COMMISSIONER OF INTERNAL REVENUE

1966 ANNUAL REPORT

for the fiscal year ended June 30, 1966

Publication No. 55

INTERNAL REVENUE SERVICE - U.S. TREASURY DEPARTMENT
.President Johnson and Commissioner of Internal Revenue Sheldon S. Cohen congratulate

newly appointed Chief Counsel Lester R. Uretz (left). The Chief Counsel is the top legal authority in the Internal Revenue Service.

Former Deputy Commissioner Bertrand M.

Harding (left), selected by President Johnson for the position of Deputy Director,

Office of Economic Opportunity, receiving

farewell congratulations from Secretary of

the Treasury Henry H. Fowler.
Notes: All yearly data are on a fiscal year basis, unless otherwise

specified. For example, data headed "1966" pertain to the fiical

year ended Juno? 30, 1966, and "July P inventory items under

this heading reflect inventories as of July 1, 1965. .

In many tables and charts, figures have been rounded and may

not add to the totals which are based on unrounded figures.

TRANSMITTAL

Hon. HENRY H. FOWLER,

Secretary of the Treasury,

Washington, D.C. 20220.

WASHINGTON, D.C. 20224.

DEAR MR. SECRETARY:

The attached annual report of the Internal Revenue Service for fiscal year 1966 reflects the

continued growth of Service accomplishments and of our national economy. A record number

of returns was processed, and a new record of $128.9 billion was collected, with only a minor

increase in the number of persons employed by the Service. I view this not solely as an indication

of the capability and dedication of our staff, but also as a tribute to the overwhelming majority

of American taxpayers who file their returns timely, and conscientiously compute and pay their

taxes.

Throughout my first full year in office, I stressed improving tax administration, believing

as I do that managerial improvements will result in enduring benefits to the taxpayer and to the

Government. Our central effort has been directed towards strengthening voluntary compliance

by cultivating better taxpayer relations through improved service to the public. Improvements,

covered in detail throughout this report, took many forms, of which the following are illustrative:

A centralized telephone service was initiated to provide direct assistance to taxpayers located in

outlying areas; some of our offices were operated on nights and Saturdays for the convenience

of the public; our program to provide better quarters in which to conduct public business was

accelerated, with emphasis on insuring privacy during discussions between taxpayers and Service

personnel; forms and form letters were simplified; quicker and simplified responses to letter

inquiries from taxpayers were emphasized; and more cases were adjudicated at the lowest appeal

level. Above all, we have stressed the need for displaying courtesy, tact, and a spirit of understanding in all contacts with the public.

Allied with these actions are many of an internal nature that benefit taxpayers. To name

a few, there was a substantial increase in employee suggestions and related monetary savings;

the quality of Service personnel received emphasis through observance of high recruitment

standards, more specialized training programs, and improving the methods for selecting and the

techniques of training people in key supervisory and managerial positions; better manpower

utilization was achieved through introduction of cost-cutting techniques in the collection of pastdue accounts; and the substitution of specially trained taxpayer assistors in lieu of higher-graded

technical personnel helped to achieve economy without sacrificing quality.

The conversion to automatic data processing of individual income tax returns has continued

on schedule. Business master file processing became operational nationwide on January 1, 1965.

Three of our seven service centers are now fully processing individual tax returns, while two

additional service centers are processing returns for all but one state within their region. The

two-regional service centeis not currently procqssing individual returns, as well as the two states

presently not covered in other regions, will be brought under the system on January 1, 1967,

For sale by the Superintendent of Documents, U.S. Government Printing Office

Washington, D.C. 20402 - Price $1 (paper cover)
TRANSMITTAL-Continued

completing the conversion. We look forward to 1967 with enthusiasm fc'r the increased benefits

this ingenious and versatile tool will provide in speed, completeness, and uniform treatment fur all.

I am confident that after reading this report you will agree that 1966 was, indeed, a ~;ar of

progress for the Internal Revenue Service, and that credit for this should be shared by many.

SHELDON S. COHEN,

Commissioner of Internal Revenue.

TABLE OF CONTENTS

Page

Letter of Transmittal .................................... .......................... v

REPORT ON OPERATIONS

Chapter I-Informing and Assisting Taxpayers ................. .. . ....... ........2

Chapter 2-Collections, Refunds, and Returns Filed ............. . 9

Chapter 3-Automatic Data Processing .............. . ......... . . ... .... ..... 15

Chapter 4-Enforcement Activities .......... ............... ....... ......... 21

Chapter 5-Supervision of the Alcohol and Tobacco Industries .............. ............ 40

Chapter 6-Legislative and Legal Activities ................... ..................... 43

Chapter 7-International Activities ...................... ..................... ..... 48

Chapter 8-Planning Activities .......................... ........................... 53

Chapter 9-Management Activities .................................................. 62

ORGANIZATION-PRINCIPAL OFFICERS

Organization of the Internal Revenue Service ................... ...................... 82

Internal Revenue Regions and Districts ......................... I ..................... 83

Principal Officers ............................................................ ..... 84

Historical List of Commissioners ...................................................... 88

APPENDIX ................................................................. 90

STATISTICAL TABLES ....... . ................................................ 112

INDEX ..................................................................... 141

vi vii
Mission of the Service

The mission of the Service is to encourage and achieve the

highestpossible degree ofvoluntary compliance with the tax

laws and regulations and to maintain the highest- degree of

public confidence in the integriy and efficiency ofthe Service.

7'his includes communicating the requirements of the law

to the public, determining the extent of compliance and

causes of noncompliance, and doing all things neet~ful toa

proper enforcement of the law.

Report

on

Operations
INFORMING

AND

ASSISTING TAXPAYERS

Chapter I

INTRODUCTION

The American system of taxation places primary

responsibility on the taxpayer to deter-mine his tax

liability. Under this self-assessment system the taxpayer must become acquainted with those sections of

tax laws, rules and regulations necessary to the fulfillment of his tax obligations. The Intemal Revenue Service assists the individual in understanding

his rights and responsibilities through a continuing

program of taxpayer service. Under this program

the Service publishes regulations, rulings, and tax

guides covering specific tax situations, releases information through mass communication media,

maintains convenient offices throughout the country

staffed with tax experts who are available to answer

questions, provides tax materials and speakers to

schools and other groups, and distributes tax forms

and instructions to the millions of American

taxpayers.

PLAIN LANGUAGE PUBLICATIONS PROVIDE HELP

IN FILING TAX RETURNS

The Service publishes many booklets and pamphlets explaining the tax laws in nontechnical language. All the information that most taxpayers

need to file tax returns is arranged in an easy-to-use

format and examples are used freely to clarify the

narrative material. Some, like Your Federal Income Tax, cover a very broad range and have become well known over a period of years. Others

deal more specifically with subjects like casualty

losses, child care, medical expenses, and income

averaging, A few of the smaller publications are

reprints of chapters from the larger booklets but

most of them either relate to material that is not appropriate for the booklets or give more detailed information about material that was curtailed in the

booklets because of space limitations or limited

applicability.

Two new publications, Document No. 5640, Reporting Your Tips for Federal Tax Purposes, and

Document No. 5642, New Withholding System,

were developed and published to provide assistance

in complying with new provisions in the tax laws.

INFORMING AND ASSISTING TAXPAYERS

Also, a special purpose publication was developed

for use by Taxpayer Assistors in answering inquiries

about the Tax Adjustment Act of 1966. A few

documents relating to excise taxes were discontinued

this year because many of those taxes were repealed.

Descriptions of selected publications, together

with a list of all others, start on page 90.

KEEPING THE PUBLIC INFORMED

subject to tax withholding. The quiet success of this

huge operation testified to the thoroughness of the

explanatory material and instructions provided almost ovemight to approximately 4 million employers

and 70 million employees, both directly and through

mass media. Similarly, affected public sectors were

provided complete information in advance on semimonthly depositing of employee withheld taxes, use

of "piggyback" address labels, and direct mailing of

refund retums to regional service centers.

Service to the Public Improved

In keeping with the Presidential program to improve the Federal Government's services to the public, the public information program focused nationwide effort on reaching the highest attainable

standards of "fast, efficient, and courteous service."

The most important area open for the improvement of service to the public lies in the field of communications, especially since the American system of

taxation is rooted in the principles of self-assessment

and voluntary compliance. These in turn demand

public knowledge and understanding of tax laws and

procedural requirements. The public information

program is aimed at meeting these public needs adequately and promptly.

To emphasize the importance of high standards of

individual integrity and courtesy to the public, ihe

Commissioner had a film made of his talk on these

subjects to employees of theBaltimore District Office.

Prints were distributed to other district offices, so

that employees throughout the Service would have

an opportunity to see the Commissioner deliver this

message. This film plus the coverage of these topics

in the Commissioner's monthly letter to all employces laid the groundwork for the expanded courtesy

and service program.

A formal program was established to give official

recognition in the form of special awards for excellence in improving communications and services to

the public. Under this new program, district directors, service center directors, regional commissioners, and National Office division directors can

present certificates of appreciation to employees for

such contributions.

Changing Tax Requirements Publicized

A major challenge in the continuing effort to keep

the public informed was the Tax Adjustment Act of

1966, with its rapid enactment and early effective

date, and its impact on the millions of employees

Use of Mass Media

To gear the total information program as closely

as possible to changing needs, a new procedure was

instituted calling for weekly notice to the National

Office of the trends of taxpayer inquiries during the

filingperiod. As new needs were ascertained prompt

action was taken to supply the required information

through newspapers, radio, or television, in order

to reduce the volume of individual requests.

The popularity of the Service's question-andanswer column series, providing information on the

most commonly asked questions, continued to grow.

During the filing period it was regularly published in

some 845 daily newspapers (44 percent of all

dailies) and more than 1,300 weekly papers. Publication outside the filing period also continued to

expand.

As aids to news sources, two new series of informational releases were inaugurated: Fact sheets

(which provide the facts on matters of public inquiry, but which do not call for general news rcleases), and ADP taxpayer information materials

(which provide basic guides, release outlines, radio

spot announcements and the like for regional

adaptation in accordance with local requirements).

A new poster, emphasizing the importance of

careful preparation of income tax retums, was displayed nationwide during the filing period. In

January, with the cooperation of the U.S. Post

Office, the poster was shown on the sides of some

50,000 mailtrucks. During March and April the

poster was exhibited on more than 2,000 billboards

with the cooperation of the National Outdoor

Advertising Association.

On April 5 the Columbia Broadcasting System ran a network audience-participation program,

the "National Income Tax Test", with the advice

and assistance of the Service. The show made a

substantial contribution to public knowledge of the

citizen's tax rights and obligations.

2

3
ANNUAL REPORT as CHAPTER ONE

The National Office issued 177 technical and 66

general news releases, and provided field offices with

330 informational materials forlocal adaptation and

use. These included such items as news releases,

feature stories, and radio scripts and spot announcemerits. In aH, information was supplied in response

to about 40,000 inquiries from mass media and

other sources.

Radio and television stations were provided with

a variety of informational packages during the year.

Wide exposure was obtained during the filing period

of a dozen color TV spot announcements providing

helpful hints on return preparation. Another set of

twelve 4-to-5-minute radio tapes offered advice on

matters of general taxpayer interest. Altogether taxpayers receiving return and refund advice and assistance through broadcasting facilities were numbcred in the tens of millions.

Previews and Preventatives

Throughout the year the main thrust of the information program was "prevention," that is, planning and taking advance action to prevent gaps or

nrisunderstandings in public knowledge of the laws,

regulations, and procedural requirements for which

the Internal Revenue Service has administrative

responsibility. For example, before the 1966 filing

period, tax practitioners throughout the country

were sent information on modifications in tax forms

and other Service changes which would affect their

operations. They were also provided narrative

definitions of all codes used on service center taxpayer notices, so they could help widen taxpayer

understanding of ADP procedures.

Active Steps Taken To Improve Service to Taxpayers and To Promote Voluntary Compliance

During the year taxpayer educational conferences

were conducted in each of the regions to introduce

the new tax payment procedures to the distilled

spirits industry. As a result, the transition from the

old to the new system in 1966 was made with a

minimum of confusion and misunderstanding.

One of the concomitant and most beneficial features of the new emphasis on the Firearms Records

inspection Program (see p. 39) was the assistance

rendered the public in keeping accurate records,

thus avoiding technical violations of the National

Firearms Act and Federal Firearms Act through

lack of knowledge.

4

A YEAR OF INNOVATION IN TAXPAYER

ASSISTANCE

Nearly 26 Million Taxpayers Assisted

More taxpayers voluntarily sought and received

assistance than ever before. Nationwide, nearly 26

Trillion taxpayers received assistance during 1966.

This was over 650,000 (2.6 percent) more than last

year. Of the total taxpayers assisted, 16.6 million

were through telephone contact, an increase of nearly

400,000 (2.4 percent), and 9.1 million taxpayers

visited Service offices, an increase of nearly 300,000

(3.0 percent).

Taxpayers clulded

Type

More

Total taxpayers assisted----- -------- 25 0" 071 25 755 437 2 6

Teacher. -1,tioc. '

Assistance to office v@-to-n,

16:225:954

ll~ 873,117

16:615:369

9,140.068

4

2

0

New Telephone Concept Holds Promise of Still

Better Service to Public '

. The Service has encouraged taxpayers to obtain

information by telephoning rather than by making

a personal visit to district offices, since this has proven

to be an effective and economical method of providing assistance. Obviously, however, use of the

telephone depends in large measure upon the possibility of telephoning Service personnel at local rates,

an important consideration to taxpayers located at

a distance from Service offices.

Tests being conducted hold promise, if costs prove

reasonable, that a new telephone concept will improve assistance operations and open up new areas

to telephone contact. This concept is known as

Centiphone, a centralized telephone service that

enables a taxpayer to make a toll-free call to the district office even though he might be located some

distance away. Three pilot installations were

established: Santa Ana-Los Angeles; Little Rock,

covering seven cities in Arkansas; and Washington,

D.C.-Baltimore. From a manpower resources

standpoint Centiphone will permit reduction of

costly work interruptions of high-grade technicians

in subordinate Service offices, since telephone calls

normally made to them for taxpayer assistance will

be automatically directed to the Centiphone Service

headquarters.

INFORMING AND ASSISTING TAXPAYERS

Extended Office Hours Tried

This year an experiment was conducted to determine the nature and scope of assistance the public

requires during evening and Saturday hours. If

the results of this experiment indicate that taxpayer

demand for service is substantial during these hours,

arrangements will be made to extend taxpayer assistance service to meet these requirements.

Physical Facilities To Be Improved

Large numbers of taxpayers visiting Service offices during January I to April 15 have made it

difficult to provide adequate space and furniture

without incur-ring a degree of inefficient utilization

during the rest of the year. A study encompassing

the results of a test of furniturr designed for taxpayer convenience but with a multiplicity of uses

has been completed. On a test basis, the furniture

design has proven itself attractive and comfortable

with adequate space allocated to taxpayer assistance activities without incurring nonusage during

low-traffic periods. The furniture design will be

tested further to obtain a broader evaluation of its

applicability under varying conditions and circumstances prior to introducing it on a national basis.

Taxpayer Assistor Specialists Provided Year Round

In an effort to bring assistance not only during the

filing period but also year round to taxpayers far

away from Service headquarters, the Service has

placed 448 full-time specially trained assistors in 435

offices. This represents an increase over last year of

84 full-time assistors and 160 more offices, and thus

provides much better service to taxpayers in rural

areas.

In addition, the Service employs spc~ially trained

temporary employees to furnish taxpayer assistance

during filing periods. This not only provides more

assistors at a time when public need is greatest, but it

also frees highly specialized technical personnel to

fulfill their primary enforcement mission.

IMPROVEMENTS MADE IN TAX RETURN FORMS

AND FORM LETTERS

suggestions from practitioner groups such as the

American Bar Association and the American Institute of Certified Public Accountants, as well as Service employees and the general public, have been

carefully considered in developing and revising

forms. In addition, a private firm was engaged this

year to review some tax return forms and form

letters and to suggest ways of improving their appearance and design.

In a further effort to improve form letters, a group

of Government experts was asked to examine this

program. As a result of this study, a special section

has been established to review new and revised form

letters to improve their content, tone, and appearance. In connection with this program, nearly 500

new or revised form letters were reviewed during

the year.

To further assist individual tax return filers, the

Service designed tables showing State sales taxes and

gasoline tax rates for inclusion in the instructions

for Form 1040. Also, by combining tax computation tables, the number of tables in the instructions

for Form 1040 were reduced from five used the

preceding year to three.

Many tax return forms have been designed to cnable the Service to make the best use of collateral

information in certifying items of income, deductions

and credits shown on returns and to advance processing of returns for optical scanning. These advances in processing will also be beneficial to the

public.

Two new forms issued this year are of special

interest:

Form 3646-Income From Controlled Foreign

Corporation. Many meetings with outside organizations were held in the course of the development

of this forin to insure that the form would provide

the required information with the least possible

effort on the part of the filer,

Form 4067-U.S. Annual Information Return.

This form was designed for use in summarizing information from Form 392 I-Exercise of a Qualified

or Restricted Stock Option, and Form 3922-Trans.

fer of Stock Acquired by Certain Options, and transmitting copies of thm forms to the Service.

Emphasis has continued on improving the appearance and comprehensibility of tax return forms,

while maintaining the technical accuracy required

by complex tax laws. As in the past, comments and

TECHNICAL INTERPRETATIONS ARE ISSUED TO

TAXPAYERS AND FIELD OFFICES

One of the functions of the National Office is to

issue private letter rulings in response to inquiries

5
ANNUAL REPORT ga CHAPTER ONE

from individuals and organizations on tax consequences of proposed transactions. The National

Office also encourages field offices to request technical advice where needed in connection with the

application of the tax laws to particular taxpayers.

During the year, 27,672 requests for private

letter rulings and 3,14.-9 requests for technical advice were answered. These requests are classified

by tax category and subject matterinthe table below.

Requests for tax rulings and technical advice processed

Subject Total Taxpayers'

requests

Field

requests

Total.... ...... _. 30,921 27,672 3,149

Accounting methods... ...................... 3,572 3 572

A ---- --------- 9,996 9:996 ----------

A ------

Ad.mistrati=hm.............. ------

161

189

73

124

118

65

Alcohol and ... I ....................

ar p'

1,331 St. 3,

2

.101 ........ 1,121

Ernp .:r .~d 667 590

Eagin ...inigilotel ... (deprecil 0 tc)

E t t d t a "' ' *

252

M2

171

402

81

s . . an axes............... 130

Exempt a,ganicaticm ................

oth , -m t.....................

r, if.

1 S1

2

.391

I

111

317

24

oth., in .. to. rmitt".__ ------

5: . : 7

84

922

Pension trusts.............................. 637 439

198

DETERMINATION LETTERS ARE ISSUED ON PENSION PLANS AND TAX EXEMPT ORGANIZATIONS

District directors issue determination letters to

employers on the tax qualification of pension, profitsharing, stock bonus, annuity, and bond purchase

plans, and on the status for exemption from tax of

related trusts. Such letters are based on published

principles and precedents which are applied to the

facts in the cases considered.

During fiscal year 1966, 15,515 plans covering

1,143,482 employees, exclusive of self-employed individuals, were held qualified. Data as to this activity appear in the following table:

Determination leners issued on employee benefit plans

Item

D.t.-patlem letters issued Mth . expect to1. Initial qualification of plans:

a. Plans approved.

P.MaiNifirs ..Pl.

It. Plans disair roved.

2. Termination of pF,,n

C. es closed

without

illu.m. .1 datermInahon

letter.... .

....................... ....___

Profit.

sharing Plan,

17t: 1 E 1S

1

50

554

629

Pension or

.nn.ity plans

8, 590

643,347

"I 5.0

745

Stock

bonus

plan,

14

28

'

316

3

In addition to the foregoing, 7,231 plans which include self-employed individuals, covering 11,526

participants, were held qualified. Ile details appearin the following table:

Determinations issued on benefit plans For self-employed persons

Plethl- P-osin. Bond

sharing 'Plan, purchase

plan, plan,

Determined- issued vAth respect to1. Initial oWifil.0m of plan,:

a. Plans approved -------------------

..

310 Participating employees.. ..... _ 3: US 523 1.

runrul.

1 Plans di,ep ------

.b. 2 ..often a co~.a-

'm

IN

2

3

. l ' --------

Cases closed "Ithout asuance of determinathers.- 91 269 29

Adverse determinations may be appealed to the

National Office. During the year 62 cases were appealed, resulting in 34 decided in favor of the taxpayer, 26 against the taxpayer, and 2 partially in

favor of the taxpayer.

District offices issued 14,330 determination letters

to organizations seeking to establish exemption from

Federal income taxes under provisions of the Interrial Revenue Code which authorize a tax-exempt

status for qualifying nonprofit organizations including those engaged in charitable, religious, and educational activities. Of the total determination letteis issued, 13,445 were letters of approval and 885

of disapproval. In addition, 1,972 cases were

closed without issuance of a determination letter.

WEEKLY BULLETIN INFORMS TAXPAYERS

The Internal Revenue Bulletin is the authoritative

instrument of the Commissioner for announcing

official rulings and procedures of the Service and for

publishing tax legislation and related committee reports~ Treasury Decisions, Executive Orders, tax

conventions, court decisions, and other items considered to be of general interest. The Bulletin is

published weekly and may be obtained by the public

on a subscription basis from the Superintendent of

Documents, U.S. Government Printing Office. Its

contents are consolidated semiannually into a permanent, indexed Cumulative Bulletin.

Under established standards for publishing rulings involving substantive tax law and internal procedures affecting the rights or duties of taxpayers,

.329 Revenue Rulings and 44 Revenue Procedures

were published in the Bulletin, as follows:

INFORMING AND ASSISTING TAXPAYERS

Revenue Rulings and Revenue Procedures published

Type

Total ...._-------------------------------

AdministratNe.----------------_- ---------

Alcohol and tobacco

E-pI:y.ZrI War nd I ..x ------------ -------------------------------

"I

I

Cuse taxes "A"' --------------- --------------------------

Exempt I mcoma tax

Pension

Sell.employm Wtax_ ------- ------

Number

373

27V

'

2

2

.

27

33

159

26

2

The more significant Revenue Rulings and Procedures are summarized on page 94.

During the year, the Bulletin contained announcements of acquiescence or nonacquiscence in approximately 120 decisions of the Tax Court of the

United States. In addition, 88 announcements of

general interest were published. Twelve listed the

names of organizations, contributions to which are

no longer deductible under section 170 of the Code -1

seven listed disaster areas in which losses qualify for

the special tax treatment under section 165 (h) of

the Code; and four announced tax administration

agreements with the States of Arizona, Delaware,

Hawaii, and Vermont. Other significant announcements of general interest are described on

page 97.

A 1,012-page Index-Digest Supplement, wh.ich

may be purchased from the Superintendent of Documents, U.S. Government Printing Office, includes

finding lists and topically arranged digests of Public

Laws, Treasury Decisions, tax conventions, court

decisions, rulings, and procedures published in the

Cumulative Bulletins for the years 1961 through

1964. Together with similar publications for the

years 1953 through 1956 and 1957 through 1960,

this Supplement is a valuable tax research and reference aid. A looseleaf Index-Digest Quarterly System provides research assistance on a current basis

for Service personnel.

Alcohol and Tobacco Industries Receive Advance

Notice of Technical Changes

The Service issues industry circulars to the various

segments of the alcohol and tobacco industries so

that they will be currently advised of matters affecting operations and procedures, the Service will receive the benefit of industry thinking in various operational and procedural areas, and voluntary compliance with laws and regulations will be promoted.

Thirty-five industry circulars were issued during

the year. Twelve of these announced the sub.

stance of revenue rulings and revenue procedures in

advance of publication ip the Bulletin, and seven

called attention of the affected industries to the more

significant changes resulting from enactment of the

Excise Tax Reduction Act of 1965 and related regulatory changes. Circulars of particular interest arc

described on page 98.

REGULATIONS ISSUED UNDER THE INTERNAL

REVENUE CODE

The most authoritative means for communicating

and interpreting the tax laws to taxpayers is by regulations issued under the Internal Revenue Code.

Such regulations are written to provide general

guides for the Internal Revenue Service and taxpayers alike and are binding upon Service personnel.

The usual procedure for issuance of tax regulations is for initial publication of a notice of proposed

rulemaking in the Federal Register. By this means,

interested persons are given a notice of what the intended regulations are, and are given the oppor.

tunity to submit their views by means of written

comments and a public hearing, if they so desire.

After all relevant comments have been considered

and appropriate changes have been made, the proposed regulations are published irf final form in the

Federal Register by means of a Treasury Decision

which carries the approval of the Secretary of the

Treasury or his delegate.

Occasionally, however, conditions may demand

departures from the usual procedures. In some

cases, for example, it is permissible for regulations

to be published without a notice of proposed rulemaking where a notice would be unnecessary or impractical or where the needs of the public are otherwise better served without such notice. Another

departure is the case of temporary regulations which

are published without a notice of proposed rulemaking in order to provide temporary rules, e.g.,

in situations where taxpayers must make important

decisions almost immediately after the passage of

legislation. These are followed by permanent regulations which are prescribed under the customary

procedures.

Thirty-five final regulations, 7 temporary regulations, and 12 notices of proposed rulemaking, relating to matters other than alcohol and tobacco

taxes, were published in the Federal Register during

the year. These regulations were issued under the

6 1 7
ANNUAL REPORT

provisions of the Internal Revenue Code of 1954

as amended by subsequent public laws or on the

basis of administrative determinations.

Six public hearings were held on the provisions

of proposed regulations and were attended by approximately 225 taxpayers or their representatives.

Seven Treasury Decisions, four notices of proposed rulemaking, and five final regulations were

e CHAPTER ONE

imued in connection with alcohol and tobacco tax

administration. These were published in the Federal Register. Three of the Treasury Decisions and

one notice of proposed rulemaking related to the

E xcise Tax Reduction Act of 1965. .

I

Treasury Decisions containing some,67 the more

important final and temporary regulations published during the year are listed on pages 93 and 94.

INTERNAL. REVENUE

COLLECTIONS, REFUNDS,

AND RETURNS FILED

Chapter 2

REVENUES JUMP TO NEW RECORD

Gross internal revenue collections rose sharply in

1966 to a total of $128.9 billion. This was an increase of $14.4 billion or approximately 12.6 percent over the prior year. This increase was the third

largest in history, exceeded only by those in 1944

and 1952.

There are three primary reasons for the increase:

The high level of business and personal income;

growth in the number of taxpayers; and changes in

the Federal Insurance Contributions Act (FICA)

tax withholding rate. A slight further increase in

ALL MAJOR TYPES OF COLLECTIONS INCREASED

EXCEPT EXCISE TAXES

I

61.3 no

TUTALS

1965 114A

19W in.9

CHANCE +12.6%

14.8

13.4

3 1

11611iill

Corponflo. ...... Indlld..? E.Ply."t Edds ond Who Wo

t..

g"t txu

t." W.

CHANGE FROM 1965

+18.4

+1 +12.7

1 ti-

-9.4

8 231-691 O-OC-2 9
I

ANNUAL REPORT el CHAPTER TWO

collections resulted from regulations requiring em- This became effective in June 1966, with one addiployers having more than $4,000 monthly in with- tional payment included in collections for the year.

held individual income and FICA taxes to deposit Gross collections by class of tax for 1965 and 1966

such funds twice a month instead of once a month. are shown in the following table:

Gross internal revenue collections

In thousands of dollars. For detailt see table 3, p. 1211

So....

Grand total ~ ---- ------- __............. .............__-------------_

late.. Us... total ......... --------- _ ......... __ --------- .....................

Car ration ------------_-------------- -----------------------------------------

12,3d.A. total ........... -------- _------ ------------------_--------

Withheld by employers I ---------------

Other -----------

2

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

Emplo(denen,t 0 . taxes, total -------------------------- ------- -------------------

end disability insurance, total. ----- ---------

Fed

Fence

.... .....

Set

i.e.

I.ym..t in an mrce aatl

..._......

'W'"t lent

"a"

toy ..I.nc.-. ... _------ ............................

R d con -----_-------- _ ------------- __........................

Estate and gift taxes. ........ ------ ___ ------ -------------------- .......

Excise tax,., total. _ ............. .................. ....... -------------_--

Alcohol--- ........................... ................... ------------

Tobacco - --------------------- ___

Oth................. __ ---------------

Firmed.

Collections are adjusted to -Ind. amounts transferred to the Government of

Guam. For

d

fail, se. table

I' P.

112 and tootoote 5

'

a e. 123

Estunattd-Col

lacti

ons of Individual in... is. ithh.id are not reported freps.

rattly from aid-age and cilsability Insurance taxes on wages and salaries. Similarly,

callectia's of indi,idual income bar not withheld are not reported age rattly from

old..,. ad disability insurance taxes on self-employment income. T a amount of

P at of

1966

ollecti ...

100.0

71.5

13

-"

"

.6

33.2 14.3

15. 7

14.7

14

.5

2.4

10.4

3.0

1:1

3

'

814 378

2

073:956

7: 509,777

15.5

18.0

14.2

16

'

2

9.9

1 9': 1 _I22 0

-80.0

9

7: 5

9: 4,

old-age and disability Insurance tax witections shown is based an estimates mod.

by tat Secretary of the Treasury pa~xaart to the provisions of sec- 201(.) of the Social

Security Act .

a

amended . and inc u

d

as al

I

old-age and disability insurance taxes.

The estimates shown for the 2 classes of individnet income taxes were derived by sub.

tracting the old-age and disability insurance tax estionsters from the combined totals

reported.

1965

114,434,634

79,792,016

53, SSO 683

36, 840, 394

16,920,288

175:1814

'6: 30' 073

1:82,211

622,499

635,734

2,745,532

14,792,779

312 772, G.U

8: 14' 871: '"551

1966

123,879,961

92,131,794

311,834 6 243

1,297;552

42,81

18. 486:1 "170

11 2

'

19; 133

005:4

8.

18,078 143

927,34

5

567 01

683~ 631

13 9g; 13 1

3: 2' 33

11

2

Increase or decrease

Amount_T Zcirnt

14,445,328

12,339,778

4 702 909

7: 636: H9

,

970 987

1: 665: 882

151,827

159 415

I"

: 28

1. 1173

-55 485

47,897

_1,34 399

3948;667

41 745

-74: 638

-1,361,774

12.6

Income Taxes Produce Bulk of Revenue

Individual income tax, including both amounts

withheld from wages and amounts paid with regular

and estimated income tax returns, continues to account for about half of total gross tax collections. In

-spite of the reduced tax rates on 1965 income which

were established by the Revenue Act of 1964, there

was a substantial increase of $7.6 billion in 1966

individual income tax paymcnts-a 14-percent increase over 1965. Contributing to this increase was

the larger number of taxpayers (68.6 million individual returns filed in 1966 versus 65.9 million returns filed in 1965) and a sharp increase in personal

income.

Changes in withholding and payments on income

taxes during 1966 are shown in the following comparison with 1965:

Income tax collections for 1965 and 1966

[I'larrouind-ld.11mal

Source 1965 1966

Change

Amount Percent

l.dixid..I-Withh.ld

--------

36 840 394

' '

42,811,381 +5.970,987 +16.2

Indixidual-Orther th;ri

xvithh,ld------------- ..... 16,820.288 18,486,170 +1,665,882 +9.9

ToUl . ~ ---------------- 53,660,683 61,297,552 +7,636,869 +14.2

Corporation..... _. ---------- 26,131,334 30,934,243 +4,702,909 +18.0

Total con4i nd'Ada.' ad

.0mr. .......... 79, 792, 016 92,131,794 +12, 339. 778 +15.5

Corporation income tax is the second largest

source of tax revenue. Despite the fact that the corporation surtax was at a higher rate during half of

1965 than in 1966, corporation tax payments increased by $4.7 billion over the period, accounting

for almost one-third of the total increase of $14.4

INTERNAL REVENUE COLLECTIONS, REFUNDS, AND RETURNS FILED

billion in taxes collected. The increase is primarily

attributed to the high level of business activity during the year. A modest increase of 82,000 (6 percent) in the number of corporation returns also contributed, as did an increase in corporation estimated

tax payments. The latter change was brought about

largely by a revision in the rate schedule for installments of corporate estimated tax, bringing corporations more nearly on a pay-as-you-go basis than

had previously been true.

Employment Taxes Rise

Employment taxes experienced the highest percentage increase of any class, with an 18.4-percent

rise. Almost all of the increase occurred in the

Federal Insurance Contributions Act (FICA) area,

where there was a $3.3 billion increase. This increase resulted from changes effective January 1,

1966, which raised the maximum annual income on

which the tax is applied from $4,800 to $6

'

600 and

increased the rate itself from 3.625 to 3.85 percent.

In addition, the new Medicare provision added

another 0.35 percent to the tax. Both rate changes

apply equally to employees and employers. An increase in the total number of employed persons in

1966 over 1965 also caused some of the increase in

FICA taxes collected.

Excise Tax Collections Are Down

The Annual Report for 1965 pointed out that the

Excise Tax Reduction Act of 1965 (Public Law 89-

44) would substantially affect Federal revenue in

fiscal year 1966. Excise collections of $13.4 billion

were down $1.4 billion from last year, a decrease of

over 9 percent. . The reduction in revenue was moderated by the Tax Adjustment Act of 1966 (Public

Law 89-368).

The tax on passenger automobile chassis was reduced from 10 to 7 percent by Public Law 89-44.

As the next step in the reduction program, the rate

was reduced to 6 percent on January'l, 1966. Public Law 89-368 restored the 7-pcrcent tax rate ef.

fective March 16, 1966. This tax brought in total

revenue of $1.5 billion in 1966 as compared to

$1.9 billion in 1965. Present legislation provides

that the rate will be cut to 2 percent on April 1,

1968, and then to I percent on January 1, 1969.

The 10-percent tax on local and toll telephone

calls and teletypewriter services was reduced for a

time, then later restored under Public Law 89-368,

which further provided for a reduction to I percent

on April 1, 1968, and repeal January 1, 1969. In

1966 the revenue from this source was $0.9 billion,

compared to $1.1 billion in 1965.

JUDIUNISTPATTIT BUDGET RECEIM

S_ .1 owead D.11-1966

Total Receipts 104.7 billion

Individual Income Taxes

53.0%

Corporation Income Twes 28.7%

Excise Taxes 8.7%

Estate and Clit Taxes 2.9%

Customs 1.7%

Miscellaneous 4.9%

10

I I
ANNUAL REPORT gis CHAPTER TWO

"Administrative budget receipts" is that part of revenue, customs duties, and receipts from miscelthe total collections of the Federal Government avail- laneous sources are reduced by transfers to trust fund

able for financing the operations and programs in- accounts, refunds, and interfund transfers. The folcluded in the annual budget. To arrive at admin- lowing table describes the source of gross c6flections,

istrativc budget receipts, gross collections of internal deductions, and administrative budget Ti;cCipts:

Gross collections, deductions, and administrative budget receipts

[In thousands of dollars]

11.1, Trust fund lrl.rf..d Administrative Source to

lections transfers Refunds transact.ons budget

,..lots

Individual Income ie.;

withhold..... .....................................................

