corporations, etc., for January and February, 1913, computation of ; . . S 28 on corporations for year 1912 to be paid S 28 Excise Tax Law — provisions to remain in force, limitation S 28 Executors — must file returns D 6 Exemptions — See Deductions. Expenses — business, deducted in ascertaining net income for nor- mal tax B 4 deducted from gross income of foreign corporations, etc. . . G (b) IS deducted from gross income of corporations, etc G (b) 14 of corporations to be shown in the returns G (c) 18 False Returns — See Returns (False or Fraudulent). False Statement — in order to obtain deductions, penalty . E 9 Federal Income Tax — See Income Tax. Fiduciaries — all persons, corporations, etc., acting as, must file re- turn D 6 Fines — See also Penalties. for divulging information by officer or employee of U. S., Sec. 3167 Rev. Stats I 22 for making false or fraudulent returns F 12 of $5,000 for collecting interest on foreign obligations with- out a license E 11 Fire Insurance Companies — See Foreign Insurance Companies, Foreign Mutual Fire Insurance Companies, Insurance Companies, Mutual Fire Insurance Companies. Fire — losses by, to be deducted in ascertaining net income for nor- mal tax B 4 Firms — See Partnerships. Fiscal Year — corporations, etc., designating to pay tax 120 days after return due G (c) 20 designation of by corporations, etc., procedure G (c) 17 35 Foreign Associations— deductions applicable to interest upon ob- ligations of E 11 how net income of, ascertained G (b) IS normal tax on net income from business in U. S G (a) 13 returns of, when to be filed G (c) 17 tax to be withheld from interest upon obligations of, al- though less than $3,000 E 10 what the returns of must contain G (c) 18 Foreign Countries — deductions, applicable to interest upon obli- gations of E 11 deduction for taxes paid, by corporations, etc G (c) 20 taxes paid any, to be deducted from income of corpora- tions, etc G (b) IS withholding of tax from interest coupons on bonds of, al- though less than $3,000 E 10 Foreign Corporations — deductions applicable to interest upon ob- ligations of E 11 how net income of ascertained G (b) IS interest paid on indebtedness deducted from gross income limitation , G (b) 16 normal tax on net income from business in U. S G (a) 13 returns of, when to be filed G (c) 17 what the returns of must contain G (c) 18 withholding tax from interest upon obligations of, although less than $3,000 E 10 Foreign Insurance Companies — additions to reserve funds to be deducted from gross income G (b) 15 additions to reserve funds to be shown in returns G (c) 19 deductions, applicable to interest upon obligations of E 11 deductions for sums paid on policy and annuity contracts.. G (b) 16 how net income of ascertained G (b) 15 normal tax on net income from business in U. S G (a) 13 returns of, when to be filed G (c) 17 tax to be withheld from interest upon obligations of, al- though less than $3,000 E 10 what the returns of must contain G (c) 18 Foreign Joint Stock Companies — how net income of, ascertained G (b) IS normal tax on net income from business in U. S G (a) 13 returns of, when to be filed G (c) 17 what the returns of must contain G (c) 18 Foreign Life Insurance Companies — actual payments to State or territorial officers treated as payments to reserve funds G (b) 16 deductions by, of amounts of premiums repaid or credited policyholders G (c) 19 portions of premium^ returned to policyholders not part of income of G (b) 16 Foreign Mutual Fire Insurance Companies — See also Mutual Fire Insurance Companies, premium deposits returned to policyholders not part of income •. G (b) 16 premium deposits returned policyholders not part of income G (c) 19 Foreign Mutual Marine Insurance Companies — deductions of sums paid for reinsurance G (b) 16 may deduct from a gross premium income, cost of reinsur- ance G(c) 19 Foreign Mortgages— tax on interest from to be withheld although less than $3,000 •.: E 10 Foreign Obligations — license required for business of collecting interest upon, penalty E 11 tax on interest payments although less than $3,000 to be deducted by bankers E 10 Fraternal Beneficiary Societies— law not applicable to G (a) 13 36 Gains and Profits — included in net income B 3 of partnership taxable whether distributed or not D 7 permitting, of corporations, etc., to accumulate of no avail to escape additional tax A (2) 2 whether distributed or not included in taxable income under additional tax A (2) 2 Gifts — income from, but not value of, included in net income B 3 Governors — of States may request inspection of returns, when G (d) 21 Gross Income — See also Income, Net Income. deductions from in ascertainment of net income G (b) 14 deductions from in cases of foreign corporations, etc G (b) IS to be shown in returns by persons D 6 to be shown in returns of corporations, etc G (c) 18 Guardians — must