SPECIAL-TAX PAYERS' RETURNS. (21316.) Reporting delinquent special-tax payers for assessment of taxes and assessable penalties and revising Circular No. 470. [Int. Rev. Circular No. 539.] TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue: Washington, D. C., June 27, 1899. Collectors in reporting on Form 23 the names of persons liable to assessment of special taxes or the assessable penalties of 50 per cent for neglect or delay in making returns on Form 11 or Form 457, or of 100 per cent for making false or fraudulent returns on Form 11 or Form 457, will be careful to clearly state in the space allotted for the purpose all the facts necessary to enable this office to make the determinations and assessments, including the assessment of these penalties, as required by law. 1. The only lawful returns of special tax are those made on the forms prescribed by this office. The prescribed return, properly sworn to, should be made by each person liable to pay a special tax. If, however, the person is conducting a business which renders him liable to pay two or more kinds of special tax returnable on Form 11, as where a man is engaged in selling distilled spirits, sometimes in quantities less than 5 gallons and sometimes in quantities of 5 gallons or more, and is also a dealer in tobacco, and the proprietor of a theater in a city of over 25,000 population per last census, all at the same place of business, and is liable, therefore, to pay the tax of a retail liquor dealer, a wholesale liquor dealer, a dealer in tobacco, and of a proprietor of a theater, he must make one return on Form 11 as retail liquor dealer, wholesale liquor dealer, dealer in tobacco, and proprietor of a theater. If he omits to specify either of the kinds of busiuess in his return, Form 11, his statement on Form 11 "that he has done no business for which he would be liable to pay a special tax without having paid the same, except as above," might be false. The provision of the law (sec. 3173, Rev. Stat., as amended), which authorizes the collector or deputy collector to make a return for a person liable to a special tax who declares to the collector or deputy the character of his business, refers to the return on the prescribed form, which must be filled up and delivered by the collector or deputy to the special-tax payer for the latter's signature and oath. 2. A person who makes a true return of special tax on the day on which he commences or continues business (in the latter case always July 1) is not liable to the 50 per cent penalty nor to the 100 per cent penalty, neither is he liable to either of such penalties if he renders to the collector or deputy such return during the month in which he commences or contiques business. Also, if such person is sick or absent during the whole calendar month or that part thereof elapsing from the time he commences business to the end of the month, he may make his return on Form 11 or Form 457, as the case may be, at any time within thirty days after the close of such month, without incurring the 50 per cent penalty, provided that the collector, after being satisfied of such continued sickness or absence, excuses him from making the return for such period not exceeding thirty days (sec. 3176, Rev. Stat., as amended). As it is sufficient in the case of a firm that the return on Form 11 or Form 457 be made by a member thereof, the collector will not have a valid reason for excusing the firm, as provided in section 3176, unless all the members thereof are absent or sick, as above stated. It will be seen that if the date when the return is received, as stated in column 7, Form 23, is later than the last day of the calendar month in which the taxpayer commences or continues business as above stated, it will be necessary to assess the 50 per cent penalty unless the collector excuses the taxpayer on account of sickness or absence as aforesaid and notifies this office of the fact on Form 23, or by letter, so that the fact of such excuse may be considered at the time the assessment is made; or, unless it be shown that the facts as to the special-tax payer's business were known to the collector or deputy in ample time for him to have made up the return for the taxpayer and to have received it back, duly signed and sworn to, before the expiration of the calendar month in which the business was begun, and that the collector or deputy neglected this duty. The special excise tax imposed on gross receipts is returnable monthly on Form 420. A return on that form should be filed with the collector within fifteen days after the close of the month for which it is rendered. The amount of tax ascertained to be due should be assessed (see sec. 31, act of June 13, 1898), and, when assessed, should be collected as in the case of other assessed taxes. ROBT. WILLIAMS, Jr., Acting Commissioner. (21517.) Concerning assessable penalties of 50 per cent and 100 per cent. [Int. Rev. Circular No. 543.] TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To officers of internal revenue: Washington, D. C., August 12, 1899. Collectors and agents of internal revenue whose duty it is to ascertain and report for assessment the 50 per cent and 100 per cent pen 13442--21 alties imposed by law will be guided by the following instructions in computing said penalties: (1) A 50 per cent penalty is due in every case where the required return is not made within the time prescribed by law, or within the additional thirty days for which the collector may excuse a person on account of sickness or absence. (2) A penalty of 100 per cent is always computed upon the amount actually due over and above that shown to be due by the false return. In the case of special taxes, the basis on which the 100 per cent penalty is to be computed may be the one or more other taxable occupations of the taxpayer not disclosed in his false return, or the additional time for the same occupation not disclosed by the false return. (3) When