0

zap

Q 2 P*
SecretaryKennedy (left)

and Commissioner

Th rower (right) at the

opening ceremony of the

Visitor's Gallery located in

the Internal Revenue

Service Building,

Washington, D.C.

Viewofup randlower

levels at t:Visltor's

Gallery.

r:1 4!

Visitors viewing upper level exhibits and using audio equipmerit that narrates significant

events in tax administration

history.

Visitors operating an'Alcohal

and Firearms exhibit.
ra

EW&AmomM ~[~@ Vn&@UgV

Internal Revenue Service

ff)@ &@gm

Honorable David Kennedy,

Secretary of the Treasury,

Washington, D.C. 20220.

Dear Mr. Secretary: I welcome my first opportunity to describe

the accomplishments of the Service by presenting to you the attached annual report

.of the Internal Revenue Service forthe fiscal

year 1969.

An increase of more than

3 million returns filed (our basic workload unit) in 1969

compared to 1968 filings reflectsa con.

tinuing and uncontrollable growth trend

that imposed additional work in practically

all of the Service's major programs. While

this was taking place, the Service lost many

employees who could not be replaced be.

cause of the Revenue and Expenditure Control Act of 1968. As a result, severe

retrenchment occurred in compliance pro.

grams, and accomplishments declined in

areas where work volume increased.

Despite budgetary restrictions, the Service handled a large volume of work expe.

ditiously. Gross collections totaled $187.9

billion, an increase of $34.3 billion over last

year, 29 million taxpayers received assist.

ance, compared to 27 million last year; and

all except full paid returns were mathe.

matically verified.A quick refunding pro.

gram on overpayments of corporation

estimated taxes was successfully initiated.

Our overall refunding operations were also

accelerated, thereby causing the rate of

interest paid on refunds to reach its lowest

point-less than one cent for each dollar

refunded.

The Exempt Organization area received

close attention beginning witha reorganization designed to broaden examination coverage and achieve a more intensified enforcement of the regulations. The Exempt Organization Master File was improved and

plans were formulated to achieve stronger

control of the examination program through

centralization in 13 districts of processing

of applications and audits of organizations.

Also, the Firearms function of the Service

expanded considerably at the expense of

other enforcement programs to carry out

the licensing and registering provisions of

the Gun Control Act of 1968.

As evidence of the increasing pace of

change in the IRS, we continued the study

of requirements fora "System of the 70's"

for tax administration, and began

a study

of the organization of the Service.

In summary, I believe that the Service has

performed well under trying budgetary constraints. Management, by moving quickly,

zintaineda reasonable balance among all

m jor programs and held curtailments of

operations toa minimum. Fortunately, the

budget picture for 1970 is brighter and'i

look forward to significant progress.

Sincerely,

W. rA400CA01-

Randolph W. Thrower,

Commissioner of Internal Revenue.
mission

of the

service

The mission of the Service is

to encourage and achieve the

highest possible degree of

voluntary compliancewith

the tax laws and regulations

and to maintain the highest

degree of public confidence

in the integrity and efficiency

ofthe Service. This includes

communicatingthe

requirements of the lawto

the public, determining the

extent of compliance and

causes of noncompliance,

and doing all things needful

toa proper enforcement of

the law.

contents -

Letter of Transmittal/IV

Report on Operations

Informing and Assisting

Taxpayers/3

Data Processing Activities/10

Enforcement Acivities/17

Supervision of the Alcohol and

Tobacco Industries/35

Legislative and Legal Activities/38

International Activities/43

Planning Activities/49

Management Activities/54

Organization-Principal Officers

Organization of the Internal

Revenue Service/68

Internal Revenue Regions and D 9 S

ervice itict%6acling Rooms/70

Principal Officers/71

Historical List of Commissioners/75

Appendix

Taxpayer Publications/78

Tax Form Activity/80

Court Decisions/81

Statistical Tables/97

Index/125
notes

All yearly data are ona fiscal year basis, unless otherwise specified. For example,

data headed "1969" pertain

to the fiscal year ended

June 30, 1969 and "July 1"

inventory items under this

heading reflect inventories

as of July 1, 1968.

in many tables and charts,

figures have been rounded

and may not add to the totals

which are based on un.

rounded figures.

For sale by the Superintendent of Documents, U.S.

Government Printing Office,

Washington, D.C. 20402-

Price $1.50 (paper cover)

report on

operations

Highlights

Millions

1968

Gross collections ............... $153,636.8

pallunds:

Number .................. 51.9

Amount................ I I $11,41M6

Returns filed .................. '107A

lieturns examined ............. Z9

Additional tax from enforcement. . $3;M.9

Delinquent taxas collected, Wl. $1,52L9 , R-I..d.

1969

$187PI9.6

49.6

$1Z942.6

11V

Z5

$3,36U

$IA393

Percent

change

22.3

-4A

133

33

-12A

3.5

27A
ci

Informing

and Assisting

Taxpayers

Greater Use Made of News Media.

Public Attention Directed to New

Legislation.

Year-Round Service to Taxpayers.

Program for Sampling Taxpayer

Inquiries Effective.

Internal Revenue Bulletin Provides

Official Tax Guidance.

Introduction

The American system of self-assessment depends

on an informed public. To further strengthen this

system, the Service carries out a broad information

program, making use of the various news media, to

communicate tax laws to taxpayers and apprise them

of their rights and obligations in computing, and

reporting their tax liabilities. In addition, taxpayer

assistance teams were available in each district

office to answer questions and provide tax materials.

Regulations, rulings, simplified tax guides, and

forms were issued to increase public knowledge

and understanding of tax laws and procedural

rcqwrcmcnts.

Concern for Public's Right and Need

to Know

Access to information about the activities of Government is, of course, a fundamental right of the

citizen in a democracy. Carrying this concept a step

further, the Service believes that the public also has

a need to know. Consequently, the Service not only

provides tax information to persons who ask for

it, but reaches out to make information available to individuals who are unaware of tax law

requirements.

Error Prevention Top Priority

'nc basic thrust of the public information program is the prevention of errors on tax returns. Interwoven into virtually every message is the reminder

that errors can delay refunds, require time-consuming correspondence on the part of taxpayers, or

necessitate further action by the Service. Messages

go on to point out that, for the Government, errors

entail increased costs of operation which, in the final

analysis, lead to more expense to the public. Special

emphasis is placed on the principal types of individual and business errors: On individual returnsuse of the wrong tax table, mathematical mistakes,

missing documents such as W-2's, omitted or incorrect social security number, failure to sign the return; on business returns,--missing or incorrect business code, omitted identification number, errors in

arithmetic. 11c Service has made a major effort to

get taxpayers to use the "piggyback" label appearing

on the tax forms they receive in the mail in or-der

to reduce the number of errors caused by omitted

or erroneous social security numbers. The various

3
means of communication used include television,

radio, news releases, magazine articles, speeches,

slides, pamphlets, fact sheets, posters, displays, and

exhibits.

Media Use of Messajes Reaches New Levels

The Service reached new highs in media use of

taxpayer information materials. Posters displayed on

some 50,000 mail trucks stressed the importance. of

taxpayers using the "piggyback" label. Service personnel fulfilled more than 7,000 speaking engagements before practitioner and civic groups. A total

of 42,000 media inquiries answered and 950 interviews held innational and field offices were recorded

during the fiscal year. Hundreds of news releases

and other issuances were directed by Service offices

to some 1,750 daily and 8,000 weekly newspapers.

A most effective means of providing helpful information to taxpayers continued to be the weekly

11question-and-answer" column. The column, based

on the most frequently asked taxpayer questions,

was used by 999 daily and 2,394 weekly newspapers

during the filing season. Some of these papers continued to carry the column after April 15, reflecting

the year-round interest and timeliness of this feature.

Increased Emphasis on Radio and Television

Ube Service, through its regional, district, and

local offices, participated in approximately 6,100

locally developed television and radio programs and

set up some 475 exhibi

'

ts. More than 700 television

and 5,500 radio stations carried Scrvice-produced

materials. Field personnel arranged for use of these

materials on local stations in their areas. For the tax

filing season the Service made available television

spot announcements and stider, a 27-minute color

film presentation, and a number of radio spots and

program series. Ali of these concentrated on areas of

most frequent taxpayer misunderstanding and

uncertainty.

Many Service officials, ranging from the Commissioner to supervisors and agents, participated in

the Service's public information program by appearing on network and localradio and television discussion-type programs. Error rates were again made

available to field offices from the computers of the

regional service centers so that releases could be irsued on the types of errors giving taxpayers the most

problems.

Public Attention Directed to New Legislation

Passtagc of the Revenue and Expenditure Control

Act of 1968 required a swift and effective taxpayer

4 / Annual Report / Chapter One

informational effort by the Service. Using innovations in release processing and interdivisional coordination, the Service was able to issue three basic

nc)n releases on the day the act was signed.

Following up on this, the Service developed a

special series of news releases dealing with the computation of the tax surcharge as well as new procedures on estimated tax declarations. Again the basic

aim was to reduce misunderstanding and the incidences of error brought on by these new provisions

in the law.

Public Informed About New Gun Control Act

As the administering agency for the Gun Control

Act of 1968, the Service provided timely information

necessary to bring about compliance with the new

law. To meet the separate effective dates of the actOctober 22 for import controls; November 2 for

registration of certain firearms and devices (beginning an amnesty period ending December 1); and

December 16 for licensing requirements-the Service developed a coordinated National and field office

approach in its information program. Information

was distributed to 200,000 licensed gun dealers who

had to be informed of their obligations under the

new law; 396,000 local and 46,000 State police in

some 10,000 agencies who required insight intotheir

increased duties; 25 million hunters, 200,000 target

shooters, 100,000 gun collectors; and the general

public.

In addition to using the regular means of communication, the Service conducted press conferences,

made available special question-and-answer columns, and displayed public notices showing the

weapons subject to the new law,

Year-Round Service to Taxpayers

Reaches New Peaks

For the fifth consecutive year, service to taxpayers

seeking help reached new peaks as almost 29 million

taxpayers either telephoned or visited Internal Revenue Service offices in 1969. This was over 2 million

(7.7 percent) more than last year, of which some

1.3 million were gains in telephone inquiries and

0.7 million were gains in visitors to Service offices.

Coincidentally, these increases in telephone inquiries

and visitors to Internal Revenue Service offices represented identical gains of 7.7 percent over last year.

Also, the record numbers serviced marked new highs

for each of these categories, over 18 million telephone

inquiries (64 percent of the total) and more than 10

million visitors to Service offices.

Trained Taxpayer Service Representatives Give

Major Assist in Improving Public Service Activities

The 1,350 specially selected and trained taxpayer

service representatives played an important role in

meeting this year's increased requests for taxpayer

service. Of these 1,350 employers, 843 provide fulltime year-round service in 352 taxpayer service

locations. Additional service was provided on designated days by 57 visiting taxpayer service representatives at 141 service locations not staffed with

full-time taxpayer service employees. During the income tax filing period, when the public need for

help is the greatest, 450 temporary employees were

used to provide taxpayer services. This combination

of permanent, visiting, and temporary help has

avoided the costly expenditure oftechnical time previously found necessary to provide such services.

Taxpayer Inquiry Referral System Instituted

In 1969, a. taxpayer inquiry referral system was

formally adopted. This system permits taxpayers to

obtain complete service at any Internal Revenue

Service office location. If the location is not the taxpayer's home office or, if for any reason, the information needed is not available, the system permits

an accumulation and forwarding of the necessary

data to the correct location. Upon receiving a referral inquiry at a distant location, special handling

is provided and a solution is forthcoming within a

short period of time. This system expedites information requests and eliminates taxpayer inconvenience in being referred to a distant taxpayer service location. Already more than 70,000 taxpayer.

have availed themselves of this service.

Internal Consolidations Streamline Service to

Public

During 1969, actions were initiated to consolidate

managerial and procedural functions to assure greater uniformity and efficiency in administering taxpayer service operations. By the end of 1970, a district office taxpayer service functions will have been

consolidated, thereby providing more uniform program direction and supervision from similar organizational structures. In addition, the consolidation

has also resulted in functions being identified and

pulled together which, in effect, "tend the scope of

taxpayer service activities. For example, now the

vast majority of departing alien clearances are performed as a part of the taxpayer service program.

This means that most aliens departing from the

United States can be fully cleared at the taxpayer

service location.

Program for Sampling Taxpayer Inquiries Effective

The Service program for sampling taxpayer inquiries continues to be an effective device for quickly

identifying significant taxpayer problem areas which

are nationwide in scope. Once identified, efforts are

then made to resolve these problems through mass

media news release, e.g., newspaper, radio, and television. In addition, the Service uses this information

for two other purposes: first, in preparing TAXNEWS releases to alert taxpayer service employees

on important tax questions and, second, in preparing training materials, public-use documents, taxpayer education releases, and the tax form package.

Taxpayers Served

1968 on hf-t

Total taxpayon somod-.......... ... 26,581,624 as,sn,sas 7.7

T.11o.. ..

so.. - - __. ........................... I I I

17 Mo. 9

1 83? ln~,

7

77.7

Tax Return Forms and Form Letters

Activity

The principal contact most taxpayers have with

the Service is through the filing of tax return forms

and the receipt of otherforms and form letters issued

as information requests or notifications. The Service,

therefore, continued to make every effort to provide

the best forms and form letters for public use.

Much of the activity in the tax return forms area

this year resulted from further implementation of

the provisions of the Revenue andExpenditure Control Act of 1968. A number of new and revised

forms also were required in the interest equalization

tax area.

Most individual estimated income tax return filers

were placed on a "voucher" system of filing in 1969.

Under this system, quarterly notices for estimated

tax installments due no longer were sent to taxpayers; instead taxpayers submit each installment

payment when due along with a payment "vouclier"

that was furnished with the estimated tax form

package. This innovation should prove beneficial to

the Service and taxpayers because of the grratcr

speed and accuracy in posting payments to the taxpayer's accounts.

Two short-form returns were developed for use

of exempt organizations whose gross receipts for the

year and total assets at the end of the year do not

exceed $10,000. These forms reduce the reporting

burden on these small organizations, while still proInforming and Assisting Taxpayers / 5
viding sufficient information for administrative and

audit purposes.

A list of forms developed and eliminated appears

on page 80.

Efforts to improve the quality, tone, and content

of public-use forms and form letters were greatly

expanded. Centralized review in the National Office

of all forms issued by field offices was instituted. A

review of all existing National Office forms was almost completed and good progress was made in

reviewing existing field office forms. Under the centralized review of field forms, district directors and

regional commissioners generally must now obtain

clearance from the National Office prior to issuing

a new or revised form.

Taxpayers Rights and Duties Explained in Plain-Language Publications

As part of the effort of the Service to provide

self-help guidance to taxpayers, many booklets and

pamphlets that explain the tax laws in nontechnical

language are made available for widespread use. A

few of the larger and better-known publications are

designed to meet the normal requirements of large

groups of taxpayers. Among these publications are

Your Federal Income Tax, Tax Guide for Small

Business, and Farmer's Tax Guide. Other publications relate to specific problem areas such as child

care, alimony payments, and income averaging.

Most of these publications are revised annually to

reflect new developments or to simplify the language

and improve the organization of material from the

standpoint of appearance and readability. Increased

actMty in this area has resulted in modernization of

format design and a thorough rearrangement of material in the 1969 edition of Your Federal Income

Tax. A substantial reorganization of material for

the 1970 edition of Tax Guide for Small Business

was underway at the close of the fiscal year.

Obsolete publications are discontinued and new

items are added from time to time to adjust to

changing conditions. Furtherinformation about current publications starts on page 78.

Technical Development and Guidance

Employees in the National Office and in the field

who are concerned with the technical aspects of

the tax laws benefit from various internal use publications. Comprehensive discussions of significant

legislation, regulations, court decisions, and administrativc rulings are presented as study material in

6 / Annual Report / Chapter One

the Quarterly Review of Technical DevelopmentsIncome Tax and in the Annual Review of Technical Developments-Employment, Estate, Gift,

Excise Taxes covering fiscal year developments.

These publications (replacing what formerly was

called the Annual Technical Review Institute) are

supplemented by special issuances of other booklets

identified by subject matter titles, such as Review

of Technical Developments-Foreign Investors Tax

Act of 1966.

Reports on Current Tax Literature, issued every

2-weeks, is a two-page presentation of digests of

articles published in professional journals or other

tax literature containing legislative suggestions, criticism of Service position, or reports of abuses or tax

avoidance devices. These digests are presented for

information and appropriate action by Service officials having responsibility regarding the matters

discussed.

Tax Briefs is a pocket-size publication issued

every 4-wecks so that revenue agents, office auditors, and tax technicians in field offices, as well as

technical personnel in the National Office, may

keep informed about the latest developments with

a minimum expenditure of time. Thc brief digests

of new legislation, regulations, court decisions,

Revenue Rulings, Revenue Procedures, and other

matters are accompanied by references to the research source niog likely to be available to field

personnel.

Internal Revenue Bulletin Provides

Official Guidance

The weekly Internal Revenue Bulletin continued

to serve as the Commissioner's means of providing

technical and procedural guidance for all Service employees as well as for taxpayers and tax practitioners. A substantial increase in the number of

Revenue Rulings published-from 602 to 696

illustrates the emphasis throughout the year on the

public announcement of technical interpretations

in order to encourage voluntary compliance and to

promote the uniform application of the tax laws

to all similarly situated taxpayers.

One of the more significant rulings published during the year is Revenue Ruling 69-4, which provides detailed guides for integrating pension, annuity, profit-sharing, and stock bonus plans with the

old-age and survivors insurance benefits provided

under the Social Security Act. Revenue Ruling

69-56 presents examples to show that the marital

deduction for estate or gift tax purposes is not d.isallowed or diminished by various administrative

powers conferred on an executor or trustee under a

will or inter vivos trust instrument or by applicable

local law.

Administrative procedures of the Service that

affect the rights or duties of the public were announced in 37 Revenue Procedures during the year.

Revenue Procedure 68-44 sets forth the standards

for publishing Revenue Rulings and Revenue Procedures in the Bulletin. Revenue Procedures 68-45

explains newly established procedures relating to

master and prototype corporate pension, annuity,

and profit-sharing plans. Revenue Procedures 69-1

through 69-6 describe the general procedures for

issuing rulings and determination letters to taxpayers, furnishing technical advice to District Directors of Internal Revenue, and processing requests

for exemption or qualification under certain provisions of the Code.

The Revenue Rulings and Revenue Procedures

published during 1969 in the various tax categories

are shown in the table below.

Revenue Rulings and Revenue Procedures published

Type

T.tsf........................... ___......

Administutin................. ____.........................

Alwhol, tobec., end fuselm, ... ........ .........

=y,mertts vd es. ___ ........ -------_----_-

Excise taxes."I" 'os-... --------- ---------------------- -- ------

te- ....... ------- ..........

Pension trusts ............... ------- _..........

Self-employment tax.. ......... .......... __ ... _... __. -----

Number

733

3119

79

24

67

359

57

5

More than 2,300 pre-1953 published rulings were

declared "obsolete" during the year and 143 others

were updated and supencried by republication under the current statute and regulations. This is

part of a continuing program for reviewing all of

those older rulings and publicly announcing

whether they still are appropriate statements of

Service position. The purpose is to eliminate unnecessary research and to reduce the possibility of

improper reliance.

Among the other items published in the Bulletin

to enhance its use as a convenient reference publication were 26 Public Laws relating to internal

revenue matters, 13 committee reports, six Executive Orders, three Tax Conventions, 57 Treasury

Decisions containing new or amended regulations,

five court decisions, two amendments of the Statement of Procedural Rules, four Treasury Department Orders, ten Delegation Orders, and three

notices of disbarment or suspension from practice

before the Service.

Announcements of acquiescence or nonacquiescence in 63 adverse decisions of the Tax Court of

the United States were published. Among the 137

announcements of general interest, 12 listed the

names of organizations that no longer qualify as organizations, contributions to which arc deductible

under section 170 of the Code, one announced a tax

agreement with the State of Georgia,-and nine listed

disaster areas in which losses qualify for the special

tax treatment provided by section 165 (h) of the

Code.

The weekly Bulletin is readily available to all

Service personnel and, at a reasonable cost, to the

public. Its contents are extensively disseminated

(with appropriate citations) by the commercial tax

services and various professional journals. During

the year, it was redesigned in what no doubt is the

most extensive format change in its 50-year history.

Consistent with the progressive design program of

the Service, the prior book format with full-page

column width has been replaced by a new format

(combining a narrow column width with a new

type face and other typographical techniques) that

is intended to provide a more contemporary visual

impact.

Material of a permanent nature is consolidated

semiannually into Cumulative Bulletins, each of

which contains an index and finding lists. As a

further research aid, an Index-Digest Supplement

has been published for each 4-year period since

1953. These quadrennial bound volumes contain

digests arranged under topical headings along with

finding lists to facilitate locating material under

particular sections of the Code and regulations.

For the 4-year period 1965 through 1968 a new

format was adopted for the Index-Digest Supplement 'System to increase its effectiveness as a research

tool. The system will be made up of five basic volumes, or "services," with subject matter coverage as

follows: Income Tax; Estate and Gift Taxes; Employmcnt Taxes; Excise Taxes; and Alcohol,

Tobacco, and Firearms. In addition to the topical

digests for the 4-year period, the finding lists in each

of the services include citations of all currently effective Revenue Rulings and Revenue Procedures

published during the period 1953 through 1964 appropriately integrated with those published during

the period 1965 through 1968.

Cumulative supplements will be issued for each of

the basic volumes, quarterly for the Income Tax

service and less frequently forthe others. Periodically,

all currently effective material will be combined in

a new basic volume.

Informing and Assisting Taxpayers / 7
Alcohol and Tobacco Industries, and Firearms

Licensees Notified of Technical Changes

The Service continued its program of issuing industry circulars to aid the alcohol and tobacco

industries in keeping currently apprised of the requirements of internal revenue law, regulations,

rulings, and procedures. Since passage of the Gun

Control Act of 1968, circulars have also been addressed to firearms licensees.

Thirty-one industry circulars were issued during

the year. Of these, 10 discussed changes in law, and

related proposed or actual amendments to regulations; five announced the substance of Revenue Rulings and Revenue Procedures; three discussed the

use of prescribed forms; three related to firearms

matters; two discussed the timely filing of mailed

returns and documents; two discussed the experimental use, of plastic bottles for packaging distilled

spirits, and the remaining six announced other mattells of current interest.

National Office Issues Technical Interpretations to Taxpayers and Field

Offices

It is the practice of the Service to answer written

inquiries of individuals and organizations, whenever

appropriate in the interest of sound tax administration, as to their status for tax purposes and as to the

tax effects of their acts or transactions. A "ruling,"

which may be issued only by the National Office,

interprets and applies the tax laws to a specific set of

facts. (A ruling, therefore, is distinguishable from a

"determination letter," which may be issued by a

District Director only if the question is specifically

covered by statute, regulation, or precedent publishcd ruling.)

Letter rulings are requested by taxpayers or their

authorized representatives. District Directors also

request technical advice from the National Office in

connection with the examination or consideration of

a taxpayer's return or claim for refund or credit.

During the year, 27,827 requests for letter rulings

and 2,523 requests for technical advice were procemed, classified by tax category and subject matter

as shown inthe following table.

Requests fortax rulings and technical advice processed

Sub*t

-to'

Taxpayers'

'imimat,

Hold

requests

Total ------- ..................... 30,350 27,927 Z 5Z3

Accounting methods 1 13'

A

=

period.-. 1 % ------------

.

1 1:

02 11: 0 2

A atters- ...... ----

Administrative provusons....: ...............

45

100

22

73 27

Alcohol, tube.., ad fi,earm. taxes1" l " V P ` -5

,

552

655

4

,

423

655

1,129

ffp o,:~ ..d W1:iiii;I~iiii4 iials-----:, 583 546 ------ T

Engineering Estate and ItQuestions (dinnexi-bim, ft)--- _ 159 93 66

ilt taxes,

F.'rupt -::J r, I'S's

393

1, ago

112

265

Other excum taxes ......

Other imoom. us en.tte", 4"US J9147 114 '3'

Pension trusts... ......... ...... 925 613 312

Determination Letters Issued on

Pension Plans

Most of the determination letters issued by District Directors relate to the tax qualification of pension, profit-sharing, annuity, and bond purchase

plans under the provisions of section 401 (a) of the

Code and the exemption of related trusts or custodial

accounts under section 501 (a) of the Code.

During the year, 131,346 plans that include selfemployed individuals were held qualified. Among the

210,659 participants in these plans were 150,927

self-employed individuals. In addition, 25,493 employce-beriefit plans covering 946,148 employees

were held qualified. Details regarding this activity

are shown inthe tables that follow.

Determination letters issued on employee benefit plans

It..

prordsharing PlansPensiax

or simensity

tasq,

Stock

bomm

rate.

Determination Jultuil letters issued with mapecttovuLr.tiiin .1 Va.:

tons eZo......... 12 1 5

:,

2 077

68: 04

0

3 391

659:243

2

274 268 l8'8651

C. Z Termination of his ........... 762 742 2

us closed without issuance of determine.

tion letter.....

........ ------- 1,039 1,446 ........

Deterno nation letters Issued on benefit plans for selfemployed'W persons

Profit- Pension Bind

It.. sharing plans plan, PIZI 11111

O.Ormirmt!... issued with 'es:dt- I ,

1. Initial qualification, in p rus:

a

".0it _ _

"

67,599 GZ 807 950

Iturnbe, .1 participants, 111,617

:

97 905 1,137

h. Plan, disaw-ad......

2. Titnumaticna u! plan- ... .......

ZU

85

Ifis

97

5

,.,.

--- .......

closed

without

issuance ot ~Wtr_

nation letter.--------1....... ......

1

4,493 1 4,088 1 58

Regulations Provide Interpretation

of Internal Revenue Code

Regulations interpreting the tax laws, authorized

by the Internal Revenue Code, provide writtenguidelines for the application of Code provisions by

Service personnel and the public in general.

Proposed tax regulations are normally issued

through the publication of the complete text in a

notice of proposed rulemaking in the Federal Register, By this means, it is intended to give due publicity

of the action proposed. Persons interested in the proposed text of the regulations are given an opportunity to comment in writing and orally at a public

hearing. After consideration of comments and recommendations, accepted changes are made in the proposed text and a Treasury Decision containing the

final regulations is prepared, signed by the Commissioner, approved by the Secretary of the Treasury

or his delegate and published in the Federal Register. These regulations have the force and effect of

law.

Occasionally it is necessary or appropriate to omit

publication of a notice of proposed rulentaking.

Under certain conditions taxpayers may be required

to make important decisions under a new law soon

after its enactment. In such cases temporary regulations axe published without prior notice, followed

by permanent regulations issued in the usual manner. In some cases it is permissible for regulations

to be published without a notice of proposed ruilemaking where a notice would be unnecessary or

impractical or where the needs of the public are

better served without such notice.

Thirty-seven final regulations, one temporary regulation, and 29 notices of proposed rulemaking, relating to matters other than alcohol, tobacco, and

firearms taxes, were published in the Federal Register during the year. Thirteen public hearings attended by over 700 persons were held on proposed

regulations.

Sixteen Treasury Decisions and eight notices of

proposed rulemaking were issued relating to the

administration of alcohol, tobacco, and firearms

regulations.

8 / Annual Report / Chapter One Informing and Assisting Taxpayers / 9
Data

Processing

Activities

Gross Collections Increased $34.3

Billion,

More than 70 Percent of Total

Collections Processed through Federal

Tax Deposit System.

ADP System Accelerated Refunding

Program Including Quick Refunds

to Corporations.

Mathematical Verification Results in

High Yield for Government.

Continued Upward Trend in Returns

Filed.

More Corporations Report Tax

Information on Magnetic Tape.

10

Gross Collections Again Set a Record

Gross collections rose to an all-time high of $187.9

billion. The increase, $34.3 billion (22.3 percent)

over last year, was the largest ever recorded. Ecnomic conditions, the income tax surcharge, an

increase in the rate of Federal Insurance Contributions Act taxes from 8.8 to 9.6 percent, and an

increase in base coverage from $6,600 to $7,800 on

January 1, 1968, were strong contributing factors in

achieving the record level.

More than 70 percent of total collections were

processed through the Federal tax deposit system.

This system provides for payment of taxes directly

to designated banks and was established to accelerate

All Tax Collections

Rose Sharply

97.4

MD)

29.9

383

78.1

29.2

33.1

the deposit of taxes to the credit of the Treasurer of

the United States.

Substantial gains were noted in every major class

of tax. The largest increase in 1969 occurred in individual income tax withheld at source (including

FICA taxes) which totaled $103 billion for a gain

of $17.5 billion, or 21.3 percent, over the preceding

year.

A large gain was achieved in corporation income

tax payments, up $8.4 billion over 1968, for a total

of $38.3 billion. This represented a firm recovery

from the decline in 196B which had broken a steady

upward trend started in 1963. This year's total not

Gross Internal revenue collections

JDPII.. in thousands. For details a.. table 3, p. 1061

only regains the pace but exceeds collections for

1967, previously the highest year in corporation income tax receipts.

Excise tax collections reached $15.5 billion, an

increase of $1.2 billion over the previous year. This

is the first year that excise revenue has exceeded

that of 1965, the previous top year in this category.

Collections in subsequent fiscal years were affected

by the Excise Tax Reduction Act of 1965, which

repealed retailer's excise taxes and either rescinded

or scheduled for eventual elimination many other

excise taxes.

The following table shows a comparison of collections for fiscal years 1968 and 1969:

Source Percent of

1969 1968 lip

1.11-0 or decrease,

colleacturm,

Amount Percent

Grand tolat ...... ......... ....... -------_--_-------- 100.0 $153,636,938 SU?,M,Wo $31,292.722 22.3

mpon. tain, totsl_.................. ................... ............. M 3 1 108,148,565 i3s,778,05l 6Z9,487 25.

21 1 29,896 520 SC337 646

1 1.

26

1 " 1

51: 28 2

9

,

78~252:045 37,44W,44111 19 361 , 1", R 5

Withheld by employer, I ....... _ ....... .......... ........

,

57 30D. 546 To 192,11s 12,881,629

Oth............. .................. .................. 14~ 5 951, 4" V:2S*.Zlt 6,306,732 11.1 31), 1

Em rdaI'' `ddi b`I1 1~ 'I i ; ce; i; ia ...............................

t

17.6 29. Ws, 899 U OrA,gn 4.1192,759 173

o . r: ,I ll

i , Federal impirinex. coridnibut..... ": _- ------

- ------ --- ------------------

11is.-Is

620,648

22s,:076,796

11.4se'sal

23,11111,allint

41969,295

"'4 '

18.3

SWI-immiloyamint insurance contriouti ....._:: - - - IS

9 , 1.

543

, I '

1 ~ 699 IHI

line.ployintint mon. .............. ...................

3

fiv,.it 62 Wz = 5.5

retirement.............. ......................... .......... .5 858,448 134,6" go 236 9.3

Estate and gift lose....... ........ 1.9 979

' 2 ,

630,003 448 086 14 5

Entire Man, total.... ------------- S, 2 " : 0196 4:11,12.761

1,

?22:391 6:5

Alcohol............... ....... ...... .......... 2.4 4

' ''

6.2

Tobacco. ...........__.............

------- ------- ------ 1.1

:

2 121:169 :LL11 .

Other.................................. - I - -- 4.7 Ir log I

1,91,

443 9,L%,797 , ,,4

I

11:9

TOTALS

1969 197.9

1960 153.6

CHANGE +22.3%

3.1 3.5

15.5

I

14.3

Individual Employment Estlt ad Excise, tax.

Income to.. gift us.

Change lrom 19ft

+14.5

1

+8.5

5

i Collections are adjusted to exclude rimounts transferred to the Government of

,.arx. s for details it -I"tpbl I a 1, P ~S imilect.

' end ,

P III

Estimate .-Col on, of divid.. Income iax* wit%hold are not reported sapisettily so, from I .!d~xgav1d and disability InsuranceIthirI.,-I on wain and eateries. Similarly,

factio a o in ivi net income tax not wit a of are not reported serrately frogmt

old-age and taxes an sell.

".."I.-.- I

is

old-age and donabi ity insurance tax collections s7hopIn is based an estimates."n"m made byP

Prompt Refunding Program

Although the Internal Revenue Service is customarily viewed as a tax collection agency, approximattly twoout of every three individual income taxpayers once each yearlook to the Service for prompt

action in refunding money to them. This year, 49.6

million refunds amounting to $12.9 billion were

issued in all tax classes. Most taxpayers received their

refunds within a 4- to 6-wcek period. The timeliTess of the refunding process is illustrated by the

fact that interest of less than one cent was paid for

each dollarrefunded.

The number of refunds issued decreased by 4.5

percent from the preceding year. This decline is primarily attributable to the enactment of the income

tax surcharge.

the Secretary I of the Tiarneury:urscant to the Provisions of M. 201(e) of the Socis.

. ......d' " Mind"

at! otdage and diestillity impredice indabs,

Invm for the

I it . a

Th. IOWA., I I 11-ses - In Mosel mixiner is.., were 11ri,

subtatima the aid-elo, and disabittly imurami tax estimates it= tire curriblo,

totals reported.

~ Revised.

Refunds to Corporations Expedited

With enactment of the Revenue Expenditure

and Control Act of 1968 corporations may now apply for adjustment ("quick" refunding) of estimated

tax overpayments. Previously, refunding of estimated income taxes could not be accomplished until

the income tax returns had been filed.

Duplicate Refunds Detected

Now that accounts for all of the Nation's individual income taxpayers are incorporated in the

master file, a problem which has plagued the Service

since the inception of the withholding system has

been largely overcome. This involves taxpayers filing

more than one income tax return claiming a refund

Data Processing Activities / 11
for the same taxable period. Under automatic pro- correct filing erTors; few are attempts to defraud the

cedures, a du licatc refund is identified immediately, Government. This year, duplicate refund requests

and investigLion is undertaken before the refund is totahng $6.4 million were detected.

released to the taxpayer. Most of the duplicate re- The following table presents data on refuncLs by

turns are filed to correct the original return, or to class of tax for 1968 and 1969:

Internal Revenue refunds, Including Interest

[For refunds by region and district. sea table 5, P. 1111

Amount Worckul (PlirciPal Amount of Interest WhIdId

Type of tax

Number ml but... 9--thousand delta.) (thoursami delu.)

1968

-

US, 1968 1968 3M,

Total .fund, of Interest rensmu, I I............. .......

........ 51, M, 108 do, en, lis r 11, 420,617 Z SM M 120,552 1:101 "a

Urp.r.".. in... I ................... ............. ................ 149.695 W.M 1,313,3" Lyn on 81 543 '14, So

nd lvidual income and employment taxes, total .......................... '51, 706,096 49, 3n, us 9,829,388 ", $31: M 34:304 ts, na

Excessive prepayment inoo me is x 3.......... ............ _--------- 51 039 242 at, sue sted 9 315 085

'

a'$" no 16 337 IS'"S

Of or Income tax and Fd. ral Insurance Contributions ACUIX02 1._.

2

;

632 52

: 6

: ran: day 508: 5M W:05 17:7 14 IS, sag

11 .1r(nd retirement..... ....... ...................... ..

Unemployment i ................................... .............

413

33,789

m

371482

521

5,780

led

716=

1

3

240

6

271

Estate is...... ........... ............. ......

......

7,677 I'm 33, sag as 3,692 S,M

Gift tax ....................... ........................... ....... 817 11 "d 1

2. 141 213

Excise taxes, total ........ .................

34,

B23 431211S 242: an, no 872 _zon

Alcohol taxes,I............. ................

.

8,473 11

'

02 loo, six

1

I

Tobacco, ux. I ............ ........... ::::::: 281

Manufacturers' and retailers' lxcisd~ taxed, total .... 5,132 125'', '6"82 11 '

273 a

G."Un. used an to................. 42

7 M

87 015 1341 124 ..........

Gasoline. haphitimaxy, ---- ...........

1

275 2, M 26:503 an, ns ..........

other .............. ........ .............. ....... I .......

3:

430 SIM 12,164 21, say 273 611

All other excise, talc I.............. .................. ........ 20,937 asters, 16,470 U, fuci 590 3, an

, Revised. -L- than M.

.n'dFigur" have not been reduced to refiect reimbursements from the Federal Oldglll

to SM,953,000 in 1969.nd $2 715,000 a 1968; rom the li~hraxy Trust Fund amount.

Ins to $Z23,755.100 In 1969 and 1114,387,DDO ..

19GO: an from the Umunployermt

Trust Fund amounting to $6 852 000 in 1969 and $5,V9,000 in 1968.

,

Net of

127,547 undeffiWabl; checks totaling $10,539,000 in 1969 and 165,809 ond1l1w.bl. cheeks totaling $24,137,000 in 1968.

I Includes refunds

"'t

"theraiss dassified."

I Includes drabk,l"d;tW1mpx

:1Wuc1dxI.bfi.ti.,.iI, r'.d.%J~."y purposes.

.

neludes; narcofied, silver, vnigerins (excise and stamps), capital stock, and other

...he tax refunds.

Excludes gasoline tax .fund.'

Includes excess, FICA credits.

Upward Trend in Returns Filed

A substantial pattern of growth continued when

more than I 10 million tax returns of all types were

filed in 1969, an increase of 3 million returns over

last year. The number of Forms 1040 and 1040A

rose by nearly 2.3 million to a total of 75 million, and

accounted for 68 percent of the total. The table at

the right presents data on returns filed by type of

return for 1968 and 1969:

Number of returns filed, by principal type of return

(Figures, In thousands. For details, sea table 6. P. 1121

Type of return 1968 less

US, "I Grand total.......................................

Income tax, total...... ----_------_.......

Individual and fiduciary, totaL..... _.........._...

Individual-citizems and resident liers, total ----_..

Forms ID48............... ........

Forms 1040A ...... ........ .......

All other individual end fiduciary. ........

Declarations of estimated tax, total ............

Individual .............................

Corporation ...................... ------

Partnership ............................

C.ot?.r.if. I ....................

................... ----------- ..............

Employment is., total ..........................

loold,y.,"' Form III ----------_---------------

-

re. or_

I , ....

Emp _._, Form

"'

~bnustuhold ehp1.c1y-)_)._::::.

.,FZ ndfi~

943 agriculture am; arm

_.,I F UnemploymentInc..

U,`F`."M'9'dG_

Estate tax.. .........

Gfft

tax

------- ................

Excise tax, total -------------

1%pe"D 0 * ' a _,nii;ii~liiWi, Sec.) ...

Alcohol................................

Tobacco................... ____ ---

998"r u a tax------------_----------- .......

------------------------------------------

,107,3112

,93,245

72,679

54,062

18,617

1,159

,6,187

,6,154

33

':

002

1 623

595

2Z 323

15

4,40' '55

629

23

1,709

119

1 , 139

557

948

310

21

6 Z20

52

89, An

74,962

67,2210

17,733

I'ZS3

7,1112

7, ON

Sag

234 On

15,426

4, sard

3411 n

1,!!14

.Us

3, use

Z, me

ills

n

I

Returns Filed Continued to Rise Except in

Partnership and Employment Areas

76.2

1.0 1.0

Individual

E,_ A and Decl.ratlona partnership Corporation Employment Enis. and

fiduciary of Sell tax 'Id

!II the,

0

Chanp from 1968

+3.2

-0

2A 2-6

Nonfilers Are Identified

The Service is now able to use information documcnts and social security information recorded on

tape to make computer comparisons to identify non.

filers. Further, it is possible, through master file

comparison of the filing records, to select for invcstigation those taxpayers not appearing on the current

record.

+14.8

1

_M4.6

TOTAU

1969 110.7

1968 107.4

CHANCE +3.1

22.3 22.0

It is not only the Government that benefits from

the delinquency check. Many taxpayers, by means

of the delinquency check, arc reminded to file a return in order to receive refunds of their overpaid

taxes.

During 1968, a delinquency check was performed

for tax year 1965 for the regions which were then

incorporated in the master file. This resulted in the

securing of 20,000 returns indicating a balance of

tax due, including penalty and interest of $4.3 million; overpayments of $1.2 million; and a net yield

of $3.1 million. In 1969, a delinquency check was

performed for tax years 1966 and 1967 for all the

Nation's individuals who are entered in the master

file. Preliminary results for tax year 1966 show that

more than 60,000 returns were secured, reflecting a

balance due of $11.3 million; overpayments of $4.8

milEon; for a net yield of $6.5 million.

Mathematical Verification Produces

Benefits

One of the principal benefits of computer processing of returns to the taxpayers'and Goverrimcnit alike

is the electronic verification of the taxpayers'

arithmetic. Approximately 5-percent of the individuals who filed income tax returns in 1969 made mistakes in theirfavor. About 3-percent of the taxpayers

made errors against themselves. Errors in addition,

subtraction, and improper use of tax tables or schedtiles were common mistakes detected. The verification process resulted in adjusting liabilities upward

in the amount of $315.1 million, and adjusting others

downward by $140.2 million, providing a net yield

of $174.9 million.

The program also included a process for checking

the credits claimed by taxpayers for estimated tax

payments. This resulted in a net yield for the Government of $213 million, in addition to the assessintent of $43 million in statutory penalties forfailure

to make required estimated tax payments.

During the year, 65.8 million Forms 1040 and

1040A were mathematically verified, compared with

74.9 million last year. The decrease is due primarily

to (1) a reduction of 5.6 mMion in the number of

returns carried over from June 1968 to be processed

in fiscal 1969, and (2) the deferment of a substantial

number of full paid returns from June 1969 to fiscal

year 1970 processing because of manpower limitations. Detailed results of this ycaL?s program arc

shown in the following table.

, Revised. Data Processing Activities / 13

12 / Annual Report / Chapter Two
lnulwnuual Income tax returns mathematically verified

Item

Total Farm 1040 Form 10400%

968 1969 1XIS 1958

-

1363

Numbs, ............. ...........

l :

74 926

5:034

",an

5 3"

57 063

3:824

0 Sao

3:07

17 963

1:210

an

- ~ 1 am

M

umb., .1 .!u,n, on Web changes ad,.-.- ~ ........ .............

d

_&....

6,dum.

Jh muous.:

---------------------------- th nd d ll.

3,008

266 763

,

31s3'23"03

12,298

0 9"

. 2. Us 720

55 774

,

m

ii,dums Amount ~ ...... .................. .... ousa o - 6 1

~ith d....in.:

N..b,r ........... -----------------

thwusumd,

,

6

' '

,

a"

,

' '

1.489

,

49D

5

:: 557

Ammmt_ -----_-_--thousand dollars 135: 867 a. no 107: 770 107. M 28,097 A20

Not V:Uld:

I do

------- --- -------------

130 M

1

IT.'son 103,219

8

us M

'i

27 677

1 55

"'M

- Avoran -. 75 2AS . 1 ts

.

IL&S

Exempt Organization Master File

Centralized

Ile Service intensified its efforts to improve the

effectiveness of the Exempt Organization Master

File System (EOMF) in 1969 to support administration of the exempt organization provisions of law.

Centralization of EOMF processing responsibilities

in a permanent group working exclusively on exempt

organization matters at the Mid-Atlantic Service

Center promotes uniformity in data collection, reduction of processing discrepancies, and consistent

treatment of exemption matters, thereby enhancing

efficiency, currency, and economy of EOMF

operations.

, Centralization of the EOMF operation also

prompted centralized filing and processing of exempt

organization returns at the Mid-Atlantic Service

Center, thus increasing tht potential for controlling

returns in process and making them more readily

available for other Service needs, as well as for

developing more practical and effective delinquency

programs.

An EOMF listing of 30,078 exempt organizations.

that qualify under existing law as private foundations was furnished to SubcorriTnittee No. I of the

Select Committee on Small Business of the House of

Representatives, which in turn published the list and

made it available to the general public through the

Superintendent of Documents.

During the year, the number of organizations on

the master file increased 20 percent, from 358,000 to

416,291, more than half of which are local organizations covered by group exemptions. The distribution of exempt organizations on the master file on

December 31, 1968, shown according to sections

and subsecdons of the Internal Revenue Code of

1954, was as follows:

Exempt organizations on master file

Exemption subsection

501(c)(1) ..................................

501 (c)(2) ..................................

501 (c)(3) ..................................

501(e)(4) ................ .............

501(c)(5) ..................................

501 (c)(6) ..................................

501(c)(7) ................................. :

501 (c)(8) ..................................

501 (e)(9) ..................................

501(c)(10) .................................

501 (c)(I 1) .................................

501(c)(12) .................................

501 (c)(I 3). ................................

501(c)(14) .................................

501(c)(15) ... .............................

501(c)(16) ... .............................

501,W(17) .................................

501,(d) ....................................

521 .......................................

Total ............ ..................

Numbw

of organiautd.n.

961

3,992

137,487

104,546

77, 737

27,594

36,189

989

4,330

467

14

4,211

S,809

5,022

1,728

39

674

40

6,462

416,291

Ile number of exempt pension trusts on the

masterfile raw 25 percent, from 106,000 to 133,000,

during the year.

Tax Forms Simplified

The search for improvement and simplification in

tax reporting, although sometimes frustrating, is a

never-ending one. The ultimate test of the success

of the Service's efforts to simplify a particular form

is the acceptance it gains with the public.

A new form (Form 104OX) initiated in 1968 was

widely used by taxpayers in amending individual

income tax returns. The appeal of this one-page

form is its simplicity. It relieves the taxpayer of the

chore of completing all of the entries on Form 1041)

in order to amend his return. The new form requires

from the taxpayer only those items of information

necessary to reflect the change being made. Accelerated processing, made possible by the ADP system,

enables the Service to issue refunds to filers of this

new form much more expeditiously.

A new style form was also introduced for individuals who are required to make quarterly payments of estimated tax. Each taxpayer who appears

to be potentially subject to this requirement of law

is mailed a package containing the forms he may

need during the year to make his payments. The

taxpayer's name, address, and social security number

are preprinted on the forms exactly as they appear in

the tax records. Self-addressed envelopes for use in

making the payments are also included for the taxpayer's convenience. This system, which is substantially similar to widespread commercial practice, is

designed to provide additional assurance that the

taxpayer's payments are credited to the proper

account.

All taxpayers will have the benefit next year of a

new individual income tax return. The new return, which will continue to be known as Form 1040, Will

replace the earlier version of that form as well as the

card Form 1040A. Essentially the return consists of

a single sheet supplemented, wherever necessary, by

separate schedules. This arrangement provides an

improved way of organizing the information required under the tax laws.

It is estimated that 31 -million taxpayers will rcquire only a single sheet of paper to report their 1969

incomes. Another 22 million filers will need to

.attach one additional schedule. Individuals who

previously filed Form 1040A will find that the new

form offers them an advantage not provided by the

card form of claiming such things as itemized deductions, sick pay exclusion, and retirement income

credit.

Expanded Computer Operations

Magnetic Tape Reporting Expands

The growing tendency on the part of the business world as well as the Government, to use the

computer to help solve paperwork problems is becoming more evident each year. There is an increasing trend toward using magnetic tape instead of

paper to meet reporting requirements between

Government agencies and between the Government

and private industry. The Internal Revenue Service

is using such tape in reporting the self-employment

information it receives on individual income tax returns to the Social Security Administration for posting to the social security accounts of these taxpayers.

This technique affords both agencies substantial

manpower savings and instills a higher degree of

accuracy in the recording of this information.

A large number of corporations, banks, and other

businesses are using magnetic tape to submit required information reports on such things as interest and dividends paid to investors and the wages

they pay to their employees. This year 47.6 million

information reports were received in this manner

as compared to last year's receipts of 34 million.

Direct Data Entry System Installed

A new system for taking information from tax

returns and documents and preparing it for computer processing was successfully installed in the

Southwest Service Center this year. The system is

called Direct Data Entry. It enables an operator to

transcribe information directly from the documents

onto magnetic tape without going through the intermediate step of putting the data on keypunch

cards. The equipment performs certain arithmetic and validity checks as the data are transcribed

and it signals the operator when an error is discovered. The operator can also see on a video tube the

This young lady is operating a direct data input station

installed In the Austin Service Center. More efficient

than traditional keypunch-key verify operations, it eliminates card punching through use of a keyboard machine

that directly accesses to the computer with internal

verification and display of information. This time-saving

equipment is scheduled for installation in all seven

service centers.

14 / Annual Report / Chapter Two Data Processing Activities / 15
U~L~ U~11~ili)W 60 WaL 11 , miStaXe Is maoe it can

be corrected immediately. This reduces the need for

verification required under the keypunch system and

simplifies error resolution. The system is scheduled

for installation in all service centers by 197 1.

Instant Retrieval System Under Test

A test is underway in the Southwest Region of a

new system designed to enhance the Service's ability

to provide taxpayers with much more rapid answers

16 / Annual Report / Chapter Two

to questions about the status of their accounts or a

variety of other pending matters. The system is centered on a random access computer linked to video

inquiry stations located in the service center and the

district offices within the region. This new technology will enable the Service to retrieve information

within seconds that now requires much more timeconsuming and expensive research. Its succe&4ul

testing promises much faster service to taxpayers

and more economical operations.

Enforcement

Activities

Audit Recommends Aaditional Tax and

Penalties of $3 Billion, 3 Percent

Higher than Last Year.

Overwhelming Majority of Appealed

Cases Closed by Agreement with

Taxpayer.

Computer Utilized in Delinquent

Returns Program.

Value of Taxpayer Delinquent Accounts

Inventory Increases.

Tax Fraud Investigations Intensified.

New Legislation Expands Firearms

Program.

W3-005 0-70----a

Introduction

The Service expends a substantial portion of its

resources on enforcement activities forthe purpose of

insuring that tax liabilities have been properly detcrmincd and paid. These major activities include

auditing returns, considering appeals, securing delinquent returns, collecting delinquent accounts, investigating allegations of fraud, and enforcing the

laws relating to alcohol and tobacco products and

firearms. Computer technology has been a valuable

tool in supplementing the human resources devoted

to enforcement and the increased use of the APD

system has been an additional deterrent to delinquency and fraud. Some of the more important

accomplishments of the Service's enforcement activities are set forth below.

Effective Audit Program Critical to

Compliance

Tax returns are audited either by internal revenue

agents at the taxpayer's place of business (field

audits) or by tax auditors who interview or correspond with taxpayers from offices of the Service

(office audits). Income tax audits conducted by internal revenue agents usually involve the larger more

complex returns requiring broad professional accounting skills. Returns with less compl~x issues arc

assigned to tax auditors. Continued shift of emphasis

toward more interviews rather than correspondence

audits largely accounts for the decline in the number

of income tax office audits conducted in 1969. (See

table.) Although interview audits generally require

more time to complete, the additional time is repaid

in terms of audit effectiveness and better communications with taxpayers.

A portion of available audit resources is expended

on examinations of estate, gift, and excise taxes. During the year, 6.2 percent of total direct examination

time was expended on estate and gift tax returns and

2.2 percent on excise tax examinations. Audit

coverage in the employment tax area derives mainly

from income tax audits. Internal revenue agents

examining income tax returns of business taxpayers

verify assessed liabilities for employment taxes.

The audit program record for 1969 is particularly

noteworthy. Despite budgetary and personnel limitations, 2.5 million audits were completed, only 12.4

percent fewer than recorded for 1968. Additional

tax and penalties recommended totaled $3 billion

which, was 3 percent higher than the total for the

previous year.

17
Number of Tax Returns Examined and Additional Tax and

Penalties Recommended

Total Individual Corporation Estate Excise

and and and gfft and

fiduciary assmot ..Pl.,..t

. mrs.i.tion

The following table compares numbers of returns

audited in 1968 and 1969 by type of return.

Total Individual Corporation Estate Excise

it and and gift rul

Audits Disclose Overassessments

The basic purpose of a tax audit is to determine

the taxpayer's correct taxable income and his correct

tax liability. Responsibilities of internal revenue

agents and tax auditors in carrying out tax audits

extend equally to the taxpayer as to the Government.

This means that examining officers have equal responsibility for discovering and recommending an

overassessment where a taxpayer has erred in favor

of the Government. In 1969 audits of returns, not

involving claims for refund, disclosed $203.7 million in overassessments. The following table shows

these overassessments by type of tax:

fiduciary exempt intiploymmart

organization

Number of tax returns examined

[Figures in thousandsl

Type of return

Total Field

I --

1968 1999 1968 san 1968 ISO

Grand total._ ............. 2. 9D4 2. W 747 all 2,157 1, us

Income tax, total .................. 7' 601 1,823 73g 7

2. 136

Corporation ................. 163 im

162

Individual and fidliCiary_...:

I

,

1

2,563 2, Sea 427 2,135 1, m

Exempt organization... .......

12

Is

12

0)

Estate and silt tax................ 41 2 38 37 4

4

no

Excise and employment tax........ 12~ 4

108

17 as

I Len than 50D.

Overassessments of tax exclusive of claims for refund

Type of tax

Totg------------------------------------

Individual and fiduciary income. .............

Corporation Estate income. ..... -------

Gift_---

Est I ---------------- --------

....... I --------

Employment- . .... ------------- _.............

Amount recommended

(thouland dollars)

1968

177,929

51 019

94~ 894

2

"

945

1:

'

31

l,

43f

512

ISO

an, 747

a.

US in

New Techniques Used in Selection of Returns for

Audit

For several years the Service has used computers

to review income tax returns and identify those with

high error probability. This year a much more

sophisticated computer selection technique was

introduced called "discriminant function." This

technique is basically one of assigning numeric

weights-negative as well as positive-to certain return characteristics. The weights, plus or minus,

were determined according to the relative significance of the return characteristic as an indicator

of error.

The new computer technique was used this year

to select for audit a substantial number of individual

income tax returns. Other sets of weights or formulas have been developed and will be used to select

from the other income classes of individual returns

beginning in 1970.

The new selection technique for the first time affords a uniform standard nationwide for selecting

returns for audit. The system is expected io reduce

substantially the number of audits that result in little

or no tax change. And, of course, will conserve the

manpower previously used to screen returns visually

prior to final selection.

Claims for Refund

The filing of claims for refund creates an additional audit workload. Claims for refund stem from

a variety of causes. Discovery of an error of overpayin Tit by the taxpayer accounts for a large portion

of the volume. Other claims stem from certain Internal Revenue Code provisions, such as the net

operating loss carryback which allows recovery of

taxes paid in an earlier year because of a business

loss in a subsequent year.

About two-thirds of all claims for refund referred

for audit screening are verified and disposed of by

reference to Service records and do not require a

contact with the taxpayer. Where judgment of the

merits of a claim requires examination of the taxpayer's records, the same policies and standards as to

the extent of the examination, evaluation of evidence and opportunity for appeal are applicable as

would govern a regular tax audit.

District and service center audit staffs closed

356,980 claims for refund in 1969. Of $506,955 million claimed, $226,272 million was allowed. The

greatest number of claims related to individual income tax, 308,620, followed by 31,765 corporation

income tax claims. Corporation claims involved

$265,241 million, while the individual claims involved $171,923 million.

Section 6405 of the Internal Revenue Code of

1954 requires reports to the joint Committee on Internal Revenue Taxation of any refunds and credits

of income, war profits, excess profits, estate and gift

tax exceeding $100,000. During the year, 685 cases

involving overassessments of $393.7 million, were

reported to the joint Committee.

The following table shows data on claims closed

by audit during fiscal years 1968 and 1969: '

18 / Annual Report / Chapter Three

Enforcement Activities / 19
Claims for refund disposed of by district audit divisions, fiscal years 1968 and 1969

Closed by audit divisions I

Class .1 tax Number Amount (thousand dollars)

Claimed

b payer All-ld Disall-d

1968 in, IN8

'_8

areas

am am 1968 less

........................................ 368,olo 153,3u 00, 4 116

fee.

73%, us 2 23

ill ~

ny, us 187,593

Cledipvidual ar alienincome mcam ------------- ------------- ::::.-

.............. ...

3~107:

M1 6 'p`: 1. ...

4.' .. 1

884

sax, . is

U

ast, 1"

1

In

1

13 47

17, sel 1b, 413 ...a

Estate . ....

..... ......

ZOO I. SU

1 fl~

065

as.

.2

: .s as 7: 155 D

1 lti, ffl

117

515

M Gas

EGif~ ........... 274

a-

,

231 7.919 346

so

,

985

17, res

Carl- ... _... ............ ................. ........

mployment .

10,

159

7 902

7,359 41:534 4., ~3

5 7

1

9,93.

1

655 Sir

.

. . . . 879 iz 31 ........ ............................. . I'M

3

9 .,037

:

473 2:124 2, Us

Protested-transferred to appellate division,

Class Of tax Amount (thousand dollars)

Number Recommended by audit divisions

Claimed by taxpayer

Ali ad Disal1mved

1968 1369 1968 "$a 1968 im 1968 1969

T.UL ............................................ 4,04 1. us 153,714 112,30d 713,030 k an 140,693 103,5"

Individual ince................................

i '*"

""i"

948 1 114 2,020

U

9 us

i ~

1 051

I

106 969

, 0

8 41412 n -- -------------- * --------_-

,

139

:

057

1

,538 94:ue 11:469 ":476 105: 068

,

......... as, M

........................ I—' .... -

-------------------- --------------

58

in

as

0, 271

341

:

5,07 445 112

9,

92

3416

a, us

.. ... . ..... .. - -- .......... Emplo ment :

611 462 4

,

1

91

2.5511

-------

59 14,131 .

y ..... .... ............ I ... .... _ ........... 279 us 353 I'm 6

347

am

I Includes claims Moaned 1. 10,vithout Wrest examination of the return: 1968-253,11 thousand returns and $107.2 million; 1969-261.7 thousand returns and $124.1 million.

New System of Workload Controls To Be Introduced

Continued effort was made to complete examination of individual returns within 26 months and corp9ration returns within 27 months of the date of

filing. Expeditious audits save interest costs for both

taxpayers and the Government where tax changes

result. Prompt completion of audits also minimize

the need for extensions of the period of limitations

for assessment and overassessment.

After almost two years of feasibility study and

preparation of specifications the Service will soon

have in operation a computerized reports system that

will: Provide monthly inventories of returns at various stages in the audit process; age returns in inventories and classify over-age groups by reason for

delay so that managers can identify problem areas

quickly and adjust priorities or take other timely

action as the case may be; and reduce the files of

audit record cards, now maintained in district officcs, to microfilm registers. The system promises

substantial savings in technical and clerical manyears.

Plans Formulated for Intensified Exempt Organization Program

Plans for a highly intensified exempt organizations enforcement effort were adopted and imple.

20 / Annual Report / Chapter Three

mentation was begun in 1969. The main thrust of

the plan is the centralization of exempt organizations

audit work, both the processing of applications and

audits of organizations, in about 13 key districts. At

least one group of 15 to 20 specially trained internal

revenue agents under the direction of a specialist

supervisor will be attached to each of these districts.

Specialist reviewers and conferees will also be attaclied to the key districts.

.

Internal revenue agents and other specialists assigned to exempt organizations work will be given

special training beyond the scope of tax law and

accounting-for example, basics of sociology, poUtical science, and economics.

Functional leadership of the increased exempt

organizations effort is vested in a new exempt organization examination branch established in the Na.

tional Office Audit Division. This organization will

design the broad nationwide exempt organizations

audit program and develop specifications for the

annual work plan for each key district. Work plan

execution will be controlled by close supervision of

the process of selecting returns and assigning them to

key districts for examination. Broader uses will be

made of the Exempt Organization Master File in

determining selections of exempt organization

returns for examination.

During this fiscal year the Service examined returns of 11,845 exempt organizations and recommended revocation of exemptions in 167 cases. The

number of examinations is expected to rise substantially under the revitalized program.

Coordinated Audit Techniques Proving Effective

The coordinated examination program continued

as a significant phase of total audit activity. As of the

end of the year 1,400 corporations had been identified which met the coordinated examination case

criteria. These corporations have effective control

over 28,000 sub-entities. About 10,000 of these large

case examinations were in process at year end.

Plans have been approved for a new Coordinated

Examination Branch in the Audit Division of the

National Office. The new branch will provide the

leadership essential to overall planning and uniform

nationwide execution of the program. It will monitor

and assist, on a case-by-case basis, development of

audit plans; scheduling of examinations; and application of resources including use and makeup of

audit teams and assistance by support districts. The

new branch also will develop prototype audit plans

and audit aids and techniques useful in the examination of large complex cases.

Several National Office sponsored meetings of

internal revenue agents and coordinated examination case managers were held during the yeAr for

exchange of information and experiences on matters

peculiar to particular industries. These meetings are

valuable to Nationwide uniformity and consistency

in the identification and treatment of tax issues.

Servicing Departing Aliens

Section 6851 (d) of the Internal Revenue Code

provides that no alien shall depart from the United

States unless he first procures a certificate that he has

complied with the obligations imposed upon him

by the income tax laws.

Resources required to assist departing aliens and to

issue compliance certificates where appropriate have

risen sharply in recent years. Audit personnel processed over 400,000 inquiries from aliens and issued

227,000 certificates of compliance during 1969.

Plans are currently being implemented, in the interests of conserving audit resources, to place the remaining taxpayer assistance portion of the departing

alien activiti), with taxpayer service employees.

Interest Equalization Tax

As of June 30, 1969, 1,071 brokerage firms and

66 banks were designated as participating firms or

participating custodians under the interest equalization tax provisions. This designation permit% the participant to certify (under certain circumstances) as

to complian*cc with the interest equalization tax provisions of the law governing transactions involving

foreign securities and debt obligations. To receive

designation as a participating firm or custodian the

applicant must notify the Service that it agrees to

comply with certain documentation, recordkeeping,

reporting, and auditing requirements. Consequently,

a large part of the audit activity in connection with

interest equalization tax involves inspection of participants' records systems to assure compliance with

recordkccping and auditing requirements of the law.

In 1969, intCrTral revenue agents inspected records

systems of 968 participating firms and custodians.

Other interest equalization tax activity during

fiscal 190 involved examinations of 1,737 Form

3780, Interest Equalization Quarterly Tax Returns.

These examinations resulted in recommendations of

$9.3 million in additional tax and penalties.

Advisory Art Valuation Panel Proves Effective

A 10-man panel of art experts was created in

1968 to help the Service determine whether realistic

appraisals or fair market value have been placed

on works of art donated to charity and claimed as

deductions on tax returns. Creation of the panel

was suggested by the Association of Art Museum

Directors as an instrument thht could provide the

Service with independent expert judgments of the

values of art objects.