file returns D 6 Holding Companies — accumulation of gains and profits by, pre- sumptions , A (2) 3 Horticultural Organizations — law not applicable to G (a) 13 Illness — return in case of serious illness may be made by person paying tax at the source E 10 Imprisonment — for officer or employee for divulging information Sec. 3167, Rev. Stats I 22 Income — See also, Net Income, Understating Income. derived from any public utility not taxable G (a) 13 understating same, authority of collector D 7 upon which tax paid at the source to be deducted in ascer- taining net income for normal tax B 4 Income Tax — additional tax upon net incomes exceeding $20,000 imposed A (2) 2 contracts in regard to not valid E 11 normal tax of 1 per centum upon net income of persons, imposed, A (1) 1 payable immediately by corporations, etc., where they filed no return or filed a false return G (c) 20 penalties upon corporations, etc., for failure to pay when due G(c) 20 to be paid by corporations by June 30 G (c) 20 to be paid by individuals by June 30 E 8 when due by corporations, etc., which designate a fiscal year G (c) 20 Income Tax Law — not applicable to labor, agricultural and similar organizations G (a) 13 took effect the day after its passage U 29 Indebtedness — bonded and otherwise of corporations to be shown on returns G (c) 18 deductions for interest paid on by corporations, etc., limi- tation G(c) 19 limitation upon interest payments on, by corporations, etc., to be deducted from gross income G (b) IS limitation upon interest payments on, by foreign corporations to be deducted from gross income G (b) 16 represented by bonds with guarantee against tax, no deduc- tion allowed G (b) IS secured by collateral, interest payments deducted from in- come G (b) 15 Information — unlawful for any officer or employee to divulge, acquired in discharge of his duties, fine Sec. 3167, Rev. Stats I 22 Insane Persons — return for, may be made by person paying tax at the source E 10 Inspectors — compensation of limited N 27 37 Insurance Companies — See also, Assessment Insurance Compa- nies, Foreign Insurance Companies, Foreign Life Insur- ance Companies, Foreign Mutual Life Insurance Com- panies, Foreign Mutual Marine Insurance Companies, Life Insurance Companies, Mutual Life Insurance Com- panies, Mutual Marine Insurance Companies. additions to reserve funds to be shown in returns by G (c) 18 but one return required for both excise and income tax. . . . S 28 deductions for interest paid on indebtedness, limitation.... G (c) 19 deduction of tax at source from interest on bonds, etc., of, although less than $3,000 E 10 excise tax on, during January and February, 1913, com- putation of S 28 may deduct additions to reserve funds and funds other than dividends paid on annuity and policy contracts G (b) 14 may designate fiscal year, procedure G (c) 17 method of ascertaining net income of G (b) 14 must pay tax by June 30 G (c) 20 normal tax on net income of G (a) 13 penalty for failure to make return and for false return.... G (d) 21 returns of when to be filed and what to contain G (c) 17 to be notified of assessments by June 1 G (c) 20 Interest — deduction for, paid by banks, etc., on deposits G (c) 19 deductions for, paid on indebtedness of corporations, etc., limitation * G (c) 19 included in net income B 3 on bonds, etc., of corporations, etc., to have tax deducted therefrom at source, although less than $3,000 E 10 paid on indebtedness by foreign corporations, etc., deducted from gross income, limitation G (b) 16 paid, deducted in ascertaining net income for normal tax. . . . B 4 paid on account of indebtedness of corporations, etc., limi- tation G (b) 14 paid on deposits by bank may be deducted from income G (b) 15 paid on moneys received for investment, deducted from in- come G (b) IS payments of foreign obligations, tax to be withheld although less than $3,000 E 10 upon obligations of United States, a State or subdivision thereof excluded from net income B 5 Internal Revenue Laws — administrative, special, general and those relating to assessment, remission, collection and re- fund of taxes made applicable L 25 Joint-Stock Companies — but one return required for both excise and income tax S 28 deduction for interest paid on indebtedness, limitation G (c) 19 deduction of tax at source from interest on bonds, etc., of, although less than $3,000 E 10 excise tax on, during January and February, 1913, computa- tion of • • • : S 28 gains and profits from, whether distributed or not, taxable under additional tax A (2) 2 may designate fiscal year, procedure G (c) 17 method of ascertaining net income of G(b) 14 must furnish statements of gains and profits upon request of Commissioner or Collector A (2) 3 must pay tax by June 30 G (c) 20 normal tax on net income of G (a) 12 penalties for failure to file return and for false return G (d) 21 returns