operations are permanently discontinued at any distillery with spirits in warehouse and there are no outstanding accrued taxes or penalties, an indemnity bond may be given in lieu of the lien and consents under such sections, if such bond is given in a sufficient penal sum to cover the value of the land and buildings thereon constituting the distillery premises, and all other property covered by the lien except the spirits in warehouse and their containers. The lien upon such spirits and containers for taxes and penalties shall remain in full force and effect.

The Commissioner, with the approval of the Secretary, is hereby authorized to make all necessary regulations for the enforcement of this section.

Title XIII (new section). Conviction of illicit distillers.

It has been suggested that the law should permit the conviction of illicit distillers in cases in which the complete still is not discovered in operating condition. This suggestion is made for the reason that it is a common practice for illicit distillers to take their apparatus apart and for one person to have in his possession the still and for another to have the worm.

It has been suggested also that it would be better to leave the manner in which the registration of stills, worms, etc., should be made to regulations rather than incorporate the provision in the statute; and that the words "shall be forfeited" be changed to "may be forfeited," in order to remedy the drastic provisions of the section.

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

Amend the Revenue Act of 1918 by adding a new section as follows:

SEC. 1325. That section 3258 of the Revised Statutes is hereby amended to read as follows:

SEC. 3258. Every person having in his possession or custody, or under his control, any still, worm, condenser, or distilling apparatus, or any apparatus designed to be used for distilling set-up, shall register the same with the collector of the district in which it is,by--subscribing and filing with him-duplicate statements, in writing, setting forth-the-particular-place-where such still or distilling apparatus-is-set-up, the-kind-of-still-and its-eubie-contents, the-owner-thereof,-his-place-of-residence, and the purpose-for-which-said-still-or-distilling-apparatus-kas been or is intended to-be-used; one-of-which-statements-shall be retained and preserved by the-collector,-and-the-other-transmitted by him to the Commissioner of Internal Revenue. Stills and distilling apparatus shall be registered-immediately upon their being set up.

Every still, worm, condenser, or distilling apparatus, or any apparatus designed to be used for distilling, not so registered, together with all personal property in the possession or custody, or under the control of such person, and found in the building, or in any yard or inclosure connected with the building in which the same may be set-up, shall may be forfeited.

And Every person having in his possession or custody, or under his control, any still, worm, condenser, or distilling apparatus or any apparatus designed to be used for distilling set-up, which is not so registered, shall pay a penalty of $500, and shall be fined not less than $100 nor more than $1,000, and imprisoned for not less than one month, nor more than two years.

The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, is hereby authorized to make all necessary regulations for the enforcement of this section.

Title XIII (new sections). To allow the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, to dispose of seized distilled spirits in such manner as they direct. Under the language of section 3460, Revised Statutes, it is necessary to sell property seized for violation of the internal revenue laws, of the value of $500 or less, in the district where seizure is made, which, in the case of liquor seizures in dry territory involves conflict with the local laws.

It has been suggested that it would be desirable to invest the executive officers with more discretion than the statutes at present allow. Section 3460, Revised Statutes, makes sale compulsory and section 3334, Revised Statutes, requires that distilled spirits be sold subject to tax. Much of the spirits seized is of such low quality that it can not be sold in a legitimate market for the amount of the tax. In such cases literal compliance with the statutes is impossible. Furthermore, the Government itself is a considerable consumer of alcoholic liquor for medicinal and other purposes, and it has been suggested that it would sometimes be more advantageous to turn the liquor, even in wet territory, over to some department or branch of the Government than to offer it for sale.

It has been suggested that no harm would result from conferring such authority without regard to the value of the property seized. Such result could be achieved by omitting from the first paragraph of section 3460 Revised Statutes, the words, "which, in the opinion of the collector or deputy collector making the seizure, are of the appraised value of five hundred dollars or less"; and omitting the word, "said" before "collector."

If the aforementioned suggestions are adopted section 3453, Revised Statutes, should be amended and made consistent with section 3460, Revised Statutes, as amended.

The language of section 3453, Revised Statutes, seems to require institution of court proceedings in all seizure cases, without exception. An amendment, consistent with those suggested with respect to section 3460, Revised Statutes, could be made by adding to section 3453, Revised Statutes, the words:

"Provided, That the proceedings prescribed by section 3460, Revised Statutes, as amended by section 1329 of this act, may be followed if the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury so directs."

If the aforementioned suggestions are adopted, all the matter following the first sentence of the second paragraph of section 3450, Revised Statutes, should be eliminated.