Activities of the panel have been highly successful

in reducing controversies over art valuations. During

1969 the panel reviewed 396 works of art valued for

tax purposes at $13.9 million. It recommended that

claimed values of 167 of the art items be reduced

by an aggregate of $2.7 million. A list of members

appears on page 65.

Appeals System Provided for Taxpayers

Taxpayer Has Opportunity for Independent

Administrative Review

The appeals procedure of the Service provides the

taxpayer with an opportunity for a prompt, convenient, and independent review of his case when he

does not agree with proposed adjustments to his tax

liability. The purpose of the procedure is to present

an opportunity for resolving tax disputes, without

litigation, on a basis which is fair and impartial to

both taxpayer and Government.

The appeals function operates at both district and

Enforcement Activities / 21
regional levels. Both offices handle appeals on overassessments and on deficiency cases involving all internal revenue taxes except those on alcohol, tobacco,

firearms, narcotics, ande wagering. Both consider

cases which range from the simplest to the most

complex, from single issue cases to those with many

issues, from those involving few dollars to those involving millions of dollars. Both offices have the same

objective-to effect an early disposition of each case

on a basis which reflects a fair administration of

the I aw-althoughthere are some differences intheir

authority and jurisdiction'

In an overwhelming majority of cases a mutually

satisfactory answer to the disagreement is found at

either the district or regional level and the dispute

ended administratively rather than through litigation. As a result, less than 2-percent of all contested

tax cases have reached the courts in recent years.

Early Hearings Provided

The appeals procedure is designed to achieve disposition of disputed cases with minimum inconvenience, expense, and delay to the taxpayer. The

appeals function is decentralized, affording the taxpayer opportunity to discuss his umgreed case at

one of 58 district directors' offices and, if agreement

is not reached, at one of the 40 branch offices of the

regional appellate division. The Service also provides

conference opportunities, on an as-necded basis, at

other locations where conference staffs are not

maintained.

Both district and regional offices offer conferences

within a short time after the case is received. The

convenience of the taxpayer as to date and time is

a paramount consideration. In cases in which the

disputed tax is less than $2,500, a written protest

is not required for conference in the district office.

The same rule applies in the regional appellate

office provided the taxpayer has first availed himself

of a district conference. Proceedings in both offices

are informal in nature and the taxpayer may represent himself or be represented by a tax practitioner.

Both offices are independent of the examination

branch and give completely independent and impartial consideration to the issues in controversy.

As an additional convenience, the Service has

recently provided that in office audit type cases, the

taxpayer will be provided with an immediate conference at the time of examination, if he desires and

circumstances permit. The Service is also revising

its statutory notices to the taxpayer to advise him in

22 / Annual Report / Chapter Three

appropriate cases of the small case procedures now

available before the Tax Court.

If agreement is not reached at either the district 01'

regional office, the taxpayer can in most cases file

an appeal with the Tax Court. Even though this L,

done and the case has been docketed for trial, the

taxpayer may still carry on settlement negotiations

with the regional appellate division. Asan alternative

to trial ifi the Tax Court the taxpayer can take his

case to a U.S. District Court or the Court of Claims,

but this requires payment of the proposed deficiency

in tax, followed by the filing of refund claims and

suit against the Government.

Actually, most cases are settled with the Service.

For 1969, the appeals function disposed of 52,599

cases by agreement. There were 720 cases tried in

the Tax Court and 471 cases tried in the District

Courts and Court of Claims.

Districts were able to obtain agreements in 65

percent of the cases closed during 1969.

District conference activity is set forth in the

following table:

District conference case work-load

It.. Field

audit

office

audit

Total

Ca... pending

Jul'

I

Cases -nnad~ .... :::::---- ::-- : ' 3 ' '0 1 V2

1111,!! - --------

21: 343

15,367

1 5: 122

15,012

10: 6

N..b .....d : :::: :::: Q, 379

' -

15 647 10 739 26,386

Agreed as

=

a p to total.. ::: ::

e f

62 72 65

Cases pending S . _ ~ ..... : ... ::--

a

929 3,110 12,039

Appellate Receipts and Disposals

Case receipts in appellate offices in 1969 were very

close to receipts for 1968, 33,103 compared to

33,213. Average disposals of 49 cases per appellate

conferee remained high. Inventory was up 3 percent

over the prior year, but remained in current

condition.

Over 80 percent of appellate workload is made

up of nondocketed cases (those not docketed for

trial in the Tax Court). In 1969, 81 percent of these

cases were closed by agreement with the taxpayer.

Agreements have averaged 81 percent over the past

5 years.

Taxpayers filed petitions for hearings before the

Tax Court in 5,981 cases in 1969. Settlement negotiations on these docketed cases continue between taxpayers and the Service and most are ultimately settled. The result is that for 1969, 83 percent of all

docketed case disposals were closed by agreement

with the taxpayer.

Appeals--(Income, Estate, and Gift Tax Cases) Method of Disposal

MW

0

Change from 1968

+15.7

2

TOTAL

1969 27.616

ISM 29,940

CHANGE -7.8%

+1.5

1W

Enforcement Activities / 23
I

The following table shows the processing of both

nonclocketed and docketed cases in 1968 and 1969.

(For additional information see tables 16 and 17,

page 119.)

Appellate Division processing of all cases for 1968-1969

(income, estate, gift, excise, employment, and offers In compromise)

Status

Pending July I__..........

assailed ................. ... _ ...... ...........

Disposed .1. total............. ............

U loy ------------------------------

and ofter-in-compronric. ..t"rflach.

ByTtaxpayer as Court default On statutory notice or dismissal by

.... ---- ---- -

Y

titi.. to the Tax Court..............

T',

ad

Onin the T., Court...........................

Pending June 30.... ................... _...... _.. ....

Number of uses

1963

N33: 2'l 73

35,046

28,386

1,473

, :

259

3 126

902

31,264

less

Is, 2"

31,103

26, W

1,37,

1: In am7"

32,027

Increased Activity in Delinquent

Returns Area

Low delinquent account inventories at the beginning of the year permitted the deployment of additional enforcement personnel to delinquent returns activity for an extended period. The Service

secured delinquent returns valued at $309.1 million

in tax, interest, and penalties during the year. Ile

major portion (740,000 returns assessed at $253

million) was secured through the established delinquent returns program. ne balance was secured as

a byproduct of audit examination.

Operations Under ADP Broadened

Planning and study in prior years concerning delinquent fileis culminated in a broadening of ADP

operations in several delinquent return program

areas during 1969. Major among these were the delinquency check computer programis conducted nationwide for the first time for the individual master

file and the exempt organization master file.

The individual master file oper-ation consists of

an annual check for nonfiling of Forms 1040, Individual Income Tax Return. Information returns

(Forms W-2, 1099, and 1087) submitted on magnetic tape are also used to identify delinquent filer

cases. The exempt organization master file computer

program is designed so that delinquency letters can

be issued to taxpayers at any time during the year.

Prompt personal contact is made by enforcement

personnel when foundations and organizations fail

to respond to delinquency letters.

24 / Annual Report / Chapter Three

Several business master file computer changes

were formulated during 1969 which should provide

a better quality output, greater insight into reasons

for taxpayer delinquency, and a conscque~t improverrient in taxpayer relations. Implementation of

these changes is scheduled for 1970, as well as

for the "tension of the delinquency check program

to taxpayers serviced by the Office of International

Operations.

Efforts Joined With Other Government Agencies

Extended coordination with other government

agencies in areas of mutual interest should lead to

more effective utilization of enforcement personnel

and more fruitful results from the efforts expended.

A study was conducted by the Internal Revenue

Service, Department of Labor,. and State unemployment insurance services which indicated a

definite value in having a Federal Unemployment

Tax (FUTA) program in every district office. A

permanent FUTA program has been designed

utilizing the insight provided by the joint study.

The Service has also coordinated efforts with the

Bureau of Customs on a program for the enforcement of excise tax requirements on certain imported

motor vehicles. Procedures were developed whereby

vehicles are declared at the time of customs clearance

and the declaration forms are forwarded to the

Service for appropriate follow-up.

Still another area of inter-departmental coordination involves marihuana and wagering taxes. Recent

Supreme Court decisions have not affected civil cnforcement in securing delinquent returns. The

Service recently coordinated efforts withthe Department of Defense Drug Abuse Control Committee

which will result in the Service being informed of

arrests of stateside military personnel. This will permit Service application of the appropriate civil law

in these cases.

Taxpayer Delinquent Account Activity

Increases

Almost 2.5 million delinquent accounts were established in 1969, an increase of nearly 300,000 or

12 percent above last year. In large measure, this

increase was triggered by two factors: (1) An

unusually low number of delinquent accounts was

established last year as a result of program changes

necessitated by budgetary limitations; and (2)

although the budgetary impact was even more

severe this year, several alternative programs were

successfully developed wherein delinquent accounts

I

containing prescribed characteristics were output

from the system on an accelerated basis to permit

more timely and direct application of enforcement

personnel. The amount of delinquent tax involved

rose some $756 million, or 36 percent, to $2.8 billion in 1969.

Disposal of Delinquent Accounts Still Sizable

Considering personnel shortages brought about by

the year-long hiring restrictions, overall accomplishments were good. Over 2.3 million delinquent accounts were closed in 1969; slightly less (2 percent)

than were closed in 1968. In view of the higher

dollar amounts established, the somewhat smaller

number of 1969 closures still accounted for $2.4 billion, almost $400 million more than in 1968.

1 Inventory Rises for First Time in 4 Years

Inability to dispose of as many delinquent

accounts as were established, caused an increase in

the ending inventory for the first time since 1965.

However, the 1969 ending inventory, 778,000

accounts, approximately 170,000 or 28 percent

above the 1968 level of 608,000 accounts, was only

some 30,000 above the 1966 and 1967 levels. To a

great extent, the increase was due to manpower

shortages experienced during the year. In smaller

part it was also due to the accelerated release of delinquent accounts during the last 2 months of the

year which had not had sufficient time for closing

and, therefore, remained a part of inventory. The

value of the 1969 inventory total

I

ed $1,786 million,

$407 million higher than last year. Some $139 million of this increase, however, was awaiting the application of credits as the year ended.

Further Use of ADP Helps Enforcement Efforts

Further efforts were made to increase the use of

ADP as an additional deterrent to delinquency. Procedures were implemented for ADP system follow-up

of accounts whose collection is impeded by the taxpayer's financial condition or by inability to locate

Taxpayer Delinquent Accounts

Value of Accounts Rise

21-Ir~1_ I

Enforcement Activities / 25
the taxpayer. Computer analyses are made of these

accounts, involving comparison with tax returns for

subsequent years to determine collectibility and to

assist in locating the taxpayer. When the taxpayer's

financial condition has materially improved or a new

address is received, the account is referred to field

enforcement personnel for collection.

The internal offset program was in nationwide use

for the third consecutive year in 1969. This program

provides for the partial or whole deduction of any

refund due for application to any prior years' unpaid

liabilities. It has been most effective in capturing

millions of dollars in overdue taxes. A'total of

858,000 overpayments amounting to $124 million

were applied to unpaid balances in the accounts of

individual income taxpayers. In addition, a procedure was developed to enhance recovery of unpaid

taxes occurring prior to the establishment of the

ADP system. In this instance, accounts have been

transferred into the ADP system so that they are

subject to the internal offset and machine monitoring

capabilities of the system.

The delinquent accounts activity is shown in the

table above.

Offers In compromise disposals

Type of tax or penalty

Often seassplad, total........... ....... ......

1, gh11.1 Employ .0. king ..i:::: --------------------------------------------

0 he a -----------

--

........................ .......... ........... Dwfilguemy s Pr.g.milfiacm_41't ................. ................... ..........

Offers rejected or Mthd.am, -------total----------------------------------------------------- ....... ............. ..... - ............ -----------

Inasne. est%t1,.m1~l1tt .................. _.......................

IA=11.as 11,!"d_ _- ------------------------ - ------

---------------------------------------------

otha.adut .. .

s .......... ---------------------------- Pa. U............................

Revised.

Intelligence Division Marks Golden

Anniversary

The Intelligence Division was created July 1,

1919, and for the past 50 years has played an

essential role in promoting compliance with the intemal revenue laws. Over the years, numerous

individuals and corporations, including many racketeers who otherwise might not have been brought

before the bar of justice, have been successfully

prosecuted for income tax violations.

Ile Intelligence Division, in enforcing the criniinal tax statutes, materially benefits society as a

26 / Annual Report / Chapter Three

Taxpayer Delinquent Accounts

Status

RI-blishd! ............ ........_

Closed, total.... ...... -------- ---

BY type of action: Collected._i- .......... Additional .1 actions Other disposals t ...........

Pending June 30, total............

Number thousands)

K11 me

12,228

12.367 2om 2. Us

. 1,955

-

....43

1,962

........ 353

Amount (thousand dollars)

Ed]

3 22:051,727 053,853

21465135

, 56:065 532~653

M 1,378,762

..Includes ta. disposals due to mcollectibility and -moun and displi.t. .-a.

nol Mire! at 366 items totaling $7401000 (Puerto Rico Accelerated collection Prelmou luded.).

Number of Offers in Compromise

Disposals Increase

The number of offers in compromise cases processed during the year increased by 2,684 cases, or

26.8 percent from last year. Total liabilities involved

a decrease of 11. 7 million, or 12 percent.

The following table provides a summary of compromise cases closed in the last 2 years:

INS

Number

Ell

7,091

561 4436725

741 209

2,917

1,390 924

175'7

483 '18

$.an

.55 3770as

1.21,1 I'M

3'an

1. 312

an

to

gas

Amount (thousand dollars)

Liabilities

26.767

3 29 1,068

'71712

".an

as:.

1"

1.

69,880

52.228 8,950 106 8,067

..... 530 ...

"'ass,

"'gos. CanM

$.anW

1968

5,604

EE

2.SM4$6

2,4KM

L as. us 431.0"a

an,

1. age. con

off'.

a,=

3: I

'121 492 116 15594

10,477

7.748 I

2, 2419

443

...27

a,-

a,-

a

2,213

$,ges

1,79525 no

1

whole; and by developing evidence necessary to successfully prosecute criminal elements in this country, it plays a vital role in the President's stepped-up

program against organized crime.

New Approaches Employed to Achieving

Intelligence Objectives

The intelligence mission of the Service is accomplished through two principal programs: One,

"General;" the other, "Racketeer." To stay abreast

of the more sophisticated schemes now being resorted to in attempts to evade taxes, the Service is

concentrating special agent manpower on fraud dctection activities designed to identify the more serious pockets of noncompliance by the racketeer segment and taxpayers in general.

Drive Against Organized Crime

The Intelligence Division continues to play an

import ant role in the Government's drive against

organized crime. Since the inception of the drive

in 1961, the Service has conducted more than 6,000

tax investigations involving organized crime drive

subjects. Among the results axe more than 2,200 convictions with over $3 million in fines imposed. Additional taxes and penalties recommended for assessment in these cases are in excess of $300 million.

Racketeer Infiltration of Legitimate Business

Investigated

Gathering background information relating to the

financial activities of racketeers is a significant facet

of the program under which the tax affairs of persons identified as racketeers are continuously scrutinized to assure tax compliance. In addition, the Service has conducted in-depth investigations of many

taxpayers who arc members or associate members

of the 22 closely-knit La Cosa Nostra families. In

connection with this effort, data processing techniques have been used to gather and consolidate information pertaining to 40,000 racketeers drid

related business entities. Ile availability of this material, for cross-nation distribution, will be of major

assistance in completing investigations of top racketcers. Increasing involvement in information gatherIng activities, including surveillance, undercover

assignment, and the application of machine T)rocesses to the collating of such information enable's the

Service to make a greater contribution towards the

drive against organized crime.

Strike Forces Active

The Departments of justice, Treasury, Labor, and

Post Office and the Securities and Exchange Commission have instituted a new concept in law enforcement known as "The Strike Force," with the objective of pooling the resources of various Federal

law enforcement agencies and through their combined efforts, to concentrate and strike out against

underworld elements in the major cities.

The Service is actively participating in the Strike

Forces now operating in Buffalo, Detroit, Philadelphia, Newark, Miami, Chicago, Brooklyn, and New

York City.

Gambling Casinos Scrutinized Closely

Major investigations concerning casino operations

in Nevada have continued. More than $7 million in

additional taxes and penalties li~s thus far been recommended for assessment and two of the major casino operators in Las Vegas have been convicted for

filing false income tax returns. It is noteworthy that

records of the Nevada State Gaming Commission

disclose that operators of gambling casinos in Clark

County, Nev., reported approximately 34 percent

more income from gambling forthe 12 months ended

September 1968, than in the preceding 12 months.

It may reasonably be concluded that the Service's

continuing efforts in this area have promoted greater

compliance with the income tax laws.

Service Strives for Balanced Enforcement

Program

Tax evaders are found among all classes of taxpayers and in all walks of life, necessitating a Uanced enforcement program. The enforcement effort

against evaders is one of the most important deterrents to taxpayer wrongdoing. Among the many taxpayers convicted in 1969 of criminal tax violations

were:

A real estate promoter and developer with a 10-

year failure to file record had constructed a palatial

mansion and furnished it at a cost of about $300,000.

A I -year sentence was imposed and additional taxes

and penalties exceeding $165,000 were recornmended for assessment. Income was reconstructed

by contacting over 200 witnesses and examining

bank and other third-party records.

A stock promoter diverted large sums of money

from his wholly owned selected investments corporation and participated in a number of schemes to

swindle money from investors. He was convicted of

attempted evasion of income taxes and sentenced to

serve 3-ycars in prison.

An unusual investigation involved a noncommissioned Army officer who failed to report profits from

black market operations in Vietnam. Additional income taxes and penalties exceeded $65,000. This

was the first occasion on which the Service presented

evidence of tax evasion before a General Court-Martial. The military court imposed a fine of $25,000.

A Florida nightclub owner and notorious "fence"

for stolen property was convicted of attempted eva,-

sion of cabaret excise taxes. The case was complicared by false defense testimony and fear by Government witnesses. A sentence of 13-years was imposed.

Enforcement Activities / 27
A bookmaker and operator of a licensed Las Vegas

Race and Sports Book was convicted of conspiracy

to dcfraud,,attempted evasion of excise taxes on

wagers, and failure to file income tax returns. The

investigation disclosed that wagen by preferred custorricirs were accepted on white slips of paper whereas

others were accepted on pink slips. Although the

white slip wagers constituted 80 percent of the total

accepted, they were not reported on the returns filed.

Additional taxes and penalties exceeded $1.5 million.

The operator was sentenced to serve I-year in prison

and to pay a fine of $ 10,000.

The general office manager for a citrus fruit processing plant was convicted of attempted evasion of

income tax as a result of his failure to report over

$838,000 embezzled from his employer. Tax deficiencies and penalties totaded $730,000. The court

imposed a 3-year prison sentence.

A $10,000 fine and a 3-year probation sentence

were incted out to a lumber company executive who

diverted over $1 million in corporate funds to corricealed personal bank accounts. The funds were used

to purchase nontaxable municipal bonds and to

invest in trust funds for his children. Additional taxes

and penalties exceeded $2.4 million.

A 1 0-year prison sentence and $40,000 fine were

imposed upon a Detroit racketeer for income tax

evasion. Taxes and penalties approximate $350,000.

The defendant was reputed to be an "enforcer"

for the Mafia.

Enforcement Projects Stressed

The Service continued to stress project-type enforcement actions designed to uncover complex corporate schemes to evade taxes through obscure financial transactions with closely related corporations.

This concentration of enforcement action is directed

at multi-company combines usually controlled by one

individual, a family or a tightly drawn group of

investors. It is focusc~ upon widespread and flagrant

situations wherein an alleged tax evasion practice

has been widely adopted in an industry. Typical of

these projects is an extensive probe into the practice

of large corporations claiming political contributions

as legitimate business expenses for tax purposes, in

violation of the taxing statutes and other Federal

laws; an investigation of the "give-up" commissions

practice on the part of mutual funds and brokers;

and a study into the practice within certain industries to make rebates to customers.

28 / Annual Report / Chapter Three

Foreign Financial Transactions Studied

The Service is conducting studies of evasion

through the use of foreign financial transactions and

foreign financial facilities. The ultimate purpose is

to devise procedures calculated to detect and deter

the use of foreign financial facilities, such as Swiss

Bank numbered accounts, for tax evasion purposes.

In this connection, the Service has cooperated with

the Department of justice and with the House

Banking and Currency Committee in their consideration of this problem.

Prosecution Recommendations for

Tax Fraud Increased

Over 117,000 allegations of tax fraud were

screened and evaluated in selecting the investigative

caseload. Many of these required some form of

investigative activity.

There was a significant increase in the number of

prosecution recommendations for tax fraud in the

income tax area. This was accomplished by the diversion of special agent manpower from wagering

tax investigations since recent adverse Supreme

Court decisions (the cases of James Marchetti and

Anthony M. Grosso) practically eliminated prosccutive action for wagering tax violations,

The decline in completed investigations is the

result of the initiation of very few wagering tax

investigations in 1969 and the loss of 95 special agent

man-years due to hiring restrictions.

A tabulation of the investigations undertaken by

special agents in 1969 follows:

Tax fraud Investigations

Type

9,739 41, us

1,135

1968

Investigations completed, total..... ............._

Prosmortionmeassommention, total .......

Fraud ......... ... ......... ...........

i;iiivi-- C --------------- I in .....................

Investigations in p'rocres, -------------------------------------- June 30.. ..............

1,620

952 5861369

7,217

a,"1.,4

53

I'val

Assistance Given to Other Government Agencies

The Service furnished assistance to the Secret

Service in the protection of the President and other

officials. Thirty-five special agent man-years were

devoted to this responsibility, for which President

Nixon expressed his appreciation in a letter dated

February 5, 1969.

The Service maintains close liaison with other law

enforcement organizations, including State and local

agencies. During the year, special agents testified in

State and local courts in connection with the prosecution of individuals charged with crimes other

than Federal offenses. On occasion, where disclosure

of information is authorized by law, evidence

gathered by Service personnel has been used by the

Department of justice and local officials in prosecudons for offenses not under Internal Revenue Service jurisdiction. Such prosecutions involved State

officials and others, under Federal conspira y

starutes, for zoning and financing manipulations; c the

prosecution in Baltimore, Md., of one of the city's

kingpin numbers operators; and the conviction in

the Superior Court of New Jersey of a Newark crime

syndicate leader on a charge of conspiracy to violate

State gambling laws.

Referrals to Department of Justice Increase

A total of 854 income and miscellaneous criminal

cases, with prosecution recommendations involving

875 prospective defendants, were forwarded to the

Department of justice. Compared with the prior

year, this was an increase of 11.9 percent in the

volume of referrals. In 1969, indictments of such

cases were down 3.2 percent and the total disposal

of cases in those categories in the district courts

decreased 5 percent.

In income, excise, and wagering tax criminal

cases, 470 defendants pleaded guilty or nolo contendere, 91 were convicted after trial, 20 were acquitted, and 244 were dismissed.

A comparison of indictments and court actions

for the last 2 years follows:

Results of criminal action In tax fraud cases

Action

Total 1 nalleteeru.nd Infismiallim ....

........... ..

DiSfami total.---------------

Pl~in C W.1%.t.r nolo contend.In...... ...... td.1 A [ft-d ............. ....... ............

N~.Ypnoswdl Or dismissed I........... _ ............ _

lexure.rd imicallarma.. ca... I

Indichmentsvind information ................... __ ........ Disposals, total ....... ..... _ .............1

CPIO~~,,,=, note cambind.,........... .............

A

Or

trill........ .............. ---------

hi~.Pi:tml 0. - -------- ------_............ _

..ad a, discru d I ...... ...... .....

Indictrimitimul Inform.-AIC'nirg!" ..as ................. Disposals, total

Pies, guilty or nolo contendere.... Convi led after trial_.. ---------

Number of defirruints

Ell am

026 1 739

638 Ila

39

-

944

652

660

475

893165

3 4

7

9

1,07

16329

879

OU

an

On

as

n

U

1"

............

mixed or dismissed................. _ ..........

U

al

in

Include, uses diluni ...d fii~lthe folkiivinS ,.a... :9 because of da.th,..f principal defordir-Ob..7-irlurm am., ,....or des bad us Inem!ndb 6 because principal defendant adplasided -.1.1hidmairilat, ...

and firearmsitU%M." "igift, and excise Inear other than wagering, alcohol, tobacco,

Cases InvolvingCriminal Prosecution

Total additional taxes and penalties of $96 million were involved in cases received in the Chief

Counsel's Office with recommendations of criminal

prosecution. This was a dccrme of $22.3 millioii

under the amount involved in the prior year.

An analysis of criminal tax cases of all types

(other than wagering-occupational tax cases handled'at the district level) flowing from the Assistant Regional Commissioners (Intelligence) through

the office of the Chief Counsel to the Department

of justice follows:

Receipt and disposal of criminal cases in Chief Counsel's

Office

Status

Pending July I

Received, total__ ....._.................... ........

With mummendatiopl [at pm&mxrtIon:::::,: With requests for opinion, etc........ . .....

Disposed of, total .... ...................................

Prosecution not worranted-........... ................ Departiripat of Justice declined--- P scutmrs .... ....... ........... Orini ... delivered ..........................

A

ther closings. ....

Pending June 3D ............ ...........................

190

2~351

1,128

1,04682

1,331

128

13,0. 70 179

2,148

2. us

I.m

-1.ft9

a

ii,urg

I W=

anOF in

2, On

a

ilacti, Department of Justice ndusive of wagering tax

2 Includes wagering tax clues disposed .1 folloveirg th. "Marcheal" and "Grossm" Supreme Court decision.

Additional detail on legal workload involved in

the prosecution of criminal cases by Service attorneys

during the past 2 years is provided in the following

table:

Tax and penalty and number of tax years Involved In

criminal fraud case disposals

(Exclusive of wagering and col-Imnated gaining device man)

Disposition Tax yam

-

2. 1102

2. as7

I

968

UU.220,M

assis TO and penalty

x

Total ...............

APmessiZions. 11 the .. ..... :

3,545

-

2' 575 970 765

1 Includes uses declined by Department of I ussfice.

$109,680,088

44 360 302

65, 319: 785 . no .13 U:"?:"s

Additional Taxes From Direct

Enforcement

The importance of direct enforcement is not

limited to the dollars collected. A balanced enforcement program covering all classes of taxpayers at

every level of society generates a public feeling toward compliance. The vast number of taxpayers

Enforcement Activities / 29
who voluntarily file tax returns and pay their correct

liabilities with no enforcement work required is a

tribute to the enforcement system of the Service.

Ile bulk of taxes are collected quite simply and'

routinely. The enforcement efforts of the Service are

directed toward maintaining full compliance with

the tax laws, through collection of delinquent taxes

due, examination of returns, and prosecuting those

who have violated criminal aspects of the tax laws.

Revenue resulting from direct enforcement is substantial even though it represents a small percentage

of the total collected.

In 1969, recommendations for additional assmments of tax, penalties, and interest as a result of

examination of tax returns totaled $2,383.1 million,

an increase of $174.9 million over 1968. In addition,

$309.1 million delinquent taxes were collected, a

gain of $15.9 million over the prior year.

Ile following table sets forth for the past 2-ycars

the source of additional tax, penalties, and interest assessed including other results of direct

enforcement:

Gross tax, penalties and Interest resulting from direct

enforcement

[In thousinds of dollars)

13,253,896 3.3".335

2. an, m

1968

Additional to., p.OSltl.,, and frollmostnuented, boul ....

From Uscringthm Of tax returns, total.. ---

Income tax, total..........--.................

Enot-milifthia =mttax (iwc

Fnienrinthmeati 1.11ficati-limcconcetaxiet....... Front verification of estimated tax payments cl.infi.d.

From delinquent returns sicumd, byhol..... ............

district collection dl,!,Io................... _, Y distinctudit division..........................

Claims diselfinved, total ............

By disilrict audit division- agoinal.pisellatedivislons._...

Revised.

2.208,151

1,820,476

~,075 447

745:029

181~.101

54:

1

44,060

'266 763

495: fin

293.143

255,56A 37,577

362,930

i7s57:592373

1,521,935

1, as, on

1, gag~ no

7U,Tn

n,: go

am

3U,10 M, 092

jo,075

232, M

U,gss

gaill

iss,in M,M

1,9n,uh.

Workflow in the Service and the

Courts

The major portion of the work of the Service

results directly from the millions of returns filed each

year. The time needed to process a return through

Results from Direct Enforcement

Taxpayer Delinquent Accounts ~ollected Show

Largest Increase

2,383

..F,, on losses., lost] definition -eNt collectedDelinquent

Secured

Math verification

different activities depends on the complexity of the

items and issues involved. Many returns are processed to ultimate disposition within a short period

while others require work by different divisions of

the Service and are not closed during the year of

filing.

The unit of measurement at the audit level is on

a ,, basis. In the appellate and intelligence divisions as well as in the courts, the work unit is the

case. A case may involve more than one return and

more than one taxpayer. The following tables reflect

comparative data on actions completed by the Service during 1968 and 1969:

Workflow In the Internal Revenue Service and the courts,

fiscal years 1968 and 1969

Tax returns filed, total -----------------------

Individual income .........................

=alluSi come...................

Emplo

a

E nnentllt~ -----------------------

........

other 6;w; ..........................

1968

1 -

Returns

1107,382,432

73,839,802

1,622,605

22,322 257:77%20 556,705 '7; 783, 814

INCOME, ESTAT~ AND GIFT TAXES

Numbircif turn, ...!.ad (IncJ.de. For,, it b

Fill I, .1th adjustment, propon y t

d 1 n...... ---------------- ....... ..

Disposed of by audit divisions: Agreal c Or do

S- ---

Other ............. ........................

Civil cases

2,779,156

1,838,715

1,539 2 238 48:255 45,290 5,932

Total received in appellate dlvlslons Disposed of by a pellate divisions:

..Agreed, pal11. .crjd.f.u1ted... --- ------------- Iris of oiNfinal jurisdiction: Tax Court; Tat I petitioned to Tax Court._._

Dilmicned Of ------------ Settled by Stipulation...... bill Settled fill Tax Court dechdinn. ---- Decided yU.Curilb.t.ppallUl. ... 'Ict courts and Court of Claims: Total tied in dill kt courts and Court of Claim, ...... Settled in districi i;Yri;;Wd_I5;iiii;i Decided by district cmint, and Court Of Clai-.... Court. cf:xgull:

Settle Jy ..it, of Upeal, decision --- ...... F. ,able to GO....marit .. Favorable to UUS -.. Modified .........---------_- Decided by courts of appeals but reviewed by

ST.- C.1t__ .......... _ ........... Supreire curt:

Settled by Supreme Court decision.......

Fraud clun, I

Received for foll-scole investigation in intellig oce division........._... ............... Disipsanitif by int,111U.I. dl,lsiorl: Pro, P-scolu,nneclornmeord,id

.. I.. not Disposed Pins, of bthy Otficeof Chief Counsel:

- on ""'Tted' P Including uses marecutions OKI ined by the Department of Justice..

..............................

Furvised. Includes ..fee is. ....

2.249

I9713

252

630

no, on, 03

76.m an 1, M: US

M02V4:g`"

1. US, no 8'rol

2.~,=

1. San, as

1 374 an ,M:..

on

3.735

U-Suall 21.924

G,au272 -.7711 713

S25

&.m1,02

an

m

anu

6

2,.3

L Sun, 1.m

Son in

Amounts of revenue Involved at each level of the tax system

fiscal years 1968 and 1969

[Million, Of diAl..]

Internal revenue collections, total--------- ........

I fidividunil income taxes, ..........

Withholding.. .... .....__---- _ _

Other ----- ......

Corporation Estate and J!,rcome ----------------- .......taxes

Ittaxes---

Employment 0-as----------- --------

----

Excin to .................... ...... _...........

Calls

24,737

25, this

"IN5 5, D58 fill

235

1 403

'792

516

24'

170

51

22

4

4

Eil

153.637

78l

2570,-No'

29.897 3,092 28,213 14,320

am

Son, via

", US

To27:'"2111011

U.an 3 M

":M

go, Us

, Amounts ofrevenue Involved at each level of thetax systern fiscal years 1968 and 1969-Continued

INCOME, ESTATE, AND GIFT TAXES

Civil can,

Additional fee and penalties in ... disposed Of I. audit division, by easement, p7-1, Or default. Additional tax and penalties n uses disposed *i dnisions by agreement, Payment, of d .......... Additional tax and penalties determined by settlement in

Taffi=," ------------------------ i

......... Add li; tallies determined by Tax Court d.l. slons: Dli,mll,d-; _: -------

"Islons a

. ....... Addithimilin, GO co and penalties in uses decided by Sup, in,

Amu.rt1,jI..qarcbjP texpa'yaeles-W Wd ii~ i&---

Fraud us. I

Deficiencies and penalties in man disposed of In intelligence divisions: Prosecution recommended ............................ Prosecution not recommended...............

Revised. I miludes out,. fee1 368

325

82

IS3

6

55

'119 '29

i'm

341

0

Ill 47

83

go

Improving Tax Administration

Through Federal-State Cooperation

Many years ago the Service adopted the policy of

cooperating with State and local tax administrators

to the fullest extent permitted by law. Over the

years, this policy has been augmented with the signing of formal tax coordination agreements establishing procedures for the exchange of tax return information. and providing for reciprocal action by State

and Federal tax officials to improve the administration of the tax laws of their respective jurisdictions.

The existence of the cooperative exchange program,

coupled with increasing knowledge of its operation

by the general public inevitably leads to improved

taxpayer compliance -the most important benefit

of the program. The increase in the number ofStates

levying an income tax, the trend to conforming

State tax laws more closely to Federal tax laws, and

the case with which tax return information can be

exchanged by use of computers have led the States

to place a greater reliance on the use of information

from Federal tax returns and the Service's audit

activities.

Formal Exchange Agreements.-During the year

a tax coordination agreement was signed with the

State of Georgia, bringing to 45 the number of

agreements with the States and the District of Columbia. In addition to Georgia, agreements are now

in effect with: Alaska, Arizona, Arkansas, California, Colorado, Delaware, District of Columbia,

Florida, Hawaii, Idaho, Illinois, Indiana, Iowa,

Kansas, Kentucky, Maine, Maryland, Massachu30 / Annual Report / Chapter Three Enforcement Activities / 31
setts, Michigan, Minnesota, Mississippi, Missouri,

Montana, Nebraska, New Hampshire, New Jersey,

New Mexico, New York, North Carolina, North

Dakota, Ohio, Oklahoma, Oregon, Pennsylvania,

South Carolina, South Dakota, Tennessee, Utah,

Vermont, Virginia, Washington, West Virginia,

Wisconsin, and Wyoming.

Model Agreement.-A "model" agreement was

drafted to take into account developments in the

Fcderal-Statc program which were not covered in

existing agreements. Additional provisions in the

"model" include (1) a broadening of the scope of

the agreement to cover cooperative activities in addition to the exchange of information; (2) a statement of conditions under which State tax officials

may furnish tax return information to tax officials

of a political subdivision; (3) a strengthening of

measures designed to protect the confidentiality of

returns; and (4) authorization to inspect returns.

This "model" will be used as a guide in drafting new

agreements or in revising those in existence.

Increaring Audit Coverage-One of the procedures in use for many years to expand audit coverage

at State and Federal levels has been the exchange

of information in abstract form relative to audit

adjustments. This exchange has continued unabated

with a resulting increase in additional tax assessments. The major benefits of this exchange accrue

primarily to those States which have only a limited

number of personnel assigned to the examination

ofreturns.

An extension of the audit abstr-act program has

been the development of a coopcrativc~audit procedure which has promise of being most productive,

not only from the standpoint of the States, but also

for the Federal government. Under this

*

program,

State enforcement personnel audit the State returns

of taxpayers whose names were selected by the Service after a review of the taxpayer's Federal return.

The significance of this procedure lies in the fact

that the returns of the taxpayers would not normally

be reached for audit by the Service because of rcsource limitations. Under this procedure, adjustments made by the State to the taxpayces State

return would generally lead to a similar adjustment

of his Federal return. Ile effect of this program is

to expand the number of returns subjected to audit,

with a consequent increase in both State and Fcdcral revenue. At year's end, plans were being developed to extend the cooperative audit program procedure to as many States as feasible.

Information Exchange by Computer.-Under

this program, the Service furnishes selected information from the individual master file on magnetic tape

to the States. Tbirty-four States and the District of

Columbia have participated in the program for

eithertax year 1966 or 1967, or both.

Although complete information on the benefits

accruing to the States is not yet available, preliminary reports indicate that many millions of dollars

of additional revenue were collected by the States

and many thousands of nonfilcrs of tax returns were

add ed to the tax rolls as a direct result of using the

magnetic tape data.

Training of State and Local Tax PersonnelThe Service, under the authority of Public Law

87-870, assists in the training of State and local tax

personnel. Training included attendance of six State

tax personnel from four States in classes conducted

by the Service. A total of 109 correspondence

courses were furnished to five States for use by State

tax personnel. Additionally, the Service supplied 74

sets of training material to four States for their use

in conducting training classes.

More Federal Assistance to State and Local

Authorities

During the past year Service personnel rendered

more assistance to State and local law enforcement

officials than in any year in history. Alcohol, tobacco,

and firearms enforcement personnel have for many

years maintained outstanding liaison with other law

enforcement agencies. During the past year, demands

for the Service's assistance increased as a result of the

enactment of new laws providing Federal support

to State and local law enforcement officials in their

fight against crime. Alcohol, tobacco, and firearms

enforcement personnel have been called upon to appear before State legislative bodies as advisors in

formulating new State firearms laws, and at law

enforcement training schools, seminars, and meetings

to discuss mutual operational endeavors; and to assist in investigations of crimes in which firearms were

involved. In addition to the actual participation in

investigations, enforcement personnel have transmitted oral and written information on 9,375 violations to State and local authorities and to other Federal agencies, of which 6,581 related to violations of

State or local firearms laws.

Alcohol, Tobacco and Firearms

Enforcement Restructured

Level of Liquor Law Enforcement Reduced

Expansion of the Service's responsibilities relating

to firearms necessitated redeployment of investigator

manpower to implement the Gun Control Act of

1968 and the firearms provisions of the Omnibus

Crime Control and Safe Streets Act of 1968. This

reprograrning of resources resulted in a 30 percent

reduction from 1968 in the manpower expended on

illicit liquor investigations, and was a principal contributing factor to the 26 percent decrease (from

4,136 in 1968 to 3,063 in 1969) in seizures of illicit

distilleries in 1969.

Although the main thrust of the Service's liquor

law enforcement program continues to be centered

in the southeastern States (the only remaining geographical area of the United States where substantial

revenue frauds persist and which accounted for 90

percent of all illicit distillery seizures in 1969), the

concentrated emphasis on Operation Dry-Up could

not be maintained. The Dry-Up program which is

based on intense investigative effort, strong public

information campaigns, and close cooperation with

State and local enforcement agencies, has as its goal

the ultimate elimination of large-scale illicit liquc~r

operations.

In the first 5-years of Operation Dry-Up more

than $27 million in additional revenue was collected,

probably due to shifts in the consumption of alcoholic

beverages to legal markets. In the first State in which

the prograin was implemented, illicit distilling activity of major commercial scope virtually disappeared. In the other two States to which Operation

Dry-Up was extended, substantial inroads against

large-scale illicit operations were made. Although

the further planned reductions in violations of major

scope did not materialize in thew two States in 1969,

it is anticipated that beginning in 1970 additional

manpower can be applied to Operation Dry-Up with

ultimate restoration of all necessary resources for full

program effectiveness.

Firearms Program Expanded

The Firearms function of the Service became a

major enforcement program as a result of the enactment of the following strengthened firearms control

laws.

Title I of the Gun Control Act of 1968 (effective

December 16, 1968) strengthened firearms licensing

32 / Annual Report / Chapter Three

M-005 0-70----d

provisions and set forth comprehensive restrictions

on commercial and private transactions involving

firearms and ammunition and on the transportation,

shipment, and receipt of these articles in interstate

and foreign commerce. Under the provisions of this

law the Service was faced with a massive licensing

task. Following enactment of Title 1, 86,958 applications were received for firearm licenses upon which

action was required to be completed within 45 days

following receipt. In connection with these applications, 39,205 field investigations were made to assure

that applicants met licensing eligibility requirements.

In addition, 47,454 investigations were made of licensee operations to ascertain compliance with the

provisions of the new law. By the end of the year,

77,573 licenses had been issued, 1,705 licenses had

been denied, and 1,328 applications had been

withdrawn.

Title II of the Gun Control Act of 1968 (effective

November 1, 1968) amended the National Firearms Act by inclusion of the destructive devices category of firearms and the insertion of more stringent

penalties for criminal violations of the act. Ile act

required that all firearms, as defined by Title 11, not

previously registered had to be registered within a

30-day amnesty period immediately following the

effective date. During this period, 57,258 firearms

were registered and added to the National Firearms

Registration Record. The Service was also give responsibility for enforcing Tide VII of the Organized

Crime Control and Safe Streets Act of 1968, which

prescribed penalties for the illegal possession of

firearms.

Manpower expended on firearms activities in

1969 doubled from the 290 positions used in 1968.

Investigations conducted under the firearms program in 1969 resulted in the completion of 1,595

criminal cases, the arrest of 715 violators, and the

seizure of 4,152 firearms. These figures compare

with 919 criminal cases, arrest of 449 violators, and

the seizure of 1,092 firearms in 1968.

Importation of Firearms and Ammunition

The Gun Control Act placed responsibility on the

Service for implementing the act's importation provisions. The volume of applications for permits to

import firearms and ammunition far exceeded

original estimates. From October 1968 through June

1969, permits were issued to import 19,074 sporting firearms. During this same period 270,775

sporting firearms were imported, and 1,428 appliEnforcement Activities / 33
cations were disapproved covering imports totaling

59~,901 firearms not meeting the importation

criteria.

In addition to the functions assumed under the

Gun Control Act, the Service, under executive Order No. 1 143 2, was given responsibility for administering the importation provisions of the Mutual

Security Act of 1954 covering articles on the U.S.

Munitions list (includes arms, ammunition, and

implements of war).

Seizures and Arrests in Firearms Cases Rise

Substantially-Decreases Continue for Illicit Liquor

Violations

Seizures and arrests resulting from investigative

work in 1969 are compared with 1968 data in the

following table:

Seizures and arrests for alcohol, tobacco, and firearms

violations

Itire 1968

S.4-

as ............. ..........ru.b.-

Stills at distilleries........._..__...do__

Nortupaid distilled spirits ......... ..... gallons..

Rush- ._................ ......:......do .....

Firear s .............................. number..

Property (appraised value).... ....... ..

Arnad

................ ......... _

Vahi'i ........ ----------- --------number.. do

4,136

5,

112,254 8"

2,697,345

1,092

1,8761: 730..

5,338

3,063

1. 4 3112 M

M. on

4,132

a. 1.=.

4,4152

I Includes 715 arrests I., firearms violations, 2 1.;, tub-lhobsti.ms, and 19 for

er violation! 1. 1969 courripwad with 449 rfit rams, 5 for tobacco, and none

for other violations in 1968.

Not-I

"I

ud. unures and arrests In casea, adopted, as well as ofillosted, by the

Internal Reveno aservice, of Investigated jointly with State or local law enforcement

.E.W...

Indictments and Disposals in Alcohol, Tobacco, and

Firearms Cases

Recommendations for prosecution were presented to U.S. attorneys in a total of 2,758 cases,

involving 4,129 defendants, as 'a result of actions

taken against violations of alcohol, tobacco, and firearms laws.

A comparison of indictments and disposals for the

last 2 years is shown above.

34 / Annual Report / Chapter Three

Results of criminal action in alcohol, tobacco, and firearms

cases .

Action

Ia dictuments and information , .. -~_......... ...........

Disposals Intel-........................

Pa.., ,,v,,t1ty or nolo

On

site tender ........

r th. I ........ -....... -------

ftquitleL ...................................

N,I-p..ed or dismissed............... .............

Number of

defendants

IK~j

3

3: 21'5

2,536

461

147

481

11149

2'"1~ .1

in

m

Chemical Laboratory Services Extended to Other Agencies

Samples of illicit spirits analyzed in the national

and regional laboratories dropped from last year's

8,120 to 3,884 and narcotic samples from an all-time

high in 1968 of 11,500 to 7,315. These changes reflect, in part, the shift of investigative time from

liquor law enforcement to the critical firearms area,

and the programed transfer of work to the Bureau

of Narcotics and Dangerous Drugs Laboratories.

Physical evidence samples and materials examined

in connection with criminal cases rose to 2,758, an

increase of 558 over the previous year. The greatly

expanded capabilities of the photographic laboratory

has resulted in the annual production of more than

14,000 color and black and white photographs of

physical evidence, and art objects.

During 1969 the National Office Laboratory became actively involved in use of a new and more efficient technique developed for dating writing inks

which formerly was done only through the use of

neutron activation analysis. The laboratory was able

to acquire a complete library of domestically manufactured inks, as well as a library pf authentic domestic typewriting specimens. With the availability of a

complete ink, typewriting and paper analyses library,

laboratory work is now being performed for other

agencies and in organized crime investigations.

Supervision

of the

Alcohol and

Tobacco

Industries

Alcoholic Beverage Advertising

Reviewed for Compliance.

73,349 Applications for Certificate of

Label Approval Processed.

On-Premises Workload Continues

Upward Trend.

Chemical Analyses Made for

Regulatory Work.

Public Hearings Held on Labeling and

Advertising of Distilled Spirits

In April 1967, the Service announced (after recei.ving comments and suggestions from interested

industry members and evaluating the recommendations of the Distilled Spirits Standards and Labeling

Survey Committee) that a series of three public

hearings would be held to consider amendments in

the regulations in Title 27, Code of Federal Regulations, Part 5, "Labeling and Advertising of Distilled

Spirits."

In September 1968, the second of these hearings

culminated in the issuance of a Treasury Decision

which established standards of identity for blended

applejack and certain flavored distilled spirits (primarily flavored brandies), and amended the standards of identity for gin and vodka. This Treasury

Decision also requires the alcoholic content and the

net contents (where the product is not packaged in bottles conforming to the standards of fill)

to appear on the brand label of all distilled spirits

and prohibits net content statements from being

qualified by any descriptive term such as "jumbo,"

"full," and "giant."

The third and final hearing was held in April

1969. The notice of the hearing, which also contained several substantive proposals not previously

considered, was published in the form of a proposed

new regulation. At the close of the year a Treasury

Decision was being drafted to dispose of the issues

considered at the hearing and to include a complete

rewrite of the regulations.

Administration Developments Relating to Alcohol Industry Operations

Plastic Containers Being Tested

In view of the continuing trend toward the use of

plastic containers for an increasing variety of products, the Service announced that, for experimental

purposes, consideration would be given to applications for permission to bottle distilled spirits, during

1969, in plastic liquor bottles of less than one-half

pint and of one-half gallon capacity. It was specified

that such plastic liquor bottles must be made of

polyvinyl chloride containing only such additives as

have been approved by the Food and Drug Administration, and the Department of Health, Education,

and Welfare for use as containers in packaging al35
cohol products. Several distilled -spirits plant proprietors engaged in this experiment.

Alcoholic Beverage Advertising Spot Checked for

Compliance

While it is not feasible to examine A alcoholic

beverage advertising disseminated at producing,

wholesaling, and importing levels throughout the

United States, a sampling is made of advertising

published in selected newspapers and magazines of

general circulation in various regions of the United

States. During the year, advertisements in approximately 18,000 newspapers and magazines were

examined.

While distilled spirits am not generally advertised

by radio and television (because of restrictions imposed by the radio and television codes of the National Association of Broadcasters and voluntary

actions on the paxt of members of the Distilled Spirits

Institute), both media are employed for the advertising of wines and malt beverages. During the year,

602 broadcast or televised commercials were reviewed. In addition, 1,066 proposed advertisements

and advertising campaigns were reviewed and commented upon as a service to industry. Unlike labels,

advertisements are not required -by statute to be approved prior to dissemination.

Actions taken as the result of such examinations

involved criticism of some 1,400 advertisements

either in conference or by correspondence.

Large Number of Labels Microfilmed

In administering the provisions of the Federal

Alcohol Administration Act and its related regulations, the Service received and processed 73,349 ap-

,plications for certificate of label approval during

'1969. This volume is significantly larger (21,830)

than that processed during the preceding year. The

increase is principally due to the resubmission of previously approved labels for distilled spirits in furtherance of a project to convert label records to microfilm. This project was initiated due to increasing

difficulty in maintaining voluminous label files.

Offers in Compromise Processed

Fifteen cases were closed upon the acceptance of

offers in compromise pursuant to section 7 of the

Federal Alcohol Administration Act. These cases

involved such matters as the furnishing or giving of

equipment, services, things of value to retailers, or

paying the retailers for advertising by alcoholic

36 / Annual Report / Chapter Four

beverage permittecs; practices which are contrary

to the provisions of section 5(b) of the Federal Alcohol Administration-Act. In addition, action was

taken on 13 offers in compromise of violations of

the Internal Revenue Code.

Increase in Permits Issued,. Formulas Processed

In the National Office, 67 permits to use tax-free

spirits and 10 permits to use specially denatured

spirits were issued to Government agencies. The National Office processed 1,139 (up 300 over last

year) formulas forrectified products, including such

products as cordials, cocktails, and blended whiskies,

and 208 formulas for wine.

On-Premises Workload Continues

Upward Trend

Distilled spirits plant proprietors received tax deferral benefits on imported spirits upon enactment

of the Watts Bill (Public Law 90-630). This law

provided for the transfer of bulk imported spirits to

internal revenue bond, making such spirits eligible

for the longer tax deferral upon their subsequent

withdrawal from internal revenue bond under the

present taxpayment-on-shipmcnt plan. Such transactions are required to be supervised by an onpremises inspector. The on-premises workload has

increased due to the fact that proprietors have acquired bonded warehouses to avail themselves of the

Watts Bill benefits.

Production of distilled spirits increased from

905.5 million tax gallons in 1968 to 985.6 million

tax gallons in 1969. During the year, 240.3 million

tax gallons of spirits were removed from bonded

storage upon determination of tax, 686.8 million

tax gallons were withdrawn tax-free, and 304.0 million wine gallons were bottled. At the end of the year,

1, 166.1 million tax gallons were on storage in internal revenue bonded warehouses. Production of rectified distilled spirits products totaled 117.2 million

proof gallons.

Production figures for other taxable products are:

Beer 122.7 million barrels (31 gallons each); Wine

243.5 million gallons of still wines, 13.0 million gallons of effervescent wines, 5.7 million gallons of

vermouth, and 18.3 million gallons of other special

natural wines; large cigars 6.9 billion; small cigars

631.6 million; and cigarettes 573.0 billion.

Alcohol and tobacco tax collections continued to

climb, totaling $6.7 billion in 1969 as compared to

$6 A billion in 1968.

Continuing Inspection Program

Although the total number of inspections made

during the year remained approximately the same

as the previous year, the number of onsite inspections

of regulated alcohol and tobacco plants and facilities

dropped considerably. This drop is attributed to (I )

the freeze on hiring to fill inspector vacancies, (2)

the use of 24 inspector man-years on firearms dealers inspections (the total of 28,954 inspections completed during the year includes 5,554 firearms

dealer inspections), and (3) deployment of inspectors to on-premises supervision because of many

existing on-premiscs inspector vacancies (onpremises supervision is required by law and rcgulations).

Continuing emphasis was placed on developing

and applying quality criteria in the selection of

plants and facilities for onsite inspection to assure

compliance with Federal law and regulations. Complementing the onsite inspection program are the

examination and audit functions of the regional

offices. During 1969, personnel of these functions

processed 22,185 notices and applications for permits, examined 28,950 tax returns, and reviewed

5,907 reports for determination of assessible liability.

Chemical Analyses Made for

Regulatory Work

The National Laboratory has pursued a continuing program of instrumentation and analytical

studies in developing new methods and techniques

for carrying out the scientific aspects of its regulatory

functions.

Using atomic absorption spectrophotometry, the

laboratory cooperated with other Government

agencies and private industry in three collaborative

experiments to be considered for sanctioning by the

Association of Official Agricultural Chemists. These

experiments were directed toward the determination

of cadmium in various food products; of glucose in

plants and of iron in alcoholic beverages.

"Analytical Profile of Cistern Room Whiskies,"

an extensive study utilizing analytical methodology,

was published in a scientific journal. This report

tabulated pertinent data on mashing, fermentation,

and distilling techniques for each sample. Characteristics of these samples were compared with those reported in studies as early as 1898.

The analytical portion of a profile on straight

bourbon whiskey has been compiled and will soon

be completed. It will include the effect on whiskey

of entry proof, type and size of barrel, warehouse

conditions of temperature and humidity, and the

time of storage in charred new oak cooperage. These

and other research programs resulted in the publication of seven papers which contributed to thef

'

und

of technical information for both Government and

private industry.

The national and regional laboratories examined

7,048 formulas for specially denatured alcohol articles, 2,119 formulas for nonbeverage foods, flavors,

and internal medicinal products, and 10,211 label

approval requests. Figures forthe previous year were

4,379, 2,398, and 10,568, respectively.

More than 100 major categories of materials are

analyzed each year by the national and regional

laboratories. Among these are alcoholic beverages,

food products containing, alcohol, flavors, toilet

preparations, lubricants, and tobacco. This year a

total of 19,736 regulatory samples were analyzed as

compared to the previous year's figure of 22,048.

Supervision of the Alcohol and Tobacco Industries / 37
chap

Legaland

Legislative

Activities

Government Successful in Overwhelming Majority of Trial Court Cases.

Service Assists in the Drafting of

Tax Reform Proposals.

Legal Staff Decreases.

$154 Million Successfully Defended

in Settlement or Trial of Cases

in the Tax Court.

Interpretative Activities Focused on a

Wide Variety of Problems.

Introduction

The legal work of the Service is performed in the

Office of the Chief Counsel. The Chief Counsel

renders opinions to officials of the Service on substantive legal questions. The office furnishes technical assistance to the Treasury Department's legislative program. (See p. 40.) The legal staff also

prepares drafts of proposed regulations implementing the tax laws and participates in the rulemaking

process involving these regulations. For a discussion

of the regulations program, see chapter 1, page 9.

For a list of selected regulations published, see appendix beginning on page 80.

Ile Chief Counsel represents the Commissioner

in trying and in helping to settle cases docketed in

the Tax Court of the United States. The legal staff

also furnishes advice relating to refund litigation,

general litigation, criminal enforcement, and alcohol,

tobacco, and firearms matters. Important court actions are included in the appendix beginning on

page 81. Statistics on legal activities are shown in

tables 18-25 on pages 120 and 121. Criminal prosecution cases are shown under chapter 3, Enforcement Activities, page 29.

Caseload Inventory Down Slightly

Caseload receipts in the Chief Counsel's Office

during 1969 were 25,591. Disposals totaled 25,946,

down four cases from 1968. At the end ofthe yearthe

pending total caseload was 22,970, a decrease of 355.

Civil Litigation

The Supreme Court rendered two decisions in

Tax Court casesduring the year. The Court decided

one for the Government and one in part for the

Government. The Supreme Court rendered four

decisions in tax refund suits. The Government's

position was sustained in each case.

Ile Government won, in whole or in part, 283 of

the 349 civil tax cases decided by courts of appeal

(exclusive of general litigation and alcohol, tobacco,

and firearms legal matters). See table 21, p. 121. In

the trial courts (Tax Court, Court of Claims, and

U.S. district courts) the record of Government wins,

losses, and partial wins appears as follows:

Trial court cases won, lost, or partially won by the Govern.

anent

Tax C~urt Court of Dlitrict

Action

Cl.i.,

co.rtz

1968 an$ 1968 im 1968 1913

Won------------- ................... 213 sic 48 ix 3DI in

Loci.... ...........

- - 19 23

I

........... 12 0 1n 3 5605 an

Inthe trial or settlement of cases in the Tax Court,

$154 million was successfully defended. In refund

suits in the Court of Claims and the U.S. district

courts, $73 million was successfully defended. A

total of $227 million of revenue was thus saved for

the Government in these cases. At the end of the

year, $1.8 billion was involved in taxes and penalties

being contested in trial courts (see table below).

Taxes In litigation

[in thm-d, of doll-I

Tax can

stuu3 Total

Deficiencin Ovarpay.

-ta,

RaWd

t cation

ft.qlng My 1 Rac-od D ...............

P..1" 11 ad

Arna. at .,ad ---------

$1 322 214 $55 931

540

1

1, 55 1 419: 477 9:461

34

11820: 131, 11 31,3:,6,2 11: 854510

227,287 145,589 8,696

~311 1: '41 217

4,7:37 110

73,002

, Raxind.

Tort Claims

The Service acted on 151 administrative claims

under the Federal Tort Claims Act during the year.

The Service also acted on 79 claims under the

Military Personnel and Civilian Employees' Claims

Act of 1964.This represents almost no change in the

number of claims under the Federal Tort Claims

Act and an increase of approximately 8 percent in

the claims under the Military Personnel and Civilian

Employees' Claims Act of 1964 over the preceding

year.

General Litigation Legal Services

Case receipts and disposals relating to general

litigation matters handled at the national and field

levels decreased in comparison to the preceding year.

There were a total of 10,201 cases received during

1969 as compared to 11,469 cases received during

1968. Disposals for 1969 were 10,475 as compared

of 11,654 cases disposed of in 1968. The inventory

of pending cases at the end of 1969 stands at 4,913,

a decrease of 274 cases under the 5,187 cases pending at the end of 1968. The decreases in case receipts

Case Disposals by Office of Chief Counsel

Disposals in

Alcohol and Tobacco Tax Area

Show Largest Increase

I

6,187 6.121

t 4,606

TOTAL$

1969 25,946

1968 25,950

~331 1.15, 1 573 1,114i~;

868 790

Collation Tax Alcohol Enforcment Mud Othgr litigation Court and litigation

tobacco tax

and disposals occurTed at the national and field

levels and related to both cases in litigation and noncourt cases. Most of the decrease in casework relates

to cases involving court proceedings. Case receipts

concerning matters in court decreased by 870 cases

in comparison to 1968 and receipts involving cases

not in court, such as advisory opinions, decreased

by 398 under the preceding year. Case disposals for

1969 were down from 1968 figures by 836 cases in

court matters and 343 cases in non-court matters.

For detailed statistics on case receipts and disposals,

see tables 23 through 25 on page 121.

There were no Supreme Court decisions in general litigation cases during the year, but there were

a number of significant decisions by the courts of

appeals. These decisions relate not only to issues

arising in connection with the collection of Federal

taxes and the assertion of tax liens, but also relate

to issues arising in cases involving the civil enforcement of internal revenue summonses. These civil

summonses enforcement cases continue to be a major

area of litigation at the appellate level. Summaries

of some of the courts of appeals cases may be found

starting at page 84.

38 Legal and Legislative Activities / 39
Extensive legal assistance was furnished in connection with disclosure of information matters, including matters arising under the Freedom of

Information Act (5 U.S.C. 552). Also, national

office and regional general litigation supervisors and

attorneys participated extensively in training sessions

conducted during the year throughout the country

in the new Advanced Technical Training Program

for Revenue Officers.

Revenue Legislative Assistance

Provided

The Service provided extensive technical assistance to other offices of the Treasury Department

and to committees of Congress in the development

of legislation and legislative proposals relating to

internal revenue matters. Although a substantial

portion of this activity was directed toward legislation which was enacted by the Congress during

the year and to bills pending before the Congress

, at the close of the year, the major portion of the

activity was directed toward tax reform proposals.

The Service also conducted research and study projects involving tax administrative problems and unintended benefits and inequities with a view toward

the development of corrective legislation, and evaluated a number of legislative suggestions made by

Congressmen, taxpayers, and its own employees.

The technical assistance was performed in several

ways but principally by (1) preparing information

reports, technical reports, drafts of bills and accompanying technical explanations, and other data

pertinent to the legislative proposal under consideration, and (2) attending public hearings and

congressional committee meetings.

Tax Reform Proposals

Studies and proposals for tax reform were developed by the Treasury Department during the administration of President Johnson pursuant to the

request of Congress in the Revenue and Expenditure Control Act of 1968. These studies and proposals were referred to in identical letters, dated

December 31, 1968, from President Johnson to the

Speaker of the House of Representatives and the

President of the Senate. Copies of these studies and

proposals were transmitted to the Chairman, Committee on Ways and Means, and the Chairman,

Committee on Finance, by the Secretary of the

Treasury in January 1969.

Tax reform was the subject of President Nixon's

message to the Congress on April 21, 1969.

40 / Annual Report / Chapter Five

Hearings before the Committee on Ways and

Means on the subject of tax reforTn, which began

on February 18, 1969, were concluded on April 24,

1969. During the remainder of the year, the committee met in executive session, on numerous occasions, for the purpose of considering tax reform.

Although a bill relating to this matter had not been

introduced at year end, the committee chairman

had announced certain tentative decisions for purposes of drafting legislative language.

Legislation Completed During Year

Public Law 90-518, enacted September 26, 1968,

amended section 1263 of Title 18, U.S.C., relating

to identification of intoxicating liquors shipped in

interstate commerce. This pro vision is enforced by

the Service. The new law permits identifying information to be placed on bills of lading in lieu of

the previously required marking of shipping

containers.

Public Law 90-615, enacted October 21, 1968,

included a minor technical amendment to the tax

drawback provisions of the Internal Revenue Code

with respect to tax-determincd distilled spirits used

in manufacture of nonbcverage products.

Public Law 90-618, the "Gun Control Act of

1968," approved October 22, 1968, significantly

amended Title 18, U.S.C., Chapter 44, firearms

controls previously enacted (but not yet effective)

as Title IV of the "Omnibus Crime Control and

Safe Streets Act of 1968." These controls arc administered by the Alcohol, Tobacco, and Firearms

Division of the Service. Changes included modification of standards for licensing firearms dealers,

manufacturers, and importers; extension, to long

guns of certain controls applicable only to handguns; and advancing the effective date of import

restrictions.

Title II of Public Law 90-618 substantially revised the National Firearms Act (Chapter 53 of the

Internal Revenue Code of 1954). A prime objective

of Title II is to overcome the effect of the January

1968 decision in Haynes v. United States (390 U.S.

85). This decision had significantly reduced the ef.

fectiveness of the act's controls over machineguns

and sawed-off shotguns by declaring unenforceable,

as compelling self-incrimination, provisions related

to registration of or possession of, unregistered

firearms.