of, when to be filed, and what to contain G (c) 17 to be notified of assessments by June 1 G (c) 20 Judges— compensation of U. S. Supreme and inferior courts now in office excluded from net income B 5 June First— notice of amount of tax to be given all persons lia- ble, on or before E 8 38 Jurisdiction— conferred upon courts of first instance in Philippine Islands M 26 conferred on U. S. District Courts to compel production of witnesses and books K 25 Labor Organizations — law not applicable to G (a) 13 Laws — See also Internal Revenue Laws. general provisions of made applicable L 25 License — required to conduct business of collecting interest upon foreign obligations, penalty E 11 Life Insurance Companies— See also Insurance Companies. not to include as income premiums paid back or credited a policyholder G (c) 18 sums paid back to policyholders, or credited to pre- miums due, not included in income » G (b) 14 Life Insurance Policies — See also Annuity Contracts, Endow- ment Contracts. proceeds of, not included in net income B 3 Local Benefits — taxes for not included in those deducted in ascertaining net income for normal tax B 4 Lodge System — orders or associations operating under, not em- braced in the law G (a) 13 Losses — not compensated by insurance to be deducted from gross income of corporations, etc G (b) 14 not compensated by insurance to be shown in returns of cor- porations, etc * G (c) 18 sustained in U. S. by foreign corporations, etc., deducted from gross income G (b) 15 sustained in U. S. to be shown in returns of foreign cor- porations, etc G (c) 18 sustained, to be deducted in ascertaining net income for normal tax on individuals B 4 March First — return by persons to be filed on or before D 6 Married Persons — deduction of $4,000 from net income of C 5 to obtain deduction, notice to be filed with person paying tax at the source E 9 Mines — allowance for depletion of, limited in ascertaining net income of corporations, etc G (b) 14 allowance for depletion of limited in ascertaining net in- come of foreign corporations, etc G (b) 15 allowance for depletion of, limited in ascertaining net in- come of individuals B 4 Minors — return for may be made by person paying tax at the source E 10 Misdemeanor — collecting interest on foreign obligations without a license E 11 for officer or employee of U. S. to divulge information, Sec. 3167 Rev. Stats I 22 Mortgages — of corporations, etc., tax at source, although inter- est less than $3,000 E 10 Mutual Fire Insurance Companies — See, also, Insurance Com- panies, not to return as income portions of premium deposits re- turned to policyholders G (c) 18 returned premium deposits not part of income G (b) 14 ■ Mutual Marine Insurance Companies — See, also, Insurance Companies. deductions of sums and interest repaid policyholders G (b) 14 gross premium less cost of reinsurance to be shown in returns of G (c) 18 may deduct from income sums paid for reinsurance G (b) 14 premiums received included in gross income G (b) 14 Mutual Savings Banks — without capital stock, law not appli- cable to G(a) 13 Names — and addresses of persons where tax withheld at the source to be stated in the return D 6 Net Earnings — income from, of taxable corporations, etc., to be deducted in ascertaining net income for normal tax B 4 39 Net Income — See also Income. deductions in case of normal tax B 4 does not include proceeds of life insurance policies B 3 excludes interest on United States and State obligations.. B S five-sixths of, for year 1913 of corporations, etc G (c) 17 includes income from, but not value of, property by gift, bequest, devise or descent B 3 method of ascertaining, of corporations, joint-stock com- panies, associations and insurance companies G (b) 14 of corporations, etc., subjected to normal tax, G (a) 12 of foreign corporations, joint-stock companies, associations and insurance companies, how ascertained G (b) 15 of persons residing out of U. S., how ascertained, for normal tax B 4 tax computed upon remainder of, after deductions D S to be shown in returns of "corporations, etc G (c) 20 what included in " B 3 what payments on life insurance policies, endowments and annuity contracts not included in B 3 New Buildings — no allowance for, in ascertaining net income for normal tax B 4 Normal Tax — arriount sufficient to pay, to be withheld at the source E 9 deductions in ascertainment of net income B 4 of 1% upon entire net income of corporations, etc G (a) 12 of 1% upon entire net income of persons A (1) 1 provisions respecting payment at source only applicable to E 11 provisions respecting, applicable to additional tax A (2) 2 returns of those only liable to, need not show dividends from corporations, etc., liable to the tax D 7 to be withheld by those making fixed and determinable payments to others, when D 6 Notice — of amount of tax to all persons liable by June 1 