registry of the court, and the balance is the sum paid to the collector.1 The right of the customs officer or informer to a share in the forfeiture accrues at the time the seizure is made, or penalty incurred. The right is a personal one; it is vested and descends to the personal representatives of the party in case of death, and is not defeated by removal from office. It does not attach to the office, so that the successors may claim it.? But while the right is one that relates back to the seizure, yet as to the government it is an inchoate right, and may be defeated by a remission of the penalty by the Secretary of the Treasury, when such power is vested in him, if the power is exercised before condemnation or judgment. After that period the right cannot be defeated. This doctrine was modified, where in the early history of California there was a seizure by the collector, and there being no means of procuring a condemnation, by consent of the owner the goods were sold, one-half paid to the United States, and the other half distributed by the collector. A remission of the penalty by the Secretary of the Treasury after the receipt by the collector of the proceeds of sale did not divest his rights as informer. It is sometimes difficult to determine who is the person giving the information which has led to the seizure or recovery of the fine or penalty. Where Smith informed W. of a breach of the revenue laws, and W. telegraphed to B., who directed the seizure, Smith was said to be the person, and neither W. who sent the telegram, the person who carried the telegram to the office, or the officer who made the seizure was entitled to a share in the proceeds. The person who first obtains control and possession of the goods seized is the person who makes the seizure, and if it be continued and not abandoned he is entitled to the share of the informer. The informer's right to a share of the proceeds is not affected by the fact that he is under arrest for a criminal offense. The proceeds of a bail bond given for a breach of the revenue laws, paid into court, are not distributed as a fine or penalty to an informer.8 1 United States v. Five Dozen Pieces of Merchandise, 2 Sprague, 100. 2 Jones v. Shore's Ex'r, 1 Wheat. 462; Van Ness v. Buel, 4 Wheat. 74. 3 United States v. Morris, 10 Wheat. 290. 4 United States v. Collier, 3 Blatch. C. C. 325, 346. 5 United States v. 50,000 Cigars, 1 Lowell, 22. The Josefa Segunda, 10 Wheat. 312. 8 United States v. Fauquil, I Lowell, 117. 7 16 Int. Rev. Rec. 92. CHAPTER XXV. INTERNAL REVENUE. THE taxes arising from the customs, which have just been considered, are laid upon merchandise coming into the country from foreign countries, and is a tax on the consumption of foreign goods. The tax collected under the internal revenue system, comes from the business of the country, and is laid on the manufacture and consumption of goods within the United States. It is similar to the tax laid by the States on the privilege of engaging in certain occupations, or the privilege of receiving a legacy. There is this difference, that in the case of the United States it is purely a tax, and the payment of it does not give the party the right to engage in a particular business without complying with the regulations of the State in which the person proposes to carry on the business, nor does it conflict with the exercise of the police powers of the State. This tax, in distinction from the customs, is called the excise tax, and although but little used until recent years as a source of taxation by the federal government, is not of recent origin. It was first introduced into England in 1643; the system had been practiced before that period on the continent of Europe. In the United States it was first used in 1791, and although the highest tax imposed on the distillation of spirits was only twenty-five cents per gallon, yet it gave rise to what is known as the "whiskey rebellion" in western Pennsylvania. At first it was only upon spirits, but subsequently it was extended to carriages, snuff, refined sugars, auction sales, licenses for retailing wine and spirits, and to stamps on bills of exchange, bills of lading and other instruments. During Jefferson's first presidential term the whole system was abolished. After the war of 1812, a system of internal revenue was recommended by Mr. Madison, to aid in increasing the revenue of the country. A plan devised by Mr. Gallatin was adopted, imposing a tax upon similar objects as under the former act, and this, like its predecessor, was in force but a short time, being repealed in 1817.1 In 1862, during the late war, the present system was originated. See Report of Commissioner of Internal Revenue, Nov. 8, 1875, by D. D. Pratt, 21 Int. Rev. Rec. 403. It reached every species of manufacture, trade, profession and occupation; incomes of individuals, firms and corporations; documents of various kinds, embracing every species of contract; legacies and successions; the gross receipts of all common carriers and transportation companies; lotteries, theatres, museums, operas, banks and bankers, so that the number of distinct subjects of taxation could be counted by thousands. By successive acts the number of subjects has been reduced, until now it is imposed on comparatively few subjects. Fermented and distilled liquors, manufacturers of tobacco, cigars and snuff, patent medicines, bank checks, deposits, capital and circulation of banks, and a few occupations complete the list. The articles now taxed are very similar to those taxed in Great Britain under their excise system. § 165. Officers of Internal Revenue.-The head of the department is the Secretary of the Treasury, but there is a separate bureau for internal revenue, presided over by the commissioner of the internal revenue. This officer has the general superintendence and control of the assessment and collection of all taxes imposed by law for raising revenue by excise. He prepares and distributes instructions, regulations, forms and blanks, for the officers in his bureau, and decides on appeals taken from the decisions of the collectors.1 Collector.