Public Law 90-619, enacted October 22, 1968,

contained amendments to the wine provisions in

Chapter 51 of the Internal Revenue Code. These

amendments, which are of nrinor significance, are

intended to liberalize and simplify certain controls

over wine production.

Public Law 90-630, also enacted October 22,

1968, amended sever-al provisions in Chapter 51 of

the Internal Revenue Code related to distilled spirits. Under the new law, bulk imported distilled spirits may be transferred to Internal Revenue bond

from Customs custody prior to determination of

tax. Controls over bottling of distilled spirits for

export arc liberalized somewhat, and provision is

made for some minor additional allowance with

respect to tax on distilled spirits lost after removal

from bond but before shipment from the plant

where received for bottling.

Congress enacted a number of public laws related

to tax matters, some of the more important of which

arc listed below:

Public Law 90-607, relating to the effective date

of the change in the definition of earned income for

purposes of certain pension plans made by Public

Law 89-809.

Public Law 90-621, relating to the income tax

treatment of certain statutory mergers.

Public Law 90-622, relating to the income tax

treatment of earnings derived from the ownership

or operation of a communications satellites system

by a foreign entity.

Public Law 90-634, which amended the. provisions of prior law relating to the treatment of interest on industrial development bonds in the case

of certain small issues.

Public Law 91-36, which extends through July

1969 the rates of withholding of income tax (including withholding of surtax) in effect with respect to

wages paid before July 1, 1969.

Public Law 90-618 (the Gun Control Act of

1968) (1 ) channeled interstate and foreign commerce in firearms through importers, manufacturers,

and dealers licensed under meaningful Federal

standards, (2) curbed the flow into the United

States of surplus military weapons and other firearms not suitable for sporting purposes; (3)

amended the National Firearms Act to extend the

strict controls over gangster-typc weapons to destructive devices, such as grenades, rockets, mortars,

incendiary bombs, mines and similar devices; and

(4) prescribed penalties for the knowing sale of firearms to certain persons (including convicted felons,

narcotics users, and those adjudged mentally dcfective), and for the unlawful receipt, possession, or

transportation of firearrWs in commerce.

Public Law 90-619 (1) allows the use of special

natural wines in the production of wine spirits; (2)

permits the addition of wine spirits to certain natural wines of other than a winemaker's own production; (3) liberalizes restrictions on the sweetening

of high acid wines; and (4) changes the alcohol

content limitations applicable in the production of

certain wines.

Public Law 90-630 (1) extended the loss provisions of the Internal Revenue Code relating to spirits

to losses of distilled spirits after bottling but before

removal from bottling premises; (2) eliminated the

requirement that spirits be bottled or packaged cspecially for export with benefit of drawback but required that drawback claims be filed only by the

bottler or packager; and (3) authorized bulk imported spirits to be transferred to internal revenue

bonded warehouses without payment of the tax.

Pending Tax Legislation

Among the tax bills which had been passed by

the House and, at the end of the year, were awaiting

Senate action are:

H.R. 8654, extending tax relief to the crew of the

U.S.S. Pueblo during imprisonment by North Korea.

H. R. 995 1, which, among other things, provides

for quarterly collection of the tax under the Federal

Unemployment Tax Act.

H.R. 12290, which would (1) extend the surtax

on individuals and corporations at the 10 percent

rate for the period July I through December 31,

1969, and at the 5 percent rate through the first 6

months of 1970, (2) repeal the investment tax

credit, (3) postpone for 1 year the scheduled reduction of the excise taxes on passenger automobiles

and communication services, (4) provide a low income allowance for individuals, and (5) allow fast

tax depreciation of costs of certain air and water

pollution control equipment.

Legislative Cooperation

The Service has been cooperating with the staff of

the joint Committee on Internal Revenue Taxation

in drafting amendments to the Internal Revenue

Code designed to eliminate obsolete and unnecessary

provisions in the alcohol, tobacco, and firearms areas.

The joint Committee anticipates early passage of a

noncontroversial bill to achieve elimination of

"dead wood" from the Code.

Interpretative Activities

Cases referred to the Interpretative Division by the

Assistant Commissioner (Technical) and the litigation divisions in the Office of Chief Counsel during

Legal and Legislative Activities / 41
the year included a large number of particularly

significant legal issues. Of special interest are a senes

of rulings in the cooperative area; a

wide

variety of

problems involving public policy; and numerous

questions regarding depreciation and the investment

credit. Segregated schools and groups concerned with

urban renewal received particular attention in the

exempt organization area. Both litigation and ru ng

requests generated numerous interesting accounting,

earnings and profits, and corporate reorganization

issues. Varied questions relating to the taxability of

nonprofit organizations were encountered. The areas

of organization classification, taxation of insurance

companies, constructive receipt of income, partncrships, and natural resources have been pamcularly active during the past year.

Legal Staff Decreases

As of June 30, 1969, the Chief Counsel's Office

employco 1,249 Persons, with 620 attorneys and 629

non-attorncy employees. This represents a decrease

of 29 attorneys and a decrease of 4 non-attomey employees from last year. Attorneys are assigned to the

National Office and regions as follows:

Office

Number of

.1t.r.,y,

National Office -------------------------------- 242

Central Region --------------------------- ---- 48

Mid-Atlantic Region--------------------------- 59

Mid-st Region--------------------------- 53

North-Atlantic Region------------------------- 66

Southeast Region -------------------- --------- 43

Southwest Region---------------------------- 41

Western Region--- -- - -- - 68

International

Activities

Foreign Tax Assistance Staff Gives

On-Site Technical Advice.

Inter-American Center of Tax

Administrators Holds Third Annual

Assembly in Mexico City.

Overseas Taxpayer Assistance Furnished

"Competent Authority" Activity

Expanded.

$23 Million Additional Tax Remitted

by Foreign Governments or Withholding

Agents under Tax Treaty Provisions.

Introduction

The broad overseas program of the Service consists of three functions. One involves providing

assistance when requested to developing countries in

improving their systems of tax administration. Another is the administration of tax laws as they apply

to U.S. citizens living abroad, nonresident aliens,

and foreign corporations. The third function involves

participation in the negotiation of tax conventions

or treaties with foreign countries to prevent cconornic double taxation. When approved and put

into effect, these treaties become useful and necessary

guidelines in administering our tax laws in the foreign area. Some of the more important highlights

and accomplishments resulting from the Service's

efforts to carry out these functions during the year

are related below.

Foreign Tax Assistance

For the past 6-years the Internal Revenue Service,

through the Foreign Tax Assistance Program, has

been providing technical assistance to developing

countries of the free world at their request. This

program is mainly a joint effort with the Agency for

International Development (AID), in which AID

provides the funds and the overall development

policy, and the Service provides the technical program, direction, and staffing. International and

private organizations which have formulated programs for tax reform in developing countries are

continually consulted to insure consistency and to

prevent duplication in the programs. Among those

consulted are the Organization of American States,

the Inter-Amcrican Development Bank, the International Monetary Fund, the United Nations, and

Harvard University.

Onsite Assistance Provided

Onsitc technical advice is one of the two major

features of the program. At present there are 61

long-term advisors staffing 21 overseas teams. Seventeen of the teams are located in Latin America:

Argentina, Bolivia, Brazil, Chile, Columbia, Costa

Rica, Dominican Repubfic,El Salvador, Guatemala,

Honduras, Nicaragua, Panama, Paraguay, Peru,

Trinidad and Tobago, Uruguay, and ROCAP

(AID's Regional Office for Central America and

Panama). The four remaining teams are in Korea,

the Philippines, Turkey, and Vietnam. This year the

42 / Annual Report / Chapter Five 43
major phase of the project in India was successfully

completed and the onsite team was withdrawn. On

the other hand, a long-term team was sent to Trinidad and Tobago. The program is also providing

technical backstopping for retired Service and

Treasury personnel who are engaged in assisting the

Republic of China, Jamaica, Lebanon, and

Singapore.

In support of the long-term teams, 24 specialists

were given short-term assignments to 13 countries.

Surveys of tax administration reform needs were

completed in British Honduras, Ethiopia, Lebanon,

and Singapore.

More Countries Participate in U.S. Training"

The other major clement of the program is the

orientation and training of foreign tax officials.

Supervisory and managerial training is provided in

the United States, in major foreign languages, while

technical training is done in the host countries. This

year 219 participants from 58 countries took part in

training in the United States. Since the inception of

the program, the Service has been host to 1,693 such

visitors from 94 foreign countries.

A new feature of the training activity this year was

the preparation and distribution, through AID missions and Service teams, of a Spanish-language home

study course in accounting. This course is intended

to fill a need for accounting training in those countries in which such training is difficult to obtain.

Development of Systems Analysis Capability

Systems analysis capability is essential to the development of tax administration institutions in Latin

America. A pilot System's Analysis Training Program (SATPRO) was developed and given as an

experimental course to 25 participants from five

countries in 1966. Experience gained from this pilot

program led to the'dcvclopment of SATPRO 11

which is designed for onsite presentation in each

country. The program includes a five-volume set of

materials in Spanish and provides 60 weeks of combined classroom and on-the-job training. Successful

completion is a necessary"first step in the develop.

ment of senior analysts. Courses were initiated this

year in Chile and Costa Rica.

CIAT Expands Operations

The Inter-American Center of Tax Administrators (CIAT) is a regional self-help institution composed of the principal tax administrators of Western

Hemisphere countries. Canada became a member

during the year, increasing the number of countries

represented to 21. The Third Annual General Assembly took place in Mexico City in May 1969,

where the members concentrated on various aspects

of planning for tax administration. Fifty-nine'delegates from member countries participated, together

with over 50 observers from international organizations and other countries within and without the

hemisphere. The U.S. delegation was headed by

Commissioner Thrower, and included Deputy Commissioner Smith and Harold Moss, Director of the

Foreign Tax Assistance Staff. Mr. Smith was one of

the featured speakers. Lic. Roberto Hoyo, General

Administrator of Income Taxes of Mexico, was

elected president of CIAT's Executive Council, and

Commissioner Thrower was elected First Councilor.

Among its other activities, the Center sponsored

its first technical seminar in San Jose, Costa Rica, in

January, for directors of audit. The United States

was represented by Mr. Singleton Wolfe, Director

of the Service's Audit Division. Based on the success

of that effort, a similar seminar on automatic data

processing has been scheduled for nexfycar.

Tax Harmonization in Economic Communities

The formation of communities of developing

countries, such as common markets and free trade

areas is an increasingly impoqant clement in advancing economic progress. The harmonization of internal tax systems will play an importantrole inimproving the pace and quality of this development. The

Foreign Tax Assistance Program's regional advisor

for Central America and Panama rendered active

assistancc to the Permanent Secretariat of the General Treaty forCentral American Economic Integration (SIECA) in the development of a tentative

plan for harmonization of tax policy and administration. This effort is being watched quite closely since

it will provide a precedent for tax harmonization in

subsequent common markets.

New Tax Conventions Negotiated

Attorneys from the Office of the Chief Counsel,

as representatives of the Commissioner of Internal

Revenue, assisted the Treasury Department in negotiations with eight countries concerning bilateral

inconic tax conventions and with three countries

concerning bilateral estate tax conventions. In 10

cases the negotiations took place outside the United

States.

Instruments of ratification of an income tax convention between France and the United States were

exchanged on July 11, 1968.

Overseas Taxpayer Assistance

Furnished

Tax assistanot was furnished U.S. overseas taxpayers for the 16th consecutive year. Participating

in this program were 12 field agents and seven office

auditors. Over 100,000 miles were traveled during

the 1969 filing period in offering tax assistance to

some 25,000 taxpayers located in 109 cities, in 53

different countries plus the Canal Zone and the

Islands of Wake and Guam.

A series of income tax seminars on tax assistance

were held for U.S. taxpayers in 16 pre-selected cities.

These seminars were held on an experimental basis

to provide economical but highly effective assistance

to large audiences. The experiment was so successful

that a decision has been made to expand this type of

taxpayer assistance next year.

During the 1969 filing period the document "Answers to Questions Most Frequently Asked by U.S.

Taxpayers Abroad" was used in television and radio

broadcasts and in the newspapers to assist the maximum number of taxpayers abroad with their tax

problems. This booklet is available for reference purposes in all U.S. embassies and consulates.

To provide tax assistance to the military community abroad, the Office of International Operations

(010) and The Judge Advocate General of the

Army again sponsored a program of classroom basic

income tax law instruction to selected members of

the Armed, Forces. Over 800 servicemen attended

these tax schools which were conducted at military

installations in Europe, the Far East, and the Canal

Zone. Upon completion of the program, the students

returned to their military units where they made income tax advice available to approximately twothirds of our Armed Forces abroad.

Foreign Post Activities

Tax interests overseas are of majorimportance due

to U.S. citizens and business interests abroad. The

Service depends largely upon a staff of 17 technical

and nine clerical employees, assigned to nine foreign

posts, to carTy out the mission of the Service in overseas areas. The foreign posts are located at Bonn,

London, Manila, Mexico City, Ottawa, Paris, Rome,

Sao Paulo, and Tokyo. As foreign geographical areas

are divided among these nine foreign posts, some post

areas are vast, encompassing thousands of miles. For

instance, 16 foreign countries are included in the

Sao Paulo post territory whHe the Rome post includes

14 countries on three continents and requires 4,000

miles of travel to the most distant point.

The functions of the foreign posts are varied. They

include district type activities such as audit, collec.

tion, informal conference, and collateral assistance.

Compliance is promoted by assisting taxpayers and

U.S. business firms and organizations abroad. Offices

of Chief Counsel, Department of justice, and Treasury frequently are assisted on tax matters involving

foreign areas. Extensions of the foreign post duties

include such activities as locating and interviewing

witnesses, assisting with depositions, serving summonses, arranging contacts and giving guidance on

tax matters to Government officials who travel

abroad.

Income tax treaty administration matters are

among the important functions of the foreign posts.

In this area they assist with competent authority

matters, maintain close liaison with foreigris tax officials, handle informally matters that otherwise might

become complex and serve as advocates Pf U.S. citizens and business firms when foreign taxation contrary to treaty provisions is proposed.

U.S. Investment Abroad Increases

Under present law, information returns must be

made on Form 959 by every citizen or resident who,

on or after January 1, 1963, owns 5 percent or more

in value of outstanding stock and by every officer or

director of such foreign corporations.

Information from these reports is incorporated

in our ADP system and used to identify U.S. ownership in foreign corporations for audit purposes and to

determine the trends in investment abroad. It is also

used to develop Treasury and Service programs involving United States-foreign transactions.

Analysis of these reports indicates that more U.S.

businesses are entering foreign markets through direct investment inforeign corporations.

In 1969, 3,161 new foreign corporations were

identified from 7,288 Forms 959 filed. At the close

of the year the total number of foreign corporations

identified in which U.S. persons own at least 5 percent of the stock increased to 39,627. Canada, United

Kingdom, Mexico, and France, in that order, are

the top four foreign countries in which U.S. persons

have made investments.

Expansion of Automatic Data Processing to 010

The task force appointed last year has identified

the systemic and procedural problems which have

in the past prevented the processing of 010's low

volume, high complexity returns under the Service's

automatic data system. Some of these problems are

the extended filing date for taxpayers overseas, the

44 / Annual Report / Chapter Six International Activities / 45
income exclusion provisions of the Internal Revenue

Code, the location of taxpayers all over the world

which necessitates the exclusive use of airmail, the

use of Spanish language by taxpayers residing in

Puerto Rico, and other peculiarities which makes

the processing of 010's returns unlike the processing of returns filed by stateside taxpayers.

These problems have now been resolved, including the issuance of Spanish language fornis and correspondence, making it possible to machine process

these returns. Therefore, OIO's conversion to data

processing has been scheduled for January 1, 1970,

for business returns and January 1, 1971, for individual returns. The Mid-Atlantic Service Center

has been selected to process these returns.

Included in the documents which will be taken

into the system are approximately 200,000 returns

filed by U.S. citizens residing abroad. Because these

returns frequently contain unique issues not found

in the returns of resident citizens, they cannot be

identified for examination by the computer under

the discriminant function system being used to screen

the returns of other taxpayers. Special procedures

arc being adopted to screen 010 returns manually

at the service center through the use of specially

selected audit criteria.

Some Returns Not included in ADP System

Remaining outside the ADP system will be returns filed by nonresident aliens (Forms 104ONR),

foreign corporations doing business in the United

States (Forms 1120F), and withholding agents responsible for withholding tax from income flowing

abroad (Forms 1042). These returns, almost

100,000 in number, will continue robe filed with and

processed manually in CIO, along with the approximately half-million information documents

(Forms 1042S) which accompany withholding

agents returns. Study of these returns will continue

in boom of resolving systemic and procedural problems to permit their inclusion in the automated System at an early date.

Developments in Collection of Taxes Overseas

The location of taxpayers and their assets outsice

the United States and the collection of taxes from

these taxpayers generate unique problems for 010.

However, a precedent established by success in a

court case during this year will somewhat alleviate

these problems.

Normally, U.S. courts cannot assist in these cases

because of lack of jurisdiction. However, in one

case, it was discovered that the U.S. court had juris46 / Annual Report / Chapter Six

diction notwithstanding the fact that both the taxpayer and his assets were in a foreign country.

Ile case in point was United States v. Hendrik

uan der Horst, et al. The United States District Court

for the District of Delaware ordered the sequestration of 5,000 shares of preferred stock, the certificates

for which were located outside the United States, and

rendered judgment in favor of the United States.

This ordpr was rendered under the provisions of

Delaware law. The Delaware law provides that the

situs of stock in a Delaware corporation is presumed

to be in Delaware regardless of the location of the

stock certificates. This law allows creditors of shareholders in Delaware corporations to foreclose their

liens by action in Delaware on such shares even

though the stock certificates are unavailable and the

debtors beyond reach.

Requests for Relief Under Revenue Procedure

64-54 Continue

Revenue Procedure 64-54 provides for administrative relief from double taxation where Section

482 allocations are made between U.S. taxpayers

and their controlled foreign entities. This Procedure

has expired for taxable years beginning on or after

January 1, 1965; however, requests for relief from

economic double taxation submitted under this pro-

(:cdure continue to be received.

At the end of 1969, 128 requests had been receivcd claiming $12 million in offsets. Action was

completed on 99 requests involving $9.6 million.

Relief denied for various reasons totaled $2.8 million

or 29 percent of the total claimed.

Relief under Revenue Procedure 69-13 is extended to domestic corporations and their domestic

subsidiaries located abroad. It'is too early to determine the additional volume of requests that will

be received under this new concept. However, initial

requests indicate that they will be unique and

complex.

Expanded Competent Authority Activity

The elimination of double taxation by the comPetent authority under tax treaties with foreign

countries is an activity growing in scope and

importance each year. The expanded activity during

this year is attributable to several factors. There has

been a large increase in U.S. investments abroad.

There has also been an increase of foreign investmerits in the U.S. primarily due to the Foreign

Investors Tax Act. In addition, the Organization

for Economic Cooperation and Development meetings; have made treaty countries aware of the problems of the proper apportionment of income and

deductions between related enterprises. This has

brought about an increase in international allocation

type cases which have necessitated consideration

by the respective competent authorities.

Various issues were acted upon by the U.S. competent authority and his counterparts under the

treaties which included determinations of nature of

income, dual residence status, permanent establishment problems, and foreign tax credit problems.

During the year 63 treaty cases (income and estate tax issues) were considered and 34 cases were

closed. The greatest activity in the treaty area involving competent authority intervention was with

the United Kingdom and Canada. Even further

activity in the competent authority area is expected

because of the expiration of Revenue Procedure

64-54. For taxable years beginning after December

31, 1964, taxpayers who are subjected to economic

double taxation due to section 482 allocations made

between related domestic-foreign entities may apply

for relief to the competent authority, if a treaty

country is involved,

Service Achieves Uniformity in Certification

Program

The Service withholds at the statutory rate of 30

percent on income flowing abroad to nonresident

aliens unless the address of the payee indicates that

a treaty country reduced rate is applicable. On the

other hand there has been a trend among treaty

countries to use a certification system to determine

if U.S. recipients of income from their respective

countries are. entitled to reduced treaty withholding

rates.

The Service has encountered administrative problems in certifying to all the information requested

by these treaty countries; furthermore, there has

been a lack of uniformity among the treaty countries

as to the nature of the information requiring

certification.

A study of income received by U.S. recipients

from treaty countries indicated that potentially more

than 123,000 requests for certifications could be

received annually. Considerable effort, therefore,

was devoted to achieving consistency and simplicity

in a certification program which would find acceptability by the United States and its treaty partners.

The Service developed a standard format which

has been accepted by six treaty countries (United

Kingdom, Belgium, Germany, Netherlands, Italy,

and Luxembourg). Basically, this certification states

that the particular U.S. person has filed a U.S.

income tax return as a resident of the United States.

It is contemplated that if other treaty couritrics

request certifications similar arrangements will be

negotiated to follow the procedure.now in effect.

Income From Foreign Investment in

the United States

Each year the Service compiles statistics on income flowing from U.S. sources to nonresident

aliens, foreign corporations, and other foreign entities. This income, whether subject to or exempt

from withholding, must be reported to the Service

by the U.S. payer. Analysis of these statistics provides useful data on the nature, source, and amount

of foreign investments in the United States. This

information is used by Treasury and the Service

in considering legislation and compliance programs

in the international area.

Latest statistics available show that for calendar

year 1967, as in past years, substantially all of the

foreign investment in the United States originates

in foreign countries with which the United States

has income tax treaties. These treaties. provide, in

most cases, for preferential tax treatment of the income from investments in the United States by persons resident in treaty countries. At the present time

the United States has income tax treaties with 32

countries. These include 10 countries to which the

22 basic treaties were automatically extended when

they became independent.

The following table is a summary of income paid

to nonresident aliens and foreign entities and applicable tax withheld from such income during calendar

year 1967. The table shows that persons from

Canada, Switzerland, and the United Kingdom invested the largest amounts in U.S. enterprises. The

amounts shown in the fourth column of the table,

headed "Tax from Foreign Governments or Withholding Agents," represent additional tax remitted

to the United States in excess of the reduced rate on

dividend income provided for by an applicable

treaty when received by persons not entitled to the

reduced rate. This income is subjected to withholding in the United States at treaty rates since it is paid

to per-sons with addresses in treaty countries. Where

the recipient is a nominee and the beneficial owner

is not a resident of a treaty country the treaty country

collects and remits an additional amount to meet

the U.S. statutory 30 percent withholding requirement. Of the $23 million additional tax remitted by

foreign governments, nearly $21 million was from

Switzerland.

International Activities / 47
Income payments to nonresident alien persons of treaty and nontreaty countries during calendar year 1967 and tax withhold therefrom

Thousand dollart

Country

Number of

information

Tax withheld

b dominitic

Tax from

forei n T t l

fttinnimt, 1-in.

y

withholding

g

government;

o a tax

withheld

agents or withholding

agenda

rebel...................................... .............. 475,650 928.947 114,346 23,305 137, 51

Treaty

o

nine.;

A

usV21it----------------------- ------------------------------- - AU .

3 546 2 453 300

and ..1aeni;iiiii; ......... ........ ------------------- _......

1: 798

7 864

4: 133

15 279

M3

943 1 188

123

1

........ :: ...... ---------------------

203:826

.

190 920

,

24 302

'

1,211

2 13

15:5

Finland

6

32 5: 64 2

1

F ........

-_W ------

......... ....

U

2

12,819

543

40,545 4,299 50 4 34

9

ledlr:l 1 I ......... ... ...... .............

G

20.917 4 157 2,143 --------- ......

2:

143 r

l alenW :::::::

......

2,D66

f: .

3'

:

31

'

i .

--- ------- 2~ 3

Hal -

3 172

:795

3 230

1:1

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--------------------- 2 33

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7 1"

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Lu-bouii..:

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4

6: 1

48 634 94

947

Whvi.rd, 729

4 907 86 654 10 452 52 7

10 1 1 No. Z l d

1:6

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22~925 3: 154

5

3,. 1 5 ea an .......... .......... ......... ......... .................. 723

33' 11 '

=W:_

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-------------------------------------------------------------

3,757 17 2, 33B 221 227

.

Sweden--- ......

7

3,509

292

14,350

934

51 ----------------

95,14

SwWal.nd...........................................

11~" of

30,9283

D9

174.536 20.102

............

20 754 51

'91 . nd ... .........................

U led K ................... ..........

1

7

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72

814

T

218

28,

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53

2' 0 '

Nontreat untf by Form & 1042S.. . . _ . _.. -~ ...

nd"o ies

7

7: 397

: 52 Of 13,27

:

3:2M ,

Treaty a ntru ty countrieli by Coupon Bond 30,916 10,513 879

-------------

87-1

. Arriounts too iunall to report.

When reporting income payments to foreign persons the U.S. payer submits an information document, Form 1042S, identifying the recipient of the

income, the nature and amount of income paid, and

the amount of tax withheld. Under the automatic

exchange of information provisions of income tax

treaties with foreign countries the Servico.- furnishes

copies of these information documents to the tax

authorities of these foreign countries. During calendar year 1968 approximately 400,000 information

documents were automatically sent to these foreign

tax authorities. In return, the Service received 123,-

000 documents from them giving similar information on income received by U.S. taxpayers'from

sources within their countries.

Planning

Activities

Planning Geared Toward Growing

Workload.

Continued Studies Measure Compliance.

Computer Selects Returns for

Statistical Samples.

Planning-Programing-Sudgeting

System Focuses on Key Management

Issues.

Research Studies Taxpayer

Oriented

Research activities were directed toward advancing the overall administration of the tax laws. Rcsearch projects were initiated to:

1. Assist the Treasury Department in formulating

its legislative program.

2. Measure the extent of taxpayer compliance in

reporting specific types of income, and

3. Effect improvements in procedures, forms and

instructions.

Assistance in Treasury Legislative ProgramThe assistance provided the Office of the Secretary

on tax legislative proposals took many forms. The

impact of tax reform proposals on the Service's costs

and resources was periodically updated; optional

sets oftax tables were designed to implement various

tax rates proposed; and the administrative implications inherent in changes in legislative proposals

were reviewed as proposals took various shapes in

the legislative process.

Studies to, Measure Compliance.-Studics to deterTninc the extent of taxpayer compliance in reporting various types of income provided objective bases

for legislative proposals, regulatory changes, and

other program modifications. Prominent among

these compliance-oriented studies completed or in

process were the following: (I) A study of taxpayer's compliance in reporting Federal unemployment tax conducted in cooperation with the Bureau

of Employment Security of the Department of

Labor; (2) a study to determine the extent to which

farmers rcpor~ as income payments from the Department of Agriculture under major conservation and

commodity stabilization programs; and (3) a

sample survey to ascertain the extent of compliance

in the reporting of interest from the redemption of

series E savings bonds.

Research to Improve Overall AdministrationResearch studies having an effect on overall tax

administration included a review of the present filing

due dates for tax returns and information returns

to determine whether any changes would assist taxpayers and the Service. In addition, a study is underway to determine the most effective approach for

employing computer methods, to assert penalties for

failure to comply with requirements for timeliness

and adequacy of tax deposits for employment, excise,

and estimated income taxes.

49 48 / Annual Report / Chapter Six

363-OD5 0-70---6
E§ortsExpended to Better Coordinate rvith Facilities and Systems of Employers and States.-A survey of payroll practices and systems of employers was

initiated in order to provide benchmark data for

devising improvements in the various employment

tax laws, and to enable the Service to adjust withholding and collection systems in accordance with

facilities available to employers. Also, with a view

toward facilitating the interchange of tax informa--

tion between States and the Service, State tax agencies and employment securities offices were surveyed

to obtain basic information about their data procming systems.

Projects To Assist Taxpayers

A survey of the reporting practices of payers of

annuity benefit was conducted during the year. The

purpose of this survey was to obtain data to provide

a basis for improving the content of information

furnished to recipients by the taxpayers. Also, assistance was given in preparing an instructional booklet,

which in layman's language provides rules on the tax

treatment of annuity payments received by regular

and disabled Civil Service retirees. The Civil Service

Commission mailed approximately 600,000 of these

booklets to disabled and regular retirees.

Additionally, in order to alleviate hardships on

taxpayers arising from overwithholding of income

tax, a study to determine the primary causes of such

overwithholding was completed and recommendations were made to: (1) eliminate withholding on

nontaxable employees; (2) liberalize the rules for

claiming additional withholding allowances; and

(3) provide for optional cumulative withholding

where compensation is not spread evenly over the

year, as in the case of commissions, bonuses, and

seasonal employment.

Systems Development Activities

Plans for Third Generation Equipment at Data

Center

A request for proposals for replacement equipment for the Detroit Data Center was made to the

computer industry in October 1968. The present

equipment is almost 10 years old, and it is anticipated that modern computers, with modern programing aids and operating systems, can greatly

reduce programing time and production time, improve computational capability and reduce the unit

cost of production. Six potential suppliers responded

with proposals which were evaluated in part through

live "benchmark" tests. Equipment selection is

scheduled for April 1970 for installation in October

1970.

Requirement For Effective Planning-The Taxpayer Compliance

Measurement Program

In planning effective programs to solve the longrange enforcement problems of the Federal tax

system, the Service requires an accurate measure of

its workload as well as its major characteristics so

that alternative applications of its limited resoumes

can be evaluated. For this purpose the Taxpayer

Compliance Measurement Program (TCMP),

which is the majorlong-range scientific research program of the Service, was established in 1963.

In emence the TCMP can be described as a research system whose purpose is to determine whether

the operational plans of the Service are attaining arid

maintaining the objectives of tax administration at

reasonable cost. T'his means that in addition to developing cost yield relationships the major uses of

TCMP data will be: (1) To measure the levels of

compliance and tax administration gaps for determining the Service's long-term enforcement policies;

(2) to determine changes in compliance levels over

a period of time for proper direction of enforcement

programs; (3) to develop better selection procedures

to improve the effectiveness of enforcement operations; and (4) 'to identify alternative methods of

operations to achieve greater operating economics.

Since its inauguration, TCMP efforts have been

expanded to coverfourmajortax enforcement areas:

(I ) Individual income tax returns filed, (2) corporation income tax returns filed, (3) delinquent accounts, and (4) delinquent returns. Planning or

implementation efforts were undertaken in each of

these four areas during 1969 despite severe shortages

of enforcement manpower.

The first use of the computerized discriminant

function system in 1969 for seJecting low-income

individual income tax returns for audit was a major

benefit from the use of TCMP data. Research using

data from a more recent cycle of the TCMP individual returns filed survey was also undertaken to

update and improve the efficiency of the discriminant function formulas to be used in selecting

individual returns for audit from all income classes

in 1971.

The first TCMP survey of small corporation (with

assets of less than $1 million) returns was started

during the year. Data from this survey will be used

to develop discriminant function formulas for select -

ing returns for audit from the small corporation returns procemed in 1973. In addition, survey data

from both the individual and corporate returns filed

phases of TCMP will be used in developing resource

allocation models; determining needed changes in

audit class definitions; evaluating taxpayer assistance programs; and measuring the level and changes

in taxpayer compliance by audit class, the gross tax

administration gap, and the indirect effects of tax

return audits on taxpayer compliance levels.

In the delinquent accounts and returns areas, two

surveys were initiated during 1969. For the first time

a TCMP delinquent accounts survey was developed

using a sample of taxpayers from the individual and

business master files. The purpose of this survey is to

determine the overall size and nature of the delinquent accounts problem in terms of taxpayer delinquent account issuance levels; sources of issuance;

and distribution by size of delinquency, geographic

area, and tv, pe of tax. This survey will also be used

to develop and maintain a master file model for use

in analysis and evaluation efforts where a sample of

taxpayers, rather than a complete count, will be sufficient.

The third TCMP delinquent returns (nonfarm

business) survey was also initiated during 1969. For

this third cycle, the survey was extended to all seven

Service regions as planned so as to completely measure the extent and tax significance of return filing

delinquency among nonfarm business taxpayers; to

measure the level and changes in noncompliance; to

test the coverage completeness of the ADP master

file system; to determine taxpayer characteristics associated with nonfiling; and to measure the returns

filing delinquency gap not accounted for by current

operations.

Planning-Programing-Budgeting System Focuses on Key Management

Issues

Analyses of the 1969 program alternatives were

conducted to meet the resource restrictions imposed

by the "Revenue and Expenditure Control Act

of 1968" (Public Law 90-364) as a part of the

Service's Planning-Programing-Budgeting System

(PPBS) to minimize the impact of hiring restrictions

on tax administration programs. First priority was

assigned to data processing programs in order to

make timely tax deposits, to issue refunds, and to

issue bills for taxes due. Second priority was afforded

to the delinquent accounts and returns programs.

Since the Service has no way to control the number

of delinquent accounts issued, orthe number of leads

to unfiled returns, inventories in these enforcement

areas grew. As a consequence, the effects of the hiring restrictions had to be absorbed predominately

in the audit program.

A "Specialized Analysis of Programs for Reduction of Crime" was conducted as a part of an executive branch effort to identify resources allocated to

combat crime. A decision was made to increase resources allocated to the drive on organized crime.

As an integral part of the PPBS, the Service continued to conduct several in-depth analyses of significant Service programs in order to facilitate the

selection of alternative courses of management action. Among the most significant of these are:

1. A special study of the total "Taxpayer Assistance and Services" program to re-examine the overall objectives in areas of rulings and interpretations,

forms and publications, printing and distribution of

tax forms, taxpayer assistance and related services,

and taxpayer education and public information.

2. A complete review to re-evaluate the role of office audit in accomplishing the overall Service mission of maximizing voluntary compliance with the

I nternal Revenue laws.

3. A study which is to result in a developmental

effort aimed at designing and implementing a data

processing system to provide the capabilities required

by tax administration in the 1970's. A contract was

negotiated with a systems engineering consulting firm

to assist the Service in planning and conducting this

study.

. Two major program issues were designated by the

Budget Bureau for PPB studies. A study of the "Level

of IRS Audit Coverage" was completed and a longrange study of Service organization, aimed at producing a plan of organization best suited to the tax

administration job of the next decade, was initiated.

Service Workload Expected to

Continue to Grow

The projected expansion in U.S. population, employment, and income indicates a continuing growth

in the number of tax returns to be filed through 1980,

and the need to plan for the required resources and

systems capable of handling the workload associated

with the increased volunne. Effective planning requires projections of tax returns to be filed for various detailed categories to meet specialized needs for

processing and auditing returns, and for estimating

long-range requirements for the number of personnel

and facilities. In addition, the projections are used

for current work planning, budget development, and

the allocation of funds and manpower between regions and service centers.

50 / Annual Report / Chapter Seven Planning Activities / 51
Between calendar years 1960 and 1969 the numher of individual returns rose 24 percent and corporation returns 57 percent. The more complex individual returns, those with incomes over $10,000, increascd from 4.7 million in 1960 to 19.1 million in

1969 (306 percent) and are expected to increase to

44.9 million by 1980.

The totalreturns workload grew from 94.5 million

in 1960 to I 10. 7 million in 1969 and is expected to

reach 113.2 million in 1970, 124.7 million in 1975,

and 137.7 million in 1980. Projections for some of

the major categories of returns are as follows:

Selected Types of Returns Filed In 1968 and 1969 and

Projected for 1975 and 1980, by Calendar Year

(I. thousands)

Type of Return

Total returns.... --------------

Individual,

AGI under $10,000-.. ...... AGI $10,000 and al-....

Corporation, total ..............

Forms 1120.rd 1120Speoml, total ...............

Assets under S50.01)) I_ Assets $50,0D), under $1,000,0DO_ ........ A...ts. S1,010,001) or more----- .........

pignei'mm, or 1120S.nd 1122 ...... E. .01. All ....

AcItual 1

969

108,900

72, U5

57.317 15,5U

1,710

1,493

647

750

96

217

1

12: U 1412

Fill ate 2

1969

110,917

75,131

"

030 19:101

1,780

1,545

667

781

97

235 22ll:"o111

Projected

2, U5

11111,

893

1,086

134

4326

21: 13 RN

1 Data by size class are wtim.ted. 1 Band on most recent rg.rt-1 returnI d; ,,d d

i" .' a

I

n add itia~n to Farm a 104 a nd 1040A. :11.d FloMr. "040C,'N of "A, olll!" n'd'S

-1-d mas 940 94 gat portged.

as

9,3. 43PR, CT-1 and CT-2. -Includes individual declarations. perinership special restate,

1120L.=.d.m, fidod.7, -In tax returns, i d Fmm1ff7`0t0'4-.xUd p(.t af`2X.',-.UF-,N"x Form 104 but *mind. corporation declarations in 1968.

Computer Designates Returns For

Statistical Samples

Computer selection of tax returns for statistical

purposes was extended to corporations. First used

to select 1965 Form 1040 and 1040A returns at a

single service center, this computer application is

now in oper-ation at all service centers to produce a

stratified probability sample from all individual and

corporation income tax returns entering the master

file system. In the individual area the technique has

permitted a reduction of 100,000 returns in the size

of the sample. This represents a one-third decrease

and a substantial cost saving in processing information. Sample returns so selected are used in the two

major statistical efforts of the Service-Statistics of

Income and the Taxpayer Compliance Measure.

ment Programs.

52 / Annual Report / Chapter Seven

1975 1980

124,686 137,6V

85,757

50.349

f,_T'

95,272

": goo 33 957

2.153

2,811

772

925

114

342

2I

':' 2 5418

Statistics of Income

Two 1965 Statistics of Income volurnm--onc for

corporation income tax returns, the other for noncorporate businesses were released, completing the

series of reports representing the 50th consecutive

year of the publication of statistics with respect to

the operation of the income tax laws. A list of other

Statistics of Income reports published during the

year appears on page 92.

Some highlights of the most recent data, published or unpublished, are:

1. Individual income taxpayers reported a record

high $505 billion adjusted gross income for tax year

1967, an increase of almost 8 percent. Tax liability

rose to $63 billion, a substantial 12 percent increase.

Net capital gain showed the sharpest rise of ;uiy

source of income, art increase of almost 38 percent.

Some summary data for 1967 are presented in the

table on page 53.

2. Preliminary estimates of data taken from

Schedules C and F, Forms 1040 for 1967, indicate

that there were 9.1 million sole proprictorships for

1967 with business receipts totaling $21 1 billion and

net profit of $30 billion. These estimates reflect very

minor increases over similar data for 1966.

3. Preliminary estimates of data taken from Partncrship tax returns filed for 1967 show that 906,000

entitites, representing over 2.9 million partners, had

busin .. receipts totaling $78 billion and net profit

of $11 billion. While net profit showed a small increase, the number of partnerships and amount of

business receipts declined slightly, continuing a longterm trend.

4. Data for 1966 from the complete corporation

income tax return report reveal that there were

almost 1.5 million returns filed for such entities, reflecting total receipts of $1.3 trillion, total deductions of $1.2 trillion, and net income (less deficit)

of $81 billion, all 9 percent increases over 1965.

The Tax Models in 1969

During the past year, the Service expanded the

uses of the "Tax Models." Originally developed 6

years ago to meet the Treasury's need for timely estimates of the revenue effect of proposed tax legislation, these models have proved to be valuable

planning and economic tools.

Each Tax Model consists of a magnetic tape file

containing a randomly selected sample of taxpayer

records, and computer programs capable of manipulating these records so that tax (or other return

Individual Income tax returns: Number of returns, sources of Income, and Itemized deductions

A. Number at returns

All individual returns, total ..............................................................

Taxabl-------------- __.................. ............................... ...... Nontaxable -----------_ .................. -------------_........ _:

Returns with itemized deductions, total--- ...........

T ..It ---------------------- ------------------- ........ ........ Nontaxable------------_-------------_- ------- ..........

Returns with standard deductions, total I ......... ................................ .......

T..bi ----------------------------- ......... ..................... .............. Nontaxable] ------------------------------- __.-----------------_...........

0. Sources of income

Adjusted limas income, total ............................................................

S&1,,,,.1ax ,"d,*,

'

an as to ."' _jiW_m_ ---------------------------------------------------...... and ion........ ___............................ Dividends in adjusted gross Inc... 1. ~ --------------------- ---------- --------------

Intemstracermd P ..................................... ........................... artrmship.......................... I ................... ........................

ca pita! gains ...................... Other.-..'-----------------_- ---------------------

C. Itemized deductions

Itemized deductions, total ...............................................................

T..as ....................................................... -----------------

Interest C I b paid I, on

Medical other and dental expense-................. deductions------------------------------

lecormy...

1963 I f- In lit",

63,943

11:31, 069

26,910

5313:819116

65.376

(Thousands)

11:6311 .2 2D

28,154

252 8216

32

35,789

11:115 10 294

368.778

299 443 23: 872 1 452 9 12

9 313 6:449 9,037

46,053

IN.. tabulated

211:11900

38,446

1112:191

16

396,660

323 266 25:628 11,91 0,1275

9 731 7: 939 8,055

67,596

27,872

211:19151

39,724

17f1:71980a

(Million dollars)

429,2DI

347 15' 27:953 121 961 1:29G

10 606 10:181 9,055

468,451

I 966

70,160

113:71

451

28, 56D

26:792

768

41,600

29ll:'1.3

(Million d.11...

46,832

1'2~ 0R. 17 42E7 7:8095 4 92

50,739

JN.1 tabull4d

11 117 30:258 13 998 113:225

0,726 9 941

9:236

54,566

17 468 14:111, j2 J

'7:681 5,322

71,652

58,673 12.979

29,774

281:122 652

41,977

3D, 1 551 1,327

504,M

411646 30:745 14,202 14,899

11,534 13 682 8:101

59,623

J.ol tab.13und

Note.-Returmolassified astaxable am thosawith incametax after credits.

I I ncludes, returns with no adjusted gross income. For 1963, reduced br sick pay exclusion and certain enangte business expenses. For 1964-1967 firms, selarles am shown. ExRe=tor 1967, on ~u1, desId amounts reported on Forms 104 A. d byseH-emp eye pension deduction for 1963and by self-employed pension deduction.sick pay exclusion, employee business expense deduction, and employee mov. Ing expense deduction to, 1964-1967.

items) can be determined under prescribed conditions. The models are capable of measuring the cffect of simultaneous changes on each tax record and

projecting the results to the entirt taxpaying

population.

The 1966 models for individuals and corporations

have recently been used to evaluate various tax reform proposals including repeal of the investment

credit, a minimum income tax, and new individual

income tax return filing requirements.

Various segments of the Service have found the

Models increasingly useful as an aid in determining

and evaluating workload problems. Some examples

of tabulations in this area include: Redefinition of

audit classes of individual income tax returns reflecting the discontinuation next year of the Form

1040A; the effect of various surcharge rates on the

number of balance due and overpayment returns;

projections of income sources through 1985 to aid

in projections of returns filed by income classes.

The past year found a larger portion of model

tabulations being directed to requests for economic

data by other Federal Government agencies. The

Service provides these data, on a reimbursable basis,

to the extent that the projects do not interfere with

regular internal programs. Two recent examples of

these types of tabulations are: Geographic distributions of sole proprietors with and without employccs

by size of gross receipts (Bureau of the Census);

and, geographical distributions of farm income, farm

program payments, and sources of nonfarm income

forfarm proprietors (Department ofAgriculture).

Planning Activities / 53
Management

Activities

Nationwide Promotion Plan Developed.

Hiring of and Services to the Blind

Expanded.

Training and Development of Managers

Receives Renewed Emphasis.

Systems Approach Applied to a Variety

of Training Programs.

Surveillance Maintained Over Internal

Operations.

54

Financial Management Continues

Contribution to Improvement of Resource Management

Over the past several years the Service has taken

a number of measures toward achieving maximum

utilization of resources in accomplishing its work

programs-an effort which continues to challenge

the imagination and ingenuity of all Service officials.

These measures include the Planning-PrograntingBudgeting System and related Special Studies Program; the Taxpayer Compliance Measurement

Program; the annual operating financial plan; the

position management system; work planning and

control systems; and the decentralization of management and control of resources to the lowest feasible operating levels. The Service's financial management operations are vitally concerned with these

efforts.

Service Responds to Employment Restrictions

During 1969 the over-riding restraint on accornplishment of Service programs was the restriction

imposed on employment by the Revenue and Expenditure Control Act of 1968. This act limited

Government employment by prohibiting the filling

of more than three of every four new vacancies occurring through attrition. This ratio was later cut

to seven of 10. As a result, the Service lost many

employees whom it could not replace, and so was

unable to accomplish all the work which had been

provided for by the 1969 appropriations passed by

Congress.

The fact that these restrictions came on the heels

of severely unbalancing expenditure cuts imposed in

fiscal year 1968 magnified the damage. In these 2

years, the Service lostsome 4,900 positions which

it would otherwise have, had available to perform

vital compliance and returns processing work.

(About 2,500 of these were the result of the fiscal

year 1968 cuts; about 500 were new people,'authorized by Congress for fiscal year 1969, who could

not be hired; and approximately 1,900 were attrition

vacancies, occurring during fiscal year 1969, which

could not be filled.) Under these circumstances the

Service was obligated to give the clearest possible

explanation to the Congress of the real effects of

these cuts on the tax administration system. In response to these problems the Congrem has authorized

3,486 additional positions in fiscal year 1970.

Early executive decisions on the Service's approach were essential if plan managers were to

maintain a balanced operation. Priorities were set

to insure the processing of the uncontrollable workload of tax returns received, while allowing other

crucial programs to continue at reduced, but

relatively balanced levels.

To meet the basic requirements of the law special

controls and reporting procedures had to be established. Supplementary controls and more timely

reporting procedures were also established to help

insure that resource management decisions were

made promptly, and that ~Ian managers had the flexibility to respond quickly to changed conditions.

For fiscal year 1969 the Internal Revenue Service was authorized an increase of 836 positions and

$60.7 million over 1968. However, because of restrictions placed on manpower and expenditures,

the Service was unable to realize 1,002 of the manyears of work originally planned for fiscal year 1969.

Forced savings from employment restrictions were

applied to reduce the supplemental appropriation

required for pay increases as shown in the following

table.

Utilization of savings

[in .111imns of d.11.,,l

Total cost Forced supple.

Appropriation of Pay savini s mental

increases

Opp,, d

Total ...................... 30,266 20,924 9,342

S Will. and allimses------------- -----

:

1,014 564 450

11 11.u, accounting and processing- 5 112

----- ,

C 'I :::::: 5 592

men lance----------------_- _

:

660 Wiia 3: 300

Man-years authorized and realized by appropriation for 1968 and 1969 (exclusive of reimbursements) are compared below:

Man-years authorized and realized

Authorized Realized Pence

rt e

Appropriation realizeal

1968 1969 1968 1M 1969 suene

=3R d eX P GnWS ----- 1,479 1,515 1 497 1 48; 101 2 58 2,,,, , tin, ,,,

,

, . ,

--- - 21 141 -:1 22 891 zz.- 104.3 a.. 4

:::: a :: : 42: 6

D9 42, "

42:

966 as, an 100.6 n.r;

Toto

1

6,036

6

69 472 67 260 U no 101.9 92.6

increase 1969 .

is. .......

For more detail by appropriation, by activity

I

and

also obligations by districts, regions, and National

Office, see tables ~6 and 27 on pages 122 and 123.

Management Improvements Yield

Savings of $14.7 Million

Many noteworthy cost reduction and management improvement actions, described elsewhere in

0

this report, were implemented in 1969. However,

the total man-year and dollar savings realized-

$14.7 million-fell $2.1 million short of the record

savings reported in 1968. The negative impact of

severe resource restraints Was Certainly a contributing factor.

Managers and employees throughout the Service

again demonstrated their ability to devise better and

less expensive methods of doing their work. This is

illustrated by the fact that $11 million, or 75 percent, of the total savings achieved in 1969 stemmed

from improvements originating at working levels,

mostly in the field. The balance of savings, $3.7

million, was derived from major projects originated

by the National Office. In 1970 and 1971, the

Service is projecting savings goals of $15 million

and $15.1 million, respectively.

Emphasis on Quality Suggestions Brings Increased

Savings

As part of a new look for the suggestion program,

communications were improved and emphasis was

placed on quality suggestions. By mid-year there was

a noticeable decrease in the number of suggestions

received and adopted, but savings nearly doubled

over those for the same period the previous year.

Thirty-six Service employees were honored at the

Department of the Treasury Fifth Annual Awards

Ceremony. Of this number, one received the Exceptional Service Award and three received the

Meritorious Service Award.

Revised Administrative Accounting System Brings

Added Benefits

The administrative accounting system has been

revamped to incorporate accrual and cost information and to meet overall financial management and

reporting needs. A few of the changes resulting from

study of the financial and accounting systems were

as follows:

1. The 1970 Operating Financial Plan orinternal

cost budget provides allocations of funds and manpower by program to major operating levels. The accounts make readily available to each financial plan

manager information on cost and fund allocations

as well as the status of obligating authority.

2. Plan managers now work from an Operating

Financial Plan which consolidates appropriated and

reimbursable funds. Only the reimbursement program manager in the National Office is responsible

for measuring the execution of the reimbursement

plan. He coordinates all planning of reimbursable

work and advises plan managers on the status of

Management Activities / 55
execution against amounts included in their plans.

This procedure provides plan managers some relief

and, at the same time, aids in the planning and control of reimbursable funds.

3. The system provides accounting data on accruals and costs in the detail and at the levels re.-

quired to support the Service's cost-based budget

and to control the execution of the Operating Financial Plan. Reports on plan execution which compare

planned with actual man-year and dollar expcnditures have been changed in format to allow a more

meaningful managerial review. These reports on

plaxicxecution furnish Service-wide data on program

accomplishments and related costs and supply financial information required by the Bureau of the

Budget.

Consolidation of Alcohol, Tobacco and Firearms

Laboratories

Alcohol, Tobacco, and Firearms Regional Laboratories in Chicago, Dallas, New York, San

Francisco, and Seattle were consolidated into multiregional laboratories located in Atlanta, Cincinnati,

and Philadelphia during the year. In these larger,

better equipped facilities, more efficient use of manpower, space and equipment is expected to provide

better services to regions at an annual savings in

excess of $162,000 annually.

Narcotic drug analysis formerly done for the Bureau of Narcotics was phased out as the justice Department's Bureau of Narcotics and Dangerous

Drugs activated laboratories to take over this work.

This change was required by Presidential Rcorganization Plan No. I of 1968.

Reports Management Program Produces Significant Results

The Service-wide Reports Management Program

continues to move forward through high level management emphasis and active participation by Service pi~iople. During fiscal year 1969, the Service

placed special emphasis on the cost of reporting and

the need to reduce the reporting burden where pos.

sible. Through this effort, the Service achieved a.

reduction of 9 percent in reporting cost. The net:

dollarreduction in overall cost amounted to $1,187,-

000 thus permitting a redirection of manpower to

essential operations or to increased workloads. Considerable attention is also being directed to the mechanization of many of our reporting systems with the

benefit of more accurate, timely, and less costly

management information.

Change in Financial Management Improves Over-all

Program Quality

By treating the fiscal year 1970 training programs

as a unified support program, the planning, reporting, and administering of Service training funds have

been simplified. This approach enables training

personnel to devote more manpower to progiram

management rather than funds control and facili

tates decentralization of the administration and

financing of training programs.

Personnel and Training Programs

Improve Quality and Increase Efficiency

Service Center Employment Increases as Redeploy.

ment Approaches Final Phases

Concentration of returns processing operation in

seven service centers continued to present a staffing

problem. More than 90,000 employment applications were processed in securing 14,000 seasonal

card punch opera

'

tors, clerks, and tax exanriners

needed to assist mi processing the high volume of

tax returns. Major recruitment efforts were required, since the labor market for clerical employees

continues to be extremely competitive.

The Service is continuing to carry out the dala

processing conversion with minimum adverse impact on affected employees. Of the initial 12,000

employees affected, approximately 10,800 have been

redeployed without resorting to any adverse personncl actions or involuntary transfers. Although there

will be approximately 1,200 positions for such employees remaining in the districts, staffing imbalances

in certain offices will require further redeployment

solutions (already identified) for approximately 250

employees. The Southeast Region completed :its

phase-out of manual operations last year, and four

more regions were scheduled to complete changeover by July 1969. The Service is exerting all possible efforts to conclude redeployment with the same

degree of success the program has enjoyed to date.

Recruitment Resumed at Year-End

Contacts were maintained with campus recruitment sources and seminars were held for academic

representatives in preparation for renewed hiring

authority which began to be restored toward the

end of the year. In spite of the general cut in hiring,

provision was made for continuing and expanding

special emphasis programs, such as employment of

the blind and other handicapped or disadvantaged

personnel. The work-study program under which

students work part-time was stimulated as a potential source of replacements for professionals, particularly accountants, in the face of a diminishing

supply.

Because of the urgent need to proceed with service

center hiring, very fewvacancies were left to be filled

under the 70 percent rule. As a result, only 600 professionall employees were hired. As an exception to

the legislative limitations, the Bureau of the Budget

authorized, late in the year, the filling of 599 en.

forcement-type positions for the organized crime

drive.

The Civil Service Commission authorized special

higher salary rates for newly recruited revenue officers in California. This action was designed to aid

in recruiting and retaining these necessary enforcement personnel in an extremely competitive' California labor market. The new rates became effective

in April and are applicable to future recruits as

well as to the 74 entrance level (GS-5 and 7) revenue

officers already on duty.

Man-years realized during each of the past 2 years

and employees on rolls at the close of 1968 and 1969

are shown in the following table:

Location and type

1963 sea

Man

rinaiiyze'd's

Number at close an rolls

of year

Service, let-[................ -----------

Permanent ........... _ ..........._

Nob Temporary------- ..........

Fia Idonsaelmqj!ec 1-at -a 19-

Data prociesaing, total--.-.-------__

Collection, total ----------

.

.......... in

Audit, total

..........

Revenue agents...... .........

Offil.a.ifit.r. t, and tax tectmida-,

Of er ------------_---_--_

Intelligence, total

Specialegent- -------____

Orth- ----- _._. -----------_

Alcohol and tobasto tax, total.___

lovestigid......................

Iiispectin-l-ral_ ...........

Inspectors- promises ----------

Othe

Appellate---- total----------------------- ..............

.......

'Addietl.1111! : :: :: :: -:: : -

Administraflon, other--- District Office.

Reg*

no

Regional Inspection----------_------ :

67,574

60,412

7,162

967

1613: 607

21,665

10,213

6.118

3,935

21,155

'3

430

3:147

4,578

2,386

1, "',,

2,607

921

434

41

9

774

1,623

"'

745

161

782 63

=

Go.oica

-

UT M

"

~ 3 an

U:"2

a, Of

is, an

us

':. 236

aff, an

= ya

2:8

4. 02

2. n3

1- -M

2,as

-I's".5

4.

.1

M

1. .6no

an

7M59

1968

.

65,177

59,517

5.660

3:.71

61 77

119,820

9.951

6:030

3 921

21,154

13 061

3;'001 5

D92

~, _3"

",',3,'

2.610

4985

414'

795

152

748

1,598

'it 7

67863

u, rpor

57,742

6, in

as.:n,

M

n, us

la'an

5'..

4. U2

n,m

32, 611

2.11

s,-

1,-07

L M

"M

'$"a

"7

1.3

an

Me

Revised.

n.a. Not awilable-Included in District Office above.

0 3 Includes iginal leave man-yeats for entire Service.

at. 1 includes Cant in of International Operation, National Computer Carter, a r. od IRS

I Includes overseas employees hired locally (3 in 1969 and 3 in

.

1968).

Cooperative Work-Study Participants Increase

The Service continued its efforts to attract undergraduates majoring in accounting and to prepare

them for careers in the Service as internal revenue

agents and internal auditors. The program is structured either for alternating extended periods of work

in Service offices and on-campus study, or students

may work part-time throughout the school year and

full-time in the summer. Although the manpower

ceiling restrictions continued to curtail full-scale

participation by many offices, 175 students participated in the program. Seventy-one percent of the

students completing the program during calendar

year 1968 became full-time Service employees.

Nationwide Promotion Plan Developed

In line with continuing efforts to improve the

quality and utilization of employPercosm,othe Service

tion Plan,

wdeveclopceodveras niertwuaScyrvailcle-n%oiridscupervisory positions

in the Service and replaces eight different promotion

plans previously used by the regions and the National Office. The benefits of a single plan will be

twofold-it will provide uniform procedures and

promotion opportunities for all employees, and it

will enable managers to be better aware of qualified

employees outside their immediate offices.

Assessment Centers Utilize Advanced Selection

Techniques

The Service has developed and implemented a

pilot Assessment Center Program for helping select

first-line supervisors, This technique (first applied

by the American Telephone and Telegraph Co.)

involves trained managers' observations and evaluations of candidates as they perform in a series of

group and individual exercises which simulate supervisory situations. Selecting managers then receive a

written report which gives them data on different

skills and behaviors than are ordinarily observed on

the job. The Service's pilot Assessment Center was

designed by personnel and training specialists, and

used by North-Atlantic Region managers to assess

about 150 candidates from that region. Based upon

an appraisal of the costs and benefits involved, decisions will be reached on extended use of Assessment

Centers within the Service.

Service Establishes New Links With Universities

In recognition of the fact that professors of

accounting and tax law have considerable influence

in shaping the attitudes of their students toward tax

administration, the Service invited representative

56 / Annual Report / Chapter Eight Management Activities / 57
accounting and tax law professors from 50 colleges

and universities to meet with National Office executives to explore common areas of interest, such as

tax administration problems, student intern co-op

programs, training programs and utilization of college professors for short. and long-term assignments

within the Service. A number of mutual benefits are

expected to grow out of these meetings, and followup seminars are planned to keep the Service closely

attuned to university developments. In addition,

arrangements arc being made for universities to

administer and grade the Service's longstanding correspondence accounting courses.

Service Intensifies Efforts for Handicapped

Substantial accomplishments in employing handicapped persons were made by the Service during the

year, including the designation of 200'Service coordinators for the employment of the handicapped.

Related efforts included appointments of mentally

retarded individuals to appropriate lower-grade positions. Service centers continued to employ deaf persons as well as sonic mentally retarded people. The

North-Atlantic Service Center continued as a pacemaker in productively utilizing the mentally restored. Recognition to the handicapped included a

Commissioner's Award for the late Paul Spence,

t he Service's nominee as Outstanding Handicapped

Federal Employee of the Year and one of the 10

National finalists for this Civil Service award. This

employee had the primary Service responsibility for

the recent renovation and air conditioning of the

National Office headquarters building.

Hiring and Services of the Blind Expanded

Special efforts were made on behalf of the blind,

including successful utilization of blind persons as

taxpayer service representatives. By the end of the

year, 22 such employees had been trained and were

employed in districts throughout the country. Another 50 to 75 will join them in the next 3-years,

as the result of a special training program conducted

for the Service by the Arkansas Enterprises for the

Blind, under a $100,000 grant from the Department

of Health, Education, and Welfare. Braille masters

for materials to train these employees were prepared

by women volunteers of the Cleveland Chapter of

the American Red Cross, who received the Commissioner's Award in recognition of their outstanding work. This was the first time the Commissioner's

Award had been granted to persons outside the

Service.

The Service again provided blind taxpayers, employm, and trainees braille copies of tax forms,

along with related instructions. The bulk of the

copies produced were distributed to the Library of

Congress which fills requests from the public. Copies

were also distributed to the Arkansas Enterprises for

the Blind and to regional libraries throughout the

country.

Clifford Glotzbach, Assistant Director of Internal Revenue Cleveland District, presents the Commissioner's

Award to William Birkhold and Mrs. Arthur Skall, offi.

cials of the Cleveland Red Cross Chapter who accepted

the award on behalf of its Voluntary Braille Service

Group No. 908. Twenty-six members of the Group

worked with complete dedication to produce 4,000

brailled masters (the transcription of 16 tax forms with

instructions and nine publications into braille) from

which copies were made for use by Service blind

employees.

Gains Achieved in Equal Employment Opportunity

Minorities made encouraging gains in all grades

from GS-5 to GS-16. Eight members of minority

groups were in senior staff and managerial positions

at GS-1 5 and above at year's end.

Foremost in the year's equal employment activity

was the revision of the Equal Employment Opportunity Handbook and the issuance of a new action

plan. The revision also implements a program of

equal opportunity for women, provides for assistance

to minority groups in findingsuitable housing if housing acts as a barrier to employment, and places more

emphasis on advancement, training and promotional opportunities.

Many efforts have been made by operating

officials to achieve equal employment opportunity.

Three of the most significant accomplishments

include:

(1) A Programer Reading and Training System

at the Detroit Data Center.-This is a self-developmental program where clerical employees are given

the opportunity, through a Dat~ Center developed

home-study course, to gain entry into technical and

professional level positions.

(2) Assistance to Negro Colleges.-Nine field

offices have met with Negro colleges in their areas

and pointed out to college officials where curricula

need strengthening or where additional accounting

courses were needed to qualify graduates forinternal

revenue agent positions.

(3) Intergroup Relations Seminars.-In recent

years the Service has run a series of Equal Employment Opportunity seminars for supervisors and

managers. As part of this continuing effort, seminars

were held at the Little Rock District Office and the

Southwest Service Center, designed to test some of

the assumptions that members of different races

make about one another. The participants worked

alternately as members of all black, all white, or all

Spanish-American teams and then as members of

mixed teams to better understand the attitudes and

assumptions of all of the participants. Insights were

developed into how each participant could become

a better teani'member in a real work situation. The

Service Center seminar has been filmed for the purpose of developing an audiovisual supervisory

development aid for Service-wide use.

Employee-Management Cooperation Activity

Continues Rapid Increase

During the year the tempo of employee organization activity increased. The Service became one

of the most highly organized agencies in the Government with more than 90 percent of its eligible

employees being exclusively represented by four

major employee organizations. Approximately

51,500 employees are now covered under exclusive

recognition, an increase of more than 8,000 over

the past year.

There was also an increase in negotiation activity.

During the year the Service negotiated 10 more

collective bargaining agreements, for a total of 26

since the beginning of the Employee-Management

Cooperation Program under Executive Order

10988. There are now 18,000 employees covered

by negotiated agreements. Nine other agreements

to cover some 4,800 employees are in the process of

being negotiated.

Training and Development of

Managers, Receives Renewed

Emphasis

A complete]), redesigned middle-management

course was offered to newly appointed managers.

Its object is to present contemporary management

approaches and theories and to explore current Service management problems and areas of emphasis.

