It has been suggested that these changes could be accomplished by an amendment in substantially the following form:

Strike out subdivision (c) of section 402 and insert:

(c) To the extent of any interest therein of which the dece dent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property-in-the-nature-of-a-final-disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title;

The words "contemplation of death," as used in this section, shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall such words be limited and restricted to that expectancy of death which actuates the mind of a person making a gift causa mortis; and it is hereby declared to be the intent and purpose of this title to tax any and all transfers which are made in lieu of or to avoid the passing of property transferred by testate or intestate laws. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within six years prior to his death, except in the case of a bona fide sale for a fair consideration in money or money's worth, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title. Any transfer made within two years of the death of any decedent without consideration, save and except love and affection, shall be conclusively presumed to have been made in contemplation of death;

TITLE VI-TAX ON BEVERAGES.

Section 600. Distilled spirits withdrawn for nonbeverage purposes and diverted to beverage uses.

It has been suggested that this section of the law be amended so as to provide specifically that in cases in which distilled spirits are withdrawn and tax paid for nonbeverage uses and diverted to beverage uses an additional tax of $4.20 (the difference between the beverage and the nonbeverage rate) shall be imposed upon such spirits.

It is believed that flavoring extracts, patent and proprietary medicines, antiseptic solutions, cosmetics and toilet articles, and many similar preparations have been sold in large quantities in prohibition territory to be used as beverages.

It has been suggested that this change could be accomplished by an amendment in substantially the following form:

Amend subdivision (a) of section 600 by striking out the period at the end thereof and inserting a colon and the following:

Provided, That an additional tax of $4.20 on each proof gallon, and a proportionate tax at a like rate on all fractional parts of such proof gallon, shall be levied and collected on all distilled spirits withdrawn and tax paid at $2.20 per proof gallon for use for nonbeverage purposes, and which are shown to have been sold or used (1) for beverage purposes, or (2) in violation of any regulations governing the sale and use of nonbeverage spirits prescribed by the Commissioner, with the approval of the Secretary, or which are shown to have been used in the manufacture of any article used or intended to be used for beverage purposes, containing one-half of 1 per centum or more of alcohol by volume.

Section 600. One hundred thousand dollars limit proposed in the case of distillery warehouse bonds.

It has been suggested that distillery warehousing bonds prescribed in section 3293 of the Revised Statutes, as amended, should be limited in amount to not in excess of $100,000, on the grounds that the rates of tax on distilled spirits having been greatly increased the distillers have difficulty in inducing surety companies to obligate themselves on such bonds, and that it is improbable that any distiller will hereafter be in position to fraudulently remove a sufficient quantity of spirits from any warehouse to exceed the security afforded to the Government by a bond in the sum of $100,000.

It has been suggested that this change could be accomplished by an amendment in substantially the following form:

Amend section 600 by adding at the end thereof a new subdivision, as follows:

(d) Distillery warehousing bonds prescribed in section 3293 of the Revised Statutes, as amended, conditioned for the payment of tax on the spirits entered into the distillery warehouse, shall be in a penal sum not less than the amount of the tax on such distilled spirits, but in no case will any new warehousing bond be required in a penal sum in excess of $100,000.

Section 620. Disposition of violations of wine tax provisions by the assertion of tax and penalty in lieu of prosecution.

It has been suggested that this section of the law be amended so as to leave no doubt as to the power of the Commissioner of Internal Revenue to assess the tax and 200 per cent penalty before conviction has been had in court in cases of willful evasion, as is similarly provided in section 23 of the Revenue Act of 1914, in section 1004 of the Revenue Act of 1917, and in section 605 of the Revenue Act of 1918 It has been suggested that this change could be accomplished by an amendment in substantially the following form:

Strike out section 620 and insert:

"SEC. 620. That whoever evades or attempts to evade any tax imposed by sections 611 to 615, both inclusive, or any requirement of sections 610 to 621, both inclusive, or regulation issued pursuant thereto, or whoever, otherwise than as provided in such sections, recovers or attempts to recover any spirits from domestic or imported wine, or whoever rectifies, mixes, or compounds with distilled spirits any domestic wines, other. than in the manufacture of liqueurs, cordials, or similar compounds, shall, on conviction, be punished for each such-offense by a fine of not exceeding $5,000, or imprisonment for not more than five years, or both, and in-addition-thereto-by-a penalty of double the tax evaded, or attempted-to-be-evaded; to-be-assessed-and-colleeted-in-the-same-manner as taxes-are assessed and collected, be liable to a penalty of double the tax evaded, or attempted to be evaded, together with the tax, to be assessed and collected in the same manner as taxes are assessed and collected, and in addition thereto shall, on conviction, be punished for each such offense by a fine of not exceeding $5,000, or imprisonment for not more than five years, or both, and all wines, spirits, liqueurs. cordials, or similar compounds as to which such violation occurs shall be forfeited to the United States. But the provisions of this section and the provisions of section 3244 of the Revised Statutes, as amended, relating to rectification, or other internalrevenue laws of the United States, shall not be held to apply to or prohibit the mixing or blending of wines subject to tax under the provisions of sections 611 to 615, both inclusive, with each