Out ' 041 11'

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

18 : 0

Total ... ------------------------------- 7

11 13 .. 5'851 . as

.

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

55 445 707

Corporation Income texts......_............ 30: 934 : 2 43 761.215

....

30:073:028

Excise I xft:

Hghway trust fuld- ------------- --------- 069 390 3 949 458

. .

131

'1'

0 --- --------------

1 ........... ---------------------------------------------------

3

_9 28:722 . - ... - ....

638

2 6: --- 9,112,094

Total ....................................... ____-----------------_--- 13,398.112 3,949,458 336,569 ---------_-- 9,112,084

Empl0ard.sen.t taxes:

and di,abillty ln,.r.n.................... -----------_--------- ------ 19,005 488 IS 777 813

'

227,675

M_----------- ___----------- --------- ------------- 683:631 683:458 173 unemployment Insurance- ----_---------------------- 567,014 561,428

5

586 ....... ------

Total ........................... ................ 2 1, 2 11, 1 13 20

,

022

,

69S 233 431

Estate and 91ft taxes............................................ --------

3. .9 3 , .22 ...

----------- 27:605 066,317

Total internal revenue --------_-------------- -------- ---------------_--------- 128,879,961 23,972.157 7,210,667 ........ ----- 97,697,137

Adjusted to conform with "Satement of Receipts and Expenditures of the Us -37,430

11 .. 3 2 If

Ad 906

justed total Internal revenue ...................... ............ :. ------- ------- 128,842 531 23,938 - : 8 14 7,il7: 411 97 696 251

Dustoms. ------------------------

Miscellaneous receipt------_---_

: ~

I "

1 17

5:797,338

...

44 627

'285 ...... fis'JiYJ

1:766:543

5,

1

68,305

Tot.l. ------------_...... _--------- .................. -------- 136,451,039 3,938,824 252,369 620, 747 F- 1..131.-

I preliminary.

REFUNDS INCREASE

The total amount of refunds paid, including intercst

was$7.3billion. This is about the same amount

as was refunded in 1964 but $1.2 billion more than

in 1965, a 2 1 -percent increase.

The number of individual income tax refunds (including employment taxes) increased 13.5 percent

during the year, from 38 to 44 million. This re-

-versed the 1965 drop which had resulted from

underwithholding of taxes in the last several months

of calendar year 1964.

Corporation income tax refunds declined slightly

in number, but increased $90.8 million or 13.5 percent in principal amount. At the same time, interest on corporation refunds increased by more than

$25 million to $69.8 million. This comprised 67.1

percent of all interest paid in 1966 with the corporate increase amounting to 95.4 percent of the

total increase. The large increase was caused by

sonic very large interest payments on corporation

income tax refunds during the year.

Elxcise tax refunds totaled $338 million, an increase of $114 million. Of the increase 74.1 percent

is in manufacturers' and retailers' excise. tax categories. Refunds by class of tax are shown for 1965

and 1966 in the following table:

INTERNAL REVENUE COLLECTIONS, REFUNDS, AND RETURNS FILED

Internal revenue midlands, including Interest

[For neturds by region innal district. sea table 5. p. 1251

Amount refunded Amount of

Type of tax

Number

(pf

Unnuxaad Wall anddo,Interes,

lars)

Int....I Included

(thousand dollars)

1965 1966 1965 1966 1965 1966

Total .funds of internal .an.. -------------_- ------------ --- 39,916,251 45,106,265 6,068,596 7,314,599 77,419 103,931

Car ration income twos ........ ------------------ ----------- _

Zo --- - - - "2 24'

117 252 711 879 830 9S

8

41

' 0 "

78

n ldu.1 Income and employment fares, total a.--------_----------- - - - 311j0 : 43,647:266 5.097:226

:

6.11

5

148 2

8:

72. 29~869

r1me

p"I"n ' i '' r _ - - -----

31,11 2 72 42 436 224 4 865 851

'

5 958 028 10 07

Other nd . nd j61~kily 1 ::::: 0 1 ' '

'".

me la

1,049: 6

52 1:178:131 223:435 251: 131

17:6

76 .:042

Railroad reUramen

U proyaramit I

ns

no `~u -::

195

45,573

308

32,603

189

7,751

76

813

9

2

3

227

7,state tax .......... -----------------------------------------

-

13

" a

7,326 30.962 29 386 3,3

09 "1 1t

.111 tax...------- ----------------------- ------ ---- -_-_::::: :::

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

9f

7

1,345,579

7

1,333,6931D

11941

223,587

1~477

337 591

26166 15

1,022

Alcohol taxes 4 --------- ........ ------

-

2,045 777 83,796 94 427 4 7

Tobacco t-34.----------- ..............

:

039

I

S

=

1

6,729

j,

26

1

Manufacturers' and rentallers'excise taxes, total----------------------- --

1,3

2: 262

.

277, 2 126,463 210, 899 305 179

Gasoline used on farms.. --- ----------------- --- 1,2;9, 777 231 7 7

Gasoline, na.high.ey---------------------- 7' for .0' --------------

,

2

" 1 1

S:

2 242 22 121

Other ::::: ---_--------- P I70 -------------- -----------

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

: 4 274 12,643

2 :9 ,

1 : 3 3 305 179

All other excise taxes a-----------_-------------- __.------ 20,233

1

46,420 6,601 24,679 357 836

j reflect reimbursements from the Federal Old or

'

III,,,, h

..

no' '"'

'I=dI -A

and

Surnsivars

and Federal

D It

I

nsurance Trust Funds amounting to $227,675,

0

in 1966 and $191,690,001) in 196 ; from the

N I

hway Trust Fund samenturl, to

$119,772,000in I%6srdllI23.49B,ODOin 1965; and Isom the Unemployment Trust and

announfin to$600D,000 in 1966 and $7609000in 1965

I Not ofI99 OIF2 undeliverable chw:ks'MQinz $111,24i,000 in 1966 and 58,1117 sands,

Interstate checks totaling $4,165,000 in 1965.

a Includes refunds "not otherwise classified."

Includes cl-b.1ke and stamps asionniatical.

A Includes narcotics, si ver, watering (tacme and stamps), capital stock, and other

excise tax refuncls.

- L.. the. W.

12, 13
ANNUAL REPORT re CHAPTER TWO

RECORD NUMBER OF RETURNS FILED A total of 104 million tax returns of all types was

filedinl966. This is an increase of 1.6 million over

ALL MAJOR TYPES OF RETURNS INCREASED EXCEPT

PARTNERSHIP AND EXCISE

69.7

TOFFAILS

1965 10Z.5

1966 104.1

CHANGE +1.5%

22.3 22.4

4.7

3.1

1.0 1.0 1.4 1-5 - cmam

Individual Dirchmationa, Partnership Commaition Employment Ex.fi`tand

and Of estimated it the,

fiduciary tax E CKANGE FROM 1965

+5.3

+4-1 +2.6 1 E

1

+0.8

it

33.9

the number filed last year and reflects both the continuing growth in population and the expanding

economy. Returns filed in 1965 and 1966 are compared in the following table by type of return. I

Number of retums filed, by principal type cri.rartum

[Fig.. in th....nd,. Far details, ... table 6, p. 261

Type of return

,102,492 104,078

79,111

965 1966

Grand total.~_ -----------_-------- ------ --- L_

Iname tax, total--_-------------_ ....................

Individual and fiduciary, total.. ...................._

Indl,fil..1-cifirtm, and resident efiml, lot.] ........

Form

a

1040 ............ -----_.....:::::::

Form, 1040A.-. -------------_ ----_

pact All other individual and fiduciary-. ..._.. --------

OrAUDn$ Of estimated tax. total.. ------------------

I Odividual- . _. --------------------------------

G.rimrati.n.. . ~ ------------------------ --------

Partnerships. ------------------------ ----------

Corpo radon -------_------_- ----_----------

Other. ---- ------------------------_ ...._ --------

Employment tax, total-.. ---------------------------------

Employers' Form 941 ........ ----- i ..... -----

Employer,: lam ythreF 142 1(haal.11.1d lrnp~lI

Form

943 pri 1, rid am

arm or. a

F

I

Frla.a)d retirement, Forms CT-1, CT- -------- --------

Unemployment insurance, Form 940. .. ................

Eatal.t..-_-------------------- ......... ----------

Gift Excimtaxtax, - ------ total.................... -- ------- ------------_----- -------- --_-------

oce"'ti-I

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

Form 720 (retailers, tc.)

Alcohol-.--.. --------- --------------

Topicco ------------- ...............

H41h.. tax -------_------------

... .................. -------_-----_-

, F,vised.

76,113

66,965

65.932

48 158

17:774

0,032

6,197

6,166

31

977

1,420

,555

22.266

15,483

22

1,510

94

122

,3.898

_F2,21, 262a

249

,65

69,724

68.632

50 OS4

18~578

1, 092

6,356

6,329

27

962

1,50

567

22,446 1 632

577

63421

1,582

113.

2,284

1'003 97

229

220

57

Taxpayers' Requests for Filing Extensions

More than one-half million taxpayers requested

extension of the deadline for filing individual income

tax returns. The Service weighed these requests

carefully, approving 57 percent of the requests received. These extensions do not relieve taxpayers

of any interest charges they may incur by late

payment.

AUTOMATIC

-DATA

PROCESSING

Chapter3

ADP TO BE COMPLETELY OPERATIONAL

JANUARY 1, 1967

The Service's integrated automatic data processing (ADP) system, already operational nationwide

for high-volume business tax returns, will become

operational nationwide for individual tax returns

on January 1, 1967. Thus, the basic plan becomes

an operating reality on schedule, just

5 years after

testing began ina pilot installation in the Southeast

Region in 1962.

Meeting this schedule was made possible by the

successful introduction of the Southwest, Central

(except Michigan), and Western (except California) Regions into the individual masterfile operation in 1966. Remaining to be phased into the

program arc the Midwest and North-Atlantic

Regions, and the States of Michigan and California,

which will be brought under the system next

January.

MASTER FILES CONTINUE TO GROW

Operations in 1966 brought about tremendous

increases in the number of accounts in both the business master file (BMF) and the individual master

file (IMF). The BMF went from5 million accounts at the close of 1965 to 5.7 million at the close

of 1966. The introduction of additional offices into

individual return processing increased the IMF accounts from 17.8 to 36.9 million. Over 19.3 million

of the 26.8 million business returns received during

1966, and over 35.6 million of the 76.1 million individual income tax returns and declarations of estimated tax received during the same period were

posted to these accounts in 1966.

EMPLOYEE REDEPLOYMENT, HANDLED

SMOOTHLY

The reduction in the number of positions in district offices resulting from implementation of the

ADP program presents

a real challenge to the Service. However, with the advice and assistance of the

Civil Service Commission, considerable success has

been achieved in the redeployment program. Mr.

14 15
ANNUAL REPORT * CHAPTER THREE

John Macy, Chairman of the CSC, has stated that

the IRS "has done an exemplary job of minimizing

the impact on employees in its extensive ADP conversion program." Permanent staffing in the district office returns processing function was reduced

from approximately 12,000 in 1960 to 4,300 in June

1966, a net reduction of some 7,700 positions. This

has been accomplished without once resorting to involuntary separation or transfer. All placements

were on a voluntary basis, and the majority were

made within the employees' own district offices.

Present plans call for about 1,800 employees to remain at the end of conversion.

IRS DATA CENTER NOW OPERATIONAL

Operations in the new IRS Data Center at

Detroit, Mich., began as planned on January 1,

1966. The Center, located in interim space pending

construction of a new building, is relieving service

centers of all data processing activity not directly

related to the ADP master file. This facility will be

completely operational by January 1, 1967, at the

same time the basic ADP plan is fully implemented.

THE ADP SYSTEM IMPROVES TAX

ADMINISTRATION

ADP Identifies Nonfilers

Under ADP, delinquency checks are performed

by comparing recorded returns filed against the filing

requirement ineach taxpayer's account inthe master

file. For businesses, the system is little more productive than the manual procedure previously employed; however, computer checking has proven to

be faster, easier, and somewhat more comprehensive.

Results are shown below for the IMF check in 1966,

when all seven regions, were included, compared to

1965, when only four regions had been under the

BMF for sufficient time to permit this check:

Number of notices of nonreccipt

issued -------------------

Number of delinquent return

1965 19&6

1,011,366 1,981,872

investigation notices issued - __ 583,749 1,055,723

Number of delinquent returns

secured

------------------ 396,915 777 624

Dollar value of returns secured - $83, 289, 000 $171, 077: 000

Full-scale delinquency checking of individual returns was not feasible prior to ADP, and the full

potential of the system for detecting failures on the

Part of individuals to file will not be realized until

the system is fully installed. A delinquency check

by computer process, however, was ma*dc in the

Southeast Region in 1965. Surprisingly, the

delinquency checking process, normally designed to

collect past-due taxes, has uncovered thousands of

cases in which taxpayers, in failing to file required

returns, have been depriving themselves of millions

of dollars in refunds.

Results to date show that over 9,000 delinquent

returns were secured. The total tax shown on these

returns was $2.6 million, of which $2.4 million were

prepaid through payments of estimated tax and

withholding of income tax at the source on wages.

Additional revenue amounting to $0.6 million was

due on these returns, as were refunds of $0.4 million.

These results were brought about by notices mailed

to individuals from whom income tax returns were

not received. Cases of nonfiling for which there was

no taxpayer response are being acted on by enforcerincrit personnel.

ADP Performs Extended Verification of Data on

Returns

The ultimate capability of the ADP system will

permit verification of the mathematical accuracy of

all returns as well as verification of estimated tax

credits claimed by individual and corporate taxpayers on their returns. In 1966, all of the highvolume business returns filed by the Nation's taxpayers were subject to the verification processes.

Iviathernatical verification by computer was also applied to returns filed by individuals in the five regions

having all or part of such returns processed under the

ADP system, including a more comprehensive

verification of Form 1040 performed under ADP.

Verification of all estimated tax credits claimed by

individuals, which could be done only on a limited

basis under manual processing, was performed by

ADP in theSoutheast and Mid-Atlantic Regions. It

is estimated that ADP mathematical verification,

including verification of estimated tax credits,

yielded about $19.1 million which would not have

been produced save for the more extensive processing performed by the new system. The verification

also resulted in the assessment of $1.2 million as

penalty forthe failure of taxpayers to make sufficient

estimated tax payments.

AUTOMATIC DATA PROCESSING

Computers Check on Outstanding Accounts Before

Refunding

The ADP s~stcrrt has been effective in identifying

unpaid accounts prior to refunding overpayments to

taxpayers. In fiscal year 1966, overpayments numbering 291,863 and amounting to $58.7 million were

offset against tax liabilities for the same taxpayers.

At present, the offset procedure is employed for all

the Nation's BMF returns, and for all individual income tax returns on the IMF. All individual returns will be subject to the ADP offset procedure in

1967.

In addition, the offset procedures will be expanded

nationwide in 1967 to cover non-master file accounts which went into a delinquent status. In

tests in the Southeast and Mid-Atlantic Regions this

year 87,516 IMF accounts were flagged to note

the existence of a non-ADP delinquent account. As

a result, offsets against ADP refunds were made

automatically in 21,367 cases and revenue totaling

$1,397,070 was realized. Many of these cases had

previously been classified as uncollectible.

ADP Stops Duplicate Refunds

Another problem that has plagued the Service

since the inception of the withholding system is the

fact that a large number of taxpayers, most of them

with honest intention, file more than one refundable

income tax return in the same filing season. One

of the most common reasons for this is that many

taxpayers who have had more than one employment

during the year make the mistake of filing a separate

return for each withholding statement they receive.

This frequently gives the taxpayer a lesser total tax

liability than he should have. Under the old system these duplicate filings were detected by manual

methods, long after the refunds had been issued, and

recovery action was difficult and expensive. The

ADP system permits identification of duplications

before the refund checks arc issued. This system

resulted in over $6 million in additional revenue in

calendar year 1965 in the two regions using ADP

procedures for processing individual returns.

Matching of Information Documents With Returns

Progresses

Testing has continued on the optimum use of

information documents received each year from individual taxpayers and from savings institutions,

businesses, and employers reporting payments of

interest, dividends, wages, etc., to investors and wage

carriers.

A test conducted in the Southeast Region covering

tax year 1963 demonstrates that more extensive use

of these documents will result in substantial additional revenue. The test revealed 1,699 apparent

nonfilers and 1,513 apparent underreporters of income with additional taxes and penalties assessed

amounting to $150,000 and $193,000, respectively.

In addition, 372 delinquent returns were secured

cov ring 1962 and prior taxable years with aggregate

tax liabilities of $72,000. Six substantial fraud cases

were uncovered, three currently being investigated,

and three whose additional taxes, penalties, and interest are expected to exceed $132,000.

The current test, for tax year 1964, encompassed

the Mid-Atlantic Region as well as Southeast.

Preliminary results show that over 11,000 delinquent returns were secured with net tax plus penalty

and interest due of $478,000.

ADP Looks at All Returns in Making Selection for

Audit

ADP provides a systematic and rapid means for

screening tax returns to select those most likely to

contain tax error. For this purpose audit selection

criteria are programed into the computers at the

service centers and the National Computer Center.

The computers are also programed to pass over the

'returns of-taxpayers where seemingly questionable

issues have been examined for the immediately preceding year and found to be acceptable. This

means that generally a taxpayer will not be contacted from year to year for the same reason, a consideration of no small consequence in reducing annoyance to the public. It mean- also that audit

can be extended to cover other taxpayers whose

returns may not have been selected for audit because of manpower limitations.

Direct Filing With Service Centers Proves Popular

The option of filing returns claiming refunds direct with the service center, which was received

enthusiastically by taxpayers in the Southeast Region in 1.965, was extended to individuals in the

Mid-Atlantic Region in 1966. In the Southeast

Region, 82.3 percent of overpayment returns, and

80.7 percent of those in the Mid-Atlantic Region

were sent by taxpayers directly to the service centers.

This eliminated the need for sorting, packaging, and

16 1

17
I

or_nvi%,c. I.,r-WILK AUTOMATED MAIL PROCESSOR

Artist's rendition of the main portion of the Service Center Automatic Mail Processor. The candling machine is not shown in this view.

INPUT FEED AND CULLING SECTION.

Mail which has been removed from tied

bundles is placed in the automatic feed.

As the envelopes leave the input feed at

a rate of 500 per minute, they are photoelectrically scanned to see if they are of

the IRS size which can be automatically

sorted. Those varying from this size are

culled out for manual processing.

LETTER OPENER. Letters are lifted vertically to a common height where high

speed milling knives trim off the top of the envelope. This system avoids cuffing

the contents of the envelope, often a problem under other systems.

SORTING OPERATION. The edges of

envelopes are coded to enable automatic

sorting. The code is scanned photo.

electrically, and the number processed

under each code is automatically tallied.

A total of 128 different codes can be

handled on this processor. Processing

is controlled through the operating console shown in the picture.

CANDLING MACHINE. A final check is

made by this machine to insure that all

returns, checks, or other documents

have been removed from envelopes.

Each "empty" envelope is tested for mul.

tiple thicknesses of paper or unusual

dark areas by transmitting a light

through the envelope. Any envelope

not passing the tests is set aside for a

final manual inspection.
ANNUAL REPORT

9 CHAPTER THREE

shipping returns from the district offices to the service centers. The resulting savings to the Government are estimated at $50,000 for 1965, and

$113,000forl966. The option is being extended to

taxpayers in the Central, Southwest, and Western

Regions, except for those residing in California, in

1967.

ADP Brings About Increase in Voluntary

Compliance

Because of the difficulty of determining motivation, no accurate measurement can be made of the

amount ofrevenue realized from taxpayers who have

filed delinquent or amended returns because ofa

fear of being caught through ADP. There are good

reasons to believe, however, that many millions of

dollars in previously unreported taxes are being

voluntarily tendered. Since January 1, 1962, approximately $6 million in previously unreported

taxes have been realized from taxpayers who have

spe,cifically indicated that they were filing delinquent or amended returns because of fear of detec~

ti on by the ADPsystem. Ir

Innovations Provide Further BenefitsSome of the more important operational improvements developed in the ADP area this year, described more fully in Chapter 9, Management Activities, include: (1) Installation and testing of an

automated mail sorting machine at the Southeast

Service Center (see illustrations on p. 18 and 19

and detailed description in Ch. 9, Management Activities, p. 63) ; (2) development of a pilot system

for optical character recognition; (3) installation

ofa magnetic tape rehabilitation process at the

National Computer Center; (4) testing of

a pilot

project for using information return data furnished

by payers on magnetic tape in lieu of paper docu.

ments; and (5) expansion of the use of preaddressed mailing labels on income tax returns.

20

ENFORCEMENT

Chapter4

INTRODUCTION

ACTIVITIES Through its enforcement activities the Service

seeks not only to detect those individuals who willfully attempt to evade their tax obligations, but also

to identify persons who have unintentionally erred

in determining their tax, whether in their own favor

or in favor of the Government. The self-assessment

system on which ourtax system is based requires that

taxpayers have confidence that each individual is

paying his taxes as prescribed by law; the Service

spendsa considerable portion of its total budget to

make this confidencea reality. Enforcement activities include mathematical verification of returns,

selection and examination of returns, investigation

of tax fraud, the securing of past-due returns and

collection of delinquent accounts, and provision for

appeals and legislative services allied to these activities. They also include enforcement of the laws relating to alcohol and tobacco taxes and firearms.

YIELD FROM MATHEMATICAL VERIFICATION

INCREASES

The Service verified and corrected arithmetic

operations an nearly 61 million Form 1040 and

1040A returns this year,a decrease of about2

million from 1965. The first major benefit of

mathematical verification is an intangible quality

of fair-share tax administration for all taxpayers, but

certainly not far behind is the very tangible net yield

in tax revenue through disclosure of taxpayer errors.

Taxpayers file returns with er-rors predominantly in

their own favor (aboutI V2 toI) . Moreover, average errors in favor of the taxpayer are about 1 V2

times as large ($91 to $58) as those in favor of the

Government. Therefore, while either the taxpayer

or the Government may benefit from any single

mathematical verification, total corrections resulting from the process significantly increase Federal

revenue.

Last year, net yield from verification, which is

the difference between the sums of these two kind

of error, was diminished due to widespread misunderstanding of tax tables and instructions by

1040A taxpayers. Their most common error was

to select

a tax table which called for more tax than

21
ANNUAL REPORT as CHAPTER FOUR J ENFORCEMENT ACTIVITIES

they rightfully owed. As a result, these "decrease"

errors overbalanced those producing net gain to the

Government-the reverse of normal events.

Through revisions in tax tables and instructions and

through taxpayer education, that abnormality has

been corrected in 1966. Net yield from mathernatical verification this year was $104.3 million. Total

net yield has increased steadily with the growth in

returns filed and the implementation of ADP, increasing $4.4 million in 1966 alone. The results

of the mathematical verification program-,are shown

in the table below:

Individual income tax returns mathematically verified

To tal Form 1040 For. ID40A

1965 1966 1965 1'66 1965 1966

Number. ------------------------------------- ---------- ------ thousands

- '

Num 62 879 60 721 47,174 44.211 1 705 1 510

be, of returns an which change, war. ad------- ----------------- :

Returns with I. ,a,,:

.... do_ 3:856 3: 461 2,412 2,405

4

1: 44

0

56

Numb.

r

---- ...... ............ -------------------------- ---- ;_.th ... ends-- 1.980 2 050 1,456 1,456 524 594

.1 Amount ........................... ...... ----------t ousand dollars.-

R urns with decrease:

194,096 96:244 149,909 141,692 44,277 44,552

Number. --------------_---__ ---------------- _------------- _11hou'und- 1, 876 1 4 11 956 949 920 462

Amount ------------------------------------------------------- thousand dollars 94,194

8 :,

54 61,133 60,387 33,056 21,567 Isor

V.1l

------

.-do-.

---------- ----_---------- -------------------- I -------------_---- .... dflar99.8I 2.591

104,289

1.72

88.61 71

.88

81.305

1.94

11.221

0.71

221994

.39

AUDIT PROGRAM SUCCESSFUL IN DETECTING

ERRORS

Selection of Returns Is Starting Point

Ile starting point for a successful audit program

is the careful classification and selection of returns

for examination. The basic objective in classification and selection is identification of those returns

which are most in need of examination. Considerable effort has been expended to detertirdne those

characteristics of returns which indicate a probable

=or in reporting some aspect of income or deductions. Selection criteria are continuously evaluated

and updated to gain the benefit of the most recent

Service experience.

Priorto thE introduction of ADP, the classification

and selection of returns was done manually. When

returns processing by ADP was implemented, it was

determined that a certain amount of this work could

be done by the computer, using criteria similar to

those used in the manual process but designed

specifically to make use of the capabilities of the

computer. Ile system has gradually been improved

and extended. Five of the seven regions are now

operational under this system, with three regions

added this year and the remaining two regions to be

brought under the system next year. Manual

screening is required even after the computer selection, but computer identification has nevertheless

greatly reduced technical pertonnel time required in

selecting returns for audit.

Using both the manual and ADP systems, 18.2

million income, estate, and gift tax returns were

classified in 1966, in comparison with the 71.4 million such returns filed. Of this number, 2.9 n-dllion

were selected for examination.

Number of Examinations Holds Steady

Returns selected for audit are examined either by

office audit techniques which usually are limited to

correspondence and office interview, or by field audit

techniques, normally requiring a visit to the taxpayer's place of business.

As planned, the total number of returns examined

this year was approximately the same as last year3.5 million. Within the examination program,

planned shifts toward the examination of more complex returns are in progress. The emphasis reported

last year on quality audit of returns was continued

this year, as was the assignment of teams of experienced revenue agents, rather than individual

agents, to the audit of returns of large, complex

corporations.

The Service has undertaken a concerted effort to

place its audit workload on a more current basis, and

substantial progress has been made. This, of course,

reduces the number of instances where it becomes

necessary to extend the statute of limitations to complete the examinations.

. Of the 3.5 million returns examined, 1.9 million

resulted in deficiency recommendations, of which

.1.8 million (96 percent) were agreed to by the taxpayers. Some examinations disclosed an overstatement of tax liability and the examiner recommended

a refund. The number of tax returns examined by

type of return follows:

Number of tax retums examined

lFigures in thousands]

has risen substantially. For example, the total

amount recommended exceeded $2 billion for the

first time in 1963; in 1966 the trend continued and

for the first time the $3 billion mark has been

exceeded.

Additional taxes and penalties recommended increased in almost every tax area. Recommendations

resulting from the examination of corporation returns were 24 percent higher than in i965, while

recommendations in estate tax cases increased 33

percent from last year. There was a slight decline of

J percent Irom last year's recommendations in the

individual and fiduciary area. This was attributable

in part to the Tax Reduction Act of 1964.

Average additional tax and penalties recommended per return examined by field audit increased

Total Field audit Office udit

Type of return -

1965 1966 1965 1966 1965 1966

Grand total ---------- 3,472 3.480 756 767 2,716 2,713

Income tax, total. 3,268 3.273 584 590 =684 2,683

Corporation ------------- 164 168 162

lcdi,id..l ..it fiduciary

----

3 092 3.092 4120

Exempt organization.. 12

13

166

4131

2

2,682

2

2,681

,,late ,it gill to, --- 31 191 310

'acire

and iirrcilcirn,~f,,~ 169 Ili .4 135

42

1

29

3

26

I Less than 500.

Additional Tax Recommended Reaches New High

For the fourth consecutive year, additional taxes

and penalties recommended for returns examined

Total

NUMBER OF TAX RETURNS EXAMINED AND ADDITIONAL TAX AND PENALTIES RECOMMENDED

TOTAL EXAMINATIONS AND AMOUNT RECOMMENDED INCREASED

176 181 35 38 169 169

Individual Carbonation Estate Excise

and and end gift ..it

f,duch,

Y exuarm, isho

ployment -

swgiamization

0

CHANGE FROM 1965

Total Individual

and

induce

ry

1.569

Generation

and

extumpt

.igamication

Estate

and gift

79 79

Exchur

end

playroom

+30.4

+23.8

+15.0 W 0

+8.6

+0.2 ~Non,6 +2611 None

~-4

-1.2

3,139

H

22 23
ANNUAL REPORT e CHAPTER FOUR

to $3,777, which is 15 percent above the $3,288

average recorded in 1965.

Exempt organization Examinations Continued

The Service continued its prognam. to detect and

prevent tax abuses in the tax exempt organization

area by examining 13,331 returns from such organizations during the year, an increase of about

7.5 percent over the 12,406 returns examined in

1965. As a result of these examinations and returns

of related taxpayers, approximately $37.7 million of

additional taxes and penalties were recommended.

Examining officers recommended revocation of the

tax exempt status of 232 organizations.

To assure continued quality audits in this

specialized area, guidelines for examination were

issued to field personnel, and special classroom training sessions and field Conferences were held. The

Exempt Organization Master File, set up in previous years utilizing data processing techniques, was

expanded to include records pertaining to trusts

established under pension plans.

Claims for Refund

Claims for refund closed by district audit divisions

totaled 433,507 in 1966 and involved $512.6 ril

bon. Of the total $214.4 million was allowed and

the remainder, or $298.3 million was disallowed.

Taxpayers' claims in the aiinount of $95.9 mflhon

were unagrced and forwarded to appellate divisions

for further action.

Individual (including fiduciary) and corporation

claims represented 82.2 and 7.7 percent, respectively, of the total number of claims submitted.

However, corporation claims accounted for 53.4 percent of total dollars claimed for refund, whBe individual and fiduciary accounted for only 26.0 percent of the total.

The number of excise tax claims increased 84.2

percent over 1965 and the dollar amount claimed

increased 91.5 percent. The Excise Tax Reduction

Act of 1965, which provided for floor stock and consumer refunds, was responsible for a substantial portion of the increase.

The following table shows a detailed comparison

by type of tax of the number of claims and amounts

involved during the past 2 years:

Claims for refund disposed of by district audit divisions, final years 1965 and 1966

Class.1 is.

retail ......... ------- ----------- ---------- ----

Individual income..-.... -------- Corporation Into a ------- ------

Eslut ......... ---------------- -::::::::

Gift ----------- ----------

E.cl -s------------------------- -:

Eppipyramft ------------ --------

cl-I tax

Total.. --------- - ------------------ -------

Individual income- -.... Corpor.ho income ....

Exist ......... ........

G --------------

El

-

It

I

....... ......... Earn.y...1,----------------------------------------------

INS

Number

398,133

325:,987 2it 33

AN5

1.:6'49

1965

Number

5,022

11:,311

91

37

34

76311

1966.

433,507

358.360 32,281 1965 7

' 293

13:23813'

1966

5,503

563 l: 15738

53

73980

91

Closed by audit divisions

Claimed by taxpayer

1965

392,100

2134,024

15,505 8 352 1:540

ul'"I 3,843

1966

512,631

14 209

25425,037 2. 709

635 SO

314 3:717

Oinallownd

19N-1965

In, 967 298,265

Amount (thousand dollars)

1965

Allpvmd

1%6

192,132

93 080

93: NO 6,604 408

6 IN 2: 052

1965

214,368

104 497

76:042 7,651 222

"2: '23,

P,stestad-ugmsf-ad to appellate cl.01i.ol

Claimed by taxpayer

91, "0

10,663

:9,631

41 679 :277 5,164572

Amount (thousand dollars)

Recommended by audit division

Allmav!

1%6

95,896

12,308 7

0,101

8 630 3 41

937&

502

7,180

6,905 172~5

29

2916

13flf

.2s

1.

Is132

"J: 77'9'1

-41,113 17817:326 "7 2

:473 '

'1, 493

Disallowed

'7fI

91,11

EI9.66

1965113 1150684' 810 0663,5363061 43: 66 :535 4,602

3 1:24 8"0'

8

41

25 3

,

135 at

12 556

ENFORCEMENT ACTIVITIES

Overassessments Are Disclosed Through Audit

At all stages of the audit operation, field exarniners

look for indications that taxpayers have overstated

their tax liabilities. In 1966, examination of returns disclosed overassessernents amounting to

$154.5 million. This excludes the amounts determined to be allowable on the basis of claims for

refund. The following table reflects the amount of

overassessment recommended by type of tax:

0veranessments of tax exclusive of claims for refund

Type of tax

Total -------------------------------------

Individual and fiduciary inconne.-

Estate--- --------------------------------------

0Giff--tion ... rc-m -----------------

Amount recommended (thousand dollars)

IN5

144,577

47,052 84,133 11,145 604

4"2 2'

1966

154,548

48, 779 89.093

11, 483'12

4,043179

taxpayer. If agreement is not reached at the conference, other established avenues of appeal remain

open to _the taxpayer.

District conference activity fortire year is set forth

in the table below:

District conference case wariclood

FORMAL APPEALS SYSTEM PROVIDED FOR

TAXPAYERS

Taxpayer Has Opportunity for an Independent Administrative Review

The appeals procedure of the Service provid6 a

-taxpayer who disagrees with a proposed adjustment

to his tax liabdity with a means of obtaining a prompt

and independent administrative review of his case.

The appeals function is decentralized and operates

at two organizational levels, the district and the

region. jurisdiction at both the district and regional

levels extends to disagreements involving overass essments as well as deficiencies and to all internal reveTrue taxes except alcohol, tobacco, firearms, narcotics,

and wagering taxes.

District Conferences Give Taxpayer Early Hearing

After examination has been completed, the taxpayer may or may not agree with the findings

reached by the examining officer. If he does not

agree, he may request a hearing at a district office.

The fundamental purpose of this district conference

is to effect the early disposition of contested cases

on a basis which reflects a fair and impartial administrationofthe revenuelaws. Under conference proCc d fires put into effect in 1965, the examining officer

~lsprepares a full report for study by a review staff prior

-to the issuance of the conference invitation to the

Item 11,1dd audit ft, still otal

C...x Pondi", J41Y I ---- ...........

fi

3,328 0,124

cases r , ld .... ...............

e'm

~

art.a 7,449 2.381 confer completed: A, r d 11 " "

U

.;

C.... Pending I ... 30---.....

....

:

4

270

3,464 792 13.482

Taxpayer Has Other Options Available

If an agreement is not reached at the district

level, the taxpayer may request that his case be considered by the appellate division of the regional

office. In the event an agreement is not reached

on an income, estate, or gift tax case at the appellate

division level, the taxpayer may file an appeal with

the Tax Court of the United States. Even after

a case has been docketed in the Tax Court, conference opportunities are available in the appellate

division.

A taxpayer who does not reach an agreement

either at the district audit or the regional appellate

level and prefers to avoid litigating his case before

the Tax Court has other choices. These can be

exercised by paying the deficiency and within 2

years from the date of payment filing a claim for

refund of the amount in dispute. 'When the claim

is disallowed by the Service, or 6 months after the

the claim is filed, he can file suit in either a U.S. district court orthe U.S. Court of Claims.