Key officials teach a substantial portion of the revised course. Additionally, public administration and

social science research is also being used to provide

new insights into management problems. A Readr

.

ngs in Management collection of articles was distriR )uted to all Service managers, as well as the new

Management Training and Development Handbook. The Handbook for the first time systematizes

and puts into perspective the wide variety of training and other activities involved in developing

Service managers at all levels.

Revenue Agent Training Restructured

The basic training for new revenue agents was

revised during the year to include practical on-thejob training. The curriculum provides initially for

a few weeks of desk-side assistance to an experienced

agent auditing a case followed by periods of classroom training and additional practical experience.

The trainee is introduced to the whole job sooner

than under the former curriculum and obtains a

base of practical experience to help him get more

out of classroom sessions.

Systems Approach Applied to Training Programs

Considerable training time and attention was

devoted to examining the training curriculum and

insuring that the program continues to fit current

performance expectations of Internal Revenue Service jobs. Although the individual principles involved

in this re-examination are not new and have been

used by the Service in the past, they are now being

applied on a more systematic basis, or training systems approach-similar to the approach currently

being used by universities and a number of other

agencies-to further tighten training programs. A

number of Service training specialists, selected analysts, and managers attended tr-aining systems workshops during the year. These workshops foster

analysis of the total organizational setting in search

for solutions to human performance problems; they

emphasize use of non-training solutions, such as job

redesign, where analysis indicates that training

would be a more expensive or less effective solution.

58 / Annual Report ~ Chapter Eight Management Activities / 59
Service center training programs continued to

receive high priority attention because of their

critical contribution to the efficiency of the automatic data processing system. As Part of the systems

approach, emphasis this year was placed on analyzing service center processing operations to review

specific tasks performed and evaluating and measuring performance during and after training sessions.

Use of Sophisticated Equipment Improves

Training Effectiveness, Cuts Costs

Teaching machine programs were used in several

different courses, principally in Form 1040 processing operations taught in all seven service centers.

Savings in instructor and trainee time offset initial

equipment and program development costs the first

year, and recurring savings are anticipated.

Instructional television equipment is now being

installed in principal training sites in the field. The

closed-circuit television system at the National Training Center has been used routinely in technical skills

training, instructor training, and other situations

where video-taping of trainee preformari can increase learning effectiveness. This capability is

being extended to the field.

Regional Training Center Added

A training center was activated at Hofstra University to service the North-Atlantic Region as part

of the Service's plan to establish a center in each

region. Satellite training sites will be used in Boston

and Buffalo when savings. can be achieved by conducting classes there. Regional Training Centers for

the Mid-Atlantic, Southeast, and Southwest Regions

are now in the planning stages.

Taxpayer Education Emphasis Shifts to Adults

In the past, the Service's taxpayer education efforts have centered largely on instilling an understanding of taxes in high school students; however,

last year other approaches were expanded. During

1969 the Service conducted a pilot institute for povcrty workers using some of the learning material developed for taxpayer service representative training.

Plans are to expand this effort during 1970 to help

soften the impact of tax form changes, particularly

on taxpayers with small incomes. A comprehensive

guide for regions has been developed that defines

elements of the program with emphasis on reaching

broader segments of the public.

Tax education institutes are presented annually

for professional tax practitioners and others who help

fill out tax returns.

The Service also has developed a number of taxpayer education seminars for the general public, particularly for small businessmen. Other programs have

been developed in conjunction with bar associations,

certified public accountants association$, and local

newspapers, to help these groups aid the general

public. An increasing number of Service employees

are teaching in local adult education programs.

Taxpayer education in school systems is still the

largest of them programs. Materials are distributed

free, upon request, to high schools, junior high

schools, business schools, and other groups. In 1969,

requests totaled 3.5 million general student texts,

500,000 farm student texts, and 80,000 teacher's

guides.

Firearms Training Broadened

As a result of the enactment of new firearms laws

it was necessary to develop training material for firearms instructor schools. Two schools were held in

the National Office for training special investigatorinstructors with 60 special investigators in attendance. These training schools were designed to

prepare those attending to conduct similar training

sessions in the regions for all alcohol, tobacco, and

firearms special investigators.

Better Facilities Management

Benefits Employees and Taxpayers

New Returns Processing Space Acquired

The Service in fiscal year 1 969 used 11.7 million

square feet of space to house its offices, service centers, training centers, warehousing, and laboratories.

Fifty-five percent of this space is in Federally owned

buildings. The balance of 45 percent is leased by the

General Services Administration at an annual cost

of $17.7 million. The use of leased space increased

by 2 percent over last year because the service centers

required additional offsite space to handle their

workloads.

The service center expansion program initiated 3

years ago is progressing. The Southwest and Southcart Regional Service Centers have received additional space, and contracts have been let for the extensions to three other centers. Estimated completion

dates for these are: North-Atlantic, January 1971;

Mid-Atlantic, July 1970; Central, December 1970.

Construction already has begun on the extensions to

the Midwest and Western Regional Service Centers.

To meet pressing additional space needs generated

by the increasing number of returns filed, the Service

intends to construct three additiorial service centers

by September 1971. Proposed general locations are

Fresno, Calif.; Suffolk County,.Long Island, N.Y.;

and Memphis, Tenn. Each of the new centers would

comprise about 500,000 square feet and be able to

accommodate a peak- week prime shift of about

4,100 people.

Telecommunications Save Manpower and Money

The Service continued to make ever-increasing use

of the telephone and other telecommunications media as the most effective and economical means of

communicating, both internally and with the public.

Telecommunications systems were expanded or redesigned to provide operating officials with additional voice and message communicating facilities.

Continuing in-depth studies of the cost of telephone calls made by major field offices in communicating with the pubiic, as opposed to the cost of alternative methods of communicating, produce additional evidence of the benefits of expanded usage of

telecommunications facilities.

Tax Forms Acquire Colorful New Look

In January 1969 more than 30 million taxpayers

received Federal income tax packages printed in two

colors of ink. The basic reason for use of color was

an effort to minimize taxpayer error. Approximately

9 percent of all returns filed contain errors which in.

total require a significant expenditure to correct. It

was hoped that the use of a strongly contrasting color,

highlighting those areas having the greatest error

factor would aid the taxpayer. The significant words

in those areas appeared in red with the balance of

the forms and instructions printed in blue. Approximately 25 million tax~aycrs received this red and

blue version. Anotherfive million in the area serviced

by the North-Atlantic Service Center received

a slightly different tax package. This version, in

addition to two colors on the Form 1040 had a ti~t

color over the information areas and white for fill-in

spots.

A scientifically selected sampling indicates that

color has reduced errors by 57 percent. This means

the prevention of millions of errors which otherwise

would cost approximately $2 each to correct. Overall

taxpayer reaction to the colored forms was excellent.

Records Holdings Continue to Decrease

Although more tax returns were filed, Service

records holdings continue to decrease, due to an active disposal program and use of Federal records

centers. In calendar year 1968, 442,215 cubic feet

of records were destroyed or sent to records center

for storage. Much needed space and equipment valued at $1.9 million were released for reuse by the

Service.

A contributing factorin reducing records holdings

was the agreement negotiated with the General Scrvices Administration, and approved by the Bureau

of the Budget, to send tax returns to records centers

approximately I year after processing. In the past,

these returns were kept in Service space for 3 years

prior to retirement. These records are retrieved by

enforcement personnel when needed.

More Forms and Form Letters Standardized

Both the public and Service are benefiting from

continuing efforts to eliminate unnecessary forms and

form letters. This year's net reduction of 478 public

and internal-use forms main6ined the 5-year average of a 3 percent per yearreduction of Service forms

and form letters.

The following table summarizes the results of this

year's forms management program:

Forms and form lefters

Prossribed by

Cilso.1.8

loven- tory

N.~?

dove

oped

Elioni-*

noted

Closing

invento ry

N t

change

Total ........ I!L!!7 -478

National Office (used at headquar.

_

o . c --- 5,844 473 233 6. Oso +240

coonIn,"!,_.

. -. - 6,936 745 1,286 6,395 -541 Dis~rlct t lcis Iffidles .o ,=dl-1 dllin.t.

41 _ _

1,047 166 458 755 -292 S c. : 1,1108 7 4 3 606 1,945 +137

Data conte ..................

2

10 9 3 1

15

1

88 -22

Joint Post Office-IRS Efforts Yield Better Mailout

Operations

Continuing close cooperation and coordination

with the Post Office Department resulted in improved postal operations, particularly during the tax

package mailout and filing periods. Specifically,

-the Post Office picked up approximately 44

percent of the tax packages from I-to-5 days

earlier than usual, the taxpayer received his

tax package earlier, and some storage space requirements were eased;

-usage increased for two-way cartons in place

of mail pouches for mailing tax packages, enabling the Post Office to keep several thousand

mail pouches (normally tied up for days waiting to be used for mailing the packages) in daily

service;

60 Annual Report / Chapter Eight Management Activities / 61
-during the labeling and packaging operations,

postal employees at the service centers helped

direct and assist in staging tax packages so they

could be loaded into Post Office trucks quickly

and in correct delivery sequence;

-equipment such as forklift trucks, truck trailers,

and typing machines, when not immediately

needed by the Service or the Post Office, was

loaned to the other;

-misdirected mail averaged less than one-half

of I percent, as opposed to more than

I

percent

the previous year.

Motor Vehicle Fleet Increased

The Service fleet of law enforcement cars increased by 2 10 to 1,460, primarily to carry out additional duties pursuant to the new Firearms Act

and the organized crime drive. An additional 1,776

cars are leased from General Services Administration

for administrative purposes. The Service has worked

closely with GSA and employee unions to provide

the quantity and quality of transportation employees

need to do theirjob.

Disabling Injury Rate Lowered Again

The disabling injury frequency rate of 2.4 during

calendar year 1968 was the lowest in 16 years of

recordkeeping. This represents an 8 percent improvement over the 1967 experience. Thus, in the fourth

year of the 6-year program of the President's Mission SAFETY-70, designed to reduce the number

of injuries and costs by 34 percent by the end of

1970, the Service has already achieved a 31 percent

reduction.

The Cheyenne District extended its perfect record

to 14 years of activity without a disabling injury. The

unique performance of the Aberdeen District was

noteworthy in completing 1968 without sustaining a

single automobile accident or personal injury of any

kind.

Service-wide accident prevention efforts in 1968

averted 151 disabling injuries with an estimated

saving to the Government of $453,000. In the past

4-years an estimated 382 injuries were averte and

$958,000 saved in costs for medical care, lost production time, and property damage.

Record Motor Vehicle Safety. Rates Achieved

Although the National total of motor vehicle accidents increased during 1968, the Service accident

rate remained the same as the previous year-7 accidents per million miles driven. Only 659 accidents

were sustained during 93 million miles of driving.

This motor accident frequency rate represents one of

the lowest rates ever recorded in the Service.

Surveillance Maintained Over

Internal Operations

Integrity Vital to Public Confidence

The success of the tax system depends upon the

public's faith in the objectivity and the integrity of

the Internal Revenue Service as the impartial administrator of Federal tax laws. To insure that this

faith is not violated the Service conducts continuing

inspections into questions of integrity, and the adequacy and effectiveness of operations.

Facts developed through audits and investigations

are reported to management officials, who have the

responsibility for taking corrective action. When

evidence of a violation of a Federal criminal law is

disclosed pertinent data is furnished to the Department of justice.

Internal Auditing Helps Management Maintain

Effective Programs

All Service activities and functions are subject to

internal audit-as an integral part of the Service's

management control system. Major emphasis is

placed on activities most closely related to collection

of tax and enforcement of the tax laws.

Data process

.

ing activities at the seven regional

service centers are examined on a continuing basis

by teams of auditors stationed at the centers to permit timely detection and correction of systemic and

operational deficiencies. During 1969 the system for

reporting internal audit findings on data processing

activities was modified to further reduce the time

between detection and correction.

A new format forreporting the results of examinations of the audit function was put into effect to provide management with ~more comprehensive data

for evaluating the effectiv)eness of the various programs and operations through the country.

Management's actions to correct and resolve reported deficiencies and problems contribute significantly to the efficiency and effectiveness of the

operations of the Service and to improved taxpayer

relations. Additional revenue and savings from corrected deficiencies in 1969 are estimated at $39

million.

Tests disclosed that about 18 percent of the claims

by taxpayers on their 1968 income tax returns for

excess Federal Insurance Contributions Act (Social

Security) taxes were erroneous and that more than

90 percent of these errors would not be detected

under the processing procedures in effect. Management's actions to revise the processing procedures

will result in additional revenue estimated at $14

million annually.

Integrity Safeguarded by Service Inspection

Programs

Internal security for the Service is accomplished

by conducting background investigations on applicants and by investigating complaints or allegations

of misconduct or irregularities concerning Service

employees. Investigation of persons outside the Service are made when their; actions constitute an effort

to corrupt Service personnel through bribery or other

means.

Since September 1, 1961, 650 Service personnel

have reported what they believe to be attempts by

taxpayers or their representatives to bribe them in an

attempt to gain an improper tax advantage. A total

of 162 individuals have been prosecuted since 1961

for attempting to bribe Service personnel.

This program continues to show effective results.

Arrests or indictments for attempted bribery in tax

cases totaled 44 in fiscal year 1969 as opposed to 32

in fiscal year 1968. At the end of the year, 58 cases

were pending trial.

Attempts to bribe are not confined to any one

geographical area nor to any particular segment.of

our citizenry. Examples are as follows:

A realtor in California offered' a revenue

agent five acres of land to influence examination of his returns. The subject of this investigation received the most severe sentence ever

imposed as result of this type investigation. He

was sentenced to 15 years in prison with no

suspension provisions and fined $20,000 followinghis conviction for attempted bribery.

A certified public accountant in New York

offered $5,000 to a revenue agent.

A widow in Florida offered a revenue agent

$2,600 regarding examination of her returns.

An insurance consultant in Pennsylvania

offered $1,000 to a revenue agent.

In Louisana, a stockbroker and an independent businessman, acting as intermediaries for an

alleged underworld figure who was the subject

of a tax examination, offered a revenue agent

$10,000. .

In Michigan, the owner of a supply company offered a revenue agent $1,200.

Major Schemes to Defraud Investigated

Teams composed of internal auditors and internal

security inspectors investigate breaches of integrity

involving actual or potential frauds on the revenue

by employees or through collusion between employces and taxpayers.

Investigation was continued in the case of 26

employees and former employees and one accountant, all of whom were arrested in January 1968 on

charges of attempting to bribe an internal security

inspector. Twelve additional arrests have since been

made. These bribes were for the purpose of obtaining

information contained in inspection files. or to circumvent investigations relating to corrupt activities.

During the year five persons pleaded guilty, 20 are

awaiting trial, I I are pending grand jury action, one

person died, and the grand jury returned a no true

bill on one of the 38 subjects.

Tax examinations initiated in connection with this

investigation have resulted in deficiencies well in

excess of $1 million. The investigation is continuing

and it is anticipated that the total tax deficiencies

involved will amount to over $2 million.

False Refund Schemes Detected

The complexities of the automatic data processing

system and the continued changes taking place

within the system have required new approaches in

dealing with fraud. In one case involving the ADP

system a revenue officer initiated a multiple income

tax refund scheme. Prior to apprehension he

acquired over $31,000. The employee was prosecuted, convicted, and sentenced to prison. An analysis of the characteristics involved in the scheme was

made and computer programs were developed as a

means of identifying similar schemes. These programs have resulted in the identificatioii of two

additional schemes.

Investigation of one of the schemes disclosed the

perpetrator filed 112 returns at the seven service

centers during the past 3 years and received approximately $80,000 in refunds. He was prosecuted on

charges of false claims for refund and sentenced to

8 years in the penitentiary with 5 years probation to

commence upon completion of the prison sentence.

In a second refund scheme a former employee

filed individual income tax returns using fictitious

names in obtaining refunds in excess of $20,000. She

was indicted May 8, 1969, on 26 counts of false

claims and 13 counts of forging and uttering. The

Intelligence Division participated in both of these

cases.

Recently, another fraudulent refund scheme was

identified. Auditors and inspectors are working in

cooperation with the Intelligence Division on this

case, and computers have been used to identify

62 / Annual Report / Chapter Eight Management Activities / 63
participants. Over $100,000 in fraudulent refunds

have been identified to date.

Inspection Program Results in Sizable Number of

Prosecutions and Convictions

During the year there was considerable activity in

the initiation Of PTOSCcutive action involving various

offensives. A total of 56 individuals were arrested or

indicted; 12 were employees or fomicr employees of

the Service and 44 were taxpayers and tax

practitioners.

At the end of the year, trial or indictment was

pending involving 50 employees or former employees

and-82 taxpayers. These prosecutions were initiated

on the basis of such charges as embezzlement, selling

confidential tax information, fraudulent refund

schemes, attempted bribery, solicitation of a bribe,

and conspiracy to defraud the Government of taxes

due. As a result of one investigation, bribery and

conspiracy indictments were returned involving a

Service employee, a president of an electronic

corporation, a president. and general manager of a

contracting firm, and a certified public accountant.

A number of the prosecutions involved charges of

embezzlement. In. one case, a former revenue officer

was indicted by a Federal grand jury on one count of

extortion and five counts of embezzlement. Investigation to date disclosed the former employee failed

to account for approximately $9,500 collected from

various taxpayers.

Thirl persons were convicted during the

year of various criminal offenses. Twenty-six of those

convicted were non-cmployces and 13 were employees or former employees. Thirty of the thirtynine defendants preferred to plead guilty rather than

go to trial.

Investigations Completed

During the year, 8,950 investigations were completed compared to 12,081 last year, a decrease of

3,131. Police record checks were made on 3,137 individuals considered for short-term temporary appointinents and on 1,787 persons hired in connection

with economic and education opportunity programs.

This decrease in cases completed is a result of curtailment in hiring due to budgetary restrictions.

The Service also conducts investigations relating

to background of certain applicants for enrollment

to practice before the Internal Revenue Service;

charges against tax practitioners; and accidents involving Service employees or property. Special

investigations or studies requested by the Commissioner, the Secretary of the Treasury or other

components of the Treasury Department are also

part of the Service's internal security effort.

A tabulation of the types of investigations completed during the past 2 years and the related

disciplinary actions are set forth as follows:

Investigations and disciplinary actions

Typ..1 investigation and action

Total investigations closed.. ............................

personnel Investigations

Number at uses closed. total ..........__... .... .........

Character and security investigations_ -----------

Conduct

.......

investigations. - _ ~-------- _..........

Special N.Iri...... ................

Actions taken by Service in,,anagemen! officials as a result of

Panama. invest' gallons

Disciplinary actions, total._....__------------ ------

Separations, total ---------- .............

Bribery

Earbumlement "u"Ifeaor thft a' "'I"(sm . :Wmn, ------to nd~sar'jrap.rty. ------

Failure at employ., to pay proper

Fals, cation or distortion a, Gaveu at,-----------------------------------

nauthorized outside .1tivit

Failure to discharge

out,., ryr;~;~I~

Divulgence of confidential information.-----------

Acceptance .11... a, gratuities. ---- --------- ____

Pereenal and other I_nduct-.. ................

S" p"'a""'in

id of

Reprinumil.,varn nsy."'.P!y:::

Nordiaciplinary actions (including clearances, do"d without

.be., and th... ...... .....................

Other Investigations

Number of uses closed total ..........--........

Applications far Zoon-'n'to-pnitice before the Internal

Revenue Service-. ....... ------------------- ---

In .... Federal

. gairst CPA's, and enrollees-.. _.. ......

to"

claims............... ------ __... --------

Aftemptal arffiery......_ ...

Investigations forother Treasury 'Ill,ureaus ----------------------- -------

12,081

9,920

6

'

022

505

3,393

534

4

'

232

.75

1'"S

4"

195 1 122

25

7

9

99

5 3

15

,2

4 .1

311

9,386 6, US

2,161

736

102

163

89

1,071

2,U4

7.e

So

in

in

I Include, r:algnetkim, rethriaments, or iithi,~ unuatimnS while employees were

Under invest a !on or before a carristralive decision was made an disciplinary action

where investigation disclosed derogatory Information.

Assistance Rendered to Other Government

Organizations

Internal Security conducted 1,053 investigations

for other Treasury components during the year. As

in prior years, considerable assistance was also furnished to the Secret Service in the protection of the

President and other persons. Due to the political

activity in the country this past year there was considerable demand in terms of inspection manpower

involving protection details.

The Service continued to' give assistance in the

development of a modem tax system to the Virgin

Islands, at the request of the territorial Governor.

An internal audit conducted in 1969 included a special study that resulted in a recommendation to

change filing requirements from a monthly to a

quarterly basis for excise, gross receipts, and withholding taxes. Since the assistance program was

initiated, Virgin Islands tax revenues have increased

from $8.9 million in 1962 to $33.8 million in 1968.

Advisory Groups Aid the Service

Advisory Groups are appointed for the purpose of

suggesting ways in which the Service can improve

its operations and to furnish expert advise pertaining

to Art and Fircanns matters. Two Advisory Groups

assisted the Service during the year.

The Art Advisory Group consists of members representing the three major segments of the Art

World-musrums, univenitics, and dealers. The

Group provided advice on the valuation of works of

art for Federal tax purposes at meetings held on

October 31-November 1, 1968, and March 13-14,

1969. ne membership of the Group was as follows:

Dr. Richard F. Bmwn Director, Kimbell Foundation, Fort Worth, Tex.

Mr. Anthony M. Clark Director, Minneapolis Inatirule of Arts, Minneapolis,

Minn.

Mr. Charles C. Cunningham Director, Art Institute, of

Chicago, Chicago, 111.

Mr. Louis Goldenberg Art Dealer, Wildenstein &

Co., New York, N.Y.

Dr. Sherman E. Lee Director, Cleveland Museum

of Art, Cleveland, Ohio

Mr. Edward R. Lubin Art Dealer, E. R. Lubin, Inc.,

New York, N.Y.

Mr. Allan McNab Art Comultant, La Pointe,

Wis.

Prof. Charles FMontgomery University of Delaware,

Newark, Del.

Prof. Charles Seymour, Jr. Yale University, New Haven,

Conn.

Mr. Eugene V. Thaw Art dealer, E. V. Thaw Co.,

New York, N.Y.

The Firearms Evaluation Group was established

on November 15, 1968. Meetings were held on December 10, 1968, and January 17 and 27, 1969, at

which advice was given conceming the development

of standards to control the importation of firearms

and ammunition. The membership of the Group was

as follows;

Mr. Donald Flohr

Mr. Harold Johnson

Mr. Doinied D. Musgrave

Mr. John Richards

Mr. Jeptas Rogers

Lt. Col. Joseph S. Smith

Firearms Technician, H. P.

White Laboratory

Ordnance Expert, Department of Defense

Representative, Mauser Works

of West Germany

Owner, Potomac Arms Co.

Administrative Assistant, In.

ternational Association of

Chiefs of Police

Deputy Director, Civilian

Marksmanship Program

64 / Annual Report / Chapter Eight Management Activities / 65

363--005 0-70----6
organization

principal

officers

Organization of the Internal Revenue Service

Internal Revenue Regions and Districts

Service Reading Rooms

Principal Officers

Historical List of Commissioners
9

2

a

9

a

I

hwl

1!

j

d

L

Internal Revenue Service

7 Regions . 58 Districts

1,11-1 I.ad.1

.1 to I I ~Vnbktt..' 0. C)

ccamh'w." - IftnjQ Ak"t.

0 NO I C."I" 4'a" (muti.I.J. 1. VO

0 111 hu Cut. (Imet. Ind)

d

>

z

3; 8

For ign Posts,

Office of

I

nt:rnational Operations

BONN

LONDON

MANILA

MEXICO CITY

OTTAWA

PARIS

ROME

SAO PAULO

TOKYO
Internal Revenue Service Reading Rooms

(Locations of reading rooms same as mailing address unless otherwise indicated) -

NATIONAL OFFICE

Mail Address:

Director, Public Information Division

Internal Revenue Service

I I 11 Constitution Avenue NW.

Washington, D.C. 20224

CENTRAL REGION

Mail Address:

Regional Public Information Officer

Room 7106

Federal Office Building

550 Main Street

Cincinnati, Ohio 45202

Mm-ATLANTIc REGIO14

Mail Address:

Regional Public Information Officer

P.O. Box 12805

Philadelphia, Pa. 19108

Location:

401 N. Broad Street

MIDWEST REGION

Mail Address:

Regional Public Information Officer

17 N. Dearborn Street

Chicago, Ill. 60602

NORTH-ATLANTIc REGION

Mail Address:

Regional Public Information Officer

Room 1102

90 Church Street

New York, N.Y. 10007

SOUTHEAST REGION

Mail Address:

Regional Public Information Officer

P.O. Box 926

Atlanta, Ga. 30301

Location:

Federal Office Building

275 Peachtree Street

SOUTHWEST REGION

Mail Address:

Regional Public Information Officer

1600 Patterson Street

Dallas, Tex. 75201

WESTERN REGION

Mail Address:

Regional Public Information Officer

Flood Building

870 Market Street

San Francisco, Calif. 94102

Principal Officers of the Internal Revenue Service

As of June 30, 1969

NATIONAL

OFFICE OF THE COMMISSIONER

Commissioner -----------Randolph W. Thrower

Deputy Commissioner---------William H. Smith

Assistant to the Commissioner ---Edwin M. Perkins

Assistant to the Commissioner ------RogerV. Barth

Chairman, Tax Forms Coordinating Com-

. mittee ---------------------James N. Kinsel

Assistant to the Deputy

Commissioner ------------Donald C. Dawkins

Director, Foreign Tax Assistance

Staff ----------------------L. Harold Moss

ADMINISTRATION

Assistant Commissioner-------Edward F. Preston

Director, Program Staff----Julius H. Lauderdale

Division Directors:

Facilities Management------Leo C. Inglesby

Fiscal Management-----Gray W. Hume, Jr.

Personnel---------------Albert J. Schaffer.

Public Information------ Joseph S. Rosapepe

Training----------------Stanley Goldberg

COMPLIANCE

OFFICERS

Operations -----------------Clinton L. Walsh

National Computer Center,

Martinsburg, W. Va ---- John E. Stewart

Systems ------------------Donald G. Elsberry

INSPECTION

Assistant Commissioner ------Vernon D. Acree, Jr.

Executive Assistant------------Fred 0. Robinette

Division Directors:

Internal Audit------------Francis 1. Geibel

Internal Security------William T. McCarthy

PLANNING AND RESEARCH

Assistant Commissioner--------Albert W. Brisbin

Division Dire6tors:

Planning and Analysis ------Marius Fariolctti

Research----------------James R. Turner

Statistics --------------------Vito Natrella

Systems Developm ent- Lancelot W. Armstrong

TECHNICAL

Assistant Commissioner--------Harold T. Swartz

Deputy Assistant Commissioner

Assistant Commissioner --------Donald W. Bacon Richard J. Stakrm

Deputy Assistant Commisioner----Leon C. Green

Division Directors:

Alcohol, Tobacco, and

Firearms ----------------Harold A. Serr

Appellate ----------------Arthur H. Klotz

Audit-----------------Singleton B. Wolfe

Collection ---------------Harold E. Snyder

Intelligence --------------William A. Kolar

Office of International

Operations ----------- Clarence 1. Fox, Jr,

DATA PROCESSING

Assistant Commissioner----------Robert L. Jack

Deputy Assistant Commissioner ---Garrett DeMots

Division Directors:

Management Information- -William E. Palmer

IRS Data Center, Detroit,

Mich---------------Lawrence P. Doss

Division Directors:

Income Tax ----------- John W. S. Littleton

Miscellaneous and Special Provisions Tax

Linder Hamblen

Technical Publications and Services

August F. Pohlig

OFFICE OF CHIEF COUNSEL

Chief Counsel---------------K. Martin Worthy

Technical Advisor to Chief Counsel

Robert B. Jacoby

Special Assistant to Chief Counsel-W. Dean Mathis

Special Assistant to Chief Counsel-----Lester Stein

Associate Chief Counsel (Litigation)

Richard M. Hahn

Technical Advisor to the Chief Counsel

Paul E. Treusch

70 / Organization Organization / 71
I

NATIONAL OFFICES-Continued

Division Directors:

Alcohol, Tobaceo, and Firearms Legal

John F. McCarren

General Litigation ----J. Walter Feigenbaum

Enforcement-----------William F. McAleer

Refund Litigation --------Robert A. Bridges

Tax Court----------------- John T. Rogers

Associate Chief Counsel (Technical)

Thomas McP. Davis

Technical Advisor to Chief Counsel

Samuel R. McClurd

Special Assistant to Chief Counsel

Arthur B. White

Division Directors:

interpretative ------------- John L. Withers

Legislation and Regulations- james F. Dring

Operations and Planning------William P. Crewe

REGIONAL AND DISTRICT OFFICERS

Central Region

All Regional Offices at 550 Main Street, Cincinnati, Ohio 45202, unless a different address is indicated

Regional Commissioner----------------------------------------------------- Charles G. Keebler

Assistant Regional Commissioners: District Directors:

Administration------------Arthur J. Collinson Cincinnati, Ohio 45202 -------Paul A. Schuster

Alcohol, Tobacco, and Firearms---Rex D. Davis Cleveland, Ohio 44199----Frank S. Turbettjr.

Appellate -------------W. Franklin Hammack Detroit, Mich. 48226 -----Ambrose M. Stoepler

Audit------------------Michael A. DcGuirc Indianapolis, Ind. 46204 -------- James E. Daly

Collection -----------------William J. Grabo Louisville, Ky. 40202 ----------Robert J. Dath

Data Processing----------Wayne S. Kegcrreis Parkersburg, W. Va. 26101 -----Hugh D. Jones

Intelligence ------------------ Harold B. Holt

Director, Central Service Center, Covington, Ky. 41019 ---------------------------- Everett L. Meek

Regional Counsel--------------------------------------------- 7 ------------ Clarence E. Price

Regional Inspector -------------------------------------------------------- William A. Costello

Mid-Atlantic Region

All Regional Offices at 2 Penn Center Plaza, Philadelphia, Pa. 19102, unless a different address is indicated

Regional Commissioner--------------------------------------------------------Dean J. Barron

Assistant Regional Commissioners: District Directors:

Administration------------Americo P. Attorri Baltimore, Md. 21202 ----------Irving Machiz

Alcohol, Tobacco, and Firearms Newark, N.J. 07102 -------Roland H. Nash, Jr.

Charles R. Peterson Philadelphia, Pa. 19108 ---Seymour I. Friedman

Appellate-------------------Victor Cuniglio Pittsburgh, Pa. 15222 -----------H. Alan Long

Audit---------------------Dwight L. James Richmond, Va. 23240---------James P. Boyle

Collection ---------------William F. Culliney Wilmington, Del. 19802----James H. Kennedy

Data Processing -----------Anthony L. Carrea

Intelligence---------------Amerigo R. Manzi

Director, Mid-Atlantic Service Center, Philadelphia, Pa. 19155---------------------Earl L. Torgerson

Regional Counsel------------------------------------------------------------- Cecil H. Haas

Regional Inspector, Bankers Securities Building, Walnut and juniper Streets, Philadelphia, Pa.

19017-------------------------------------------------------------- Emanuel M. Schuster

72 / Annual Report / Organization-Principal Officers

REGIONAL AND DISTRICT OFFICES-Continued

Midwest Region

All Regional Offices at 35 East Wacker Drive, Chicago, 111. 60601, unless a different address is indicated

Regional- Commissioner-------------------------------------------------------Alvin M. Kelley

Assistant Regional Commissioners: District Directors:

Administration -----------William F. Sullivan Aberdeen, S. Dak. 57401 -----William C. Welsh

Alcohol, Tobacco, and Firearms Chicago, Ill. 60602 -------Eugene C. Coyle, Jr.

William A. Collawan Des Moines, Iowa 50309 -------John F. Hanlon

Appellate ----------------Wallace T. Morris Fargo,,N. Dak. 58102 ----Frederick G. Kniskern

Audit-----------------John W. Baudendist Milwaukee, Wis. 53202 ------Walter S. Stumpf

Omaha, Nebr. 68102 --------Richard P. Vinal

Collection ------------------- Roger C. Beck St. Louis, Mo. 63101 --------Edwin P. Trainor

Data Processing ----------Norman B. Bergeson St. Paul, Minn. 55101 ------George 0. Lcthert

Intelligence ---------------William B. Mayes Springfield, 111. 62704---------Jay G. Philpott

Director, Midwest Service Center, Kansas City, Mo. 64170-------------------------Arnold S. Dreyer

Regional Counsel----------------------------------------------------------- Frank C. Conley

Regional Inspector------------------------------------------------------ Gordon M. Anderson

North-Atlantic Region

All Regional Offices at 90 Church Street, New York, N.Y. 10007, unless a different address is indicated

Regional Commissioner -------------------------------------------------------- Harold R. All

Assistant Regional Commisisoners: Augusta, Maine 04330----Whitney L. Wheeler

Administration --------------John E. Foristall Boston, Mass. 02203 ------William E. Williams

Alcohol, Tobacco, and Firearms--Edward J. Fox Brooklyn, N.Y. 11 201 -------Charles A. Church

Appellate ---------------Stephen C. Volpone Buffalo, N.Y; 14202 ------------ John E. Foley

Audit--------------------William M. Wolf Burlington, Vt. 05402--------Fulton D. Fields

Collection ----------------Roger F. Shockcor Hartford, Conn. 06115 ----Joseph J. Conley, Jr.

Data Processing-----------J. Orville Tuescher Manhattan, N.Y. 10007

Intelligence------------------Alan McBride Edward J. Fitzgerald, Jr.

District Directors: Portsmouth, N.H. 03801 ----Frank W. Murphy

Albany, N.Y. 12 2 10 --------Donald T. Hartley Providence, R.I. 02903 --------John J. O'Brien

Director, Nortb-Atlantic Service Center, Andover, Mass. 01812 --------------------Nor-man E. Morrill

Regional Counsel, 26 Federal Plaza, New York, N.Y. 10007------------------------Marvin E. Hagen

Regional Inspector, 26 Federal Plaza, New York, N.Y. 10007 -----------------------Sidney M. Wolk

Southeast Region

All Regional Offices at 275 Peachtree Street, N.E., Atlanta, Ga., 30303, unless a different address is indicated

Regional Commissioner ---------------------------------------------------William J. Bookholt

Assistant Regional Commissioners: District Directors:

Administration -----------Zachary T. Johnson Atlanta, Ga. 30303 -----------Aubrey C. Ross

Alcohol, Tobacco, and Firearms Birmingham, Ala. 35203--Walter T. Coppinger

William N. Griffin Columbia, S.C. 29201 ------Harold M. McLeod

Appellate -------------------Vance N. Bates Greensboro, N.C. 27401 ---------John E. Wall

Audit--------------------Harold B. Bindseil Jackson, Miss. 39202 ------James G. Martin, Jr.

Collection -----------------William H. Loeb Jacksonville, Fla. 32202 Andrew J. O'Donnell, Jr.

Data Processing -----------Daniel H. Hollums Nashville, Tenn. 37203 ------James A. O'Hara

Intelligence ---------------Edmund J. Vitkus

Director, Southeast Service Center, Chamblee, Ga. 30006 ---------------------------- Claude A. Kyle

Regional Counsel ------------------------------------------------------- Henry C. Stockell, Jr.

Regional Inspector------- I------------------------------------------------------ Earl L. Fuoss

Annual Report / Organization- Principal Officers / 73
REGIONAL AND DISTRICT OFFICES-Continued

Southwest Region

All Regional Offices at If 14 Commerce Street, Dallas, Tex. 75202, unless a different address is indicated

Regional Commissioner ------------------------------------------------------- B. Frank White

Assistant Regional Commissioners:

Alcohol, Tobacco, and Firearms

James G. Carroll

Appellate -------------------G. Clinton Witt

Audit-----------------Lawrence M. Stewart

Collection-------------------Alfred N. Kay

Data Processing------------George M. Oliver

Intelligence -----------William E. Beloate, Jr.

District Directors:

Albuquerque, N. Mex. 87 101 -William M- Coard

Austin, Tex. 78701 ------------R. L. Phinney

Cheyenne, Wyo. 82001 -------Richard L. Hutt

Dallas, Tex. 75201 ---------Ellis Campbell, Jr.

Denver, Colo. 80202 ------Arthur A. Kennedy

Little Rock, Ark. 72203 ------Fred W. Johnson

New Orleans, La. 70130 -------Chester A. Usry

Oklahoma City, Okla. 73102

Clyde L. Bickerstaff

Wichita, Kans. 67202 -------Harry F. Scribner

Director, Southwest Service Center, Austin, Tex. 78740 -----------------------------Ervin B. Osborn

Regional Counsel, 1025 Elm Street, Dallas, Tex. 75202 -----------------------------William B. Riley

Regional Inspector, 1511 Bryan Street, Dallas, Tex. 75201 ----------------------- David 0. Lowry, Jr.

Western Region

All Regional Offices at 870 Market Street, San Francisco, Calif. 94102, unless a different address is indicated

Regional Commissioner --------------------------------------------------- Homer 0. Croasmun

Assistant Regional Commissioners:

Administration--------------Joseph T. Davis

Alcohol, Tobacco, and Firearms

Brenton G. Thorne

Appellate -------------Gardiner B. Willmarth

Audit------------------ Raymond F. Harless

Collection ---------------- Charles D. Moran

Data Processing------------Willard L. Pierson

Intelligence---------------Herman F. Kuehl

District Directors:

Anchorage, Alaska 99501 ------Lewis J. Conrad

Boise, Idaho 83701 ----------Calvin E. Wright

Helena, Mont. 59601 ---------Nelson L. Seeley

Honolulu, Hawaii 96813 --------Evan S. Lloyd

Los Angeles, Calif. 90012 -----Frank S. Schmidt

Phoenix, Ariz. 85025---George D. Patterson, Jr.

Portland, Oreg. 97204 ------Arthur G. Erickson

Reno, Nev. 89502-----------Warren A. Bates

Salt Lake City, Utah 841 10 ----Roland V. Wise

San Francisco, Calif. 94102 --- Joseph M. Cullen

Seattle, Wash. 98121 ----------Neal S. Warren

Director, Western Service Center, Ogden, Utah 84405 ------------------------------ Robert H. Terry

Regional Counsel, 447 Sutter Street, San Francisco, Calif. 94018 -----------------Richard C. Schwartz

Regional Inspector, 1076 Mission Street, San Francisco, Calif. 94103 --------------------Henry A.Feltz

74 / Annual Report / Organization-Principal Officers

Historical List of Commissioners of Internal Revenue

Office of Commissioner of Internal Revenue created by Act of Congress, July 1, 1862

Name

George S. Boutwell ..............

Joseph J. Lewis .................

Wflliam Orton ..................

Edward A. Rollins ..............

Columbus Delano ...............

Alfred Pleasonton ...............

John W. Douglass ...............

Daniel D. Pratt .................

Green B. Raum.................

Walter Evans ...................

Joseph S. Miller ................

John W. Mason .................

Joseph S. Miller ................

W. St. John Forman .............

Nathan B. Scott .................

George W. Wilson ...............

John W. Yerkes .................

John G. Capers .................

Royal E. Cabell .................

William H. Osborn ...... : .......

Daniel C. Roper ................

William M. Williams ............

David H. Blair ..................

Robert H. Lucas ................

David Burnet ...................

Guy T. Helvering ...............

Robert E. Hannegan ............

Joseph D. Nunan, Jr ............

George J. Schoeneman ...........

John B. Dunlap .................

T. Coleman Andrews ............

Russell C. Harrington ............

Dana Latham ..................

Mortimer M. Caplin .............

Sheldon S. Cohen ...............

Randolph W. Thrower ...........

State F-no To

Massachusetts ...............

Pennsylvania ................

New York ..................

New Hampshire .............

Ohio .......................

New York ..................

Pennsylvania ................

Indiana ....................

Illinois .....................

Kentucky ...................

West Virginia ...............

..... do .....................

..... do .....................

Illinois .....................

West Virginia ...............

Ohio .......................

Kentucky ...................

South Carolina ..............

Virginia .....................

North Carolina ..............

South Carolina ..............

Alabama ...................

North Carolina.. . ...........

Kentucky ...................

Ohio .......................

Kansas .....................

Missouri ....................

New York .................

Rhode Island ...............

Texas ......................

Virginia ....................

Rhode Island ...............

California ..................

Virginia ....................

Maryland ..................

Georgia ....................

In addition, the following were Acting Commissioners during

periods of time when there was no Commissioner holding the

office: John W. Douglass, of Pennsylvania, from Nov. 1 1870,

2, 1871; Henry C. Rogers, of Pennsylvania: from

to May 10, 1883, and from May I to June 4, 1907;

J~~-'Y-aj`~ Knox, of Minnesota, from May I I to May 20, 1 8B3;

Robert Williams, Jr., of Ohio, from Nov. 28 to Dec. 19, 900;

Millard F. West, of Kentucky, from Apr. 12 to May 26, i921;

H. F. Mira, of Washington, from Aug. 16 to Aug. 19, 1930;

July 17, 1862 Mar. 4, 1863

Mar. 18,1863 June 30, 1865

J uly I , 1865 Oct. 31, 1865

Nov. 1,1865 Mar. 10, 1869

Mar. 11, 1869 Oct. 31, 1870

Jan. 3, 1871 Aug. 8, 1871

Aug. 9, 1871 May 14, 1875

May 15, 1875 July 31, 1876

Aug. 2,1876 Apr. 30, 1883

May 21,1883 Mar. 19, 1885

Mar. 20,1885 Mar. 20, 1889

Mar. 21, 1889 Apr. 18, 1893

Apr. 19,1893 Nov. 26, 1896

Nov. 27,1896 Dec. 31, 1897

Jan. 1,1898 Feb. 28, 1899

Mar. 1,1899 Nov. 27, 1900

Dec. 20,1900 Apr. 30, 1907

June 5,1907 Aug. 31, 1909

Sept. I , 1909 Apr. 27, 1913

Apr. 28, 1913 Sept. 25, 1917

Sept. 26, 1917 Mar. 31, 1920

Apr. 1,1920 Apr. 11, 1921

May 27, 1921 May 31, 1929

June 1, 1929 Aug. 15, 1930

Aug. 20,1930 May 15, 1933

June 6, 1933 Oct. 8, 1943

Oct. 9,1943. Jan. 22, 1944

Mar. 1,1944 June 30, 1947

July 1,1947 July 31, 1951

Aug. 1, 1951 Nov. 18, 1952

Feb. 4,1953 Oct. 31, 1955

Dec. 5, 1955 Sept. 30, 1958

Nov. 5, 1958 . Jan. 20, 1961

Feb. 7,1961 July 10, 1964

Jan. 25,1965 Jan. 20, 1969

Apr. 1, 1969 .............

Pressly R. Baldridge, of Iowa, from May 16 to June 5, 1933;

J

Harold N. Graves, of Illinois, from Jan. 23 to Feb. 29, 1944;

ohn S. Graham, of North Carolina, from Nov. 19, 1952, to

Jan. 19, 1953; Justin F. Winkle, of New York, from Jan. 20

to Feb. 3, 1953; 0. Gordon Delk, of Virginia, from Nov. I to

Dec. 4, 1955, and from Oct. I to Nov. 4, 1958; Charles 1. Fox,

of Utah, from Jan. 21 to Feb. 6, 1961; Bertrand M. Harding,

of Texas, from July 11, 1%4 to Jan. 24, 1965; and William H.

Smith of Virginia, from Jan. 21 to Mar. 31, 1969.

Organization / 75

I
. appendix

Taxpayer Publications

Tax Forms Activity

Selected Regulations Published

Supreme Court Decisions

Actions of Lower Courts

Statistics of Income Reports Published
APPENDIX

Taxpayer Publications

The 1969 edition of Your Federal Income Tax,

Publication No. 17, again contained a wealth of information needed by taxpayers when preparing returns. Among the features are a table showing how

to claim additional withholding allowances on the

basis of itemized deductions, information on the

new income tax surcharge, the new procedures c for

payment of estimated tax, and instructions for

treatment of interest on certain industrial development bonds. This 160-page booklet includes such

taxpayer aids as a comprehensive index and a completed tax return with entries keyed through page

references to explanations of the law and examples

of its application to actual situations. It is revised

each year to include the latest changes in the Federal

tax laws, regulations, and official rulings.

Approximately 913,000 copies of the 1969 edition

of Your Federal Income Tax were sold at 60 cents a

copy by the Government Printing Office and local

Internal Revenue Service offices. The Service used

an additional 160,000 copies in various educational

programs.

The Teaching Taxes Program, used in approximately 25,000 high schools and colleges during

1969, is based on three publications. The first is the

Teachers Guide, Publication No. 19, which contains answers to the tax problems appearing in

the student text, information on the 50 most frequent tax questions, a wall chart of individual income tax return forms, and other teaching aids. The

student text, Understanding Taxes, is published in

• 28-page general edition, Publication No. 21, and

• 36-page farni edition, Publication No. 22. Both

editions present illustrated step-by-step explanations

of the preparation of typical income tax returns, answers to practical problems, and supplementary

questions and problems. Introductory chapters discuss civic responsibility, U.S. tax history, and the

Federal budget. The last eight pages of Publication

No. 22 are devoted to farm tax situations. Of the

3,960,000 students who participated in the 1969

Teaching Taxes Program, 3,493,000 used the general text and 467,000 used the farm edition. A total

of 84,000 Teachers Guides were distributed.

Tax Guide for U.S. Citizens Abroad, Publication

No. 54, explains the conditions under which income

earned abroad may bc partially or fully tax exempt.

It also discusses other special tax provisions that

78 / Annual Report / Appendix

affect U.S. citizens living in foreign countries. ApProximately 770,000 copies of this booklet

printed for free distribution through Internal Reve- were

nue Service offices and U.S. Embassies and consulates in all parts of the world.

The Farmer's Tax Guide, Publication No. 225, is

a 64-page booklet in which the tax problems of

farmers are explained in everyday terms. As in prior

years, the 1969 edition features a tax calendar to

remind farmers of their tax obligations throughout

the year. Completed samples of an income tax return and the accompanying schedules that farmers

normally use refer the reader to sections of the booklet where the various entries are explained. There are

illustrations of depreciation, farm income, and expense records, and discussions of income, employment, and self-employment taxes, with examples

showing how the provisions apply to specific situations. Slightly more than 1 million free copies were

distributed by Internal Revenue Service offices and

extension agents of the Department of Agriculture.

Tax Guide for Small Business, Publication No.

334, provides answers to many tax questions conceming sole proprictorships, partnerships, and corporations. It explains in everyday language how

Federal income, excise, social security, and withholding taxes apply, and gives examples of typical situations. A checklist of activities subject to Federal

taxes shows the forms to be filed and the pages on

which each situation is discussed. A tax calendar

for businessmen reminds readers of the actions they

must take during the year to comply with the Federal

tax laws. Approximately 256,000 copies of this 160-

page booklet were sold during the year at 60 cents

a copy by the Government Printing Office and Internal Revenue Service. Anothtr 80,000 were

printed for internal use by the Service.

Tobacco Tax Guide, publication No. 464, is a

compilation of basic reference material prepared to

assist manufactures of taxable tobacco products and

others concerned to comply with Federal tobacco tax

laws and regulations. This document may be purchased from the Government Printing Office, Washington, D.C. 20402.

Questions and Answers-Gun Control Act of

1968, publication No. 650, contains the most often

requested items of information concerning the Gun

Control Act of 1968. This booklet, which includes

coverage and explanation of the major provisions of

the act, is available from the Government Printing

Office at a cost of 15 cents.

New Free Taxpayer Information

Publications

Tax -Information on Mutual Fund Distributions,

Publication No. 564, was developed to assist the

growing numbers of mutual fund shareholders. It

explains and illustrates how they should treat the

various types of distributions by mutual funds and

contains precise information on how shareholders

should report the amounts they receive.

Questions and Answers on Retirement Plans for

the Sell-Employed, Publication No. 566, is directed

to both the tax practitioner and to the taxpayer. It

provides answers to questions often asked about the

rather complex provisions of the Self-Employed Individuals Tax Retirement Act of 1962. Where possible, the answers arc keyed to the applicable sections

of the Income Tax Regulations or to the Revenue

Rulings dealing with the subject matter.

TaxAdvice on CivilService Disability Retirement

Payments, Publication No. 567, provides tax assistance to former Federal employees who retired

under the disability retirement provisions of the

Civil Service Retirement law. It explains and illustrates the tax treatment of the retirement benefits

received before these retirees attain "retirement age"

(which may be wholly or partially excludable from

gross income as sick pay) and the treatment of the

post-retirement age payments (which generally will

be reported underthe "3-yearrule"). The pamphlet

was developed in cooperation with the U.S. Civil

Service Commission and was mailed to all disability

retirees.

Federal Tax Information for Civil Service Retirees, Publication No. 568, explains and illustrates

the rules under which Civil Service nondisability retirees must report their retirement annuity payments.

It was developed in cooperation with the U.S. Civil

Service Commission, which is distributing copies to

all nondisability retirees.

Questions Asked by U.S. Taxpayers A broad, Publication No. 569, is a 12-page pamphlet that answers the questions most frequently asked by U.S.

citizens and residents living abroad. Among other

subjects, it covers the special filing requirements,

foreign earned income exclusions, withholding tax

rules, and scholarship and fellowship rules applicable

to these taxpayers.

Tax Guide for U.S. Citizens Employed in U.S.

Possessions, Publication No. 570, explains the special

"possession-exemption" applicable to individuals

who are employees or are self-employed in possessions of the United States or in the Panama Canal

Zone. It discusses in detail the numerous rules and

requirements for the exemption.

Tle following is a list of additional publications

distributed free of charge:

Publication

Number Title

308 Farmers Gas Tax Credit

349 Federal Use Tax on Trucks, Truck-Tractors and

Buses

378 Federal Gas Tax Credit or Refund for Nonhighway

and

Transit

463 Travel, Entertnunrie.1, sees and Gift Expenses

501 Your Exemptions and Exemptions for Dependents

502 Deduction for Medical and Dental Expenses

503 Child Care and Disabled Dependent Care

504 Income Tax Deduction for Alimony Payments

505 Tax Withholding and Declaration of Estimated Tax

506 Computing Your Tax Under the Income Averaging

Method

507 Tax Information on Scholarships and Fellowships

508 Tax Information on Educational Expenses

509 Tax Calendar and Checklist for 1969

510 Information on Excise Taxes for 1969

511 Sales and Other Dispositions of Depreciable Property

512 Credit Sales by Dealers in Personal Property

513 Tax Information for Visitors to the United States

514 Foreign Tax Credit for U.S. Citizens and Resident

Aliens

515 Withholding of Tax on Nonresident Aliens and Foreign Corporations

516 Tax Information for U.S. Government Civilian Employ-s Stationed Abroad

517 Social Security for CJergymen and Religious Workers

518 Foreign Scholars and Educational and Cultural Ex.

change Visitors

519 United States Tax Guide for Aliens

520 Tax Information for American Scholars Abroad

521 Moving Expenses-Tax Information for Employees

and Employers

522 Adjustments to Income for Sick Pay

523 Tax Information on Selling Your Home

524 Retirement Income and Retirement Income Credit

525 Taxable Income and Nontaxable Income

526 Income Tax Deduction for Contributions

527 Rental Income and Royalty Income

528 Information on Filing Your Tax Return

529 Other "Page 2" Miscellaneous Deductions

530 Tax Information on Deductions for Homeowners

531 Reporting Your Tips for Federal Tax Purposes

532 Tax Information for Students and Parents

533 Information on Self-Employed Tax

534 Depreciation, Investment Credit, Amortization,

D ple 'on

535 TaxeInformation it on Business Expenses

536 Losses From Operating a Business

537 Installment and Deferred-Payment Sales

538 Tax Information on Accounting Periods and M

.

ethods

539 Withholding Taxes From Your Employee's Wages

540 Tax Information on Repairs, Replacements, and

Improvements

541 Tax Information on Partnership Income and Losses

542 Corporations and the Federal Income Tax

543 Tax Information on the Sale of a Business

544 Sales and Exchanges of Assets

545 Income Tax Deduction for Interest Expense

546 Income Tax Deduction for Taxes

547 Tax Information on Disasters, Casualty Losses, and

Thefts

548 Tax Information on Deduction for Bad Debts

Annual Report / Appendix / 79
I

Publication

Number

549 Condemnations of Private Property for Public Use

550 Tax Information on Investment Income and Expenses

551 Tax Information on Costs or Other Basis of Assets

552 Recordkeeping Requirements and a Guide to Tax

Publications

553 Highlights of 1968 Changes in the Tax Law

554 Tax Benefits for Older Americans

555 Community Property and the Federal Income Tax

556 Appeal Rights and Claims for Refund

557 How to Apply for Exemption for an Organization

558 Tax Information for Sponsors of Contints and Sporting Events

559 Federal Tax Guide for Survivors, Executors, and

Acirninistrators

560 Retirement Plans for Self-Employed Individuals

561 Valuation of Donated Property

Tax Forms Activity

The following new forms were issued:

Form Number Title

W-2 (RR)------- Railmad Employee's Wage and Tax

Statement

990 (SF) --------- Return of Organization Exempt From Income Tax Section 501 (c) (other than

section 501(c)(3)) of the Internal

Revenue Code

990-A (SF) ------ Return of Organization Exempt From

Income Tax Section 501 (c) (3) of the

Internal Revenue Code

1040-FY--------- Fiscal Yew Surcharge Computation U.S.

Individual Income Tax

Schedule B Fiscal Yew-Supplemental Schedule of

(1040-FY) Income and Retirement Income Credit

1040-ES U.S. Individual Worksheet For CompuWorksh'et tation of Estimated Tax

1040-ES

(010)

U.S. Nonresident Alien Individual WorkWorksheet sheet for Computation of Estimated

Income Tax

1040NR-FY------ U.S. Nonresident Alien Individual Fiscal

Year Tax Computation

1041-FY--------- Fiscal Year Tax Surcharge Computation

(For U.S. Fiduciary Income Tax

Return)

Schedule D Gains and Losses From Sales or Ex-

(1041) changes of Property

ScheduleE (1041)- Beneficiary's Shan of Income, Deductions, and Credits

1120-FY--------- Corporation Fiscal Year Tax Computation Schedule

221OF----------- Statement Relating to Underpayment of

Estimated Tax by Farmers and Fishermen

4363 ----------- Notice of Acquisition of Stock Pursuant

to Conversion of an Original or New

Japanese Debt Obligation

4410 ------------ Interest Equalization Tax Quarterly Renirn of Tax Withheld by Participating

Firm

4461 ------------ Sponsor Application Approval of Matter

or Prototype Plan

4462 ------------ Employer Application Determination as

to Qualification of Pension

'

Annuity,

or Profit-sharing Plan and Trust

4466 ------------ Corporation Application for Quick Refund of Overpayment of Estimated

Tax

4469 ------------ Computation of Overpayment of Hospital Insurance Benefits Tax

80 / Annual Report / Appendix

The following forms were eliminated:

Form Number Title

Publication 14____. Circular H-Household Employer's

Social Security Tax G;side

942A ------------ Copy-Ernployer~s Quarterly Tax Return for Household Employees

I

001A-F --------- Exemp fion, or Reduced Rate Certificate

.040-ES Amended Declaration of Estimated In-

(Amended) c... Tax

1040A----------- U.S. Individual Income Tax Return

1120-ES--------- Declaration of Estimated Income Tax for

Corporations

1120-ES Amended Declaration of Estimated In-

(Amended) come Tax-Corporations

2031 ------------ Waiver Certificate to Elect Social Secur.

ity Coverage for Use by Ministers, Cer.

tain Members of Religious Orden, and

Christian Science Practitioners

Selected Regulations Published

Income Tax Regulations

Income tax regulations under various sections of

the Internal Revenue Code were amended or added

by the following Treasury Decisions:

Treasury Decision 6965, relating to depletion for

certain clays and cutoff point for all minerals.

Treasury Decision 6972, relating to unemploymerit benefit trusts.

Treasury Decision 6981, defining when

are performed by a controlled foreign corporation services

for or on behalf of a related person.

Treasury Decision 6982, relating to integration of

qualified plans with Social Security Act.

Treasury Decision 6984, relating to options acquired in connection with loans.

Treasury Decision 6985, relating to the medical

expense deduction.

Treasury Decision 6991, relating to the deduction

for interest on installment payments.

Treasury Decision 6998, relating to the allocation

of income and deductions among taxpayers.

Treasury Decision 6999, relating to the definition

of group-term life insurance.

Excise Tax Regulations

Treasury Decision 7011, relating to the excise tax

on the use of certain highway motor vehicles.

Employment Tax Regulations

Treasury Decision 7001, relating to the treatment

of tips for purposes of the social security taxes and

income tax withholding.

Temporary Regulations

Treasury Decision 6994, relating to procedures

applicable, in connection with the interest equalizaI

tion tax, in respect of a withholding from the proceeds from a sale of foreign securities.

Alcohol and Tobacco Regulations

Treasury Decision 6963, issued July 24, 1968,

made a number of liberalizing changes in the Beer

Regulations. For example, it provided for the establishrrent of experimental breweries, eliminated restrictions on the storage of untaxpaid bottled beer,

and provided an extension of time for taking monthly

inventories.

Treasury Decision 7002, issued February 1, 1969,

amended a number of regulations issued under chapter 51 of the Internal Revenue Code to give effect

to Public Law 90-630, discussed on page 36. Pursuant thereto, payment of the tax on distilled spirits

imported in bulk may now be deferred until the spirits are removed from the domestic distilled spirits

plant at which they are bottled.

Treasury Decisions 7007 and 7008, both published

on March 1, 1969, amended various regulations issued pursuant to chapters 51, 52, and 53 of the Code

with respect to the filing of special tax returns and

of claims on Form 843 relating to special taxes.

Treasury Decision 7014, issued on June 4, 1969,

liberalized the requirements placed on wholesale

liquor dealers as to records to be maintained and

changed the basis for reports by such dealers from

monthly to semiannually.

Firearms Regulations

Regulations, 26 CFR Part 178, Commerce inFirearms and Ammunition, which became effective December 16, 1968, implemented the provisions of

Title I, State Firearms Control Assistance, of the Gun

Control Act of 1968, and Title VII, Unlawful Possession or Receipt of Firearms, of the Omnibus

Crime Control and Safe Streets Act of 1968, as

amended by Title III of the Gun Control Act of

1968.

Supreme Court Decisions

Civil Cases

On January 13, 1969, the Supreme Court decided

United States v. Donruss Company, 393 U.S. 297

(1969), reversing and remanding 384 F. 2d 292

(6th Cir. 1967), which involved the degree of "purpose" necessary for application of the accumulated

earnings tax. The Court, in deciding the issue of

whether avoidance of shareholder tax was "one" of

the purposes of the accumulation, as contended by

the Government, or whether avoidance must be the

"dominant, controlling, or impelling" reason for the

accumulation, as the Sixth Circuit held, sustained

the Government's position. The Court in resolving

this several-sided split among the circuits sustained a

Iong-established administrative position.

The treatment of employer-paid scholarships was

considered by the Supreme Court in Bingler v, Johnson el al., 37 U.S.L. Week 4365 (U.S. Apr. 23,

1969). In that case a corporation granted selected

employees "educational leave" and monthly stipends,

ranging from 70 to 90 percent of their prior salaries

plus "adders" depending on the size of their families,

for the purpose of studying for doctoral degrees. To

qualify for a gmnt, the employee had to obligate

himself to return to the employer for a substantial

period of time after completion of the "educational

leave." The Commissioner relied on regulations section 1. 1 17-4 (c) which provides that- amounts representing "compensation for past, present, or future

employment services," and amounts "paid * * *

to * * * an individual to enable him to pursue

studies or research primarily for the benefit of the

grantor," are not excludable as scholarships. - However, the Third Circuit held the above referred-to

regulation to be invalid and the stipends received by

the employees to be scholarships excludable from

income under section 117 of the 1954 Code. This

created a conflict with the Fifth Circuit which had

explicitly sustained the regulation. The Supreme

Court overruled the Third Circuit by holding the

regulations section to be valid and the stipends to

be includable in income.

In United States v. Skelly Oil Company, 37

U.S.L. Week 4351 (U.S. Apr. 21, 1969), an issue of

first impression and of considerable administs-ative

importance was favorably decided for the Government by the Supreme Court. The taxpayer, a

producer of natural gas, repaid to its customers overcharges for prior years due to State set rate charges

having been held to be excessive. In the year of repayment the taxpayer claimed as a deduction under

section 1341 of the 1954 Code the full amount of

the repayment without adjustment for depletion

deductions that had been taken in the years the

overcharges had been included in income. The

Court, in holding that the deduction for repayment

be reduced by the amount of depletion deductions

taken thereon in prior years, prevented the taxpayer

from receiving a double benefit or windfall.

The case of United States v. Estate of Joseph P.

Grace, et al., 37 U.S.L. Week 4-486 (U.S. June 2,

1969), reversing 393 F. 2d 939 (Ct. Cl. 1968), involved the application of the reciprocal trust doctrine

Annual Report / Appendix / 81

963-005 0-70-7
for estate tax purposes. TheSupreme Court held that

the application of the doctrine is neither dependent

upon a finding that each trust was created as a quid

pro quo for the other; nor that the creation of the

trusts was prompted by a tax-avoidance motive. The

Court further held that the application of the doctrine requires only that the trusts be interrelated, and

that the arrangement, to the extent of mutual value,

leaves the scttlors in approximately the same economic position as the), would have been in had they

created trusts naming themselves as life beneficiaries

instead. The decision effqctively overrules such cases

as McLain v. Jarecki, 232 F. 2d 211 (7th Cir.

1956); Newberry's Estate v. Commissioner, 201 F.

2d 874 (3d Cir. 1953) ; and In re Lueders' Estate,

164 F. 2d 128 (3d Cit. 1947) ; thereby resolving the

conflict of opinion in favor of the Government's

position.

