REGULATIONS, CIRCULARS, ETC., UNDER ACT OF

JUNE 13, 1898.

BILLS OF LADING.

(21538.)

Relative to export bills of lading subject to stamp tax under the warrevenue act of June 13, 1898.1

[Circular No. 109.-Int. Rev. No. 544.]'

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., August 24, 1899.

To collectors of internal revenue and others:

In accordance with Treasury decision 21496 (page 24), of August 12, 1899, it is held that bills of lading for export, whether issued singly or in sets of two or more covering one shipment, will require but one stamp of 10 cents. In case of export bills of lading issued in sets of two or more, the bill retained by the consignor must be stamped and a notation made on the other bills of the same set, giving the number of bills issued covering the same shipment and a statement that the bill retained by the consignor has been duly stamped.

So much of regulations, series 7, No. 4, revised December 29, 1898, relating to export bills of lading covering distilled spirits exported in bond, as is inconsistent with the foregoing decision is hereby revoked. In this connection, attention is also called to the fact that under a former decision bills of lading issued by steamboats or other vessels plying only between ports of the United States and British North America are not required to be stamped.

Approved:

ROBT. WILLIAMS, Jr., Acting Commissioner.

L. J. GAGE, Secretary.

'This has been modified by opinion of the Attorney-General, dated January 2, 1900, so that export bills of lading issued for goods shipped from United States to points in Canada or Mexico by rail require only a 1-cent stamp and not a 10-cent stamp. (See page 29.)

13442- -20

805

BROKERS.

(21286.)

Agents of steamship companies.

Agents of steamship companies, who receive money from persons desiring to make remittances to foreign countries, and issue checks therefor, are not engaged in the business of selling "exchange" within the meaning of paragraph 2, section 2, act of June 13, 1898, and are not required to pay special tax therefor as brokers.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

To collectors of internal revenue:

Washington, D. C., June 20, 1899.

In view of the fact that all persons engaged in any business on the 1st of July, 1899, for which special tax is required to be paid, must make return under oath to the collector, pay the tax, and take out the requisite stamp for the year beginning on that date, the question of the special-tax liability, as brokers, of agents of steamship companies, who receive money from persons desiring to make remittances to foreign countries, and issue checks therefor, has again been brought before this office.

The law (paragraph 2, section 2, act of June 13, 1898) clearly requires that every person, whose business it is to negotiate purchases or sales of "exchange," shall be regarded as a broker, and pay the special tax of $50 for the year beginning July 1. But, in order to warrant the assessment and collection of special tax from any person as a broker under this provision of the law, two facts must be clearly establishedfirst, that he sells "exchange;" second, that it is his business to make such sales. The words "whose business it is" are controlling words in the definition of a broker, contained in the statute, and it has devolved upon this office to determine what constitutes the "business" thus referred to. It has accordingly been held that the mere fact of selling "exchange" from time to time does not of itself involve the person selling in special-tax liability as a broker; but that in order to hold him to such liability, it must be shown that, in addition to such sales or purchases, he has by advertisement, or by sign in his place of business, or in his letter-heads, or cards, or otherwise, held himself before the public as ready to engage in such sales or purchases. Where these facts are shown, whether in the case of steamship agents, or any other person, this office has but one duty in the premises, and that is to require the payment of the special tax which the statute imposes.

It is, however, now contended in behalf of steamship ticket agents that the transactions in which they are engaged, in receiving money from persons for transmission abroad through their respective com

panies, do not constitute the sale of "exchange" within the meaning of the law. Those transactions have been described briefly as follows: Each agent of steamship companies receives a certain number of checks signed by said company, respectively, in blank, which checks are drawn upon certain foreign banks therein named; he is authorized to deliver these checks to persons desiring them, the agent receiving as his compensation a certain percentage "on each pound or receipt for $5." It is urged that this does not constitute the negotiation of purchases or sales of "exchange," or any other of the "securities" contemplated by the statute; that the check given is an ordinary check, drawn and signed by the company upon certain banks; that at most it is a money order, which, as between the bank and payee, need not be paid; that the payee acquires nothing by purchase or sale, not even a claim against the bank; that at the most, if the check is not paid, he has an action against the company for money had and received; that the checks are issued for the convenience of persons desiring to remit money abroad, these persons trusting to the honor of the signer of the check to see that the amount is on deposit at the bank to pay the check when presented; that the transaction thus described is only an executory contract, and not a sale or purchase. There is, in the opinion of this office, great doubt whether the steamship agents who thus receive and transmit money can be regarded as engaged in selling "exchange," within the meaning of the word "exchange," as it is found in the statutory definition of brokers. Collectors are, therefore, hereby instructed to take no action looking to the exaction of special tax from any of these agents on account of the transactions herein described until they shall have been otherwise directed by this Department.

G. W. WILSON, Commissioner.

GROSS RECEIPTS.

(21367.)

Gross receipts taxable under section 27, act of June 13, 1898.

[Circular No. 93-Int. Rev. No. 540.]

