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In case of

100 per cent to be added.

Party may

tion under oath.

formation he can obtain, by the examination of such person, or his books or accounts, or any other evidence, and to add fifty per centum as a penalty to the amount of the tax due on such list in all cases of willful neglect or refusal to make and render a list or return, and, in all cases of a false or fraudulent list or return having been rendered, to add one hundred false return per centum, as a penalty, to the amount of tax ascertained to be due, the tax and the additions thereto as a penalty to be assessed and collected in the manner provided for in other cases of willful neglect or refusal to render a list or return, or of rendering a false and fraudulent return: Provided, That any party, in his or her own behalf, or as such fiduciary, shall be permitted to declare, under make declaraoath or affirmation, the form and manner of which shall be prescribed by the Commissioner of Internal Revenue, that he or she, or his or her ward or beneficiary, was not possessed of an income of one thousand dollars, liable to be assessed according to the provisions of this act; or may declare that he or she has been assessed and paid an income tax elsewhere in the same year, under authority of the United States, upon his or her income, gains, and profits, as prescribed by law; and, if the assistant assessor shall be satisfied of the truth of the declaration, shall thereupon be exempt from income tax in the said district; or if the list or return of any party shall have been increased by the assistant assessor, such party may exhibit his books and accounts, and be permitted to prove and declare, under oath or affirmation, the amount of income liable to be assessed; but such oaths and evidence shall not be considered as conclusive of the facts, and no deductions claimed in such cases shall be made or

allowed until approved by the assistant assessor. Any Party may ap- person feeling aggrieved by the decision of the assistant assessor in such cases may appeal

peal from assistant assessor to assessor.

to the assessor of the district, and his decision thereon, unless reversed by the Commissioner of Internal Revenue, shall be final, and the form, be subject to rules and regulations to be prescribed by the Commissioner of Internal Revenue: Provided further, That no penalty shall be assessed upon any person for such neglect or refusal, or for making or rendering a false or fraudulent return, except after reasonable notice of the time and place of hearing, to be regulated by the Commissioner of Internal Revenue, so as to give the person charged an opportunity to be heard.

Notice of time and place of hearing to be given.

Incomes of persons who died after December 31 are taxable, and should be returned by executors or administrators. Int. Rev. Ruling, Series 4, No. 4.

Where any portion of a legacy has been transferred by the executor to the legatee, so that the executor in his capacity of guardian or trustee has no longer any control of the profits arising from such legacy, the return of such profits as income must be required of the legatee. Int. Rev. Ruling, Series 4, No. 4.

If the members of a family have separate incomes, the returns may be made separately by the proper parties, and a ratable proportion of the $1,000 exempted from the income of each. The parent, as the natural guardian of the minor child, is required to make return for him. But where any other guardian or trustee has been appointed, the return should be made by the latter. If the minor has no guardian or trustee, he should make return himself. If he refuse or neglect, an independent assessment must be made as in other cases, omitting penalty. Int. Rev. Ruling, Series 4, No. 4.

Perjury in swearing to false income returns. United States

v. Smith, 1 Sawyer, 277; United States v. Mayer, Deady's Reports, 127.

SEC. 119. And be it further enacted, That the taxes on incomes herein imposed shall be levied on the first day of March, and be due and payable on or before the thirtieth day of April, in each year, until and including the year eighteen hundred and seventy, and no longer; and to any sum or sums annually due and unpaid after the thirtieth of April as aforesaid, and for ten days after notice and demand thereof by the collector, there shall be levied in addition thereto the sum of five per centum on the amount of taxes Penalty of five unpaid, and interest at the rate of one per one per cent centum per month upon said tax from the per month. time the same became due, as a penalty, except from the estates of deceased, insane, or insolvent persons: Provided, That the tax on incomes for the year eighteen hundred and sixty-six shall be levied on the day this act takes effect.

per cent, and

Act March 2,

1867, Sec. 13.

Income tax, when to be


when payable.