E 8 of assessment by June 1, to all corporations, etc G (c) 20 of exemptions in Par. C to be filed with persons withhold- ing tax at source E 9 where collector believes income understated D 7 Oath — required where application and return for deductions made by person paying tax at the source E 10 Offenses — punishment of, committed prior to act not affected by S 29 Partners— liable for tax only in individual capacity ." D 7 Partnership — must file a return when requested by Commissioner or Collector D 7 not liable as such to the tax D 7 profits from taxable whether divided or not D 7 Payment — if not made by June 30, penalty 5% and 1% monthly.. E 9 to be made upon notification of assessment E 9 Payment at the Source — false statement to obtain deductions, penalties E 9 how deductions in subsection B obtained in case of E 10 in all cases where income exceeds $3,000 exclusive of divi- dends, etc E 9 in all other cases assessment by personal return of tax- payer E 11 in cases of interest upon bonds, etc., of corporations, etc., although less than $3,000 E 10 income upon which there has been, to be deducted in ascer- taining net income for normal tax when B 4 method of obtaining deduction of $3,000 if single and $4,000 if married in cases of E 9 normal tax to be withheld from fixed income of all tax- able persons D 6 no tax to be withheld prior to Nov. 1, 1913 D 7 only to be made for the normal tax E 11 required to withhold sufficient to pay normal tax E 9 returns to be made by those who are required to make D 6 40 Payment at the Source — Continued. those required to withhold tax made personally liable there- for E 9 who required to withhold tax at the source E 9 withholding tax from coupons, etc., for interest upon obli- gations of foreign governments, corporations, etc., al- though less than $3,000 E 10 Penalties — See also Fines. for collecting interest on foreign obligations without a li- cense E 11 for failure of individuals to pay tax when due E 9 for false statement in order to obtain deductions E 9 for refusal or neglect to make a return F 12 if incurred prior to act are not affected by S 29 of 100% where intentionally false return filed. Sec. 3176, Rev. Stats I 24 upon corporations for false or fraudulent return, or for neg- lect or refusal to make G (d) 21 to be added to tax to be collected in same manner as the tax. Sec. 3176, Rev. Stats I 24 where tax from corporations, etc., not paid when due G (c) 20 Permanent Improvements — no allowance for, in ascertaining net income for normal tax B 4 Personal Property — profits from sales of, included in net income B 3 Persons — all having income of $3,000 or over must file a return. . D 6 Philippine Islands — included in the words "State" or "United States" if necessary H 21 income to government of, not taxable G (a) 13 jurisdiction conferred upon courts of first instance M 26 law embraces M 26 revenue there from law to accrue to government of M 26 salaries paid officials of, not exempt M 26 Policy Contracts — deductions by foreign insurance companies of sums, other than dividends, paid on G (b) 16 deductions by insurance companies of sums other than divi- dends paid on G (b) 14 returns to show sums other than dividends paid on G (c) 18 sums paid on other than dividends by foreign insurance com- panies to be shown in returns G (c) 19 Porto Rico — included in the words "State" or "United States" if necessary H 21 income to government of, not taxable G (a) 13 law embraces M 26 revenue there from the law to accrue to the government of M 26 salaries paid officials of not exempt M 26 Possession — person having, of objects taxable may exhibit same to collector who shall prepare the return. Sec. 3173, Rev. Stats I 23 Premium Deposits — returned, not to be included in income G (b) 14 returned to policyholders not part of income of foreign mutual fire insurance companies G (b) 16 returned to policyholders not part of income of foreign mutual fire insurance companies G (c) 19 returned to policyholders not to be shown in return of mu- tual fire insurance companies G (c) 18 Premiums — by mutual marine insurance companies to be included in gross income G (b) 14 deductions of repayment of, and interest, by foreign rrfutual marine insurance companies G (b) 16 returned to policyholders not part of income of foreign life insurance companies G (b) 16 sums paid back or credited to premiums due, not included in income of life insurance companies G (b) 14 sums paid back or credited to premiums, not included in income of life insurance companies G (c) 18 41 President of the United States— compensation of present, ex- cluded from net income B 5 returns to be inspected only upon order of G (d) 21 Professions — gains and profits from, included in net income B 3 income from practice of, in U. S. by persons residing else- where, taxable A(l) 1 Profits — See Gains and Profits. Property — See Business