Certiorari was granted by the Supreme Court in

two cases originating in the Tax Court and, in both,

the Court vacated and remanded the decision on

the issue involved to the Appellate Courts for consideration in the light of other opinions. In Commissioner v. Shaw-Walker Co., 393 U.S. 479

(1969), at the request of the Commissioner, the

case was remanded to the Sixth Circuit for further

consideration in the light of the Supreme Court's

reversal of a prior decision by the Sixth Circuit on

the very point in issue in United States v. Donruss

Co., 393 U.S. 297 (1969). Another case was remanded to the 10th Circuit, pursuant to the taxpayer's request with the Commissioner's concurrence, for reconsideration in view.of the chan ed ,9

legal climate in State law as the result of a State

Supreme Court decision. Collins, Jr. v. Commissioner, 393 U.S. 215 ( 1968), vacating and remanding 388 F. 2d 353 (10th Cis. 1968), affirming 46

T. C. 461 (1966). [Subsequently, the 10th Circuit

vacated its prior affirmance of the Tax Court's decision on the basis of the Oklahoma State Supreme

Court's contrary determination regarding the wife's

property interests under State law in a similar State

tax case. Collins v. Commissioner, 412 F. 2d 211,

69-2 USTC 9471 (1 Oth Cir. 1969) (CCH). Significantly, the 10th Circuit's recent opinion treats a

husband's transfer of stock to his wife in Oklahoma,

pursuant to a property . settlement incident to a

divorce, as a nontaxable division of property considered to be jointly owned under State law rather

than a taxable transfer of property by the husband

in discharge of his legal marital obligation.]

Criminal Cases

In Taglianetti v. United States, 89 S. Ct. 1099

1969), defendant was convicted in U.S. District

Court on three counts of income tax evasion. Following appeal to the First Circuit, the case Was

remanded to the trial court to determine whether

or not, upon examination of facts relating to a disclosure by the Government that certain of defendant's business telephone conversations had been

monitored as part of a general surveillance of the

activities of his employer, defendant's conviction

should stand or a new trial should be ordered. TIC

conviction was upheld by the trial court, with defendant appealing the determination of that court

that no evidence or leads affecting defendant's trial

had been generated by electronic surveillance. The

first Circuit subsequently affirmed the conviction

[398 F. 2d 558 ( I st Cir. 1968)]. It is noted that in

the district court on remand, the Government purported to turn over to defendant all of his own

conversations which had been overheard by means

of unlawful electronic surveillance. Before the Supreme Court, defendant argued that he was entitled to examine additional surveillance records

because neither the Government nor the district

court was able to determine with certainty which

conversations defendant had been a party to. In

fact, the district court examined all the records in

camera to ascertain if the Government had correctly identified defendant's voice and had turned

over to defendant each conversation in which he

had participated. The Supreme Court held that

nothing in Alderman v. United States, Ivanov v.

United States, or Butenko v. United States, 89

S. Ct. 961 (1969), required an adversary proceeding and full disclosure for resolution of every issue

raised by an electronic surveillance. Onthe contrary,

an adversary proceeding and disclosure were required in those cases not for lack of confidence in

the integrity of Government counsel or the trial

judge, but only because the in camera procedures

at issue there would have been an inadequate means

to safeguard a defendant's Fourth Amendment

rights. Here the defendant was entitled to see a transcript of his own conversations and nothing else. He

had no right to rummage in Government files. The

trial court was asked only to identify those instances

of surveillance which defendant had standing to

challenge under the, Fourth Amendment exclusionary rule to double-check the accuracy of the

Government's voice identifications. Under the circumstances presented, the Supreme Court could not

hold that "the task is too complex, and the margin

for error too great, to rely wholly on the in camera

judgment of the trial court."

In Alderman 'v. United States, 89 S. Ct. 961

1969), defendants were held entitled to inspect

bugging products for themselves. After the convictions of defendants had been affirmed, and while

their cases were pending before the Supreme Court,

it was revealed that the United States had engaged

in electronic surveillance which might have violated

their Fourth Amendment rights and tainted their

convictions. A remand to the district court being

necessary in each case for adjudication in the first

instance, the question before the Supreme Court

related to the standards and procedures to be followed by the district court in determining whether

any of the Government's evidence supporting these

convictions was the product of illegal surveillance

to which any of the defendants were entitled to

object. In filing a motion to modify the order remanding the case to the district court for further

proceedings, the United States urged that in order

to protect innocent third parties participating or

referred to in irrelevant conversations overheard by

the Government, surveillance records should first be

subject to in camera inspection by the trial judge,

who would then turn over to the defendants and

their counsel only those materials "arguably relevant" to their prosecution. It was the position of the

Supreme Court that a defendant with standing to

object to evidence gathered against him as the result

of illegal electronic surveillance is his own best judge

as to what portions of the overheard conversations

might have contributed to evidence against him.

Thus, he should be permitted to examine the record

of the illegal surveillance without any prior in

camera relevance inspection by the trial judge. Disclosure would be limited to the transcripts of a

defendant's own conversations and of those which

took place on his premises. The task of gleaning

relevant data from the bulk of material obtained

by surveillance cannot be entrusted entirely to the

trial judge, the Court emphasized. "An apparently

innocent phrase, a chance remark * * * or even

the manner of speaking or using words may have

special significance to one who knows the more

intimate facts of an accused's life. And yet that information may be wholly colorless and devoid of

meaning to one less well acquainted with all relevant circumstances." The Court further held that a

codefendant or coconspirator whose Fourth Amendment rights were not violated by an illegal eavesdropping, but who might well be aggrieved by the

introduction of damaging evidence against him obtained as a result of such eavesdropping, does not

-have standing to object to the use of such evidence

against him. Fourth Amendment rights are personal eights which, like some other constitutional

rights, may not be vicariously asserted. In an exception to this holding, the Court noted that a homeowner has standing to object to unlawfully

overheard conversations on his property, regardless

of whether he was present at the time of the conversations or participated in them.

The effect of the Court's 1968 decisions in the

wagering tax and firearms areas (Marchetti v.

United States, 390 U.S. 39, Grosso v. United States,

390 U.S. 62, and Haynes v. United States, 390 U.S.

85), in which a proper claim of constitutional privilege against self-incrimination was held to be a full

defense against a criminal prosecution, on the wagering tax forfeiture area remains unsettled with the conflicting positions of the Sixth and Seventh Circuits

unresolved. The Court granted the Government's

petition for certiorari from the Seventh Circuit

in United States v. United States Coin and Currency in the Amount of $8,674.00, (Angelini, Claimant) 393 U.S. 949 reported below at 393 F. 2d 499

(7th Cir. 1968), and the case was argued before the

Court. However, by order of the Court on May 26,

1969, the case was restored to the calendar for reargument in the October term 1969. The petition for

certiorari filed by the claimant in United States v.

O ne 1965 Buick (6th Cir. 1968), 392 F. 2d 672 has *

not been acted on by the Court.

The Court also considered the effect of Marchetti,

Grosso, and Haynes in the marihuana, firearm, and

liquor areas.

On May 19, 1969, the Court decided Lear), v.

United States, 395 U.S. 6, and UnitedStatesv. Covington, 395 U.S. 57, holding that a proper claim of

the constitutional privilege against self-incrimination

provides a full defense to prosecution for transporting, concealing, or obtaining marihuana without

having paid the transfer tax.

However, following the decision-, in Lear), and

Covington the Court denied certiorari in the case

of Wilson v. United States, 395 U.S. 923, in which

the Fifth Circuit had sustained a conviction of possession of an unregistered still. Wilson was admittedly

prohibited under State law from carrying on the activity of distilling. He claimed Federal registration

would incriminate him under State law. The Govemment's position was that the liquor statutes are

not aimed at a "highly selective group inherently

suspect of criminal activity" but rather are for the

82 / Annual.Report Appendix Annual Report / Appendix / 83
sole purpose of assuring collection of this important

source of revenue.

In the fireaqw area in the case of Varitinos v.

United States, 395 U.S. 976, the Court denied certiorari in a First Circuit case which sustained a conviction for receipt and possession of a firearm

transferred in violation of 26 U.S.C. 5814, where

defendant asserted a Haynes type plea of selfincrimination.

In a case construing the Federal officer removal

statute (28 U.S.C. 1442 (a) ( I)), relating to removal of cases against Federal officers from State

courts to Federal courts, the Court in Willingham

et al v. Morgan, 395 U.S. 402, reversed the decision

of the Court of Appeals for the 10th Circuit holding

that the statute is not "narrow" or "limited" but "at

the very least is broad enough to cover all cases whert

Federal officers can raise a colorable defense arising

out of their duty to enforce Federal law."

Actions of Lower Courts

Civil Cases

In addition to Collins, discussed in Supreme Court

cases, supra, the I Oth Circuit rendered two other

significant decisions in favor of the Commissioner.

It reversed the Tax Court and held that the "tax

benefit theory" applied to the gain on the sale of

property held for rent by a corporation which had

been expensed by the corporation at the time of purchase-resulting in its treatment as recognized ordinary income to the corporation even though said sale

was made pursuant to a plan of liquidation adopted

under section 337. Commissioner v. Anders - F.

2d -, 69-2 USTC 9478 (10th Cir. 1969) (~CH),

reversing 48 T.C. 815 (1967). The Court also reversed, at the Commissioner's urging, a Tax Court

decision which had held that reimbursement by an

employer for an employee's meals and lodging while

awaiting permanent quarters at a new post of duty

was not includible in the employee's gross income.

Commissioner v. Starr, 399 F. 2d 675 (10th Cir.

1968), reversing 46 T.C. 743 (1966). In doing so,

it rejected the Tax Court's distinction of, and followed, its prior opinion in United States v. Woodall,

255 F. 2d 370 ( I Oth Cir. 1958) and noted that John

E. Cavanaugh, 36 T.C. 300 (1961), on which the

Tax Court had relied, had been expressly overruled

in England v. United States, 345 F. 2d 414 (7th Cir.

1965), and was not followed by the Court of Claims

in Ritter v. United States, 393 F. 2d 823 (Ct. Cl.

1968), cert. denied 393 U.S. 844 (1968).

The Government was similarly successful in various appellate courts in several other tax cases. In the

Second Circuit, the Commissioner won a two-fold

victory in one case. Borge v. Commissioner (Danica

Enterprises, Inc. v. Commissioner), 405 F. 2d 673

(2d Cir. 1968), cert. denied, 395 U.S. 933 (1969).

Therein, the Court considered proper the Commissioner's allocation, pursuant to section 482, of an

entertainer's compensation to him individually rather

than allowing it to be included in the income of his

wholly owned corporation as reported. It further

allowed only limited farm loss deductions to the corporation, as would have been appropriate in the individual's situation under the provision of section

270 of the Code, by applying section 269 on the theory that the latter is applicable to any situation in

which a taxpayer obtains a deduction which he

would not otherwise have been allowed but for the

incorporation. The Commissioner's allocation under

section 482 was likewise sustained in the Seventh

Circuit where insurance commissions were deflected

to two controlled corporations established as insurance brokers by their parent (a finance company)

which performed the services of selling and servicing

insurance policies for an independent insurance company. It is notable that the allocation of the

commissions to the finance company was permitted

despite the fact that State law forbids finance companics from receiving any income other than interest

from loans. Local Finance Corporation v. Commissi

.

oner, 407 F. 2d 629 (7th Cir. 1969), affirming 48

T.C. 773 (1967). The Eighth Circuit also agreed

with the Commissioner's restrictive position that

stock of a farmer's cooperative, in order for it to

qualify and retain its tax exemption under section

521, must be substantially owned by active producers who market their products and purchase their

supplies and equipment through the association on

a "current" basis. Cooperative Grain & Supply Co.

v. Commissioner, 407 F. 2d 629 (8th Cir. 1969).

In addition to the foregoing, both the Third

(Childs v. Commissioner, 408 F. 2d 531 (3d Cir.

1969) and Fifth (Spillers v. Commisisoner, 407 F.

2d 530 (5th Cir. 1969) Circuits reaffirmed the

Commissioner's position that there must be a strict,

technical adherence to a written plan, complying

with the statutory provisions if a taxpayer seeks to

have stock treated as section 1244 stock. In Spillers,

the Court held corporate resolutions making no

mention of the period in which the stock was to be

offered and not limiting the maximum dollar

amount of stock which could be offered did not

qualify the stock for section 1244 purposes. It noted

that the 1244 requirement must be met at the time

the plan is adopted and the stock issued-and that

the stock cannot qualify under a later complying

plan. In Childs, it was held there was not a written

plan where the corporate resolution recited solely

the offer of a sale of stock to the taxpayer and the

minutes of a shareholder's meeting recited his acceptance. Eger v. Commissioner, 393 F. 2d 243 (2d

Cir. 1968), where corporate resolutions were held

to be a sufficient written plan, was distinguished on

the grounds that the corporate resolution there spe.

cifically referred to the stock as section 1244 stock.

The Commissioner also made substantial gains

in litigation before the Sixth Circuit in several important tax controversies. In Commissioner v. Wilson,- F. 2d -, 69-2 USTC 9458 (6th Gir. 1969),

the Court joined with the Fifth Circuit's rationale

expressed in Commissioner v. Dodd, el al.,- F. 2d

-69-1 USTC 9362 (5th Cir. 1969), in reversing a

Tax Court decision adverse to the Commissioner.

The Tax Court was held to be erroneous in allowing, in years prior to the taxable years to which recently added section 217 is applicable a taxpayer a

deduction for unrcimbursed moving expenses in.

curred by an employee being transferred from one

office to another by his employer.

The Sixth Circuit was also instrumental in

thwarting two recently developed tax schemes. In

First National Industries Inc. v. Commissioner 404

F. 2d 1182 (6th Cis. 1968) cert. denied, 394 U.S.

1014 (1969), the Court struck down a controlled

corporation's utilization of a tax exempt Foundation

and an elaborate transmittal of the sales,proceeds

scheme through several interrelated subsidiaries

thereof in an attempt to avoid a capital gain tax

upoh the disposition of certain investment stock. It

held that the disposition was, in effect, a sale to the

Foundation and concluded that the "donated" stock

was accepted by the Foundation subject to the taxpayer's debt (equal to the sales price of the investment stock) despite the lack of a formal assumption

thereof by the Foundation. In Commissioner v.

Baertschi, ei al., 412 F. 2d 494 (6th Cir. 1969), the

Court held a Tax Court approved plan of keeping

a transaction open, rather than closed, by providing,

in the sale contract involving a residence, for a delay

in the final payment and limiting the seller's legal

recourse in the event of default solely to the property

itself rather than to the purchaser individually, was

to no avail since the transaction was closed at the

date the purchaser could have obtained possession.

A contrary holding would have rendered meaning.

less the 18-month statutory limitation for replacement of a former residence by a newly constructed

residence under the nonrecognition provisions of

section 1034.

Lastly, further litigation is expected with regard

to two companion cases decided by the Ninth Circuit: Estate of Stauffer v. Commissioner, 403 F. 2d

611 (9th Cir. 1968) and Associated Machine v.

Commissioner, 403 F. 2d 622 (9th Cir. 1968) and

an adverse decision by the Sixth Circuit (Commissioner v. Turner, et al., 410 F. 2d 952 (6th Cis.

1969). In Stauffer and Associated Machine, the

Ninth Circuit, contrary to the Commissioner's position that an 'T" reorganization under section 368

was only applicable to the reorganization of a single

corporation, held that a multi-corporation reorganization could, and did, qualify as a "I"'; and, in

Turner, the Sixth Circuit held there was a net gift

of the value of given stock less the gift tax where a

mother transferred her stock to her children with the

condition that the latter pay the gift tax on the transfer. The Commissioner had contended in that case

that there was a sale of the stock to the extent the

gift tax exceeded her basis although it was~ a gift to

the extent the stock's fair market value exceeded the

gift tax.

In a case involving labeling of wine under the

Federal Alcohol Administration Act (27 U.S.C.

205) Miller v. Kennedy et al., unreported (D.C. District of Columbia) the Court held that the Secretary

or his delegate was authorized to distinguish for

labeling purposes between artificially carbonated

wine and naturally fermented sparkling wine.

Naturally fermented sparkling wine is taxed under

the Intemal Revenue Code of 1954 at a higher rate

than artificially carbonated wine.

The Third Division of the Customs Court in

Schieffelin & Co. et al. v. United States, unreported,

held that the Irish and British treaties with the

United States providing for nondiscriminatory tax

treatment were not violated by taxing bottled imported distilled spirits under section 5001 (a) (1) of

the Internal Revenue Code of 1954 on a "wine

gallon" basis. Previous decisions of the Court of

Customs and Patent Appeals had held the same provisions not to violate the General Agreement on

Tariff and Trade. The Customs Court also held in

the case that Schieffelin was not required to show

compliance with section 6423 of the Intemal Revenue Code of 1954 (relating to proof of bearing the

ultimate burden of the tax) as a condition precedent

to the bringing of the action in the Customs Court.

The case of In re Hancock Trucking, Incorporated, 407 F. 2d 635 (7th Cir. 1969) involves a

reorganization proceeding under chapter X of the

84 / Annual. Report / Appendix Annual Report / Appendix / 85
1;

Bankruptcy Act. The amended plan of rrorganization in this case provided that tax claimants, including the United States would receive payment of their

claims in full, 10 percent in cash within 6 months

from confirmation and the balance in 78 equal

monthly installments. The Government objected to

the plan since it provided for payment of general

creditors prior to full payment to the United States,

which is contrary to the provisions of section 3466 of

the Revised Statutes. Also, it was asserted that section 199 establishes a first priority in payment for

claims of the United States for taxes and that the

priority thus conferred is superior to all other claims

against the estate, even to existing and perfected

hens which might otherwise be prior. It was maintained a plan cannot be confirmed and reorganization can be prevented unless payment in full is

provided for, except upon the acceptance of a lesser

amount by the Secretary of the Treasury certified to

the court. Notwithstanding the timely notice of rejection, the district court judge stated that for

equitable reasons he was approving the amended

plan. The district court was affirmed by the Court of

Appeals for the Seventh Circuit.

The thrust of the Seventh Circuit's opinion is that

section 199 does not require prompt full payment of

the tax claim and that R.S. 3466 does not apply to

chapter X cases. This is in conflict with the Fifth

Circuit which has held that R.S. 3466

'

applies to

nontax matters in chapter X proceedings and is also

in conflict with the Third Circuit which has held

that R.S. 3466 applies to tax claims in these

proceedings.

In Washington v. United States, 402 F. 2d 3 (4th

Cir. 1968) the facts are as follows: Revenue agents

obtained a search warrant and raided the taxpayer's

farm and there discovered the taxpayer conducting

a gambling operation. Evidence seized during the

id was used to compute a wagering tax. In the district court the taxpayer conceded that the search

warrant was properly issued and executed and admittcd that he was liable for the wagering tax. The

district court sustained the assessment (with a slight

cluction) and ordered that the taxpayer's farm be

sold at public auction; the proceeds of the sale to be

used first to satisfy a mortgage lien, second to pay the

present value of the wife's contingent dower interest, and third to satisfy the tax lien. (The issue of

liability forfraud penalty or delinquency penalty was

present in the district court case but was later abandoned by the Government on appeal.)

On appeal the taxpayer contended: (1 ) that his

liability for the wagering tax was extinguished by the

Supreme Court 1968 decisions in Marchetti and

86 / Annual Report / Appendix

Grosso, supra; (2) that the evidence supporting the

tax assessment was illegally obtained because it was

seized in a raid which was unlawful because it "was

acquired under circumstances which the highest

Court has now declared to be in violation of fundamental constitutional rights;" and (3) that the trial

court had no right to sell the taxpayer's farm property free of his wife's contingent dower interest.

The Fourth Circuit held for the Government on

each of the three issues. It stated that the Grosso and

Marchetti decisions did not invalidate the wagering

tax and did not invalidate the search warrant used to

obtain the evidence of the wagering tax liability and

further that the wife's inchoate dower interest is

subject to termination by the sale of the taxpayer's

property pursuant to the order of the district court

under section 7403(c), 1954 Code. The taxpayer's

petition for certiorari, filed on December 13, 1968,

is pending.

The Court of Appeals for the Ninth Circuit in

Slonehill v. United States, 405 F. 2d 738 (9th Cir.

1968), cert. denied June 16, 1969, affirmed the district court which had denied taxpayers' motion to

suppress certain records and documents obtained by

U.S. revenue agents from the Philippine National

Bureau of Investigation (NBI). This motion to suppress was filed in the foreclosure action commenced

by the Government in 1965 to enforce Federal tax

liens. The records and documents obtained from the

NBI had been seized by it in raids on the taxpayers'

premises in 1962. Some of the records were seized

in raids on the taxpayers' residences and subsequently

such raids were held to be illegal searches and seizures

in violation of the Philippine Constitution by the

Supreme Court of the Philippines. The taxpayers in

their motion to suppress argued that the use of such

evidence in the foreclosure action in the Federal

district court would be in violation of the Fourth

Amendment to the U.S. Constitution. The district

court denied the motion to suppress based on its findings that there was no instigation or unlawful participation by the U.S. Government agents in the raids

conducted by the Philippine officials.

In Pizzarello v. United States, 408 F. 2d 579 (2d

Cir. 1969), the Second Circuit reversed a district

court order dismissing for lack of jurisdiction taxpayer's suit to enjoin collection of a jeopardy assessment for wagering excise taxes. Applying the test

of Enochs v. Williams Packing Co., 370 U.S. 1

(1962), the court of appeals concluded that the

Government could not ultimately prevail on the

merits fortwo reasons. First, the court held that there

was insufficient factual foundation in the record to

support the method by which the tax liability was

computed, thereby rendering the assessment excessive and arbitrary. Secondly, the court found that

the assessment was based upon records obtained

during an illegal search and seizure of the taxpayer's

business premises, and held that an assessment based

entirely or in substantial part on illegally obtained

evidence is invalid. The Second Circuit did not determine whether equity jurisdiction otherwise exists

in this case. However, the court indicated that the

taxpayer's argument, that his legal remedy was inadequate because his burden of proof in a refund

action created a conflict between his privilege against

self-incrimination and his right to contest the seizure

of his property, was sufficiently meritorious to warrant a conclusion that collection activity may, in fact,

result in irreparable injury to him. The court remanded the case for a complete hearing to develop

the facts.

The Court of Appeals in Bauer v. Foley, 404 F.

2d 1215 (2d Cir. 1968) held that where the taxpayer alleges forgery or duress in signing a joint return she is entitled to a hearing on the merits in an

injunction suit to enjoin the Government from seizing or selling her property. The district court had

denied the taxpayer's motion for an injunction and

granted the Government's motion to dismiss. The

district court had found that the taxpayer-s had not

established that under no circumstances could the

Government ultimately prevail so as to remove the

prohibition against injunctive relief under section

7421 (a) of the 1954 Code. The Second Circuit

reversed the district court and remanded the case

for a hearing on the merits of whether the signature

of the taxpayer was forged on any of the returns in

question or whether she signed the returns under

duress. Thus, the court was of the opinion that it

was complying with the test of Enochs v. Williams

Packing Co., 370 U.S. 1 (1962) since it held that

if the returns were forged or signed under duress she

could not possibly be liable for the tax.

The court also held that the taxpayers under a

joint assessment are each entitled to a separate notice

and demand. Since a separate notice was not given,

the court held the lien was invalid. On rehearing at

the request of the Government, the Second Circuit

limited its opinion requiring separate notice and

demand to the situation where the signature on a

joint return is forged or signed under duress. Bauer

v. Foley, 408 F. 2d 1331 (2d Cir. 1969).

The Sixth Circuit in United States v. Estate of

Donnelly, 406 F. 2d 1065 (6th Cir. 1969) affirmed,

per curiam, without opinion the decision of the district court. The lower court had held that in 1950

the Internal Revenue Service was required.to file a

notice of lien against real property with the Register

of Deeds of the State notwithstanding the Michigan

requirement of a description of the real property

which was later held invalid by the Supreme Court

in United States v. Union Central Life Insurance

Company, 368 U.S. 291 (1961 ). The district court

reasoned that Union Central was pro-pective only

and that the Service must first attempt to file with

the Register of Deeds before filing with the clerk of

the district court even though the State has not validly designated an office for filing notices of Federal

tax lien. On May 10, 1969, the United States filed a

petition for writ of certiorari.

In the case of Gefen v. United States, 400 F. 2d

476 (5th Cir. 1968), cert. Denied 393 U.S. 1119

( 1969), the Fifth Circuit, in deciding the case, recognized that in civil actions by the Government to

enforce or recover Federal taxes, it has been held

that the taxpayer is entitled as a matter ofright under

the Seventh Amendment to a jury trial with respect

to his personal liability for taxes, penalties, and interest, but not with respect to the establishment of

tax liens against the taxpayer's property or the sale

of the property to satisfy such liens. This case involved a situation where suit was instituted in the

United States District Court to reduce the assessment

against the taxpayer to judgment and to foreclose

the Federal tax lien against his property. The taxpayer demanded a jury trial. The district court

denied thatrequest and ultimately entered judgment

in favor of the United States, which was affirmed by

the court of appeals.

A number of decisions involving the enforcement

of civil summonses were rendered by the various

Circuit Courts of Appeals' Some of these decisions

are worthy of comment here. As regards one important issue, the Fifth Circuit consolidated four appeals

for briefing and argument and in one opinion,

Roberts v. United States, 397 F. 2d 968 (5th Cir.

1968), held that the Service is required to pay wit.

ness and mileage fees to taxpayers and third-party

witnesses who have been summoned to appear and

testify before Service agents pursuant to summons

issued under section 7602 of the 1954 Code. Enforcemerit proceedings had been instituted by the Government seeking compliance with summonses issued

against two taxpayers whose tax liabilities were

under investigation and against two others as witnesses. In each case, the persons summoned objected

to the summons and refused to appear asserting nonpayment of witness or mileage fees or the guarantee

or assurance of payment. The Government asserted

that neither a witness nor taxpayer is entitled to the

fees since there is no statute authorizing such payAnnual Report / Appendix / 87

I
ment. The trial court ordered the witnesses to comply

with the summonses and held that upon compliance

the witnesses were to receive a, fee pursuant to

§ 503 (b), Title 5, United States Code. The trial

court also found that neither taxpayer whose tax

liability was under investigation was entitled to fees

and ordered compliance without payment of the

fees by the Government.

The Government conceded that 5 U.S.C., section

503 (b) (2 ) does not make a distinction between taxpayers and third-party witnesses but asserted that

section 503 (b) (2) is inapplicable since that section

provides that a "witness is entitled to the fees and

allowances allowed by statute for witnesses in the

courts of the United States when- * * * (2) he

is subpoenaed to and appears at a hearing * * *."

It was contended that the word "hearing" has generally been interpreted to mean proceedings which

are adjudicatory or quasijudical in nature whereas

summons proceedings are investigatory or inquisitorial. The court rejected this contention and held

the word applies to any sort of proceeding at which

testimony is taken.

In another summons case, United States v. Benford, Fred T. Mackey (Intervenor), 046 F. 2d 1192

(7th Cir. 1969), the Seventh Circut reversed the

order denying the taxpayer's motion to intervene in

a third-party summons enforcement proceeding

calling for the production of corporate records. The

district court had denied intervention on the grounds

that the taxpayer had shown no proprietary or other

special interest in the records sought and that his

being the taxpayer whose liability was under scrutiny

was not, by itself, a sufficient basis for intervention.

The Seventh Circuit concluded, that the Supreme

Court's opinion in Reisman v. Caplin, 375 U.S. 440

(1 964), did not expressly or impliedly limit the taxpayer's right to intervene in enforcement proceedings to situations where a legally protected interest

in the records could be shown.

Also, in the case of United States v.Bank of Commerce, Arthur Meister (Intervenor), 405 F. 2d 931

(3d Cir. 1969), the Third Circuit held that pursuant

to Reisman v. Caplin, 375 U.S. 440 (1964) that

the taxpayer had standing to intervene and raise

objections to enforcement of summonses served upon

a bank calling for production of certain of the bank's

records relating to transactions with the taxpayer.

The taxpayer had alleged that the information

which brought the Service's attention to the bank

records was the product of an unlawful search and

seizure; that such information was thereby "tainted"

and, therefore, the bank records were also "tainted"

88 / Annual Report / Appendix

and their production should not be compelled. The

court of appeals vacated the district court's order

grantingthe Government's petition for enforcement

and remanded the matter for a hearing and determination of the taxpayer's Fourth Amendment claim

(relating to the tainted information) to assure that

the court's process would not be abused if enforcement of the summons is granted.

In Howfield, Inc. v. United States, 429 F. 2d 624

(9th Cir. 1969), the Ninth Circuit decided jurisdictional issues raised in two related cases consolidated

on appeal. Shortly after the taxpayer instituted an

action for return of illegally seized property and its

suppression as evidence, the Government returned

the documents in question, and all copies, and

moved to dismiss the action for failure to state a

claim on which relief could be granted. The district

court granted the motion, holding that a preindictment action which seeks solely suppressive relief is

premature. The Ninth Circuit approved the dismissal of the action as premature and held that the

dismissal order was not appealable. Simultaneously

with the taxpayer's suppression action, the Government had filed a petition to enforce the summonses

issued to the taxpayer for its corporate records, including documents which were the subject of the

suppression action. After dismissal of the suppression

action, the taxpayer counterclaimed in the enforcement proceeding for injunctive relief and to have

section 7602 of the 1954 Code declared unconstitutional by a three-judge district court. The court of

appeals affirmed the district court order dismissing

the counterclaim and denying the application for a

three-judgc district court on the ground that there

was no basis for equitable relief since the taxpayer

had an adequate remedy at law by defending against

the summons enforcement petition. It may be noted

that the district court decided the summons enforcement proceeding on the merits in favor of the Government, finding no illegality in the Service's investigatory activity in this case. An appeal to the

Ninth Circuit from the order enforcing the summonses is presently pending.

Further, in United States v. Zakutansky, 401 F.

2d 68 (7th Cir. 1968), cert. denied 393 U.S. 1021

(1969), the Seventh Circuit affirmed an order directing an accountant to produce workpapers he

used in preparing the taxpayer's returns. After two

summonses were issued to the accountant and prior

to service of a third summons, the accountant transferred physical possession of the workpapcrs to the

taxpayer. A summons was then issued to the taxpayer who refused to comply, claiming ownership of

the workpapcrs and asserting his privilege against

self-incrimination. In a proceeding to enforce the

summonses the court examined the workpapers in

camera and found that they were accountant's workpapers and were the property of the accountant. The

district court further found that the taxpayer did

not acquire "rightful possession" of the workpapers

from the accountant because both knew that the accountant was under a "moral, if not legal, obfigation" to deliver them to the Government, and

therefore rejected the taxpayer's claim of the privilege against self-incrimination.

The issue of proper tax classification of lawyers

in United States v. Empey, 406 F. 2d 157 (10th

Cir. 1969), and doctors in United States v. ONeill,

69-1 USTC 9372 (6th Cir. 1969), and United

States v. Kurzner, 69-1 USTC 9428 (5th Cir.

1969), under the laws of Colorado, Ohio and

Florida, respectively, was decided in favor of the

taxpayers. The Government's arguments that these

organizations were properly classified as partnerships, rather than corporations, were rejected, and

regulations section 301.7 701-2, as amended by T.D.

6797 on February 2, 1965, and more particularly

subparagraph (h) of the regulations, was held to

be invalid. The resolution of this issue may affect

professionals throughout the country.

Pending before the Court of Claims in Litton

Industries, Inc. v. United States, Ct. Cls. No. 14-69,

is the issue of whether the taxpayer, upon repurchase of its own convertible debentures at a premium, is entitled to deduct as premium expense the

portion of the premium attributable to the value of

the privilege to'convert the debentures into shares

of its own common stock. While this issue is also

present in other pending cases, its appearance in

Litton presents by far the most dramatic example

in view of the magnitude of the amount involved

and the percentage of the premium to the face value

of the debentures.

TheFifth Circuitin UnitelStatesv. W.M. Webb,

Inc., et al., 402 F. 2d 956 (5th Cir. 1968), decided

adversely to the Government the issue of whether

menhaden fishermen are employers of the boat own.

ers for purposes of the employment taxes. The Government has been litigating the issue of whether

shrimp fishermen were employees of the boat owners for a number of years, within the jurisdiction of

the Fifth Circuit, with only several successes in the

district courts and no success in the Court of Appeals

for the Fifth Circuit. However, the Court of Claims

and the First Circuit have decided fishing boat cases

for the Government. Since the fishing industry is

carried on along the entire coastline of the United

States, resolution of the issue is of considerable administrative importance. This case is presently pending before the Supreme Court.

The expenditures of the survivor corporation

of a reorganization in appraising the value of dissenting shareholders' stock in the merged corporation were held to be currently deductible by the

Seventh Circuit in Hilton Hotels Corporation v.

United States, 69-1 USTC 9336 (7th Cir. 1969).

The Court rejected the Government's argument that

the expenses were incident to a corporate reorganization and were capital in nature and therefore nondeductible capital outlays. This decision created a

conflict among the circuits. The filing of a petition

for a writ of certiorari has been recently authorized

by the Solicitor General.

A petition for a writ of certiorari has been filed by

the Government inthe case of United States v. Davis,

408 F. 2d 1139 (6th Cir. 1969). The Court rejected

the strict net effect test in determining wheth~r a

corporate distribution to the taxpayer in redemption

of preferred stock was emcmially equivalent to a

dividend within the meaning of section 302(b) (I )

of the 1954 Code. The Government contended that,

since there is a pro rate distribution with the taxpayer ending up in substantially the same position

after the redemption as he would have occupied had

a dividend been declared, the distribution constitutes

payment of a dividend. The Sixth Circuit applied

the flexible net effect test and carried over the purpose for the issuance of stock as a valid business purpose for redemption, thus conflicting with Ballenger

v. United States, 301 F. 2d 192 (4th Cir. 1962), and

Berenbaurn v. Commissioner, 369 F. 2d 337 (10th

Cir. 1966).

Two important circuit court decisions were rendered in the life insurance area. In both Franklin

Life Insurance Co. v. United States, 399 F. 2d 757

(7th Cir. 1968), certiorari denied 393 U.S. 1118

(1969), and Jefferson Standard Life Insurance Co.

v. United States, 408 F. 2d 842 (4th Cir. 1969),

petition for certiorari pending, the Courts held that

(I ) in computing taxable investment income, deferred and uncollected premiums and due and unpaid premiums, including the "loading" related to

such premiums, are includable in the assets of a life

insurance company under section 805 (b) (4) of the

1954 Code and (2) "loading" on deferred and uncollected premimus is not deductible in computing

gain or loss from operations under section 809 of

the 1954 Code. These Circuit Court decisions upholding the Government's position. are significant

Annual Report / Appendix / 89
since they involve important interpretations of the

Life Insurance Company Tax Act of 1959.

Criminal Cases

The lower courts declined to extend the selfincrimination defense, established in Marchetti,

Grosso, and Haynes discussed in Supreme Court

Cases, supra, with respect to wagering and firearms

into the liquor tax area.

In Schoeffit v. United States, 403 F. 2d 991 (5th

Cir. 1968) the court held that the defendant could

not raise the self-incrimination issue with respect to

charges relating to possession of unstamped containcrs since he was not required to pay the tax or

affix the stamps. In other cases relating to possession

of unregistered stills and carrying on the business of a

distiller without having registered and given bond

the self-incrimination issue was squarely raised but

the courts declined to allow the defense. The courts

took the position that, unlike the statutes relating to

wagering and firearms, the liquor taxes were not

aimed at a group inherently suspect of criminal activity but rather were solely for the purpose of assuring collection of the revenue. Anderson el al. v.

United States, 403 F. 2d 207 (5th Cir. 1968); Wilson v. United States, 409 F. 2d 604 (5th Cir. 1969)

certiorari denied 395 U.S. 923; Williams v. United

States, 297 F. Supp. 103 (Eastern District, N.C.

1969).

The Haynes decision has continued to have a

serious impact on prosecutions arising under the National Firearms Act prior to the amendment of such

act by the Gun Control Act of 1968. There have so

far been no adverse decisions involving the self-incrimination issue under the amended act. Persons

charged with failure to comply with the making and

transfer provisions of the act (prior to amendment)

successfully raised the self-incrimination plea as a

bar to prosecution. DePugh v. United States, 401

F. 2d 346 (8th Cit. 1968); Lauchli v. UnitedStates,

402 F. 2d 455 (8th C ir. 1968). However, efforts by

defendants charged with possessing unlawfully made

firearms to plead self-incrimination were unsuccessful. Reed v. United States, 401 F. 2d 756 (8th Cit.

1968) ; Mower v. United States, 402 F. 2d 982 (8th

Cit. 1968); and Lewis v. United States, 408 F. 2d

121 0 (1 Oth Cir. 1969). The courts held in these

cases that the transferee was under no statutory requirement which would incriminate him. Also in

Varitimos v. United States, 404 F. 2d 1030 (Ist Cir.

1969, certiorari denied 395 U.S. 976, conviction of

a transferee of possession of a firearm transferred in

violation of 26 U.S.C. 5814 was sustained.

The Courts of Appeal in the Seventh Circuit and

the Fourth Circuit handed down conflicting decisions

regarding the rctruactivity of the Haynes case. In

United States v. Miller, 406 F. 2d 1100 (4th Cir.

1969) the Fourth Circuit gave retroactive effect to

Haynes by allowing defendants to withdraw guilty

pleas and plead the privilege against self-incrimination, while the Seventh Circuit in Gi!lespie v. United

States, 409 F. 2d 511 (7th Cir. 1969) denied a petition to vacate sentence based on a plea of guilty for

possession of an unregistered firearm.

The inspection of a retail liquor dealer's premises

pursuant to statutory authorization without a search

warTant was upheld by the Second Circuit in United

States v. Colonnade Catering Corporation, 410 F.

2d 197 (2d Cir. 1969). The district court had

gr-.Lnted a motion to suppress the evidence stating

that under the holding of the Supreme Court in

Camera v. Municipal Court, 389 U.S. 523 (1967)

and See v. Seattle, 389 U.S. 541 (1967) a search

warTant was required. The circuit court stated that

the specific and limited authority under the statute

made a warTant unnecessary. The defendant in this

case has filed a petition for certiorari.

The great weight of judicial authority continues

to hold that absent "custodial interrogation" as defined in Miranda v. Arizona, 384 U.S. 436, 444

(1966), agents of the Internal Revenue Service are

not required to advise a taxpayer under investigation

as to his Sixth Amendment right to counsel. Accordingly, and aside from the issue of misrepresentation,

fraud or coercion, where one is legally free to reject

the Government's invitation to appear and participate in an interview, is free to walk out of an interview at any time, is free to ask investigating agents

to leave his premises, is not physically in custody

through arrest or otherwise, and whose freedom of

action is inno sense curtailed, the requirements enunciated in Escobedo v. Illinois, 378 U.S. 478 (1964)

and Miranda, supra, do not apply. The Fifth, Eighth

and 10th Circuits have now joined the so-far unanimous parade of circuits which have embraced this

position. Agoranos v. United States, 69-1 USTC

9316 (5th Cit. 1969); United States v. Jernigan,

411 F. 2d 471 (5th Cir. 1969); Cohen v. United

States, 405 F. 2d 34 (8th Cir. 1968), cert. den. 89

S. Ct. 1274 (1969); Muse v. United States, 405

F. 2d 40 (8th Cir. 1968), certiorari denied

(1969); Ping v. United States, 407 F. 2d 157 (8th

Cir. 1969) ; Hensley v. United States, 406 F. 2d

481 (10th Cit. 1968). Only the Third and District

of Columbia Circuits have yet to rule upon this

issuc. Other recent decisions holding that Internal

Revenue Service agents, who solicit information

from a taxpayer under investigation, need not give

the Mirando-Escobedo warnings unless the inter-

'View amounts to "custodial interrogation" arc:

United States v. Mackiewicz, 401 F. 2d 219 (2d

Cir. 1968), certiorari denied 393 U.S. 923; United

States v. Bagdasian, 398 F. 2d 971 (4th Cir. 1968) ;

Taglianetti v. United States, 398 F. 2d 558 (Ist Cir.

1968), affirmed per curiam on other grounds 89 S.

Ct. 1099 (1969) ; UnitedStates v.Sq~eri, 398 F, 2d

785 (2d Cir. 1968) ; United States v. Marcus, 401

F. 2d 563 (2d Cir. 1968), certiorari denied 89 S. Ct.

633 (1969); Spahr et al. v. United States, 69-1

USTC 9315 (9th Cir. 1969); United States v.

White, 293 F. Supp. 692 (E.D. Pa. 1968); United

States v. Charamella, 294 F. Supp. 280 (D. Del.

1968); and United States v. Cymbala, 69-2 USTC

9457 (E.D. N.Y. 1969).

The Solicitor General authorized an appeal to the

Seventh Circuit under Title VIII of the Omnibus

Crime Control Act of 1968 in the cases of United

States v. Dickerson, 291 F. Supp. 633 (N.D. Ill.

1968); and UnitedStates v. Lackey,-F. Supp.

-(N.D. Ind. 1968). Motions to suppress had been

granted in each instance forfailure on the part of the

special agent to give the Miranda warning. See also

United States v. Habig, -F. Supp. -(S.D. Ind.

1968), which is similarly on appeal to the Seventh

Circuit.

In a case involving an assault upon a Federal

officer, United States v. Rybicki, 403 F. 2d 599 (6th

Cit. 1968), defendant was convicted under 26

U.S.C. 7212 (a) of obstructing, by threats of force,

two officers of the Internal Revenue Service who

were then engaged in the performance of their duties, seeking to collect from him income tax owed by

him to the United States. The Sixth Circuit reversed

and remanded the case for a new trial, holding that

the failure of the district judge to instruct the jury

that a necessary element of the crime was the knowledge on defendant's part that the persons he obstructed were Government agents engaged in their

official duties was prejudicial error. As the court

noted, all the recent cases have held that scienteri.e., knowledge of the official character of the Federal employee-is not an essential element of the

crime of assault under 18 U.S.C. I 11. See, for example, Burke v. United States, 400 F. 2d 866 (5th

Cit. 1968), certiorari denied 37 LW 3449 (1969).

However, the Sixth Circuit distinguished these cases

from the instant situation on the ground that the

offenses there involved would have been crimes regardless of the person against whom they were committed. Here, if the Federal agents had not been acting in their official capacities, defendant would have

had the right to threaten and use reasonable force to

prevent the "theft" of his property. Thus, defendant's actions were criminal only because he threatened Federal officers acting in an official capacity.

Racetrack winners lost at a tax fraud scheme in

United States v. Haimowitz, 404 F. 2d 38 (2d Cit.

1968), as the use of straw men to cash in winning

tickets constituted fraud. Section 7206(2) of the

Internal Revenue Code [26 U.S.C. 7206(2)1 in

substance makes it an offense to aid, assist in, or procure the preparation or presentation of fraudulent

or false information in connection with material

matters required to be reported under the Internal

Revenue laws. The essence of the charges against

the defendants was that they conspired to deprive

the Government of material information concerning

their parimutuel twin double winnings at certain

raceways by paying other individuals to cash their

winning tickets, thus preventing their own names

and the amounts of their winnings from appearing

on Internal Revenue Service information return,

Form 1099, which is filed by the racetrack pursuant to 26 U.S.C. 6041 (a). Defendants' main

contention appeared to be that because the persons

to whom the proceeds of the winning tickets were

paid gave their correct names and addresses to the

racetrack, the Government was in no way defrauded or deprived of information it was entitled

to receive. This argument, however, misconstrued

the thrust of the charges against defendants and the

purpose of sections 6041 and 7206(2). It is indisputable that section 6041 is intended to help the

Government locate and check upon recipients of

income and amounts they receive. The evidence at

the trial showed that defendants were in fact the

winners and true recipients of the payments made

by the racetracks and that their scheme of causing

the track to record another person as the winner was

calculated to defeat the Government in its tax collection. In these circumstances it was clear that the

Government had been defrauded within the meaning of section 7206(2). To the extent that United

States v. Blumberg, 258 F. Supp. 885 (D. Del.

1966), cited by defendants, was inconsistent with

this opinion, the Second Circuit specifically disagreed with it. See also United States v. Green, 69-2

USTC 9469 (S.D. N.Y. 1969).

The number of circuit courts which have adopted

the American Law Institute's Model Penal Code

test for determining criminal responsibility has increased to six; with the addition of the Fifth and

I

90 / Annual Report / Appendix Annual Report / Appendix / 91
Sixth Circuits. Blake v. United States, 407 F. 2d 908

(5th Cir. 1969) ; United States v. Smith, 404 F. 2d

720 (6th Cir. 1968). Section 4.01 of the American

Law Institute's Model Penal Code provides in parC

as follows: " (I ) A person is not responsible for

criminal conduct if at the time of such conduct as

a result of mental disease or defect he lacks substantial capacity either to appreciate the criminality

(wrongfulness) of his conduct or to conforin his

conduct to the requirements of law. (2) * * *."

The relationship between the right to consult with

counsel as guaranteed by the Sixth Amendment and

a psychiatrist's examination confronted the Second

Circuit in United States v. Driscoll, 399 F. 2d 135

(2d Cir. 1968). Error was found in the admission

of a psychiatrist's testimony concerning a court ordered examination, pursuant to section 4244 of the

Criminal Code, to determine a defendant's competcnce to stand trial for willfully failing to file income

tax returns. The court pointed out that the cxamination was ordered to determine the competence

question only, but that the psychiatrist was allowed

to offer his opinion at trial that the defendant was

legally sane at the time of the alleged offenses. Only

if, the court decided, a defendant is given notice of

the use to which such an examination may be put,

and is afforded the right to consult with counsel

prior to the time of the examination, may such tcstimony be introduced at trial.

In the area of electronic eavesdropping, three

circuit courts have held that Katz v. United States,

389 U.S. 347 (1967), has no application to evidence

obtained from a conversation between defendant

and an informer that the authorities were able to

record by means of an electronic device concealed

on the person of or carried by the informer. Holt v.

United States, 404 F. 2d 914 (10th Cir. 1968),

certiorari denied 89 S. Ct. 872 (1969); United

States v. Kaufer, 406 F. 2d 550 (2d Cir. 1969),

affirmed 89 S. Ct. 1223 (attempted bribery of IRS

agent]; Koran v. United States, 4 CrL 2401 (5th

Cir. 1969). This position is premised on the concept

that the risk a person takes in confiding in a potential informer is far different from the risk that an

unknown third party will intercept and record a

conversation without the knowledge of any of the

participants, as had occurred in Katz, supra. The

Seventh Circuit (reaffirtning en banc) has ruled

contrary to the foregoing in the belief that Katz,

supra, has drained On Lee v. United States, 343

U.S. 747 (1952), of its vitality by doing away with

the Fourth Amendment trespass doctrine. United

States v. White, 405 F. 2d 838 (7th Cir. 1969),

certiorari granted 37 LW 3379.

92 / Annual Report / Appendix

It is further worthy of note that the Second and

Fifth Circuits in Kauler and Koran, supra, have

perpetuated the propriety of moftitoring telephone

conversations with the consent of one party. In citing Rathbun v. UnitedStates, 355 U.S. 107 (1957),

the Second Circuit held that Kaufcr's claim that

his Fourth Amendment rights were violated when

an Internal Revenue Service agent listened on an

extension telephone to his conversation with another

agent was without merit. Particularly pertinent was

the court's observation that "the logic of the Rathbun case, that 'each party to a telephone conversation takes the risk that the other party may have an

extension telephone and may allow another to overhear the conversation,' 355 U.S, at I 11, is in no way

undermined by the decision in Katz, where a conversation was overheard with the use of electronic

attachments and without the consent of either of

the parties."

Action on wagering tax judicial forfeiture cases

pending in the lower courts has generally been suspended awaiting resolution by the Supreme Court

of the conflicting opinions of the Sixth Circuit and

the Seventh Circuit in the light of Grosso and Marchetti. The Supreme Court has granted certiorari

in Angelini which held that such forfeitures were

barred and the petition for certiorari filed in One

1965) Buick which held that such forfeitures are not

barred, is pending before the Court.

The question as to the status of property administratively forfeited by reason of involvement in

wagering tax violations has also been raised. The

Sixth Circuit in United States v. Filing, 410 F. 2d

459 (6th Cir. 1969) held that the district court did

not have jurisdiction to order the return of property

which had been administratively forfeited in accordance, with statutory procedures. The court held

that Congress had provided an adequate remedy in

26 U.S.C., section 7325, and that a person who did

not timely seek a judicial determination in lieu of

administrative action could not thereafter judicially

challenge the administrative forfeiture.

Statistics of Income Reports

Published

Individual Income Tax Rctums, 1966 (248 pp.,

$2.50).

Individual Income Tax Returns, 1967, Preliminary

(29 pp., 300).

Zip Code Area Data for Individual Income Tax Returns, 1966, Supplemental Report (96 pp., $1.).

U.S. Business Tax Returns, 1965 (391 pp., $4).

U.S. Business Tax Returns, 1966, Preliminary (27 Corporation Income Tax Returns, 1965 (354 pp.,

pp., 250). $3.25).

Corporation Income Tax Returns, 1964 (394 pp., Corporation Income Tax Returns, 1966, Prclimi-

$3). nary (33 pp., 350).

Annual Report / Appendix / 93
Statistical

Tables

Notes:

All yearly data are on a fiscal year basis, unless otherwise specified.

For example, data headed "1969" pertain to the fiscal year ended

June 30, 1969, and "July I" inventory items underthis heading reflect

inventories as of July 1, 1968.

In many tables and charts, figures have been rounded and may not

add to the totals which are based on unrounded figures.

In ernal revenue districts are listed in this section by the names of

headquarters ti cities. Each district is identical with the boundaries of

the State in which the headquarters city is located except for the

States recapitulated at the bottom of tables 1, 5, 6, and 14. A map of

the districts appears on page 69.
Statistical Tables

I Collections, Refunds, and Returns Filed

1. Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas/98

2. :nt :rnal revenue collections by sources and by quarters/105

3. nt nal revenue collections by sources, fiscal years 1968-69/106

4. Internal revenue collections by principal sources, fiscal years 1940-

1969/108 5. Internal revenue refunds including interest/ 111

6. Number of returns filed, by internal revenue regions, districts, States and other areas/112

7. Internal revenue collections, cost, employees, and U.S. population, 1940 through 1969/113

8. Internal revenue tax on manufactured products from Puerto Rico/113

Alcohol and Tobacco Taxes

9. Establishments qualified to engage in the production, distribution, storage, or use of alcohol and alcoholic liquors/113

10. Establishments qualified to engage in the production or exportation of cigars and cigareftes/1 14

11. Pennits relating to distilled spirits under Chapter 51, IR Code/114

12. Permits for operations relating to alcoholic beverages under the Federal Alcohol Administration Act/114

13. Permits relating to tobacco under chapter 52, IR Code/114

14. Label activity under Federal Alcohol Administration Act/1 14

Stamp Taxes

15. Number of occupational tax stamps issued, by class of tax and by internal revenue regions, districts, and States/115

CASES RECEIVING APPELLATE CONSIDERATION OR IN

LITIGATION

Appellate Division

16. Receipt and disposition of cases not before the Tax Court (nondocketed

cases)/119

17. Receipt and disposition of income, estate, and gift tax cases petitioned

to the Tax Court (docketed cases)/1 19

Office of the Chief Counsel

18. Processing of income, estate, and gift tax cases in the Tax Court/120

19. Receipt and disposal of Tax Court cases in courts of appeals and in

Supreme Court/120

20. Receipt and disposal of suits filed by taxpayers in Federal courts and

actions by the United States for recovery of erroneous refunds/121

21. Decisions of courts of appeals and Supreme Court in civil tax cases/ 121

22. Receipt and disposal of collections, injunction, summons, and disclosure

cases/121

23. Receipt and disposal of insolvency and debtor proceedings/121

24. Receipt and disposal of miscellaneous court cases, lien cases not in

cou

rt, noncourt general litigation cases and appeal cases/121

25. Caseload report/121

Cost of Administration

26. Obligations incurred by the Internal Revenue Service/122

27. Obligations incurred by the Internal Revenue Service, by appropriation and activity/ 123

28. Quantity and cost statistics for printing/ 124

363 . -00,, 0-70-8

Annual Report / Statistical Tables / 97
Table I.-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas

11, Ilm'"unds of dollars. See table 3, P. 106. to, is, iab,s ,it Further breakdown of national totals by soacesl

ladhidual income ad employalgint lame,

Total

I

"'O's Inc.

in

'a.

Internal rev.rum regions, districts.

b"= C'rp':'' 1'n

~ .

of ""

Me -

'Ih h

I

it

and

Railroad

mpl.y-cut

I

late, and other areas I A

collections

"Ic or ,. . '.pa and i

"

turphisumun, - .1t'is .,ad

ai

,

,

inerrant iOc,,n,.

(Star tea represented by single districts

taaa in'.

lanco

a I

indicated in P... otheses; I.I.Is for

other States shown at but[.. of table) (1) (2) (3) (6

U,ftwd istia.a. t1tail ----- ------------- i"M1.560 Mail Ms 130,10al 23.972,1111 19. 947 1stax; 933.1.. .0.010

heInh-pareill. R spen. .. ............ .. .399.4iss 12.30a.211 ..012.131 sr's.9

Albany as"o, 1.346,311 3,111 7 116

)

1 1.311

7 74 815 10 1 52

2

41

'

4

11

9

2 : G

0a

......

F

Boston- na, 4 55.432 1. 112: 743 3.947,538 9 0 71 2 1 1 o : 1 463

1

19,348

Brooklyn --- ........ (see (c) below) ---------

8 flabo_ ........... (see (C) below) ..

3.790.844

3.41 141

4

8641.740

110

3,139.947

2,421 213

"07

1.4 1

502

7

13

2 14

1

I~IGS

OCR1.

f

'20

2095

281

a ..:::::: !":78

Again ........... (Vermont) .....

!I

f fill.

2 2.

5IF7 1, 3 3 4

9 131

to 122.732 1,173 all

, (Cimmutudd)_ ......... 3,478.040 647,935 2.50.422 7 361

9 9

83 09 871 11.282

Nixon 1

S ' f') below)

at 8.

41

1

311 13,82 Iol

6

2. 2111 83 3

1

424:472 43: 77

Portsmouth- N, w H..Psh,,;j :: (

Providence. . . ....... (Rhode Island) ----

_

447: 6SZ

300

1: IN.

6

176,626

:,

71 74

676

' 253

:

89 4

131,486 06

D

28 369

541,17

?

6

20

15

3.576

Allientil Bass- ...... ....

: :: :

Baltimore ------ (Maitland add C.

, ' - - - -

5,425,303

:,-I

'

.7.

482 234

141..1- . 387

AM 642

4,021,727

673,024

15,411.

IISi

3. 681 ~ 866

.39.a.

1 645

12,111

11

,

, 07 ,)

Newark ............. (New J-d( . . 1 . 1 111 II I 4 11~ 7al 4 I12 1 71 1 16 1 1. 3. 39QL Og5

5 111. 24 ' 1

' 86

Philadelphia-

: : W 0~~ . F T,:,~. :G. 6 :

142 3.914 5

' 510

,

Pittsburgh ....

Richmond

.... I= )

4: ~2 30

2 Go

29

95

5: 48804

61375

3: 100

"S: 87S

529,015

4' N

5

2,605:

9761

'

:

,

12 47

69,594

IT

.41

9.071

W

a mington-- . 1: ~: ~ ~ - a,vj:: 1. 318, 593 628.466 647,901 IV IT 23:376

1

7

3

171

i.mthwa.t Framiam.. ... ------

Atlanta ..............

(GO 'gla)_ .....

11,sub,351if

7

2

2.61

al 1.111.115A

523,50

M1,111,fars

1,9C5.283

alff"....

428.497

I.Sai

1.163 all

22.9.8

1.,

4

1

xpt~gacs

10,880

On OR (AIL 1

:

1,332 600 182

4N ' 053

5

fall

N

5~

77 13.

' " 9

a :::: (Seat h

C.1hrob. Cambes)...

Greensts, IIIim )

( " 22

4, Tli ': 617

; 1 ~ 112

712 13

77 ~: 207

2 12

"' 1

7

I I:1165

1G 7

598,352

"

7.163

138

'

1 :8 5 3

13 34 ) s .

p

P,

( .?~

I .. : .

N2

La

4

9,:8

7

0

116 332 3a 17.

:

2 991

Jacksonville ---------- (Florida)........

N., life ...........

is

(Tennessee). .

31:816281.64

1

1

32

537

34 '1' 945

48

":1 1"',1 44, , , 3'"98:7M9 9

701: 07

1 33 53

1I:N35191 183.,825

737

...... I R..I-- ~ -- ------ ...... .... 32.1101".

4 113

7.2417,304

113

a

8

2

21I.L11:61s2

72

a 5

3

1.,16317:61710* 11:41a:M

141 153

62.0611

1 17

93.

1"

Cin

Cl ...land

.08

7: 1! '1: 504 342

1

.

5.180.953 808,931

3

" 1113

324

'3:

"1

13:20

23 535

Detroit ..... ... (Michigan).. . . . ........

1

3.111,133 3: 17 231 1 1 7 4 1 11 1. 11 1 1 4 1 1 l1 1 11 1 2

132

31.

9

76

1"1j,1i1J1d.Hx:: I( 1~1.1,i',.nc

LA

" to

7 1

1:4,1. I 92.

":

,

,: .2,

6a

111 141

2 :27 ~ : 2 72

1. 121.&1 7

51 3:~ 3 7

10 131

F : G7.: Sit.

11 110

, :

63

23,01 0

11

14

11

1 7

PA'F "

"

I!shut&. ---- (West V! fgfima). 131

'

13B

82:'

94

~ I~ ' :

140

032 3

70

*

280

52 1: 7

subs : 20

-IRINfoun._ ----------

Ab ribeen (South Dakota

)

ads,

flift.1117

1 1 1 711

5.3213~j5o22 20.4111S 185~50979 1 .Us. 213

68,313

15.7611.333

116.385 2

202.0211

809

Chi" (So. (b) below

h

4 :

l2,

'

44 28a'9

2,719,490

217 351

8,652,365

1 1 913

1" I

1,311

79

397

3

1,114.0761 7, 74 12N, a

...

41 '3,13

IF

:

Des , (

ow.) ... .... .......

Far lie -- --- -- (North Dakota)- - -

F 2.

20

1

84

2

:,

20

, 137G:4

06

6

Mil 6: 54 5 111:064 3S 762

eupiki........... (Wisconsin)

odwh ..... .. .. (Nebraska).

-

1

.353:665

131 81

7

OG.275

141

..

Z 364,03 1

79~3. 21 f

111 23:1 21

402

1,858 78

536:3925

556

43

,

135

2:17'

3

'.2

S . Louis.... .. (Finfacial). .. .

St. Paul ........ (Minumanta).....

:

4:

782 7

so

3 111 7 41

1

'110~415F '4

3.

I,30'~Va at 3"

1~1'~: it 7.

440

2.111.1a4

1,862,377

54'o

52, 3AM5

IT 37.1 I:

SP

rang"'d

(San M be]..)-

2: .: ,

07 94 360,460 1,338.052

5

356. 20 973.224 2,336 5,972

367, VG 29, 0 1 ".321:1541

as

.12 08 ': I'

8.

ass ..i

238,503

asi's.

10

13

:1314

A

_

o

4. 111

6

14' 51 " '! ' N '1 ' NT '.'82 101

3,194 14.180

:

(See M 1,1111)

4~:

0

50

3~ 41,16. Oil

3

150: 3963 7

1

I I : O

2.633.309 26

7 O

7451~207

7 1:6

( 1,856,75821 11.8745 13~441'7'

D C.

Little R.k-. . CR k eas _: :

how Orleans. (1+X'9-.)_

1,111

65 "

'~3

17.

F

.639,895

..1~1213'1

251,329

I

I. "

71:

52 '2"

1,290.97507

65,

M16' Ito

364.703

""'351145a'

918,715

771

3 1

9"

2 12

Oklahoma City. . (Oklaw. 1.598 24 G V3'

1

205,790 1, 055. 729 284. 19

2

Wic ( 765,955 88 : 4 5

~Iblt..... .. K A.,)....

185:

089

1 11

77.3 951.249

6 2

3D5, 9

590 276 50"

Ar......

28 4 083

Anchorage' I

Boise. (Idaho)..

.'.32:"' 0%

379,633

'.afs

:"'

5S.37 2" MI,M64" 2'.'3' 72 033

is 11 a.

237:3'78 " '

M a,

3

aus 1 is

466

L

706

H Montana)

. H i

I

2

273.164 6

2G 62

81!

38

226.600

412 746

80:813

91 363

144,643

311 111

1

IT

11

9

27

F' "'

awa i) .

--- .

Los"Angeles........

SV below)

9. 460:433 1,362,308

7, 4 ,

51G. 43

1

.

1,75 .178

9

~:3

5,65

4,

F6. 313 1 14

Phoenix. . far A 717.348 68.338 6211,008 191,324 42 121

'

133

:N2

Portland ...... ..... (Oregon) .. .... - ..

New IN O.d,).

1.288,3265

3

1

4

' 1

209,%4 45

IDII

1.028 997

284:52

3

26

G

7.

2:283

9

5

7

,

7:

187.875

3.993

2

1:317G,

3

Salt Lake City, . (Utah

:

43 al 135

53

~IG

S 98 361.09 7 83,219 275. 157 3 1,711

(See a) tallov). 7.317.012 71 112 5 594 411 1. 177. 851 4.322.609 71,426

22

( 1 526

Washington). . . 2,472.322

: FG

3 714

:

'no'. us 979~ 987 470.783 FONI21 174 Gal

A.1. ...

Puerto RICO . . .

.

622

'1

.'sary

253 13:1, 3

3G

971.9

1 `13 M

as '~

121,11, 11

1

3,577 "'

Dan 4 a:111 34,311 4f1.7.1 113: l 323,412

" 1 "1

Jorlistributed

Foil Mx deposits and dmoshall le.dipt

!d

411 7 31 341.117 GG;. 722

.....

..... 88,496 7 74

.blecabal? 0, and xCcs-. FICA Cb hs 7

%

7ad:7 ~8 2,

.969 755, 829 755, M

T nsfietred to Government of G,- . .

Withheld laxelol Federal employees. . .........

-9.304

-817,576

......

............. ~

-1,315

j

-817, 76

_j197:3

576 ----

Total s for States not s how, abooe

(a) Uilornial.. 16,777,444 2. 240 700 13

.. "

2 11 7

.. 7 1

1 1 711

Of 11

""1' -

21

1

1

1

0 9:

3.

7

11 1:"a :417

1: %9:

814 7:1137 2 3

1

7G

SI~ 'as

an.

(it) Ohio "L

24':

3:

2a,

3

12,407.061

1

D,199:7241 42

2,407

2.1: ~IIJI: 11 4:1 Dal: 76 61.111 as

'

2

7: '47'1: 2"6

7

Gila

25 . 169

..a as

(A) 36.741,

(1) P.Awqtv 11.110.924 1 1 71 1 1 341 131 1 111, 1 G. 51a. 113 62 23 7 4 991

7,615,532

: 7

180:04

S: 44

4,

372 :

56.1.7 3,832,889 15: 058

s

2

7:627

See lootmates do p. 108.