-There is one in each district, but there can be no more districts in a State than it was entitled to representatives in the thirtyseventh Congress. It is the duty of the collector to collect all the taxes imposed by law in his district. He may, by an instrument in writing, appoint his own deputy, to be compensated by him. There are many details connected with the office which will be noticed hereafter. Formerly he received large sums of money from the taxpayers, but now nearly all taxes are paid by means of stamps, and the principal amounts are received for stamps sold to manufacturers of articles, the tax of bankers, the deficiency tax on distilled spirits, cigars and tobacco being the only taxes paid in money. Inspectors.-Inspectors of tobacco and cigars are appointed in such districts as may be necessary, and they perform their duties in such manner as the commissioner of internal revenue prescribes, and are paid by fees from the manufacturers. Gaugers.-As many as may be necessary are appointed in every collection district. They perform their duties under the supervision of the collector of the district, and are entitled to fees regulated by the quantity gauged, to be determined by the commissioner.1 R. S. U. S. § 321. 2 R. S. U. S. § 3141, 3148, 3183. 4 R. S. U. S. §§ 3156, 3157. Storekeepers. As many as may be required are appointed in every district. They have charge of the distilleries and bonded warehouses in the district. Their compensation is determined by the commissioner, and they can engage in no other business without his permission.1 Revenue Agents.-The commissioner is authorized to employ competent agents, not exceeding twenty-five, and assign them to duty under any internal revenue officer, or to such special duty as he shall deem necessary. Supervisors. Not more than ten of these are appointed. They are assigned to duty by the Secretary of the Treasury on the recommendation of the commissioner. Their powers are very large. The supervisor is to see that all laws and regulations relating to the collection of the revenue are faithfully executed and complied with; to aid in the prevention, detection and punishment of frauds on the revenue, and to examine into the efficiency and conduct of all officers of the internal revenue. In the exercise of the duties, he has power to examine all persons, books, papers and accounts, and premises, to administer oaths, and to summon any person to produce books and papers, and to appear and testify before him, and he may compel compliance in the same manner as collectors. He is to report the delinquency of revenue officers to the commissioner in writing, and he can suspend any inspector, gauger or storekeeper, and may suspend the collector for fraud, gross neglect of duty, or abuse of power. In the first case he is to report to the commissioner in three days, in the latter case immediately. He may transfer the inspector, gauger, or storekeeper from one distillery to another, or from one district to another.5 Of these officers the commissioner, supervisor and collector are appointed by the President, with the advice and consent of the Senate, the inspector and gauger by the Secretary of the Treasury, and the storekeeper and revenue agents by the commissioner. Power of Officers of Internal Revenue.-Prior to December, 1872, in each district there was an assessor and a number of assistant assessors. Persons subject to tax gave to the assistant assessor their list of taxable property, just as is the custom in the case of State taxation. If the tax-payer was dissatisfied, he was entitled to an appeal and review of the case by the assessor. When the office of assessor was abolished, the duty of making the assessment of taxes devolved upon the commissioner, but it was impossible for such an officer to 1 R. S. U. S. §§ 3153, 3154. R. S. U. S. §§ 3159, 3160. 2 R. S. U. S. § 3152. gain personally the information necessary to make the assessment, and consequently many of the duties of the assessor devolved upon the collector and his deputies. The lists formerly required to be returned to the assessor are now returned to the collector, and if there is a failure to return, or a fraudulent return, he has the same powers to compel a correct return.1 The power formerly of the assessor, now of the collector, to examine the books and papers of parties, was intended to compel the tax-payer to make a faithful return of property liable to tax. If the tax-payer make a return which is suspected by the assessor to be false, or fraudulent, then there arises a necessity for the exercise of the powers conferred. It contemplates an examination of the taxpayer as to the entries in his books relating to his business. It is the entries, and not the books, that are sought for, and the use of them is given solely for the purpose of furnishing evidence for making a return. The books to be examined are the books of the tax-payer, not of those who have had dealings with him. The books of a corporation cannot be examined under this power to ascertain the income of a stockholder in the corporation. The power to issue the summons to compel persons to appear and produce books is not considered as investing the assessor with judicial power, but as conferring a power similar to that of overseers of roads to require persons, by a notice, to attend and work upon the roads, or of committees of Congress and of the legislature to send for persons and papers, to enable them to obtain information for a definite purpose stated in the act. This power cannot be exercised after the assessor has transmitted his list to the collector, as it is only to be exercised for the purpose of making up this list.5 The doctrine is laid down in In re Lippman that when the taxpayer appears before the assessor, only the entries relating to the tax can be examined, and that if either the entries or his answer to any question will tend to criminate himself, he may refuse to answer. It may well be doubted if the proposition is correct, certainly it would seem not to be in reference to the books required by statute to be kept by distillers and others. In such a case the party is conducting a business under the surveillance of the officers of the government, 1 R. S. U. S. §§ 3173, 3174, 3175, 3176, 3177. 2 In re Lippman, 3 Ben. 95; In re Strouse, 1 Sawyer, 605. Lee v. Chadwick, 11 Int. Rev. Rec. 133; s. c. In re Chadwick, 1 Lowell, 39. 4 In re Meader, 1 Abb. C. C. 817; In re Doll, 11 Int. Rev. Rec. 36; Perry v. Newcome, 10 Int. Rev. Rec. 20. 6 In re Brown, 3 Int. Rev. Rec. 134. 63 Ben. 95. |