Workload Highlights

Receipts of income, estate, and gift tax cases

from audit divisions increased a nominal 4 percent

from 1965. However, case disposals were 20 percent higher reflecting more effective use of manpower as well as some staffing increase. Although

the number of cases on hand on June 30, 1966, was

7 percent above a year ago, the inventory continues to be in a current condition.

Greater Number of Pre-90-Day Cases Processed

If a taxpayer disagrees with a proposed determination of tax liability in a preliminary notice,

commonly referred to as a 30-day letter, he may

file a Protest and request a conference. If no agree231-6RI 0-00-3 25

24
ANNUAL REPORT ex CHAPTER FOUR

- APPEALS-41NCONIE, ESTATE, AND GIFT 'TAX CASES) METHOD OF DISPOSAL

UANCE OF

IYSNOTICE

21,475

17,161

TOTAL

1965 25,127

1966 30,144

Change +20.0%

PET[TIONED TO TAX COURT

499 552

Untainted .or mrsent .ad Claims

rejection

STATUTORY NOTICE

OUTSTANDING

835 758

Agreed

1,184 1,126

Defaulted

Me CHANGE FROM 1965

4,476

5,195

A-N 271 "1

mma~

Agreed Dismissed

or defaulted

=

694 726

Tried on nuirit.

+4.6

IN

ENFORCEMENT ACTIVITIES

ment is reached at the district level he may request

the case be transferred to an appellate division office.

These cases are referred to by appellate divisions as

pre-90-day cases. The appellate division's activities during 1965 and 1966 in the processing of these

cases is summarized below. (For additional information, see table 15, p. 13 3.)

Pre-90-day cases

[Appeal, Prior to W..n.00stutoly notice]

Status

Pending July I -----------_- ------------

Received.. ------- ------------- ------------- ---------

Disposed of. total-----------_------------ ----_----_-

By.g'....ot------ _--- _ ------------------------- Named a,e ... .no lot and Claim rejections.-- --- Bysissuarce of statutory notices-transfarred to 90-day false ----------------------------------------

Pending.1-30 -----------------------------------------

1965

15,531 30

26,

21,737

17,161 499

_4, 077

20,095

TOTAL PRE-90-DAY CASE DISPOSALS

(INCOME, ESTATE, AND GIFT TAXES)

RISING TREND IN CASES CLOSED BY

AGREEMENT AND TOTAL DISPOSALS

1962 1963 1964 1965

966

2027:011 652

26:278

21,475 552

4, l~

21,

ffm

PERCENTAGE OF DISPOSALS BY AGREEMENT HAS

0

RISEN STEADILY OVER THE PAST 5 YEARS

The number of pre-90-day case disposals in 1966

was 21 percent greater than in 1965. For the fifth

consecutive year, the percentage closed by agreement rose. During 1966, 82 percent of pre-90-day

case disposals were by agreement.

Case Disposals by Petition Relatively Low

If a taxpayer does not accept the district director's proposed determination, or if he files a

protest but does not settle his case at the appellate

level during the pre-90-day consideration, a statutory notice of deficiency is issued. Such a notice

is commonly referred to as a 90-day letter, because

the taxpayer is allowed 90 days from the date of the

letter to petition the Tax Court of the United States.

A case which is pending in the appellate division

during this period is called a 90-day case. The following table shows the results of processing these

cases in the appellate division. (For additional infortnation, see table 16, p. 133.)

90-day cases

IStsturtory notices issuedl

status

P:ndi" July I.. -------------_-- -------- R ciuved, total _................. ___ ... I -----

Statutory noticeelesued by appellate divisions 1 StatutorYnDti-issued by district directors and during 9r)-day period ....... ------------

Disposed of, total -------

B

..... Y., d ...... .... .... --------------- Btatpatition to the Tax Coull-tranifirred to docketed

. ou-------- ..............__ ..................

. P.ndingJun.30 ........... _........ ...

Number of Cases

1965

I 39D 4: 378

3

,

921

457

1966

1 299 4:443

4.101

342

469 4,345

1,835184

2,450

1,299

758 1.125

2,462

1,397

I Difference from preceding table 13 caused by cases being combined or split for

purpose of issuing the statutory notice.

With the number of pre-90-day and 90-day disposals by agreement totaling 22,233 cases, an alltime high, the proportion of disposals by petition

to the Tax Court was the lowest ever.

Docketed Case Disposals Increased

A taxpayer who does not agree with a deficiency

determined by the Service in a case involving income, estate, or gift taxes, may file a petition with

the Tax Court of the United States asking for a

redetermination of his tax liability. Such cases are

referred to as petitioned or docketed cases. The

Tax Court is an independent agency of the Govern27 26
ANNUAL REPORT as CHAPTER FOUR

ment and has no connection with the Internal Revenue Service.

A taxpayer may discuss the possibilities of settling

his case with the Service even after it has been petitioned to the Tax Court, regardless of whether he

has previously availed himself of conference opportunities with the audit division of the district

office or with the appellate division at the regional

level. Settlement negotiations in docketed cases

may be conducted by the appellate division at any

time before the case is called for trial by the Tax

Court. The Regional Counsel may be represented

in these negotiations since settlement of docketed

cases requires his concurrence.

The following table reflects the processing of

docketed cases. (For additional information see

table 17, p. 134.)

Docketed cases

Iftlition.d to the is. C...I]

star.,

Pending J

Received. uly totalI':----------- ......I............. ------- --- ---------- --- ::-:::_- -

P.13her, filed In response tDistrict directors' statutory notices

appellate division,' statutory ------- -....

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

By stipulated agreement--------------- I 1i ... H~ ------

"

.I I b4th: T,, Court or

Us

payer daul _. -----

in ad before

I

T xC

.

urtonth..

.

t ...............

Pending.1-30................... ------ --------------

Number of cases

1965

':6 IN.52

":

493

2 359

5,448

4,476 278

694

9,334

1966

74

4

'

489

21385

6,234

5,

195 313

726

10,024

cl - Difference Irom num~er shown as petitioned In preced.ing table is caused by

distric dlrutDrs statutory notices considered -udins by ppellate in 90-day status.

The number of docketed case disposals was 14

percent greater than in the previous year and per.

centage of disposals by agreement also increased.

Disposals Exceed Receipts in Excise and Employment Tax Appeals

The number of excise and employment tax cases

on

hand June 30, 1966, was 1,090, which is a decrease of 63 cases from -,L year ago. A total of 1,719

cases was received and there were 1,782 dispositions.

Revised Procedures for Processing Joint Committee Cases Adopted

A total of 947 cases involving overassessments of

$492.2 million was reported to the joint Committee

on Internal Revenue Taxation in accordance with

section 6405 of the Internal Revenue Code of 1954,

which requires reports to the Committee of all refunds and credits of income, war profits, excess

profits, estate or gift tax in excess of $100,000. This

represented an increase of 407 cases and $158.9

million over the previous year.

The increase in cases processed results in part

from new procedures for processing joint Committee cases which were put into effect this year to provide better service to taxpayers by reducing elapsed

time, to save interest costs to the Government, and

to reduce operating and manpower costs.

Under prior procedures, joint Committee cases

were subject to special audit and documentation

requirements and received several successive reviews

before being reported to the joint Committee.

Even if a case was agreed to by the taxpayer and

the district director, the results were nonetheless

subject to a complete review by the regional appellate office and also by the Office of the Chief Counsel. Under the new procedures, these cases no

longer require greater documentation or intensity

of audit than the Service normally accords other

cases, nor are cases agreed ai district level subject

to special reviews by regional appellate and Chief

Counsel's offices. Agreed and unagreed cases obtain a thorough procedural and technical review by

joint Committee coordinators in the. district office

located in the same city as the regional headquarters.

If the case is agreed at the agent's level, the report

to the joint Committee is prepared by the coordinators, and is forwarded to the National Office for

processing and official signature. Where agreement is reached at the regional appellate or regional

counsel level, the report is prepared by appellate

conferees. If a settlement is agreed upon before

trial in cases before a district court or the Court of

Claims, the report is prepared by the Office of the

Chief Counsel, and includes a detailed supporting

memorandum prepared by the Department of

justice.

ALMOST I MILLION DELINQUENT RETURNS

SECURED

During the year the Service secured 966,000

delinquent returns representing $246.7 million in

unreported tax, interest, and penalties. The lion's

share, 912,000 returns representing $203 million,

was secured through the established delinquent returns program. Accelerated attrition of revenue

I

ENFORCEMENT ACTIVITIES

officer strength due to retirements as a result of the

Daniels Act, and difficulty in recruitment, reduced

manpower below the anticipated level. As a result, this year's achievements were lower than

planned, and decreases below last year of 18 percent

in the number of delinquent returns secured and 8

percent in the amount assessed were experienced.

Data Processing Paves Way for New Programs

Statistical result-, alone, however, are not the full

measure of accomplishments. In fact, the new

major programs and concepts made possible by the

ADP system which were launched in 1966 will improve compliance, create a smoother and more effective operation, and reduce costs for future years.

Foremost among these is a system known as the

entity concept. In the past when a taxpayer became

delinquent in filing any return, a delinquency notice

was issued for each class of tax and for each period

of delinquency. Under this new concept, only one

delinquency notice is issued for the earliest tax on

which a taxpayer is delinquent. In this way, all

returns due are secured as a result of the one investigation, thereby reducing the number of delinquency investigations by an estimated 30 to 40

percent.

Another major program instituted during the

year provides for immediate contact with selected

taxpayers who are listed on the Business Master

File, but fro'in whom a required return has not been

received. In the selection processing, the taxpayer's compliance history and monetary delinquency are taken into account. When the taxpayer is identified as one who has been flagrant in

not complying with filing requirements, normal

processing time is set aside and delinquency notices

are immediately issued.

In a somewhat similar manner, as data processing becomes nationwide in processing individual income tax returns, every effort is being made to insure

that all taxpayers receive equitable treatment and

pay their share of the tax. To identify those cases

where the taxpayer has fafled to file, a comparison

is made of the individual master file with the current year's return. In this way, those taxpayers

who have filed one return and fail to continue filing

are easily recognized. In addition, tape information submitted by industry and Government agencies

reflecting information on income paid to payees is

also being utilized to identify nonfilers.

TAX FRAUD INVESTIGATIONS INCREASED

All intelligence programs were maintained at a

high level with continued progress toward the objective of ferreting out tax law violations at all strata

of society, in all geographical areas and for all types

of taxes. This resulted in more full-scale investigations in both the nonracketcer and the racketeer

categories.

A summary of investigations by special agents

follows:

Tax fraud in4stisations

Type 1965 1965

Ful i-scale investigations, total...

Prosecution recommended, .................

Fraud. .......

Wagarl;i_: ......... ......... .. ....

Coin-o Ing d. led ......................

Us .__ .................. -----------

Prosecution not recommended, total. ...... __......

Preliminary investigations, total.............. ____ ......

Fraud and miscellaneous. . ... .. .. . ..... --- .........

Wagering and coln-operated gaming devices............

3.643

Y, 382

1 216

1: 088

26

52

1,261

10,520

8,786

1,734

3,772

2,418

1 163

1: 177,5

33

1,354

10,436

,

988

1: 448

Total full-scale investigations increased 3.5 percentoverl965. Overall, the total number of prosecutions recommended increased. Although the

number of prosecutions recommended in fraud cases

declined, this was more than offset by the increase in

prosecutions recommended in wagering cases. This

increase in full-scale investigations and prosecution

recommendations was accomplished in spite of the

loss of a substantial number of experienced special

agents through retirement in December 1965.

Organized Crime Investigations Accelerated

The Service continued to play an important role

in the Federal Government's drive against organized

crime. With support of compliance divisions of

the Service, an increased number of the Nation's

notorious and prominent racketeers were investigated and prosecuted for tax violations in 1966.

President Johnson on May 5, 1966, stated in his remarks regarding the drive on organized crime, "the

campaign against racketeering must not only be

continued but it must be accelerated." In line with

the President's directive, the Intelligence Division

is now in the process of establishing the Organized

Crime Drive as an integral part of regular district

operations, thereby making available to the Organized Crime Drive the knowledge and skills of all

28 29
ANNUAL REPORT at CHAPTER FOUR

intelligence division supervisory personnel. It will

also permit district directors; chiefs, intelligence divisions; and other district management officials to

be kept currently informed regarding the progress

of these investigations and will result in more effective utilization of the manpower devoted to this

program.

As part of the Service's enforcement efforts against

violators of the wagering tax laws, special agents

conducted nationwide coordinated raids for the

10th year. As the result of raids made in 1966,

$463,000 in currency and other property valued at

$275,000 was seized.

ADP Assists in Identifying Tax Violations

As mentioned in Chapter 3, Automatic Data

Processing, procedures have been established to detect multiple return filers. Additional studies and

field tests are underway to explore further the capabilitics of ADP in identifying criminal tax violations, including false claims of payment of estimated

tax and failures to file. Tax enforcement work in

future years will be greatly assisted by the capability

of the computer to store and report facts on a nationwide basis, providing to special agents the leads

needed to investigate suspected violations.

sioners (Intelligence) through the Office of the

Chief Counsel to the Department of justice for all

types of tax except wagering-occupational cases

handled at the district level:

Receipt and disposal of criminal cases in Chief Cdunsel*s Office

Status

Pending July I ........................... ----------- _

Received. total,.----------------------------------------

W!th recommandationj for promotion. ......_-------- With requests for opinion, ate. ------------------------

Disposed of, total.... .............. _.__------------

prosecution not warranted ------- --------------

Department of Justice declined ---------------------- _

Prosexcutions........................ ---------------

0 inion, chili, it ....... ........._---------------

AFI other closings ------------------------------------

Pending June 30 1... ................. ___------------

1965

2,104

1,507

1,393 114

1,275

12082 $5372

148

2,336

1966

2,336

1,490

1,363 127

1,463

190 72 995

75 141

2,363

C,;,Includes Cases smiling action in Department of Justice exclusive of wagering tax referred by Intelligence Division.

The table below provides additional detail on

legal workload involved in the prosecution of criminal cases by Service attomeys during the past 2

years:

Tax and penalty and number.oFas to years involved in criminal

fraud co dia;ol.

lExclusive of wagering and coin-opented gaming device cascs]

Intelligence Career Development Strengthened

A Career Development Program for Intelligence

Division technical personnel was established in.1966,

This program provides a systematic approach to

identifying, developing, and promoting employees

on the basis of merit into supervisory or managerial

positions within the intelligence activity. Further

details on this program are given on page 65.

NO SIGNIFICANT CHANGE IN CRIMINAL

PROSECUTION CASE RECEIPTS

Cases received in the Chief Counsel's Office with

recommendations for criminal prosecution this year

involved total additional taxes and penalties of

$150.3 million, for a nominal increase of $2.7 million over 1965. Cast: receipts numbered 1,490-

almost the same as in 1965 (1,507 cases) and 1964

1,493 cases).

The following table provides an analysis of criminal tax case flow from Assistant Regional CommisDisposition

Toltals-------_-- _

111.1l All other lusiWii .

Tax years

1965

3,801

2,909892

1966

4,141

21:824595

I Includes Cases declined by Department of Justice.

T-rd penalty

1965

$122,231,399

72 108 G03 50: IZ2;796

1966

$108,993,554

49 431 490 59:5152:064

Referrals of income tax and miscellaneous criminal cases to the Department of justice did not

change significantly. This year, 1,009 such cases

with prosecution recommendations involving 955

prospective defendants were referred, compared to

994 cases involving 1,005 prospective defendants in

1965. Indictments of these cases were down 6.8

percent from 1965, and the total disposal of cases

in this category in the district courts decreased 7.8

percent.

In income, excise, and wagering tax criminal

cases, pleas of guilty or nolo contendere were entered

for 1,147 defendants and cases against 226 were

dismissed. Trials of the remaining defendants resulted in 177 convictions and 66 acquittals.

Indictments and court actions for the last 2 years

are shown in the following table:

ENFORCEMENT ACTIVITIES

Results of alminal action In tax fraud cases

Action Number of defendants

1965 1966

1,660

1.616

Total

1mictments, and informations .... _----------- _........

Disposals, total ---------- _ --------------- -------------

Plea,,gilly., nel-ontandere --------------------- _

led site, trial ---- __.........................

A, oitted--. ........ ___............. ...... _..

NoTpre cm,dimu,sed----- _ ----------_ .......

Income and miscellaneous Cuts, I

Indictments and Informations -----------------------------

Disposals, total..----------------- ------- --------------

CPins~lgu"ty.itsor molo contenders -------- -------- ctind trIa ------ _----_----------------

A, -itted ------------------------- _ .......... ----

Notprossed or dismissed..-.-. ------------------_

Wagering tax cases

Indictments and informations .............. --------------

Disposal,, total---------------- ------ -----------------

lea.

porm, fly W. tend.'-------- ------------

c

icgit'.id flo'nhill_! ------------ I --------- Acquitted ----------------- ....................

Nol-prossed or dismissed-----------------_......

1,919

1,732

1.251 20086 195

823 790

73

so95

1,096 942

671297

311 ]Do

1,14777

'26626

767 728

70

's' a

893 M

16 1607

13287

ii~ilgdludrix 11s., dismissed for thefollowintressims: 17 because of death Mint it ant, 4 because of seriousillness, and 5 because principal defendant had 1~"VSedl il or had been convicted In a related case. rcludes Income, estate, gift, and excise taxes other than wagering, alcohol, tobacco, and firearms taxes.

Indictments and Disposals in Alcohol, Tobacco,

and Firearms Cases Decreased

A total of 3,381 cases involving 5,304 defendants

were presented to U.S. attomeys with recommendation for prosecution as the result of actions taken

against violators of the alcohol, tobacco, and firearms tax laws. (See p. 37 for additional detail.)

The number of indictments and disposals for the

last 2 years is shown below.

Results of criminal action in alcohol, tobacco, and firearms cons

Action

Indictments and Irformations._ ------------- _...........

Disposals, total----------------------- ........

pI-,a,,,gCIIt .1imloccriendrare ------------- ctedlVertrial. ........

hot., A ..I~Ihsdl ------------------ ........ ouind a, Chart ...it ................_

Revised,

Nu.barCf

defendant,

1965

1 908

5 021

1966

4,3"

4,615

3,696 %4 220 5413,256

250692 598

YEAR OF CHANGE FOR TAXPAYER DELINQUENT

ACCOUNTS PROGRAM

Systemic and Procedural Changes Increase Volume

of Accounts Established

Responding to the procedural changes that werr

set in motion last year and the systemic innovations

introduced this year, almost 3 million delinquent accounts were established, an increase of 24- percent

over the previous year. WMIe the $1,742 million of

delinquent tax involved was $191 million higher

than that of 1965, the average dollar value per delinquent account was less ($583 in 1966 versus $642

in 1965). The increase in the number of delinquent

accounts was caused by two factors: (I) A new pro

cedure which altered the pattern so that accounts

that would have been established iii June 1965 were,

instead, established in July, thereby reducing last

year's accounts and increasing this year's commcnsurately; and (2) inception of a new program which

expanded the previous prompt collection program

to include chronic delinquents and taxpayers having

certain specified types of outstanding liabilities. As

a result, delinquent accounts which, under normal

processing, would have been established in July 1966

were instead established in May and June, thereby

raising this year's accounts by almost 200,000.

Almost 2.8 million delinquent accounts were

closed in 1966. This was 88,000 or 3 percent below

the number closed in 1965. The decline, however,

is misleading since the 1966 closings do not include

the many accounts which, as a result of procedural

changes, were closed on a followup notice to the

taxpayer rather than as a delinquent account as was

done in prior years. Moreover, the delinquent accounts actually generated were established 5 to 7

weeks later than in previous years. This had the

effect of reducing the time available in the remainder

of the year for closure action. Further, even though

closings were somewhat fewer, the $1,758 n-dllion

value of delinquent accounts closed in 1966 was

$230 million greater than the amount of delinquent

accounts closed in 1965.

Inventory Still Low Despite Rise Caused by Systemic Changes

The basic procedural and systemic changes which

together caused the sharp increase in delinquent accounts established also caused an increase in the

30

31
ANNUAL

Established

TAXPAYER DELINQUENT ACCOUNTS

VALUE OF ACCOUNTS INCREASED'

W

Closed

1WA01 CHANGE FROM 1965

REPORT * CHAPTER FOUR

Inventory

June 30

+12.3

1 +2..

size of the yearend inventory. Last year, a historic

alltime low of 530,000 accounts was attained. This

year, however, under a new processing system almost

200,000 delinquent accounts were established during the last 2 months of the year which, under prior

procedures, would have been established next year.

Since not enough time was available in which to

close these "last minute" accounts, the increase in

yearend inventory to 764,000 accounts compared to

32

last year's level of 530,000 is inflated. Actually, allowing for the aforereentioned "last lirdmite" establishment of accounts, the 1966 inventory level would

have been only slightly above last ycar's,i and one

of the lowest in history. 7

Utilization of ADP Has Marked Impact on Programs

As in the case of other programs, the progressive

"tension of ADP nationwide has'had a salutary

impact in the delinquent accounts area. As one

major "ample, ADP has enabled the Service to

expand its program of prompt collection of underpaid liabilities and dishonored check cases. The

AEIP service centers now, in addition to sending the

local offices accounts involving certain underpaid liabilities and dishonored check cases, are also immediately establishing accounts on chronic delinquents and taxpayers having outstanding liabilities.

In the past, the accounts reflected only the liability

of the taxpayer for one period and one type of tax.

The accounts that are now being established reflect information concerning. the taxpayer's tax

history that is recorded in the ADP master file.

This information enables the local office to make

a more systematic check of its own records. The

result is that local office employees now have a more

complete picture of the taxpayer's problem, and

consequently can deal with his delinquencies more

effectively.

,17he ADP system has also made possible development of a program that will deduct unpaid taxes

assessed priorto the establishment of the ADP system

from any refund due the taxpayer on his individual

income tax. This is accomplished by feeding into

the ADP Individual Master File a list of individuals

who owe income taxes or business taxes for prior

years. The Service will then deduct the prior

liability and send the balance, if any, to the taxpayer.

As important as any program benefit is a fruitful

byproduct to be derived from data processing;

namely, the quantitative data required to manage

and control the entire delinquent accounts and returns area. Here, the system already contains data

sudi as delinquency notices issued, delinquent accounts established, closures, inventory, etc., of all

accounts and delinquency investigations now under

the system. Programs and systems for retrieval of

the data have been devised and the first machine

output is scheduled for August 1966. Thereafter, a

testing period will ensue during which time an

ENFORCEMENT ACTIVITIES

evaluation of the machine output will be made for

purposes of refining the program, proving the

capabilities of the mechanized reporting system, and

eventually replacing the more costly manual system

now in effect with the relatively inexpensive mechanized system.

The delinquent accounts activity (including

activity related to the accelerated collection of underpaid liabilities and dishonored checks) is shown in

the following table:

Taxpayer delinquent accountis

status

Established. --------------

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

By type of action i

Cal

I

ectm14---I-------------

Addlumpa co lectlons_

Other disposals I... _-----

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

Accelerated collection of underpaid

liabilities and dishonored checlut:

Received - ----------------------

Collected-:__ ------------------

Number

(thousands)

1965 1966

2 43

2:

988

2

754

2,341 21292

'~15i ....W_

530 764

148

IN "I96

Amount

(thousand dollars)

1965

1:51,1,1:14' ,

13

1 034 734

10:

80'

432,645

1,182,110

313 2

2 7: 07,

1966

75. 711:211

31

I

,

067 611

143,701 46:919

1,212,451

"' 195:186 M

I includes disposals due to uncollectibility and erroneous and duplicate assessments.

SUMMARY OF ADDITIONAL TAXES FROM DIRECT

ENFORCEMENT

History records few laws that have operated successfully in an enforcement vacuum. This is particularly true of laws imposing taxes. While the

American internal revenue laws and regulations

stress the concept of voluntary compliance, a wealth

of experience makes it clear that there always exists

a proportion of the population that attempts to avoid

or evade taxes. Successful evasion attempts not only

result in an unfair distribution of taxes, but also tend

to corrupt the honest into what might be facetiously

called "fair share cheating."

The bulk of taxes are collected quite simply and

routinely, with no enforcement work required. The

enforcement functions of the Service concentrate on

maintaining full compliance with the tax laws, collecting any taxes due, refunding any erroneous overpayments, and bringing to prosecution those individuals who have violated criminal aspects of the tax

laws. The primary emphasis is on gaining continuing taxpayer cooperation, rather than on an afterADDITIONAL TAX FROM DIRECT ENFORCEMENT INCREASED

IN EXAMINATION AND DELINQUENT ACCOUNTS COLLECTED

2.427

1,115

247 El

-F-, dransayer .11, D.H.Quart re se testa

comit an a tolerant to- r1ficati..

accounts, ....it

collected

+12.B

the-fact- pursuit of taxes due but not paid. Assessments resulting directly from enforcement, however,

are quite substantial. The amount of tax, penalties,

and interest assessed in 1966 as a result of these programs reached $2.9 billion, an increase of $232.9

million over last year.

Additional asssessirents resulting from examination of tax returns totaled $2.4 billion, an increase of

$276.1 million over 1965. 'These assessments represent liability determined after any appeals action

or court litigation, which may delay closing of a case

for a year or more, and hence are not comparable

with proposed assessments resulting from current

year examinations of returns.

The following table shows the source of additional

tax, penalties, and interest assessed.

-12.3

33
Itern

Addillonal tax, nernillied,.rd lateral assessed, total----

From examination of tax returns, total. . _ -------------

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

C.'Polituci ------ ------ Individual an cutlery:

Prorefund audit_... ..........

Ratial-aulit -------------_-----------

Exist: and gift is .... ------- --_-----------::

Enact (including withheld Income to.). .,I, .

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

From mathematical -ifation of income tax returns_

Fla. National Identify File--- __......... _ ........

From delinquent returns secured, total-.------------_

34

Byyddt,g1c1coIImc on division ................... _:

0 1, madit~divrrloas ---- _........ --------

Total --------_------------ _-_--------

By d1stric ancilldi'llism,----------------- :::::::

regional I appellate christen.........

obal. Delinquent tax., collect.rd

T ... ------------ ...... ----------

0. ccoun ---

=rxilecu underpaid liabilities -a cf,happlad,heck'.a' ........... at ----------- ___

ANNUAL REPORT

Tax, penalties, and Interest resulting From direct enforcement

[in thousand, of delta,.]

1965

2,629,925

2,151,17

1,866,

2 0

1,001,565

107,583 757.093

224.61

9,639I

50,701

194,086

3,374

281,278

22061:126 152

278,795

IS9, 17

828

1,312,909

1.095,538

217,371

1966

WORKFLOW IN THE SERVICE AND COURTS

2,862,817

2, 427' 0 329

, 96,201

1,275,667

93.000 727.533

2169 279

0: 081 51,769

196,244

2,548

246,696

202 :697

43 999

401,122

2

.2 857 X

1,309,716

1,114,530

195,186

In fiscal year 1966, 104.1 million returns were

filed and 3.5 million returns were examined.

The time required to perform quality examinations of selected returns and, when required, to

conduct fraud investigations, provide appellate Service, and participate in litigation proceedings makes it

impossible to complete processing of all returns in

the year of receipt. The tables which follow provide

a comparison of volume on which processing was

completed at each administrative level for the current and the last prior fiscal year, even though the

return processed may have been filed in an earlier

fiscal year. It should be noted that the unit count

varies at different levels: Returns filed and an t

division activity are recorded on a return basis, while

processing in appellate, intelligence, and the courts

isonacascbasis. A case may involve more than one

CHAPTER FOUR

return. The major administrative workload involves income, estate, and gift tax returns, especially

in the appellate divisions and the courts, hence

the following tables are confined to -4hese returns except for returns filed and interriii] revenue

collections:

Worlictillow in the Internal Revenue Service and the courts, Real

yea. 1965 and 1966

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

Individual Income ... ------------ -------------

=aborril,ntaome... and ----_----- __ -----------

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

Employment ------------------

Excise---- ---------------------_-

Other income-----------------------------------

Revised.

I Includes excise tax cases

INCOME, ESTATE, AND GIFT TAXES

Number of returns examined Returns with adjustments p;~pcW;irjby -simciii-eWslani: Disposed Df,by audit divisions: Agreed paid a, defaulted ................

Civil cases

Total Disposed"lived In appellate divisions,... ---------------

of by allsellate divisions:

Agioed,pai or defaulted-. ---------------- _ ---- Caurb of

or gloal jurisdiction: Tax Court: T tal petitioned to Tax Court------- Di','.I..d -------------------- at, ad by iff P"I,l r----------------- Tax Court allocation - ~ ---

Decided g

Coui b I appealed:-: ----- District courts'and"Court or u Total filed In district conalt-und `-C.u1taC Claims-- Settled in district crerteandCourtof laime ---- Co'Its Decided1. by district courts and Court at Claims

.,a79y...... xqf.p ...is decision-.-----------

Sy"'Favorable to Government-. -------------- ...

Favorable to is payers ----- _---------_...

Modified.. ------------------------- Declare xabyCL.,.t," of of appeal. but rend...d by

Sucre

ir

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

Supreme court: Settled by Supreme Court clecitioFraud I

Received far full-scale if ...figrition in Intelligence divisions............. -------_------------_-_ Disposed of by intIlli 1. division,: P ..... titar-m"mitaced ------------_----- --- Prosecution not-dinarronalml ------_----------- Inlolumcfacti.y , a1,1,ce.*.1,11.1e1 . . .~,u n,,.Idl; if is to Pimn an in I declined

Proletarians by the Department I Justice...

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

1965

I

Return,

102,492,013

66,964,537 1,419,978

215.568

22,265 607

3,897:887

7,728,436

112: "g

: '2: "' 769

1,956,446

26,602

19,679

61942 284

4,635 825

368

1, 47'

162 473

381 2677935

C....

22

22

23

1I: 043

202

953

104.077,987

69,7 148 1, S

776

"7 059 22 44, 558 2:784 fql~,218 2

7, 28

317 318 1:2 5

2 5:G

1,950,264

27,844

23,910

7.013 345

1,104

77

332

1,50

Of 506

3

21"0 6221

10

10

1, 975

1: 1'95'

252 995

internal revenue collections, total._ --- _ -------- _ ---

Individual Income taxes, total---------------------

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

Car Oth

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

E. Par adalaccoo. Ias es..... ---- _.: ---

blue: fit taxes --------- ----------- EC=I.v, -----

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

Civil cases

Additional tax and penalties )a cases disposed of in audit diff,miria, by agreement, Ferment , or default --------- Additional taix, and penal has in cases disposed of in

'T1I`1* a:11 d I sion, 1y,r~,1rrmmxnt, payment, or default_ Ad . 't....n pena as determined by settlement in Tax Cou tax a ... -------------------------- --- Additional tax and penalties determined by Tax Court decision: Dismissed ----------------- _ ------------------- Darl.hur, an main------------- ---------------- Additional tax and penalties in cases decided by Supreme 1

"

,.it Ara.20 suff_ .....a'dins _"........... %' %`p`P'1'1';ii -a-i-esuNt"o-t- ridur-d-

--------

Fraud reass

Deficiencies and penalties in cases disposed of in latelli- Sam'. ivisi.as: Prosecution d recommended Plislaccatili not warranted

Department of Justice --------------------------

I Includes excise taxes.

-

IMI[lionsoldoliarsi z

INCOME. ESTATE, AND GIFT TAXES

Type of tax or penalty

Offers accepted, total.----_------------------ -----------------------

Income ate, I . and III is Eraploy4.t ad withibl.fidi'n",

Alcohol taxes-------------------------_ --------------------- ---- Ofluareact,olftsas ..... --------------------------------- ----- __ Delinquency penalties on all taxes-. ----------------------- ..... Specific penalties .... ---_------------------- -----------------

Offer-jectial., withdrawn, total ------_-------- _ ------------ ........

an IE`mp1m.;Z.aat:;d W, Ch'c'IdIo", -t-.-;i---------------------------------

Alcohol taxes -------------------

Other excise taxes --- .............. .................. Delingency, enalles an all taxes... --------- __

..... -------- Sperl

c

panaFter,. -------------- --------- ...

COLLECTION LITIGATION LEGAL SERVICES

REQUIRED BY FIELD OPERATIONS

Collection litigation legal services are furnished

at both the national and regional level, with the

greatest volume of work being performed at the

regional level. The attorneys providing the smices are primarily concerned with legal work arising

as a result of the activities of the district directors'

offices, and the divisions of the National Office,

ENFORCEMENT ACTIVITIES

Amounts OF revenue involved of each level oF the tax system, NO SIGNIFICANT CHANGE IN OFFERS IN firocal yea. 1965 and 1966 COMPROMISE WORKLOAD

1965

114,435

53,651

36,840

2"6: IN?

17': 71044' 14,793

1,269

195

90

3

23

is

37

72

50

1966

128,880

61,298

42,811

316: 24' 1314

2G:

2

56 13,398

1.371

334

112

8

is

10

46

49

60

Offer in compromise disposcls

1965

11,094

1,068 95' 78

222 204 566

4,485

I ~ 2'S9

AS 1.05626

When it has been determined, after a careful investigation, that a taxpayer is unable to pay the full

amount of his tax liability, or there is substantial

doubt as to the amount of the liability, the Internal

Revenue Code provides a means whereby the

liability may be compromised. In certain cases

where the agreement concerns present inability to

pay the liability in full, the compromise arrangement

provides that additional payment will be made in

the future if the taxpayer's income exceeds an agreed

upon figure.

The overall number of offers in compromise cases

processed during the year declined by 7 percent

from last year. Total liabilities involved were $101.3

million, an increase of 7 percent from 1965, but for

offers accepted liabilities declined by 7 percent.

A comparative summary of compromise cases

closed in the last 2 years follows:

Number

1966

10,706

1, ou

"1ITS 167 1,673 61920

3,789

1: J J72

21

21341 75' 35

1965

28,667

......

65,631

46,628 11.079 379 6 771

...... '775

Liabilities

1 261

':705 7 gas4

'1:712 54

Amount (thousand dollars)

1966

26,575

16,745 6,393

347

0,25

.......

74,735

56~ 997 11 134 '226

5 647

'731

.........

1965

7,590

941 2: 104..

3'1 '3'

240

11,870

3,313 2155514 711519

4

Off

1966

6,858

3.993

1,94

129

438

232

126

13.266

9. 7"

2,696

30 574 1642

including the Office of International Operations.

In general, the services include providing legal opinions in noncourt matters and work in connection

with court proceedings. Most collection litigation

actions can be disposed of finally at the regional level

because of broad delegated authority; however, a

substantial segment of work involving initial action

by the regional offices is subject to National Office

consideration'before final action can be taken.

35
ANNUAL REPORT * CHAPTER FOUR

Some Decrease in Courtwork in 1966

.