Table I.-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas-Continued

lin thousands of dollws. See table 3. F. 106, for tax rates and further breakdown of national totals by sources)

Alcohol take~~

interrul revenue begions. itistricts, states, tax

E

e

s

x

C

,

1

tsofit istilled spirits taxes and othe

,

ardo, i Estate Gift (sum at

(States .Presented by single district, indicated in

tax tax

0 26, TO

I In'

Let I

pa;enth

all

t

I

the, States shown at

i ld 113 11

I .

3 :: 37 38 t,blind Feel,. DoNO

tom Or w Il And 50) Total

Le 0

11Ccted armielfiel cation I national' Dan,,,,

(1 GO ..C

2)

(

13) (M)

0 1) (11)

U.1t.d N-uni, .. .....

. 193,373 15.UZ.787 4,554.141 a-un"th 'is - 'a sI a1 111 13,111 1,141

iberth A11111tie R.91...... ...

....

Alb ' ' '1 ' 4` "I "1

473.005 M 717 301 2.016 a.7.

-

any,. see (C) below) ----- .7

Au usta (M m

21. 573 2 076 9 ~ .41 I : 281 239 238 1 d). ~ .....

....

g a

Boston Ma.Ooh.sCtt,)

III G7~1,1

05:

lli 111 afaf Ila1: 111 T2: 13 1,0

' V 31 3

---

B-kly.- 1See (C) w1ow) .... fill, 981

.

8,948

3"

95.229

I T

6!L029 213

162,669

5,941

91.460

.... ..

6a 879

5:316

7 1

59

549

56

Z

B

Rd1aIC,, .

I 1w)_

I

13 111 1. 111

8'

703 38,41

l ... 'G ~

r

nalf

off

Ha '

l lfidr,L

I

Connecticut)

'

6:

1,

1

06

'.

1

F:732 a l 33

- 13

kit ~r0 , -------

Italian l :1 (1,, (C) below)-

.917

1

9,242 136,524

1. 111 1 7

67.978

217.111

64,366

116,851 183..,' 1 7 1152:'19958

279

929

317

412

71 Purfail

ProWdure. IN dwd 1

R

h l d

F I~ 7L, 7C

0

2: 1, 27a 1

a e i so s.. 5 ... 219 4 21

lbol-11.1b, Int uen

22.344 2.211 13,8G5 10,681 83 .... B, .q - ...... ...... .....

Ivaryland and D.C.)

472.467

241

11

0.2cus

1 7

1

2.2M.1112

391.30a

.91.1

2914 52

--111

2GO.785

1 141 7G:6112.2 1~2:111 .22 I.acd

271

112

to

4

Newark ......... ev, Jus.

Phil d l hi r

It :,36

1

13:

643

7

433. 64

'

232: 96 135.576 .... .. 133 ,g, 1 1,3

..

a e p a. . "I ,

L, (II 'low)-:::: hot

Pitsbtu h

24; go4N.687 Stal. 744 134

' ' ' "

89: 1 : A'd

G11 21:1 . ..)

g _

RIFh..nd ----- (Vurfitia)

51

649

12 1 11

15.126

4 431

358,601

11 0 11

70: 1 20

1,3ab

x1a :a al

4,13(il

44.834

41 It,'

1,547

1

430

7

3

243

,,

W.-jr.- (Delaware)

--- :02 I

28

f 45a

2:

':

754 46

......... ...... ............. 3G 0 -

G"r ial`

"'ba,

44 5 1

as.",

5 10

a.62's.." 94..'1 60.872 2 .9da irf l 1 11,

as,

A

~

B Alabama) g .- - - ~ ----

1 , 6

' 41

,6

1 "1

135.792

11 1

'

11

10,880

1.818

6.04

3

1.630 1 25

5:br~

37

.

117

46

221

Colombia 26

.... (South Camliw~:.:_

Greensb (N th C l

1: .

92

2 : FI5 ~

19

,

..

~7 ~. .....

a0

44 na

oro-. or aro

M

GIL'

'2 9.576 1.186:385 402 FIG 21

Inksonviiii, fFmrsddis 1pp H':1'1 9 1F 3' . T'2

247 05

1 32 .. T ess'a ) 53 21

Nd,h,illd. - .- . ( )-- - .. -

7 71

33,269

11, 1 9

3,158

115, 74

43.311

5 40

If: 0418

31: 0 9

2 92133

28.379 3. 161

20.82

356 35262 5

..".I IN- Fix------ --- ---------- 34

i, CaricbmullL .

323.519 45,23' SJU 110 a,11s 1aS a.3 TS.296 242. Z54 1.119.122 10JU 2.093 in

. "" (itI 1:11w

Cl l d

(31 831

1

1.926

189:608 159: 773 I

30 633

eve an -

(~w ( d b . 128,991 1. 429 309 2

Detroit Mi i

:

856 17,573 725.278 119,933 103: 784 9T.472 5.690 82 531 ( cIs gar). ...

a olis (Indi )

95,389 8,853 2, 5GG. 138 236 jS

' =

111 11 141,712 'Full 521 74 'IleP ana

(Kentucky).

.

43,806

23. 143

4,620

L 311

xlll~ -1

1,212 111

7

33 111

131 211

31 3:

I,11

621 111

~11: 13173

2 1

1 :7141

97

345

117

a

Parkersburg- 9

(We,

tVugI-Y_. .. .

. .

16,498

~

29

17: 1" 4 :~5' 4: 48 4

d.- ................ .. ...

.456 6 45 40

Aboldrues (South Dakota)

416.66S518

3

52.414G 12 1,UG.412

1 14

7

as *' "'t"

a. .1sl .."s. .,,a is h --

C edc --- ------- (So. ) below)

st

,

161,731 21,302

1151 :

999 1,57:~Io F:I. J7I -341 67 40 4j2

754

65

......

Des bles ..... .. flow --,

F r N h k t ::

111 1, 11 2 1 124 471 170

,

a go- ( ort Da o a)

Milwaukee-------- (Wexionsin)-_

O h

,IT

48

1IIT

7

16

''

4:

229.602

I

04

150,760

93

5, 000

3. 133

01 '37 7

G a

654 rra ... ~,Ndtulaxka)., ....... ...

,.. i

" '

21 5 G

6

3: 1 39

8

70. Got; 7,646

1

03 .- ..

;) I "

r

_-

(MIO fl

P~u!

S rin field S 'js" lowi~~:

7,729

42,758

1 0.278

.776

364.054

121,068

127,333

50,252

31: "

...

- 2 '

2 la

1:11111

~d.

372

44 1

p g _

195

. on b bt

R.91 suit -------

14

__Next.

C

.

Albuque .

e

39,129

29u.sa,f

8 620

1.17

as 77

9 go

331.117

.1.1

7

293,349 21 1. 45.867 144 8,9,3 2GI.5911 15

..a,

3,267,

28G

Usti 97

_

A n LSed M bOIDW)..

,

78, W2 13. 150 702:~'~'5' 15.81'5

112

2G, 378

'.3f, 11,

Cheyenne Ila, IWyoMing)- . . . . ....

.31 2G

Da S

if b l

3,670 296 11 1 1 1 31

' '" ' '

ee ( ) e ow) ----------

'

79,936

7

9,874

lou: ~~ 'a I~l

220 :.: : 91 9~

Little Rock 1kdnVTs); . - ~A

2 .482

1 3 3 9

2,746

1

154.877 52.750 142 ---

111

--- ... _ _ .

New Dries ....... (Louisiana)........ -::

2 8: 42

20

2 : 11

102

271:17 G

093 1 1: 1" 13,0sal I a. 611 1

5~

11 8

5

Oklahoma City 1. ----- (Oklahoma) ...t K

Ann

31,830 1.971 301.12

1

1 111 6

5 7 4 ' 14

, d .... . ........

...... of--- ------

--- ------- ........

Amhirag~

28.142

115.1il

294

2,591

C.311

9

, 7

a.M."If16

U

:7~'

liala,lalf

"

649

.7,401 02.343

1.59 1

2 4.550 7,095

1 ~

2.06G

1

3

IT rise, . ------ ----

(Idaho) .... ... 4.147 48 3

2,0

4. 65I

I

"U

1

06

24

.......89

24 Hal

IN

;a).

if

'38

3.333 1,036

M

..

(Ha ...

Los An ela .

(S b l )

17:111 2,

": "'- ~ G'I

2,66a 2,502

1

D

A

g ..... . Ph ue (3) e ow ... .....

wrax (A,, .

231,738 19,452 39a 503 11 ,: 5 ? 90 f.04 4 D. 028 48.618 1.114 ss 16 ...... .

, w),. . . ~ Portland (a a o ' ::~* ) RI 1 " 2:"1' 3 :7 13

1, 1 2l 141 1 l ...

......... . g ' .....

He..,

1 G

9:704

1 21 l

863

3 1 1

10,221

, a

01 111

"

654

71

" S6 o '7

7 4

1

5 Salt Let, I Fit Y, . (Unh)- 4,548 531 14.662 34

7 7 ..

San F

'die's. (See (a) below) ... .. ..

rl

172.227 11. 575 660.407 310 074 223,694 37.481 178.895 6.573 743

.....

e-,. i

I

Sea Washington) choe

of op

1. 37.190 5.937 132.495 67,577 23.659 20,744 2,627 105 170 14

...I

I....

....

I,

dItd Ru:~ ISI

sirs

107

9G."'s

84 7

Mials 1 .1. Ta...

1

~

Idi,il"Itunt ' "eil:_ - ........ I

4,7D9 579

.7 3

2,071

73.944

....

....73,904

-

72,549

...

1: 5C

...... .... ....

Federal lax deposits and depositary receipts 6..

------

30,312 .. . . ... .

Gasoline. lubricating U, add I,.- Cloth's FICA

'

.. ... ......... .. ........

Transferred 1, G...frurent at Guam:_ :: : :::: q 7:::::::: Wrthh.hd taxes Cl Federal mrpl,n......

...

- ----- - - -- -

Trials I., Star I of h owu diam,

(a) 113 165

' 931

1 21 17, 11 1 1 711 111

:

9 dCG: B6I

7

341 :2.1

"

3 3f , G 3:75, 1. G

05

N

'

I, York

~d

I

Ohio.

515.320

145.687

367,665

17? 711

243,547 2

1 1 l 1

8

1

,

1:

..

of

Pours.,

I

adix 176.452

20,:6

G2

Lt : I a

1,U34 317 (1) Texas .. ........... 158.029 86.786 2U,598 222

l

a

M

65

0

U

98 / Annual Report / Statistical Tables be Imismue, no I, jo~.

Annual Report / Statistical Tables / 99
Table 1-Internal revenue collections by sources and by internal revenue regions, districts, States, and other

areas-Continued

11, thousands of dollars. See table 3. 1, IOG. for tax isle, and further breakdown Of national totaly by sourcesl

Alcohol lum-Cmitmad

Interest a.... a region,, did id

:c"' a it mh` a

i~

n me,, -111N, .1c., leles Bee, taxes . &"H ~

d

nifiesuir,

(States r esented by aan d I reported Occ.fre. I

'p,

mas lot

in P.-th : Is or In., States shown &I

F. f= i,

Total

Gxma,Hc

I I taj collected by

GooseStie

bell.. at table)

~

Customs)

I .

:

customs)

I

sea 11

"ll,

(19)

t

2) (23) (24) (25)

-11.d Suss... to.'....... ................ a7.2- 119.70 1-116 G,203 a.-

33-2017 .4 0 410

as

7 1 1:'G, 25 11 550 75 Albany. . . .

August ...............

... i""

4

b

. .1312

- .

.........

463 4 .2 10f.

------- ....

. ..... li~i_

,

874

55

9 BQ,W,. S,

beow .... Brookly- ............ ( ae c

.

3,799 1 711

.

2

"

127

~ ~

Buflalo.... ----------- (San c brilaw)..

- IS, 5, ..

15: 585

2

3

22: 2.

20

21: 7

11

3

Burlington. ........- (,V:rmant)--------

Hartford. . ~ ........... I aftectiCut) ---

42

1,816

.....

-----

421

766 J

Marmattan,:::: I below). t

nuou Port ::::::: (New 'Hampshire). . . . .

8, 526 7,OG1

........

1: 45E

.....

9 2.554

2

8

2,373

N. P i

a,.d,hce------ ..... (Handa

I

land) ............

. 1 10,597

Mid-111fle ar.9i.n. ::::: ::::: - , .1a" 2.152

UT1

141

IT?1

3 . al..'sys, 311 0 x;6 G C

) ----- 1 111 1,112 37

1,

1 13 3 1 1 31: 712

48

N rk

......... (Me. I... cy) .....

9:825

2 4 2 4 1 21

.,794

36 316

.......

::::

,74

3G 20

20

(1,: (So 11('~ hall 1 w 113

Pittsburgh .

oyv~: . .

1

,

23 114

---- __

--- 3:750 5

Richmond... ......... (Virginia)............ 1,494 ..... _:::: 1,358

126 ,: 03,

9 81

winniml ......... (Delaware) .......... :::

Sauxth...a sliestwe ...............................

I

4.133

......

1'iU- ------2_2;71_

I

7.0

I

21.4se

3

U.369 ..11

Atlanta. .... ......... (Georgia) ............ 915

.......

: ---- 841 74

3

3.922

22

----------

30

3,856 66

91 Boroughs

G l bi m'::::-:- (Aular"' (1mitA

66

468

63

342

126 1

00

......... - . ..... 1

00

o mm a.

Greensboro ............ (North Carolina

,3

.

-

3 150

1

"

its

(1kuida`i~'lf` 2 5332 ------

..

94 -----

1 0

3

423

1

24,9353 279 -N-512

13163

Nashville .............

(I nae,,,n)- ......

,

2 ....... 1 . . ...... ~ ___

2 1

26

...... ..... .......

1

21

...-ACl R ....... . .. . . .. ..... ... . . .. . .. . ......

i f

(S.,(d

I ' .

2. ass 3.gaa

I Gas

736

159

111, ent,

27.932

.11

... -------- 110"If 27,911

UT

21 oc

ami ............ (

Cleveland... . (See it) 1: Iflo ............ 971 . 569 241 11: 11 32 111

1

4

Detroit n)- 1) --------------- (Micli 1,161 1.544

0

2

,

34 916 Go

:2

34 32 gn:) 1 :::

1 adlanapolis ...........

(I am,

1 (K t k )

9

732 -------- JiM

1111 1.03: 1

9739

..... ::::::: 23:~146 1. ~ 31

6

1

La e. ............ en uc y .

u

1-1

Parkersburg .. (West Virginia) ---------- 9 ----- ------ 1-) 9 298 ------------ 197 101.

Fruld...' ye"--__...... ------ -,-' 2,.11 . 319.75 3 ux Its. ass, 611 Able,

dean-----------_ (South Dakota).----- ---

Chicag- (Sea Hit hot..)-- ----

------------

5 gsq

------------

1,427

------- -

4,45

'

_F

3 3

9,56

2

........

2-3-5- ------iiw336'

---------- .... -

Des Moines. . ~ ........ ::

,

12 ---------- 67 15 21 9 ------------

F.19 ...... ----------- (Mort

h ....

--------- ------------ 10 (1)

--

ii5 Mi

lwaukea... (W 25797 239 35

59

2

7

4

1

3

': :47

9,

.274

7 11~1

0

Snarl Lou ((Noti-koM -0

,

1 173 175 1,797

------------

1

112

.......... i_

0 0

101 .

St. Pau; :____---- (Mmumarto

, 4 311

295

1

40 37:612 5 37, 430 173

Springfield- ------ -(Sea (b) below). . --------

1

2

28,

202 -------i_j~ 2

8

182 2C

6-thwaut Mass . .............................. S.712 iii 4,923 Us 133

.

79'2

s

11ft, ", ---::::::: fS.:W(M.sc.)

A

,gu_ _!"a

lral.voi ---------- 2,897 429 2,212 257 42,559 --------iW - ----- 4.2,-0-1-9-- 391

Cheyenne

759 61

6

19 172

............ ....

" Is0

Dallas 82

D L': (G l-d ) 55

---

13 2 52:

551

52:519 3

.- ----- ------ o o

Little 168

--------_--

----------- 452 16 629 .........- 587

~

No. Giles Lo is 1,562 199 1,361

4

2

3

16,917

1 071

67 16,757

958

91

ID Oklahoma City.,...---_ (Oklahoma)____ 11I 1 ,

92

-------

----- 82 W3

its ... (Kahess)-... ---------

Was- R. anx ...... ......... 82.1a3 a 2"

------------

1! 1xM 12S W

-- --------

I.Oara

----- --

Is Ml I.,

Anchorage-...------ _

(Alaska), _ __ _:::::::

d h

:

29

I

-

--------

--------

2~ Bois..... .. --------- fl . v.)~ ..........

(Montane)

-

35 v-)----- --------- 36* 243

--------- -

Man lulu (Hawaii) ----- -

''

307 71 228 7 321

IS 2 ' 3'

__

I., A agelas-------__ (See (a) below)- . - _ 11,298 2,2:1 9,002 56

30

x2l~

S',

1 749

51. 4 3: 14 4

739

121

Ic :

(A'-x).

P 11 -

31

884 2

(

760 82

,

4 373 18 4 326 3~

. ad..

to FD N d

----- -- -

1 , 4 ............ ......... ..

ns_-_ --------- ( eva a) ------------

Salt Lake City 004)

------ - - -

1`

27 ------ ----- - ------ --

1~ -.------- ..........

San Francisco ........ (See (a) b low) 122

'7

285 259 312 11 1 11 9

Seattle............... (W~,hu,tan). 2 :674 140 2:472 63

41,

193

,, 4,: 111

24

Chill'. .1

1

.....

0-.,.- ax

P ,to R

-------

5 5

............

3 .N

Oth----------------------- __ .......... .... ............ ..

I

.......

------------ ------------ ------------ ------------

Undistribute :

Federal to. deposits

and de"Kary

1.1,

'1". ' - ------- ---------- -----------

-------

------------ ---------

------------ --------- -- ------- I ---- ------------ ------------

Gasoline. lubil oifin,

oil, and

excess

FICA -dit, I _--------------------- ------- -------- --- ----------- --- -_ ----- - --------- - ---------- ------------ ------------

G to

-erreareat of

Guam i - _'....... --- ------ ----- ------ ------------ ------------ ------------ ------------

------------ ........... ... -------- ------------

WithholiJ t;;e; of

Federal ..of ....... ... It - ----

-

------------ ------------ I------- ...... .. ------ -------------------

utaloor states notshown ab ove

(of-Cafilamia----

...

8 4 0_, 2_9 -1 _171-1-14 -3411 1 63 21 4 943

23'

-6

37

2-6

411

-42~,22E

It

(b) Illinois. ..... :::: (c)

'law ) ork, ~13S: 32~~

Q,

7

~f

':

. 4 1 3 9

1 7.1

2,3 3

s ll

1 2~

S,

(it) 0 2:987

I

171 1:111 Do

2

4, 32 492:9111 5 54

Is

(e) 1 ..... ___

f)

T_...

':6 ~ '0316 429

2 40,

2,910 18

1

6

......... _

H6 61.908 47~2

So, footnote, an p. 108.

100 / Annual Report / Statistical Tables

Table I.-Internal revenue collections by sources and by Internal revenue regions, districts, States, and other areas-Continued

He thousands at dollar,, So. table 3. P. 106, for tax rat., 'ad further breakdown .1 national totals by sourcesl

truternal reveme, legions, districts, States, and other areas I

Tube- a... Total stamp

taxes an

states .Presented by single districts indicated in partrithasses totals for

Total 11, ,ell I

a

litair, I Other

, xx

Ad

. her

;

.the'

States showriat bottom of table)

I :

in

'Nuestant,

(26) 27) (28) (29) (30)

twill" st -1t1tedNw,th-A suit. iscielion sa 12

11,

254 Albany ----------- .............. (Sea (c) below). -------------- 17 17 ........ Augusta ......................... Mim,)_ ~ - _ _ .

Boston M-ach . Iw :::

38

31

37 .........

-------------------------- .. . -----

Brook ~n ----- See (a) below). .................

7 (:1) 26 361 20

4

.... e Y

Diarlmigton ----------

(San (s) below ---------------- ................ 0 37 Vermont) ------------------------

H

------------

.........

Martford ------------ Connecticut).....................

h tt 2

an

I a an ------------- __ (11, H mPybu;j::::: kil, ... :::: .....

Par shoirth ..........

(,..(c),b 628 111 0 417

..... ..

1

22 Play' deuce ------ _ ............. h

0

de Island) .................... ..... ....

------------ ,

(1) fild-Attainflo isaw,xises.. -------------- --------- -------------------- sma .443 41S..I 24.983 ii 47

N k ...... : ...... ~Alllfi~nd nd 1-C.) --------------- 26 ...... ...... _. ................ 26

1

r aw a,)_ .

----------------

Philadelphia 111 (e) b v

-

34

23 028

1.)

5

11 22 1

----- -------- ~ Im ----

P~xburgh ---------------------- See (a) be

~:::

,

529

------ ------- -

1

23,02

529 Richmond,: : ::: ~ 1111l-------_------------

111 1 1

:::: :: : :~ :: ::: :: ( 476,406 1.420 ............ Wflarringla Delaware) -----------------------

ah

-------- ~ . . ................ ................ ......

------

,,x ,-Itygion. ------------------

Atlanta

(",rgl,)

1-14"315 923 1'131.478

"i

------- -------------

Colundi Birmingh in ---------------- Alah.m.5-: ......

S. U lh "

928

........ 923

1,928

-.............

V) 31 ............

Greembor;....------------------ (N-l th Carel"'11rus)-----

2 is

1,131, 8747

1.

131,312

2.184

51

............

~li' 19 (MI.,ssfal _

Jackson ----------- -----------

.... - , -- -- - ... *...

20

If

Jacksonville ------- ....... ~F mids)------_------ ---------

Nashville :::: Tennessee) 136

w ii .054

1'

19

----_------ ...... ......................

.- Is I . .......................................................

Cincinnati Is t b

473,M

................

41a.Ml

4.1 3 1 31

: *

_.. ------ ........... a (i(it)) b.1e w

It

(S:n

C evehrad ---------------_----- 74

15

773

31

Datanlt_ .......... 1 -._ -.

"i"il

6

2 1 0

:: :::

Imfen.paPs-------- inch ..)_ --- ...... 1- ---

!

737 ............ --- 737 ............. 4 Lou 1xville----------- Ken uc1fy~..___. ......1- -----

P k' !

476,396 474,091 1.3"

1

sr .,sb.,g........ We, Virginia)------------- ------

ad.ext R

Aberdeen............................ .................... (South Dakota) -----------

Chicag.

.S

233

11

5

................ 231

10

....... ......

1

6

.277

__....................

Des Moines ----- ------- -...... (low

-------

4

-------

1

--..

------

165

To go----------------------- ---- 23 (North D~lmai)_ .............. _

Wil ff :::::: ..... .

..

wau 2

Wisconsin) ---------------

O h i ": ------ -

6 ................

6

a N bi

nis u s. - , -ka)----- : -------

St. Lo

--------- --------

--- imis.a.)

------- ...... ... .............. .

I

............

(

2

' I

St. ffifin-taf ....................... C) P 20 Smi,gfie

'a'

Of below)- . .......... ...... ............

,

................ ------------- I

xiouthwsst

11"'.7- ~

------------------ --------------:

Albuquerque

`11* M"')

iii 5

"TO .. -------------

Austin....... --------- (So, (t~ .lowi-:. ------ ......

................

150

............ .

.

......

.............

2

511 Chevenn------ ------ Wynne ng).......... ... - -- .

......

Delta -------- ------ ---- ~Saa (1) but..) ----------------

D, nver d *)

''

31

----- ....... .

(

,, as., ,

Litt . Rack ................... AM

.... ............ .. _ ............ .......... ..... ................ 2

1 Me. Odlean ---------

(L' i l ..sli ----

9

Oklahoma City...... ( ~hh mry ) Is

W

------- ...... ....... -------

24 ichita ----_------------------- (Kansas) _ ....................

- ----------------------------------------------------

&Y

.76

(~~)

st I.$ as

54

1n11mI!,:::: nal

... :: ------ (Alaska)......... ...... ----

'

0 ................ ................ 0 31 .is,_ (

Main)- .......................

Helena. gM,wl )

j,n,

Honolulu

.............. . .............. ..... .. .............

I

. . )

---

Los Angeles-- ----- (See (e) below) ................... 162 1 136 25

7

179 ::: (

Ph

rims _

Anion.)

Portland -----------_ --- -- (Oregon) .

23 -- ---- ...........

Nonef,i, -6i ............. * ....... (Nevada)............ 0 ....

5 Sall " e t ...

S ~

I

an

Francis._

s

S ttl 78 6

19

27

ea e --------------- ---------- (Wash! goo")___ .,.a121. ...... ...... 12

.2

1

(.)

5

Puerto Hit -----_----------------------- 9.352 ------ 8.352 `x) ..............

adi,t,ib oth ------------------------------------- led:

Federal tax deposits and desessitary recauds I...........................

G seline, lubricating oil, and excess FICA

................ ........ ....... ......... ...... ............. . ..............

credit, 7 ............ ------------------------------ .............

Transferred to G.vernment of Guam. .......... -........ ..... ..

.........

F .... . .

withhold taxes of

carol

earpliry-..................................

... ............

... ............

...........

............ ... ................ ......... ......

-----------

Totals for States not shown alsove

(a) California- ..... .............. 240

"

44 206

(h) 11 acis................

5

4 1 166

(c) New York -------

il~ 'to If ---

652

''

11

........

123

887

j

1

Is

1

.

220

-37 Peeirs 23, 557 5 2 552

_ .

........ .. 26 (1) Texas --- -........................ 150 1 69 79

(

A

S

h

a

96

So, lonfinte, a P. 108.

Annual Report / Statistical Tables / 101

I
Table 1-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas--Continued

it. thousand, of delta,,. See table 3, is 106. to, tax rates and further breakdown of nations[ totals by sources]

Manotaoulers, excise Islas

Internal revenue legions, districts, States. and other areas I Total

I.b,!-

Tims 0, 1 part -bell( Moto, vehicles,

chassis

,

bodies,

'et.H.'

I.c.s.

Slat

'

a

represented by single districts imli,,b1fiel in parentheses;

call for other States shown at bottom of a 0)

Total ..,.line pH' cat."t,C. lU,1be,,,),, in P-11~~g'qd

of,

e it a.

"I

Other - taxes -I

(31) (32) (3 (35) (36) (37)

Unnav! St-1, te.1........ ----------------_-------_ 6.5411 3.186.212 .?..16 111.1n 11.a57 36

N-1-I.-H. Na,. - ..........................

b l

1.

1 699

W:1111

2

11,221 1111,151

4

1

22

Albany.... .............. (See (1) e ow). - - 1"

A gulf. 3

3 "

1 11

8

1*)

2

38 293 4

'

~:))

Boston. 20: 042

1,:

998 142 364 996 1. 1 -4

b:lgw~ 12

"' '

112

AD "1 1

: 131 20

B Sea (c) Is

Bunnell .................. (Vermont) ...... ..........

27:

IS1

723

4 go

556

as

V)

B 787

30

1: 3

11 1 120 -------

Hartford .................... (Connecticut) ... ------- ....... 60.679 6.713 5 3

7"

1 737 16,469 Mae Per' of : ::: :: :: :: :: : : ~1,, (,) firdow) .................

Ine New haush

---

G11.99857

3

494,8088

71

14,88 76.150

154

1,:4

54

44

iz, oa4

27

-2

---------

Pro vidence.................. (Rhode yard ....

2

.42 0

45

1

.7 334

2

49

9

3 I

Muld_auriltle Rxviia,, ... ....................... I ...............

Baltimore. . ............ (Maryland and D.C.)----------- -

711.-

55.897 18,599

.2sS

774 14:914'~ A7.1834

117

2,A94

..

1

P ilade lot;~a-:.-.: -~.~'h

b.Ic.)... -------------

2

P

,lh- Sea u

"s"

14

'33:11' 185 1

258.31

6

GG

2U32: 2

243 11

5:1511a

7,111

11:71,11

,218

13: 24 1 5

49

5

.

M4

411 8

56

11

1

3 chmo :: :: ( .

it,. V

'

rRine ) ............ -......... 7.867

~: 2

13

41

284 At Wliml, .......... _ ( '90

At... Delaware) ...................

'

I ........

"

67

1

South

-'

R.I.. __-----_-----------------

Atlanta ...... -------------- (Georgia).......

As

17, 78"0 11'3:5'55 7*5

7 123

1:627

11

2.3

32 2.IU1 go-1

HI'm -7

!"all

a

l

"

ora) ---------------- 11. 117

', R1

Col. 1,658 3, 1 11 III (*)

able _ (South Carolina)---- ------------

G ....also .................... (Numb Crimlin.)--_--_---------

10.8

1

4

27 725

1 . 1

24 172

4 .

82

1

"

2 0o

1,510

300

46 N -1

...................

J.. hwi;: --- (",

I's

Florida) -------

6:603

11 21

4: I's

1 111

7

11

1.7"

217

5

1

04

1. 58

1. 45

4`18

-2

Nashville ------------------- (Trimerinxi,s) ----

:

047 ,:G.3

66 158 2 1

cv-1 Rag-, ------------- 18

.

115:1I IS

01

- 111

8 460

11,941

36

414.441

5

092

~

s.20, UiL

1 447

2,07.

65

jnrat _ ~ ....... ..

C"

.....

Cl.. land........... ....... (See (it) be low) 511 131

,

100 52

8

13, 2M 410,110

,

38

4 0

1

1. 1

8 1

4 Detroit . ~ ..................i

Michigan)

I i

2,1,4:3

oz 38:959

"

4

41?

_

"

0 5

Too

0

2.155:1 7

Indian rlix I ....... nd ana) -------_------- 7 407 ING1 -3

an kti~

.He

RM85 ~53 R:81 32 $1 2 725 168

, We, V 1 364 14

...... Parkersburg- ... 1,875 1, 54 2

,

1 185

,

143 3 N

Wild- Raelem ................................................

Abell 111"th

'

SS7

m

4:

071

.,.

11,

3 90D

1.07.

2

5,207

3

.113. 1

62

11 "1

-

--------

Chicago- b) b,l.. 334,418 25 5:55) 6,310 2,57 5 68,215 1.729

Day Mon.,, low.).........................

Fa go ....... (North Dakota)-

16, 168

2.03

11.970

1,45%

1, 5

24 11N

1: 121 1 DO

4

27I

MIM.1k .................... 49, CBS 39,36? 159 172

8,

851 545 ..........

O1IhI_ 0. ~",bralka). ....................

St. is: Millood) .................... 2

so'

5,373

' "1

2051

1,558 3,1711 70 1274 ---------

S Pmfl .....................

4o~

u, 141 39:236 894 260 1.879 3,878 -3

S inglild -- -------------

(See (b) is 26,664

24,472 75 -9 1,115 111 ........

S-h-1

All.

. ..............................................

"

'c ' ' """ 1'i )

I.e.._

5 102 ""'5,0211 "' .""2

s1,717

37

As._

Z3

70

12

.

........

' . ( ) ,. le. .:: Austir.! S ! .

5:

60 101 581.143 17,786 4.919 1,13 9

11~ .

Cheyenne Dallas. (Viverema)- ~ ................. Sea (f)

below). .............. 7DI

52

439:5"'62 - HO517 3,295

6

5,429

13

- 108

..........

1-)

Denver LID A .................. -::

A l .

27:316

20 931

14,30;!

19 95(1

54

85

11,221

29 1""423 444

---

1-)

.

l ,In I *~ ------------_-----

New O,arm .................

I

Louisiana). --------- I .... ..... 9 942

,

8,031 1.068

99

693

,

(:)

Oklahoma C M.Isfirm".)- ----------------- -

.tY--:::

:

329 539

1

31,1: 711? 9,3157

49

93

14

3,092

111 .131

Wkb

ta .... . . _ a

VVIIII,e, igaigiveri. ........................

,

643

193.741

26

303110

.,a

S.Aay

An is I ~Alaska) ------------------------

So fit he)........................

'

24

1,958 1, 4%

....

.......... 63 1169 320I --------

112~ W . ........... ...... (Montrin if : ............. _ 377 292 V) 3 3 33 14 ..........

Non lulu ................... (Hawaii)

1.

Q9 48 --- ------

1

7

1,

048 10

V)

Los Angeles. _ sm, O) .............. 172,757 142.966 4,471 2.058 21,

"1

1,41,

-3

Phorm ..... ............... --------------_

Portland ....... ............ .................

341

14,504

as

93

--------

7 -

so

29

1

13,15793

11

88

v)

---------

A .......................... (Nevada) 669 587

.......

U is 63 1

L a"'it'- -- 17'' 1472: 73'.1 ~)752

Ij111

27

16 117

393

2,111 1

San 1-cl- --------------- 49

Seattle ..... ............... Washington). .................

1 53 24~ 56~

9

6,875

,

14 162

,

17.297 22

Art, or hoo-tievell

0 1........................ ....... .................... I

....

go 140 ........

................. . .

Outh,We R." ------- - -

Urdi,tHbYte'd:...........................

--------J4 9

---------

:::::

---------

.... _----- 6 _

-------

0

...... R _

6

__

----------

Federal tax deposits and depositary receipts I ~ -------- ......... .....

~ ~

Gasoline, lubricating 0 1. and excess FICA credits 7 ............... ....

Transferred to Government of Guam--_-----------_--------

Withheld firms of Federal employees........................

: .......

-----------

...........

........... ......

Totals for States not shown above

I 1,libirow, 344,289 290 877 223

I

'

3,385 38 200 1 604

b Illinois ... 36

H

-B~.31

~

G 4.S I. 56G 7B:I80 1 ~890 5

c) No. Y.,

'

1:6

Il

offI

so I

"B74

93 476

18,919 3,297

(it) (ml.- . . ~ 'l 108,989

1

3,319 415: 202 39,587 1,143

(ra Pormylbialia ------

(1) Texas ............

14

65

41 6.107

624,

7.5 1~1:gll 1 . 1.3:3

2159

29,569

6.568

912

6

See footnotes on P. 108.

102 / Annual - Report / Statistical Tables

Table I.-Internal revenue collections by sources and by Internal revenue regions, districts, States, and other areas-Continued

[in thousands of dollars. See table 3 P. 105, for tax rates and further breakdown of national tebils by innees)

Internal revenue legions, dishicts, States, Ind other areas I

Total

Admissions:

......

I

xonr:e,[~: '

ethic

contexts, "

calla ,.of gard is,

ots, to

(39)

Miscellaneous excise taxes

(State, rep

r"

an~,d by "' "

indicated in parentheses;

Islas to th

,

, Stal xb`o1w'1n~at`bottom or table)

1.1,01d Star.. tax .......................................

Navrth;Aftv, 1. 11.9liv, ........ ....... .......................

I'l

a

my 1,, (c, help.) --- .... ......

A

U,

usta me

I

e)-------------------

Balton Break, ------ ----- (Massachusetts) ............

yn .... ..

R

onsto -

: :' :: (Se (c) be

Burlington-.-. ..... ....... .. (Vermont) ....................

Hartford - - - . . . ... . (Connecticut) -----------------

Morhathol---- ......... .. (See (

c

I

below)------------ .-

Pirtlemilt I ------- -- (New Names

h

ire). ------------

P

idena, .............. . . (Rhode Island) ------------

Afflid-1-- 'a' c' Real............

B.1hurcle-

"'w"'. Philadelphia ------------ -

Pittsburgh-------------------- `S`r(e)belpw))-::--- ::---

Richmond _ - . . __ (V,,Rjnia).....................

Wilmington-. ------------ (Delaware).. ----------------

SIulh... III, - -------------- i*--------

Atlamta~

Birmingham----- Alaboons)....... ............

Columbia-

.........

IS

-

"

in

Ile'Isbell, _:._ (,,.rlh

In

,

k

son ~.

(M i-iPPI)------ -- --------

Jacksonville.. . . .. ....... (Florida) ------------ ----- --

...-INashville.- .. _ _ ---. (Tennessee)..... .........

Paid,... .......... ------------

Cincimah- . ..... ... (SeeI, ~d) be

C1... ja,d~:::: (S

it)

b2w) ----------

Detroit---

(

Michigan)_

ludion.p.lis__ - --- ------ (I pdg~,C.~,, : ~::'

Leei,,ill --- -------- - - -_ (Kin .......

Parkersburg. _- -- ---- -- (West Viigima) ..........

Null-it R.Iii------------- ------------ ------_-------------

Aberdee ------------

' '

akll,),:: :::

Chicag............. ((Sam`(`b) below -------

De, Mmnax,.:, *a)-,,

FiugpiuW~,:: M,lw ................ Nort

(Wisco, in) ------

-----

Nem.k.)

Sl. Mis: ------ P'sau'll, -------------

St. Paul ----- (Minnesota) Springfield..._ S. ------ --------(b)

bebwj

__ - Ilip, - ----------- ....................

Allim

qu'

rque-.. ~,K:,w(M - -------

Ausfin_ ----

exico) --------

Cheyerne U'Re -------------------- (Wyoming)- ................

b,l,*-------_--------

Denver- ---- (2.%(r2d

.

I --------------------

Little Back ------------------- (A,ka.in) -------------------

New Orleans.................. (Louiriars)_ . ------_---------

Oklahoma City. ~ ------- ...... (oklah,

I

). -------------- __

Wichita-------------_----- Kansas) _-------------------

W.O.. Reuse.

Anchorage. . *----- ----

a.

ise ---------------- ...... (I

H,leriii. - _ ------------------- f1d.al1-a;a)-

Horolu

"

f)

,,, I

.

,

.,at Ph. S

. .........

.......... (A,,,.,.)

Portland: ----

Reno_ ----- N

o.ad. ................

S It L kc C try--------- ----- (Utah) -------------------

Sa Free-................ . (See~) befew)--. --------

"'.Seattle ---------------- ------ (War irHtmn) .................

' ..'. . I...I o_xxi..._'_ ~ --- ------------------

Pea, IT

Othelo

A

tfindistributeK__

Federal tax deposits and depoll.

fall, l-cmpt' I ......................... -------------_---

Gasoline, lubricating oil, and

excess FICA credit, : ..... _ .... -------------------------

fanshured to Government of

Gua,--.------ - --

Whhh.ld fares of

nmixter ............. ..............................

(A) Cold.,....................

(b) Illinois-

(c

a

(d~ ohiw~_Yo ..........

W P.nmyl,ami---------------

H, Texas --------------------

See footnotes an P, 108.

(38)

als"'..?

Telephone:

_., etc., and

.q.;,P.ent ..

ncirs

(40)

41.... 241 .40,112A

1

2. D4

1: 141 3894

73,918 13 57.471

3.258 -6

19

14,361 1 7,879

872

... ....

.... 218

2" ' " - "

21, GOG

3111.1111 7

1

'G' 206

"' 1~ :

1

85

7'D 6

1 172.635

39.559 -5 29,239

60.397 5 51,329

11.3

" -

3

2. GI: I~l

21g C)

o

27:787 4 22,1731

1,024 ..... .... 3

295.S32

10,197 7 26 -29 113.936

2: - 5 655

4

_ ,

1:

23.20D -2 14,263 3"

31:"8"1 IQ, 13.N'l

077 3.454

2117.4ull -7 1531.321

18,420

_3

13, BJG

66,399

2

5o,979

": '77 '6':

097

38 15 - 2 2 GD4

1~1:7

"

-4 4.724

.59 ..... .. . . ).Boo

410.02D

2,019 .............. Is 2"'T"555

143,DO3 3 75,114

1.114 3 4.342

1,529

.............

24.104 -1 5"

1., 1

31

131.172 (1) 32.980

S3,

'31

3 121, 71116

26. ADS ............ 3, 871

13.452 9,

1

73

-.7.0

2,759 168

32.957 ........... 11 2,291

--- 75

3

1

21 -2 488

7l

14 1.

47

of

15,062 1,347

4,77o 6 -2 746

.144 -2 2

7

'oo

1:41812 , 5 3

323.072 -2

2,165 1 1,141

2.35'

15.

11877 2 389

6 961 V) 4 258

73 2 33:245

3 S7 251

6 U too

I .

121

9

~ N-2

9.56Z 2 92

1

65,412 3 128.887

42,111 0 35,9

44

3GI 7.

892 .....197

Totals for States net shown be,,

239.413

1

1: 411

392

"1

84.818

111":I0"71

5

134

-2

84 2.1 3'7

60,153

64.015

15:, "T79,

I " risen, fallen

of Persons "

(41)

-.87

sugar

(42)

10.191

Drexel and

special

Motor fu all

(43)

=I .."

7a Ja~ 411.11. 23 29y

22 22 1. Sal

7 627 4.111 2,400 2.111 2,G

1

72.

2.099 3 2.057 15

1

395 31 4 1: 7 65~993 38.275 181~1

2

14

408

... .......... . . 204 1... 30.466 3,686 a 2.381 34

50 1.451

1.2 2

"T" 3 312

212 29.121 1.- II.U2 14.588 5,398 3.081

1:7117

4'293

3,511

13 2

1,893 3,095 9,092 1 :

3 271

954

3

12A

39 3.168

70, 21..0 93 2,333 88 13

A

9.535

1215, 1.4,6 5

a G 219 46 ........A:

...... 6,067 2 2 813

31.163

.12

13, 312 14 6 Z,921

too 24

4 ....... 1,643

22:

"T'

17 6ji 4.289

127 14 2:738

22

5

3 2 099 .0.2ra 2S.932 SO.".

a 29 2: 1

2.134 31931

1, 3 ..... 796

........ 1.712

5 331

1

20 6.329

~7

1

3

22

1

5 2:71

12I (.)11,6153 2:021

12 671

6 .......

ic .....

" 302

202

_......

42'51752 42 ....... 1.367

921

981

3 1 142

15.048 299 18:98

418 2 D3'

.:934

4 ........ 1.116

1 :3710 718 2,674 560 13 03 121:316

6 1.&33

...... ..... . I's

7S

............

11 ..............

17'5:6ali 711

68,348

181

62

7, 464

..............

.............

..............

13,328

:18. 303

339

4.453

3,931

..............

..............

30.946

17

846'

11.867

'

3

260: 1115

Annual Report / Statistical Tables / 103
Table I-4internal revenue collections by sources and by internal revenue regions, districts, States, and other

areas-Continued

IN, lholands Of dollars. See table 3, p.106,lortax fates Bad turther breakdoemof national totals by sources)

internal revenue terraria, districts, States,

and Other ...a i

Miscellaneous excise t-e-Confimund

a threNslifirvil

States represented fi~ single districts indicated in

lieses; totals of other States shown at bottom

Pa

rea

Narcotics

and anuflauer.

Coin-omraled

asinine

Wagering taxes Uso tax on

highway

Dfir"

excise taxes

l

a, so including

.-bell... I

devices

Occupational Wall I

I

Zllcll.~r

taxes

(44) (45) (16) (47) (48) (49) (50)

thrited see-, tateL ...................... 1.936 12'ses 3. I.g. Ilia.- 11a.- 20,574

taie.-A"..". " ............ 73 74 ss .1. .04,6sa 111.11

A = - - "'s

2 5

83

1

79 -110

A a:: : . , n a) ~ -a : :: Beat..,.

asal

M

- ------- --- 32

..............

6

48

4790

21

4,497

41

9

4,145

took

B I '~

105 5

'4 01 11 8

uffalo_ ......... S ~ [~

Burlington -. .... 1 e

"" i)

131 .... :::: ..... . ..........13

-

2

------------

078

2.

230

175

12

2

55

:: : ~C.

No rtford... . mmocr c~i;

Manhattan... ... (See (~ below)..... ------ 131I 1

3

12

7

15

1.457

3,432

5

all,

55

39

0

-17.83 6

66,08

Portsmouth- (No. arachre) 2 299

1 0

Z8

President,......... (Rhode Island).. ... i::::: 3

_.. .

.... ... . 2

I "1

: 114 15

.N,-t-I, leagi.- ................ .........

Baltimore ....... --- (Maryland suit OC ) .......

sea

29

a

"a

..

a

22

1.2

as.,.

2,528

a0,7r21

99 33:3an73

Newark...... .... (New ),,a'

A

13 7

2 3

12' 711 11, 1 12

a,

)

"

So. below)

P" o I

79

14

9

90

2s 28

29

5:

a36

2 705

8:

~49

220

1 ~ '

0,

1

......... 1 731

Richmond ' ." '_ ..... Virgin .) --------------- Wilmington- Delaware). . _ ........... 11

7 ----------- 15

,

I'll, .8 39688

1:

4

-- ------------ -424

"I

as, us 11.02

a.a.0

11 161 3 58 2,722 267 33:9 a '88

Columbia h

~6::::::::

693

1

7

81

38

1

2 412

1: 087

1 61

'17

141

5,58

92~

3

-

a

n,b.

Jack....

1'

42

25137

1 0

14

3, 9

1.102

la .

24,827

iacXsoavi1W.:::::::

Nashville. ......... (Tennessee)-.. ........ 13

15

827

3

2

63

65 4'

327

4 334

6Z2

176 ,

072

1:

,0

"""" '-I- --------- ...........

ge, .3 as a,23S a9.2,

'

1.

Na .01. .3 Ciadnaafl..: dh

-:: Cleveland...."::::: ~s (d) .... 'b:1'.wT: ....

20

13

195

60

13

1

60

"1

2.51 5

971

15788 a

-24: -3 7'7~

3 6 11, 5:

4GO

297 7 3 341

led (Indian.) 74

1" 11

589 3. BW

221 3: '6

L..ia,ill --- (Kimtacky~ W,

Park,rsbu rg. eit Virg!m.) -------- ...... -----

8

4

15

378

11

13

201

1.

582 117

2'

-7,616

14 Mid 1a3 311 age 20,86a 3,901ses"

n

Atherdee ::

Chiceir ..... ------- (Sea (b) below) .........

2

35 17 4

1

29

5. 485

131

2,802

3

i

14.863

Des Moines.......... 0...) .................

1

'.1

44 60

1,

4

Fargo,... ....... .... (North Dakota)_ ..... _ 3 3 1 7 "

3,9

34 323

M1l-kee__ __ _ _ I

(W k !" 1 1

: : ::: 005 166 5 640

0

.he..

in IN an tos i: : 1 14 4 3R 1:197

4' 20 397

.......

S Paul, Morwaota) ------

37

16

86

11

1 23:12

8a2

51~

246 -2.2" 10.430

Springfield ........... (See (b) below)... ...... 6

1

14

1

195

1.

sers 740 40 -301

-- -- ---- -- ---- ------

13

1

1..3a as 303 17,929 3.913 -39.113

- - -

Ab"rou.m.- --- I' , vil

6 10 1-) ----------- 479

51

-

7

A.m. ) k .......... - . . (a.. ( 61

4 1 2

3

,

829

318

Sol

6

1, SaG

11"I"re .11. ((Wro S all) orinb,.)lc~_j.::: 104

1

1

-----------

~12 4 1 1 7 1.11 2

Denver .............. (Colorado) 6 "

.........

-

2 :22 ,

204 3:

(All a 5 12

N

3

1

1.373

1

(,.. is, 7Z8

New (trIevs::

a

S O 5 45 1,180 1,417

Ohl home City ..... _ (Oklahmma)... 11

'

10

63 4 as 994

1

I8G

-45. 1 1

Wlehit............... (Kericas) ..... ........ 8

148

7.010 210

8

2.022

as.1 : 140

599

102 ."a

-1

a.."34

Anchorage

------------ 5 17 1 1

132

75 -244

Briiae_.::::::::::: odsh.).

,

3

1 7

90

7

279

Helena. _. ......... (Monism "UW

Honolulu............ IN ..

................ 3

14 8437

........... 11

--

22

--------------

4

480

10

9

64

_744

84

Los Anit, l i1 e(,)1I1 3 50 io 96 4.4 9 7 1,7 69 1,

3" Phimmile.1n. . Aa a .. . w

2

O

21

3

I

I11ga (:) 3 2 11 "

3'

85

..

-

1 IT

,

tined ............. ( regon) ........

Be ' _ __ _ _ _ ......... ("

35

5,961

7 1

4"

,

221 239 341

S "11 L,ske C,7ty.__ (U

I ,

5 168 20 64 5`99 62

'I :::::

(a"

. 1M sea "" ___W.)..... :: :::: 151

1 1

6

6.455 935 ' 35

Seettle . .......... Washington)_ -------- 43 414 58 as 2.152 712 -1,846

offlZoll't. xelaimsel

0 are - - ---- -----

' ' ------- ------ --------------

----------- -------- It. us 142 p

...to Rico........... ...- .......... : :

:

I : - ------ ------------ ------- ni 502'

2 176

Offer-.... .......................... .......

Undistributed:

------------- ------- ...... -

------ -------------

d it trade

' a' " "' " """' . - i - - ------- ---- -----------

31 3 2

FICA credits 7 ............. .....

I-started to Government at Gus.

Withheld taxes at Federal employees.::::::::::: , ::::::::::::

_

T::: ..... ....

....... ......

..............

.....

... _ .... ............. ------------

Totals for States not shown above

C,Iifa.ia.-- 4. It It 1 . I. a~1 3,101 10 937

(b) Illinois 41

a ~4 7: 2,

6 2.843 4.55

Newyork.. __.... 34 1

'a 26

7.

886

19, 431 317

": it) Ohl,

* ,

a

3

2

55

8

13

'

7,486

'"

-28 7, 3

th Permsyle,mi a:::: : : 94 913 a 7

8.

141

a

570

1 ?N5 W T.a.." .... 76 6 10 129

8,

665 ' 3

s

1,

See laminates On p, 108.

X04 / Annual Report / Statistical Tables

Table 2-Internal revenue collections by sources and by quarters

Ile thousands of dollars]

Quartet ended F

Source of revenue

Sept. 30, 1968 Dec. 31

'

1968 file, 31. 1111 -1un. 3D, 1969

(1)

1

(2) (3)

1

(4)

Grand total----- --------------------- ------ -------------- ------------- 40.990,571 36,975,776 63,04,218

o,mratio. into . I...... ------------- ------------- --------------- I --- 9,045,949 7,447,900 7,638. 6D9 15.205, 18i

ndividu,l income and employmeat taxes, total-..

---------------------------- * ---------

----~8,365.928 24, 761,374 34.376.473 43.005.337

Income ~a not withheld and sell-employment tax 3

--- -----------

4

' Ga "1 ' I7 " 1

GDO, 052

7

. . 15,7 711 Income withheld and old-ag, and disability insuranc - 44------------------- - ---- 23: 166:533 23, "1 : 1 33 25: 2 11s

9 '

2 N: 363

7,02 Railroad retirement-,

Unemployment 225.1658

4. 47 234,649

-

3.580

:

i

237

,

G17.117

2140.662

4.586

state fee, ------- __---------------

ift tax ---- -------- --------

- --

-

690.179

9.D9O

729,309

9.855

908,357

14, D42

-

0:17

387 xcise taxes, total ---- ---------- : .:::: ------- ----------- -------------- ------- 3.879,424 4.027.339 3.651.565 3,984,460

Alcohol tatel_ ------- ----------------------- --------- ------------- 1,215,992 1.059.929 .....!.068,944 1.209.287

Distilled spirit .................. ------ ------------------- ----------------- 857,414 31 11 11,213 113.11

Wines, Beer cardials, etc---------- --------

------- ------ I ---------------- 36'

957

321,622

:45:,84

75,441 232:5' '7'01 2371:1510

Tube,. taxes, total ---------------------- --------------------------- 615.903 504,054 499,017 $18,903

I staff a --------

C a ------ --- --------

601.513 488.773 487,463 Sol

C oar, '

l

14.00

0

14.111 17

". '

14: INs

O h.,::: ----------- ---------------- 391

331

248 367

Stamp taxeson documents, other instruments, and playing cards, total2l------ --...... -571 214 376 294

Manufacturers' excise taxes, total. . ~ ------------------------------------------- 1,627.587 -1.531,493 1.725.439 1,616,628

Case Lub,!ine ------------------ --------------- _ ---------- ------ ... 773,08D 875,423 711 31 7 31 11

rioting oil, e!c

------ ------

22,296

017

21. 20:1

64

: '99

3

Tire

p .. ". .

fil,111, gam., rules. nq tread rubber.. ----- --------- 159,999 148.923 179,883 142 711

.at., er-le, find,".

pa' . and

...... as ....... ............ ....... 658. 2 71 471.~l1 716,346

.7:

6

'39

R:dio and telavWan sets, phontsirraphs, comp nects. etc-..-. . ---- ----------

--- R at,

firlizentors, rescers, au-sandifloners, , electric, gas, and oil appliances... _. ---

2 0~

46 -20

-3

1

17

-8

IN ------

be ---------------------------------------------------------- __ __ 13.681 13,932 11,704 12,4111&

Retailers' excise taxes, total_ ----_ ..... _.. .................. ................... ! -a -2 7

Luggage. etc .. ...... ....................... ..........................

:I

V) -1 V) Jewelry. at,-----

Furs

5

7

1

t 3

T

R

o rw.~miimoa .............................. ........... _--------------

-----------

-9 -4

_

lifistellameme, excise taxes, total ............................... _........ 413.541 ......L95. 824 9.464 668,717

Admissions:

Theaters, concer% athletic contexts. at ............. -1 -30 -2

Root gardons

-

ote - -------------------

''2' r ' '

52 -ID 12 _2B

Club d... and mi11 . .. Iet, I- ......... _..................... ...............

Tell

a

phone wire, Ore. and equipment services---- ......................

196

178,09

207

347,248

637

333.926

10

,,, 456,895

T

5

criterion . P-me ---------------------_---- __ ........... 54,449 27,479 90,033 51,725

Use of safe deposit Hi, boxes ----

Coconut and of er vegetable mi ---- Or essed ------------ _.............. ---------------------- ......... ........... .............

- ---------

................

...... 21 4: 1,1 1 11 311 21 172

Diel. anl uels. ............

' no ~

52:550 57,306

55: 05

filitux 59:395 and firarina.fis, aclaoing Occupational tax ......................

Coin-opmated amusement devices, bowling alloys. pool tables, e1cU... ............

4299

3

25

416

9

77510

X. Operated g ining device........... ---------_--------------- ........... 7

10,

WaR Occupations taxes a------------- 7 11 1211 1.131

- -

Wage's . ...... I:2 ~ 1

1,126 712

1 12

281

Us. is. an highway met., ohid......... 63,50 15. 1

its

3 22 :206 :

0

21

Oth r ----------------- ................ 25 375 14,605 X971 S3. 341Is

Unclassified excise taxes .......................... ------ ........ 5,789

5,

43 bui 834 I -211,673

C

-29,376

C

See footnotes on p. 108.

Annual Report / Statistical Tables / 105
Table 3-Internal revenue collections by sources, fiscal years 1968 and 2969

[In then... us of dall-I

Source of revenue

Grand total, all sources -------------------------------------------------------------------------------------------

Cap.n.t... im, ... uses. total -1. ....................... ----------------------------------------------------- -------

a. np,;'~~jaWlal_p I -b*u',i I -I -a c- I ------------

------------- * ------------- * ------------------------

.................................................. ------------------

Individual in... and ennolay-ol taxes, total-------------------------------------- ------ -- ------- ------ -------- ---

Income t:xa n?t,wilhhela h and self-employment tax. ............ --------- Incomal,agi ----------- Railroad no-Lutts

..........

Unemployment 4 insurance. employ,,, of 4 a, more persons taxed 3.1 percent on taxable portion of wages, aftect- January 1,

196 , credit allowed up to 90 percent of tax lot contributions to State unemployment funds-.-.-- _-------- ------- --

from 3 '"'Von first $5'000 of

net .,late in ac.11 of $60,000 exemption to 77 pe 'cent on portion over

"t :0"0".".`d

1 .1,

510,000 0 ...-............... -, -dfarSlat.drollitass-........................... -------------------

Gift

tax,

graduated ales from 7~, percent on firal $5,000 at net gifts in excess of $30,000 exemption to 57!~' percent an Portion over

$10,00ODDO; $3,

06

annual arth-son to, In ifinne-__ _-------------- -----_-------- -- ---------- ----------

lExcise taxes, lotal_.......... --------------------------------------------------- -------- --------- ----- ---------

Alcohol taxes, s total._.. -------

Di tilled3pillistaxesi total...-... ----------

------------- :: ::

:

:::: ::::

P

arted (cdleriWI by Customs, rate, sarti, -------------_----

...

11

Domestic, .50 per proof gallon or wine gallon When below proof 1~ ...... ...... ............ ...

Rectification, 30 cents ph, proof g.1l.n -...... ..............

Occupa tiona taxes:

R

Jent,..... go me I.I.,turrils of spirits. $25, $50. $1 DO, par yea-----------------------------------------------

Man:

Los, the. 20,000 print I, !

20.DaO "a!"`s2 Pro , 20..Open', r ...r!.r: .. ................................. Retail TerajeIralli'liquor or medicinal spirits. $54 par ------------ ------------

~iqthp.lld,,xle 251 p,,.,.,re,r------------------- -------

M

anul.clu

5 Par .... .........................

Salinities. ,"allies, etc ------------------ ---------

Stills or condensers manufactuired. $22 each-.----::I: ------

Wines, cordials, tc.. taxes, total.................................... _ ........... -----_----------------- _ ---------

Iminorifind (co~ieclecl by Customs, rates,t!ame.2a,s dome~tic)... ........

I1Ii%*Ine.,,,f7, c),pI,,.11, 11 -------id ~60 --- ----- * - --------------

~, $2

hinto 's, '. 1. 2 per wine gallon; spaik ins wines, $3, ;a wily carbonated win.. $2.40;

................ .................. _ -----------------------------------------

Occ.c,fi.,,ndM.tp.:

a rus in wines of in wines and beer, $54 per ?.I, ------- ............. _1 --------

Wholesale dealers in wims or in wines and beer, $25 par year. . .........................

Ban, taxes, tot.] ... ------------------------------------ --------------------_--- --------------_--- ------

Imported (callenctd! by Customs, -to, I.. a domestic).............. __

Domestic, $9 per b rrel of 31 gallons ..... ----_-------- ---------

Occupational taxeia:

Brewers:

,bu Is,,barthanre's100or b,,;:Il. the Ill P. .I .......... --------

10 Pro year_ -------- ------------ ~: Retail dealer, in bear. $ilfpe, y--(inclunles limited retail dealers to wines or be.r, $2.20 Per month)- Wholesale dealers in beer, $123 Per tax ......................................_................

Tobacco late. total -------------------------------------------------------------- ---------------_------------

Cigarette, Intel. ..................... ------

Inna iris

a (2." '$8.4'0' peoulbonditni 'wispil'il -, 6!~ inches ties $4 Par thousand for each 24............ inches or traction

thereof ------------------------ ................ ----

N.Patyriannts ...................................... ------------- -------------

Cupic, total -------------------------------------------------------- -- --------- --------------- -- - ------

Large ciga . total ------------------ __

.............................

Class 'A (Retailing at not over 2!4 cents each), $2.50 per thousand. -------

C ass B (Over 2~~j cents. Pat over 4 cents each), $3 par thousand -------_----------- ---------_-----------

Class C (Over 4 cents, not ever 6 cent, each), 34 per thousand .....................

Clan D (Over 6 cents, no] over 8 cents each). $7 1,,thousand. ::::*"' - __ ::::

,1,,~ I ,em,,xPxa;r.

0

(1- -------------------

C,!:,s, 'F

(Dan 15 1

... 'c an ""... nL:: ------ ........... .....................

ClaxaG (Over 20 cents each) $20 Pat thousand. .........................................................

Small cigars, 75 cents per thousand--

Prepayments......................

=nd.,i.,,-,6,i1... Ile, cigarette Papers and cigarette I has, (collected by Custo-, rates same as domestic)-

bl-p . .. .... ......... ... ..6...

-_

----

::::::

Cigarette papers and tubes, Papers 314cont per 50; tubes I cent or --------------

Stamp taxes on documents, other instruments, and playing cards, total a-------------------------------------------- -----

Manufacturers' excise taxes, total-... ------------------------------------------ ------------------ ------------- ...

Gasoline, 4 cents pet gallon........................................................ -------------------- --------

Lubricating all. en,, 6 cents per V ton; cutting oil, 3 cents per Italian 24. ...................... _ ----------------------

So. footnotes I P. 108.

106 / Annual. Report / Statistical Tables

1968

(1)

Fictail

year 1969

(2)

153,616,838

29,896,520

29,893,255

3.265

106,337,943

22112:137,:3112 11

I,

859,448

__ 606. 802

187,919,560

38,337,646

38,332,032

5,613

130,509,062

1 .112.7131 7

"8

'

B5

938:.. 694

40,030

2,710,254 3,136,691

_L11 111 393,373

14,320,396 15, 87

43 117 137 1

'765:91D'4'

2,389.950

29.

2

84

75

17

11,94-6

654

9 4

422

127,263

12,721

112,618

1,795 1

28

963,062

9 5 964 6

53: 06

14

2,6799

78

2, 122,277

2:056 29

2 066: 52

I

54,937

14.112 ~I

3

1,730

.3S 1

21".1115

4,69G

3,522

34Z

5zz

50

17

614

48,721

5,713,973

3,030,792

92,311

4,554,153

3. 8311: 3 1

Got

2,504 41252

39:

1

70

3

47'

12.6 0

12Il

1,1392

157,222

19,71ill

134,816

2,47

166

1,007, 144

9"2: 9,48

1'4

4,56

730

2,137,877

2 @821106

2: 082, 101

54,434

53,646

339

875

L21 255

769

A:

4,86

3,5N1

413 345

590

87

669

1,455

6,501,146

3.186,239

97,476

Table 3-Internal revenue collections by sources, fiscal years 1968 and 1969-Continued

111 thousands of dolialal

Sonno at revenue

Fiscal year

196

(2)

FUcir, taxes-Continued

Manufacturers* -hr, tuar-C.utimun!

Tires (wholly or in part of rubber), inner tubes, and tread rubber:

Tinos, high,g type. 10 cents per Pound other, 5 cents per Pound except laminated lines (other than type Used on h ) I cent psi pound ------------------------ --------------- ....... Innightuaylve 1cles .