both of these penalties are incurred for the same period they are assessable at the same time. As they accrue for different reasons, they are in no way interdependent upon each other, and the assessment of the one never includes or prohibits the assessment of the other. For example: A person who was in business July 1, 1898, as W. M. L. D. and R. M. L. D., and who, in January, 1899, makes a return as R. M. L. D. for six months ending June 30, 1899, is liable to taxes and penalties as follows: R. M. L. D., twelve months ended June 30, 1899, $20 tax. R. M. L. D., twelve months ended June 30, 1899, $10; 50 per cent penalty. For return made false as to six months, R. M. L. D., $10; 100 per cent penalty. W. M. L. D., twelve months ended June 30, 1899, $50 tax. W. M. L. D., twelve months ended June 30, 1899, $25; 50 per cent penalty. For return made false as to W. M. L. D. for year, $50; 100 per cent penalty. G. W. WILSON, Commissioner. (21536.) Concerning the circular letter of August 12, 1899, relating to the 50 per cent and 100 per cent assessable penalties. In order to correct an erroneous impression that seems to have been derived from the circular letter of August 12, 1899, collectors and revenue agents are hereby informed that the purpose of that circular was not to indicate that there had been any laxity heretofore in the exaction of the 100 per cent penalty in any cases in which the facts showed it to have been clearly incurred, or to induce a greater exhibition of zeal in the discovery and report of cases indicating the liability of special-tax payers to this penalty. This circular was intended mainly to explain the method of computation of the penalty. It is only when the facts in any case reported to this office show, or tend to show, an intentional falsification of the return on Form 11 by the special-tax payer that this office feels warranted in assessing the 100 per cent penalty. Collectors and revenue agents, in making their reports of cases of this kind, are expected to submit, in behalf of the special-tax payer, any facts or circumstances tending to show that in his sworn return he had not willfully made a misstatement in regard to his liability. ROBT. WILLIAMS, Jr., Acting Commissioner. (21850.) Special-tax payer—Arrest for failure to pay. Where a person, after his arrest for failure to pay special tax as required by law, proffers to the collector the amount of the tax and 50 per cent penalty, upon his signing and swearing to return, Form 11, the collector should receive the money proffered. This does not relieve such person from his criminal liability. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue: Collectors are advised that where any person involved in specialtax liability, "after warrant of arrest has been issued," proffers to the collector the amount of the special tax and penalty, he should, of course, accept this money, requiring the person at the same time to make sworn return, Form 11. This payment does not have the effect of relieving him from his criminal liability for having carried on his business without having paid the special tax within the time required by the law. (United States v. Angell, 11 Fed. Rep., 34; United States v. Van Horn, 20 Int. Rev. Rec., 145; United States v. Devlin, 6 Blatch., 71.) G. W. WILSON, Commissioner. TOBACCO. (21045.) Sale of leaf tobacco. Loose leaf tobacco composing the breaks on the warehouse floors in the loose-leaf markets may be sold at public auction, or at private sale, by the owner or warehouseman, who will not be required to pack the same in hogsheads, cases, or bales before offering the same for sale.-Packages of leaf tobacco received at such public warehouses may be broken and the tobacco removed therefrom to the warehouse floor and separated into as many lots as there are grades of tobacco contained in such package; and each lot may be offered for sale separately from the remainder of the tobacco. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue: Washington, D. C., April 19, 1899. Internal Revenue Circular No. 523, dated February 20, 1899, relating to the sale of leaf tobacco in quantities less than a hogshead, case, or bale, shall not be construed as applying to tobacco composing the breaks on the warehouse floors in the loose-leaf markets where it is sold at public auction to qualified dealers in leaf tobacco, or to qualified manufacturers of tobacco, snuff, or cigars, or to persons who buy leaf tobacco for export only. Every person who buys loose leaf tobacco, composing the breaks on the warehouse floors, for the purpose of reselling the same at public auction, or at a private sale, without removal from the warehouse, is regarded as a dealer in leaf tobacco, and will be required to pay special tax and qualify as a leaf dealer at each place where he carries on business, and must keep a record of his purchases and sales in Book 59 for each place the same as other qualified leaf dealers. Every qualified dealer in leaf tobacco who purchases loose leaf tobacco from the farmer or grower of the tobacco after it has been placed on the warehouse floors may resell the tobacco at that place without being required to repack or reprise the same in hogsheads, cases, or bales. Loose leaf tobacco purchased outside of a public warehouse by a qualified dealer in leaf tobacco directly from the farmer or grower, before the same is offered for sale and delivery by such dealer, is required to be put up in hogsheads, cases, or bales, except that cigar leaf may be sold and delivered by him from his place of business to a licensed manufacturer of cigars in quantities less than a case or bale for use in his own manufactory exclusively. In case the farmer or grower of tobacco delivers at a public warehouse two or more different grades of tobacco in a single package, the tobacco may be removed from the packages to the warehouse floors and assorted and divided into as many different and distinct lots as there |