The legal work during the year continued at about

the same general level of activity reached forthe year

1965, but there were decreases in both receipts and

disposals. There were 11,565 cases received during 1966 as compared with 12,493 cases received

during 1963. Disposals for the year 1966 were

11,491 cases as compared with 12,456 for the year

1965. The inventory of pending cases at the end

of the vear stands at 5,165, an increase of 74 cases

over & 5,091 cases pending at the end of 1965.

For a detailed statistical report of case receipts and

disposals during the year, see tables 23 through 25

on page 136.

The U.S. Supreme Court decided five cases vitally

affecting legal problems in the collection litigation

area during the year. Also, the Court granted certiorari in one case decided by the Court of Appeals

for the Second Circuit. in favor of the Government.

There were a number of cases decided by the courts

of appeals in some of which petitions for writs of

certiorari to the Supreme Court were denied.

These decisions relate not only to issues concerning

the collection of federal tax claims and tax liens, but

also to issues arising in civil summons enforcement

cases. Summaries of some of these cases may be

found starting on page 99.

Day4o-Day Legal Assistance Important

The statistical data indicate the number or cases'

handled in the collection litigation area and show

generally the types of legal services being performed -1

however, such statistics do not reflect all of the activities of the collection litigation lawyer. The lawyer performs many other services which are not

counted as cases and do not relate to cases. Such

noncase work includes rendering day-to-day formal

and informal legal assistance to administrative

personnel, periodic visitations to district offices and

subofficcs, and participation as instructors and counsclors in training programs for collection personnel.

FEDERAL-STATE COOPERATION SHOWS

FURTHER GAINS

Over 80 percent of all taxpayers live in States with

which the Service has concluded a cooperative exchange agreement. With the addition of Arizona

and Hawaii, 41 agreements, including the one with

the District of Columbia, were in force at the end

of the year.' Two additional agreements, with the

States of Mississippi and New Jersey, were in process

of negotiation.

The year was marked by increased a~tention to

the exchange of tax return data througkf the use of

computer-generated tape files. Working with the

National Association of Tax Administrators, the

Service is seeking a consensus from State tax administrators with respect to a uniform set of data elements to be furnished routinely on magnetic tape

to the cooperating States. With the completion in

1967 of the Service's conversion to fully automated

data processing, it is expected that the Service will

have the capability of providing States timely and

useful tax information at reduced costs to both the

Service and the States. Additionally, State tax

personnel continued to inspect and abstract information from Federal tax returns-totaling approximately 3.5 million returns this year. The interchange of audit abstracts continued to be an

effective means for increasing revenue receipts, cspecially at the State level, and for reducing the

number of instances in which a taxpayer is required

to undergo an audit of his returns by both State and

Federal agencies in the same year. During calendar

year 1965 the Service prepared and forwarded to the

States 339,000 audit abstracts.

In addition to cooperating with the States in the

interchange of tax information, the Service continued its program under Public Law 87-870 of providing training assistance and special statistical

services to the States. Seventeen State tax personncl were enrolled in the Service's various training

classes. Beside this classroom training, the Service

provided the States with 144 sets of training matcrials and 142 sets of correspondence courses.

ALCOHOL AND TOBACCO TAX PROSECUTIONS

PRESSED

In recognition of the importance to effective law

enforcement of the prompt and successful prosecution of violators, the alcohol and tobacco tax lawyers in the offices of Regional Counsel maintain a

very close liasion with the offices of the U.S. attorneys in their regions. Thus, they can be kept informed as to the prosecution of criminal cases

,

Agreements arc in effect or in process of negotiation with

all S!a'cs except Alabisona, Alaska, Connecticut, Georgia,

Louisiana, Nevada, Rhode Island, and Texas.

ENFORCEMENT ACTIVITIES

referred and render assistance as requested in drafting pleadings, briefs, libels, and other legal documents. They also are available for legal research

and prepare memoranda of law on issues likely to

be raised in cases referred for prosecution or judicial

forfeiture.

The attorneys in the National Office also keep in

close touch with the attorneys in the Department of

justice who handle cases within the alcohol and

tobacco tax function so that timely assistance will

be available to them if needed.

Similarly, alcohol and tobacco tax attorneys normally participate in training programs for law enforcement personnel and attend regional meetings

of investigators and agents when practical. Thus,

the

individual enforcement officers are made fully

aware that legal assistance is readily available to

them during the course of investigation as well as

thereafter during the review of completed case reports for prosecution of criminal cases.

The alcohol and tobacco tax attorneys review and

prepare legil opinions on offers in compromise and

petitions for the remission and mitigation of forfeiture filed by those who have an interest in property

seized because of its use or intended use in violation

of law. During the past year, the Service investi.

gated and acted upon 410 such petitions and in addition recommended action on a number of similar

petitions which were filed with theAttorney General

with respect to property referred for judicial

forfeiture.

ALCOHOL AND TOBACCO TAX ENFORCEMENT

CONCENTRATES ATTACK IN HIGH VIOLATION

AREAS

Production of Illicit Distilled Spirits-Number One

A&TT Enforcement Problem

The illicit liquor enforcement problems confronting the Service have not changed materially from

those encountered in 1965. In 1966, 82 percent of

all illicit distilleries seized were located in the Southeastern States, which historically have been the site

of entrenched moonshine activity. There has been

no indication of a resurgence of large-scale organized

illicit alcohol operations in the metropolitan areas

of the Eastern Seaboard States which, in past years,

led to enormous losses of revenue.

Slightly over 80 percent of all investigative time

during 1966 was used in combating the illicit production and distribution of nontaxpaid liquor. Almost 8 percent of investigative time was devoted to

enforcement of the laws relating to firearms. The

remainder of the inveitigative effort was expended

on other enforcement programs, including assignments to the Intelligence Division in connection with

the drive on organized crime.

Seizures and arrests resulting from this application of investigator manpower during 1966 are compared with results of the prior year's work in the

following table:

Seizures and annindre; for alcohol, tobacco, and Arsearms violations

1965 1966

Seizures:

111.11110.....................

Stills at dislillerl------------

Nontaxp.ld distlired spirlts._. --- ..........SellsMash :............ ........ do

Vehiciii: ------- :--' -.......... ......... ;Upb;;:.

Property (appraised Value). . . . ._ .

........... dollar.

A

rre'l, ~ _ ...................

~ _ _...rumber::

156, I': 1,32

544

3,

637 981

2:099

2.486 193

7:426

5.273

7,685

153,062

31664 890

1: 705

21133 600

6:980

$,Includes 251 arrests for firearms violations and no arrests for tobacco violations

966 compared with 254 and I respectively, 1. 1965.

Note.-Includes; seizures and arrests In cases adopted, a well as originated, by the

Internal Revenue Service.

Operation Dry-Up Expanded

The 1966 increase in seizures of illegal distilleries

of 2 percent and the decrease in arrests of 7 percent are partly attributable to the large-scale diversion of investigative manpower to "Operation

Dry-Up," where the initial effort is concerned primarily with the location and destruction of all illicit

distilleries in a preselected geographic area and the

measurement of violation potential. As a result

of these saturation-type raids, and the attendant

publicity, the violator is forewarned and often cs~

capes without detection in the early stages of the

program.

This program, used successfully in one Southeastern State for the past 3 years, was extended to include

a second Southeastern State in October 1965. The

program contemplates an intensified effort toward

elimination of cornmercial-type illicit liquor activity.

Its success in the first State where it was instituted is

attested to by the increase in sales of legal, taxpaid

alcoholic beverages and the virtual elimination of

large-scale illicit distilling operations in that State.

In essence, the program consists of the application

of unremitting pressure on the violator by an enlarged force of mobile investigators. Tied in with

this concentration of investigative manpower is an

all-out effort to secure the active support of enforce36 37
ANNUAL REPORT * CHAPTER FOUR

Illicit distilleries are concealed in a variety of protective

disguises.

However, the filthy clutter of an illicit

distillery is almost universal.

ENFORCEMENT ACTIVITIES

ment officers and prosecutors at all levels--local,

State, and Federal. Another principal feature is

the intensive use of radio, television, and other news

media to call attention to the health hazards in drinking moonshine whisky and to solicit the cooperation

of the public in reporting suspected violations. The

program has already produced results which are

encouraging in the limited time it has been in operation inthe second State.

CHEMICAL ANALYSES AND RESEARCH

STRENGTHEN. LAW, ENFORCEMENT

The National Office laboratory has continued to

keep abreast of advances in the field of chemical

analysis and instrumentation, so that new techniques

and procedures can be successfully utilized in carrying out work in the area of alcoholic beverages, industrial products produced from or with alcohol

specially denatured alcohol articles, and miscel-'

laneous nonalcoholic items subject to excise taxes.

Since the initial introduction of neutron activation

analysis into Federal courts by the Internal Revenue

Service, this technique has gained widespread recognition. Neutron activation analysis has been successfufly used in handling such physical evidence as

opiate drugs, synthetic narcotics, marihuana, barbiturates, tranquilizers, soils, paints, metals, gunshot

residues, brans, coins, illicit alcohol, waters, and

other items. In 1966, a total of 1,006 samples were

examined by neutron activation analyses.

Successful application of aton-dr: absorption spectrophotometry to analytical problems has resulted

in a more efficient use of manpower and a reduction

in time required for each analysis.

Gas chromatography has proved its usefulness as

a backup and screening instrument, along with neu-

,ron activation analysis, in the development of court

testimony. Work is continuing on the development

of quantitative control methods for use in permissive

work as well as in other areas of interest.

Service laboratories analyzed 9,260 samples of

illicit spirits and 5,360 samples of narcotic drugs

in 1966. During the preceding year, 8,769 illicit

spirits samples and 5,088 narcotic samples were

analyzed. Statistics on laboratory work required by

the Service's regulatory function are presented on

page 42.

FIREARMS. ACTIVITY. INCREASED

There was an increase in manpower expenditures

on the Firearms Program during 1966. Investigations of violations of the National and Federal Fire.

arms Acts resulted in 466 criminal cases, 251 arrests

and the seizures of 87 vehicles and 839 firearms.

In addition, 13,783 inspections were conducted of

the records of persons and businesses holding Federal

Firearms Act licenses. This inspection activity is exhibiting multifold results; it allows for a systematic

approach to weeding out.those holders of Federal

Firearms Act licenses who are not, in fact, bona fide

dealers; it has greatly encouraged compliance with

the recorrikeeping provisions of the act by bona fide

dealers; and, perhaps most important, it has provided

local enforcement officials with a helpful tool for use

inpolicing local firearms laws. The program is proving highly useful in acquainting the public in gen.

eral and the small dealer in particular with the

requirements of law relative to firearms thus enabling them to avoid technical violations. Reports

from many local law enforcement officials indicate

that information referred to them under this program has been of value in keeping guns out of the

hands of the criminal element and has, in many

instances, been directly instrumental in allowing

them to trace weapons used in committing a crime.

A factor relating to the increase in manpower

expenditure on the firearms program is the emphasis

placed on suspected violations of the National Firearms Act by vajious extremist and paramflitary

groups. Intelligence sources have reported large

stockpiling of all types of weapons: handguns,

machineguirs, artillery, and explosives. Investigation of these reported violations is continuing.

38 1 39
SUPERVISION OF THE

ALCOHOL AND TOBACCO

INDUSTRIES

Chapter 5

MANUFACTURED TOBACCO TAXES.,REPEALED

The repeal of the 103-year-old Federal tax on

manufactured tobacco (smoking tobacco, chewing

tobacco, and snuff) became effective on January 1,

1966, and* concurrently, internal revenue controls

on manufactured tobacco were terminated.

Effective on the same date, internal revenue controls over tobacco materials were discontinued.

Tobacco may now be handled in any manner at any

place so long as such handling does not result in a

taxable tobacco product (cigar or cigarette).

DISTILLED SPIRITS REGULATORY STUDIES

MOVE AHEAD

Proposed Draft of Revised, Regulations Covering

Labeling and Standards for Distilled Spirits Issued

Informally

In June 1965, a Distilled Spirits Standards and

1',abeling Survey Committee was established to reappraise regulations ' issued under the Federal Alcohol Administration Act. On May 25, 1966, the

Committee draft was released containing a complete

regulation proposing many substantive changes in

the labeling, advertising, and standards of identity

of distilled spirits (27 CFR Part 5). Drafts of the

proposals were furnished members of the industry

in Industry Circular No. 66-9. An important adjunct to this study has been the addition to the Committees agenda of an exploration into the aging of

neutral spirits through storage in reused cooperage.

The proposals arc completely informal at this time.

The Committee will continue its work in 1967,

and is now considering suggestions submitted by

various industry groups in connection with the proposed changes in regulations.

Two Public Hearings Held

A public hearing was held on January 11, 1966,

concerning proposals to amend 27 CFR, Part 6, Induccments Furnished to Retailers. A Treasury Decision is expected in the nearfuture which will clarify

SUPERVISION OF THE ALCOHOL AND TOBACCO INDUSTRIES

the "gray area" surrounding the meaning of certain

sections of present regulations,

Public hearings were held in April 1966,~o elicit

infon-hation pertaining to any aging effect on specially distilled neutral spirits resulting from storage

in reused cooperage.

ACTIONS TAKEN RELATING TO INDUSTRY

OPERATIONS

Label Applications Approved and News Media Monitored for Advertising Practices

Under the provisions of the Federal Alcohol Administration Act, 53,341 applications for label approval, and exemption from label approval, were

processed by the National Office during the year.

The increase in this activity from the previous year

(47,454 applications) is due primarily to the increased activity in private labeling.

The act also imposes certain requirements in the

field of advertising as a means of supplementing the

controls established for the labeling of alcoholic

beverages. To measure the degree of compliance

with these requirements, 18,856 advertisements

placed in newspapers and magazines were examined and 2,669 broadcast or televised cornmercials

were reviewed by the National Office. Although*

approval of advertising prior to publication or dissemination is not required, 1,094 proposed advertisements and projected advertising campaigns were

given advance review by the National Office as a

service to industry members.

Permits Issued, Formulas Processed

In the National Office, 20 permits to use tax-free

spirits and 12 permits to use specially-denatured

spirits were issued to Government agencies. The

National Office processed 1,203 formulas for rectified products and 259 formulas for wine during the

year. This represents an increase in formula ap.

provals of 339 over last year, when 925 rectification

formulas and 198 wine formulas were processed.

Plant and Permittee Qualifications Numbered

Nearly 20,000

The offices of Assistant Regional Commissioners,

Alcohol and Tobacco Tax, approved 19,860 original and amended permits, notices and applications

which authorized their holders to engage in various

types of business utilizing alcoholic beverages, industrial alcohol, cigars and cigarettes.

ON-PREMISES SUPERVISION WORKLOAD INCREASED BUT COST REDUCED

As depicted by the chart on page 42, since 1957

production at distilled spirits plants requiring supervision has continued to

increase,

During the same

period, applied man-years have dropped from 728

on-premiscs officers to 395 during 1966. The reduction in man-years reflects the continuing trend

away from immediate supervision, resulting from the

Service's simplifications in plant control concepts.

Distilled spirits plants requiring on-premises supervision produced 889.3 million tax gallons of

distilled spirits during 1966. Tax-free withdrawals

of spirits amounted to 630.9 million tax gallons, of

which 576.4 million were denatured. Distilled

spirits in bonded stor-age at the dose of the year

amounted to 1,098.6 million tax gallons. The production of rectified products totaled 98.8 million

proof gallons, and 264.7 million wine gallons of

distilled spirits were bottled during 1966.

Emphasis Placed on Quality Inspections

The inspection program covers on-site examination of records, equipment, processes, and premises

of 18 different types of establishments, including

many that embrace a variety of operations in one

plant. The program is geared to operate closely

with a technical office staff which analyzes operating

reports and pinpoints possible trouble areas for the

attention of inspectors.

During the year a total of 31,080 inspections were

completed compared to 30,552 in 1965. Of the

total completed, approximately 43 percent were

revenue-related inspections while the remaining 57

percent were regulatory in nature. Emphasis continues to be placed on the conduct of high-quality,

audit-type inspections.

Breweries subject to inspection produced 109.7

million 31-gallon barrels of beer. Wineries subject

to inspection produced 267.0 million gallons of still

and effervescent wines, 5.0 million gallons of vermouth, and 16.5 million gallons of special natural

wines other than vermouth. Tobacco products factories, also subject to inspection, produced 7.5 billion

large cigars, 474.7 million small cigars, and 562.7

billion cigarettes.

40 281-691 0_66 i 41
ANNUAL REPORT as CHAPTER FIVE

GOVERNMENT SUPERVISION AT DISTILLED SPIRITS PLANTS

MANPOWER APPLIED TO ON-PREMISES SUPERVISION SHOWS STEADY

DECLINE ALTHOUGH PRODUCTION CONTINUES TO RISE

MAN-YERRS MILLIONS OF TAX

GALLONS

889

728

1957 1960 1963 1966

MILLIONS OF

TAX GALLONS PER

MAN YEAR

2.3

0.9

1957

CHEMICAL ANALYSIS MADE FOR REGULATORY

WORK

The national and regional laboratories analyzed

a total of 38,645 samples in 1966. The number

analyzed during the preceding year was 38,589.

The majority of these analyses were made in cormcction with regulatory functions but some were required by enforcement work in. the Service and

other Treasury Department Bureaus. (See p. 39.)

In the National Office laboratory, 2,671 new formulas using taxpaid (nonbeverage) alcohol in foods,

flavors, and medicines were approved and 772

samples were examined. Comparative statistics for

1965 are 2,452 formulas approved and 724 samples

examined. Manufacturers using specially de42

natured alcohol submitted 4,551 formulas, 5,656

samples, and 10,606 labels for approval this year.

1,ast year 4,682 formulas, 4,834 samples, and 12,485

labels were submitted. The following table indicates

*the general increase in the volume of work generated

by the processing of formulas by the Alcohol and

Tobacco Tax Division:

Forintillas approved or processned

F.-las 1965 1966 P.-at

,h.rg,

llan;tllied product,. . ~ ---------- -------------- 925 1,203 +30.1

ftribi;irige *i"' 2. 4252 2, 26'1'1

+3+0.8

specially denatured spirits products_---- ------ 4,682 4,551 -21:1

Total -------------_ -------- _._---- 8.257 8,684 +5.2

LEGAL AND

LEGISLATIVE

ACTIVITIES

ChaPter6

The legal work of the Service is performed in the

Office of the Chief Counsel. In the technical area,

the Chief Counsel renders opinions to officials of the

Service on substantive legal questions. The legal

staff prepares drafts of proposed regulations implementing the tax laws and participates in the rulemaking process involving these regulations. The

Office also contributes greatly to the Treasury Department's legislative program (see p. 45). For a

discussion of the regulations program, see Chapter 1,

page 7.

In the litigation area, the Chief Counsel represents the Commissioner in trying and helping to settle

cases docketed in theTaxCourt of the United States.

The legal staff also furnishes advice rela'

ting to refund litigation, collection litigation, crinruinal enforcement, alcohol and tobacco tax, and firearms

matters. Statistics on legal activities are shown in

tables 18-25 on pages 134 to 136. Criminal prosecution cases, legal services in the collection litigation

area, and legal work in alcohol, tobacco, and firearms matters are shown under Chapter 4, Enforcement Activities. Important court actions are reported in the Appendix beginning on page 99.

SLIGHT INCREASE IN CASELOAD INVENTORY

Caseload receipts in the Chief Counsel's Office

during 1966 were 27,215, down 1,885 cases from

1965. The disposals of total caseload were 26,270, a decrease of 1,281 front 1965. At the end of the

year the pending total caseload was 23,793, an increase of 945.

THE GOVERNMENT SUCCEEDS IN MAJORITY OF

CIVIL CASES

The Supreme Court rendered decisions in six refund suits during the year (one opinion covered

three related cases). The Government's position

was sustained in four of the decisions. The taxpayers won the other two case,%. The Supreme

Court decided three cases originating in the Tax

Court against the Commissioner and remanded

a

fourth case after enactment of legislation which

provided special relief for the taxpayers.

43 I
ANNUAL REPORT ar CHAPTER SIX LEGAL AND LEGISLATIVE ACTIVITIES

CASE DISPOSALS BY OFFICE OF CHIEF COUNSEL

Disposals Increased In Tax Court Enforcement Litigation,

12,647 and Refund, But Declined In All Other Areas

IW7

IR I

0. lecti.. T" Alcohol EnforOarren Refund Other

titjptl.~ Court

tube

and

to.

litigation

The Government won, in whole or in part, 311 of

the 373 decisions rendered by the circuit courts of

appeal in civil tax cases (exclusive of collection

litigation and alcohol and tobacco tax legal matters).

See table 2 1, page 135.

The record of Government wins, losses, and

partial wins in the trial courts (Tax Court

'

Court of

Claims and U.S. district courts) followsi

Trial court means won, lad, or partially won by the Government

Tax Court Court Of CISIM3 District Courts

Actlon

1965 1966

1965 1966 1965

1966

Wo..................... 235 20 40 37

215

247

Last 94 79 13

'

1 1 7 145 159

P.M.7 79 so

15

4

45

P ..... .n or partially

6

.n. -.-.............. 83 82 at 71 4 :,1

In the trial or settlement ofcases inthe Tax Court,

proposed deficiency assessments totaling $327.3 million were successfully defended. In refund suits in

the Court of Claims and the U.S. district courts, the

Government's position in $47.8 million of amounts

claimed for refund was successfully defended. A

total of $375 million of revenue was thus saved for

TOTALS

1965 27,551

1966 26,270

CHANGE -4.6%

.1.2.n;g 1,298 1,360 1,363

-ines -978

the Government in these cases. At the end of the

year, $1.6 billion was involved in taxes and penaliies being contested in trial courts (see table below

and tables 18 and 20, pp. 134 and 135 */

Taxes In litigation

(In thousands of dollarsi

T,1 urt

Refund

Status Total

Defki-10 oratory.

,usation

Pend ing ---------

i'd . .....

It 1,454 ,208 1 1 032 $62 57 302 364 044

-dl.d ..................

Disposed of ... ............

690 955

562.812

~

'38: 533

447 843

5

16: 55

20 874

1

35: 767

. 94,095

P.rdi,

J m 1-- ------- 1,582 2

5 0

1

1

M.nfg _ :: 23: 551 52: 983 405,716

read _ __. 375:0 78

3

10, 121 17,155 47.802

TORT CLAIMS DECREASE

Ile Service acted on 167 administrative claims

for damages resulting from negligence of Service

employees acting within the scope of their employment under the Federal Tort Claims Act, compared

with 201 such administrative claims disposed of last

year. The Service assisted the Treasury Department in drafting its regulations under the Military

Personnel and Civilian Employees' Claims Act of

1964. After the issuance of these regulations, the

Service acted on 18 claims under this Act.

An administration bill, H.R. 13650, which has

passed both Houses of Congress, will become law

next year.' This bill amends the Federal Tort

Claims Act to require tort claims, regardless of

amount, to be submitted to the administrative

agency concerned for consideration before suit may

be instituted, and provides the agency with authority

to dispose of claims up to $25,000 in amount. Ile

agency may settle claims for amounts over $25,000

with the approval of the Attomey General. This

bill undoubtedly will result in a substantial increase

in the number and dollar amount of tort claims to be

handled by the Service.

REVENUE LEGISLATION ASSISTANCE PROVIDED

The Service continued to play a significant role

in the development of legislation relating to internal

revenue matters by providing technical assistance to

the other offices of the Treasury Department, to the

committees of the Congress concerned with tax mat-

' Enacted as Public Law 89-506, July 18, 1966, effective

January 1967.

ters and, on occasion, to other executive agencies.

This technical assistance was performed by many

means but principally by (I) preparing information

reports, technical reports, drafts of bills and accompanying technical explanations, and other data relating to legislative matters, and (2) attending public

hearings and congressional committee meetings.

Much of this activity was directed toward legislation

which was enacted by the Congress during the year

or was still pending at the close of the year.

To assist the Assistant Secretary for Tax Policy

in the formulation of the Treasury Department's

legislative program, the Service carried out a number of its own research and study projects to develop

information about tax administrative problems, and

to suggest ways and means of simplifying certain

areas of the tax law and removing unintended benefits or inequities. The Smice also considered and

evaluated comments on tax laws and suggestions for

improvements which were advanced by taxpayers

and their congressional representatives.

Fourteen draft reports and technical memoranda

were prepared forthe Treasury Department on legislative proposals in the alcohol, tobacco, and firearms

area. The Service prepared comments for departmental use on 10 other legislative proposals in

connection with alcohol, tobacco, and fircaffns

functions.

More Effective Regulation Sought Over Interstate

Traffic in Firearms

The President, in his message to Congress on national strategy against crime, recommended the

enactment of S. 1592, a bill to amend the present

Federal Firearms Act so as more effectively to regulate the interstate shipment of firearms and to

prevent state controls over the traffic in firearms

'from being nullified or evaded by interstate Shipments. The Service, in preceding years, had actively assisted in drafting the bill. The Subcommittee to Investigate juvenile Delinquency of the Senate

judiciary Committee held hearings on S. 1592 and

the House Ways and Means Committee held hearings on identical House bills (H.R. 6628 and H.R.

6783). After coordination with other interested

agencies, at the request of the legislative committees,

assistance was rendered in drafting language to

revise the bill so as to reflect the views and suggestions of members and others interested.

S. 1591 and companion House bills, H.R. 6629

and H.R. 6782, would amend the National Firearms Act by including "destructive devices" such as

bombs, rockets or launching devices within the control provisions of the Act and by doubling the rate

of each of the taxes now imposed by that Act. As

in the case of the President's proposals to amend the

Federal Firearms Act, thew bills reflect, to a great

extent, the efforts of the Service for several years

to effect needed amendments to the National Firearms Act. The House Ways and Means Committee held hearings on this proposed legislation at

which the Under Secretary and the Commissioner

appeared in support of the legislation.

Important Legislation Completed During Year

By far the most important enactment during the

year from the standpoint of impact on most taxpayers was the Tax Adjustment Act of 1966 (Public

Law 89-368). This Act contained a number of

provisions which will have a far-reaching effect on

the collection of the income tax. One of the most

significant features, which resulted from a suggestion made by the Commissioncr at a Cabinet meeting in the Spring of 1965, imposes graduated rates of

withholding of income tax collected at the source

on wages. As a result, the collection of income tax

from almost every wage camer in the United States

will be affected. For many taxpayers, this will

cause the amount of income tax withheld from their

camings throughout the year to come very close

to equaling their tax liability as ultimately shown

on their tax returns. Thus, while the overall tax

liability of an individual will not be increased by this

provision, the income tax will be collected on a more

timely basis throughout the year.

The Tax Adjustment Act also provided for an

acceleration in the amount of the quarterly payments of estimated income taxes by certain corporations. Ultimately, this will bring the affected

corporations into a pay-as-you-go system similar to

that now provided for estimated income tax payments by individuals. Another significant feature

of the Act was the provision for the postponement of

certain excise tax rate reductions. Other provisions

related to the combining of estimated self-employment tax and income tax in the declarations of estimated tax, and to the disallowance of deductions for

certain indirect contributions to political parties,

such as expenses of advertising in convention

programs.

44 45
ANNUAL REPORT 4) CHAPTER SIX

Another Act which affected tax matters was the

Social Security Amendments of 1965 (Public Law

89-97). Among the more significant tax aspects

of this Act are the provisions relating to an increase

in the social security tax, and the inclusion of tips

as wages for purposes of the social security employee

tax and income tax withholding. Such treatment

of tips will have a widespread impact on people employed in the service industries, such as waiters, cab

drivers, and barbers.

Eight public laws affecting the Service's alcohol

and tobacco tax function were enacted. Of particular interest is Public Law 89-184 which authorizes the Secretary of the Treasury to waive a

statutory bar to the issuance of a license under the

Federal Firearms Act if he determines that such

action would not be contrary to the public interest

and that the applicant would be likely to conduct

his operation in a lawful manner.

A number of other public laws having an effect on

tax matters were enacted during the year, the following being of particular interest:

Public Law 89-212, relating to an amendment

of the Railroad Retirement Act of 1937 and the

Railroad Retirement Tax Act.

Public Law 89-243, the Interest Equalization

Tax Extension Act of 1965.

Public Law 89-352, relating to the exemption of

certain nonprofit corporations operated to provide

reserve funds for domestic building and loan associations.

Public Law 89-365, relating to the tax treatment

of certain amounts paid to servicemen and survivors.

Public Law 89-384, relating to the recoveries of

foreign expropriation losses.

Public Law 89-389, providing for the repeal of

subchapter R and amendment of subchapter S of

the Internal Revenue Code of 1954 relating, respectively, to the election of certain partnerships and

proprictorships as to taxable status and the election

of certain small business corporations as to taxable

status.

Several Tax Bills Pending

Some of the more important tax bills which had

been passed by the House at the end of the year and

were awaiting Senate action were:

H.R. 10, relating to limitations on contributions

of self-employed individuals to pension plans, etc.

H.R. 4260, relating to permission to corporations

to qualify as real estate investment trusts.

H.R. 4665, relating to exploration expenditures

in case of mining.

H.R. 13103, the Foreign Investors Tax Act of

1966.

Additionally, two bills had been IYassed by both

the House and the Senate by the close of the year

and were awaiting the approval of the President.

These bills were H.R. 136, relating to the priority

of liens in bankruptcy, and H.R. 3438, relating to

limiting priority and nondischargeability of taxes in

bankruptcy.'

Legislative Implementations

An important function of the Service, related to

that of assisting in the development of legislation,

is to implement the tax legislation once it has been

enacted. Implemeniation includes the issuance of

new and amendatory regulations, revisions of tax

return forms and instructions, issuance of publicity

primarily through news or technical information releases, revisions of Service publications, and the issuance of special instructions and procedures to the

fieldoffices. (For a fuller discussion of some of these

programs, see Chapter I and the Appendix.)

INCREASES NOTED IN INTERPRETATIVE

ACTIVITIES

Interpretative activities increased substantially

during the year. Cases formally referred to the Interpretative Division by the Assistant Commissioner

(Technical) and by litigation divisions in the Office

of Chief Counsel increased from 708 last year to 763

and dispositions increased from 664 to 759. Contumed efforts were made to improve legal services

to the Assistant Commissioner (Technical) by the

use of informal consultation. Written procedures

were finalized to carry out recommendations to this

effect by a study group appointed by the Under Secretary of the Treasury and experimental procedures

were instituted in the informal clearance of revenue

rulings. During the year many areas of substantive

tax problems were extremely active including especially those relating to insurance companies, exempt

organizations, foreign transactions, cooperatives, and

corporate stockholder relationships.

'Both of these bills were signed into law shortly after the

close of the year.

LEGAL AND LEGISLATIVE ACTIVITIES

LEGAL STAFF DECREASES SLIGHTLY

As of June 30, 1966, the Chief Counsel's Office

employed 1,251 persons, with 616 attorneys aitd 635

nonattorney employees. This represents a decrease

of six attorneys and an increase of one nonattomey

employee from last year. Attorneys were assigned

to the National Office and regions as follows:

Number of

Office attorney,

National Office - ------------------------------ 243

Central Region -------------------------------- 45

Mid-Atlantic Region ---------------------------- 59

Midwest Region ------------------------------- 55

North-Atlantic Region -------------------------- 71

Southeast Region ------------------------------- 42

Southwest Region ------------------------------ 38

Western Region -------------------------------- 63

46 47
INTERNATIONAL ACTIVITIES

48

Chapter 7

INTERNATIONAL INTRODUCTION

ACTIVITIES The important and sensitive overseas affairs of the

Service continued their growth during this year.

Tax modernization teams working in foreign countrics were expanded to 19 during the year from the

17 teams of last year. Tax conventions were negotiated with seven countries during the year with

respect to four new conventions, two protocols supplementing existing conventions, and one convention to replace the one presently in force.

FOREIGN TAX ASSISTANCE PROGRAM

The Foreign Tax Assistance Program became operative in 1963 honoring a pledge made by the Seeretary of the Treasury at Punta del Este in 196 1.

The program extends to developing countries of the

free world requested technical assistance in tax administration. To insure coordination of the wide

variety of functions included within the program,

the Foreign Tax Assistance Staff, which is responsible for this program, is an organizational part of

the Commissioner's Office. The Staff's activities

are conducted in collaboration with the Agency for

International Development, Department of State.

Tax Assistance Teams Increased

Tax assistance teams are established overseas to

help tax officials of foreign governments in devising

arid installing modem methods of tax administration. During the past year, two new long-range

teams were assigned, one in Argentina and the other

in Honduras. As of the end of June, there were 19

teams active overseas. In prior years, teams were

assigned to India, the Philippines, and South Korea,

and in Latin America to Bolivia, Brazil, Chile,

Colombia, Costa Rica, the Dominican Republic,

Ecuador, El Salvador, Guatemala, Nicaragua, Panama, Paraguay, Peru, and Uruguay. In addition,

agreement was reached to establish a regional office

for Central America and, Panama.

A total of 69. long-term advisors are.assigned to

these teams. An additional.44 short-term advisors

were detailed abroad this year for 54 special projects

in 17 countries. A survey of tax administration

requirements was completed in South Vietnam, as

a prelude to establishing a long-term team in that

country. Final arrangements are also being made

toward assignment of a team in Turkey.

Seminar Held for Inter-American Tax

Administrators

A high point of the year was a 3-week, InterAmerican Seminar for Directors-General of Taxation, held in Washington in the Spring of 1966.

Twenty-seven of the principal tax administrators

from 17 countries participated. This was the first

opportunity for these top level officials to meet and

work together. The immediate objectives of the

seminar were to provide an effective forum for the

exchange of experiences and concepts in tax administration, and to familiarize the participants with

the Service's operation in the National Office and in

the field.

As a direct result of this seminar, plans were initiated to form a permanent association of the principal tax officials of the Western Hemisphere. An

organizing committee, composed of members from

Chile, Mexico, Panama, Uruguay, and the United

States, with the assistance of the Foreign -I ax

Assistance Staff, has started work on a plarl of

organization.

Visits by 319 foreign tax officials from 58 countries during the year helped to emphasize the worldwide scope of tax administration problems. Several

officials from the United States participated by invitation ina special conference conducted by the Mexican tax administration for its upper level tax

officials.

Foreign Language Training Programs in Operation

This year marked the beginning of a regularly

scheduled series of International Tax Training

(INTAX) seminars and courses for the officials and

managers of tax agencies of developing countries.

This series, developed jointly by the Foreign Tax

Assistance Staff and Training Division, covers the

development, operation, and management of tax

programs, including audit, collection, taxpayer relations, training, and data processing. Most of the

courses and seminars held this year were conducted

in Spanish for the 128 persons who attended.

The success of this first year of operation has confirmed the desirability of expanding the INTAX

series. Seminars and courses have now been sched-

.uled through 1970, and will be offered in French,

English, and Spanish, while spqial courses are also

scheduled to be given in Portuguese.