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

1. Amend the Revenue Act of 1918 by adding a new section as follows:

SEC. 1326. That section 3450 of the Revised Statutes is hereby amended to read as follows:

SEC. 3450. Whenever any goods or commodities for or in respect whereof any tax is or shall be imposed, or any materials, utensils, or vessels proper or intended to be made use of for or in the making of such goods or commodities are removed, or are deposited or concealed in any place, with intent to defraud the United States of such tax, or any part thereof, all such goods and commodities, and all such materials, utensils, and vessels, respectively, shall be forfeited; and in every such case all the casks, vessels, cases, or other packages whatsoever, containing, or which shall have contained, such goods or commodities, respectively, and every vessel, boat, cart, carriage, or other conveyance whatsoever, and all horses or other animals, and all things used in the removal or for the deposit or concealment thereof, respectively, shall be forfeited. And every person who removes, deposits, or conceals, or is concerned in removing, depositing, or concealing any goods or commodities for or in respect whereof any tax is or shall be imposed, with intent to defraud the United States of such tax or any part thereof, shall be liable to a fine or penalty of not more than $500. And all boilers, stills, or other vessels, tools, and implements, used-in-distilling-or-reetifying, and forfeited under any of the provisions of this title, and all condemned material, together with any engine or other machinery connected therewith, and all empty barrels, and-all grain or other material suitable-for-distillation, shall, under the direction of the court in which the forfeiture-is-recovered, be sold at publie auction, and the proceeds thereof, after dedueting the expenses of sale, shall be disposed of according to law:

And all spirits or spirituous liquors which-may-be-forfeited under the provisions of this title, unless herein-otherwise-provided, shall be disposed of by the Commissioner of Internal Revenue as the Secretary of the Treasury may direct.

2. Amend the Revenue Act of 1918 by adding a new section as follows:

SEC. 1327. That section 3453 of the Revised Statutes is hereby amended by striking out the period at the end thereof and inserting a colon and the following:

Provided, That the proceedings prescribed in the fourth subdivision of section 3460, Revised Statutes, as amended, may be followed if the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, so directs.

3. Amend the Revenue Act of 1918 by adding a new section as follows:

SEC. 1328. That the first paragraph of section 3460 of the Revised Statutes is hereby amended to read as follows:

SEC. 3460. In all cases of seizure of any goods, wares, or merchandise, as being subject to forfeitures under any provision of the internal-revenue laws, which, in the opinion of the collector or deputy collector making the seizure, are-of-the-appraised-value of $500 or less, the said collector or deputy collector shall, except in cases otherwise provided, proceed as follows:

4. Amend the Revenue Act of 1918 by adding a new section as follows:

SEC. 1329. That the fourth subdivision of section 3460 of the Revised Statutes is hereby amended to read as follows:

Fourth. If no claim is interposed and no bond is given within the time above specified, the collector or deputy collector, as the ease may be, shall give ten days' notice of the sale-of the goods, wares, or merchandise by publication, and, at the time and place specified in the notice, shall-sell-the-articles-so-seized-at publie auction, and, after dedueting-the-expense-of-appraisement and sale, he shall deposit the proceeds-to-the-credit-of-the Secretary of the Treasury shall be forfeited to the United States and shall be disposed of in such manner as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may direct.

Title XIII (new section). Any regulation or Treasury decision reversing a prior regulation or Treasury decision to be made effective from date of approval.

In regulations 47, article 10, it was ruled that all sales of articles taxable under section 900 were tax exempt when sold to a State or municipality and paid for out of funds of the State or municipality. Section 1319 of the revenue act imposes a fine of not more than

$1,000 or imprisonment not exceeding one year, or both, in the case of any taxpayer passing on a tax to a purchaser and representing it to be a tax when in fact it is not. The effect of the aforementioned regulation and section 1319 of the revenue act was, for example, to cause the music concerns of the United States to sell pianos to school boards tax exempt. If the music companies had not made these sales tax exempt, they would have been liable to penalty under section 1319. The Attorney General reversed this ruling. of the Treasury Department in June, 1919, holding that all sales of articles taxable under section 900 when made to a State or municipality were subject to tax. In view of the fact that Congress has never seen fit to allow an administrative officer to waive a tax legally imposed, it was the duty of the Commissioner of Internal Revenue and the Secretary of the Treasury to assess and collect a tax upon all sales of taxable articles under section 900 of the Revenue Act of 1918 and section 600 of the Revenue Act of 1917, as well as certain other sections of both acts. While the policy of Congress in refusing to allow an administrative officer to waive a tax legally imposed is a proper one, in cases like the aforementioned it very frequently works a great hardship. It has been suggested that an amendment be made to the present revenue law providing that in case a regulation or Treasury decision, approved by the Commissioner and Secretary, reverses a prior regulation or Treasury decision, the subsequent regulation or Treasury decision may, in the discretion of the Commissioner, with the approval of the Secretary, be made effective from the date of approval.

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

Amend the Revenue Act of 1918 by adding thereto a new section as follows:

Sec. 1330. That in case a regulation or Treasury decision, approved by the Commissioner and Secretary, is reversed by a subsequent regulation or Treasury decision, such regulation or Treasury decision may, in the discretion of the Commissioner, with the approval of the Secretary, be made effective from the date of approval.

Title XIII (new section). Credit allowed for tax reimbursed to manufacturer of a taxable article when such article is used in the manufacture of another article subject to tax.

In a number of cases a tax is imposed upon the selling price of an article which is used in the manufacture of an article also subject to tax. It was the opinion of the Treasury Department that it was not the desire of Congress that in such cases an article should be doubly

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