It was decided by the Supreme Court, in the case of Erskine v. Milwaukee & St. Paul R. R. Company, 4 Otto, 619, that the penalty of five per cent and interest at the rate of one per cent a month applied only to cases of default in the payment of duties upon income imposed by Sec. 119 as amended; and this decision was expressly reaffirmed in the case of Elliott v. Railroad Co., 9 Otto, 27.

Act July 13,

186, Sec. 9.

Duty of five per

SEC. 120. And be it further enacted, That there shall be levied and collected a tax of five per centum on all dividends in scrip or money thereafter declared due, wherever and whenever the same shall be payable, to stockholders, policy-holders, or depositors or parties whatsoever, including non-residents,

cent on divi

dends of banks,

trust com

panies, savings institutions,

and insurance


whether citizens or aliens, as part of the earnings, income, or gains of any bank, trust company, savings institution, and of any fire, marine, life, inland insurance company, either stock or mutual, under whatever name or style known or called, in the United States or Territories, whether specially incorporated or existing under general laws, and on all undistributed sums, or sums made or added during the year to their surplus or contingent funds; and said banks, trust companies, savings institutions, and insurance companies shall pay the said tax, and are hereby authorized to deduct and withhold from all

Same duty on additions to

surplus or contingent funds.

Duty to be withheld from

all payments payments made on account of any dividends

on account of such dividends.

or sums of money that may be due and payable as aforesaid the said tax of five per centum. And


a list or return shall be made and rendered to the assessor or assistant assessor on or before the tenth day of the month following that in which dividends or sums of money become due or payable as aforesaid; and said list or return shall contain a true and faithful account of the amount of taxes as aforesaid; and there shall be annexed thereto a declaration of the president, cashier, or treasurer of the bank, trust company, savings institution, or insurance company, under oath or affirmation, in form and manner as may be prescribed by the Commissioner of Internal Revenue, that the same contains a true and faithful account Penalty for de- of the taxes as aforesaid. And for any deing return. fault in the making or rendering of such list or return, with such declaration annexed, the bank, trust company, savings institution, or insurance company making such default shall forfeit as a penalty the sum of one thousand dollars; and in case of any

fault in render

Return to be made to assessor within ten days after dividend is payable.

Return to be verified by oath of president, cashier, or treasurer.

In case of de

fault, assess

lection to be in

with general

default in making or rendering said list or return, or of any default in the payment of the tax as required, or any part thereof, the assessment and ment and colcollection of the tax and penalty shall be in ac- accordance cordance with the general provisions of law in provisions. other cases of neglect and refusal: Provided, That the tax upon the dividends of life insurance com- Dividends of panies shall not be deemed due until such companies not dividends are payable; nor shall the portion of premiums returned by mutual life insurance companies to their policy-holders, nor the annual or semi-annual interest allowed or paid to the depositors in savings banks or savings institutions, be considered as dividends.

life insurance

due until payable.

Premiums re

turned by mu

tual life insur


not dividends.

Where depositors in a savings bank do not receive a fixed rate of interest independently of the net profits of the bank, but receive a share of such profits as the bank may find that it has made after deducting expenses, it was held that such profits were a dividend and not interest within the meaning of the internal revenue act of June 30, 1864, as amended. Cary, collector, v. San Francisco Savings Union, 22 Wall. 38.

Under Sec. 120, act of June 30, 1864, held that embezzlements during the period covered by the returns may be deducted. By "profits" is meant "net profits" after deducting expenses and losses from whatever sources connected with the business. United States v. Central National Bank, District Court S. D. N. Y., February 3, 1882, Brown, D. J., 10 Fed. Rep. 612.

In an action to recover taxes on dividends paid by the bank assessed under Secs. 120, 121, act of June 30, 1864, held, that the law of the State, requiring certain taxes to be deducted from payment of dividends to stockholders, did not lessen the obligation of the bank to pay the United States the tax on the whole dividend declared; neither can the courts give relief where it appears that the dividend declared was not actually earned, but owing to the defalcation of a cashier

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