Mobile instructor teams, first used last year, were

used this year to furnish intensive on-site audit training to revenue agents in Bolivia, the Dominican

Republic, and Honduras. The mobile instructor

team concept will be broadened to cover collection

and other areas for future operations.

TAX CONVENTIONS WITH SEVEN COUNTRIES

NEGOTIATED .

During the year, the Service participated in 11

negotiations with 7 countries regarding income tax

conventions. Five of the discussions took place in

Washington and six took place abroad. These

negotiations were directed to the conclusion of four

new conventions, two protocols supplementing conventions already in existence, and one convention

replacing an existing one.

Supplementary protocols to the income tax conventions with the Federal Republic of Germany, the

Netherlands, and the United Kingdom were signed

and received the consent of theSenate to ratification

in 1966. The Senate also consented to the ratification of a protocol supplementing the income tax

convention with Belgium which had been signed in

dic previous year. On December 27, 1965, the

instruments of ratification of the protocol with the

Federal Republic of Germany were exchanged and

the protocol entered into force.

INTERNATIONAL OPERATIONS REORGANIZED TO

KEEP PACE WITH INCREASED INTERNATIONAL

ACTIVITY

Program Activity Broadened

Increased U.S. involvement in international affairs places a comparable increase on the importance

of maintaining effective Service programs to encourage voluntary compliance with U.S. tax laws by its

citizens residing abroad and by nonresident aliens

and foreign corporations receiving income from U.S.

sources. To keep pace with this increased international activity, the Service improved and expanded compliance programs and initiated procedurrs to improve the administrative provisions of

the 22 income tax conventions and 14 estate tax

49
ANNUAL REPORT * CHAPTER SEVEN INTERNATIONAL ACTIVITIES

onventions between the United States and foreign

countries. Under the delegation order to act as

the Government's Competent Authority under these

treaties, the Office (of International Operations

(010) continued to be active in the administration of the tax conventions of the United States.

Complex Audit Problems Involving International

Area

In addition to action require

'

d to receive and process returns, and collect or refund tax, there was a

full range of audit activity in which approximately

20,000 returns were examined. Approximately $23

million in tax deficiencies and penalties resulted

.from these examinations. The examinations involved many complex problems pertaining to international taxation. Because of the complexity of

the international provisions of the tax laws and the

special treatment of tax under particular tax treaties,

there was a much greater percentage of requests for

taxpayer assistance in proportion to total returns

filed than are ordinarily received in connection with

the same number of domestic returns.

New Foreign Posts al: Rome and Tokyo

New foreign posts at Rome and To

'

kyo were activated during 1966. Nine foreign posts are now in

existence to handle Service affairs in overseas areas.

Prior to 1966, foreign posts were already in operation in Paris, London, Ottawa, Mexico City, Sao

Paulo, Manila, and Bonn.

To service foreign posts, a cadre of highly qualified persons has been established. Because of their

varied functions, all cadre members are given intensive training courses in all Service functions. In

addition, they attend Department of State orientation and language courses. Such training is important since these individuals represent the Service in

all functions necessary within their geographic areas.

The representative at Paris was requested to head a

working party within the Organization for Economic Cooperation and Development (OECD) in

Europe to investigate the possibility of standardizing

forms and administrative procedures under the

treaties.

Information was furnished in 328 collateral reports in response to requests by districts, regions, and

National Office components for information needed

from foreign countries in connection with compliance activities of these offices.

Assistant Commissioner (Compliance) Confers

With Foreign Tax Officials

-The Assistant Commissioner (Compliance) attended the Etircopean Regional Conferenc'c of the

International Criminal Police Organizatidn (Interpol) in Rome, in May 1966. While in'Europe he

took the opportunity to confer with foreign tax

administrators in Rome, Bern, Bonn, Paris, and

London. In addition, he held discussions with

American Embassy officials and Service personnel

stationed in those areas. While in Bonn the Assistant Commissioner presented a 100-year-old income

tax return to the German tax officials for display in

the Tax Museum of the German Finance Academy.

010 Realined for Added Functions

The increased activity in the international tax

area coupled with additional functions assigned,

necessitated a realinement of the organizational

structure and functions of 010.

Among the additional functions assigned are: (1)

Determining the amount of relief from economic

double taxation under Revenue Procedure 64-54;

(2) functioning as International Coordinator to the

Assistant Commissioner (Compliance) in all matters

in the international area, including recommending

and furnishing guidelines in the international enforcement program of the Service; and (3) accumulating and analyzing data involving foreign tax

laws for use in treaty matters and other aspects of

international transactions involving U.S. taxpayers.

The Research, Tax Treaty, and Technical Services Division was created under the realinement to

administer the major portion of these additional

functions.

U.S. Taxpayers Overseas Assisted for 13th Consecutive Year

For the 13th consecutive year, U.S. citizens residing abroad were furnished assistance during the filing period under the Overseas Taxpayer Compliance

Program. To supplement the four agents assigned

to this program from foreign posts, 18 Service employees visited 118 cities in 51 countries, plus

Guam and the Canal Zone. A total of 41,000 taxpayers were assisted.

The Office of International Operations and the

judge Advocate General of the Army jointly sponsor

an annual military income tax school program involving the instruction each year of approximately

1,000 servicemen in 10 tax schools in Europe and the

Far East. 010 materially contributes to this program by supplying all of the instructors and the

course of instruction for these schools. Tax assistance rendered within the military community by

the graduates of these schools serves the needs of

upwards of two-thirds of our Armed Forces abroad.

Hence, these jointly operated military tax schools

significantly increase the ability of the tax assistance

program to reach Americans wherever they may be

located in the world.

Competent Authority Function on Increase

There has been an increase in the number of issues

that 010, as the Government's Competent Authority under tax conventions, has been called upon to

resolve. An increase in the number of informal inquiries received on treaty matters before the cases

have reached the point where they can be referred

to the Competent Authority, gives indications that a

continued increase in Competent Authority cases can

be expected. The number of informal inquiries received indicates a definite need for publication of

policies and procedural rules for use in applying for

relief from double taxation. Proposed publications

on this subject are being prepared for consideration

within the Senvice and by the Treasury Department.

Special Programs Initiated To Identify U.S.

Taxpayers

Various foreign laws and practices in the international area preclude the use of many of the taxpayer compliance programs ordinarily

used

by district offices. Sharp increases in recent years of U.S.

persons employed or engaging in business ventures

in foreign countries have necessitated research to

find new approaches to effective taxpayer com-

,pliance programs abroad.

One of the problems has been to identify U.S.

persons having an interest in foreign corporations.

Prior to the amendment of section 6046 of the Internal Revenue Code by the Revenue Act of 1962, very

little information was available on foreign corporations in which U.S. persons had an interest or about

the U.S. persons who owned them.

During this year, 2,862 additional foreign corporations were identified. This brings the current

inventory of foreign corporations in which U.S. persons have an interest to 29,41 1. The information on

U.S. persons with an interest in foreign corporations

will be used to identify persons who have potential

tax liability through their investments in these foreign corporations.

To promote filing compliance by U.S. persons

residing abroad, a program was initiated to identify

U.S. citizens who apply for or renew passports.

These individuals are requested to complete an information document, Form 3966, identifying the

office where their tax returns were filed for prior

years. It is estimated that under the new procedure

approximately 150,000 Forms 3966 will be received

annually. Under present plans the information obtained from the program will be utilized for delinquency checks through facilities available under

automatic data processing.

Taxes and the Economist

Continuing assistance on complex economic problems encountered in tax cases is provided by 010

economists. Such assistance has received increasing

attention and acceptance within and without the

Servic Courts are accepting sound economic appreaches for solving problems relating to section 482

allocation adjustments. This indicates that principles of economics are compatible with judicious

administration of tax laws.

Mitigation of Economic Double Taxation

Claims filed for relief from economic double taxation resulting from adjustments made between related entities under section 482 are being processed

in accordance with section 3 of Revenue Procedure

64-54. Twenty-four claims representing 65 tax

years were received. These cases involved $6.5 million in income adjustments, and $3.4 million U.S.

tax attributable to these adjustments. Offset claims

totaling $2 million have been filed under Revenue

Procedure 64-54 against the additional tax of $3.4

million.

A related procedure, Revenue Procedure 65-17,

permits the taxpayer to file a claim to repatriate from

the foreign affiliate the amount of the section 482

adjustment without such amount being taxed as a

distribution of earnings and profits from the foreign

entity. Only 8 of the 24 claims filed with 010

under Revenue Procedure 64-54 also contained

claims under Revenue Procedure 65-17.

The effective period covered by these two revenue

procedures was advanced to taxable years beginning

50 51
ANNUAL REPORT

prior to January 1, 1965. This extension is expected to increase the number of claims filed under

both of the revenue procedures.

Foreign Investments in the United States

Information reported on more than 12,000 Form

1042 returns filed with the Office of International

Operations continues to indicate growth in the

amount of foreign investment in the United States.

While the basic purpose of Form 1042 is to summarize only the nature and amount of income paid

and tax withheld at the source from foreign persons,

the forms also provide Treasury with actual statistics

for use in their fiscal projections as details of the

nature of foreign investment in the United States

is available from nearly 500,000 documents (Forms

1042S, 1001, and 1001 (treaty series)) which accompany the Forms 1042.

These forms provide 010 with information for

delinquency checks on alien taxpayers. They also

provide the means by which information is sent to

treaty countries to comply with the automatic exchange provisions of the treaties. In return, 010

receivesa large number of documents from treaty

countries permitting the Service to verify the reporting practices of U.S. citizens receiving income from

foreign sources.

as CHAPTER SEVEN

The following table is an analysis of the tax withheld from nonresident alien entities:

Tax withheld from payments to nonresident xfli~,,entities of

treaty and nonfreaty countries, calendar yea., 964

ountry

No bet

of inforus.tion d

Anent, a"-

Thousand dollars

Tax with- Tax fro.

=Z foreign

with. or Total

holding

agents holding wit -

agents

Total . . .... ----------------- 443,827 100,127 20,301 12D, 428

TreatyAuscountr as:

4-0- ......... __ ----------2 702 '321

....*, ....

321

Auxtra. ------------------------

Belgium and oversee territories. ...

9 944

304

109

1,937

(.)

197

log

2,134

C.

n

ads ---------- --------------

Denmark-------- -----------

I

'I

1,: 61h`

377

19, g4

1229

(.)908 20,757

122

F~nfaced'. ............. --------- 197 12 ---------- 12 F a ........ -- -----------

Federal Republic .1

07-ty ------

"

eace ........... ___ ---------

26,108

11:

o290

2 54

3.287

1,687 171

35

_.......... -------

3,322

1,687 1

71

Honours ----_ ........_ ------- 500 25 ...... ---2

s

I

stand ............ __ ---------

jItal ....................

.pan ---------------------

2,732 11:972

16

343

42, 721

3

...

346

12

1

42,

I_....bo.1g_ Netherlands -------- ---------

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

673 968

95o

'

...

273

68

6,223

N:therl N mIsArUlles.. ------------ 2:53

5 .:959 23 1,982

. 2ex

I

N and ------------ -----

_ 688 66 ---------- 66

orwav.: ---

Pakistan

3,4`6 1

3d

1196 1569

Sw.dn----- --------------- 3,063 471 471

SwItraNnd... -------------

Union fSDUth Africa..

or

-----------

31,329 845 22, 227 16D ....18,759

...

40 919

Un '227

tod Kingdom and overseas terd~

tortes -------------------------

Nontreaty countries by Forms 1042S

Treaty and nontrenty countries

47:809 7,

08

26,158

131199

ID2

..........

26.260

13,199

coupon bond Information do,uments..1 35.326 698 ....... 598 - Amourt too small to report. Included in the total% on the first line.

Chapter8

PLANNING EFFECTIVE TAX ADMINISTRATION REQUIRES

ACTIVITIES EXTENSIVE PLANNING

The size and complexity of the Federal tax system make extensive planning a. prerequisite for

effective tax administration. Overall program

planning activities are directed at both short- and

long-range needs of the Service and are centered on

the formulation of

a comprehensive multiyear plan

reflecting the objectives and resource requirements

for all functional areas.

New approaches to improve the Service's operations and to reduce the compliance burden on taxpayen are developed through an intensive research

effort. Basic information with respect to the operation of the tax laws is provided through the statistical

reporting program for use in tax studies and legislation by the Congress, as well as for the Service's

own research and planning needs.A continuing

program is conducted for the purpose of reducing

costs and increasing efficiency in the Service's data

processing operations and other internal systems.

PLANNING

- PROGRAMING- BUDGETING SYSTEM

PROVIDES FOR REVIEW OF PROGRAM OBJECTIVES, ACCOMPLISHMENTS, COSTS, ALTERNATIVES

New System Installed To Improve Program

Management

Introduction ofa new Planning-PrograrningBudgeting System throughout the Executive Branch

was announced by the President on August 25, 1965.

The new system is designed to improve the quality

of agency planning and resource allocation through a continuous review and analysist on a cost/benefit

basis, of program objectives and the various alternative means of meeting these objectives.

Provisions for comprehensive long-range operational and financial planning were established in the

Revenue Service in 1956.A Long-Range Plan has

been prepared and updated annually since 1959 to

provide an overall view of the Service's long-term

program objectives and resource requirements.

The new PPB System replaces the Long-Range Plan

52 53
ANNUAL REPORT ra CHAPTER EIGHT

with a multiyear"Program and Financial Plan" and

supporting "Program Memoranda," which require

more extensive analysts of program objectives, performance, costs and benefits, and alternatives.

However, the experience and capabilities developed

under the earlier system have facilitated the changeover to the PPB System.

The new PPB System is designed to:

(1) Make available to top management definitive

data relevant to broad decisions;

(2) Spell out more concretely the objectives of

IRS programs;

(3) Analyze systematically and present for review

and decision alternative objectives and programs to

meet these objectives;

(4) Evaluate thoroughly and compare the benefits and costs of programs;

(5) Produce total rather than partial cost estimates of programs;

(6) Present on a multiyear basis the prospective

costs and accomplishments of programs;

(7) Review objectives and conduct program

analyses on a continuing, year-round basis, instead

of on a crowded schedule to meet budget deadlines.

The Program and Financial Plan and the Program Memoranda together comprise the Service's

long-range plan and, subject to continuing modification and updating, serve as the basis for planning

the general level of operations and the accompanying allocation of resources. For example, the 1966

editions of these two documents describe the specific

program objectives over the period 1968-72 and

will serve as the basis for determination of budgetary planning levels for the fiscal year 19,68 budget

estimate to be developed during the early part of

fiscal year 1967.

Short-Range Work Plans Are Developed From Program and Financial Plan

Another important phase of the Service's planning

activities is the development of work plans for the

year immediately ahead. These are based on the

Program and Financial Plan and Program Memoranda mentioned above but they provide a more detailed breakdown of program objectives and priorities. Current goals, workloads, and performance

measurements for the principal activities are provided by detailed work planning and control systems

and by integrated reporting systems.

After enactment of congressional appropriations,

appropriate adjustments are made in the program

plans for the coming year. Rciources to carry out

the programs are then allocated to the van'lous activities of the Service as part of the Oper4tfng Financial Plan.

Planning Studies Also Cover Organizational Needs

Organizational planning during the year wa's concentrated on the problem resulting from the transfer

of returns processing and accounting functions from

the district offices to the regional service centers.

While this transfer is being phased in over a period

of years, the eventual result will be a radically reduced processing operation in the district offices.

Taxpayer assistance and enforcement functions will

continue to be handled at the district level and, due

to intensive efforts to reassign and retrain personnel

affected by the transfer, it is expected that no employers will be involuntarily separated or transferred

on account of these adjustments. However, the

organizational status of the eventually small remainder of returns processing and accounting functions

in the districts remains to be determined. Several

discussions of this problem were held during the y ar

between national, regional, and district officials,

with particular emphasis on pending legislation to

authorize the direct filing of tax returns in regional

service centers.

Further Increases Expected in Number of Returns

Filed.

Projections of the number of tax returns filed con -

tinue to be one of the more valuable tools used by

officials in making long-range estimates of the Servic

,

e's workload. The steady, upward trend in the

volume of returns filed has been maintained in recent years and the outlook for continued growth in

the Nation's population, labor force, and economy

indicates further substantial gains in the number of

returns. An indication of the impact of the expanding economy is shown in the expected increase

in the number of individual returns in the Adjusted

Gross Income $10,000 and over class-a twofold

increase in the 10-year period from 1965 to 1975.

The total number of returns filed during the calendar year 1965 was approximately 102 million,

representing an increase of over 13 million returns

during the last 10 years. Projections recently prepared for long-range planning purposes indicate

PLANNING ACTIVITIES

that the number of returns filed will reach 113 million by 1970 and will exceed 125 million by 1975.

The accompanying table shows the national projections for selected types of returns.

Selected types of returns riled in 1965 and projected for calendar

years 1966, 1970, and 1975

11, thousands]

Type of return

Totalraturns ----------- ----- _----- _ ----

I ndi,idual, total ------------ -----------

AG: unit,, $10,0001----------------

AG I 0ID00 and over. ------ _-----

Corporation, total ---- --_----------_-

Form 1120,total --------

A is .1151,106 ........... ,,:I: n1

A 150.0 0. do,

Assets $1,003,000 or more

For. 1120S ..... --------- --------

For. 1122 ------------ ------------

E.=,nt-..-----------_----

All ------------------------

Actual

1965 -

102,140

66,226

56,792

9,433

1, 477

1,297

57

644

79

160

20

22 368

1 2:069

966

0 '599

68,812

11~ 814

'

ID

70

1,550

1,344

594

667

82

23

221 734

0: 503

Projected

113,473

74,991

N: 15 NO041

1,944

1'.3717

94

27D

31

"

362

12: 376

1975

125,030

82,913

11:,41

37

2,246

801

906

III

387

41

26 511

13: 360

:Data by are class are estimated.

:~ncedditlohto Forms 1040 and 1040kincludes Forms 1040C,11,1111, NB&,PR,andSS.

oilas Forms 1120 with assets not reported.

Includes indiQual declarations, iorliefirtion declarations. Partnership, estate, gift,

exempt special occupation, iducisty, and excise tax returns, and Forms,

7004 and relative 1120L and

M

and 11 2.

DIVERSIFIED RESEARCH PROGRAM EXPLORES

ADMINISTRATIVE PROBLEMS

The Service's advanced research program was directed toward exploring a broad spectrum of administrative problems inherent in a large and changing

tax structure. Studies related to broadening and

improving the coverage of the information reporting

system and sample surveys of compliance in the reporting of various specific types of income were undertaken as possible means to improving taxpayer

compliance.

Indicative of its expanding activities, the research

staff was increasingly called upon to assist the Treasury Department in developing its legislati . progr!0I

and in pinpointing the alternative administrative Ive

costs and benefits under current tax laws compared

with various legislative proposals.

Graduated Withholding System Is Developed

Alternative plans of withholding of income taxes

from wages were examined in order to design a system of graduated withholding which would more

effectively synchronize withholding with actual tax

liability. This system of withholding, which was cnacted as part of the Tax Adjustment Act of 1966,

will minimize the burden on taxpayers of additional

yearend payments because of underwithholding as

well as reduce hardships for many low-income taxpayers due to overwithholding.

In place of the prior flat 14-percent withholding

rate, the new graduated withholding system provides

for withholding at six graduated rates. These rates

will bring withholding closely in line with the actual

I due on wage income up to the level of $12,000

f7r single taxpayers and up to $24,000 for married

couples, whose deductions are approximately 10 percent of income or who take the minimum standard

deduction. These income levels encompass the first

nine tax brackets and rates in the tax rate schedules

for single and married persons. For people above

this income level with deductions of approximately

10 percent of income, withheld and actual taxes

will be more closely related than under the previous

system. Moreover, the minimum standard deduction is now reflected in the new withholding system

through an increase in the value. of the personal

exemptions forwithholding purposes and a Zero with-

,.holding rate on $200 of wages on an annual basis.

This change will appreciably reduce overwithholding for those employees who use the minimum standard deduction, particularly those with income falling in the first two income tax brackets.

Under the new system, it is estimated that the

number of returns with overwithholding will drop

from 39.8 to 32.7 million, the number with underwithholding will decrease from 12.5 to 9.7 million,

while the number of "break-evert" returns (with

withholding within $10 of liability) will increase

from 10.8 to 20.7 million. In terms of estimated

dollar amounts, the new graduated withholding system is expected to reduce overwithholding by $800

million and also reduce underwithholding by $1,105

million.

Information System Studies Promote Increased

Use of ADP Facilities

In connection with improving the information

system, several studies were directed toward facilitating the integration of information document

programs with the increasing capabilities of the Service's automatic data processing system. Prominent

among these were studies designed to: (I ) Determine what changes need to be made in the dividend

reporting rules in order to secure compatibility beI

I

54 55
ANNUAL REPORT * CHAPTER EIGHT

tween data on income tax and information returns;

(2) develop methods t

*

c, facilitate and stimulate

better compliance with the taxpayer identifying

number requirements on information documents by

both payees and payees; (3) develop more efficient

and effective approaches to matching information

documents to tax returns; and (4) extend the information reporting system to cover amounts paid to

recipients of agricultural program payments by the

Department of Agriculture.

One result of the latter study was an agreement

whereby the Department of Agriculture will provide

the Service with information returns on magnetic

tape covering payments made to farmers under the

major agricultural conservation and commodity

stabilization programs.

Sample-type studies were undertaken to estimate

the degree of taxpayer compliance in reporting

specific types of income, including: (1) Capital

gains from the sale or exchange of corporate securities; (2) interest income from the redemption of

Series E savings bonds; (3) dividend and interest

income shown on information returns; and (4)

wage income from domestic employment.

Measurement of Taxpayer Compliance Aids in

Program Evaluation

To permit more effective program design and

evaluation, and to meet the demands for a long,

range research program which would further the

objectives of long-range planning and other tax administration requirements, the Service bias implemented a Taxpayer Compliance Measurement Program (TCMP). TCMP is gathering new data in

three tax administration areas: (1) Delinquent ac~

counts; (2) delinquent returns; and (3) individual

returns filed. Plans arc being developed to cover

corporate returns filed. Outputs from 1963 delinquent accounts and delinquent returns programs

have been tabulated and analyzed. Field audit

work for the 1964 individual returns filed program

has been completed, and its output tabulations are

scheduled to begin in the early part of fiscal year

1967. The 1966 programs of delinquent returns

and individual returns filed are in operation. Additionally, a new segment of the delinquent returns

program covering farm operators has been planned

for the Central Region in 1967.

Tangible results have already been obtained from

the 1963 delinquent accounts and delinquent returns programs as described in last year's report.

Additional ben6fits from the delinquent accobnts

study are ~Ianned in fiscal year 1967 through the use

of master file processing controls to reduce the time

spent by field collection personnel in handling small

delinquent accounts. Approximately 70,000 accounts will be processed under the new procedure in

fiscal year 1967, releasing about 70 productive manyears for other work. The delinquent returm

program results have been put to further use in

designing a procedure for effective use of master

file information to increase the productivity of revemic officers in canvassing operations.

In anticipation of the availability in fiscal year

1967 of TCMP data from individual returns filed,

the Service has started a new research project to use

mathematical techniques to develop a more effective

ADP procedure for selecting from the 66 million

individual returns filed annually those most urgently

in need of examination. Utilizing previous research

claim, two selection (discriminant function) formulas

have been developed for selectIng low-income single

proprietor returns, and a field test has been installed

to ascertain the effectiveness of these formulas in

comparison with existing selection procedures.

If present expectations are realized, the ADP

selection via the formula approach would increase

the effectiveness of a given size audit staff by: (1)

Reducing the proportion of examined cases resulting

in no tax change; (2) increasing the average tax

change resulting from audit; and (3) substantially

reducing the manual returns classification requirements.

Expected short-run operational benefits from

TCMP can be summarized as: (1) Establishing the

extent of potential cost reduction from revised

collection programs based on greater use of data

processing procedures and lesser use of enforcement

manpower; (2) determining the adequacy of the

Business Master File as a delinquent returns check;

(3) disclosing pockets of delinquent returns noncompliance for systematic followup by enforcement personnel, educational programs and other indicated

tax administration methods; and (4) developing an

effective ADP selection procedure for more than 66

million individual returns filed annually. In addition to the increased efficiency expectations outlined

above, TCMP will help clarify overall tax administration needs by providing new data indicating the

sizes of the various kinds of tax-return-filing delin56

PLANNING ACTIVITIES

quency problems among farm and nonfarm business

taxpayers, and the tax error problems of both individual and corporate income taxpayers.

Over a longer period, TCMP will indicate

whether the current levels and methods of tax administration are reducing, increasing, or maintaining the willingness and ability of taxpayers to comply

with the Federal tax laws.

Administrative Implications of Present and Proposed Tax Laws Are Evaluated

An analysis of information reporting provisions

of the Internal Revenue Code, with a view toward

identifying areas that might benefit from amendatory legislation, is indicative of the type of analysis

the research staff was requested to furnish in order

to improve tax administration. As a means of administratively reconciling relations with foreign tax

entities, researchers developed procedures for Service certification of evidence of U.S. residence for

withholding on foreign-sourcc dividends subject to

withholding, and conducted a study to determine

the ownership characteristics of resident foreign

corporations.

In connection with consideration of proposals for

possible inclusion in the Treasury Department's

future tax legislative recommendations, the research

staff furnished analyses and comments on the administrative aspects of such proposals.

Statistical Reporting Provides Data for Tax Studies

and Other Research Purposes

During 1966 the Internal Revenue Service con.

tinued to prepare statistics for use in analyzing the

operation of the Federal tax system for both revenue

estimating and tax research purposes." Input data

for thes

'

c statistics were derived from samples of the

tax returns filed during the year. Substantial cost

benefits are realized by utilizing tax retu is as basic

source documents to obtain information on sources

of income, deductions, assets, and liabilities, and significant characteristics of taxpayers. As a useful

byproduct of the tax-reporting process, these statistics provide a financial profile of taxpayers and also

supply financial and economic data used in the

preparation of the National Income and Product

Accounts and in research conducted by other Government agencies, businesses, private research organizations, and universities. The data are published

in the Statistics of Income series as required by sec231-6910-66-----5

tion 6108 of the 1954 Internal Revenue Code. A

list of these reports published during the year may

be found on page 107. A few summary statistics related to topics covered in these reports follow.

The 1963 Individual Income Tax Return Report

contains data on sources of income, exemptions, and

tax items, presented by States and for the 100 largest

standard metropolitan statistical areas. The State

tables show, for example, that one out of every four

individual tax returns filed was from California,

New York, or Pennsylvania. These States accounted for 31 percent of the individual income tax

reported. Of particular interest in the report for

1964 individual income tax returns is that while adjusted gross income in 1964 amounted to $397 billion, an increase of almost $28 billion over 1963,

income tax after credits dropped over 2 percent from

1963 to a little more than $47 billion. This was

due to the lower tax rates effected by the Revenue

Act of 1964. Another statistic of the 1964 report

worthy of comment is that the number of returns

with itemized deductions declined by 1.3 million

returns from 1963. The decline reflects the provision of the 1964 law which introduced a new minimum standard deduction. Prior to the law change,

the proportion and number of taxpayers itemizing

deductions had been increasing.

The table on page 58 presents, for a 5-year period,

some of the overall summary information contained

in the Statistics of Income reports for individual

taxpayers.

The 1963 Corporation Income Tax Return Report reflects several "firsts" attained by U.S. industry. U.S. corporations for the first time reported

receipts of $1 trillion on their income tax returns.

Profits before taxes reached a record $54 billion and

cash distributions to stockholders exceeded $21 billion, another high. The investment credit claimed

by corporations in 1963 rose to $1.1 billion, up 33

percent over 1962, the first full year for which the

credit was allowed, when $834 million was claimed.

The U.S. Business Tax Returns Report for 1963

presents, for the first time, data on the use of the

investment credit provisions of the law, by both

corporate and noncorporate businesses. For 1963,

investment credit reduced total income tax liability

by nearly $1.4 billion. Other new data, which

measure the effect of a recent change in the law,

are for deductions claimed by sole proprietors on

57

I
ANNUAL REPORT as CHAPTER EIGHT

Individual income tax returns: Number of returns, sources of income, and itemized deduction,

Item

A. Number of returns

All Individual returns, total........ ................ __---------------_-- --------_--

T...bi ... ............... ..................

Nontaxable............... ............. :":: ......

Returns with itemized tied uctions. botaL..... ------------------ --------

T talfil............ ...............

Nontaxable -------

Returns with standard deductions, total ............__ ------------- _ -----------

T... bI...................................

Nontaxable - ............................ ------------------------------------

it. Sources of Income

Adjusted Iran ince-, total .... ------------- ........ -------------- -----

salaries and ..Is' -------------------------------------------- _-------

Business. frum

am,

.J ...C ..... --- ---- ............... :-1-------------

Or idends in a lusted gross income

fi.scratit P 1. eilld ......___--------------------------------- -__ ......... ---------- -------

C:rtrer'hIp_._ ---------------------------------- _---------__ -----------

P flat 9trin.............................. ........ ................

Other ircome-__-----_----_.................. ............

C. Itemized deduction,

Itemized deduction. hotel........... - ................ ------- ........... ...........

T...................... ............

fint... I seld .................... :::..... :_:~:: Contritutlars.-_...-------___-------- Meet londdrimulexpense-__

Other'sloductions ..................... .......................... __------

Note.-Returns classified as taxable are those teportfingincome tax after credits. Includes returns with no adjusted iron Income. Far For 1960-63jeduced hysick pay-lusion and certain amplo

64' on 11 a,- I own.

yeebusinessexponser.

19 rd

'I fir h Excludes di dends and interest reported an Farm& 1040A, end for 1961, ..cluchn

their tax returns for contributions to self-employed

retirement plans.

The 1962 Fiduciary, Gift, and Estate Tax Returns

Report presents extensive data on these three littleknown kinds of Federal tax returns-all related to

personal wealth. The 1962 report continues the

classification of estates by size of gross estate and

presents a new classification by size of economic estate; that is, gross estate less debts and mortgages.

Also new in the report are separate figures on funeral

expenses and the various administrative expenses.

The 1960 Supplemental Report on Depletion

Allowances for Mineral Production Reported on

U.S. Tax Returns completes a study initiated in

1962 to provide background material on the operaticrn of the depletion provisions of the Revenue Code.

The report contains information on the composition

of depletion allowances, income, and expenditures

related to mineral production. Statistics are shown

for various minerals and statutory percentage deple1-ty. year

1960

61,028

4f

2: '967

24,083

2 18, f: .1

36,945

25,87

11,0696

315,466

227,918 1,072

9,530 5,057

8,966 5,301) ,,24

35,313

10 52 5~2 .41675019

4,4112

61,499

583 91

22: 7

25,262

23:259 2 004

36,238

25 325 10:913

329,861

266,902 22,630 9,89 5,683

8.949

11:1187"

38,391

ofhe t.b.-

ted. IN

(Th-rdtf)

62,712 63,943 65,376

50.092 12.620

26,451

224 351

: too

36,261

25 741 10:520

(Million dollars)

348,701

283,373 23 925 10:640 7 155

9: Us

1:7 ,

4911

(Million dollars)

41,661

13 st, 45 W 2'is fij it"

4:747

51.323 12,620

28,154

25,3828 2,6

35,789

25 495 10: 294

368,778

299,443 23 $572 11:4 2

91212

9 313 6:449 -9,037

46.053

NetWed. -

1

51,305 14,069

26,910

211:009

38.466 900

26.297 12,169

396,660

323 266 25:628 11,917 10 125 '731

7: 9 939

x 8. 055

46, U2

14 17 12:457'

327 ': .5 7

4, U2

certain Forms 1040 with less than 11209of d Wdends or Interest Reduced by selfn ptoym ant. fransrn deduction of $1 9,493,000.

Reduced by lic u.en a $522,233,000 proves moving expense, of

$92,635 emplolvePay 'u-sipmns expenses of $2, 028,000. and self-employed

'000'

b ~3'1'

prodon deduction u $26~393,000.

tion rates, industries, operating and nonoperating

interests, and foreign and domestic properties.

Tax Models Yield Data Needed for Legislative

Changes

The Service is continuing to make extensive use

of Statistics of Income tax models for tax research.

The 1962 model which is based on a sample comprised of 100,000 individual income tax returns was

developed to provide fast and reliable estimates of

the revenue effect of changes in tax laws and their

administration. The model was used extensively in

making estimates of revenue that would be received

under varying graduated withholding rates on salaries and wages. These model estimates laid the

groundwork for Code changes which were effected

by the Tax Adjustment Act of 1966 (Public Law

89-368).

A model based on,individual income tax returns

for 1964 is being designed to provide more up-toPLANNING ACTIVITIES

date base data and more flexible manipulation and

tabulation possibilities. The model tape file will

contain a sample of 95,000 returns (stratified by size

of adjusted gross income) from the population of

66 million individual income tax returns filed for

1964. The file is a subsample of the regular 470,000

returns used to produce Statistics of Income. The

data record consists of 67 items from the individual

return form-virtually all of the income, deduction,

exemption, and credit information required for tax

computation. In addition, codes indicate, s

sential characteristics as sample class, filing

_uch 5~~-

_Ai:jtrict -_ =~ZlI

form of deduction, marital status,and-the ii-sE-ufcrr~-

tain special provisions of tax law.

Studies Undertaken for Other Agencies

Under the terms of sections 7515 and 7809 of

the Internal Revenue Code as amended by Public

Law 87-870, the Service continued to undertake

special studies on a reimbursable basis. During the

year, 12 projects were completed, with the estimated

cost of the projects ranging from $300 to $7,100.

The major users have been other Federal Government agencies, State and local government agencies,

universities, private individuals, companies, and research. organizations. In addition, 69 requests for

material from the Source Book of Statistics of Income were filled, consisting of approximately 850

photostats or microfilm prints and 78 rolls of

microfilm.

Statistical Processing Operations Transferred to

Data Center

Many of the activities that relate to the Statistics

of Income program are now being performed at the

Detroit Data Center. Beginning January 1, 1966,

the Center started the clerical processing of the

Statistics of Income sample of Forms 1065, 706,

709, 1041, 1120L, and 1120M. In addition, the

processing of the data from all returns used in the

Statistics of Income sample will be handled on computers located at the Data Center. Thus, on some

of the returns used in 1965 Statistics of Income,

data will be edited, keypunched, checked, and tabulated all at one central location. This centralization

of activities is expected to result in several benefits.

Whereas, in the recent past, the various computer

tests for statistical consistency in the data for each

return were carried out at a site far removed from

that at which the editing had taken place, these tests

can now be made at the same location as the editing

and, Ykere necessary, the returns can be used to

check out questionable items. This should help to

produce better quality data and perhaps shorten the

processing cycle, thereby permitting the sample returns to be sent back to the district offices earlier for

audit and other uses.