other or with other wines for the sole purpose of perfecting such wines according to commercial standards: Provided, That nothing herein contained shall be construed as prohibiting the use of tax-paid grain or other ethyl alcohol in the fortification of sweet wines as defined in section 610 of this Act and section 43 of the act entitled 'An Act to reduce the revenue and equalize duties on imports, and for other purposes,' approved October 1, 1890, as amended by this Act.

Section 628. Exemption from tax of the amount paid for containers of taxable beverages.

This section imposes a tax on certain beverages which is necessarily imposed on the selling price, including the price of the container. In cases in which the containers are returned to the manufacturer by the purchaser and refund made by the manufacturer to the purchaser the department allows a refund of the tax paid on this portion of the selling price.

It has been suggested that the law be amended to specifically exempt from tax the selling price of the container provided the selling price of the container is billed to the purchaser separately from the price of the beverage.

It has been suggested that this change could be accomplished by an amendment in substantially the following form:

Add a new paragraph at the end of section 628 as follows:

(c) In the case of any beverage specified in this section, if the beverage is sold under an agreement by which the manufacturer is to refund the purchaser a specified amount upon the return of the ccontainer, the tax shall be computed upon the selling price of the beverage if the selling price of the beverage and container are billed to the purchaser separately. In such cases the selling price of the container shall not be billed at an amount in excess of the refund to be allowed on the return of the container.

Section 630. Taxability and nontaxability of articles of food or drink defined. The terms "other similar place of business," "in or in proximity to the place of business," and "amount paid" defined. Proprietors of soda fountains, ice cream parlors, and other similar places of business required to furnish purchaser a ticket indicating amount paid and tax separately.

This section imposes a tax on the amount paid to any person conducting a soda fountain, ice-cream parlor, or other similar place of business for soft drinks, ice cream, and similar articles.

In the administration of section 630 it has been necessary for the Treasury Department to define taxable and nontaxable articles under this section, and the terms "other similar place of business," "in or in proximity to the place of business," and "amount paid."

It has been suggested that in the interest of certainty these definitions as indicated in the suggested amendment should be incorporated in the Revenue Act of 1918.

It has been suggested that this tax would be paid more willingly if means were provided for the certain collection of the tax by the Government and that to this end proprietors of soda fountains and other similar places of business should be required to furnish the purchaser a ticket indicating the amount paid and the tax separately, and that these tickets be serially numbered.

It has been suggested that these changes could be accomplished by amendments in substantially the following form:

Amend section 630 by adding the following six new paragraphs at the end thereof:

The term "similar articles of food or drink"-

(a) Includes such articles as orangeade, lemonade, pineapple juice, coca-cola, root beer, moxie, phosphates, fruit and flavoring sirups compounded or mixed with plain or carbonated water, milk shakes in any form, cream and egg shakes, ice cream sandwiches, and ice cream cones; but

(b) Does not include such articles as beef tea, coffee, tea, buttermilk, milk, hot chocolate or cocoa, clam broth, clam bisque, tomato bouillon, bromo seltzer, citrate of magnesia, rochelle salts, seidlitz powders, bicarbonate of soda, castor oil, epsom salts, and essence of pepsin;

The term "other similar place of business" shall be deemed to refer primarily to the character of the business transacted rather than to any physical resemblance to the place where the business is done;

The container used to convey any article taxable under this section shall be the primary test in determining whether or not the article is to be consumed "in or in proximity to the place of business”;

Sales of articles taxable under this section shall not be subject to tax when made in the regular course of business at a hotel, restaurant, cafeteria, lunch room, or club house, unless such articles are sold separate and apart from meals. Ice cream sold with any substantial article of food at such places shall not be subject to tax. All sales of such articles at a soda fountain or in an ice cream parlor shall be subject to tax even though sold as a part of a meal.

The term "amount paid" as used in this section means the entire amount paid by the purchaser and not the amount paid for each separate article of food or drink.

Every person conducting a soda fountain, ice cream parlor, cr other similar place of business shall provide serially numbered tickets to evidence separately the amount and tax paid for articles liable to tax under this section. The Commissioner, with the approval of the Secretary, is hereby authorized to make all necessary regulations to carry into effect the provisions of this paragraph.