relation to foreign corporations has been referred to in a previous paragraph.36 Exempt Corporations. The special excise tax is expressly made inapplicable to any corporation exempt for income tax purposes.37 As foreign corporations falling within the classes enumerated as exempt in the income tax law (except in the case of building and loan associations and cooperative banks) are exempt for income tax purposes,38 they are also exempt from this tax, if falling within such enumerated classes. A corporation paying this tax is not on that account exempt from any occupational tax.39 Tax Due. This tax is an excise tax on the privilege of doing business, similar to occupational taxes imposed on individuals. Being a privilege or occupational tax, it is payable annually, in advance,-in July, the beginning of the Government's fiscal year, by domestic corporations making no income tax return or making such return on the basis of a fiscal year corresponding to the Government's fiscal year and by foreign corporations in the first month of the taxable year by other taxable corporations. The tax is payable to the collector, at any time after such due date, but penalties for non-payment do not attach until ten days after notice and demand therefor have been served by the collector upon the taxpayer.40 Returns. Returns are required to be filed in July of each year with the collector of the district in which the principal place of business of the corporation is located. Forms will be sent to taxable corporations known to collectors, but failure to receive a blank form will not relieve 36 See p. 788. 37 Revenue Act of 1918, § 1000 (c). 38 Letter from Treasury Department dated December 6, 1916; I. T. S. 1918, 1182; Reg. 38 Rev., Art. 12. 39 Reg. 38 Rev., Art. 17. 40 See T. D. 2423, and Chapter 35 for rulings as to notice and demand. a corporation from the penalties prescribed by law for failure to make the return within the time required.41 IN WHAT CASES REQUIRED. A return is required of every domestic corporation engaged in business, having a capital stock issued and outstanding, regardless of the par value, or the actual value, of its capital stock, unless such corporation was not engaged in business during the preceding taxable year.42 Subsidiary corporations, all or a part of the stock of which is owned by another corporation, are required to file returns in the same way as other corporations.43 EXTENSION OF TIME. Under the former law an extension of time for filing the capital stock return could be obtained in the case of sickness or absence, such extension not to exceed thirty days. Under the present law extensions may be granted to the same extent as in the case of income tax returns. RETURNS TO BE PUBLIC RECORDS. Returns filed pursuant to the special excise tax law, constitute public records, and are open to inspection in all respects the same as income tax returns.45 FOREIGN CORPORATIONS. A return is required of every foreign corporation irrespective of the amount of capital employed either in this country or elsewhere in the transaction of its business.46 Returns are filed with the local collector under the rules which apply to the filing of returns of annual net income.47 Payment of the Tax. All assessments are made by the Commissioner. The collector, within ten days after receiving any list of taxes from the Commissioner gives notice 41 Reg. 38 Rev., Art. 21. T. D. 2364. Domestic corporations used Form No. 707 under the former law. 42 Reg. 38 Rev., Art. 18. 43 Reg. 38 Rev., Art. 24. 44 Revenue Act of 1918, § 1317. 45 Reveune Act of 1918, § 1000 (d). 46 See T. D. 2383. 47 See Reg. 38 Rev., Appendix B. to each corporation liable to pay any tax stated therein, to be left at its place of business or to be sent by mail, stating the amount of such tax and demanding payment thereof. A collector has no authority to extend the time for payment of the tax. The collector may accept payment of the tax when the return is filed as an "advance collection," subject to any adjustment later found necessary, but no corporation is required to pay the tax until within ten days after notice and demand.48 Penalties. Any corporation carrying on business within the meaning of Section 1000 of the Revenue Act of 1918 without having paid the tax therein provided is subject to a penalty of not more than $1,000 besides being liable for the payment of such tax.49 PENALTY FOR FAILURE TO MAKE RETURN. If a corporation fails to make a return on or before the time required by law in any year, the collector or deputy collector may make a return from his own knowledge or from such information as he can obtain through testimony or otherwise. In any such case the Commissioner may, from his own knowledge or from such information as he can obtain through testimony or otherwise, make a return or amend any such return made by a collector or deputy collector. Any return so made and subscribed by the Commissioner, or by a collector or deputy collector, and approved by the Commissioner is prima facie good and sufficient for all legal purposes. A penalty of 25% of the amount of the tax so found due will be added, unless a return is made and it is shown that the failure to file it was due to a reasonable cause, and not to wilful neglect. The amount so added to any tax (or the amount added, as stated in the next paragraph) will be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the neglect, fal 48 Reg. 38 Rev., Art. 23. 49 Revenue Act of 1918, § 1005. sity, or fraud, in which case the amount so added will be collected in the same manner as the tax.50 FALSE OR FRAUDULENT RETURN. In case a false or fraudulent return is wilfully made, the Commissioner will add to the tax 50% of the amount thereof.51 PENALTY FOR DELAY IN PAYING TAX. Upon failure to pay the tax assessed within ten days after notice and demand, a penalty of 5 per cent. of the tax unpaid, and interest at the rate of one per cent. per month until paid, is added to the amount of such tax.5 52 FOREIGN CORPORATIONS. The above penalties apply to foreign corporations as well as domestic corporations.53 Additional Penalties. In addition to the penalties discussed above, certain further penalties relating to the Special Excise Tax are provided in the Revenue Act of 1918, Section 1308. Administration of the Law. All administrative or special provisions of the internal revenue laws including the laws relating to the assessment of taxes, so far as applicable, are extended to and made a part of the Revenue Act of 1918 (including the Special Excise Tax) and every corporation liable to the tax considered in this chapter is required to keep such records and render, under oath, such statements and returns, and comply with such regulations as the Commissioner may prescribe.54 50 R. S. § 3176, as amended by the Revenue Act of 1918. See Reg. 38 Rev., Arts. 21 and 22; General Instructions Appendix A 4, 9. 51 R. S. § 3176, as amended by the Revenue Act of 1918. See Reg. 38 Rev., Art. 22; Appendix A, General Instructions 9. 52 Revenue Act of 1918, § 1305; R. S. § 3184. 53 See Reg. 38 Rev. Appendix B. 54 Rev. Act of 1918, § 1305. CHAPTER 47 THE STAMP TAX The present stamp tax is imposed under Title XI of the Revenue Act of 1918, which became a law on February 25, 1919. This title is to some extent a re-enactment of the War Stamp Tax Act of 1917 (Title VIII of the Act of October 3, 1917, referred to in this chapter as the "former" or 1917 law), but the two acts differ in certain respects. The Revenue Act of 1918, like the former law, does not contain Schedule B of the Act of October 22, 1914 (referred to in this chapter as the 1914 Law), which provided for a tax on perfumery, cosmetics and similar articles, and chewing gum or substitutes therefor. The 1914 Law was preceded by the Act of June 13, 1898 (referred to in this chapter as the 1898 Law). The taxes imposed by the Revenue Act of 1918 are, in the case of any article upon which a corresponding stamp tax was hitherto imposed by law, in lieu of such tax.2 The date of the incidence of the tax, that is, the first day on which the tax applied, is February 25, 1919.3 General Scope of Present Law. The present law taxes the following subjects: Bonds (of indebtedness, indemnity and surety), the original issue of certificates of stock or of profits or interest in property or accumulation of corporations, the sale or transfer of shares or certificates of stock 1 Other stamp tax acts will likewise be referred to in this chapter for the sake of brevity by the year of their respective enactments. 2 Revenue Act of 1918, § 1100. 3 The former law went into effect on December 1, 1917, except as to the tax on playing cards, which became effective on October 4, 1917. |