1

SYSTEMS DEVELOPMENT CONTINUES EMPHASIS

ON OPERATIONAL IMPROVEMENTS

Good progress was made during the past year on

a number of developmental projects directed specifically toward reducing ADPsystems' costs and increasing operating efficiency. Major attention was

given to projects relating to input preparation, a

process which represents the largest single item of

cost in the Service's total ADP operations. Concurrently, work was continued in developing improved management information systems and in

furthering plans for designing a conceptually new

ADP system capable of satisfying needs not met by

the present system.

Lower Cost Input Methods Are Tested

In dealing with the problem of finding more eco.

nomical and efficient ways for converting input documents to a form acceptable for computer processing, input documents are grouped into two broad

classes: (1) Those which may be received in

machine language without human transcription; and

(2) those which require human transcription.

(1) Machine-language inputs.-Analysis and

evaluation of the results of the pilot magnetic tape

reporting program was completed. Under this pro.

gram, a small number of payers submitted 1964

Forms W-2 and 1099 information on magnetic tape

on an experimental basis. The test proved the

practicability and advantages of this form of information reporting and led to the establishment of

an operational tape reporting program beginning

with 1965 payment information filed in calendar

year 1966. Approximately 18 million Forms W-2,

1099, and 1087 were filed on magnetic tape by payers under the new program and this number is expected to double for the succeeding payment year.

Progress was also made on projects directed toward developing systems for handling several types

of high-volume documents which lend themselves

to magnetic. tape conversion through the use of

58 59
ANNUAL REPORT e CHAPTER EIGHT

optical scanning devices. Specifications were developed for a scanning system,designed to handle

documents prepared within the Service and which

can be printed or typed under controlled conditions.

These documents are primarily taxpayer bills and

other notices which are returned to the Service and

are then reentered into the master file processing

operations. A relatively simple and inexpensive

optical scanning device can be used to read these

documents. 'An invitation to propose such equip,

ment for the Service's consideration was issued on

July 27, 1965, to manufacturers of this type of equipment and several proposals were received in September 1965. Evaluation of these proposals led

to the selection of a single-font scanning system for

use in a pilot operation to be conducted at the Southeast Service Center beginning in September 1966.

If the test is successful, plans will go forward for the

acquisition and installation of additional scanners

for other service centers. Substantial savings can be

expected to result from elimination of the need for

key punching and key verifying the documents

involved.

Another set of specifications was developed for a

scanning system capable of handling a large segment

of the approximately 200 million information returns (Forms W-2, 1099, and 1087) which will be

filed annually on paper forms rather than magnetic

tape during the coming years. A more complex

scanning device is required to handle these forms

since they are ordinarily prepared on a variety of

printers or typewriters, without Service control of

the imprinting. An invitation to bid on such a system was issued to manufacturers in March 1966,

with proposals due to he received in July 1966. Assuming that a selection of a supplier is made, a pilot

operation will be conducted at the Southeast Service

Center beginning in September 1967. As in the

case of the single-font scanner, results achieved during the pilot operation will determine whether or

not additional systems will be acquired for the other

service centers.

(2) Inputs requiring human transcriptionThis class of documents contains principally tax

returns which are not suitable for magnetic tape

reporting or direct optical scanning because of complexities of content or format. A request for propomb for furnishing equipment to the Service for

the initial transcription, verification, and conversion

to tape of data contained on returns was issued on

December 17, 1965. Ten manufacturers submitted proposals in April 1966. Evaluation of

these proposals and selection of a supplier (assuming one is selected) would lead to the indtallation

of pilot equipment in January 1967 for,i6ting at

the Southeast Service Center. If justified by test

results, a complete system would be installed and

put into operation in the Southeast Service Center

dwing the Fall of 1967. The decision to replace

the present system of key punching and key verifying tax returns will not be made unless the new

system can achieve a substantial reduction in manpower requirements, sufficient dollar savings to recover the cost of new equipment within two to three

years, and a substantial reduction in the floor space

now allotted to transcription.

Improvements Sought in Management Information

Systems

Projects in this area continued to move forward

during 1966. Steps were taken to effect improvements in systems established in'the prior fiscal year

and to expand these systems to accommodate additional functions. This was particularly true with

respect to information systems serving the appellate,

legal, administrative, and IR-Manual activities.

(1) Appellate and legal information systems.-

The principal development during 1966 was the

perfecting of a comprehensive automated reporting

system for appellate nondo~ketcd cases. This system has been tested and will become fully operational for 1967. It produces statistical tables which

will replace both the manually-prepared statistical

reports previously submitted by the appellate branch

offices and unpublished and published analytical

tables hitherto prepared manually in the National

Office. The appellate nondocketed case reporting

system also produces legal issue tables consisting of a

fisting of cases by issues, with a summary by major

issue categories of receipts, disposals, and inventory

in terms of cases, work units and dollars; a listing of

cases by offices and case numbers; and a cumulative

list of closed cases by issue. It also provides a utility

table for nonrecurring reports as needed. A task

group of representatives of Planning and Research,

Data Processing, Appellate, and Chief Counsel have

also developed a comprehensive integrated reporting

system for docketed cases, which will measure outputs for both Appellate and Counsel, replacing all

manually-prepared reports and statistics. It also

PLANNING ACTIVITIES

will expand and improve the existing legal-issue

tables on docketed cases. Considerable further developmental work will be required before this system

can become operational.

(2) Personnel and Payroll system.-A recommendation for the installation of a computer-based

system for meeting personnel management information and related operational requirements was

approved this year. The recommendation includes

a provision to integrate the input processing of personnel and fiscal data to provide the advantages

available through the use of a single input source.

Approval of the plan for development and the

allocation of necessary funds led to the establishment

of a work group which will develop the system requirements and prepare the procedures necessary

to test and install the new system. A pilot operation

will first be undertaken in one of the regions prior

to Scrvicewide implementation. Further informadon about this system will be found on p. 69.

(3) IR-Manual Index.-This project, designed

to develop a system that will make access to Internal

Revenue Manual material more complete and rapid,

has progressed to a point where feasibility of applying the Key-Word-in-Context (KWIC) indexing

techniques has been established. This technique develops a computer-produced alphabetical index-of

key subject words and provides for complete identification of manual locations of the subject matter

being searched. During 1966, a KWIC index for

IR-Manual, Part I (Administration), was prepared

and distributed for testing. Reaction from all regional and National Office officials was generally

favorable and additional indexes will be prepared

for the remaining parts. Once established, the system will provide for periodic updating of each section.

Plan Is Developed for Future ADP System Study

A study plan was developed during 1966 which

specifically describes the approach to be taken in

identifying information requirements

and

processing functions necessary to administer and enforce

the tax laws and regulations. These requirements

and functions correlate directly with tax administration program and operating objectives and are the

basis for determining the degree to which advanced

technology available in the data processing field

should be built into an ADP system designed to meet

these objectives.

The study plan distinguishes between two classes

of objectives: nose which are systen-tic by nature,

i.e., they relate to the procedural and performance

aspects of the system and have to do with such clements as requirements for processing speeds, accessibility of data, facility to disseminate information

and response time; and those which are programmatic by nature in that they are oriented toward mis~

sions of the Service. These include objectives presently being met by the master file system and several

not now being met but worthy of consideration as

desirable goals. . Ile latter would provide for (1)

integration into the masterfile system of information

required to satisfy management and statistical reporting needs; (2) indicators needed to show the

status of accounts with respect to such legal and

technical functions as appeals, litigation, interpretation, and special investigations; (3) access to tax

account and tax-base data which might be useful

in carrying out taxpayer assistance functions; and

(4) uniform procedures for meeting the Service's

obligations under Feder-al-State - interchange programs.

Analyses of the total system information requirements, in terms of characteristics of the data, sources

of data, and processing steps required to transform

these data into the desired form, together with the

attendant time constraints, will form the basis for

the development of system specifications. This refinement and synthesis of requirements will then

permit a determination of the extent to which available technological developments in the data processing and communication fields will contribute to

meeting the overall objectives of the contemplated

systenL

The study plan proposes that the first phase of the

project, that of identifying and describing system

objectives and data requirements, be assigned to

functional task forces which will generally follow existing organizational lines. Organization and

activation of these task forces is planned for 1967.

60 61
i

62

MANAGEMENT

ACTIVITIES

Chapter9

SERVICE EXCEEDS 1966 COST REDUCTION GOAL

Managers and supervisors throughout the Service

made concerted efforts during the year to improve

the efficiency of programs and operations and to insure that maximum results were obtained for every

dollar spent. The theme of personal stewardship of

public funds and excellence in the public service has

become an accepted "way of life" within the Service, Application of this theme is continually being

demonstrated in seeking out methods and means for

doing work better at the same or less cost. The

Bureau of the Budget directive that "Government

business will be conducted in accordance with the

same exacting standards that apply to the most expertly managed private business" is accepted as a

challenge for further impr6vement by Service

officials.

Specific actions taken to improve efficiency and

reduce costs resulted in tangible savings of $14.4

million-nearly 12 percent over the goal ($12.9

Million) established at the beginning of the year.

Future Cost Reduction Goals Reflect Continuing

Increases

The previously established cost reduction goal for

1967 of $13.0 million has been revised upward to

$14.5 million, to reflecta continuation of the outstanding accomplishments in 1966.

Looking ahead another year, the Service is projecting anticipated savings of $14.6 million in 1968

from cost reduction and management improvement

actions to be taken in 1967 and 1968. Since projected savings are deducted in advance from Service

budget submissions, managers and supervisors are

continually challenged to effect improvements and

economics which will permit them to carry out effectively their assigned responsibilities with limited

resources.

Categories of Reported Savings

Actions aimed toward improving efficiency and

reducing costs are grouped for reporting purposes

under four broad categories. These categories, and

MANAGEMENT ACTIVITIES

the savings accruing in 1966 under each, are indicated Mow:

!966 savings

Category (in thousands) Increased productivity and efficiency ----------- $3 598 Substitution of less costly alternatives ------------ W, 547

Continuing management programs (incentive

a-irds, reports, position management) -------- 4,507

Special expenditure reductions (canceled expendi.

ture,S) ------------------------------------ 1,763

Total--------------------------------- 14,415

Within these broad categories, many individual

actions are involved, ranging from employee suggestions to management studies of broad scope and

complexity. Specific examples of individual actions

completed and implemented are described below

and elsewhere within this report.

Use of ADP To Identify. Returns in Need of Audit

Action

Computers in regional service centers are programed with criteria to identify income tax returns

having characteristics that indicate audit potential.

The returns so identified by the computer are then

manually inspected to select those most in need of

audit. Computer classification greatly reduces technical time needed in selecting returns for audit. -

In 1966 approximately 13 man-years or $102,000

were saved with five regions participating in the program. Increased savings are anticipated in 1967,

when the program is scheduled to become operational nationwide.

Organization Structures Streamlined

During the year

a number of changes were made

in the alcohol and tobacco tax organizational

structure in the field to promote efficiency and

economy in operations. Branch offices at Buffalo,

N.Y.; Charleston, W. Va.; Omaha, Nebr.; and

Milwaukee, Wis., were closed following determinations that the effects of these actions would not prove

detrimental to alcohol and tobacco industry operations or law enforcement activities.

The plan to consolidate local office collection

force organizations into one or two central organizations for each district was continued during the past

year. Over 80 such consolidations were made resulting in savings of 86 man-years and $590,000. In

addition, processing work is being shifted to one

or two central locations in each district where the

advantages of bulk processing will be realized. Since

the duties connected with contacting taxpayers have

not been removed from these local offices, the service offered by them to the taxpayer has not been

reduced.

Expanded Temporary Assistor Staffing

Limited tests started in 1965 were expanded during the last filing period to determine the feasibility

of using temporary employees to perform certain

taxpayer assistance duties which formerly were handled by permanent technical and semitechnical employees detailed from other activities. Evaluation

of test results showed that the 44 temporary manyears employed for this purpose released at least 33

technical man-years for productive enforcement

activities, withouta decrease in the quality of assistance rendered. Savings in salary differential

totaled $97,000. For 1967, 150 temporary manyears have been authorized for similar taxpayer assistancework.

Automated Sorter Expected To Expedite Mail Handling in Service Centers

An automated mail sorter designed specifically for

use in Internal Revenue Service Centers has been

delivered to the Southeast Service Center. The prototype has been tested and will be fully operational

ona pilot basis in 1967. Nicknamed "SCAMP"

(Service Center Automated Mail Processor), the

principal feature of this machine is an ability to read

preprinted code markings on the face of the return

envelope included in the income tax package mailed

to each taxpayer at the end of the year. The preprinted code markings are different for each district

office and for each type of return enabling the mechanical sorting of the coded envelopes by district

into the three categories of 1040 nonbusiness 1040

business and farm, and 1040A. SCAMP is ex~ccted

to process these envelopes at the rate of 30,000 per

hour, maintaining an automatic count by district

and return category, and transporting them to personnel who extract the returns and other contents.

An electronic candling device guards against failure

to remove documents from envelopes. An additional feature, still in the developmental state, is the

automatic detection of bank check remittances by

sensing the magnetic ink on the enclosed checks and

separating this mail from nonremittance returns.

63
ANNUAL REPORT * CHAPTER NINE

Magnetic Tape Rehabilitation Saves Over $5 Per

Reel

A magnetic tape rehabilitation function has been

put into operation at the National Computer Center. The equipment which has been acquired enWes the Computer Center to clean, repair, and test

all tapes as necessary. Tapes will be shipped from

the service centers and the IRS Data Center to

the Computer Center for this service.

It is anticipated that 90 percent of all regular

tapes in inventory can be restored to prime processing

condition at a cost of approximately $1.50 per reel.

By comparison, the rehabilitation of tape through

commercial sources runs from $7.00 to $11.00 per

reel, depending on contract quantities. More important, rehabilitation is effective low-cost insurance

against tape failure in critical processing operations.

Processing of Information Document Data on Magnetic Tape From Payers Proves Practicable

Pilot project testing during 1966 has proved the

practicability ofreceiving from employers and payers

magnetic tape records concerning Form W-2 wage

and tax data, and Form 1099 or 1087 information

retum data. The pilot test involved receipt, from

70 participants, of about 18 milhon data records on

599 reels of magnetic tape, of which 44 reels required translation to a recording code compatible

with Service equipment.

Substantial savings to the Service will result since

transcribing data frommillions of paper documents

to punched cards and subsequent conversion of data

to magnetic tape is eliniinated. Savings to payers

include elimination of specified paper information

return copy previously filed with the Service, although a paper document still must be furnished to

the employee or payee. A combination of unduplicated magnetic tape records and paper returns

also is acceptable.

A new revenue procedure specifying acceptable

tape formats and other details has been issued in

response to over 900 inquiries during the year. Cooperation between pilot test participants and the

Service has been most gratifying this year.

Preaddressed Labels Speed Return Processing

A two-part "piggyback" mailing label is affixed

to Form 1040 individual and Form 1120 corporation income tax returns. Both parts, one on top of

the other, bear the taxpayer's name, address, and

64

account number as shown by the master file. If

the taxpayer doeg not use the form sent to him, he

is requested to remove the top label and affix it to

the return which he does use. Expericn~c in the

Southeast and Mid-AtIantic Regions ,hherr the

labels

were used for the 1965 tax year indicates that

51 percent of the Form 1040 taxpayers filed returns

with the preprinted label, and of these, 15 percent

availed themselves of the opportunity of transferring

the top label to a return otherthan the form received

in the mail. Taxpayer use of the preaddressed

labels contributes to faster and more accurate processing of returns, and generates substantial manpower savings in the Service.

Reports Management Program Activity High

Emphasis in the Reports Management Program

of the Service is placed upon designing the most

efficient reporting systems which will satisfy the information requirements of management. Techniques used to achieve this goal include elimination

of duplication in source reports, integration of reporting systems across functional lines, incorporation of the reporting elements needed by each level

of management into the system and design of reports tailored to meet these specific requirements,

and utilization of the Service's ADP equipment

where automated processing will result in a net savings of time or costs. Service automation has made

feasible a number of management information rcport requirements which could not be economically

provided by less sophisticated processing methods.

Development of requirements, added to maintenance and review of manual and automated systems

introduced in prior years, has resulted in increased

activity involving all functional operations of the

Service.

PERSONNEL, TRAINING PROGRAMS IMPROVE

INTERNAL AND EXTERNAL OPERATIONS

personnel and training programs continued to cmphasize support fo

'

r management objectives and

development of positive means to assist managers

and supervisors in accomplishing program objectives economically, efficiently, and with the fullest

possible utilization of human resources, and in providing the highest quality of service to the public.

Following are some of this year's highlights in these

areas:

MANAGEMENT ACTIVITIES

Planned Redeployment Eases Impact of OrganIzational Change on Employees

One of the major personnel problems of the Service results from the gradual conversion from manual

operations to automatic data processing. An active

redeployment program for the staff affected is continuing as additional processing functions are moved

from the district offices to the regional service centers.

The redeployment program is based on a determination to retain and utilize the skills and abilities

of experienced personnel, and a firm commitment to

plan and conduct necessary organizational changes

in ways that minimize adverse impact on employees.

The key elements in the program are: (1) Plans to

identifv and utilize affected employees are made an

integral part of initial planning, allowing the lead

time required for effecting personnel adjustments;

(2) full advance information is given employees and

employee groups regarding the changes, to insure

understanding and cooperation in making adjustments; (3) intensive placement and training programs are developed, designed to open up new employment opportunities for affected employees; and

(4) special personnel procedures and techniques,

developed jointly with the Civil Service Commission, provide increased flexibility in appointments,

details, and reassignments to other positions.

The personnel redeployment program being carried on in the data processing conversion is described on p. 15.

During the year the redeployment concept and

techniques developed for the ADP phase-in were cxtended to personnel affected by the consolidation

of office collection functions from some of the

smaller posts of duty to larger offices, usually at the

district headquarters. This approach was also used

with employees of three area service center,; engaged

in activities connected with non-tax related data

processing, which were transferred to the new IRS

Data Center. While large numbers of employees

were not involved in these office collection and service center changes, the Service's experience in these

transfers was very satisfactory, indicating that the

redeployment approach works to the mutual advantage of employees, the Service, and the taxpayer.

Executive Selection and Development Enters Its

Second Decade

The Executive Selection and Development Program entered its second decade with the first woman

trainee included among the 17 candidates selected

from over 300 federal career nominces.

Since its establishment in 1955, the Executive

Selection and Development Program has become

the major route into the Service's corps of general

executives. It has graduated I 11 carefully chosen

candidates; of this number, 100 continue to serve

in key executive positions, including 2 regional commissioners and 29 district directors. In addition,

31 incumbent executives have received similar training in this program.

Selected individuals, who are chosen through

competition open to all qualified employees, receive

broad training in Service functions and management techniques, and remain under continuing appraisal as they progress step by step in developmental

assignments. This year attention was focused on

expanding the exposure of trainees to a wider variety

of managerial situations, styles and methods of operations. Seminars were held with high level business and Federal executives. This provided an

insight into the management philosophies and practices of industry and other government organizations

for comparison with and evaluation against those of

the Service. Top Service officials contributed to

this objective by maintaining a closer classroom

training and work assignment relationship with

sclectees. Guidelines were prepared to assure systematic continuing developmental opportunities for

graduates beyond the formal training period.

The steady improvement in operations and efficiency of the Service and its growing recognition as

one of the better managed agencies of the Government can be attributed in large part to the upgrading

of managerial and executive skills through this

program.

In response to widespread outside interest, a

brochure is being published describing the Executive Selection and DevelopmentProgram.

Career Programs Emphasize Identification and

Development of Supervisors and Managers

Further notable progress was made in the installation of a comprehensive program for selection and

development of supervisory and managerial personnel. Nationwide career development programs for

the intelligence and appellate activities were begun

and regional career plans were developed for selection of supervisors and managers in the collection

and audit activities. In data processing a 3-year

65
i

I

ANNUAL REPORT e CHAPTER NINE

EXECUTIVE SELECTION AND DEVELOPMENT TRAINEES-1966

Top, left to right: A. James Golato, John Weber, Michael Sassi, Gerald Portney, Michael DeGuire, Edmund Vitkus, T. Blair Evans, John West, William Waters, William Bartlow, Dean Morrow. Bottom, left

to right: Edwin Trainor, Joseph McGowan, Mary Taylor, Gordon Anderson, James Stigamire, Joseph

Davis.

training program leading to GS-1 4 managerial positions was begun with six employees, GS-1 I and

CS- 1 2, selected in nationwide competition.

Individually tailored training opportunities are

used to develop employees selected under these

career programs before they are placed in a supervisory or managerial position. As part of the

career programs, a counseling program was developed for use throughout the Service. This counseling not only assists selected individuals in preparing

a developmental plan, but also provides to those who

were not placed on career program registers assistance and guidance in assessing their potential and

developing their ability. To further facilitate cffective implementation of career programs, a Management Development Training Handbook was

prepared. It provides management with a flexible

guide that expresses the concepts and objectives associated with employee development activities.

To meet training needs at the first line supervisory

level, a program dealing with the human relations,

personnel, and work management aspects of supervision was implemented. In addition, a management analysis training course was begun for employces who use this skill in their program work.

A concerted cffort to improve supervisory counseling skills, through intensive emphasis on case-study

and role-playing activities, has been launched. Approximately 30 headquarters and field representatives participated this ycar in a workshop to develop

a prototype training program, and to train instruc.

tors. Field offices will be conducting training programs to help strengthen supervisors' skills in counseling and coaching, a vital aspect of their overall

responsibilities.

A supervisory training program specifically designed for supervisors in the delinquent accounts and

returns area of the collection function was conducted

for supervisors who had not previously completed

the program. This program is designed to assist

supervisors in meeting specialized functional supervisory job requirements associated with their activity,

as opposed to general supervisory training dealing

with the principles and concepts of supervision that

are applicable to all functional areas. A thorough

ev,duation of the pilot program conducted last year

was made. As a result of this analysis and evaluation, groundwork was laid for development of additional specialized supervisory training programs for

other functional areas.

Groundwork was also laid for beginning develop.

mental work on a functional manager's techniques

course to provide specialized managerial training

dealing with the managerial responsibilities peculiar

to the function. Training needs in the appellate

management area were identified during the year

arid development work will be initiated on an appellate functional managerial practice course for

appellate managers.

66

MANAGEMENT ACTIVITIES

As a continuing part of managerial development

efforts a number of highly qualified employees were

selected during the year to participate in intensive

university mid-career development programs for periods ranging from one semester to a full academic

year.

Administrative Intern Program Broadened

For a number of years the Service has had an Administrative Intern Program designed to develop

specially selected recruits or employees to fill professional administrative positions in the National

Office. As an extension of this program, a "compliance option" was added during the year, This

option enables employees who are currently working in field offices to be considered for staff positions

in National Office compliance divisions; e.g., audit,

collections, etc. A small number of journeymen and

senior employees were selected this year

to

participate

in a centralized training program and to work on

rotational job assignments. After completing the

training program and working a number of assignments in the various National Office compliance divisions, these employees will be placed in permanent

staff positions.

Incentive Awards Program Continues Upswing

An unprecedented volume of employee suggestions to improve operations and effect economics

was received, processed, and recognized through the

payment of cash awards. The number of suggestions received and adopted and the amount of estimated savings exceeded by 21 percent the alltime

record established last fiscal year. In addition, employees were recognized in greater number than ever

before for special services and performance awards,

exceeding by 62 percent the previous peak, which

was reached last year. Some of this change is attributable to liberalized IRS requirements for highquality step increases, which placed the Service on

the same basis as other Government agencies, and

resulted in 1,038 such increases this year, as against

only 318 the preceding one.

A much needed tool related to this program was

provided forService supervisors with the publication

of the Supervisors' Guide for Performance Evalua.

tion and Awards. The Guide contains procedural

and other information drawn together from a number of sources so that it is available in one complete,

easy-to-use document. It should result in a more

effective use of the incentives and appraisal techniques necessary to good management. The Guide

has won favorable acclaim, not only within the

Service, but also from many other Federal agencies

,

including the Civil Service Commission.

Service Recruiters Active on College Campuses

Trained and experienced recruitment teams from

all district and regional offices visited more than 600

colleges and universities throughout the United

States to recruit young college-trained people. Attractive and informative recruiting brochures were

sent to the schools for distribution to students

through their placement offices or faculty members.

In addition, more than 50,000 copies were sent to

students by direct mail. The Service also participated in "Career Day" festivities on a large number

of campuses. To stimulate student interest in Service careers, extensive use was made of sound films,

posters, and exhibits, as well as advertising in college

newspapers and employment information publications widely circulated to college students.

Unprecedented numbers of enforcement-typc

personnel retired during the year, to take advantage

of the attractive annuity benefits of Public Law 89-

205. In replacing these losses and the losses from

normal attrition, and hiring for the m6dcst hurnber of additional positions provided by an increase

in the Service's appropriation, nearly 3,000 enforcement position vacancies were filled during this ycajls

recruiting season.

On June 5, 1966, the Civil Service Commission

authorized increases in the pay rates for GS-5, 7,

and 9 accountants, auditors, and internal revenue

agents to overcome handicaps in recruiting because

of higher salary offers of private employers. This

authority also permitted the Service to hire accounting students under work-study agreements with colleges, juniors at grade GS-3 and seniors at GS-4.

After 6 months of training and graduation, these

students may be given carcer-conditional appointmcnts noncompetitively. Plans were made to hire

about 200 students during the coining year.under

this arrangement.

Recruiting Gives Support for New Activities and

Offices

The Western, Southwest, and Central Service

Centers, which began processing of individual rcturns during the 1966 filing season, successfully recruited and trained approximately 4,500 new enn67
ANNUAL REPORT o CHAPTER NINE

ployees. It was also necessary to recruit in larger

numbers than expected, to make up for turnover of

seasonal employees in the older service centers,

Southeast and Mid-Atlantic. In spite of the high

rate of employment in our present economy, Service

recruiting was successful in finding quality employees to meet seasonal staffing goals in each service

center.

A major accomplishment was the establishment

and initial staffing of the IRS Data Center in Detroit. Administrative arrangements were worked

out to permit timely local actions, through. delegated

authority, with technical assistance and support as

required from the regional and National Office level.

Another new activity which got off to a good start

was the National Training Center, which was staffed

during the year with high-caliber technical and administrative personnel, mostly obtained from other

parts of the Service.

Man-years realized during each of the past 2 years

and employees on rolls at the close of 1965 and 1966

are shown in the following table: .

Personnel summary

Ms. as, Number on rolls

Location and type

.a tell at

y...

1965 1966 1965 1966

Service, total............ __ -------------- 62, D98 63,5DS 60,360 61,699

p 'nument ..... -------------

5,

444

5'

51

1

56,345 57,365

Temporary ............................ :654 4:997 4,015 4,324

National (AIR. ............................. . 3.891 ~ 3,982 3,614 3,626

Field ranice, total 3.................. 58,217 _~9,52G 56,746 58,063

Date procs,sainf, total ................... 17.563 18,839 16,426 17

IS'

Collection,

tells

_

--- 10,288 10, M 10,015 9:774

R sense officers... ................

an

6 383 fi 201 5,989

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

3: 905 3:

963 3,814 3.785

Audit. total................... ........ 19,654 _,!!Ln 19,686 20,137

Raw-, office ,dir ate---- 12 45D 1 2 473 12 178 12 561

a. 'a

and

3:

126

3 :

093

3

3 :019 3:039

Other

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

4,278 4,4114 4,490 4,537

Intelligence, total---------------------- 2.325 2,343 2.336 2.350

special other agents ... ------ 1,722 1,73 1, 71' 1,721

......................... 603 611 U4 629

Alcohol and tobacco tax, total-... -------- 2,709 2,620 2,665 2,598

In'taunt.n.---------- 143 937 930 939

1.'.prfN In 1ramli;i V ............

45,

435 :1591

4

45260

453

410

Other ---------------- ------------ 972 813 959 796

Appellate, total. .. --------------------- 1,492 1,602 1,531 1,647

A ellate 7

1

g 1 677 735

An Its-

---------

151 157 153

16,

Other.._ ------- I., ..... -1 .... 677 728 713 751

Administration__ ----------- _ 2,639 2,6113 2,704 1,113

g

R cournal ................

iii-I

gamal Inspection.----- ......

742

60

742

639

7

51

630

761

644

:ncludd:: terminal leaverman-yurt for entire Semice.

rclu Ifice of

into

national Ooerations, National Computer Center, and IRS

Data Center.

I Includes onmuse employees hired locally (4 in 1965 and 6 in 1966).

Operation MUST Presents New Challenges in Manpower Utilization

The Service has long'shared the interest of the

Civil Service Commission and the Buredu of the

Budget in achieving the underlying obj~ctives of

Operation MUST (Maximum Utilization of Skills

and Training)-those of developing new or littleused sources of manpower, making full utilization

of existing skills, restructuring positions for better

manpower utilization, and training to develop full

potential of employees.

In line with these objectives, the Service has developed recruitment programs among minority

groups and other disadvantaged persons, reviewed

existing employee skills to bring to fight new talents,

engineered positions to achieve better manpower

u tiiliization, and continued with one of the most comprehersive training programs in the Federal Governmcnt.

In May and June a pilot test was conducted of a

training program designed to tap junior colleges and

other 2-year schools for GSL4 recruits with the

potential for planned advancement to revenue officer (trainee) positions at GS-5. If successful, this

program will greatly broaden the recruitment base

for revenue. Officer recruits, and, possibly, open up

new sources of supply for other occupations.

The program and innovations undertaken to

achieve the MUST objectives have been given additional urgency by the concurrent broad efforts of

theService to provide equal employment and promotional opportunities for all candidates and employees. Considerable progress towards equal employment goals has been achieved as the result of

special emphasis programs for minority groups,

women, and handicapped persons, and several economic and educational opportunity programs for

young people and disadvantaged individuals.

Equal Opportunity in Service Occupations

Equal employment opportunity coordinators, designated for all regional, district, and service center

offices, have been made responsible for monitoring

equal employment plans and programs in their area

and for reporting problem areas requiring additional attention to the heads of their offices. Local

coordinators also have been designated to serve as

minority group contacts at about 250 local posts of

duty. This has greatly improved cooperation with

MANAGEMENT ACTIVITIES

organized minority group and community leaders,

high schools, and colleges, and sharpened their interest in the employment possibilities the Service

offers minority group members.

Equal employment opportunity seminars for supervisors were held at the National Office and in

Little Rock, St. Louis, and Greensboro. These

seminars are designed to promote supervisory-employee understanding of Service policy and to

stimulate open discussions of local problems faced

in implementing this policy. Because of the success

of these initial seminars, the program will be expanded rapidly to other offices. ,

There is a continuing increase in the number of

minority group employees moving into enforcement

and other professional positions. During the year,

two minority group members were selected, trained,

and appointed to assistant district director positions,

and a third one was selected for training for a similar

executive position during the coming year.

As of December 1965, the Service had 478 women

in enforcement or technical positions--positions

often considered by the general public as I'men's"

jobs-such as internal revenue agent, attorney, estate tax examiner, tax law specialist, and revenue officer. This year, for the first time, a woman was

chosen for the Executive Selection and Development Program from which the highest executive

positions of the Service are filled. The increases to

date in the employment of women in professional,

technical, and executive positions are expected to

stimulate even further increases in the future.

The Service continued its emphasis on placing

persons with physical or other handicaps in duties

they can successfully perform. Past success stimulated increased efforts in recruiting at special schools

for the handicapped and closer working relationship

with State and local 'rehabilitation agencies. The

Service received the Blinded Veterans Association

Annual Award as "Employer of the Year." The

Treasury Department won the "Employer of the

Year Award" granted by the Washington, D.C.,

Chapter of the National Association of the Physically

Handicapped, in which achievements of the Service

played a most important role. The personnel officer

of theAustin Service Center was presented a citation

from the Governor of the State of Texas in recognition of outstanding service in the employment of the

handicapped.

Economic and Educational Opportunity Programs

The Service has been an active participant in the

various War on Poverty Programs aimed at providing work-training opportunities for young people

and disadvantaged individuals. As of May 31

there were 696 persons participating in such yearround programs, of whom 582 were minority group

members. For the most part they are paid from

funds granted to local schools and sponsoring organizations by other Federal agencies. The participants

benefit from these work-training assignments both

by the training they receive to perform capably on

jobs of increasing difficulty, and also by the financial

help provided, to stay in school and prepare themselves for even better jobs in the future.

In addition, approximately 800 students and nonstudent youths will be working for the Service during the summer months. These appointments are

financed by the Service. With the year-round appointees, about 1,500 young people a year will receive some kind of work-training assistance in IRS.

Automated Personnel Record and Document System Under Development

The first phase of what will become an automated

system for manpower management information and

personnel reporting and document output is now

being developed. This initial effort will result in

the establishment of a basic centralized computer

system that will automatically prepare personnel

action and related documents, maintain statistical

records on employees and positions, and produce

outputs to meet various reporting requirements.

Future development of this basic system contemplates

incorporating data relating to education, training

and skills of employees, data for analyzing the

dynamics of the work force (e.g., turnover), and

data to assist the managerin evaluating the progress

and impact of special employment programs and

policies.

Employee Organization Activity Increases

During the year, the number of employees in units

exclusively represented by employee organizations

increased by approximately 7,000. At the end of

the year, more than 27,000 employees in 41 districts and 3 service centers were in units exclusively

represented by 3 employee organizations. In addition to continuing consultation with organized

groups, the Service has now negotiated its third

formal collective bargaining agreement (in the Bos68

69
1!

ANNUAL REPORT e CHAPTER NINE

ton District). Aside from basic provisions, the

Boston agreement contains clauses on employee organization representatives, leave, promotions, consultation, and grievances for the approximately 1,000

nonsupervisory employees affected. Other formal

steps included submission to advisory arbitration of

two disputes relating to appropriate units for representation under Executive Order 10988, which

provides for union recognition and employee representation elections.

Employee Attitudes Sampled in Seven Districts

A high percentage of employees in seven large districts (over 4200 employees) responded to a survey

designed to communicate their attitudes and opinions directly to management. Much that they had

to say was similar to results of previous years in what

has been a continuing program of attitude surveys

in different districts each year. Responses were

evaluated to attain understanding of employee

satisfactions and dissatisfactions and to provide guidance for improvement in Service operations and

personnel policies. There are variations between

districts, divisions, arid occupational groups; but

employees generally expressed a high degree of satisfaction with the work they perform, their coworkers,

their immediate supervisors, the benefits program,

the training they received, their opportunity for selfreliance, and the knowledge they have of what is expected in their jobs. They reported that the actual

work they do is the most significant aspect of their

job satisfaction. Varying degrees of dissatisfaction

were expressed over such matters as promotions,

reports, and production requirements. Followup

evaluations and plans for corrections are being made

in these areas.

Training for Better Taxpayer Service

Several new training programs designed to provide faster and. better taxpayer service through written and oral communications were conducted during

the year. Communications training was conducted

for employees in the appellate area who meet and

hold conferences with taxpayers and their counsel.