Treada' r.bbe""5cent' centsisP~',

Motor vehicles, chassis, bodies, part,, and accessories:-

P

T2

c'111:ndurfinniabi'll' 1p.til, bodies, etc., 7 percentli ks --- . ...........

Ic U1,11. ths-, dines, etc., 10 percent

Partsa~d cass.fle, far automobile,, trucks. etc., Ynsuce ---------------- - 1 Radio and latevision sets, PhondoRraphs, components. etc., 10 pepid,,127.... ... .......

.

-- - ----- R,frigerhus. Innurms. an-con itioners. etc.. 5 percent; self-contained am-comblerning units, 10 percent,...... . ... ...

Eacific, gas. and oil agliances. 5 pefcent:z ---------- - - -------- -------

Musical instruments, 10 perconfT ----------- ----- ------ -------- ---------------- - ---

S fing goods (.the, than fishing ad,. asels, etc 1, 10 percent n ...................... - ......... ... .. FffhiIv ods. creals, at,.,10

Percent---- --------------- ------------------- __-- ------- ------------ -------

Business and store machines, 10 percentV.. ... . ... _------ -------- ------- --- ------- - - ------------

Cameras, Im-stildria, etc., 10 percent; household type Projectors, 5 pmceol~?..................... .

Liartnc light but , and t,.,bl,, 10 percent:'. ---- --- . . ...... nmU.s(.the,th.n hist Is Ind Uxrrl,~,1). shols, Ind cartridges. 11 percent. . .. . . . . . Mechanical pencils, Paris, percent: 0 1 is h fair, Odionots Pat llirhler nI of more) 10 pe rt (is,, than 31)2;~ Matches, 2 cents per thousand (but not to sacce percent a selling price): fancy wooden or colmed stems, 51 cent, perthouundt:... ------ ----------- ---- __ ............... .

Retail..' mais. bass, total ----------- -------- -------- ----------- -------------------------------

Lug age, etc., 10 Percent .. --------------------- ....... ----------------_-

JewgIry, etc., 10 percent-.. ----------------------------------------------------- ---------- _ ----------- -- ----

Fu r, 10 Percent - - -------------------------------------- -- ----------- - ... .............. --------- Tol'lei preparations, ID Percent , --------- ___------- ------------ ----------- - ------- -----------

Miscellaneous excise taxes, total-. --- ----- ------ _ ------------_----- - ------------------------------------

Achoricsions taxes, total ax- ...--_ - ------- ------ ------- ......... I ------------ -_

Theater, copcerts, athletic contact,, tc.:

Admissions, I cent for each 10 cent, at major traction thernal of the amount paid in excess of $1 Tick It.,

I'

",e,,,r 11 box office mic. .1 at Vkr,s' 10 Irchot of ami,

hintin

I a W

hich similar accommodations are sold

'1' 9 .. It ..."' 10 m"n".1 .1 1

be

Adinussion's saili'd by Proprietors in excess oil establishad jpri~e, 50 percent of such excess ......

ClubRoot girdens, cabarets. etc., 10 percent of Iola Pa d

I

or admissions, services, etr_ -- ----------------

cfims Ind initi.,tiou Is.,, 20 pa-hf(il arm, or tees are in excess at $10. pet year) 31~ . . . . . ... .

Telephone. wire in ease, etc., services, 0 percent: wife an

d

equipment services, 8 mucsah!12~ . ......

Tra tell,,

"Path

, pipilo.re

OH 41~ Dercenl: reotealci,,d Persons, 10 an -al%pl -cin_;ii 'wa; mnc I i~ -5. .....

up t palli, except coal which is 4 cents per to ; repealed III Aug. 1.

Use P'T'In .1 sets d sit In ...1, 10 Percent ............. .................................................................. Coconut and other vegetable oils processed, 2 cents pet Pound repealed, effective Aug. 31, 1963.. .....................

S)uIeRsaerf a Pitmai=ely ~~ centsper pound -- ----- . ... ............. .......... I ....... ..............

Mercer and speci

a

motor

I

of

,

4 crml

I Par ic, gallon (in some instances 2 cents par gallon).................... 1

and marihuana, total m. ------------------------------------------------------------------------------------

Narcotr a -----_------------------- -------------------------- .................................. ............

Merihuan3.. -------_------- ---------------- ------------- ------------_------------ -------------- ......

Coin-opetated amusement devices $10 Pat device, per year, bawling all, x met tables, etc., $20 pet alley a, tabla, par year cr. Ccu-peated gaining devices, $250 Par device per year _ ...............................................................

Was,0,c1cUPt

"": Ili.n

L Wagers, 10"pecI"JN1, pm.y.,~,; . -----goned- ----- ---------------------- ---- ----------------------- ............. ..

- _- ------------------ - -------------- - ---- -- -*

'e "' 'n

hillwl, Ill

it's weighing a..

26"(6 ~oupdl, $3 Par 1,000 Pound, Per year (nislallment privileges permitted) ..... 1 Adulteratedbult.r and fill

ad cheese (imported and domestic)

,

process at renovated buffer and imported oleama,gaiii, ", . .. . .1 Finann- transfer and occupational la-It---

--------------------------------------------- .... .....................

Lint Interest eqU31173t,on ----------------- Far 1.!,!go iul~,Intce

1ad since ............................................... ............................

See Initiates on in. 108.

439,751

22,442

26,945

1,530.777 4 ,

7467: 24263

597

436

23G

4,745

-62

-45

40

9,228to

-75

494

31,372

9

576 699

26:919

27,909

1, 8G3.956

589, 3304 81, 87

-129

31

12

6.183 -8

-53

It -3

-1s"

82

164

33,082

17

-------

36

44 52

287

131

34

10

-9

Ill 143 2,147,547

1,150 11

73

2

1107,

1,536

1.105,478

-2

- I3

33

1,3161:3178

174 1-221..7

30

-I7

1

.~211IS ('108 191

2' '0. 1 274:657

1,615

1.300

315

57

14.806

416

4.695

108.918

2

84

11.1435

7

288:480

1,936

72177

719

53

12,345

354

4.328

124.273

1,6676

31

IR0:41

2DO.574

Annual Report Statistical Tables 107
Table 4-Internal revenue collections by principal sources, fiscal years 1940 through 1969

lin thou-ilsot dollarsl

Income and profits taxes

.1.1 Intent.

ITe""T'" o'

'- -nd

is a

ta~.Iml letacce I-es' Ali .111,

FI-I Year ended otron., =tic o 19dividusi taxes

it

9

taxes ies I

taxes - excise taxes ).no 30

collection

x

Total

m d

Pull is Use, r I

Uses

tax,, ~

(1) (2) (3) (4) (5)

-

(6) (7) (8) (9) (10)

............... ............. 1 141 4to111 1:,111..1 It 141.59, 111 011 1 1. 111 161 0l I 624.1 1 lus. Iw 441 '11 117 31'

11

113 as, 1",7: s,5 s

25,856

: o,S

40

'

a20

05G 698,077

,: ~u~ .3.:

56ii

13.047, B69 8.006:8 4 4, 744:083

3 "' "

185.362 43

54'

1: 148, 517 780.982 771. W2 821,682

14 1 3 7

' 1 " '"1 '

11, 1%

'

6 : 6Is : 132 1, 498. 705 447: 496 423.646 923,857 504,746 21

1 1 0"

1 ......

144

~

4

1

2 :160 D.02 ,902

I

1 : 766,796 18,261,005 1.738.372 511,210 1,618,775 998,483 503,462 :7 3:(isl

I 1 1 lit 11 11 121 11 01 7 2 1 1 11All 313 1 77'.177 643,055 2,309.866 932.145 782,511 Z, 292, 101

1946

tio ~ :g 7

672

3. : 2Is:1 ,, , : ", :,0 , 711,:,

36

1 :

710 1 21 171 11 1 511 111 1 165 11

' N ' 121 9 41

1

39 1 3M 29.0is,756 9.1676.4

5'

19:343,2

97

:3 ~ 5

2

0 2 4

~:

211

:47~:7112 :2, :

'948 41 : ~ , 16s I. 4II~ W 1 : IA7 : 1 .

2 31 1 72,191 11 1 71 411 20,997,781 2, 38 1.342 899.

31 I

1. 111, 311 ..3011,180 1,649.234 2.206,823

1949 --------------- 40,463,125

29: 60

5,49

11:1, :

669 18.051,822 2,476.113 7., 5313

I

. 10,607 1.321.875 1.771,533 2,280,969

1950. ............. 38.957,132 28~007.659 10,854.351 17.153,308 2.644.575 706,227 2,219.202 1,328,464 1 8

36

19 . 053 2 2 1 4 5

51 ............... 5 445,G86 37,38 879 14 387.569 22,997.309 3,627 411 7 21 1 10 2 146

'0'

330 396

1

2: 3

R677

: 3 9 2 :

7

2

19

52 ............ -

1 Z

65.009.586 50,741 017 21 466,910 29 274,107

:2

4,464 64

33: 147 2: ~:

54 12. : 565: 162 21 348,943 2.507,933

113 ..... .........

1954 ............ -

69,686.535

69.919,991

54,130.732

54,360,014

21:114:312121 2

W

32.536.217

32.813,691

4.718.403

5,107,623

891,294

935.121

2.780,925

2,783,012 1'654-911 1.580.229

962.783

2:689,133

2,647,492

2,464,859

66.2113.192 49.914 11 , ,, 71It 1 31 110 11 6.111 111 1 1 2 17 1 712 l10 1 171 211 1 111.0111 1. 018. Us

956 75,112 649

: 1.

56 36

1: 2111: 5 2, 2 3,: 3,7:1.2 :7M

7.295

1. . 71: 237 2: ,2.: 57~ 1: 3~

61

17

I ............... 3: 456,013 2.01%38C

957

l7i :9 7 1

80

W: 560~421 21.530.653 39,029.772 7. 1,111 1 177.119 2 73,11

5

1 14 11 3 761 121 2.143,1156

1 ...............

111

:978.476

79

59,101.874

20,533 311 38 568 5W 644 386

'

~ 41 , 5

0.

1: I,

6.4G 1

~ :

734 021

3~ ':

97

'31 2

1 166. G 7

5 5 1 9 9...- ........ 79,797.973 58,1126,254

:5

18,09

1

09 40: 734: 744 1 :853 :744 1.352,992 3,002,096 1,806,816 3,953.78)

Z9

1.997, 2

91 1 74 113 17,121 116 2 414

1

5 711

"

1 11

11 '

1 616 341 3 11 1 114 1 1 3 1 11 4 711.129 2,13414,391

961

9 4 :, 01~

.86

:,.

67,917 1

1 .0

2 :714

:

:

,

00

0.5

1.2:41,

2:

:~ni:,91 3: 2, 2: 1

so

:191 :

117

4:

895.90

2

1,963.582

6Z ' '39 1 '45 3 5 1 ' ' 9 ..

1, 14 12 711 111 2 011 111 3 111,281 2,021, 735 5.120.340 2

-

264.817

1963::: 105:925:395 71: 3, 3: 7,4 2 ,: 3 31 134

7: 5.1

1218

1 I~ 004: 4M 2: is7:4" 3:

441.651 2.079,237 5.610,309

2

-

2, 78 53 1

964............... 12.260,257 78,891,218 24,300.863 54,590,354 17.002,504 2,416.303 3,577,499 2.052,545 6,020.543 2,299.645

11 34. 11 71 71

'

0 "

128: a 21 131 314 1 3 1 613 1 7 1 1 16 2 141 111 3, 7 12 614 2 111.114 1. 4111.145 2.453,406

79.%

s2;,

31 :

7.

0:. :,

3 3

,: :

297

"

5

20 : 2 111 : ' 33 3:0,3:,~2 8 14:

3 378

2 :0 73

9 56

~

5. 1 3 859 89

5.9D9

967 1 BIS

1 1 1 374 '

04,298,420

M

34,917.825 69.370

'

16 111 111 3 111 4

0

4:075,723 2.079: 8

'9

478:

34

2:

1968: 1" 'o

1

959 ............

153~ 13G: 831

187,919,560

,118.565

135,778.052

M-1. 520

38,337,646

711,252~045

97.440,40',

Is:085~ .

33,068,657

3:

081:179

3, 53D, 065

4:287,237 4

554,153

2,122,2 1 7

2,137,877 5'

713373

6,501,146

2, 1% :

2,349,611

Footnotes for tables 1-4

Not-Calenclar year figures, by regions, districts,

States, and other areas, for !;elected types of taxes may bc

obtained from the Public Information Division, Internal

Revenue Service, Washington, D.C. 20224.

-Less than $500.

Revised.

The receipts in the various States it,, not indicate. the

Federal tax burden of each, since in many instances, taxes

are collected in one State from residents of another State.

For example. withholding taxes reported by employers

located near State lines may include substantial amounts

withheld from salaries of employees who reside in neighboring States.

' Includes tax on unrelated business income of exempt

organizations.

'Collections of individual income tax not withheld include old-.ige, survivors, disability. and hospital insurance

taxes on self-employment income. Similarly. the collections

of income tax withheld am reported in combined amounts

with old-age, survivors, disability, and hospital 'insurance

taxes oil salaries and wages. Estimated separate national

totals for individual income tax and for old-age, survivors,

disability, and hospital insurance taxes am shown in the

text table on p. - and are used in obtaining nation.] total,

for individual income taxes and employment taxes in

table 4.

'Self-employment tax and taxes imposed by the Federal Insurance Contributions Act are applicable with

respret to Guam and American Samoa. Amounts of such

taxes collected in Guam and American Samoa are comhired with similar taxes reported for Office of International Operations-Other.

' Beginning with fiseid year 1957. the United States total

is adjusted to ewclude withheld individual income taxes

transferred to the Government of Guam in accordance

with the provisions of Public Law 630, approved August 1,

1950 (fi+ Stat. 392). This adjustment amounted to $9.3

million for 1969.

'Tax payments made. to.banks, under the Federal tax

dellosit system or the prior depository receipts system, are

included in the internal revenue collections for the period

in which the Federal tax deposit is purchased or the depoxitory receipts were issued. However, such payments

are not C1255ified by internal revenue districts (nor by tax

subclasses to which excise tax payments relate) until the

Federal tax deposit payment is applied to the taxpayer's

liability in the internal revenue offices or the depositary

receipts are received in the internal revenue offices with

tax returns. Accordingly, the items shown as "Undistributed Federal tax deposits and depositary receipts" represent the amount of Federal tax deposit forms purchased

but not yet applied v, the taxpayer's liability and the

aniount of d 'positary receipts issued, less the amount of

depositary receipts received with returns and distributed

by district and tax subclass.

Repiesents credits allowable on income tp returns for

certain gasoline and lubricating oil tax payments and for

excess payments under the Federal Insurance Contributi..s Act (FICA).

108 / Annual "Report / Statistical Tables

' Amounts of internal revenue, taxes collected on Puerto

Rican products transported to the United States or consumed in the island (less refunds, drawbacks. and expenses)

are covered into the, Treasury of Puerto Rico under pro.

visions of sees. 7652(a)(3) and 5314(a)(4) of the Intereal Revenue Code of 1954. The gross amounts are

included in overall collections results (tables I through 4),

beginning with 1955 and arc shown separately in table 7.

' Includes occupational taw on manufacturers of stills,

rectifiers, wholesale liquor dealers. retail dealers in liquor

or medicinal spirits. and non-beverage marmficturen of

spirits.

" Includes seizures, penalties, etc., and tax on stills or

condensers manufactured.

" Includes occupational taxes on wholesale and retail

dealers in wines or in winesand beer.

as Includes occupational taxes oil b-cm and wholesale

and retail bel, dealers.

" Includes taxes on domestically produced cigarette

papers and cigarette tubes; taxes collected by Customs on

imported cicars, cigarettes, cigarette papers and cigarette,

tribes; and miscellaneous tobacco collections.

"Includes stamp taxes on deeds of conveyances, repealed effective Jan. 1, 1968, issues and transfers of bonds

of indebtedness or capital stock, repealed Jan. 1, 1966,

playing cards, repealed June 22, 1965, and silver bullion,

repealed June 5, 1963.

" Includes taxes on fishing equipment. and taxes on the

following items which were repealed by Public Law 89-44:

Phonograph records, musical instrumenix; sporting goods

(except fishing cquipment) ; business and store machines;

cameras, lenses. film, and projectors; electric light bulbs,

and tubes: mechanical pencils, pens, and lighten: matches;

radio and television sets, phonographs. components, etc.;

refrigerators, freezers, air-conditioners, etc. ; electric, gas

..it oil ppliarices.

" Includes taxes on luggage, jewelry, furs, toilet preparations~ repealed effective June 22, 1965 (Public Law

89-44).

'T Transportation of persons: Rate 10 percent, repealed

effective Nov. 16, 1962, except on air transportation which

was reduced to 5 percent.

" Includes taxes on adulterated butter and filled cheese

(imported and domestic), process or renovated buffer and

imported oleomargarine: firearms transfer; and occupational taxes. Includes taxes on the following items which

were repealed by Public Lao, 89-44: Club dues and initiation fees; mi-perated amusement devices;. bowling

olleys, pool tables. etc.: and use of safety deposit boxes.

Also includes taxes on coconut and other vegetable oils

processed (repealed effective Aug. 31, 1963) and transportation of property and oil by pipeline (repealed effective Aug. 1, 1958).

first" Corporation incorric tax rates: Eff"tive Jan. 1, 1965.

$25,000 of net income normal tax of 22 pereent: net

income in excess of $25,000 combined normal and surtax

of 48 percent. Normal tax and surtax also apply to net income derived by certain exempt organizations from unnelated trade or business. Effective Jan. 1, 1968, a 10 percent

per annum surcharge was added to the tax. (Public Law

90-364)

"Rates of tax are as follows: Individual income tassi

Effective Jan. 1, 1963, graduated rates from 14 percent

on taxable income not over $500 to 70 percent (,it amounts

of taxable income over $100,000. Old-age, survivors, dis.

ability, and hospital insurance taxes on self-employment

taxable income, 6.4 pem-I fee taxable v... 1967 on in.

runic through $6.00. 6.4 percent for taxable year 1968 on

income through $7.1100 and 6.9 percent for taxable year

1969 on intwone through $7,800. Effective Apr. 1, 1968, a

10 percent per annum surchame was added, with limited

applicability. (Public Law 90-364)

" Rates of tax are as follows: Income tax withheld:

Effective July 1, 1967, graduated withholding, 14 percent

to 33 percent of wages in excess of exemptions (Public Law

89-368). Old-age, survivors, and disability insurance taxes

and hospital insurance taxes on salaries and wages: Em.

plo,ers' and ctriployces' tax each, 4A percent (3.9 percent

for old-age, survivors, and disability insurance plus 0.5

perr.ent for hospital insurance benefits), effective Jan. 1,

1967. For taxable year 1968, a combined tax rate of 4.4

pecrelu, (3.8 percent for social security and 0.6 percent for

hospital insurance) applies. For taxable ~

'car 1969, a con,

hined tax rate of 4.8 percent (4.2 percent for social security

and 0.6 pesirnt for hospital insuran

cc

) oplic.s. For 1967

the tax applies to wages up to $6,600 and for 1968 and

1969 tile tax applies to wages up to $7,800 paid by the

employer and received by the employee. In the. case of

wages paid after the fifteenth day following enactment of

Public Lam, 90-364 (enacted June 28, 1968) income taxi

withheld was adjusted to include the surcharge.

" Includes railroad employment compensation tax 8.65

percent for calendar year 1967, 8.90 percent for calendar

year 1968, and 9.55 percent for calendar year 1969. Tax

applies to croploym and employees. imposed on taxable

portion

of

wages. Also. ffc,five Oct. 31, 1966, includes

0) a tax on income on cach employee representative

equal to 2 cents per man-hour for which compensation is

paid to him; and (b) a tax imposed on each employer

equal to 2 cents for each man-hour for which compensation

is paid to employees. Further includes railroad employees

repirscaltative tax, 17.3 percent for calendar year 1967,

17.8 pereent for calendar year 1968, and 19.1 percent for

,.Ie.d,,r year 1969. on tit.able portion of wages.

" Issues and transfers of stocks and bonds, repealed,

effecti-Jan. 1, 1966. Deeds ofconveyances; $100 to $500,

35 cents: each additional $5011 or fraction thereof, 55

cents: repealed effective Jan. 1, 1968.

2' Cutting oil, repealed Jan. 1, 1966 (Public. Law

89-44).

Rate 10 percent through May 14. 1965; 7 percent

from May 15. 1965, through Der. 31, 1965: 6 percent,

Jan. 1, 1966, through Mar. 15, 1966 (Public Law 89-4-4).

Under the Tax Adjustment Act of 196.6, rate restored to 7

percent eflecti- Mar. 16, 1966 (Public Law 89-368).

Tire rate was scheduled to drop to 2 percent on April 1,

1968. but wits continued at 7 percent to April 30. 1968,

by joint Resolution (Public Law 90-285). Under the

Revenue and Expenditure Control Act of June 28, 1968

IPublic Law 90-364) rate restored retroactively, to 7

percent.

'"Automobile parts and accessories (except truck parts),

repealed, effective Jim. 1, 1966 (Public La. 89-44).

" Repealed. effective June 22, 1965 (Public Law

89-44).

" Air conditioners, repealed, effective May 15, 1965.

Refrigerators and fmcmrs. repealed, effective June 22,

1965 (Public Law 89-44).

Annual Report / Statistical Tables / 109

I

I

I

I

I
" Sales of light bulbs for incorporation in articles upon

which the oetnufacturer's tax was repealed effective

)title 22, 1965 fe.g. refrigerators), are free of tax on and

after such date. Tax air all other light bulbs and tribes,

repealed effecti- Jail. 1, 1966 (Publi(~ Law 89-44).

"Rcpc.I,d. cff-live noon, Dec. 31, 1965 (Public Law

89-44).

Repealed. effective Jan. 1. 1966 (Publicl,-139-44).

Private Cmunionications service, icle,craiph service, and

wire equipment service, repealed, effective Jan. 1, 1966

( Public Law 8944). General and tofl telephone and

teletypewriter service reduced to 3 percent, effective

Jan. 1. 1966. For general and toll telephone service and

for teletypewriter exchange service, the rate of tax oil

amounts paid oil hills first rendered (in or after April 1,

1966, for serviecs rendered after Jan. 3 1, 1966, was increased front 3 to 10 percent of the amount paid (Public

Law 89-368). The rate has been continued at 10 percent

by joint resolution (Public. Law 90-285), and the Revenue

and Expenditure Control Act of June 28, 1968 (Public

Law 90-364).

Repealed effective July 1, 1965 f Public I,aw 89-44).

Narcotics, I cent per ounce; narcotics order blanks,

110 / Annual Report / Statistical Tables

$1 per hundred. NI.rill-na, $1 per ounce: marihuana

(,rdcr blanks. 2 cents each. Amounts shown also include

occup.,,icinal ta.e,, 1,vid or, manufacturers, dealers, and

practitioners. For classes atild rates Of or-patiOnal taxes.

see table 34.

" Ad ulterated butter: 10 cents per pound. Process or

rcri-rued butter: Va cent per pound. Domestic filled

chcc,sc: I cent per pound. Imported filled chmse: 8 cents

per pound. Imported adulterated butter and olcomargarine: 15 cents per pound. Occupational taxes are levied

on neintifrcturers or dealers in these products and are

induded in tire amounts shown.

" Tranifeis of inachineguns. short-barreled firearms.

silencers, tc., $200 -;tell: certain truns with combination

shortguit and rifle barrels, and other special types of firearms, $5 -:let.. Occupational taxes are levied on manufacturci s, imp-ters. ordvalers in firearms and are included

in the aniount shown.

" Negative figures (excluding unapplied collections and

undistributed depositary receipts) stent primarily from

floor stock credits taken on certain taxes repealed by the

Excise Tax Reduction Art of 1965.

Table 5.-Internal revenue refunds, including interest

11 n thousand , or ddlen]

Internal revenue regions, district, States, and other

areas

(States represented by smile disilicts indicated in

~xrenlhesex; 0 a total lot other States shown at bottom

ble)

Total

1)

Corporation

mermur

(2)

Individual income and

,,Pllll,nl I,,*,

at

...W Cubb

,.payment,

(3) (4) 5)

thelt" stuat- -al I ~ ----------- -------- 11711.0. 1,9441.210 aress.'eal ...I.

No,th-Attlennic alvalax, ---------------

Alban (S e ( bel

1.120 .,a

:

In an.

:

1 .1

."1

a. 2443

y ----- -------- e c) ow).. .

Augasta- ---------- (Main,)., ..... ----- -

94 826

45,471

64 176

.186

76,018

40.005

1:628

1.048

411

1

46

12 551

97 Boston_ ------------ (Massachusetts)......_

1 1

369,609 66,217 291.983 7 250 1, 303 26 2,924

1-1h l 11 . .... ~Iol S (111:11*~ ---------

B

3S

': ''

2

3' : ' '

747

'"

6:460 839

i

. . ._ . ee (c) b bvv 5,997

.........

urlircrto - (Vermont)

2gB 8977 ~ 1 4 ~.

B

---

2 3, 8D9 939 1 2, Bil R ----------- ---- ____

artford..... ----- -- (Connecticut) -----------

18.2

3

204.798

802

24,432

16 .71

169 696

4

32

4 503

149

549

1

40 Manhattan...... .... (See (c) below) ------_

P

632,424 344.364 255:464 23:032 2,628 88 6.793 ortsmouth ---- .... ~ (New 10runhue)

P id R d ence ----------

36 994 2.971 3Z, 941 649 398 1 26 (

rov

. I

ho stand)----------

d-al-eus ar.o.am...

B l

56:201

"1' "'

5,926

ax

1*,

48,991

1.4n its

'

1. 07D

. .1

118

9.7 .

42

a

54

" "

a timore --------

Ne k N 1

49: 169 62: 59 266~246 5:626

9

14:32 a war ------- ----- ( ew erx:r,),,:_:_:: ---

Philadelphia --

(See (e

6:

4'

6

43 761

45.438

70 903

383 689

349:265

7 Z63

6~932

4,98

1

15,407

- ------

Pittsburgh--- ------- (See (q3 below) --- I ---- 259.426

,

28.300 224,568 3,977

4

826

1

7

8,767

1 738 Richmond ----------- (Vugiou) --------------

W

226.418 29,694 189,984 3.185 424

1 ,

3, 131 ilroing!............ (D.J.wvxm)~ ---------

-------- --------

33 G9Z

'3111~oerx

193 132

6 414

M~429

24 011

24.304

341.7.7

160 280

1.528

as 10

4 909

7

89

S.M

' ''

3

1.1

6

54

11.12,

2

.ingh..- Bit (A 11 111 -

- --

,

131.520

,

16.596

,

11 114 1 136 2~8 6

3. 0

641 tol ( ..III Ca a)

lumbia ::: : -- 95.436 17,312

:

76:517 1~208 133 2 259 CO.

ribam- ~ ------- J (North Carolina)........ k174,842 18 149

'

45 777 3 159 565 53 7,138 ac

so" ------- ----- (Mississippi)

Jackso-I.. ~Florid,)

* ... *

368. 155

09.046

10 777

11 2

56:251

111 320

1:473

7

'2

20

3,298

1

69

233

1 281 Nashville ... :... no ...6j

1

39.360

.

.962

:'

Z9 3: 163 235 9

.

1.162 cle,mal

Cmairo'Vi " 7- . - -:_:_jSxe_ d _fijjtivv~

25

195

2111.11ce.

7

1. 1111:1112

: U

2.111

all

11.123

- ~ ~

Cleveland (Ilc d hilov) ------ 418. 840

34 6

66:903

2 1, 194

341 326

5 173

8 300

579

458

20

27

41:8052

26 1. i tn. :

Out .11 an

----- 601,171 67,036 515:480 11:152 786 32 6.685 Indiaruts... f1.11antang),, k

Louis

274,R67

130.681

23 13D

15:652

240 985

ID9:649

5 883

2:702

379

430 1

Is

08

2:180

Park' -----------

67,461 3,562 62.468 1.144 178 1

90 ------ ----------- -----

Attend 1

D k u

14

'-'11: 3 111 1"' 1"

11.71. 4,74 2 352 19.71,

Chicago. ... (b) abeo )) ------

Rs

1 3

579 710

1: 23

90.663

19:4 7 9

470,052

682

10,089

5

1

1.557 175

95

7 169 Des Moines ----------

1

19:032 11 067 104 700 2 517 325 1 '422 Fargo -----

AaIwavkoa_:::::::::: (('*.orCI.nc'.`?:_:: win' ------

1~

2

:465

23' 261: 128788

16:658

187 762

1:461 6

3. 52 15 432 789.. 1,11a e------ ebrxs~3?---------64,

Bar 9

7:211

A",

2 111 2 272 Lov _ rMisso ,1)

S . ........... 268,937

52

563 03 12

:gill

4 563 126 7.691

IL I'll-rd::::

S i fi S

117 11

:

:

32 377 1

IS. 7'

4

' ' 0

311 5

1 979

"

ee

(b) .

ng e 151 000 23,373

~

12 , 2 2:31 9

89.

: 202

14'4:5"5 2' '2:?12' "4'0: 903 12,91 192

11112

'

Austin,,, --- --

1) ~") ----------

281,751 33,927 234.607 10,326 1,501 30 1.46 0

have -

(Wpunmrn

D Has ----- (See (1) belW.. ::::::::

=

13

22 w 674

13,788

177.589

5

27

11.930

go

1,062

10

169

19

2 4 11

0 11 _----------- (Colorado).. ------------ 12 213

S'

5 631 105 235 3 690 411 26

. 2 14

Little Rock.. --------- (Alkxrsax)~ -------- ---

No. ........

"...

__

- --

59.996

154,41D

:

4:750 5

319

52:672

134.214

2: 222

4,164

155

308

4

10

193

33 : (Okbir ..

Oklahoma Cii;:- : :

.

":

33' 11q11 1 117 1,455 1

'

1,042 Wichita ---- --------- (Katrulu) ..........

Anchorage

.57g.114

24 979

6.3

2n:

1 -32

4. 2S

2 n '. '1'

:

236

". -

691

slow

32 305

8 .- -----

- ---------

,

37,571

.2

6,128

22. 308

29,761

1,358

1 490

6

88

V 17

14I

Me tma 3

30 go

1,894 27.474

.

1.246 100

Honolulu,---_------- Hawaii) ------- .... 53~64D 7,920 44.856 721 92 to Ange as......... (See (a) below). - ~ ------ 1,231,802 1 1

'

.- 11.011.2 ~11.~11 1,1189 211 4.!I 4 . Phoenix- :: ----- :--:: : ---------

Po land93.175

1

770

1

: B

339

O:qk5

83.D63

99.415

3.12

4,053

582

154

1

'

G,

2za Beat- __6 ----------- (Nevada) ---------- 4 : 6

19

2,852 31

3'

37

1

39 7 1 29

1111 -----

_6

' 8

57

'S

4 2,213

5 : 1

4

6'

: : 237 135 9 123

San 0;vi. 655.603 66.333 557,1 10 20 251 1,149 124

1.11, id Seat" -------- ilini .4i (Washington)

Or at a.-- -usar... . ----

227 6307

a~

30,033 189.340

-'..a

6:105 921

..

11 89, Pberto -as Ric --------- ---------------- ID 41il) 14 10,145 399

.

.

.......

......

- 7

Other

--------------- ----- * --------

5,372 56 991 5 134 608 974

I...ora...-I., an od .-IFIC

curt ----------------- ......

1

I'saw; . ... ::

I

.. N:t

I --------------

b

o) Pennsylvania

--------

I) Texas

------------- -

Totals tor States not shown above

1.987,405 73

0,710

1.389,81:411 0,,

696,187

501,590

183 391

114:041 121 IDI:2

~7S

99,103

60, 501

1 62 222

3 244

' 0

4

1:1'20

573.934

412,196

"I'I 12 421

34.979

j3.473

22.257 0,99

"

13

1:451'

4.946

1,037

1,770

2,563

371 .76

124

47

117

99

14:

..

.

31.

16,160

5,878

10,505

3,875

-Less than $500.

1 Includes draw acka.

recital Disability and Federal Hosfilel Figures have not been losareance Trust funds

Fleldlimlead

ltoilelfl2ect rearbut,ements Ir the Federal Old Age and

rusumbill L. I" It

H. h I

5721'1djfl. lot IM: Imon i 1 .1 -Wnisl Fund arrunnifirit $223,155,ODO 1- 1969 and $114,38 000 1. 1%8: aid lot. the a

om

In %9 and 15-ROGO

in I

lot f 127,547 undeliverable chocks deposited totaling $18,539,000,

Represents redits allowable on income W returns to, certain gasoline and lubricating oil tax payments and ]or excess Social Security payment, under the Federal

Insurance Contribution Act (FICA).

Annual Report / Statistical Tables / III
Table 6-Number of returns filed, by internal revenue regions, districts, States, and other areas

Internal revenue regions, district,, States, and other

(Slat

`

represented by single district, indicated in

pare-,theses

;

total

3

for me

o

s State, shown at bottom

of table)

1)

I

at..

Individual

tax I

(2)

time

yoclan

fee a

1 (3)

"1",

Pallay,

'.

ship

4)

01 call.

..led tax

and .1

1

"her..as -

c

(5)

Emplmeet I...s

(6)

Estate 1

as

(7)

ax

"al

n.in

as

U'lead state.. ............... 110.6M."s 1.1al.grea Mal 87903m4a n.032.475 123,135 M.7. I

Nw,th-Atl -1. Refliwo...........j---------- :::::

b S

11.211 962:512, 5

1

Meal a 56

I

a 1 11

Men

1 2

1.711.483

' 4 3

y 3.03.693 2 U.2sa U..Tg U. 99

Al an ............. ( eale)

A

a

gulf.............. (M.1.1)........ ........ 520,419 376,114 : 111 1~ 3: 11U 1: U3

0

112.869 I - hi 1' 60560

633

678

:

17 787

9,877

Boston-. ............

(M.... c ....... 3 2 3"'

14

2"

1

' 1 11 ..

99,54

1

111 921 3.945

4.

889 39 007

)

(M., R."slo. S (M J,;:.W) ..........

: 4: 775

2,351,727

5

:

7 15:

2 M

1,800,791

14 14

37. 361;

1: 11M

20.229

34.943

35,34 3

7 a3 :

4 1 4. 4645

'068

2,894

5

4,2

3.394

48 :

157

37 065

aft ~Vxeuaommt).......... ....

B.'

I

I

;

H d )

num ical

59

240.

1 748 '72 5

J 111 03

3DO: 2g

211 thk

D

113' 71

1

2

262

64,

3 84

5

60

360

331 669 61'7J `3'

.

' .

.

. I ............

hlarhaftW.. _. ...... (C er

so

(0 below) ----------

, ,

3, 1 1 1 611

.

2.040,993 146.107

.

32,300

1

71:068

,

1,

013,918

2. 8

5,095

3, 870

10,687

25 .029

51".,

Portsmouth .......... (No. Hampshire) .......

Provalence ---------- (Rhode Island) ...........

3 6 7 :

178

5111,121

275.358

11 711

7.017

13,21;

Z 712

3,348

5,582

J0,184

168 54!1

00:627

518

5

398

593

7.014

.. 6.252

-`-- 11.1tine ' ---

".2"...

a'

.... ~.,

1 141t

a7'

-:2165

"

1191:111 412 1.11140~~11.. a.-..2

522

5

'3

1-21

1

sal

3 ''5

132.141

32.191

,walk ........... . (New 3 84 .89

2:~I :

765 J IM 035 36.451 55, 1 7.J:6 51 5: 331 1: 1 18

4

P 3,992

hiladelphi

a M

3 8,4 2T7

16:111 11 317 11 331 741 1 1 4 331 1 111 49,670

xv

P

ittsburgh. L

Richmond. ('i

V "I'"a)

2 :2 13 :3 ~2

2.205,750

,684,369

1,617.047

4.823

31,829

21: 2

23

17,282

3 .:6,.

22,248

: 4 5R

40,93,481

2 : J68

Z, 111

lim

3,006

3

.3:7027

46

Wilmington.. ........ (Dole..") .......... ...

"mellows.1,

""'---------------- * ..........

293,534

1 1 21

1

203.481

1 131 154

7,821

M1111

121

.711

2.4.

1 30sy

try

s~l

.,n..lkR

la'n, 411 592

'8

4.015

Atlanta ::::: M a.

----- ..

2: :5 9 4

126

1:472:B

97 1 6 7f 11, 211 2 1 131 548.532 1.461 2:907 30:222

Colombia ::: ::: : :: ....

(10, 1 Cl; 11n,~ ------

1,469.788

1.173.339

1,036,200

830.766

0 7

18:

441

`5

11, 732

8.572

1 ~ :

7,651 998

366,751

236 14

867

114

1.568

1 11

22.602

( C . . ::: 11,751

G nation,........... Nortis

------

1.42 713

'

1.716,000 3S : 296 17.657 24,532

: 5 2

592

a 1.767 2: 7. 3

I s ippit_ 1,115

Miss

----

Jackson... ..........

B,

4 : 099 584

135 A 324 9 ' 8 "'

239, M 639

"'

11,711

Jacksonville N.~hyillr_ ~1 !1,)

..:

3J:.441 :11

48 53

2

J:3384: 411

12.185

71:11 1

21.318

21: 960

19.692

SO:2 88

l(i 146

941.651

445, 131

5,340

1, 11

1~7.45

915

5 238

7.

30.095

act"I ------- ..........

R" -.I

15,

2:332N N8 "1:821:435 M M T:"2. 1513 'IM529 1

a ~

1 so 2.1

40 38

. ,

2

.323. 329

sa , .

2,861

..I.

21963

as

d) a, ... 3'1:'26'0'

Cleveland. -

("N'

.

3,

058

'

2. 2

111 111 41.531 22.151 55: 943 595,945 3,298 4,

"a

4

1

511

Detroit..... ( .gan) ...........

Indianapolis

1K` Mae`nt '''

1, 1.7,

2,398.611`6

:

3,

23h 2

1,817.82664

46: 27

12745

36,7117 1 31

7

*

31:6 41 1 11

52

741:3321

462

52 1:1183 3 21 307

3

6

1:301

35.5,13

Louis

vile.

P. . .1ky?

Wall V mi.)

1.313~10' 9 1

74 72

1. D06: 089

537 062

15,323

367 8

12,381

337 8

16.183

8 689

306.200

111 633

1,356

111

15

7

23S:

::::.. F .

......1 1 -.-.a-

.

244

,

-,%42

. . ., sag

9

..",

1

..I14

A a

1,11deer,.... ....... J~iiiiiti

9

N ''

19

24' '' 4 '

~

-3 3 T "' 34 .. '2 ' Bar

C

h (ISae.(b ) 11 to W) .......

l

: 58 1

1.40094 1

'

3

3,336;543

1 072 622

76 : 039

20 332

43 175

23:085

93 : 1

25 87863

78 5, 357

321 09

1

f.249

671

as

aw

) . . ... .......... 7, 216 1 ~: 517

F. (North Dl1k.1x)_--------

, ,

7

S

328.7

, :

225 963

.

4.128 4.292

.

,

3,

52

82:40Z

, 1.211

'

27, 306

3

(

wiscan';.)~ ------------ 2.268 821 I.l 31 1 11 20.11 41.1. 451,292 723 4.. 71 46H1'39

Ormb. ............... (N.Inraskx)~ ------------

St. Louis...... ...... (el..............

23: 193

a

2,384.027

570

1.71D.980

J2 : 7 3

43,356 if24:0116 "' 1

:2

3'8 3'0. M716191

1,:117 S27

13.194 is .04SL Paul.............. (M 43: 9"

lnollo

(I. (b) below) ")-.......... .........

1,927,872

1,506.440

1,439 1 4. 9

1. DO: 59

8Is: 14"Of 1~:666

336

":6 2B 3

1

1

67

32751:711 J

11

2.566

3.a01

1.980

1 119

35.113

Z~ 13 18

....... .....

Alex,q ...go. ---- _ (No.

13

"147:.7'5'1 - "111.8M91

5

al-"

299 7 0 3

8 ge 1172

4:04

2,"103I:.e1

223

.

12

'341

~

582

"I ~ in

A.,t 8, 317

m_......... - (Sea telow ----------

I

2.969,929 2,091,723 43:465 23:354 36,577 7 122

10

2, 594 4,477 57,617

Ch lomne ............ (Wye,

sea

1

I)

170.369

2 556,568

105,853

1,773.541

3,717

39.891 242~632So 371~484001

4.:

628..3M

2

2,51 S 3.'8'012 42: 74183

Ido

'. '"

1:

111.112 71.275 2J,1180 9 757 J7 11 132 61 1, 311 1 1

2'

7

Little Rmk ........ I A 1 IA

Now Orleans .......... ('shovers.).............

R,

a. a1. 54

' 1'3

Set, 061

'. B" ''4

12.533

3' 38 1

:,7,

10,044 7

:

7.33065

2" :Bit

111

SRI

.

S

1 1

:266

1 41

10, 47

11 116

Oklahoma City ~Cklxlouna)------------- 1,21,:~7. 5~: 552 H :456 12.484 14.429

4

2.: .1

: 7. 2: ~. 25:B 2

Wichita- Kansas) .....

------ ........ ----------

1.140,846

17,101,nG

809.305

U.743.111

15,243

221.a.

B789

1.1 .11

13,898

11111 -

266,83'

1.211 1is

2 J3.,1 ax2~141 na gas211,17.4

2"')

629

11 6

84 167 2 9, : ... 1:

103

24: 7

94 37 68 2,558

Us'... Id he)

H Mordsma) --------------

i

350:89

369.407

246:315

250,761

5:516

6.128

4.35

24

1 1 '

1.111 3 iil 11:111 ~ 407 33

4759

12B11 1

001

H ihiv,xia.. ------------- 369.636 275 889 6.692 :184 7:065 71.770 284 627 4 12 5

Los A (511 (1) 1!a11w)--------- 6,284,617 4, 703:355

go

.034 66.933 11. 4 21 1, 21 1 5" 7,415 6.08

.3 : '.

(Axlcina)

--------------

11rV1md (Cretan)

0

793,48

1 079 477 771: .. 013 " 0 16 1.41 J'5:3.2133

4 ~ a

161:590

is,:

234 7429 1,18449

4

Ron. ::::::::::::: 1:224 22: 3"37

N-cl 255~549 185.844 4.998 2.670 3,001

51: 9

54 17 1 7 11

S. Utah)--. '

L",

a

San "11.0

(S ! )

483 821

4 110.611

354.387

3 02 0 1

8,516

41 11 1

5.139

1 111

7.800

1 1 7 18

94,112

.1. 52B

3 .

6,01

fi.

5.472

1

:

. I

.2

82,432

Seattle............... (Wea!h ,,

1 :,

5.962

27 0:

235

: 659

25

2.: 16 2~ :' 3

353.176 1,798 1.679 39.019

M.he, .1 -- 11-0. opa'.6was ............

is Re. 207 996

......

75 567

"'all

2ft488

"'

alse 1

other ............................... as .7131:331 "' ""a -20 1 0

.......... .............................

1

,

328,975 1

,

314,744 1 2,033 1 3M 1 1,062 1 7,985 1 1,152 1 460 1

.

C

1,230

six

0) C.Iiloral........... ----------- it Ohio .York ............

(1) lexas_ ----------

Totals far States not shown above

10.415.269

5.907,021

10.420

5,387:73'3'4

6.037,529

5,526.497

72:

"

, 8

4 31 502

il7:2" 1 241

09 3"

4,526: 572

3,965,264

131 645

477

2 4.532

7

1

694

81,710

83,356

120. 9"

62.111

88 73

40: 6898

5

'

549

47: 986

66 .47

96

-3: 7"0. IN

2,103. 126

1

0 5

17

2:3 32:6 7

J, 171: 'Ss 1 71

1,338,41514

13,662 656

19,6

5,662

6,159

65:411

109

I

Include, estimated tax declarations not available bVistricts.

I

Irichrolka, 143,823 to... 10400, INS. HBA, PR, ad I which at* included in "All other individual and fiduciary" returns in this cable on p. 12.

12.170

9,135

207:311

33

ZJ8

8: 279

165.546

75,065

154 6 3

76: 772

82 69

7

1

04: 070

Table 7-Internal revenue collections, cost, employees, and U.S. population, 1940 through 1969

Op'sifin,

C,b~, af = " ~d

Tax

&:,

Number .1 employee,

Fiscal year

cast Collection, .11n . l ,I. . a) es,

Total National Field

(0- (2) (3) (4) (5) (6) (7) (9)

11 .675 518

9 '

$5 340.452.347 11.12

__

1 31 191 $4 28

0 ''

14 3 993 1 1 431

1

65,289 5 17

7:3 70

.378

1 0

~89

3,:.

94 55:04 2~:230

~

4

151

2 3.0

1'

.

94. ---------------- 75.

105:

704

13,047: 8

68 518

.58 135,36

1 EHM

29,065 4.3

29

24:7

' 6

------ 1%093.512 22.371.3&6.497 .44 137.250 J O 36,338 4.3

'7

31,9 6 1

...... 129.941,848 40.121,760,233 .32 138.916 298 82 46.171 4,11T 41.898

1141 145.39a 72D 13 B00 387 576 .3

I

141 411 1 1 12 41 1 14 4 .41 45 373 9,f::: 74 :

.795 640

4a: 11 : 9

72 096, 98 43

x.:h

36

.:

N

5,: '9T .

'

.

113:9J6: .2 39 JCS,385~ 742 .52 144 , ,

1

270.28 52.830 4:771 4 8: B 5"

1949_ -------------- ------

,3,

2183 060

09 205.715

J:

864. W. 295

40,463.125.019 :514 4

2tal

149.767 47 A ? 270:177 1

43

":266 52

4 2

4.65654

11:45 7 1

12

--------- .......... 210. 411 21 11 911. 131. 1. .59 171

1

25 84 303 51 248 5 .6~: 5

24 . 38

s~:

445 686.315 .49

1111.

54:

:

325 71 ,7 4 030

.

53 76

1 1~52 : 271,872,192

65.

009:585,560 Q 157. 553 412 61 371

"

3 84 51:523 , 3 .......

268.590,806 686.535.389

"

.38

1

1 "

4 3 ':

-

:4

,

53 6

:

3 834 49,629

1954 ------------------------ 268,969,107 29: 919,990.791 .38 63: 026 428.89 51.411 2.707 48,704

171 114 211 1 21.612 000

6

4 2

120

50

M " ,

2 67 4 1 111 56

2~~: : .

.4

7J : :

7 5 1 12, S49 OW

~

:4 03 :7

1

4 Sa: "

:

2 .3

, ,: a',

1957 ---- ------------- :: 311 137 lt

4

813.171, 971. 000 3 1

3

' 1 "

:~:: 4G6 16 51.364 2.602 48,762

11":: : : :::: :~ :::: :: ~:

7:4 ~.:

719 79,978,476.484

,

14 J74: MIZ 457:33 50.816 2,638 4

9 59 - ~ ----

.

355.469 228 79, 797, 972, 906 .44 177,830 448.73 50,200 2.633 7 567

1960 ........... _-------- 363,131 311 11. 7 74. 1111 M

3

4 1

1 R'

501.93 50,199 2.70

2

17 41

1961 -------

5:,

a

4" 22

4 ~ .

14. 96: 398

,

:4 83: 56 513.73 53,680 3.031

'a:

64

1962 ------------ 4sa:080.420 99,440.839.24

5

4 5 186 656 532.75 56 510 3 357 53.153

11

.41

1.11.314

549,692,131

la1.925.395.281

112,2610~257,115

47

.49

89:417

192.120

559.22

84.32

:,

59 86

59.357

3: W

3,753

55.924

55.504

11

1

517 317 471 4 4 34 611 721

1

12 III 511 588,07

`0' 3"

3 711 70

S'

1

. 6

h2si :.6]:~29 : 8 : , ,

2B

g 1

:3

:~B , : ..

96 654.52 61. .9

:.16

3

8 , 3

S7:

116 7 ----------_--------- ... 117 ,

080 '3'

1 4 114 2

' . " 4 a

1 14

29

74

1 11

22

"1

1 OS'

' 06'

196 8 ........... . .. .......

969 ----------_------------

190 04

: 3

6.758.785,475 '

, ILI

:

.5

3 136 7: .

187,919,559.668

4

40

5

:

2

1201 203,216

6

7 3 7R

924.65

65 7

64,507

3:

939

4,031

6 1: 2~ .

60.470

, Revised

Table B.-Internal revenue tax collected an Puerto Table 9-Establishments qualified to engage In the

Rican manufactured products transported to the production, distribution, storage, or use of alcohol

United States, by objects of taxation and alcoholic liquors

[In the....da.1 drillsal

Objects .1 t...floon 1968

82.297

Class of dyl.bli,hram~t

As of June 30-

T011L. --------------- _- ------------ -----_1 67,667

DIstat'd spirits ------------------

Diatillml spirits ractification tax ....... 't N",

Win------------------------ 9

8ne...................... ------- _ -------

Cigars, largei

C .. A

43

Class

:: I -------- 2

class C.- _-------------- _................. 1 1,382

class D ---------------------------------- ------ 64

class IF

Cig.Chs, G ------------- ------ ---- 147

is, small----- _ ----------

Cigarettes. large ------------------

Cigarettes. small,---------------

72.548

1,356

.........

I

1.124

1: 144

"

5 84Z

142

,,Note.-Amounts of internal revenue tax,, .111stm! an Puerto Rica

n 'Ib"'o

island (less o.I.,:d'~'!dinwb

~Iglrprsarl.ldlcl~~Pcha, United Shies. or consurned on

V

the

d "I"' "no

Puerto Rico older the provisions of ,,, ?~n,',es,'~a)e,Wdva3' all t`h7'1m.m`.!

ad into t

' "

RevenuaCode of 1954. The gross amounts ate included in .=Iarlions results

(tables through 4), beginning with 1955.

1968

1 1-1

343

160

"Is5

.17

137

1337

155

275

56

145

139

45

3.491

958

7.40D 1

58

!317S

2: 3 5131

56

6.393

277 1 909

32: 783

sit

III11

42

3, 4Z4

947

7' 3"' 1 158

1131

3

2. BIT

3,595 6,214

171 1":,05111

779

56

121

Distilled spirits plant,:

Plants (net number).............................

Facilities:

Production ........................

W ... h ...mg ...............

Bottling in bl...........

Denaturing- . ..........__...... ------

Demalturd ad t-hron p,.db

Dealer, in specially d

is cts~dmilwa, asm,, at,,):

nature alcohol and denatured

U

sers _iirtiiaure~ a6i~oi WWCfW;io;6rW

,am ......... ................................

Rmuccessors. ietalIttim at,.. .1 specially denatured

alcohol nicl..................................

Users of tax-tree alcohol.............

Bramr: Ble-firi.... ....................

Win.,:

handed wine cellars ........

al wine be fling houses. .

vmm,., T.-In II ognu l,ctori,, using awrizing process ......

B...I.je dlialers:

Importers ......... _ ........

Wlmlesail: dl::I:;,s I" : : : :::::: ::: :::::: :: a Whelessn a ...................

Retail dealers in liquors...........

Rasa dealers in ban, ----------

Other:

"a

prodw,ts(clawback).

Flu~lafla!

a is _

Battle manutacturets..........

Revised.

:nclul.,; I d11:;1.M:nN1 g!amd,,,,rr,

.

ad ap a me

includes 6 experimental banded wine cellars.

112 / Annual Report / Statistical Tables Annual Report / Statistical Tables / 113

X3-055 0-70--a
Table I.O.-Establishments qualified to engage In the Table 11-Permits relating to distilled spirits under

production or exportation of tobacco products and

cigarette papers and tubes

Class of establishment

Manufacturers of tobacco products .....................

Manulactu-s at cigarette papers and tubes ------------

Tobacco expert warehouses............. _ ............

As of June 30~-

1968 1969

227

4

188

chapter 51, Internal Revenue Code 1954

Secti 51 A

71 -Section 5271, I.R. Code

I.R

.

Code

Status

Total

Dealers

Users ofDis fluid

spirits chally do- Spe. I S

P '

T

plants natmed `

alcohol

clllly or

'

cd

W , ie~

natured natural

fr~a

Model

~

alcohol rum

(1) (2)

1

(3) (4) (5) (6)

1 Oest

).IV 1' 1968.

11, 14

5

206 45 3,47

1

"u 23 7, 4DO

ad

------------

583 31

3

.3

3 2

48

T.-inved, mt.] ----- 696 35 6 365 6 294

R.'oked. -------- - ------ ------- -------- -------- -------- -------

otherwise term.

listed --------- ---06 ===!= 6 365 6 284

In effect June 30,

III _ 11, 032 2a2 4 2 3,404

20

A.eAd;~:::::::::: : 7, 364

659

9 2

243

4

02

Table 12.-Permits for operations relating to alcoholic beverages under the Federal Alcohol Administration Act

Grand

111filled sodta plant, Win,

or "c... win'

Status a,.1 and blenders Importers Wholesalers

Total 2 raiders

Wand........ bottlial~ a

(6) (7) (a) (9)

In effect July 1. 19G8. ................. 12 75, 361 168 UK

...

47 2,035 1 141

..ad .......... ----------

1:

Sir 1

'3

25 26 26 40

2

306

1: 1

50

Terminated, total........... 1,672 55 29 31

1

23 40 9 278 1,290

R-kad ..... .............. 6 ...........

'

4

Othemise terminated.............. 1,666 55 29 31 1 5 8 277 1.296

1. affect June 30, 1969................. 1 626

1

311 I64 177

1

157 359 40 2.063 91809

Ameaded_ ....... ............ ...... I :z85 193

_j_.

--- -- - ----

-

- ------ ... 76 5 274 737

CEnIodesformits for customs m,nu1,c1c,,;qt ban

d

ad Iran ... as since such eflabinhAreal's Arc mid required to quality a, distilled spirits plants.

alum, ( ) does not represent the s,m

3).

(4), and (5) since one permit may cover . I the one a,,U,dy.

Table 13-Permits, relating to tobacco under chapter

52, Internal Revenue Code 1954

Total

Manutar.

fare,,

of

Export

..,choose

status

as

bacce pir.pdatirs

products

In enact July 1, 1968 ................ 430

(2)

25

(3)

177

faced ............................. 60 21

1

Terminated. total ................... 75 47 28

R kad ....................... .........

Otherwiseterminaed-. ......... 78 - ------- 17 2i

1. affect June 30, 1969~-------------- 411 227 198

Amended. ...... ..................

78

R 46

114 / Annual Report / Statistical Tables

Table 14.-Label activity under Federal Alcohol Administration Act

Applications acted own

Type of label

Grand Udal~ -------------

Distilled spirits, total -----------

Domestic

Imported ---

Wines, tot if-------------------

Imported

Maltbeymagv, total.. ---------

Domestic .... -------------

imported. ----------------

Total

Certificates Issued

Approval,

73,249 72, 589

__Q

12-3,151 8:' _72ell.

31,514

1 1': 9""g

918

654

264

31.191

12, 343

8,84

a

EsVral- ,,an,

208

56

56

152

152

894 1----------

Dis.

Approved

452

257

92

60

24

64; 248 ....... _1 8

----------

1

16

Table 15-Number of occupational tax stamps Issued, covering fiscal year 1969, or portion thereof, by class of

tax and by internal revenue regions, districts, and States

Distilled spirits

Total

ad be, R.refiffen Ruil amilms lion.l.olorm. .1 a.

Internal revenue region, districts, and SUtes

.

I ....

fictional

Man..

fac.

bovausule products

in forms whole. Medic,

(States represented by single districts indicated in stamps .1 Less 20,GOU sale final Not Not Marc

pa,mithoes; totals tar other State, shown .1 bell.. issued Mille

'

the. proof dealer a ReV ailAt spirits, ex. I. in.. of table) $55 20.000

Proof

gallons

.1

$255 d. all.

$54

1

.11. $54 $54 cced.

ing 25

ceed.

In 50

50

gallon,

pit a,, are. gall"I's.

I

931 on$, $too

$110 $220 $25 $

so

(1) (2) (3) (4) (5) (6) (7) (3) (9) (10) 0 1)

tardit-d Seat- toduil.. ------------------------ las.126 I as Itu 2.S.2 230~897 $IS 12 11 so,

Hicrth-11.11. R.91.1 -------------_-------------- JU.M 6 4 It 313 ..'shns 31 $07 1. 1 .1.

Albany (Sea(,) below)--------- 12,220

......

5. 014 17

. ,

(

August; Maine)

---- --

4

"

459 ...... 2

8 ston. ----------------

2':

4 1 1 B 96 7,088 ........ 499 6 2 37

Brom 8

.it (So (a) 'be 141 236 ----- I 1 -----

'

4131

7 0

38

8,813

7

6

1

1 1 2

55

B

I (Vermont) ---------

l1rallmd

I

Connecticut) ------

1:ol~1'7 ------- :

1

::::~: :

3

1

2

618

31

0

...... . 6

-

.

--------

........ ......

Manhatt-

'I

(Ile (1) bell*) ------- 33.355 1 .....

1

92 2

52

7

.

42

Port, a

c

th

(No. Hicantralfr;

-------- 3.367 -------- _-- :.: I

........

619 1 .... ..... . . : ...... 2 Providence.............. (Rhode Island)---- .....

haid-1-1. lit"icia. -------

B d

" d

so,3~665III ........ ........ ........ 21

no

1.673

0111

2

'11

........ 2 ........

2

5

111

a

a

"'-:. ..... :.'Yj' N.Vm,"_ are.( ). ----------

20,422

26,182

........

27

........

------

4

8

60

go

:

5 69

', "'

,

8

I

I

........

------

...... .

......

16

,

PhIlad ("1 1:~ b: , * I -------- 28,947 10 5 4J I 0 32

5

So. 3 2 52 ( b ,. .) :

Pillsifftir -

". --

7 4 1 1

1

...... . 1 1 7:111 1 4 --------

------- .

Rich-ad-.............. (Vi'Jd.i.)_ ----- :"::::

)--- ... -----

----

:~5 '

4

1.783

.

_----- ------ .

...... .

........

1

10

30.

797

2

3

2 ........

::

eorgra)

G

------- '"11:382,1. II -------- 1 1

10.

4eg

1 724

... _ ~

16 ........

an -------- :

B ~Alaffama)_ ------------ 8,942

......... :: .... ......

6

, 78~ ........ ........ . 12,

,

Columbia ---

( 'I' C

12

'

:::::::: ...... 1 3 4

Greenslcofo_~: ( N., h . 4:67 1 :::::::: ------ . ..... - 53 294 ........ 5 ........ ... 7

--- (Mis'i.ippi)....

Inks.W11;~:: ' (1

9.480

1 2

...... 1. ---

~1 141

..... 3

:::~:: (

N shVille---------

9

13: 53 ........ ........ 1 23 828 .......

___'

C-1-1 Fnral.._----------------

' ' ' (S d )

I'116:196" '11 . I1 I1 8 "I '"31 11 !"

C!.,, .ad ~S:: ~ d ) ..... 5,360 7

...... .

2

8

149

6

4,048 9

5 ..... .

2

4

4

......

......

26

1

!go

Detroit----------------- Mich A). ----_-- 32,431 3 1 4 111 13,699 29 12 ...... 24 Indiana fic- ------------- 17,02 .

...... .

.... _

1 21 1,1'4 6

..... ,

i ........ 14

P.,k raburg (West Virgin-f;i:: :: : :::

. a'

7 5 5g

.

1

1

2

IZ

2

1, &15

''3 *

1I

MudtAb R 1..

""33.199,

5

------

13

__

398 46, N5

9..

3511

........

252

I

5 22 In

C

is

cago ---------------- (See (b) below) 21. 3

'

Y 124It

1

2

"1 ' ...

:

Des Moines ------------- On..)--------

(North D.k1

"'?

78

1

01 7

2 0

:::::: -- -------- --------

------ -

5

to

:

2 921

1

.025

.....

_ ....,:.

11

2

1 .......

........

4

. (

Mi w.uka Vio'conva). . --- 26: 52 :::::::: :::::::: i a] 13,067 2 192 1 ......

Can.la - - (N.1,111k.) ------------- 6,147 ------

......

_ 36 2 056 31 6

1 2

::: :: :: : :: : ::: :

S . Louis.

(

Missouri) ..............

------- IT ""ta)

--- I ........

St. "' - --- a

18,701

16.552

i

........

F

........

T

1

51

10

5: 556

3,061

270

16

3

28 1

2

4

29

9

eid :: (S M)i below), . __

S

luinto 9.636 2 1 1 70 4.584

Sarch- "................ 1 4 ..... ~ . ...... - 7

aw 3.031

3

--------

2

I ....... :

2'

1

356

1 ------ -

2

------

i 4~

A ------

ffr~ (So.([)

bal.w) ........ 32~964 2 ........ ........ 14 2:256 37 j F ii

Ch

eyeame....... __ .... (Wyo.,

D:!!" ----------------- (See (f)"'wo be :: J": 373 631 J.275". ..... V - ------i . ......F ------ ij

-----------

' 'O""'-)__

9,

7, 3 ........ 11 1,111 11 134 1 1

Little R (Arl,,,,,l------ :: ----

New Orleans ------------

ff~1:1167 36 :::::::

1

:::::::

4,

41

759

1,111

3

1.

....

__:::. .......

..... .

......

OM.h.. ~O 133haoma) -----------

a C"Y,*::::::::: k

S)~

Wichita_ Ka -------------

11,489

8,801 ...... --------

1,

31 1. 1.11 ...... 1. ---F 3

-.-. Rca..n_:__

Anchorage

111,9111156 .... 1.

..

.....Is 1 . 1

.....

111

9

44.111

533

1,

2

1

.

is

.......

2

........

.11

Boise ..... ------ (Idaho)--- 3,337 ........ ----- 3

..

2 .. ........ ........ .

Helena ..._ t.,n,) ---

Harmful--------- J~Maw'

ii)

2 1 3

I

J.31o

1 112

5

2

Los Angeles............. Sao (As be[..) --------

Ph.emX______ --- A ~ - .....

48,567

7,427 --- ::*

2

...... .......

211

75

11:

2,71..I

1.1 49

:: . : :::

game

0

Portland --------

I'le

'

10,351

1 11'

.......

----- 5125 1.266 420

1

2

...... : -

20

------

......

.......

......

i

S all L.keply- h)- ?:: 4: I l 4

:

.

S ... Y ::::::::

an I below 31 731 3

5

15~ 12 24 1 ....... 52

89

....