and Property in U. S. owned by Persons Residing Elsewhere. Public Utilities — income from, not taxable G (a) 13 income under prior contract for, to state or territory not taxable G (a) 13 Rates — of additional tax on incomes exceeding $20,000 A (2) 2 Real Property — profits from sales of, included in net income.... B 3 Receipts — collector must give when taxes are paid J 24 separate, to be given when requested J 25 Receivers — must file returns D 6 Refundment of Taxes — laws relating to, made applicable L 25 where exemptions in Par. C, not availed of and taxes paid at the source E 9 Regulations — See Rules and Regulations. Reinsurance — cost of, deducted from gross income by mutual marine insurance companies G (c) 18 cost of, deducted from gross premium income of foreign mutual marine insurance companies G (c) 19 deductions of sums paid for, by foreign mutual marine in- surance . companies G (b) 16 payments to reserves, not income of foreign mutual fire insurance companies G (b) 16 sums paid for to be deducted from gross income of mutual marine insurance companies G (b) 14 sums retained for, reserves not to be included in returns of mutual fire insurance companies G (c) 18 Religious Corporations — law not applicable to. G (a) 13 Remission of Taxes — laws relating to, made applicable L 25 Reserve Funds — actual deposits with state or territorial officers treated as payments to G (b) 16 additions to, by foreign insurance companies to be deducted from gross income G (b) 15 additions to, deducted from gross income of insurance com- panies G (b) 14 additions to by foreign insurance companies to be shown in return G (c) 19 additions to by insurance companies to be shown in returns G (c) 18 Restoration of Property — no allowance to be made for expenses for, in ascertaining net income for normal tax B 4 Repeal— accrued rights and liabilities not affected by any repeal or change made by the law S 29 Returns (in General) — after assessment to constitute public records, proviso G (d) 20 all, to be forwarded by collectors to the Comr. of Int. Rev. G (c) 20 all must be verified by persons making same. D 7 collector to prepare where taxable objects exhibited to him. Sec. 3173, Rev. Stats I 23 Commissioner to make where none made or false or fraud- ulent E 8 duty of collector where no return made and person absent. Sec. 3173, Rev. Stats I 23 for income tax to be filed March 1. Sec. 3173, Rev. Stats. I 22 for special taxes to be filed by July 31. Sec. 3173, Rev. Stats I 22 neglect to file and for false or fraudulent, penalties and fines F 12 penalties for failure to file and for false, by corporations, etc. G (d) 21 to be inspected by state officers, when G (d) 21 42 Returns (By Persons and Corporations Liable to the Tax). deductions from gross income to be made in D 6 but one required of corporations both under excise and income tax law S 28 form of to be prescribed by Comr. of Int. Revenue D 6 from partnerships on request of Commissioner or Collector D 7 in case of additional tax, what it must contain A (2) 2 may be filed with collector where tax paid at source, to get deductions in subsection B E 10 must be filed with Collector of Internal Revenue D 6 none required where tax on all one's income withheld at the source D 7 of corporations, etc., when to be filed and what to contain. . G (c) 17 of corporations, etc., to show gross income and expenses. . G (c) 18 personal return for all cases where payment not made at the source E 11 to be filed by March 1 of each year , D 6 to be filed with person paying tax at source to get deduc- tions in subsection B E 10 to show additions to reserve funds by insurance companies. . G (c) 18 to show annual income. Sec. 3173, Rev. Stats I 22 to show bonded and other indebtedness of corporations G (c) 18 to show losses not compensated by insurance of corpora- tions, etc G (c) 18 to show losses sustained in business in U. S G (c) 18 to show paid up capital stock of corporations, etc G (c) 17 to show share of partnership profits whether divided or not D 7 to show sums other than dividends paid on policy and an- nuity contracts G (c) 18 what it must contain D 6 where liable only to normal tax need not show dividends from corporations, etc., liable to the tax D 7 Returns (on Behalf of Others). by one of several joint guardians, trustees, etc., sufficient.. D o not required where income less than $3,000 D 7 required of guardians, trustees, executors, etc D 6 those paying others subject to the tax fixed and determinable gains, must file D 6 to contain names and addresses where tax withheld at the source D 6 where liable only to normal tax need not show dividends from corporations, etc., liable to the tax D 7 Returns (False or Fraudulent) — Collector may cause produc- tion of books and witnesses. Sec. 3173, Rev. Stats I 23 Collector to prepare return and Comr. to assess the tax. Sec. 3176, Rev. Stats I 