Special training in the interpretative aspect of tax

law was given to employees who assist taxpayers

and answer taxpayer questions. This training is

designed to enable employees to answer taxpayer

questions in nonlegal ternis and thereby assist the

taxpayer in determining how the various tax laws

apply to his individual return. In addition, a completely new writing improvement course for all Service employees was developed, and telephone courtesy

training efforts were continued during the ~car.

For some years the Service has providtd instructional material on preparing various types of tax returns to schools, industry, associations, and other

groups, to assist them in conducting training to meet

their special needs. During the past year a survey

was conducted to determine the amount of local

activity in these programs and how the Service might

better meet the needs of taxpayers. Several new

programs were tested in the field including a Small

Business Teaching Taxes Program. Taxpayer assistance institutes for tax practitioners and non-Service tax assistors were also conducted at local offices

throughout the country.

Assistance was given to State and local governments in meeting their training needs by providing

selected training materials which could be used as a

basis for conducting or developing training programs adapted to local needs. In areas where the

local training requirements are similar to those of

the Service, State and local government employees

participated in Service training programs. In addition, through the Agency for International Development, assistance was given to foreign governments in developing training programs tornect their

country's special requirements. Working closely

with the Service's Foreign Tax Assistance Staff, a

basic orientation program was developed that would

be applicable to tax programs throughout the world.

Instruction, in the case of Latin American countries

requesting assistance, was conducted largely by Service instructors who speak Spanish. The Director of

theTraining Division visited several Latin American

countries to meet with members of the Foreign Tax

Assistance Teams and Latin American tax officials

to discuss approaches to meeting local training needs.

The feasibility of establishing a training school in

a host LatinAmerican country to provide centralized

training for Latin American officials was also explored during the trip.

Improved Training Methods and Operations

Following two ycars successful experience with the

Western Regional Training Center, a second regional center was activated this year in the Central

Region. Additional centers will be established in

each of the five remaining regions during the next

70

MANAGEMENT ACTIVITIES

three years. The National Training Center, designed to meet Servicewide needs on a centralized

basis, completed its first year of operations. Highly

successful, it has demonstrated that new and better

methods of course development and training techniques can be developed by a highly specialized staff

that has the facilities to carry out operations on a

centralized basis.

New advances were made in the use of specialized

instructional equipment and techniques. One

highly successful use of automated teaching equipment was conducted in the data processing area duringtheyear. An automated training program using

the latest audiovisual techniques was designed to

provide uniform training for 1,500 service centertax

examiners hired during the peak filing period to

process individual tax returns. Not only did the

program provide uniform training for all employees

in the five centers in which it was used but instruction as previously conducted was cut by one full day

of classroom time. The rate of error in preparing returns for the next processing step was substantially

reduced, and a careful monitoring of employee productivity after completion of the training revealed

a 32-percent increase in productivity which was in

part attributed to the new training technique. The

feasibility of extending this type of instruction *to

other training programs is now being pursued.

A study of organizational developmental efforts

in the Southwest Region was continued during the

year. This study is designed to measure the amount

and kind of change in employee effectiveness and

productivity resulting from efforts to develop the

total work group as one unit rather than the individual development of skills related to the

function.

Operational Training Updated and Strengthened

As a part of continuing efforts to make training

of maximum value, a number of existing courses

designed to train employees hired to fill entrancelevel jobs in the field offices were updated during the

year.

In the area of audit training, the income tax law

unit of the Basic Revenue Agent Course was completAy revised and updated. In addition, the units

covering taxpayer relations, auditing techniques, report writing, and fraud awareness were extensively

rewritten. A new format for the classroom use

of course materials was initiated providing for more

meaningful use of materials- The total thrust of

this course reorganization is toward a three-part

career training program which coordinates the rcvenue agent's development with the level of his case

assignment. The former basic course mentioned

above becomes Part I in this revenue agent training program. Updating of course material in the

future will be done on a continuing basis by the

National Training Center to keep materials current

and eliminate the need for an extensive revision at

one time.

A new Insurance Company Tax Law Course was

developed as well as specialized training for revenuc agents engaged in international issue examinations. In the alcohol and tobacco tax area both

basic enforcement and permissive training programs

for new recruits were revised and updated. In the

collection area, phase I of the revenue officer trainee

program was completely revised and updated, and

materials on ADP procedures were also developed

for purposes of training.

IMPROVEMENTS AND ECONOMIES PRODUCED

BY BETTER FACILITIES MANAGEMENT

Office Space Improved in Many Localities

The Service housed its employees and equipment

in 11 A million square feet of space in 1,270 buildings and 1,090 cities across the Nation. While 5.3

million square feet of this space was in federallyowned buildings, 5.8 million was leased at an annnal

cost of $19.3 million.

The Service's Space Management Program

moved forward along a number of avenues toward

providing a professional working environment for

its employees while improving the accessibility and

atmosphere of all of its offices for the benefit of the

taxpaying public. Nearly 5,000 employers in district or major local offices were moved into new or

renovated quarters. Less significant improvements

were made in 122 other locations. In addition, the

appearance and public facilities of 41 offices were

improved as part of the President's Program on

Beautification of Federal Buildings. A few unsatisfactory major offices remain, but these are expected

to be cleared up within the next few years by the

completion of projected Federal buildings, including

those in Chicago, Indianapolis, and Newark. District headquarters offices will move into new Federal

buildings in Detroit; Augusta, Maine; Baltimore;

71
ANNUAL REPORT

Cleveland; St. Paul; Jacksonville, Fla. Jortsmouth,

N.H.; and Des Moines during 1967; and the Nashvine space will be substantially renovated. Ile

following table reflects the continued emphasis on

improving field offices:

New or substantially renovated space

District offices headquarters Major local .1k., Other 1.1.1 offical

....... fthlbs, Mass K-~

Call ch.y:,~.~`W`y-.

Portland. Chat.

Los Angeles, alit.

11`1~.`Nlhy, M Me

9

0:1kilard, 3 Crop Calif. a 3' `

31 localities.

Meanwhile, the Service has launched a concerted

campaign to improve its smaller offices, many of

which have been in poor space for a number of

years. This program has been given added impctus by the PresidenCs Commission on Employment of the Physically Handicapped and by the administration's current program to improve the service given citizens by all Federal agencies. A primary goal will be to remove from Service offices

architectural barriers to handicapped taxpayers and

employees. The first significant results from this

undertaking are expected during 1967.

Other projects have been pushed in an effort to

improve service to the public, These include a test

of new taxpayer assistance areas which will provide

the taxpayers with quicker, more efficient service

with less "run-around" and greater privacy.

Furniture Program Nears Completion; Emphasis

Shifts to Office Machines

The Service has almost completed its 4-year program to replace outdated and worn furniture with

modern, functional-type furniture specially designed to improve operating efficiency. All major

field offices are now so equipped. The emphasis in

the next few years will be shifted to office machines.

Here, too, employees have been handicapped for a

long time by too few machines-many worn out

or of inferior quality. Ile aim is to provide all offices with additional and up-to-date equipment

geared to maximum efficiency under changing procedures and new programs. This will also help increase employee productivity and job satisfaction

and will result in further improvements in service

to taxpayers.

72

9 CHAPTER NINE

Automobile Travel Plan Cuts Costs

Use of General Services Administration (GSA)

cars to provide transportation for empl9yees at the

least cost to Government resulted in rpany objeclions from employees who preferred, to use their

own cars. To meet these objections a sliding scaleoptional use automotive travel plan was developed.

This gives high-mileage drivers the option of driving a GSA car, or their own car at reimbursement

rates which approximate the rates paid for GSA

cars. It also gives employees considerable latitude

as to which type of transportation they prefer to

use while still preserving savings to the Service

derived from the use of GSA cars. This Year savings amounted to $674,000. Although the sliding

scale plan has largely overcome employee dissatisfaction, the Service is continuing to work with cniployee organizations to improve the plan to provide

the most equitable system possible for reimbursement.

Disabling Injuries Reduced 14 Percent

During this first full year of operation under President Johnson's Mission SAFETY-70, the Service

had 3.0 disabling injuries per million man-hours

worked. This 14-percent reduction in the disabling

injury frequency rate is a real stride toward the

President's stated goal of a 30-pcrcent overall reduction by 1970. During the year, safety awards were

presented to 29 district offices and service centers in

recognition of either I or more years' operations or

1 million man-hours of operations without sustaining a single disabling injury.

Vehicle Safety Improves

The Service developed a training film entitled

"Take Time to Think" which is being shown to as

many of the 20,000 Service drivers as possible. This

film, designed to improve driver's attitudes, has had

a definite effect on reducing motor vehicle accident

frequency rate. Approximately 101 million miles

were driven on official business during calendar

year 1965 with only 822 accidents reported. This is

a rate of 8.1 accidents per million miles driven, a

creditable reduction from the 8.5 rate of the prior 2

calendar years.

Paperwork Management Results in Cost Reduction

The records and paperwork management program continued to make significant contributions to

MANAGEMENT ACTIVITIES

the cost reduction efforts of the Service. During the

year about 272,000 cubic feet of inactive records

were either retired to Federal records centers or destroyed. As more than 256,000 cubic feet of newly

acquired or reactivated records piled up, removal of

the inactive records from office-type, space resulted

ina savings of almost $940,000 by making this space

and file equipment available for reuse. Records

holdings and disposition activities are shown in the

following table:

Records holdings and disposition activities

status

On hand July I _-------- ----- _ .... __ ....

Di,pmta...................... ........ _...

=0 -----------------

On hand June 30. __-------- _ ------------_-

Were. of -d,

(al

b

1, test)

1965

603,021

244,724

119,458

125,266

599,342

1966

599,342

271,801

... :

165

160 M

587,720

A significant part of efforts to streamline and

modernize the operations of the Service is devoted

to the forms management program. Continued attention was given to the development and standardization of needed fornis and form letters and the

elimination of unnecessary ones. Total Service forms

and form letters were reduced by 1.5 percent this

year. National Office prescribed forms increased

by 11.8 percent, regional standardized fornis decreased by 1.9 percent, distriL office forms decreased

by 24.6 percent, and service center forms decreased

by 13.9 percent. The summary results of this year's

forms management activities is shown in the following table:

Fordes and Farad letters

N-flind by ,OP-nus inventory

NMI

dave~

P,d

Elidel.

-.led

Closing

never.

tc'y

c Net

hangs

Total__ ------------------

16, "s 3,725 3,990 1~a -255

Natio

no I Office (used at headqtert...

_

Heard store, offices .,826 1,197 629 5,394 +568

he.c1q.,a,rierscareponents or 2 or

,ffi

IN

.,cg di trkt offices)......

'

local qls~rGi~

' "" (used '

8,145 1,320 1,475 7,990 -155

and that, .b.rdic.

WACO t to fh-!:: __ '

339

851 1 572

-

cen ers ...... - ~ : 512

Data Center

1: 833 7

11

1,0

13

.............. 1: 578 -255

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

I

fil

1

2 99 +99

Graduated Withholding Program Printing Crises

Met

As a result of new legislation described on page

55, it was necessary to print on a crash basis (1)

new Employer's Tax Guides (Circular E), (2)

special information for employees, and (3) supplies

of Employee's Withholding Exemption Certificates

(W-4). Four million copies of Circular E and

2.2 million packages containing copies of W-4 and

information for employees were labeled and mailed

by regional service centers. Backup supplies were

furnished district offices. These items were dis.

tributed and in the hands of employers about a

month before the changeover to the new rates.

Telecommunications Improvements Help Service

and Taxpayers

The Service transmitted and received more information by telephone, telegraph, and data transmission modes than ever before. A better grade of

telephone service for taxpayers and the general public was provided and the telecommunications services essential to support operating programs were

improved. In managing services and facilities for

conveying voice, image, data, and other mess

.

age in

formation, the Service is pioneering in a rapidly

changing telecommunications field. Changes in

Service operations, such as the conversion to automatic data processing, and the centralization of tax

accounting, collection and audit functions, require

more versatile telephone systems and services to provide adequate voice communications within the

Service and to the general public. This year's tele.

communications management program emphasized

(I ) ensuring effective communications at a minimum total cost consistent with efficient operation

and reliability, and (2) providing the equipment and

circuitry necessary for essential communications,

New guidelines and criteria for determining telephone instruments, circuitry, and related equipment

needed in all Service offices have been issued. One

of these guidelines coupled with work methods prescribed for filing period operations in district headquarters should result in a 20-percent increase in

productive time of telephone assistance people.

Additionally, pilot installations of a centralized telephone-answering service (Centiphone) described

73
ANNUAL REPORT so CHAPTER NINE

on page 4 indicates promising potential benefits

in manpower utilization and taxpayer assistance.

A review of Service teletypewriter needs during the

year resulted in an annual savings of more than

$45,000.

FINANCIAL MANAGEMENT AIDED BY NEW

PROGRAMS

Toget maximum return for every dollar invested,

the Service must put its money and manpower where

the most essential and productive work is. That is

the objective of financial management. Achieving

this objective requires the closest coordination and

teamwork among all officials throughout the

Service.

The Service has taken a number of measures over

the past years to improve its allocation of resources.

These include the Long-Range Plan, the Taxpayer

Compliance Measurement Program, the Master File

ADP System, regional mergers, the Management

Improvement Program, work planning and control,

organizational and methods reviews, operating financial plans, reports of budget execution, grade

structure controls, streamlining of training courses,

and midyear reviews and adjustments of financial

resources.

To these measures several others were added this

year which have built upon the groundwork previously laid and which should have a beneficial effect

on management of Service resources. These additional measures included: The Planning-Programing-Budgeting System (PPBS), the Manpower

Utilization and Control (Position Management)

Handbook, the Cost Reduction Program, and expenditure restrictions.

a. The Planning-Programing-Budgeting Systern.-Undri-this system, which built upon theService's established long-range planning system, there

is a continual reevaluation of work programs in

terms of their objectives, costs, and benefits; and

alternative programs and objectives are studied and

compared on a cost-utility basis. Through this system, Service management officials should become

increasingly confident that they are allocating available resources to the most productive work. Operation of this system is more fully described on page 53.

b. Manpower Utilization and Control (Position

Management) Handbook.-This handbook places

renewed emphasis on the development of authorized

staffing patterns, periodic reviews of organizational

Structures, positions, work 7rinethods, and employee

utilization. It brings together many fa cets of position management already in effect,

'

aads certain

formal reviews, changes the methods of authorizing

positions and grades for certain categories, and establishes formal controls for grades GS-14 and 15.

This manpower utilization and control program is

designed to identify, prevent, and eliminate unnecessary organizational fragmentation, excessive

layering of supervisory levels, excessive use of assistants, improper design of jobs, outmoded work

methods, improper distribution of manpower, and

unnecessary levels of review.

c. The Cost Reduction Progrant.-This program

is an advancement over the previous Management

Improvement Program in that (1) annual costreduction goals are required, (2) report-, have to be

submitted showing progress toward achieving the

goals, (3) savings reported must be validated, and

(4) disposition of the savings must be accounted for

and considered in long-range planning and in development of the annual budget. Although estimated increases in employee productivity constitute

the bulk of the cost-reduction goals for the Service,

many individual projects and actions actually make

the increased productivity possible.

d. Expenditure Restrictions.-TIrough special

studies and economy measures, the Service has for

many years sought to reduce travel, communications,

procurement, and other costs in ways which would

not adversely affect law enforcement, and indeed

would release funds and personnel for strengthening

the Service's primary mission. Special emphasis was

again placed on these measures in 1966. Confronted with sharply rising commitments for a number of Federal programs, the President directed that

expenditures be reviewed and cut back wherever

possible. He set tight expenditure ceilings and called

upon all agencies to reduce travel costs, abolish or

defer the filling of vacancies, postpone or eliminate

purchases, and in general to take practical economy

measures to restrict expenditures.

In view of the essentially revenue producing nature of the Service work programs, the expenditure

restrictions had to be, and were, applied with a great

deal of prudence, to maintain revenue production

while reducing costs. As the program reports from

MANAGEMENT ACTIVITIES

other pages of this Annual Report disclose, the Service carried out and in many cases exceeded the

planned work programs and was still able to meet

the President's expenditure limitations.

The charts on the following page reflect the distribution of each dollar obligated in 1966, by function and object of expenditure. The distribution

of obligations in fiscal years 1965 and 1966 is shown

in the table below. For more detail by appropriation by activity, see table 27, page 138.

Appropriations and obligations

[in millions of dollars]

Appropriated I Obligated Percentage

Appropriation

obligated

.... ... ....

....

Salaries and expereas--------_--- ... 1966

IS

S IS 0

16.5 17. 1! IS. 2 98.9

R 0,,e account ng and Processing -

N -

i".

15h 3 159. !

SS : ,5

97.9 .Plium- --- ----------------

S

427.2 444.8 99.4 99.4

Total- 1 n. S 595.0

.. a "'. 0

Inc ...

so 1966 ---

------

+21

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

I Includes adjustments for appropriation transfers and pay Increase supplementals.

Man-years authorized and realized by appropriation for 1965 and 1966 (exclusive of reimbursements) are compared below:

of tax and administrative experts have provided onthe-spot assistance in those countries where agree.

ments have been worked out with AID. Most of

this assistance has been in South and Central America under the Alliance for Progress. Reimbursement

to the Service is provided by AID

Growth of the foreign tax assistance program is

reflected in the following figures showing reimbursementreceived:

Reimbursements for foreign tax assistance

[Dollars]

Yea,

1964 ... ... ................. -----------

:-----

R16161 ------- I--------: ---------------------------

Reimburse.

m.ol

637, 000

530 000

2

065:000

In,,.... over

prior year

637, ODO

893 000

535:ODO

Reimbursement is also received for services provided to other agencies and governments. These

services include: Collection of taxes for Puerto Rico;

providing requested tax information to various

states; and furnishing payroll services to other Treasury bureaus. The total reimbursements for 1966

amounted to $3.4 million, an increase of $ 1.1 million

over 1965.

Man-yea" authorized and realized

Authorized Realized Percentage

Appropriation ..Hard

1965 1966 1965 1966 1965 1966

Salaries and expens as . ..... 1,387 1,436 1,374 1,413 99.1 98 41 .

Revenue accoun

I

mr an

lf-'saing----------------- 19,385 20 495 19 202 20 494 99.1

,

C 100 0

onspliance--------------- _ 41,44

0

42:019 41:386 41:440 99.9

.

93,6

To

1

62

'

212 63 940 61 962

-

63 347 99.6 99 1

as. 966

.

------- +1: 728 --- ---- J 1: 38

5

......

.

......

(For more detail by appropriation by activity,

and also obligations by districts, regions

,

and National Office, see tables 26 and 27 on pp. 137 and

138.)

Reimbursable Services Increase

In the past few years the Service has cooperated

with the Agency for International Development

(AID) in providing technical assistance to foreign

governments in improving the administration and

enforcement of their tax laws. Not only has training been given to foreign tax officials, but also teams

Mailing of Salary Checks Recommended

A study of comparative cost of the distribution of

salary checks and bonds, through use of Service

personnel or by direct mailing from the disbursing

office to an address designated by the employee,

revealed that considerable saving could be achieved

through the latter method. A change over to direct

mailing has been recommended to the Treasury

Department.

Statistical Sampling Techniques Applied to Audit

of Vouchers

For some years the Service has experimented with

statistical sampling techniques in the audit of

vouchers. Public Law 88-521 of 1964, which authorized the application of such techniques to the

audit of vouchers under $100, confirms the feasibility of the Service's approach. The sampling plan

developed to carry out the authority granted under

the law may produce additional savings above those

realized under prior experimental procedures.

74 75
f ,

Collection of revenue41.4 cents

Audit of tax returns36.2 cents

76

ANNUAL REPORT e CHAPTER NINE

OBLIGATIONS BY ACTIVITY

Tax fraud and special

investigations 5.2 cents

Alcohol and tobacco tax

regulatory work 5.7 cents

Taxpayer conferences

and appeals 3.7 cents

All other* 7.8 cents

'Indud. Mints md atha WMIN) .,W-. 1.5; Iml "M- 2.4;

intmuon, 1.6; sbtistiml mporting, 0.7; nootin di-tim, 1.6.

OBLIGATIONS BY OBJECT OF EXPENDITURE

Salaries 87.8 cents

Travel 2.8 cents

All other 9.4 cents

MANAGEMENT ACTIVITIES

INSPECTION'S MISSION IS TO GUARD INTEGRITY

"Every Citizen Is Entitled to Have Completp-Conficlence in the Integrity of His Government"

President Johnson in prescribing standards of

ethical conduct for government officers and employees, stated: "Whereas government is based on

the consent of the governed, every citizen is entitled

to have complete confidence in the integrity of his

government. Each individual officer, employee, or

adviser of government must help to earn and must

honor that trust bv his own integrity and conduct in

all official actions."

The Nation's system of taxation is based on voluntary self-assessment. Such a system necessitates

that the taxpaying public have confidence in the

integrity and impartiality of officers and employees

of the Service. The Inspection Service's mission

is to constantly guard the integrity of the Service

from within and from attempts by persons outside

the Service to corrupt it, to insure that the Service

cams the confidence of the citizenry in honest and

impartial tax administration. In fulfifling this mission Inspection serves as an independent factfincling

body reporting directly to the Commissioner. Inspection performs two primary functions-intennal

security and internal audit. Major investigau'on's

involving both functions, such as those involving

fraud on the revenue, are closely coordinated by the

operational elements concerned. The organization

is comprised of a National Office inspection staff

and seven regional inspection offices under the direct

supervision of the Assistant Commissioner (Inspec-

.tion).

The decrease in disciplinary actions, particularly

separations, is an encouraging indication that the

intense efforts the Service has made to ferret out

corruption in tax administration are bearing fruit.

Recent steps taken to improve integrity have included strengthening of supervision, tightening of

intemal controls and safeguards, thoroughly indoctrinating Service managers in recognizing indications of integrity breakdown, and more careful

screening of applicants for appointments to key jobs

in the Service.

Internal Audit Provides Assistance to Management

Internal audit is an integral part of the management control system and provides protective and constructive assistance to the Commissioner and all

other levels of managemcnL Internal audit's broad

programs provide for the examination on a regular

basis of all field organizations and activities of the

Service. These programs recognize the essential interrelationship between the development of information concerning conditions requiring corrective action and the development of information with respect to the reasons these conditions existed. Internal audit, therefore, is concerned not only with the

financial impact of the matters disclosed by cxaminations, but also with any inherent procedural or internal control defects. Although responsibility for

correcting operating deficiencies is vested solely in

the operating officials, the intemal audit staff has

the responsibility for evaluating and reporting the

corrective actions, and for making recommendations for improvement where appropriate. The

Commissioner and other top levels of management

are thus provided with a timely independent review

and appraisal of all Service operations.

Program Stresses Protection of the Revenues and

Promotion of Taxpayer Relations

Intennal audit program coverage continues to

stress those activities of the Service where the results

of examinations can be of the greatest assistance in

the protection of the revenues and the promotion of

good taxpayer relations. Over 80 percent of the direct internal audit staff time was spent on audit,

collection, data processing, intelligence, and alcohol

and tobacco tax functions, while an additional 15

percent was used on integrity matters.

In the automatic data processing area a number

of recommendations for improvement in programs

and procedures have been developed which will

serve not only to strengthen the processing procedures, but also to improve the Service's relations

with taxpayers. Internal audit's 'continuous examination of the Service's automatic data processing

system at the seven regional service centers continues

to result in the early detection and correction of

errors in computer programs and operating practices,

and in improvements in systems concepts and procedureg. Continuous coordination of regional and

National Office intemal audit activities together with

the immediate reporting of systems, programing or

procedural problems has proven to be an effective

77
ii

ANNUAL REPORT as CHAPTER NINE

method of meeting internal auditing responsibilities

in the data processing area. I

Matters reported by the internal auditors have

resulted in many substantial improvements. Some

of the actions taken by operating officials as the

result of internal audit findings are susceptible of

measurement in terms of additional revenue, savings,

or other matters having an impact on the revenue.

It is conservatively estimated that the results of these

actions during 1966 aggregated more than $34 million. Included are such items as management's

action on specific cases, interest and penalties not

properly assessed, and accelerated collection actions.

Internal'Security Provides Major Safeguards

Thorough investigations are made of the character, reputation, loyalty, and background of all persons appointed to positions involving contact with

taxpayers, handling of money and other key functions in the Service. These investigations are one

of the basic Safeguards toward a reasonable assurance that those hired will adhere to the strict code

of ethics and rules of conduct for Service employees.

A substantial portion of inspection manpower is

devoted to investigating complaints or information

indicating that Service employees, acting independently or in collusion with taxpayers or their representatives, have been guilty of unethical or other

impruper conduct. These investigations range

from complaints of administrative misconduct to

alleged violation of Federal criminal statutes. Inspection also conducts investigations of complaints

from Service employees of actual or suspected

bribery attempts by taxpayers or their representatives

to influence Service actions in tax examinations, tax

collections, or other tax matters.

Internal Security investigations of all types completed during the year totaled 9,864, a 12-percent

increase over the prior year. In addition, police

record checks were made on 5,723 employees considered for short-term temporary appointments.

A tabulation of the types of investigations completed during the last 2 years and the resulting disciplinary actions follows:

Investigations and disciplinary actions

Type of investigation and action

Total investigations closed.---------_------------------

Penconer.] in...Itiatimis

Number of case, closed, total------- --------_------ L

Ch

aracter and security immsUlations..

C.ad oct innasitgatirms - -~------ _---------------------- ---------------------

Special inquiries--------------__ ..........

Actions

U

ken by Service management officials as a result of per.

sonnel I ov

estigations:

Disciplinary actions. total,. -_----------------- ---------

Separations, total I------------ --------------- ------

BE=extorlion, or collusio

ement or thelt of

Fa=N~~ ..............................

Falsification .!'Yd'!:ttoo,bp.anyp.fopGer,t~a,x~.,nt reports,

records.

atc_...

Unmithanlred in.tsideac"...

Failure to discharge doOth' as Ifir ......

Refusal to ceeperate --------------- -------------

Divulgence of confidential Information-------------

Acceptance of fins or gratuities ........... ------ Pa

rsona

I

and other misconduct--------------------

Suspensions from duty ad Petri ..... ij__ -----------

Retail mands, warnings, eass gmnen , transfers, or

dicamlimu,_ ------------- -------------- ----- -

Nondisciplinary actions. ----------------------- ---------

Other investigators

Number of cases closed, total -------------- ...... .......

Applications for admission to practice before the Internal

Revenue Service_.. ... ..... ------- __-------------

cha

rg,, ass nst enrollees.--. --- ------ ---------_-------

Federal tort let.......... --------

Attempted bribery. ----------------

Discrimination ......_--------_-------- -------------

Investigations for other Treasury bureaus ----_---- ___

1965

6,162

2,674

742

2,746

797

340

62

15

21

130

11

2

3

8

78

35

422

5,365

2,663

662

137

220

78

1,566

1966

9,864

7, 34D

-3, 4-30 809

101

770

239

22

11

20

94

a5

2

1155

58

473

6,570

2,524

7"

I

if

2D4

85

...

1,40)

I I

ricludes resignations. retirements, or offie~ separstio,as while employees were

unit.

,

nvesh

"'

on a! before administrative decision was made an disciplinary action

.her. in ..Well a itaclosed derogatory information.

The Integrity Drive Is Continuing

Although there are encouraging signs that the level

of integrity in tax administration is steadily improving, the Service will continue to stress this program.

Where there are indications of breakdowns in integrity involving actual or potential frauds on the

revenue, committed by employees, or through collusion between Service employees and non-Service

people, joint inteirrial audit and internal security

investigations will be made.

Inspection Services Are Provided to Other Government Organizations

Internal security inspectors were caUed upon to

furnish assistance to Secret Service in several assign78

MANAGEMENT

ments involving protection of the President and other

dignitaries. Over 1,400 personnel investigations

were conducted for other Treasury bureaus. The

Service also occasionally lends assistance in internal

audit work to other Government bodies. This year

the committee established by the Treasury Department to audit the Exchange Stabilization Fund was

chaired by a Service employee. The importance of

this assignment is indicated by the Fund's purposeto maintain the stability of the U.S. dollar in the

world currency market.

Another internal audit assistance assignment, one

that has continued over the past few years, involves

supervising the development and installation of a

modern tax system for the Virgin Islands, at the

request of the territorial Governor. Adoption of

the recommendations made has enabled their tax

division to make substantial improvements in its

operations and has substantially increased revenues.

For example, tax collections in 1965 totaled $17.4

million compared with $8.9 million in 1962.

ADVISORY GROUP CONVOCATION HELD

The first convocation of former and present

members of the Commissioner's Advisory Group

was held in Washington on December 14,1965. Of

the 73 living alumnae, 70 attended. Under Secretary of the Treasury, Joseph W. Barr, and Assistant Secretary for Tax Policy, Stanley S. Surrey,

addressed the group.

The Group advises the Commissioner on matters

relating to tax administration. M

'

embers serve ]-

year terms without compensation. Membership includes attorneys, accountants, business executives,

economists, and educators from all parts of the

United States. They are selected for their standing

and experience in the tax field and their familiarity

with problems involved in administering the tax law.

The Advisory Group appointed in April 1965,

and listed in last year's Annual Report, served

ACTIVITIES

through fiscal year 1966. The following members

will serve on the Group commencing July 1, 1966:

Guy S. Balser

Public Accountant

3491 Elm Avenue

Long Beach, Calif.

Warren K. Bass

Certified Public Acco,mtant

E. L. Gaunt & Co.

923 Pyramid Building

Little Rock, Ark.

J. Waddy Bullion

Attorney

Thompson, Knight, Simmons & Bullion

Republic National Bank Building

Dallas, Tex.

Charles Conlon

Executive Secretary

National Association of Tax Administrators

1313 East 60th Street

Chicago, Ill.

Milton A. Dauber

Attorney

Schnader, Harrison, Segal & Lewis

1719 Packard Building

Philadelphia, Pa.

Adrian DeWind

Attorney

Paul, Weiss, Rificind, Wharton & Garrison

New York, N.Y.

Dr. William C. Flewellen

Dean, College of Business and Industry

Mississippi State University

State College, Miss.

Charles H. Gcbhardt

Manager, Tax Department

The Mead Corp.

118 West First Street

Dayton, Ohio

79
I

ANNUAL REPORT * CHAPTER NINE

I

I

I

80

Dr. John R. Stockton

Economist

Bureau of Business Research

University of Texas

Austin, Tex.

John M. Sullivan

Attorney

Briggs & Morgan

First National Bank Building

St. Paul, Minn.

Don J. Summa

Certified Public Accountant

Arthur Young & Co.

277 Park Avenue

New York, N.Y.

Bernard Wolfman

Professor

University of Pennsylvania

Law School

Philadelphia, Pa.
A

Internal Revenue Service

7 Regions 58 Districts

~mmmlmm::

i

In"I'; it In

0 sudc' ll~'irzzl ent"

4 its comp.tv Intel

hU 1:1.11F

a

- le

*F1 n

-1 A-1111,

wiffit, .

Ilmh

41,14- City

litill 1.11

sl

7 .

j

IJUAS *

ii-I",

1101111

~

.1 cill,

st

0 U 4

. ""'00

ON,,, of Foreig n P.sts,

International Operations

BONN 0

LONDON

MANILA

MEXICO CITY

OTTAWA

PARIS

ROME

SAO PAULO

TOKYO
ANNUAL REPORT * PRINCIPAL OFFICERS OF THE INTERNAL REVENUE SERVICE

NATIONAL OFFICERS-Continued

PRINCIPAL OFFICERS OF THE INTERNAL REVENUE SERVICE

As of June 30., 1966

NATIONAL OFFICERS

OFFICE OF THE COMMISSIONER

Commissioner --------------- Sheldon S. Cohen

Deputy Commissioner -------- William H. Smith

Assistant to the Commissioner- Edwin M. Perkins

Assistant to the Commissioner --- Thomas D. Terry

Assistant to the Deputy

Commissioner -------------------- Vacant

Director, Foreign Tax Assistance

Staff --------------------- L. Harold Moss

ADMINISTRATION

Assistant Commissioner------ Edward F. Preston

Executive Assistant--------- Donald C. Dawkins

Director, Program Staff---- Julius H. Lauderdale

Division Directors:

Facilities Management---- R. Bruce McNair

Fiscal Management----- Gray W. Hume, Jr.

Personnel -------------- Albert J. Schaffer

Public Information ----- Joseph S. Rosapepe

Training ------------ George T. Reeves, Jr.

COMPLIANCE

Assistant Commissioner ------- Donald W. Bacon

Executive Assistant------------- Leon C. Green

Division Directors:

Alcohol and Tobacco Tax ---- Harold A. SerT

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

Executive Assistant------------ Garrett DeMots

Division Directors:

Operations ------------- Clinton L. Walsh

IRS Data Center, Detroit,

Mich ------------- William E. Palmer

National Computer Center,

Martinsburg, W. Va --- John E. Stewart

Reports---------------- Harry K. Dellinger

Systems -------------- Donald G. Elsberry

INSPECTION

Assistant Commissioner ----- Vernon D. Acree, Jr.

Executive Assistant---------- Fred G. Robinette

Division Directors:

Internal Audit----------- Francis 1. Geibel

Internal Security------ William F. McCarthy

PLANNING AND RESEARCH

Assistant Commissioner-------- Albert W. Brisbin

Division Directors:

Planning and Analysis----- Marius Farioletti

Research --------------- James R. Turner

Statistics ------------------ Vito Natrella

Systems Development

Lancelot W. Armstrong

TECHNICAL

Assistant Commissioner------- Harold T. Swartz

Executive Assistant---------- Eugene Woodside

Division Directors:

Exempt Organizations and

Pension Trust----- Richard J. Stakem, Jr.

Income Tax ---------- John W. S. Littleton

Miscellaneous Tax

(Acting) LindrrHamblen

Technical Publications and

Services -------------- August F. Pohlig

OFFICE OF CHIEF COUNSEL

Chief Counsel----------------- Lester R. Uretz

Deputy Chief Counsel----------------- Vacant

Ex ecutivcAssistant to the

Chief Counsel----------- Thomas McP. Davis

Special Assistant to the

Chief Counsel-------------- Arthur B. White

Special Assistant to the

Chief Counsel------------------ LesterStein

Technical Adviser to the

Chief Counsel----------- Samuel R. McClurd

Technical Adviser to the

Chief Counsel------------- Robert B. Jacoby

Division Directors:

Interpretative ---------- Richard M. Hahn

joint Committee --------- W. Dean Mathis

Legislation and Regulations--- James F. Dring

Operations and Planning- William P. Crewe

Associate Chief Counsel (Litigation) '

Rudy P. Hertzog

Executive Assistant to the Associate

Chief Counsel---------- E. Riley Campbell

Technical Adviserto theAssociate

Chief Counsel------------ Paul E. Treusch

Division Directors:

Alcohol and Tobacco Tax Legal

John W. Caggins

Collection Litigation

J. Walter Feigenbaum

Enforcement------- William F. McAleer

Refund Litigation ------- William B. Riley

Tax Court-------------- John T. Rogers

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:

Administration ----------- F. Dean McCrory

Alcohol and Tobacco Tax ------- Rex D. Davis

Appellate --------------- G. Waldron Snyder

Audit----------------- Michael A. DcGuire

Collection ---------------- William J. Grabo

Intelligence ---------------- Harold B. Holt

District Directors:

Cincinnati, Ohio 45202 ----- Paul A. Schuster

Cleveland, Ohio 441 11-'-- Frank S. Turbett, Jr.