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., July 7, 1899.

To collectors of internal revenue and others:

Section 27 of the act of June 13, 1898, provides:

That every person, firm, corporation, or company carrying on or doing the business of refining petroleum, or refining sugar, or owning or controlling any pipe line for transporting oil or other products, whose gross annual receipts exceed two hundred and fifty thousand

dollars, shall be subject to pay annually a special excise tax equivalent to one-quarter of one per centum on the gross amount of all receipts of such persons, firms, corporations, and companies in their respective business in excess of said sum of two hundred and fifty thousand dollars.

And a true and accurate return of the amount of gross receipts as aforesaid shall be made and rendered monthly by each of such associations, corporations, companies, or persons to the collector of the district in which any such association, corporation, or company may be located, or in which such person has his place of business. Such return shall be verified under oath by the person making the same, or, in case of corporations, by the president or chief officer thereof. Any person or officer failing or refusing to make return as aforesaid, or who shall make a false or fraudulent return, shall be liable to a penalty of not less than one thousand dollars and not exceeding ten thousand dollars for each failure or refusal to make return as aforesaid and for each and every false or fraudulent return. Section 31 of the same act provides:

That all administrative, special, or stamp provisions of law, including the laws in relation to the assessment of taxes, not heretofore specifically repealed are hereby made applicable to this Act.

Section 3447 of the Revised Statutes of the United States provides: Whenever the mode or time of assessing or collecting any tax which is imposed is not provided for, the Commissioner of Internal Revenue may establish the same by regulation. He may also make all such regulations, not otherwise provided for, as may have become necessary by reason of any alteration of law in relation to internal revenue.

1. Tax when due to be assessed.-The tax imposed by section 27, above quoted, being a special excise tax, the word "annually" as used in that section is held to apply to the special-tax year (commencing July 1) as defined in section 53 of the act of October 1, 1890. Under the provisions of section 31, above quoted, it is also held that the tax thus imposed is assessable as soon as determined from the - monthly returns required to be rendered.

2. Gross receipts.—As the tax so imposed is to be computed on "the gross amount of all receipts "in excess of $250,000, such gross receipts are held to include, not only receipts from sales (or transportation), but all receipts, including rents, interest, dividends, storage charges or commission, received from or in connection with the business enumerated in said section 27 during the period for which the required return is made. Deductions on account of cost of raw materials, customs duties, and operating expenses, heretofore claimed in certain cases, are under no circumstances permissible.

3. Returns, when and by whom to be made.-Every person, firm, corporation, or company liable to tax under said section 27 will hereafter render a return, on Form 420, revised, of the gross amount of all receipts each month, and not later than the fifteenth day of the following month. When the returns made include the receipts of any branch or "constituent" company engaged in the business of refining petroleum or sugar, or in operating any pipe line, in the same or

in another district, the name and location and the receipts of each such branch or constituent company should be stated in each return rendered.

The foregoing instructions will also apply to all such persons, firms, corporations, and companies where the gross receipts, during the period for which the return required by law is made, do not exceed the $250,000 specially exempted from tax. A monthly return will also be required during the temporary suspension of business. Where, however, the business carried on has been permanently discontinued, that fact should be noted on the last return rendered.

4. Change in name of firm, etc.-Changes in the name or style of any firm or company or in the personnel of any firm or company which has become liable for the special excise tax imposed will not be regarded, under the act named, as constituting a new firm or company. In all such cases, therefore, the exemption of $250,000 will be allowed only on the combined annual gross receipts of the firm or company as to which such changes occur.

5. Sugar produced and refined by continuous process.-Manufacturers who claim to refine only sugar of their own production, and to sell directly to consumers, will also be required to furnish a monthly sworn statement (to be attached to the prescribed return, Form 420, revised), setting forth specifically that all sugar refined by them during the month was produced and owned by them, and was refined on the same premises where produced, and by a continuous process, and was sold directly to consumers. Persons, firms, corporations, and companies refining sugar not so produced, owned, and sold will be liable to the special excise tax imposed, and will be required to render a return on the prescribed form of the gross amount of all receipts. 6. Sugar or oil refined by agents, etc.-Every person, firm, corporation, or company owning or controlling any sugar or oil refinery, and, under any lease, contract, or agreement, receives, sells, or negotiates the sale of any sugar or oil refined on the premises so owned or controlled, or receives any profits accruing therefrom, will be regarded as a refiner, and, as such, will be required to make the prescribed return. Where the receipts or profits so realized, or any portion thereof, are included in the returns rendered by the person, firm, or company in whose name, or through whose agency, the business is so carried on, the fact should be noted on the returns as provided in instruction 3 of this circular. The same instructions will apply to persons, firms, corporations, or companies owning or controlling any pipe line for the transportation of oil or other products.

7. Returns to be verified under oath.-In case of corporations, the returns made must in every instance be verified under oath by the president or chief officer, as required by law. This requirement does not admit of such verification by a cashier, secretary, or treasurer, or by any officer other than that designated by law.