24 Commissioner may make, for corporations, etc., within three years G (c) 20 penalty of 100% for. Sec. 3176, Rev. Stats I 24 power of Commissioner to assess taxes in cases of none or false or fraudulent return E 8 Rents — included in net income B 3 Revised Statutes of the United States — Sections 3167, 3172, 3173, and 3176 amended I 21 Rules and Regulations — governing business of collecting interest on foreign obligations E 11 governing returns E __ 11 governing returns for additional tax A (2) 2 respecting inspection of returns by order of the President.. G (d) 21 Salary — included in net income B 3 Sales — profits from, of property real or personal included in net income B 3 Scientific Corporations— law not applicable to G (a) 13 43 Secretary of the Treasury— to approve rules and regulations governing returns for additional tax A (2) 2 certification by respecting unreasonableness of additions to surplus of corporations, etc A (2) 3 to prescribe manner for inspection of returns by state offi- cers, when G (d) 21 Sickness — collector may extend time for filing return in cases of Sec. 3176, Rev. Stats I 24 Single Persons — deduction ,of $3,000 from net income of C 5 to obtain deduction of $3,000 notice must be filed with per- son paying tax at the source E 9 Sixteenth Amendment — authorizing income tax 1 Special Laws — made applicable L 25 Special Taxes — returns in cases of, to be filed by July 31. Sec. 3173, Rev. Stats I 22 Specific Exemptions — See Deductions. State— compensation of officers of excluded from net income.... B 5 deduction for taxes paid, by corporations, etc G (c) 20 income to, from public utility not taxable G (a) 13 income to, under prior contract for public utility, not taxable G (a) 13 interest upon obligations of, not included in net income.... B 5 officers of, may inspect returns, when G (d) 21 taxes paid any, to be deducted from income of corpora- tions, etc G (b) 15 taxes paid deducted from gross income of corporations, etc. G (b) 16 what the word, as used in the act, shall include H 21 Surplus— additions to, not evidence of purpose to escape tax, proviso A (2) 3 Taxes — deduction for, paid by corporations, etc G (b) 16 deduction for, paid U. S., state, territory of foreign govern- ment by corporations, etc G(c) 20 for local benefits not included in those deducted in ascertain- ing net income for normal tax B 4 paid, deducted in ascertaining net income for normal tax, exception B 4 paid, to be deducted from income of corporations, etc G (b) 15 Territory — deduction for taxes paid, by corporations, etc G (c) A) included in words "State" or "United States" if necessary.. H 21 income to, from any public utility not taxable G (a) 13 income to, under prior contract for public utility, not taxable G (a) 13 taxes paid any, to be deducted from income of corpora- tions, etc G (b) 15 taxes paid, deducted from gross income of corporations, etc. G (b) 16 Testimony — of witnesses in case of alleged understating of in- come D 7 Trade — income from, in U. S. by persons residing elsewhere tax- able A(l) 1 Trustees — must file returns D 6 Trust Companies — may deduct interest paid on deposits G (c) 19 interest paid on deposits, etc. by, may be deducted from income G (b) 15 Understating Income— authority of collector or deputy in case of D 7 submitting case to Commissioner after action by Collector. . D 7 United States — all officers and employees required to withhold tax at the source E 9 all persons residing in, subject to the tax A (1) 1 deduction of taxes paid, by corporations, etc G (c) 20 interest on obligations of, excluded from net income B 5 taxes paid, deducted from gross income of foreign corpora- tions, etc G (b) 16 taxes paid under authority of, to be deducted from income of corporations, etc G (b) 15 what the words, as used in the act, shall include H iX 44 United States District Court — given jurisdiction to compel pro- duction of witnesses and books K 25 Wages — included in net income B 3 Wear and Tear — See also Depreciation. deduction for, by foreign corporations, etc G (b) IS reasonable allowance for, deducted from gross income of corporations, etc G (b) 14 reasonable amount for, to be deducted in ascertaining net income for normal tax B 4 Withholding Tax at the Source — See Payment at the Source. Witnesses — attendance of may be compelled by U. S. District Courts K 25 production of by collector where no return or false return Sec. 3173, Rev. Stats I 23 sworn testimony of in case of alleged understating of income D 7 Worthless Debts— charged off, to be deducted in ascertaining net income for normal tax B 4 Year 1912 — excise taxes on corporations for, to be collected.... S 28 Year 1913 — excise tax imposed on corporations, etc., during Jan- uary and February S 28 net income from March 1 to December 31, taxable D 5 tax on net income from March 1 to December 31 of cor- porations, etc G (c) 17