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to them all. Therefore any article whatever, which is made principally of fur on the hide or pelt or of which any such fur is the component material of chief value, or which is enumerated in subdivision (17) of section 900 of the statute, covering liveries and livery boots and hats, or in subdivision (18) of section 900, covering hunting and shooting garments and riding habits, is not subject to tax under these regulations but to the 10 per cent tax on the full sales price imposed by section 900 of the statute. (See arts. 29, 30, and 31, of Regulations No. 47.)

It will sometimes happen that the same article is within more than one of the exceptions specified by section 904 (b) of the statute. The rule, that the more specific description governs, again applies. Either of the other designations (that is, furs, liveries, or hunting garments) covered by the several exceptions, is more specific than that relating to articles made of, or ornamented, mounted, or fitted with, precious metals or imitations thereof, or ivory. This latter is also the only designation covering a tax of 5 per cent on the full sales price. All the other designations covered by the exceptions cover a tax of 10 per cent on the full sales price. It accordingly follows that if any article is within more than one exception specified by section 904 (b), it is subject to a 10 per cent tax on its full sales price. It is only when it is within the exception relating to articles made of, or ornamented, mounted, or fitted with precious metals, or imitations thereof, or ivory, solely, that the tax at the rate of 5 per cent on the full sales price applies. Take, for example, purses. A leather purse without ornaments of precious metals, etc., would not be within any of the exceptions and if sold for more than $7.50 would be taxable on the excess of the sales price over that amount, under paragraph (5) of section 904 (a), simply as a purse. Next, take a leather purse with gold ornaments. The gold ornaments would bring it within the exception relating to articles ornamented with precious metals, etc., and it would, therefore, be subject to tax of 5 per cent of the full sales price. Now, take a purse made principally of fur or of which fur is the component of chief value. It would be within the exception covering articles made of fur, etc., and would be subjet to a tax of 10 per cent of the full sales price. Even though this latter purse were also ornamented with precious metals, it would still be subject to the same tax as an article made of fur, since the designation covering articles made of fur takes precedence over that covering articles ornamented with precious metals, etc.

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In short, an article which is within any of the specific designations of section 904 (a) of the statute is subject to the tax imposed thereby unless it is covered by any of the exceptions enumerated in section 904 (b). If it is covered by the exception relating to articles ornamented with precious metals, etc., it is not subject to tax under section 904 (a), but to a tax of 5 per cent of the full sales price under section 905. If it is within either of the other exceptions, even though it is also within that relating to articles ornamented with precious metals, etc., it is subject to a tax of 10 per cent of the full sales price under section 900 of the statute.

It has been suggested that this holding of the Treasury Department should be confirmed by legislative enactment.

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. 1334. That except as otherwise provided under section 904 of this act, when a tax is imposed upon the selling or leasing price of an article within the language of two or more sections of the act, the tax shall be deemed to be imposed only under the section which contains the most specific description of the article subject to

tax.

Title XIII (new section). Amendment proposed to section 7 of the act of August 2, 1886, to permit the required statement for properly marking oleomargarine packages to be printed on the package in lieu of affixing labels.

It has been suggested that in view of the fact that section 6 of the act of August 2, 1886, was amended by H. R. 9054, "An act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1919," to permit the use of paper containers as original packages for oleomargarine, that section 7 of the act of August 2, 1886, should also be amended to permit the required statement in properly marking such packages to be printed on the package in lieu of affixing labels.

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. 1335. That section 7 of the act approved August 2, 1886, entitled, "An act defining butter, also imposing a tax upon and regulating the manufacture, sale, importation, and exportation of oleomargarine, is hereby amended by adding at the end thereof a sentence as follows:

In the case of paper packages the required statement may be printed on the package, in lieu of affixing labels under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe.

Title XIII (new section).-Severe penalty imposed if taxpayer refuses to keep books in a manner to reflect the income.

It has been suggested that in a few instances taxpayers do not keep books in such a way as to clearly reflect the income and absolutely refuse to comply with the request of the Treasury Department, and that a sufficient penalty should be provided in order to enable the commissioner in all cases to require taxpayers to keep their books in such a manner as to clearly reflect their income.

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 a new section as follows:

Sec. 1336. That if in the opinion of the Commissioner, a taxpayer does not keep his books in a manner that will clearly reflect the income, he may require the taxpayer to keep his books in a manner that will so reflect the income.

Whenever any person fails to comply with the provisions of this section, he shall be punished by a fine of not more than $10,000, or by imprisonment not exceeding one year, or both.

tle XIII (new section).—All tax assessments to be made within five years.

Under the Revenue Act of 1918, section 3182 of the Revised Statutes overs capital stock tax assessments understated or omitted from ny list and provides that they must be made within 15 months com the date of delivery to the collector of the list upon which the ssessments of such tax are made or from which they are omitted. Subdivision (d) of section 250 of the Revenue Act of 1918 allows ive years for assessment in the case of income and excess profits axes, and it has been suggested that the same period of time should extend to the assessment of capital stock taxes and all other taxes not payable by stamp.

It has been suggested that, due to the volume of work and the limited force of the Internal Revenue Bureau in the past, the capital stock tax audit has not been completed each year within the 15-month period, and that in order to avoid legal proceedings it has been necessary to request taxpayers to sign waivers of the statu-.. tory limitation and that the suggested extension of time would eliminate the necessity for such an unsatisfactory procedure.

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 a new section as follows: SEC. 1337. That section 3182 of the Revised Statutes is hereby amended to read as follows:

"SEC. 3182. The Commissioner of Internal Revenue is hereby authorized and required to make the inquiries, determinations, and assessments of all taxes and penalties imposed by this Title, or accruing under any former internal-revenue act, where such taxes had not been duly paid by stamp at the time and in the manner provided by law, and shall certify a list of such assessments when made to the proper collectors respectively, who shall proceed to collect and account for the taxes and penalties so certified. Whenever it is ascertained that any list which has been or shall be delivered to any collector, is imperfect or incomplete in consequence of the omission of the name of any person liable to tax, or in consequence of any omission, or understatement, or undervaluation, or false or fraudulent statement contained in any return made by any person liable to tax, the Commissioner of Internal Revenue may, at any time within 15 months five years from the time of the delivery of the list to the collector as aforesaid, enter on any monthly or special list the name of such person so omitted, together with the amount of tax for which he may have been or shall become liable, and also the name of any such person in respect to whose return, as aforesaid,.

there has been or shall be any omission, undervaluation, unde statement, or false or fraudulent statement, together with the amount for which such person may be liable, above the amour for which he may have been or shall be assessed upon any retur made as aforesaid; and he shall certify and return such list to the collector as required by law. And all provisions of law for the ascertainment of liability to any tax, or the assessment or collec tion thereof, shall be held to apply, so far as may be necessary, to the proceedings herein authorized and directed."

Title XIII (new section). Amendments to Revenue Act of 1918 to be effective from date of approval of the new act.

It has been suggested that any amendment to the Revenue Act of 1918 should be effective only from the date of the approval of the act amending the same.

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 a new section as follows:

SEC. 1338. That all amendments to the revenue act of 1918 made by this act shall be effective only from the date of approval of this act.

[Part II containing a digest of the decisions of the United States Courts construing the internal-revenue laws from 1909 to 1918, both inclusive, is printed as a separate document.]

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