... ... --- 112 3,85F

I

2 2 3

Totals for Stifles not shown above

C,

it

3

, oo

3

11

2 3

5

27 113 11 ...... .

1

8: 11 3 il

If 1

6

:335 37

.

8

2 A

102,813

' N'

30 2 7~ .489 34 2 2 123

( ) 4~. 5G 21 3 27 13 71 11 2 1 ------

c) P'Ansyl.ai

'

------- _1 16~438

10 11 , all, 6 5 ..... .

lf) 17

Texas_... -------- 1 48.237 3 --------- ----- 137 3,831 24 4 i ........ 24

Annual Report / StaUstical Tables / 115

I

I
Table IS.-Number of occupational tax stamps issued, covering fiscal year 1969. or portion thereof, by class of

tax arid by Internal revenue regions, districts, and States-Contlialued

Internal revenue regions, districts. and States

(State, represented Is single districts nonfic in p an.

theses; totals lot ol~ej States shown at mtarV. .1 table)

i

Wholesale cleatel.

Wines, W!and...

$255 ' be.,

$255 ,

(12) (13)

e

Retail dealers

Wines, nd... ou

_$54 FS_-e

(14)

l.

"

ve's

5001,

balla

*1$110, "1",

(16)

-

be

I

deal.,,, fi

23

(17)

a.,

kart

dealer,

$24

(18)

etail

de.lrus

at

large.

$24

(19)

epme.

it "Is

in

liquor

(Mies

a,$2.20 beer)

per

month

(20)

Urateel star t-1 ..................... 02 "a 5 slaniz rue 2 111

Ner,th-Atureve, Reirler, .......... -. --------_----_ .6 11;? 7 .

Ra n

Albany- (Snc

I

c below)--------- -------- - ------

1 1

1 2 6 ----- - 6

A

I

U.gu,t ygaimr)~ ---------- ....

palp- ........ ------ (Massachusetts) ------

...

----------

-

24

----- I

1 1,

------

4

4

8'

96

97

.... :: .

-------

,

.....

4

7

S

11 ) b

:: w _ _

rebr. ) 17 4 2 59 8 3

B

CS.:

b - ~: :::: ::

ngion ~g,bmme) - ...

per

4

...

......

16

4

------ 1

7

....

.

1

1

9

S

1

L :

1

32

12] e . .Hean old..

-----------

M

rattan (So. %h.l- -------- -- --3-5-- ----- 2 2 3 --

8

04

. .D

Naw

irmshire)....... .

-" -------

2 --- :~:::: 26 392 1 ......

~

P.vid.b,e -------_-------- Rhode Island) ...... : : F 2

1

9 5 -------- ---- ...

14

1

61

3

~ ,121 472 29 7"1.,

9

I.ir~12. ......1

,

1

317

Newark .................... IN ow, Ietsz) -----

Plll d l

)

8 3 4 1

7 1 3

S

792

4

879

o

4

0

ies,a ~' 11

P il (S,: f:) b.ttw)) ......

. .... -----

-------

--------

1 4

8

8 0

-------

.......... . -----

Ric, end... .............. (Virgi.Lt) ...............

In

4 0 2 ,680 2 74 554

Wil.ingto------------------ (Delaware)............. ... 3

6 9 3

--------

Atlanta 0-5 -------- -- ---

1 `

.

15 17

t."s 1 086 S

1 m

21

..-. 1 2 044

Sir am::': --------- hb.m.j:: - : : : : : : : : :: 2

1

1

2' N

,

'..

*:: ----

.

--------

cof=... ................ (South Cartelib.

--------

~ 32 2 ..15 I :56 ....... .....

Grebraboro.. ............ North Carolina

Ii la i I

4 9 786

74

------ 6

71 4 4480 ---

...

( ts s pp)

lack. Florida)...............

---------

---------

--------

1

--------

7 231

--------

4 9

,

'

- - Nishir,11.... ....

(Tionneciere)....... ---- ------

2 .......

'

8 564

. .

--- ---------

C; be S d~ b

4

3I 0

4

26 732

' '

t

5

1

e

1

2

49885

4

2

2 07.

C .,.Iaad------------- ( ea ( , ------- 61

Detroit ------------- ....... Michigan)..... . ------ 9

I

0

g 2 45

8

4

1

..

0

runa

~1 `ni ) _ ---------- ------ -

2 030 4 1 8 -------- 4 the

2. kij: :

.....

.

.

7

3 6 1 1 2

Park riburg ... ............ (W,rtVhgI.la)::::::::~:

%

-------- . ......... 42

I D. : I

62

... ......

92

,,,

ealoor ----------------- --------- I .............

Aberdeen- - truth "flocre) ..........

-

...... .. -----

1

.......

r 5 ll"4026 1 1

: ar Chicau.... So (b) below)'

.......

3 71 A

Des Moines 8o..)... ... I

North 011~riil

...

----------

4

...... ---

1

-------- -

3

453

88

221

1

.........

6

4

milw

(Wisconsin) 8 1 s 3 3 31 11 15

(Nrttall lka) ............. ...... -- --------- ------- ------

2 74

4

. ------

a ( g~ a 1) K '.1_------------------ (Minnesota)-.,:::::::::

Pa

......... 4

5f 26,1 " 13

94

4

2

3

183

SStarfiralfield ................. (So, (b) below). -------- -------

, ------

2

3 2

8 2 1

Al=ll .. (New --------

i 9 t l

.

4 -

11

,

Aaa

16

- ---- 5-

-

- --- .

q ......... ----- ----------- ---

Austin ------_------------ (S-1(Qbrrkvw)- - ---------

---------

5

-----

11

- . .... 5 09

-----

-

5 6 , 522

- -

1

- -

22

C heyin"m ---- I111D rring) ........ ---- ---------

..... . .....

.

_

...... .

6 2 --------

S." eIf 1

Dallas below) ----------

......

(C.,...do)--------------

--------

-------- -

3

------ _

i

1 41

40

z

3

7

65

1. 9

311

1

------ -

5

1

Little R (Ar... --------

~6

213 --------- 4 ,3

96

j I

n

New Orleans.... L. uarim) ............ I 1 1 ,

3 6 , Oklahoma C I lkliesupar) -_-------- -------- I 011 1 1

Wichita-- Kanyvar)..... --------- 3. . 1 '

.

............

Weve- al--------------- -------------- - -----

--------

at 13

"U3 ...

21

9

"1

, 18

15.141

..... .

:.

2 7Q

An (Alaska) ............... -------- ...

8

7

Idaho) 5 ------

.............

14 35 1.440

Hoaval,lu_ (Plawali). 580

------

2 7 3 4 4

Los iAbb,s ees... ....... (See (a) beIrwj:::::::: 3 1 5 31 18

Pro n .................... (A,upra)........ -----

Portland... ................ (Oregon) ......... ....

-------

........ 7

f

1,14

2

1

2

4

54

9

I .3

.

0

-------

Rem. Nevada) 1 1 2 2

1

(

Salt L.IZe

........

--------- 1

.. ...

098 .

3

So,

S . Foodcou...............

Seattle ................... (Washington)----------

7

1

90

3

5

......

1: a43

12

45 28 51

947

-------

----------

3

10

(a) California ...... ....

1b) 111.1-is-- ----------

If Now york__ .......

it)

Ohio

.)

f) Its.,; .... --------

1 Includes 5 blowers of less than 5CO barrels at $55.

fault I., States net she.. halt

20

----------

46

4I

76I

4

a

......

8

...... 7

..

16

81

20

3.83303

6,716

21

6,440

10

ISI

8

21

7

307 315 ii1 20

1.4534

563

9.319899

20.759 9

1.33913

17,614

2

382

--------

2

573543

332 169

47

Table IS.-Number of occupational tax stamps issued, covering fiscal year 1969, or portion thereof, by class of

tax and by internal revenue regions, districts, and States-Continued

internal revenue Ingions. districts. and state,

(States represented by single districts indicated in

parentheses tatil, for other States shown at bottom

at table)

4wthA turn Athinvel.: tW St"". R v-71------ --------- -------------------- --------------

lbtny-- ~Ibl (1) be-)---------

August- Maine)------------ -

B ston,.----- --------- (Massachusetts) ---------

Bbakly,, (1:: ~S b :I, ey

uffelo.

a.):::::::::

B

Bailout- ----------- - Vermont).....

Matforij,"

Manhattan: (Sea ( hen )---------

Portsmouth. ---------- Pampp,b`nv) ------- (New Providence---------- (Rhode Island) ----- coul-Al ..", Al I-

=mmore ---- '(Aaroilid -and _O_CY::: Newark ------ ------- (New -----------

d1plail ----

Pll~,;`bagfr

----

--- ((S:: f2) bZ..): ----

Richmond ....... (Virgin,.,), ---------

W

-

--------- _ (Delaw

e)..... .......

'..thilben"yon0a --------------_-----

- -------- (Georgia)-

turnsingh " ----------_--- (Aaabhba).:::::::::::::

G ~Itnrfb C.,~.,jjn

Noe a)

Jacklarb-------------- lirlssiscippi)_ ---------

J.eko.nvillb ----------- Florida) ------

Nashville- -------- __ (Terin-ec)---

sermet-1 C Rvi- ----_----------- -----------

Cie, I tionaa I.. ......

a

ar,,vir evil --- So. d.bl u. . . .

mileth. n) ...... . .....

Indianapolis- ((Indian.)----------_---

Lonesvill! P, ............... (Kentucky)-------------

rk-baric (West V

- ------

I

.

Ignma)..

Aberdeen ------------ -

(1*,I(hbUak1I,)): ......ribs. .....

Carwsi.... Mail s ----- slo,wa). . --------------

Fggo----------- beI olsi

Mi taker, ------------ Wisca,

OpZha ................. (Nebraska)-------------

La is--- ------------ (Missouri) ......

'SI: Pao.1--------- ------- (Minnesota)-

Springfield.... ..... ---- (See (b) below)-

"in _jN.viWi----------

a (1) below)---------

Cheyeno

_

e ----- (so (Wye ra bill ----------

(So.C. (I) hot -------

:::::: I.,ado).o

Little, Rock -------------- (Ada....

New Orleans----------- late. (L

Oklahoma City ----------- ... ------

Wiehila, - ~ -------------- (Kansas)....... ------- viverewris 91, ---_-----------

Anch ------------- (Alaska)

Bobsbut ------------- (Idaho) ----------------

------- :

(2M.*."2A)!!::

Loshe Angola, (So, (a) below)----- ...

'prian ((Alilibrall)-----------

"

1),

Reno ------------------- (0N

Salt Lake Pity. .......... (Utah)- - ----------- -

S. .: Iran,, (So. I gb,,,I.w):-_:,::::: fit ------- (W.ahin o).

(a) (b) Calin nij....-------

Illinois' .............

e)

New York- ~.......

~d(a) Ohi-- -------------

(,) P n.syl,an.a::

71a. 1

Man.1-

impoer's's.

and Woncan,. to'

Itc!"PW

(21)

132

..........

7

..........

?

----------

---------

......

1

11

3

-------- -

----------

----------

1

---- 1

----------

2

cy

.

Na-fler,

Who c.

sale

dealers,

$

2

Retail

dealer,,

$3

Pitchtioners, $1

Dealers

i.

unta,ed

D;epaaIons,

$1

(22) (23) 1 (24) (25)

52 A. sm.".

..". . -.51

3 ... 223 1:1'50'2 '1'

25 1.757 12.760 23

241. 21:133 15 897

094 8:250 1'97

10' .57 1. IN 7`1 ------ i

21 1,1151 11 171 .... 117.

4

15 1:

55 ...

7 6.264

ing . .1 It. I It

2'08 .,!N6 2'

16 2.082 14':35'8' 4D

'12 11

" " " '

9D Ii.

1

105

S~7

3 116 749 7

132 11: 2' 0"0 ":'295 '15'

12 984 35,519

5

11 1 ,'169' '5: 1614 2~ .03

8

26 1,6377 " 10':033'111 257

26 1,141 4,889 21

1" ."1 462:111 349 Irry

1

4.11 21:42' 11:111. 57 3521

GRO 3

2411 1,3DO 6,572 26

84 3:847 7

I.361 178 1

m

J.

316

age

3 2. 2

95 12,185

12

5 .. .....~1

221 71 963 3,9553 75 15

1,063 6.713 .... 1 -16

6 493 2.390 4

2122 1:110 1: 02520 461

DOS

6 2

16 21 3,343 17

1c, :,., a..- 1.

2D3 11211 8

2 120 461 ------ .

28 :.R53 7.480 16

4

1 59. ':2 2 11

18 .094 4,866 7

138 885 1

701 33 8205 2

2"2 "s494 "'.121476

'1 252IS 1. 8".1 ..... 1

4 99 1.167 21

63 2,446 23.833 26

16 507 2,797 1

31 511 4.130

a

R I'S tilb ....

0

1

1

2

2711 1:111 1 5 7 9S, 1.

23 027 5,750 2

Totals for States not shown above

11

11

16

7

161

107

48

69

51

381 4

4.521

2,916

5.225

2.424

13~2 91

074

41.814

16,028

46.116

IG.IGO

11.11125

16,

36

38 411

40

114D

Labor..

bear

etc,

$1

(26)

423

-.2

'2

2z

13

12

22D

112

12

1

31

11

62

1

,1

f1

------

6

So

9

112

1

3'

----

di

......6-

3

------ 7

6

131

10

as

1.

......

7

..... i*

.......

1

2

29

45

I~2

7

41I

66

a 34

1

Man®r.

factuers,

$24

(27)

3

......

........

::::::::

........

........

...

.....

.......

... ...

.......

1 .......

....

...... 1.

Marihuana

Dealers, $

3

(28)

Pro.

docin,

..it miles,

$1

(29)

Plalfifirm.

(30)

Lobora.

It

$1

(31)

........ ...

....

....... . 4

::::::: ........ 2

- -------- 3

... ...... . I........ ........

:::::-- :::-::::

fl i

. ..... ..

....... ........ ...... .......

,

::::::

.

:::

..

....... ........ .. _ ::

::::::::

..... ........

....... ........ ..

::::::::

....... ............ -: . .....

..... ........ .....

....

.

........

::-:::::

------ -

.

12

3

......

..

-

16

....

.

....

2

......

..... .

.

------

.......

5

.......

116 / Annual Report / Statistical Tables Annual Report / Statistical Tables 117
I able 15.-Number of occupational tax stamps issued, covering fiscal year 1969, or portion thereof, by class of

tax and by internal revenue regions, districts, and States-Continued

Internal revenue regions. districts and States

(S~aIe,s,yr,!P-emtxd ~ single district, indicated in paren.

be total, for I or Star,, shown at bottom of table)

N

M-Int.'e"

I, inn-tes

__

__ - __

Class

Class 2,

$500

(32) (33)

ional Fi

Dealer

in tire. arms,

Class &2DO3'

(34)

nces Act

lorlio'le,

only of

clasw,,ipo,s

died as

"A., Weapon. Oth,..r

Class 4, ,25

(35)

.f.'.

I

t

I

classified =

as "Any Other

witapor",

Cla. $25 5,

(36)

ealer

only in

-pclassified as

"Any Other

Weapon Class G~

$10

(37) I

inoperated

gacr~ng

it ...ce

promises. $250 per

device

(32)

lterated

p,.,. or

ron.1stsel

buttr.and

hil it

choose

(39)

er.

mg, W

(4D)

Dotted Store,. trxtj. ...... ................... 22 " o

1

4 ,527

------------

--------------

1 5 ,e g

1

8 g 7 -I

6

(S''oe~ a*) - -- ------- ----

2 2

( Ii - - - --

B st ................... (M.-Imism[r)

.. .

1

s

1

0

-------- -

2

1 7 1 3

B :

:::: (2:: b':1ow): [

... -

.

----- -

,

..

........ .

:

......

:::~

I

B a . ......

,: ngt...... -........ (Vermort)-...

.....

'

::::

-

... :::::: --

-------- _

------------

_

---- -------

------- -

; 4 .....

H

r

ond_ .. ........... (Connecticut)---

Man=n ~S,. (c) but-) --------- _ -------

3

--------

1

8

------

.......... .

----------

.... .....

1

2

3

-------- -

-----

PoFt :: I :::::

III_ New Hampshire)-------

Providence . ......... (Rhode Island)-----------

-------

--------

-------

--------

..

_ -

--------

.

----------

:

............

...... ~ -

-

..........

6

*

_

---- -

ftflld.Artxartl~

Baltimore. ------- "

Naeff'

1 , ----------

i

3

11343

"'I

:

3

oli r --------- NewarP.. (

d 1 l

'

...... ....

,

3

26 9

-

I'lIh ll!, ~ be b :,.*w ..........

~'b

So. yv~

"Pft~ ---

......

--------

.

-------- ------ ---------- I ---------- 9

----

------- ---- 6

Ri homerid ............... (Virginia) --------- I

I I ---------- ------- 4 8 --------- 6

Wilmington.... ---------- (Delaware) .............. ........ . ------ ----

--------- _

I ---------

sovirt.-

Atlanta 5 ------- . ......

S

2

"41 2 i

3

Bit a, ...... ----- (Alabama) -------- ------

=

------- ---- ----- . ........... ......... ----- 2

col _ South ca 1

Greensboro.............. ( ~orth '

.044

36

---- :::-::: 1

Jackson,

i' l i' 'l ----------- ------- ----- ---- -- - ------ ---

-

-------- --

------- 1 --------- 4

J,ckjonv1l1~:::::::: ~1' l.d a)

N enne J ,*:,: ::::: h ill ::::: ::::::

5 - - - - - 3

3

1

2 41

2 3

9

e ....

as .... __ - v

read Ithelon, ...... .......

.

-,::

- - a --------------- ,

.1 n

-------i. ,

n

Cleveland S% ~d)) be me) ~ --

---

-------

---------

---------- - --------- ------

1 7

22

4

1

0

~ 68

Delholl.... .............. M.Mirm) 2 2

Indiana lil::::: ... IK"d 8 A 8

i m' ...

..... _ . ....... _

3

3

21

32 --------

5

3

..

s

e_.

Lou - ----------

Parkersburg ........... (West Virginia)-----------

-----

------

---- ----

-, --- ---- - * I

----------

4

------- -

--------- O

A1berdeer.!!_-__- --- S_~'..th. Dis...kets)----------

" ". -------

: i

I ......... ---------- 9 ---------

2

11

Chicago ..... : : : So. below)-. ....... I ---------- ----------- 5 ---------- 0

Des Moines lonv.t ...............

Fri,g, ............. No D ......... .......... ------ -------- 9'

Milw..k,. Omens ......... Wisconsin - --------

..... ............ .- Nebraska)

_- -------

125

-----------

------------

----

1:, S lout ------------------ M

Paul --------_------- R

1 3

----------

----------- 18 3 --

save ----------- (Seni®r ,a r 8

------------ -------------------

All,,uer,,,--

2_ 2 ......1 ,

,

---------

-

1sys

20

2

----------

0

itstic'.. I

A Q below) 8 ::_::::::

Ihey,n,, ffa

D ~Sue,~( W f)mDbelow) ....

----- ----

I

----

I - ---- --- 1 ------ --

7 .......... 4

a

a s

.... .. _.

Dan . ................t ---- (Colorado).. ----------

-_...

-------- --- -- ------ 3 .........

-

------------

----------

133 :, -

Little Rock........... --- (Arkinsar)... ----------

Now Orlears.- _------ (Louisiana)......... ...

--------

........ ------- ...... .....

- --------

7

. "1,6

3

----------- 7

Oklahoma C,ty::::::::::-: ...........

Wi hit K

I ---- 3

3 '2- ---- :: ----

2

c a ...... ansas)------_------- ...... 3

4 ------ ---- -----

"s

x .

Arch-le. ~Alasll) I 56 ------- 3

Boise ..... Idaho) ------

Hofer, ................... (Mrsolon.) .... -------- ---------

----

_ ------ ----------

-------

1 1'

Hem.1.1I ----------------- (H..aii) --------------- ----- .....i ...... --- ------ ---------- ------- 8 ... I ------ -----

La, A"auto, - 1o1 ( ) "to*)--- 24 1 3 ----

_

ph : _:::::::::::: ,,..a

onnis.... At )

Portland........... (Omr.on)-.- . ...........

I

....

4 ......... 2

661

.......

---------- :.

8

_

gone.-. ................. (Nevada).... ........... ...... - .587 ----- ..... 31 Ule CI, - ....

: .:::: I ---------- ---------- 1 1 --------- 5

S

"irric see

an (Sao "' "to S.atfie_............ (Ity.shingtor) ........... ------- _-_

3

----- -

---------

----- -,

---------

____ -_

.........

1

........

1.451

-------

-----------

-----

1,325

is

(d; Ohio-.

,:,.,yl.nia P nor ........

........ -

......

1

Total, let States of been above

........ .......... - ----------

12

------ ---------- -

31

25

-

9

Table 16-Appellate division receipts and dispositions of cases not before the Tax Court (nondocketed cases)

A. Progress of work

Status

Pending rely I -------

Received ------------ ------------- ----

Disposed .1, total- ~ ------------------------------------------ ........................................

By agreement ----------- -------------- ---------- ---------------- - ---------_----------

Unagreed: Jove-essments. claims. excise, employment, and oJer in compromise roject IDes)

BY tax eye( detaU I on I tUtUY-tice---- - ------ ........................................ By . .... pet,Ion to

U

P

I the Tax C-1-4ransterred 1, docketed later.....................................

Pending June 30_ ------------------------------------------------------------- ......................

13. Results obtained Indispositions

Method

Disposed of, total----------------------------------- --------- _ .........................

allres,

By

fifferydri

On - ------------------------ - ----------- * ------------ - ** ... :~:::

. (.

iiatis. excise, employment, and o3or in compromise rejections)... ...

y 11, 81, y1lodul,111 1 In Ullllly net,,, peffilo he Tax Court-transterre......... to docketed............................... stele..... ...... ----- __----------- ................ -----

Number of cases

(1)

21 705

27:122

76.648

21:3137 73

1,154

2. 5"

22.179

Number of cases

(1)

26.648

zi 53

3773

1,154

2,584

Amount stated in revenue agrini'll report (thousand dollars)

(Nificlitneividl

p... I

(2) 073)

2 263 8W

1~32i.289

1,330.189

1.05312.290

.407

33.581

230,908

-

2,262,89G

106 829

46:547

43,391

39.067

2.607

94

1.622

109,981

Appellate determination

(thousand dollars)

Deficiency,end

penal nerint r""

(2) (3)

554,138

316,029

10,770

33.993

193,444

58.642

56.818

1.765

4~

Table 17-Appellate division receipts and dispositions of income, estate, and gift tax cases petitioned to the Tax

Court (docketed cases)

A. Progress of work

State,

Pending July 1- ---- ................................................. ...... .................... Received, total ------------------ -----------_------- ----------------------------------------------

ftlitions, 11=p D rrial'.%-, mitic......

Appellate "t Division's statutory notices L----------------------------

Disposed of. total ... ------- --------------------------------------------------------------

By sIipu!ated gleement. --------------------------------------- .................................. ly,.d.-nal B it by the Tax Court 1hr taxp~,Y,, default ....................................................

but.,. the 1 as Court I t I - t....... -----------------------------------------------------

Pending June 30._ ------------------------ ................... ------------------------ ............

N.c.b,'e'

ases,

Amount stated In statutory notice

(thousand dollars)

9.559

5,981

Deficiency in tax

and penally

367

55

(1) (2)

1.313,755

438,387

3.639

2,343

242,775

195.612

5.692 408.315

4,706

266

720

355,555

4,050

48,699

9.848 1,343.828

Overesusement

(3)

35

-

20

106

54

46

&

316

1 Difference ftom table 16, transferred to docketed states is ..suit by schidmil district dinecter's statutory notices considered by Appellate in 90-day status.

B. Results obtained in dispositions

Method

Disposed By xD, 11

i1V.'d_a

By di-ils.1 by""T"'Diouri the Tax strayer ---------------------- default. ~ ------------------------ ------------------------------- _ ...................... ---------- Tried before the To, Court on the ments I ---- -------------- ------ ................... .............

Number of

(1)

Appellate determination (thousand

dollars)

5.692

4.706

26G

720

Deficiency in Is,

and penalty

(2)

169.554

116,878

3.977

48,699

Overassessment

(3)

11,443

11,391

466

1 Represents amounts Petitioned.

118 Annual Report / Statistical Tables Annual Report / Statistical Tables / 119
Table IS.-Office of Chief Counsel-Processing of income, estate, and gift tax cases in the Tax Court

States

Pending July I~------ ............ ---------------------------- -------------------

filed or reopened- ~ ........... ...... . ......... ------------- ---------------

Disposed of.. --------------------- - --

--

------- .... .. - -----------------

Pending June 30 . . . ..............

--- -----

...... ....

.

.......... -------------

Number of cases

(1)

10,824 6,08

5

"

831

1 J: 078

Amount in dis pute , (thousand dollars)

Deficiency

Tax

(2) 1 1731)"

1,210 427

389:497

361.341

1,238,583

111 787

29: 980

3Z. 358

109,409

(4)

0irepayeserit

, Ounfifig inventory In, ared.ats, in dispute adjusted for correffions at amounts previously recorded as pending at the end of fiscal year 1968.

":

931

9 46

20.542

44,850

Table 19-Office of Chief Counsel-Receipt and disposal of Tax Court cases in courts of appeals and in Supreme

Court

1. oil, .1 appeals In Supreme Court

Amount in dispute A int so .ved Amount

in

dil

Alto

11,prillmd

Status

(thousand dollar,)

. g

(IfficedIts,,)

(Ificuse

ad al

"

(thousand dollars)

Number Diski'mc

' ay ". D"i" "

Over umb

r

Deficiency l r Deficits

of un r

"' 0

'I'd

p ruml a ad : symmit of cas

and xi.;an en'

nelly ym.nt

p

P..

fly ~ asnah

~ Pon.", ~ p

enal

~

(1) 1; (5) (6)

(if,

(9) (10)

Pending July 1, total. ................... ..... 365 25.0311 r776 ---------- --------- ---------- ........ ....- ---- --------- ----------

A,psal l b ,

Cormal"! ... -

AN 1 " 1 '1 -------- - -----

pims md b y

A fiid .Ii.yet ::q:: ::::::::: 17: 71 1 2

Appealed by bat ------------- ----------- 34 2,812 38

Appealed, total.. ......................... 227 17.108 19 ---------- ---------- ------- 1,48 ---------- ---------- -----

By Complain net... .... -............... 38 833 -----

''

By

'a. r y- ... .. . .... 1 7 9

3.45

1

19 128

By baI . . .. ..

'

......

'

1 0 2.825 ---------- ---------- --------- - -------- ---------- ---- ----- ---------- ---------

Disposed al. total............................. 288 18.308 767 8,327 767 2 1.708 --------- 1_644 1 ..........

Favorable to Commissioner ..............

131 ' "' ------- ' '- --- --- I

1.58

--

58

raverabl t I xpayer_--------------- "

Monfiluel' .

315

.29

1 D93

4:683 423

S

1,801

44

423

........ -

1

_ ----

128

::::: :::

- ---

, _

_64

24

1

'649

! 1'1

3

..

...... . _ ... _

-

:::::..... . . ...... .. .......

Dismissed ............................... 48 2.316 53 ....... . ........ : - --------- - ---------- ---------- ----------

Pending I one 30, total . ... .......... 304 23.831

1

- -----

----------

-- ------- * ------ ---- - -

ppealed by Commissioner----I------- --- 4

'263

263

1

...... -- -----

A pealed by us ayer--............ ....... - -- ---- - -

l d b b &

246

24

'75So0

17:711

Big

4

:::: :::::::: :i:::: : ::: ~::::

A

P

pra ie y e .................... , ---- ---------- ------- -- ---------- ---------- - --------

, Revised.

120 / Annual Report / Statistical Tables

Table 20-Office of Chief Counsel-Receipt and dis.

P I

f suits filed by taxpayers in Federal courts

andoff"actions 0 by the United States for recovery of

erroneous refunds

tates otal

Relun,d (. suits he than

alcohol, tobacco

and firearms

taxes) I

Uple.

effus

.[.ads

Ccluit of District

Claims no n'

(1) (2) (3) (4)

Pending July 1:

Cases ----------------- number 3,748 : 444 s 3. 277 27

Amount in dispute

thousand delta.--

Received during yen

r

:

436,645 176.731 257.343 2.571

C ses. ------_------- number--

Amount in dispute

1,246 120 1.106 20

thousand dollar,

Disposed doing y... :

111.217 33,665 77,341 211

Cases -----------------number. 1,573 169 1,394 10

Amount in dispute

I ~.ousamd dollars __ 120,391 22,559 97,500 332

Refunded during ya

,

Amount....... thousand dollars--

Percent of amount

47.389

31 31

61981

3 10

40. W

41,11

....

........

Pending June 30;

Cas a.......... . 4, 1 %

95 2.989 37

Amount in dispute

th, 427,471 187.837 237,194 2.450

.1 The number of uses disposed at does'res"s hot fIg. . -fth Ih:,n.,-aa, crI.-I in

bit an decisions 11, amorld by th

'I.

in, he v. . fe".

tumpent

flip

di'amIL's. and time

In required for retrial, texampulation of

the=f Claims the number al decisions was 59. of which 24 war

nax, ate

for the

Go

V:~nnmept, 23 alls~rtlhe Govern ment, and 12 partly for and clautig against the

Go 1. It, the di ct courts

4

12 decisions vare tend ...d, of w job 196 war,

for the Government, 160 against the Government, and 56 part.

against the Government. For decisions by the courts al appoafs "'and"Supreme

Court, an Table 21.

wr' The number of cases reported pending at the end at fiscal year 1968

th the number 0

1

uses pending July 1,

1

969 due to adjustments req

u

case ire in

inventory.

Table 2 1-Office of Chief Counsel-Decisions of courts

of appeals and Supreme Court in civil tax cases

Partly to'

Far the

Against

the Go,.

and 0.

go..

Court 7.1.1 G .. r - ..meet the Gov.

ni (') '~) or",, I

(4)

Total- . ~ --------------- 355 238 66 51

By courts of appeals, total 349 233 66 55

originally tried inTax Court 1

31 5 Gain, 159 79 35 45

By Supreme Court, total -------- 6 5 ------- - I

origin tfica inIH u

Tax It ------------- 2 1

District courts. ...__ 3

Court of Claims .... 1 .......... ..........

Table 22-Office of Chief Counsel-Receipt and disposal of collection, injunction, summons, and

d

isclosure cases

status

Pending July I_-----------------_

Received

Dare,

Pending June 30-----------------------

I 'Jumb"I'll-s-I

691

A 3 gas

696

areNote.-This u table includes uses handled al national and regional level, which

ad

a,

considefation for suit or are in suit in Federal and State courns. It does 'at andinclude use, totaling to alcolual. tobacco ad finealm, taxes, Ap, a insolvency

deb for proceedings (table 23), not to appeal and

other cass,

fill ich are included

in table 24

Table 23-Office of Chief Counsel-Receipt and dis.

posal of insolvency and debtor proceedings

-

Bank,.P&y Wreath.

'at"

"IE." and a. ....I

State, jusumdual I ui....hip insalvency

proceedings' P,...ading, -

(1) (2) (3) (4)

Pending July I ............. 2,222 1. 142 6111 479

firsell 1 ...I

_~l----- - - - - -- - - -- - - - 22' 7601 1

. Gas 11092 510

d ----- 59 1.200 1,031 528

Pending ).no 30........... 1 2,064 1,031 572 461

I Proceedup instituted nele, the following sections or chapters of the Bant,-

,r,up cy, Act: Sec. 17 (railroad reorgan 1-11-ir mdabot, no c1l,ne.1111.10,~,,le ). re movipfin.

M

r

on

XI (arrangement, as to

u'!'Kule?

arrangements), and Xill (,age 011neus' plans). which litax claim, md.'Ih,'Y,

right, and interest, ~,l the United States.

I Ba.kl.pt% .4. dstiep ameerch 9,~h and, FedrSal or Ste a raceiverchip pro.

coatings , .1fle inelilm tax claim, is a ..led III—

Proceedings elating to corporate di,salliti-, n,.l ...I bank,. .,sit ..at,

[or the benefit .1 creuliftu,' or administration of .,lot., .1 doludeell. which levels,

tax claims at the U mind S fail,.

Note.-Includes cases handled at national and regional levels,

Table 24-Office of Chief Counsel-Receipt and dis.

posal of miscellaneous court cases, lien cases not in

court, noncourt general litigation cases, and appeal

cases

Misia.l. Line No ......,

T"t l.proux

I "

general Appeal

state, court :s

~

litigation

ul"i

.,.II cour I

uses,

IT

1

(2) (3)

P.mfimg)uIyI._ 1 211 111 as

'S'

::::

Received ......

Disposed .1 ....

1 : 6., 1 S',

981

890 3, 1

all

-

I, Pending June 31 76 688 76

I includes suits lot farel by mortil of other seemed creditors, and

Im 11111

ch I " United State, is ad, . party.

s Pliny.ril", .11111111i.110111

far ri'th"g.

a

I

property

I

-is. hear.

10, Primarily annernorancluens on 9,....

I I

ittgation matters fro, regional courrel

,district dir

clors

which art not related I.Pcou for ...drug,

"

I

P.Ir

ine udes cases in Federal and State a

at. court,

"lum. N, I..turn

and debtor proceedings, liencales in coor I. and collection, summons, and Injunc.

tion cases.

Note.-Includes Case, handled .1 national and regional levels.

Table 25-Office of Chief Counsel-Caseload report

I

Activity

Pend fig

I

u"

I Receipts I

(2)

Desposair

(3)

P ailing

a.

Total .......... ....... 23.325 25,591 25.946 22, 97D

Administration. ................ 87 64 93 58

Alcohol. tobacco, and twelseens- . - 695 6,082 5.928 94i

Matirmull OM. ............

Field- . ----------- 5.1 a 06 I:' 3 8771

245

704

General Litigation ...... _ ......

5,187 10,201 ID,475 4,913

National office.............

Field.....................

334

4.853

284

9,917

311

10, 164

307

606

Enforcement ................ 2. 111 1.114 1.151 1.013

National OM ...............

FwW ................

J,~13 I , g

060

41

1.118

56

2.017

interpretative Division..... ..... 271 6DU ~97 74

Refund Litigation Division ....... L~4=1

_

_~~11 __L12

1a, Court I... .................

.

6,314 6. 121 11,382

1.

,laid........ " at 'art '1::::

365

10,824

229

6,085

290

5.831

1

3114

11.073

I Statutory Notices not included.

, Revised.

Annual Report / Statistical Tables / 7

I

I

I
Table 26.-Obligations incurred by the Internal Revenue Service

juithm.sandand dull I

Total 11-I Equipment Wher

lot at a ....a fij.d, district or region and benefits

I I

(1) (2) (3) (4) (5)

A, National Office and regional totals (including district directors' offices and service

centers)

Total Internal Revenue I ... ic. I ------------_--------- ------------------- 758,785 667,191 17~ 617 9,963 _64, 014

N floral Office. . ~ ................

1 41 '

41.111

. ..1

3,812 34 366

Nkollb-Allantic. .................. 1 6:211

fl~

UN

733

3

%

3 %4

Mid-Atlentic. ------------

o Im.11 .......................

1~7

'N:

I If S

(381"

'3

1:732

2.365

537

90

3

,

4,1341' .

Go list .........................

INAW'3

77.7

S3 41231

2,026

2 337

5

74DIS

3

3' 3065i Midwest

Souffiweit::: ----- -- ----------------- ----------- 70:831

,

11,431

,

1.231 3

Western ................ ...... ........ "

1S. ,2

. 0

. 11

2 C

'

7

82 1,58

Regi ... I comrsal ..................

i

.

, ~

12

2

1. .0 7 8

'12

123

74

'

--------------

31 1'2

us t ----------------- ~ -------- ----- 5:

33

7 1 S7

5 1

7 1 4 179

National Computer Center. ........ ::: ............................. 7,212 2:298 13 2,269

' 7? '

RS Data Carl -----_----------- - ------------------------ ------ ..... 9.433 8.225 4

1

54 1: 1 3

B. Regional commissioner,' fh,,, (excluding district directors' office, and service

centers)

Nuth-Athiptio .......................... 411

1 '

11,628 250 17

2: '1'

4

10

,

775 385

159

757

Southeast ........................ ::im_ ------------------------------------ 14,59

12

72 589

11

1.203

Central ..............................

Midwest ..........................

101:3,~l

:5

119:'44

475

310

390

91

1 1

54

14'

Southwes, ....................... __ .... --------

-

7,41 9 1 113 281 3

at

fil

Western, ........................... : :~::~::~:::~::i::::~::: --------- 10, 6:12

9:51

2 387 144 599

C. Regional costs undistributed

North-Alla tic ........................... ............. 791

2

14 14

Mid-All.opic ................... 510 31 IS2 1-)

22

So. boost................. ....... -------- .................. 7113 121 212

1

1

175

CA tral .......................... ------------ _--------------

Midwest -------------_-- ------ ___

---- ------

7'

3

787

E16

4

f9

467

310

237

242

271

1

47

20

08

3

35

Western. . . ........................... 950 431 443 20 56

D. District directors' offices and service centers

INuth-Allaritk:

A .... 1 ........................... ------------

go

3,605 1

4"

98

1 11 ~-------

1 8"

1:

723 6 9 51

Boston.............. ....................... 12: 7

60

12.199

4 38

21

1639 111. '4214' 1

"-........... ---------- --

15,213

81

IS

1 ,6

8 460

IS

.............. 3 32 204 Buffalo_ ........ _

--- -- --- -- 952

.

88

32 Burlin Ha ted.. --------- - -- - - ------_----------- --------_--

rIVId

.. . 6 7'2

6.417 107 17

1

61 ---_----------

Manhattan.............. ... . 2.: 1Z2 27 :

" 1

158

41

23

7

49C

4~ Put- mith ...........................

P id -------

1.368

2 11

1

275

2 064 30 15 53

rov ence. ......... ......... :::

Puertofto Bmnch(AT&F) . ... :::: ....................... ...... :::::::

,1'1 , 119

10

A

_

North-Atlantic Regional Training C.r:e ~_ ...................... .1---------- 207 ..............

V) 1

.28 S

I

T

Nofth-Athintic R,gion-Centrahzed ping -------------------------- No

rth-All,rutic Service Center ..................................... 20,487 Iff7 ------- 19,332

80

48

------------

32 1, on

Mid-Atla tic:

Be tionore

1'

753

1'

155

11 '

........................

Newark --- ------ .............. 5~6

52

5:

a'1

241 . , 3S

Philadelphia.... ................

... ...

15,479 14,931 2 23 28S P

Itsburgh .................. .. ........

1

I"CL 8

.172 143 21

1

I G!

Iff Richmond ........................ ........7:111 I Iffo

IS

211 11,05

234

26

50

19 5( Wilmington .................... Y.

Iffid-Allarli, Regio-Ce,italized is pg.. ............. ............ ------- 129

.

----

1

It M

id-Afladfic Service Center ................................................. 19,827 7 39!

Southeast'

Atlanta 6 111 6 369 212 30 20-

:

....... .........................

Bir -d`---------------------------

=

4 :5

67

3

"

4

2:'12 174

1~3'

4

33

17

13

7~ Col - . . . .. ~ -------

G,.d,b r . ... . ...

1 .

144 0 t:.l 276 3

'

28E

............. ...

)ACIso .. ............................ ......................... 3 ODO 746

' ..

33

1

BE

I ....

.1k,on,ill ::::::~

Nashville --------

1

2:

6

57

1.117

,:

905

1

5,392

359

174

61

43

31

.....................

Szheast u Region -Cemfelizedl Training,

So east Service Center ...... ....... ............

f15

16,702

......

4,937

09

25

---------

1.59,

Central:

Cincinnati ----------------------

--------- - --------- ....

7,976

2 117

7.543

1 771

203

274 116. IS! 30: Clove and-. ---------------------

D l il

1 , 67,

4

13:

89

'22

84

17' e im - ------------

India. .......

... ...

8:422

1

1 '

7.

I ED33

134 I', 103

46

20

17~

touisvil .............. ........ ..

P k b

: 3 1 7

.

2 111 132

IS

7i

ar ... urg .....

Can xI I ' d... *"n--------- -- - * ----- ------- *- ::::

' 'I '"" " in

1

65

, .2, 1

31 11

~ T l:l,,,,::,,::::::::,,::::::::::::: 2

C I:, o o-Cim nulled

CentralService Center. .................................. ------ 17,1 '0. ...... 68

123

17

.............

Midwest:

Ab de 1.495 1,379

'1

ad.................... .... -------------

Ch

I

.............

...

19.505

a '

1

1. 7"53.

4

207

165

157

62

41

2

................................

11", 1:213 70 19 3i

------------- 6,921 12

1

211 3

1

16:

Dumb .. ............................. 3,287

,

3 73

' 314

27

42

9:

21

St. Louis............ ............ 9.92

77'

'

1.33 6

4

1

0 171 30

15,

:

St. Paul ................................. ..............................

Sp,irgfi. dt~ --------- ------------------

:

5 4

9_

5: lz 209 26 13 Mi

-in,it nl R,nm ~id.!,~Iarudl Tmhrwg~ la 17

-

----------

7.158

174

2

........

S

l9i

rootnates at and of table

122 / Annual Report / Statistical Tables

Table 26.-Obligations incurred by the Internal Revenue Service-Continued

Ilo thousand, of doll-I

Internal revenue office, district, or region Total

(1)

"muens" and benefits

(2)

T....I ~

(3)

Etligluderl

(4) 5)

-11

D, District director,' affices and service center-Confirmed

Southwest:

Albu irm; 1~--------------- - ---------- 2.21

1

g 1 114 93 12

A

Us

10

821

:

to 1',

309 25

1',

--------------

1 141 03

1

65 to 38

----- ----- :-- --------------

0:,69

4 244

1:

3 7651

11

309

08

5

15

350 I

67

Little Rock ------

.

2,948

.

2, .1

1

19 17

1

11 New Orlaam----------------------

IS: il91

113

':4 III

1

11Go

22

2'

111

IRS Oklahoma CityWi hita_ ------------------------- --------- --------------------- 4.%1 ', 128

1

5

1

U

Southwest flegion-Cima.1cred Training ....... --------------------

to .

Southwest Service Center. . . ---------_------------------ 14,663 li,745 3C -----------

Western:

Anchorage -------- ---------- 1,017

.. 11 1

54

Buds----_--_-- ---------

H,9

1.331 6. is BE

i

Nolan ..... I -------------- 572

1 899

1,420

..

IS41

11

24 l6i"

........

He

-------------- ---------

,

25.557 23':I 13 621

' N

---------------- ------------

Phoorc,.... ........ ----------- ........ 3,247

1. 111

14 13

P fland...... --------- ------------ ------------ 4,247 3 T11

Rare--------------- ...........

' 1

2 : 192

96 .0 23!

Sell Lake City ------------------- ----

2 12 2J41

11

9

San F-cia-_ ----------------

Seattle . . __-------- ---_--------_

16.297

6,312

IS 9,

7

1

all

173

at

26

61!

24

......... ..

Western Regional Training Cimta~.

-* ----------

......

290 213

3

4

Wes

jm Re

gm'_C.

nt alcred Tidmi.g._.... ------------ ...........

C l ~

20

243

856

...... 2,1~1 -_------

We,

'n

Service en e ---_--------- - ------------- ...........

.

1

-Less the. $5110.

; lociddes $3.5 million financed from reimbursements.

one not include transfer to Gen ... ISemicas Administration in the amount of $899,000 to, rental of space, and $950,000 for Early Records Retirement; also transfer to

Bureau at Narcotics I, the amount 01$63,000.

Table 27-0bligations incurred by Internal Revenue Service, by appropriation and activity

11, thousands of dollars]

Total net compensation Other

A ro riation by activity

pit foid,bi,

pp p

1968 1 19119 1968 In- 196B

Total obligations. ------- ----------- ------------ -

699,190 758,795 625.144 667,191 74.046 91.594

Appropriated fends, total.......................................... _ 694.611 755.305 664,228 73,160 91.077

Salaries and

,

xpe sea:

Total. . I ................ --------- ......... --------------------- 19,604 21,931 17,205 18.973 2,399 2,958

Execidi dipacti ...................... 7

1 1 1 J 121 7 31

3 S 341 7%

! '

Internal audit and security. .......... 1 1: 3 1 2 5 il! 825

:

1

"if I ,

Gus : 641

Revenue accounting and Processing:

Total- --------------- ---_--------------- - ---------- ---- --- 178,918 189. 183 1 W, 412 158,632 28,506 30,551

1,1, mcessid, up led, - -------- - ...... 144.590 111 111

'

111 917

'

:: - 131 111 27,111 21,111 'ttc., utupting

Still

_

:~ 5 23

860

'

4 697 6:161 766

1R

District dedusl imirati-irs ----- ----- ----------- -- - ---------- ::::~:

28: 65

1

5: 308 28:778 15,252 87

Cmdplia

Total --------------- ---------- ----------- - -------------------- - 49G.089 544,191 453,834 486,623 42,255 57,568

Audit of tax returns. ---- .......... ... _--------------- ---------- 261

0"

'4_141

1

241 71 257 616 20,232 113

Collection .1 delimiumil .,counts ..it x-ling datum.ent ,ours ............ lll:n3

,170

23

100:

94

111:

106 10,439 14,96

Taxlraud andspecial inve,ti olmos_ -----------------_ _ .............

'H

3 13

'

3 43

1 1

111

'

3 3 7 4

f

Alcohol and tobacco tax relic, ation and enforcement. ............. . ~ .- : 6 79

.5

41~ 6 :

0

32 14

: 9a

34

I

:

2

2

:

6 7

als IS

li

21,111

10 Z42

11,111

111 933

21.789

9 295

23.931

1 114

1.221

14

1

.,710

..

To, . u

ng, Icas -- -----

Legal services--. --------- --- ---

17.'121 18,452 15,684

1~: 92,

1,437 1,525

Reimbursements. total --- -------------------------------------------- 4,579 3.480 3,693 2,963 986 517

No ii-Armant: show, do not include Valso, to GSA for mru of space sprourtmz to $478,000 in 196?; $899,000 m 1969: 1 an,t,, to Narcotics of $53.000 and lorold to

GSA I Early Records Retirement of $950,000 in 1969.

Annual Report / Statistical Tables / 123

I
I

i

I

Table 28.-Quantity and cost statistics for printing

Class .1 _6

Total .... ...................

I a, ietans a no instrudions for ,for unwhing, to Wester, tool ...

P ckage I (For. ID40 and mot-tiou-20J.9or)---- --

P:change 2 (1 or. 1040 Schedule, B: c: 0111iffIL TSmI

Package 3 V or. _" "age') 1040, Sch.dules

IT

'

, a

41 no 11 Itnts -40 pages)..

Package I5 I'llor j1xi,~ I? scir,db~l 'I'd, and nslactims-40 pages)

Park, e

, r

luctems-16 pages)....

P,

ckage 6 (Form 1120, Schedule D. Form 3468, and instuctiono-24 pages)

,a

chage 7 (

renne ..a

f'. in uamrs)_

."Rent tax P.ckag-Pub. 393 (Forms 7018, 941a, W 2, VY 4, and Pub, 213).

Other tax returts. instructions, public-cre Cuts, and Pam blets.

Administration forms anit pamphlets. .. ... .....

P

Field P~irun

------- , , ---- ---------------

L : :::

lots

.

ax stamps ..................... ___-------------------------------

1968

Quantity (thousands)

Items or

cuts

(1)

Package,

(2)

..... ............

---527.287 1 84.832

94, E83

88,256

102J30

46,98 5

.

a

00

"

211

X

~o

138,450

1. 302,493

111:1170

2.519,809

Cost

(th.u.san

dollars) or

(3)

13.232

2,201

31.111 111

11.032

" g

1: ~141 311

1.080 27

III. is. 2185D

9,230 345

6. 0G4

3.383

544

1.09

1969

Quantity (thousands)

Items a,

cut,

(4)

4136. 765

IGO

"'

75:

IT,

19

869

470

425

71

4

.0

72.000

1. 538, F67

807,671

1.107.202 3- 0"

Packages

(5)

Cost

(the" sand

dollars)

(6)

......~~ _14. 271

__SI 427 1,872

31: 8113

629

'if Of

6,913 302 344

3. 190

1

58

1.085 25

47

1, 720 176

4.500 l9k

.... 1974

--------- 1,056

piece- This Pit,pnesent,tth I the frost year 19GB and local year 1969 requirements tot Pub. 393, Because of a change in production Methods it was necessary to advance the ;C., ad it.

ncreased Cost in this category Caused by including the printing cost of general, miscollan,ous us, emmki

124 / Annual Report / Statistical Tables

I

A

Acts :

Excise Tax Reduction-1965, I I

Federal Alcohol Administration, 36

Federal "Fort Claims, 39

Foreign Investors Tru~-1966, 46

Gma Control Act-1968, 4, 33, 40,

41,78

Military and Civilian Emp

I.YC, lairm, 39

National Firearms, 33, 40, 41

Omnibus Crime Control and Safe

Street-] 968, 33

Revenue and Expenditure Central1968,4, 11, 40, 55

ADP promsing, 13

010 Expansion, 45

Advisory committees, 21, 65

Alcohol and tobacco tax:

Advertising, 36

Chemical analysis and research, 37

Court decisions, 82, 83, 84, 85, 86,

87, 88, 89, 90, 91, 92

Enforcement activity, 33

Establishments:

Inspection of, 37

Qualified, 37

Industry ci~rculars, 8

Label circulars, 36

Offers in compromise, 26, 36

Operadon Dry-Up, 33

Prosecution, 34

Publications, 6, 78, 79, 80

Regulations, 91

Seizures and arrests. 34

Supervision --promises, 36

Statittieson, 34

Appeal,:

Appellate division, 22

Chart on, 23

P-e,,i.g of, 22

Statistics on, 22

Appendix, 713

Assessments, additional (Sce Taxes)

Asosistualoo:

Foreign tax, 43

Legislative, 46, 47

On-site, 43

Overseas, 46

T-payc.,4,5

Audit exempt organizations, 20

8

Bulletin, Internal Revenue, 6, 7

Business master file, 24

C

Chart:

Organization, 68

INDEX

Chief C..n,.], Office of, 38

Analysis of cases flcuving through, 39

Cases involving criminal prosecution,

29

Dispersals of cases by, 29, 39

Civil litigation, 38

Claims (Sce, specific item)

C.Ilection litigation legal services (See

General Litigation Legal Services)

C.1lecticing:

Alcohol trucce, 11, 100

Corporation income taxes, 11, 93

Disability and old-.g. ins.ranee, I I

Employment taxes, 11, 98

Estate and gift taxes, 11, 99

Estimated tax, 12, 30

Excise taxes, 11, 99

Individual-income taxes, 11, 98

Interest equalization, 21, 107

Olcl-ag(~ and disability insurance, I I

Other, 11, 102

Rail-ad retirement, 11, 98

Tobacco taxes, 11, 101

Unemployment insurance, 11, 98

Withholding taxes, 11, 98

Commissioner:

Contest of suits, 81

Commissioners of Internal Revenue, 75

Competent authority activity, 46

Compromise, offers in, 26,36 -

Corifteence;

Appellate. 21

Procedures, 21, 22

Cooperation. Fecleral-tax, 31

Conventions, tax (See tax conventions)

Coordination and cooperation with bureaus and agencies, 32, 44

Corporation income taxes:

Additional assessments, 30

'Claims forrefunds, 20

Ccillecti.ons, 11, 98

Refunds, 12, 111

Returnsi

Examined, 18

Filed, 12, 112

S tatistics on, IS

Court(s):

Circuit courts of appeals, 86

Of claims, 39

Supreme, of the United States, 38,

81

The Tax Court of the. United Statc,;,

38

U.S. Distriet, 38, 84

Criminal prosecution:

Analysis of cases, 29

Cases,

disposals of, 29

Result, of, 29

Supreme Court decisions in, 82

Current research program, 50

D

Data Processing activities, 10

Delinquent accounts:

Dispocals, 26

Other, 25

Statistics on, 26

Delinquent returns and delinquency

investigations, 24

Additional tax from, 29

Analysis of, 29

Statistics on, 30

Unemployment taxes, 24

Determin3tion letters:

Employee benefit plans, 8

Excempt organizations, 8

Pension trust plans, 8

Self-employed persons benefit plans,

8

Statistics on, 8

Direct data entry, 15

Disability insurance taxes:

Crillections, I I

Refunds, 19

Disallowed, claims, 20, 30

Disciplinary actions, 64

Discriminant function, 19

Documents, 15

E

Employment benefit plan,, deteranination letters on, 8

Employment taxes:

Additional assessments resulting from

examinations, 17,30

Claims for refunds, 20

Collections, 10, 11, 98

Refunds of, 12, 111

Return,:

Examined, 18

Filed, 12

Enforcement activities:

Additional tax from, 29, 30

Alcohol and tobacco tax and firearms, 33

Appeal,, 21

Claims disallowed, 20, 30

Delinquent accounts, 24

Delinquent returns, 24

Examination program, 17

Mathernitical verification, 13

Offers in e,-pr..i,e, 26

Tax fraud investigations, 28

Workflow in Service and the courts,

31)

Estate tax:

Additional assessments, 29

Claims forrefunds, 20

Collections, 11, 99

Rcf.nds of, 12, 111

Annual Report / INDEX / 125

t

I
Estate ta-Continued

Returns:

Examined, 18

Filed, 12, 112

Estimated tax, declarations of:

Corporation, 12, 112

Individual, 12, 112

Examination, additional assessments

fr.., 29

Examination program:

Claims for refund, 20

Classification and selection of returns,

18

O-cas'essmem, of tax, 19

Returns examined, number of, 18

Tax recommended, additional, 30

Excise taxes:

Additional assessments, 29

Collections, It, 99

Refunds of, 12, 111

Returns filed, 12, 112

Exempt organizations:

Determination letters on, 8

Masterfile, 14

F

Facilities management:

Forms and form letters, 5

Mailout operations, 61

Motor vehicle flee, 62

Printing, statistics on, 124

Space, 60

Statistics on, 61

Tax forms, new look, 14

Telecommunications, 61

Federal firearms regulations, 33

Federal-State cooperation, 31

Agreements, 31

Audit coverage, 32

Cozzq,utcr-information exchange; 32

Training, 32

File:

Direct data entry, 15

Exempt orgartization Tn"Ster file, 14

Individual matter file, I I

Federal tax deposit system, 10

Financial management, 54

Statistics on, 55

Firearms progr-m, 33

Crime control, 26

Foreign investors, 47

Foreign tax assistance program. 43

Foreign tax officials, assistance to, 43

Forms:

Cost of printing, 124

Eliminated:

Publication 14. 80

942A, 80

100 1 A-F, 80

1040ES (Amended), 80

1040A. 80

1120-ES,80

I I 20-ES (Amended), 80

2031,80

New:

W-2 (RR), 90

990(SF), 80

990-A fSF), 80 1040-Fl', 80

Schedule B (I 040-FY), 80

1040-ES Workshect, 80

126 / Annual Report /INDEX

Forras-Continued

Ne-Continued

1040-ES(010) Wocksheet, 80

1040NR-FY, 80

1041 -FY, 80

Schedule D 1041 80

Schedule E 1 04 1 80

I I 20FY, 80

2210-F, 80

4363,80

4410,80

4461,80

4462,80

4466,80

4469,80

Form. and form letter,, 5

Fraud investigations, tax, 28

G

Gasoline tams:

Collections, 102, 106

Refunds, 12

General Litigation Legal Services, 39

Gift taxes:

Additional ass"sments, 30

Claims for refunds, 20

Collections, 11, 99

Refunds of, 12, 111

Returns filed, 12, 112

Honors, 55, 58

House rulings, 40

I

H

I.c-t.x(m):

Additional, from enforcement, 29

All returns, I I Corporation

I I

Processing of prot.ted cases, 22

Indictments, 29

Individual income taxes:

Additional assessments, 30

Appellate Division, processing of, 22

Claims for refunds, 20

Collections, 11, 98

Mathematical verification of, 13

Refunds of, 12, 111

Returns:

Classification and examination of,

18

Filed, 12, 112

Individual toaster file, I I

Informing and assisting taxpayers, 4

lnspc~tion activities:

Internal audit, 62

Internal Security, 63

Investigation, 64

Statistics .., 64

Intelligence Division:

Statistics on, 28

Tax fraud investigations, 28

Inter-American Center of Tax.sol-miwators, 44

International tax training, 44

Interest allowed on refunds, 1 2

Interest equalization tax, 21

International operations:

Activities of, 43

Expansion of ADP, 45

International operations--Continued

Foreign posts of, 45

U.S. investment abroad, 45

Withheld taxes, 46

Investigations:

Delinquency, 24

Disciplinary actions, 64

Personnel, 37

Prosecutions recommended, 29

Statistics on, 29

Tax fraud, 28

Wagering and coin-operated gaming

devices, 28

Interpretative activities, 41

i

Joint Committee on Internal Revenue

Taxation, 41

L

Laboratories:

Testing, 34, 37

Legal activities, 39

Legislative activities, 40

Legislation:

Firearms, 40

Pending, 41

Public Laws, 40, 41

Litigation, appeals and civil, results of,

38, 121

Long-range planning (See PlanningPrograrmcning-Budgeting System),

50,51

M

Magnetic tape, 15

Management activities, 57

Map of internal revenue mgions and

districts, 69

Mager film:

Exempt organization, 14

Mathematical verification:

Additional tax from, 13

Statistics on, 13

Models, tax, 53

0

Obligations incurred, Internal Revenue

Service, 55

Occupational taxes:

Collections, 105

Returns filed, 12

Offers in -rnprorni,~, 26

Officers, principal, Internal Revenue

Service, 71

Old -age insurance taxes

Collections, 11, 98

Refunds of, 12, 111

Operation Dry-up, 33

Operating Financial Plan, 55, 36

Organization-principal officers, 71,

72,73, 74

Organized crime drive, 27

Overassessments, 18

P

Pension trust plans, 8

Personnel:

Equal employment program, 58

Handicapped, use of, 58

I

Personnel-CGrainued

Intergroup relations sentimrs, 60

Investigations, 65

Prcmu,timu, 57

Recruitment, 56, 57

Statistics on, 57

Planning-Prograccaning-Budgeting System, 51

Planning activities, 49, 50, 51, 52, 53,

54

Principal officers of Internal Revenue

Service, 71

Programs:

Assessment Center, 58

Delinquency check computer. 24

Equal employment opportunity, 58

Foreign tax assistance, 43

Identify U.S. taxpayers, 47

Overseas taxpayer compliance, 45

Racketeer, 26

Strike forces, 27

Tax return forms, 5

Taxpayer assistance, 4

Taxpayer compliance measurement,

50

Taxpayer publications, 78

Teaching taxes, 713

Prosecutio., 65

Protested cases, statistics on, 21

Public information program, 4

Error prevention, 3

Films, radio, and television, 4

Gun Control Act, 4

New legislation, 4

Other, 4

Public reading moms, 70

Publications, taxpayers:

Farmers Tax Guide 79

Federal Tax Info;~ation for Civil

Service Retimes, 79

Nfixt,flancous publications and documents, 79

Questions and Answer-Gun Con.

trolAct of 1968, 78

Questions and Answers on Retirement Plans for the Seff-Employed,

79

Questions Asked by U.S. Taxpayers

Abroad, 79

Tax Advice on Civil Service Disability Retirement Payments, 79

Tax Information on Mutual Fund

Distribution, 79

Tax Guide for Small Business, 78

Tax Guide for U.S. Citizens Abroad,

78

Tax Guide for U.S. Citizens Empl.ved in U.S. Pos-sirms, 79

Tobacco Tax Guide, 78

Publications, taxpayers--Continued

Understanding Taxes, 78

'Your Federal Income Tax, 78

.

R

Railroad retirement taxes:

Collections, 11, 98

Refunds of, 12 111

Returns filed, ;2, 112

Reading rooms, public, 70

Receipts (See Collections)

Recruitment, 56

Refunds:

Claimsfor, 11, 19

Duplicate, I I

Excessive prepayment., 12

Statistics on, 12, 111

Undeliverable, 12

Regulations:

Alcohol and tobacco taxes, 81

Other, 80, 81

Selected regulations published, 80

Releases, news, 4

Requests:

Technical advice, 7

Revenue rulings, analysis of, 7

Rmt,arch program, 50

Returns filed:

Classification and selection of, 12

Direct data, 15

Examination of, 12

Increase in, 12

Number cstamined, 18

P-addre.,ed, 4

Projection, 52

Statistics on, 12, 112

Verification, 13

Revenue rulings and procedures:

Analysis of, 7

Published, 7

S

Self-canployed pessons benefit plans,

determinations letters on, 8

Seminar, Inter-Americim, 45

Service to taxpayers, 4

Space, 61

Statistical reporting, 52

Statistical samples, 52

Statistics, highlights, 52

Statistics of income releases, 92

Supervision of the alcohol and tobacco

industries, 35

Supreme Court Decisions:

Civil cases, 81

Criminal cases, 82

Other court actions, 84

Systems development, 50

Data Center equipment, 50

is

Tax briefs, 6

Tax conventions, 44

Tax forms, 14

Tax harmonization, 44

Tax models, 53

Taxes, Additional:

From delinquent returns secured, 29,

30

From enforcement, 29,30, 31

From examination, 30

From mathematical verification, 30

Taxpayer assistance program, 4

Taxpayer compliance measurement

program, 50

Taxpayer publications (See Publica.

t

i ns)

Tax

?

-to=, 40

Tax rulings:

Request for, 6

Statistics on, 7

Teaching taxes program, 61

Tobacco tax(m):

Arrests, 34

Collections, 11. 10 1

Refunds of, 12, 111

Results of criminal action, 34

Returns filed, 12

Seizures, 34

Statistics on, 34

Tort claims, 39

Training:

Automatic data processing, 57

Foreign, 44

SATPRO, 44

Other, 56, 57, 58, 59, 60

U

Unemployment insurance taxes:

Collections, 11, 98

Refunds of, 12, Ill

Returns filed, 12, 112

V

Verification, mathematical, results of,

13, 30

W

Wagering tax cum, results of criminal

action, 28, 29

Wines, taxes collected, 100

Withholding taxes, by employer, I I

Workflow in Service and the Courts, 30

Annual Report / INDEX / 127

0 -