Detroit, Mich. 48226 ---- Ambrose M. Stoepler

Indianapolis, Ind. 46204------- James E. Daly

Louisville, Ky. 40202 ------- Gilbert C. Hooks

Parkersburg, W. Va. 26102 ---- Hugh D. Jones

Director, Central Service Center, Cincinnati, Ohio

45202 --------------------- Everett L. Meek

Regional Counsel------------ Clarence E. Price

Regional Inspector-------- Gordon M. Anderson

MID-AfLANTIC REGION

All Regional Offices at 2 Penn Center Plaza, Philadelphia, Pa. 19102 unless a different address is indicated

Regional Commissioner --------- Dean J. Barron Newark, N.J. 07102 ---------- Joseph M. Shotz Assistant Regional Commissioners: Philadelphia, Pa. 19108 ---- Kenneth 0. Hook

Administration --------- Robert D. McDowell Pittsburgh, Pa. 15222 ---------- H. Alan Long Alcohol and Tobacco Tax-- Charles R. Peterson Richmond, Va. 23240 -------- James P. Boyle Appellate --------------- William E. Steynen Wilmington, Del. 19802 ---- James H. Kennedy Audit----------------- Dwight L. James, Jr. Director, Mid-Adantic Service Center,

Collection-------------- William F. Culliney Philadelphia, Pa. 19154---- Anthony L. Carrea Data Processing--------- Edward J. Manning Regional Counsel-------------- Cecil H. Haas Intelligence --------------- Daniel L. Tucker Regional Inspector, Bankers Securities Building, District Directors: Walnut and juniper Streets, Philadelphia, Pa. Baltimore, Md. 21202 ---------- Irving Machiz 19107 --------------- Emanuel M. Schuster

MIDWEST REGION

All Regional Offices at 35 East Wacker Drive, Chicago, Ill. 60601 unless a different address is indicated

Regional Commissioner--------- Alvin, M. Kelley

Assistant Regional Commissioners:

Administration ----------- William F. Sullivan

Alcohol and Tobacco Tax- William A. Collawn

Appellate ---------------- Wallace T. Morris

Audit---------------- John W. Baudendistel

Collection ---------------- Edwin P. Trainor

Intelligence--------------- William B. Mayes

-District Directors:

Aberdeen, S. Dak. 57401 ---- William C. Welsh

Chicago, 111. 60602 ------- Eugene C. Coyle, Jr.

Des Moines, Iowa 50309 ----- Ernest W. Bacon

84

85
ANNUAL REPORT * PRINCIPAL OFFICERS OF THE INTERNAL REVENUE SERVICE

REGIONAL AND DISTRICT OFFICERS--Continued

MIDWEST REGION--Continued

Fargo, N. Dak. 58102------- Martin L. Webb Springfield, 111. 62704 --------- Jay (I Philpott

Milwaukee, Wis. 53202 ----- Walter S. Strumpf Director, Midwest Service Center, Kans,;s City, Mo.

Omaha, Nebr. 68102 ------- Richard P. Vinal 64131 -------------------- Arnold S. Dreyer

St. Louis, Mo. 63101 ---- Edwin 0. Bookwalter Regional Counsel------------- Frank C. Conley

St. Paul, Minn. 55 101 ------ George 0. Lethert Regional Inspector--------- William A. Costello

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 Buffalo, N.Y. 14202 ----------- John E. Foley

Assistant Regional Commissioners: Burlington, Va. 05402 ------- Fulton D. Fields

Administration -------------------- Vacant Hartford, Conn. 06115 --- Joseph J. Conley, Jr.

Alcohol and Tobacco Tax------ Edward J. Fox Manhattan, N.Y.

Appellate --------------- Stephen C. Volpone 10007 ----------- Edward J. Fitzgerald, Jr.

Audit------------------- Alfred L. Whinston Portsmouth, N.H. 03801 ---- Frank T. Murphy

Collection --------------- Elmer H. Klinsman Providence, R.I. 02907 -------- Ellis R. Rogers

Data Processing ---------- J. Orville Tucscher Director, North-Atlantic Service Center, Lawrence,

Intelligence ------------------ Alan McBride Mass. 01841 ------------ Thomas J. Gilfillan

District Directors: Regional Counsel, 30 Church Street, New York,

Albany, N.Y. 12210------- Donald T. Hartley N.Y. 10007 --------------- Marvin E. Hagen

Augusta, Maine 04330---- Whitney L. Wheeler Regional Inspector, 50 Church Street, New York,

Boston, Mass. 02215 ------ William E. Williams N.Y. 10007 ------- --------- Sidney M. Wolk

Brooklyn, N.Y. 11201 ------ Charles A. Church

'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 Birmingham, Ala.

Assistant Regional Commissioners: 35203 ----------- Andrew J. O'Donnell, Jr.

Administration ---------- Zachary T. Johnson Columbia, S.C. 29201 ---- Harold M. McLeod

Alcohol and Tobacco Tax- F. Dale McClanahan Greensboro, N.C. 27401 -------- John E. Wall

Appellate------------------- Vance N. Bates Jackson, Miss. 39202 ---- James G. Martin, Jr.

Audit-------------------- Harold B. Bindseil Jacksonville, Fla. 32202 ----- Frank S. Schmidt

Collection----------------- William E. Loeb Nashville, Tenn. 37203----- James A. O'Hara

Data Processing--------- Wayne S. Kegen-eis Director, Southeast Service Center, Chamblee, Ga.

Intelligence ------------- Allen T. HoUinrake 30005_ --------------- William H. Weaver

District Directors: Regional Counsel--------- Henry C. Stockell, Jr.

Atlanta, Ga. 30303 ------------Aubrey C. Ross Regional Inspector--------------- Earl L. Fuoss

SOUTHWEST REGION

All Regional Offices at 11 14 Commerce Street, Dallas, Tex. 75202 unless a different address is indicated

Regional Commissioner-------- B. Frank White Appellate ------------------ G. Clifton Witt

Assistant Regional Commissioners: Audit---------------- Lawrence M. Stewart

Alcohol and Tobacco Tax ---- James G. Carroll Collection------------------ Alfred N. Kay

ANNUAL REPORT * PRINCIPAL OFFICERS OF THE INTERNAL REVENUE SERVICE

REGIONAL AND DISTRICT OFFICERS-Continued

SOUTHWEST REGION-Continued

Intelligence---------- William E. Beloate, Jr.

District Directors:

Albuquerque, N. Mex.

87101 ----------------- William M. Coard

Austin, Tex. 78701 -------- Robert L. Phinney

Cheyenne, Wyo. 82001 ---- Arthur A. Kennedy

Dallas, Tex. 75201 -------- Ellis Campbell, Jr.

Denver, Colo. 80202 ------- Charles W. Emlet

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.

78741 -------------------- Erwin B. Osborn

Regional Counsel, 1025 Elm Street, Dallas, Tex.

75202 ------------------- J. Marvin Kelley

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-------------- Homer C. Gant

Alcohol and Tobacco Tax ------- Isharn Railey

Appellate ------------ Gardiner B. Willmarth

Audit----------------- Raymond F. Harless

Collection---------------- Charles D. Moran

Data Processing------- Frederick W. Bearman

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--- Robert A. Riddell

Phoenix, Ariz. 85025-- George D. Patterson, Jr.

Portland Oreg. 97232 ---- Arthur G. Erickson

Reno, N;~. 89502 ------------ Dalmon Davis

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

84-401 -------------------- Robert H. Terry

Regional Counsel, 447 Sutter Street, San Francisco,

Calif. .94108--------------- Melvin L. Sears

Regional Inspector, 1076 Mission Street, San Francisco, Calif. 94103 ------------ Henry A. Feltz

86

87
COMMISSIONERS OF INTERNAL REVENUE

Offix of Commissioner of Internal Revenue created by act of Congress, july 1, 1862

Name, Stene From TO

George S. Boutwell ...... ....... Massachusetts ............... July 17, 1862 Mar. 4,1863

Joseph J. Lewis ................. Pennsylvania ................ Mar. 18,1863 June 30, 1865

William Orton .................. New York .................. July 1, 1865 Oct. 31,1865

Edward A. Rollins .............. New Hampshire ............. Nov. 1,1865 Mar. 10,1869

Columbus Delano ............... Ohio ....................... Mar. 11,1869 Oct. 31,1870

Alfred Pleasonton ............... New York .................. Jan. 3, 1871 Aug. 8,1871

John W. Douglass ............... Pennsylvania ................ Aug. 9,1871 May 14, 1875

Daniel D. Pratt ................ ; Indiana .................... May 15,1875 July 31,1876

Green B. Raum................. Illinois ..................... Aug. 2,1876 Apr. 30, 1883

Walter Evans ................... Kentucky ................... May 21, 1883 Mar. 19, 1885

Joseph S. Miller ................ West Virginia ................ Mar. 20,1885 Mar. 20,1889

John W. Mason ................. .... do ..................... Mar. 21, 1889 Apr. 18, 1893

Joseph S. Miller ................ .... do ..................... Apr. 19,1893 Nov. 26, 1896

W. St. John Forman ............. Illinois ..................... Nov. 2Z, 1896 Dec. 31,1897

Nathan B. Scott ................. West Virginia .............. Jan. 1, 1898 Feb. 28, 1899

George W. Wilson ............... Ohio ....................... Mar. 1,1899 Nov. 27, 1900

John W. Yerkes ................. Kentucky ................... Dec. 20, 1900 Apr. 30, 1907

John G. Capers ................. South Carolina . ............ June 5, 1907 Aug. 31, 1909

Royal E. Cabell ................. Virginia . .................. Sept. 1,1909 Apr. 27, 1919

William H. Osborn .............. North Carolina .............. Apr. 28,1913 Sept. 25, 1917

Daniel C. Roper ................ South Carolina ............... Scpt.26,1917 Mar. 31, 192C

William M. Williams ............. Alabama ................... Apr. 1,1920 Apr. 11,1921

David H. Blair .................. North Carolina .............. May 27,1921 May 31,192S

Robert H. Lucas ................ Kentucky ................... June 1,1929 Aug. 15,193C

David Burnet ................... Ohio ....................... Aug. 20,1930 May 15,1932

Guy T. Helvering ............... Kansas ..................... June 6,1933 Oct. 8,194~

Robert E. Hannegan ............ Missouri .................... Oct. 9,1943 Jan. 22,1944

Joseph D. Nunan, Jr............ New York .................. Mar. 1,1944 June 30,1941

George J. Schoenernan ........... Rhode Island ............... July 1,1947 July 31,1951

John B. Dunlap ................. Texas ...................... Aug. 1,1951 Nov. 18,1952

T: Coleman Andrews ............ Virginia .................... Feb. 4,1953 Oct. 31, 195E

Russell C. Harrington ............ Rhode Island ................ Dec. 5,1955 Sept. 30,195E

Dana Latham .................. California ................... Nov. 5,1958 Jan. 20,1961

Mortimer M. Caplin ............. Virginia .................... Feb. 7,1961 July 10,1964

Sheldon S. Cohen ............... Maryland ..................

I

Jan. 25,1965 ............

I

In addition, the following were Acting Commissioners during

periods of time when there was no Commissionu holding the

office: John W. Douglasei, of Pennsylvania, from Nov. 1, 1870,

to Jan. 2, 187 1 ; Henry C. Rogm, of Pennsylvania, from May

I to May 10, 1883, and from May I to June 4, 1907; John J.

Knox, of Minnmota, from May I I to May 20, 1883; Robert

Williants, Jr., of Ohio, from Nov. 28 to Dec. 19, 1900; Millard

F. Wwt, of Kentucky, from Apr. 12 to May 26, 192 1; H. F.

Mira, of Washington, from Aug. 16 to Aug. 19, 1930; Prmly

R. Baldridge, of Iowa, from May 16 to June 5, 1933; Harold

N. Grava, of Illinois, from Jan. 23 to Feb. 29, 1944; John 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; Charla I. Fox, of Utah,

from Jan. 21 to Feb. 6, 1961; and Bertrand M. H~ding, of

Texas, from July 11, 1964 to Jan. 24, 1965.

88

Appendix
ANNUAL REPORT e APPENDIX

APPENDIX

TAXPAYER PUBLICATIONS

Your Federal Income Tax, IRS Publication No.

17, deals primarily with the problems commonly encountered in filing individual returns. It is revised

annually to reflect new legislation, Revenue Rulings,

Revenue Procedures, Regulations, and court decisions. The 1966 edition follows the pattern established in prior years, with a filled-in sample of an

individual return keyed to page numbers where detailed explanations and examples can be found. It

is available at the Government Printing Office and

all local Internal Revenue Service offices at a price

of 50 cents a copy. This publication continues to

be the "best seller" among Government publications

with sales of over 975,000 copies. In addition, 106,

000 copies were used in the Teaching Taxes Program, the Taxpayer's Assistance Program, and in

various training programs.

Teaching Taxes is issued in two parts. Publication No. 19, a teacher's manual, and Publication

No. 2 1, a student's workbook, are used by 100,000

teachers to instruct 4 million students in high school

and college classes in the preparation of individual

income tax Forms 1040 and 1040A. The two-part

1966 edition of Teaching Taxes consolidates the

four-part publication formerly used at a significant

saving in cost, but maintains the effectiveness of the

program. The teacher's manual contains step-bystep explanations and illustrations for the preparation of returns of imaginary taxpayers who have the

more usual types of income and expenses. The student's workbook contains sample problems followed

by blank forms for the students to use in preparing

returns. Both the teacher's manual and the student's workbook also contain a brief history of taxes

in the United States and a discussion of the Federal

budget.

Liquor Laws and Regulations for Retail Dealers,

Publication No. 30 (Rev. 5-65), explains briefly

and nontechrrically the Federal laws and regulations

pertaining to retail dealers in liquors. Each retail

dealer on entering business is furnished a

'

copy of

this publication in an effort to promote voluntary

compliance with applicable laws and regulations and

to enable him to avoid technical or rfonwillful. vioI ations.

Alcohol and Tobacco, Summary Statistics, Publication 67, released each year, usually in February,

presents comprehensive statistical data relating to

the alcohol and tobacco industries.

The publication contains 94 statistical tables summarizing pertinent phases of the distilled spirits, beer,

wine, and tobacco industries by States and by

months, an introduction defining principal terms,

and an index. Comparisons are made with the previous fiscal year and historical data are shown for

the years 1934 to date. Tables show such details as

the number of establishments, materials used, production, taxable and tax-free withdrawals, stocks,

imports, rectification, bottling, enforcement activities, and internal revenue collections from alcohol

and tobacco taxes.

Recent issues can be obtained from the U.S. Government Printing Office, Washing-ton, D.C. 20402,

at 50 cents per copy.

The Farmer's Tax Guide, Publication No. 225, is

a 64-page booklet dealing with the tax problems of

farmers. It features a list of Important Dates to

Remember to help farmers keep track of their tax

obligations throughout the year. Income, employment, and self-employment taxes are discussed in

detail with numerous examples illustrating the rules.

A sample farm return, complete with the schedules

that farmers normally use, is keyed to explanations

for each entry. Also illustrated are sample farm

records, including depreciation schedules. A total

of 1,250,000 copies of the Farmer's Tax Guide were

distributed free of charge by Internal Revenue

Service offices and agricultural extension agents of

the Department of Agriculture.

Tax Guide for Small Business, Publication No.

334, deals with the problems of sole proprictorships,

partnerships, and corporations. Like Your Federal

Income Tax, it is an important segment of the program for assistance to taxpayers. Income, excise,

and employment taxes are explained in nontechnical

language and numerous examples are used to illustrate the application of the rules. A Check List,

of particular interest to new businessmen, shows at

90

a glance taxes that might be incurred and what actions should be taken. A Tax Calendar for 1966

is also provided to assist businessmen in keeping

track of various things that should be done during

the year with respect to all their Federal taxes. This

160-page booklet is sold to the public for 50 cents a

copy through the same outlets as Your Federal Income Tax. This year, over 270,000 copies were

sold and 61,500 copies were printed for internal use

by the Service.

National Firearms Act and Federal Firearms Act,

Publication No. 364 (Rev. 4-66), is a reprint of

the laws applicable to firearms. It is distributed

as a public service to acquaint the general public

with these laws and to inform them of the proper

places for directing inquiries.

What You Should Know About the Alcohol and

Tobacco Tax Divisio*nl Publication No. 425 (Rev.

1-66), provides a brief historical sketch and a general description of the activities of the Alcohol and

Tobacco Tax Division. The document is particularly valuable in informing.the general public of

this phase of the Service's activities and in eliciting

cooperation from the public.

Tobacco Tax Guide, Publication No. 464, is a

compilation of basic reference materials to assist

manufacturers of taxable tobacco products a~nd

others concerned to comply with Federal tobacco

tax laws and regulations. This compilation, including a subscription to changes, may be purchased

for $3.50 from the U.S. Government Printing Office,

Washington, D.C. 20402.

Crime Prevention and You, Publication No. 477

(Rev. 4-66), is designed to acquaint tht public

with the most frequent signs of illegal distilled spirits

production and unlawful traffic in firearm and to

solicit cooperation in reporting possible violations.

NEW FREE TAXPAYER INFORMATION

DOCUMENTS

Tax Information for Visitors to the United States,

Document No. 5371, informs aliens entenng the

United States about their tax responsibilities to this

country. Arrangements have been made with the

State Department to distribute this pamphlet

through all U.S. Embassies and Consulate offices

at the time a visa is issued.

Reporting Your Tips for Federal Tax Purposes,

Document No. 5640, explains how an employee

receiving tips should report tip income to his employer. It also explains income and social security

tax withholding and how the tax is to be paid if

the employer is unable to deduct the full amount of

the tax from regular wages. There is an illustration of a Daily Record of Tips (Form 4070A) and

Report of Tips to Employer (Form 4070). Union

officials were invited to distribute this pamphlet to

their union membership as a means of implementing

provisions of law which became effective in 1966.

New Withholding System, Document No. 5642,

was developed to ease the transition into the graduated withholding system under the Tax Adjustment

Act of 1966. This two-page pamphlet, with a

detachable Form W-4, explained the new system

and alerted taxpayers to the need for filing a new

Form W-4, Employee's Withholding Exemption

Certificate. A supply in sufficient quantity for distribution to employees was furnished to all employers.

Tax Benefits for Older Americans, Document No.

5569, explains various provisions of the Federal income tax laws which are of special interest to those

65 years of age or older. At the request of the

Deputy Chief, Division for the Blind, U.S. Library

of Congress, it was reprinted in braille in coopcra~-

tion with the Director of the Clovemook Home and

School for the Blind, Cincinnati, Ohio.

Social Security Coverge for Clergymen and Religious Workers Abroad, Document No. 5586, discusses the filing of a waiver certificate for social

security coverage; individ6als who fall within the

scope of these rules; services covered; determination

of the amount treated as self-employment income;

tax years for which the waiver certificate is effective;

and, in certain cases, the manner in which retroactive application of a waiver certificate may be

effected.

Preparation of Form 1040B, Document No. 5587,

was developed to assist nonresident a

*

lien individuals

in preparing an income tax return where they have

performed personal services or have engaged in a

trade or business within the United States at any

time during the tax year. This pamphlet contains

an illustrated Form 1040B with step-by-step instructiom keyed to the nonresident alien income tax

return.

Tax Advice for Foreign Scholars and Visitors on

Official Educational and Cultural Exchange Programs, Document No. 5588, is directed mainly to

those alien individuals who are norrimigrants and

are temporarily in the United States as students or

91
ANNUAL REPORT *APPENDIX

as educational or cultural exchange visitors. It

discusses tax on income from sources within the

United States, the withholding of income and social

security taxes, scholar-ship and fellowship grants, and

tax exemptions provided by treaty or convention.

American Scholars Abroad and U.S. Income Tax

Including Fullbright Scholars, Document No. 5590,

explains the taxation of U.S. citizens who are studying, teaching, or engaged in research abroad under

scholarships and fellowship grants.

Credit Sales by Dealers in Personal Property,

Document No. 5593, discusses the reporting of income by a dealer on his sales of personal property on

the installment plan or revolving credit plan, repossessions, and the sale of installment obligations.

Information on Tax Adjustment Act of 1966 for

Taxpayer Assistance is a one-time publication developed for those having contact with the public in

the Taxpayer Assistance Program. It provides these

people with an accurate and timely explanation of

all the provisions of this legislation and includes information on the Service's implementation of the

graduated withholding system.

Fifty-one other taxpayer information publications,

ranging in size from 2 to 28 pages, were distributed

free to taxpayers. One of the primary objectives is

to increase the effectiveness of the Service's program

to assist taxpayers by conserving technical time expended on letters and personal inquiries. In manv

instances, a copy of a publication is the best and

most practical reply to a taxpayer inquiry. Following is a list of these publications and one additional

publication available for purchase:

Publication

Title number

Tax Guide for U.S. Citizens Abroad --------------- 54

A Guide to Federal Estate and Gift Taxation

(price 25 cents) ----------------------------- 448

Trawl, Entertainment, and Gift Expenses---------- 463

Document

number

Personal Exemptions and Dependents-------------- 5013

Employee Expenses, Educational Expenses---------- 5014

Sick Pay-------------------------------------- 5016

Selling Your Home ----------------------------- 5017

Retirement Income and Credit------------------- 5018

Medical and Dental Expenses-------------------- 5020

What Is Inconu,_~ ----------------------------- 5045

Tax Calendar and Check List for 1966 ------------- 5046

Self-Eniployrrunt T---------------------------- 5047

Sales and Exchanges of Assets-------------------- 5048

Depreciation, Investment Credit, Amortization, Deple.

tion---------------------------------------- 5050

Business Expenses------------------------------ 5051

Child Cam------------------------------------ 5052

Document

Title number

Contributions -- ------------------------------ 5053

Excise Taxes for 1966 -------------------------- 5054

Rents and Royalties Income --------------- 5060

Losses Fmin Operating a Business---------- ----- 5062

Interest Deductions ---------------------------- 5074

Taxes -- -------------------------------------- 5075

Filing Your Tax Return------------------------ 5107

Installment and Defer-red-Payment Sales----------- 5103

Alimony ------------------------------------- 5109

"Page 2" Deductions --------------------------- 5110

Estimated Tax and Tax Withholding------------- 5111

Disasters, Casualties and Thefts------------------ 5174

Accounting Periods and Methods ----------------- 5175

Bad Debts ------------

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

5176

Withholding Fmin Wages by Employer------------ 5

1

77

Repairs and Improvements---------------------- 5178

Partnerships, ---------------------------------- 5179

Corporations --------------------------------- 5180

Sale of a Business------------------------------ 5181

Community Property---------------------------- 5192

1

f Your Return Is Examined--------------------- 5202

Condemnations of Private Property for Public Use--- 5383

D-d-ts; ------------------------------------ 5446

Tax Tips for Homeowners----------------------- 5447

Investment Income and Expenses----------------- 5448

Cost

or Other Buis of Assets--------------------- 5516

Foreign Tax Credit for U.S. Citizens and Resident

Aliens --------------------------------------- 5517

Importance of Adequate Records and a Guide to Information Available for Preparing Federal Tax

Returns ------------------------------------ 5518

How To Apply for Exemption for Your Organization- 5551

Highlights of 1965 Tax Changes----------------- 5552

Income Avemging--. 5553

Sales and Other Dispositions of Depmciable Property- 5554

Infomation Reporting Requirements of Sponsors of

Contests or Sporting Events-------------------- 5572

Income Tax Deductions for U.S. Government Civilian

Employees Stationed Abroad------------------- 5583

U.S. Tax Guide for Aliens----------------------- 5589

Retirement Plans for Self-Employcd Individuals----- 5592

TAX FORMS ACTIVITY

The following new forms were issued:

Form No. Title

1001-L------ Ownenhip Certificate-Luxembourg.

1001-SWED

_'

Ownership Certificatt-Sweden.

3646 -------- Income From Controlled Foreign Corporation.

4029-------- Application for Exemption From Tax on.

Self-Empl-y=nt Incomc~ Claims for Refund, and Waiver of Benefits.

4067-------- U.S. Annual Information Retum, (Summary

Report of Forms 3921 and 3922).

4070-------- Employee's Report on Tips.

SS-15b ------ Certifi6te for Retroactive Coverage under

the FICA.

The following forms were eliminated:

277--------- Application for Registry of Manufacturer of

Playing Cards.

729-A ------- Information Return Broker's Sales of Admis5ion Tickets.

92 -

ANNUAL REPORT e APPENDIX

Form No. Title

741 --------- Statement of Registration (for persons en-

~ gaged in transferring stocks and bonds)

749--------- Quarterly Return of Manufacturer or Im- '

porter of Playing Cards.

752--------- Application for Registry (persons required to

collect tax on admissions).

754--------- Notification to District Director by Lessor

Whene Lessee Is Responsible for Collection

of Federal Tax on Admissions

755 --------- Application for Exemption Fro~ Collection

of Fedeml Tax on Admissions.

827 --------- Advance Report to District Dimctor by the

Owner or Lessee Who Operates Any

Theater, etc., for a Term Not Exceeding

10 days and Collects Taxable Admission

Charges.

928 --------- Gasoline and Lubricating Oil Bond (required

of manufactumn or producen).

929--------- Consent of Surety To Change in Terms of

Bond Relating to Gasoline and Lubricating

Oil.

2701 -------- Type "A" Agreement (agreement by supplier

to pay retail excises for ntailers).

2240 -------- Claim for Refund of Federal Tax an Gasoline Used on a Farm.

SELECTED REGULATIONS PUBLISHED

Income Tax Regulations

Income Tax Regulations under various sections

of the Internal Revenue Code were either amended

or added by the following Treasury Decisions: -

Treasury Decision 6832, relating to the treatment

of gain from dispositions of certain personal property

subject to an allowance for depreciation.

Treasury Decision 6838, relating to the computation of the credit for investment in certain dcpreciable property and the restoration to the depreciable

basis of amounts previously not taken into account

for purposes of computing depreciation.

Treasury Decision 6841, relating to (1) the disposal of coal or domestic iron ore with retained

economic interest, and (2) the percentage depletion

rate for ores of beryllium.

Treasury Decision 6845, relating to the reduction

of the exemption from surtax in the case of corporations which are members of a controlled group.

Treasury Decision 6850, relating to adjustments

to basis of stock in controlled foreign corporations

and other property.

Treasury Decision 6856, relating to the exclusion

from gross income of gain on the sale of the residence

of an individual aged 65 or over.

Treasury Decision 6859, relating to an election to

treat operating mineral interests in the same tract

or parcel of land as separate or in combination, in

cases of oil and gas wells.

Treasury Decision 6861, relating to the detcnnination of earnings and profits of foreign corporations

for purposes of the foreign tax credit.

Treasury Decision 6862, relating to losses caused

by the expropriation of property by foreign governments and other net operating loss deductions.

Treasury Decision 6885, relating to the averaging

of the bunched income received in a single taxable

year as if such income had been received over a

series of 5 taxable years.

Treasury Decision 6886, relating to a number of

subjects of interest to the insurance industry, for

example, the tax treatment of variable annuities,

capital gains, and accident and health insurance

contract premiums.

Treasury Decision 6887, relating to the income

tax treatment of certain employee stock options.

Regulations on Procedure and Administration

Treasury Decision 6870. The Regulations on

Procedure and Administration under section 6334

of the Internal Revenue Code were amended so as

to prohibit a levy by the Internal Revenue Service

on mail which has not been delivered to the

addressee.

Excise Tax Regulations

Treasury Decision 6847. The Manufacturers

and Retailers Excise Tax Regulations under section

6011 of the Internal Revenue Code were amended

with respect to rules relating to the refund of retailers excise tax paid by suppliers on articles held

by retailers on June 22, 1965.

Employment Tax Regulations

Employment Tax Regulations under various sections of the Code were amended or added by the

following Treasury Decisions:

Treasury Decision 6860, relating to the collection

of income tax at the source to reflect a reduction in

the income tax rates.

Treasury Decision 6882, relating to the establishment of a flat percentage rate for withholding of

income tax from supplemental wage payments in

lieu of graduated withholding rates.

Treasury Decision 6883, relating to permission to

employers and others to subrnit the information rcquired by certain forms on magnetic tape so as to fa93
ANNUAL REPORT a APPENDIX

cilitate the accumulation and processing of the required information.

Treasury Decision 6884, relating to rules which

accelerate, in the case of certain employers, the depositing of social security taxes and income taxes

which have been withheld at the source on wages.

Temporary Regulations

The enactment of the Excise Tax Reduction Act

of 1965 on June 21, 1965, required a number of

timely actions on the part of manufacturers and

others to comply with that act. In order to give

taxpayers guidance in taking such actions, a number of temporary regulations were issued under

Treasury Decisions 6839, 6846, and 6857. These

Treasury Decisions related, respectively, to (1) extensions of time for filing returns and paying certain retailers and manufacturers excise taxes

'

(2)

credit or refund for floor stocks and certain consumer purchases, and (3) floor stock refunds on

automobile parts and accessories.

Treasury Decision 6854. Temporary regulations

were also issued under the Interest Equalization Tax

Extension Act of 1965.

Alcohol, Tobacco, and Firearms Regulations

Treasury Decisions 6843, 6851, 6871, and 6880

amended regulations in 26 CFR Parts 201, 211, 240,

270, 275, 285, 290, 295, and 296 to implement the

Excise Tax Reduction Act of 1965 (Public Law

89-44) as it relates to chapters 51 and 52 of the

Internal Revenue Code.

Treasury Decisions 6848 and 6849, effective September 24, 1965, prescribed semimonthly return

periods for alcohol and tobacco taxes consistent with

calendar months, and provided for a two-step increased period of time for filing tax returns.

Treasury Decision 13877, published February 26,

1966, provides an entirely new concept I

.

or the payment of distilled spirits tax by domestic bottlers. No

change is made in the method of determining the

tax; however, the actual amount of the tax to be

paid with any one return will, generally, depend on

the quantity of finished product removed from the

bottler's premises after completion of processing and

bottling. This system provides taxpayers substantial

relief from the burden of financing their taxpayments until the tax is recovered through sales to customers.

SIGNIFICANT REVENUE RULINGS AND REVENUE

PROCEDURES

Guides for the qualification of annuity, pension,

profit-sharing, and stock bonus plans under section

401 (a) of the Code were updated (Rev. Rut. 65-

178,C.B.1965-2,94).

A junior chamber of commerce operated exclusively for the promotion of social welfare qualifies for

income tax exemption under section 501 (c) (4) of

the Code (Rev. Rut. 65-195, C.B. 1965-2, 164).

Any increment in value of so-called "advance

premiums," "prepaid premiums," or "premium deposit funds" which is applied to the payment of

premiums due on annuity and life insurance policies,

or made available for withdrawal by the policyholder, will result in taxable income to the policyholder at that time (Rev. Rut. 65-199, C.B. 1965-2,

20, as amplified by Rev. Rut. 66-120, I.R.B. 1966-

20, 8) (T.I.R. 748, 7-8-65, and T.I.R. 818,

5--16-66).

Guidelines are set forth with respect to the use

of proper identifying numbers in certain specific

situations involving escrow accounts maintained by

abank (Rev. Rut. 65-203, C.B. 1965-2,437).

An annual requirement contract and a material

release authorization, a purchase order, a shipping

order, or a similar document, properly cross-refercriced, together constitute a record which is within

the meaning of the term "purchase order or other

document" as used in the temporary rules relating

to tax-free sales and purchases for purposes of the

manufacturers excise tax (Rev. Rut. 65-210, C.B.

1965-2,424).

The requirements of section 6049 of the Code are

not satisfied where amounts paid by savings institutions are designated as dividends on information returns, Forms 1099 and 1096, in which case the

Service may decline to process such defective returns

and may require the payer to file proper returns

(Rev. Rut. 65-215, C.B. 1965-2,435).

Under the facts presented, the Service will no

longer contend that for purposes of section 337 of

the Code the date a closely held corporation adopts

a plan of complete liquidation is the date of adoption by the shareholders of a resolution authorizing

the distribution of the corporation's assets (Rev.

Rut. 65-235, C.B. 1965-2, 88) (T.I.R. 755,

8-46-65).

For purposes of the floor stocks and consumer

refund provisions of the Excise Tax Reduction Act

94

ANNUAL REPORT * APPENDIX

of 1965, a "demonstrator" 2kutomobile could be

treated as a new automobile if it could be shown

that on June 22, 1965, the label required by the

Automobile Information Disclosure Act of 1958 was

affixed to a window of the vehicle, that the vehicle

was to be sold by the dealer under a written or express warranty by which the manufacturer is obligated to the consumer, or by any other evidence acceptable to the Service (Rev. Rut. 65-239, C.B.

1965-2, 439, as amplified by Rev. Rut. 65-304,

C.B. 1965-2, 438) (T.I.R. 771, 10-6-65).

Where useful lives can be factually deter-mined

with reasonable accuracy on oil and gas pipeline

right-of-way casements and related intangibles (such

as roddage fees for traversing the land, severance and

crop damage, legal fees, etc.), the costs of such intangibles may be depreciated. A taxpayer may

show that these intangibles have a limited life if they

will not be useful after the useful life of a related

pipeline has expired (Rev. Rut. 65-264, C.B. 1965-

2,53) (T.I.R. 777, 11-3-65).

Capital gains treatment is accorded the amount

of cash received in a total distribution, on account of

separation from service, consisting partly of cash

and partly in the form of an annuity contract which

is not surrendered in the year distributed (Rev. Rut.

65-267, C.B. 1965-2, 141).

Capital gains treatment does not apply to the

amounts received upon the surrender of annuity contracts in a year subsequent to the year in which they

were distributed by the employees' trust even though

the contracts represented the total amount standing

to the employee's credit at the time of his separation

from service and were distributed in I taxable year

(Rev. Rut. 65-268, C.B. 1965-2, 143).

An otherwise qualified hospital may remain exempt from income tax under section 501 (c) (3) of

the Code even though it requires its doctor staff

members to pay fees for the use of hospital facilities

(Rev. Rut. 65-269, C.B. 1965-2, 159).

Organizations formed to promote the arts (by

teaching dancing, presenting jazz festivals, or pro-

-oting group harmony singing) qualify for income

tax exemption as educational and charitable organizations under section 501 (c) (3) of the Code (Rev.

Rut. 65-270, C.B. 1965-2, 160; Rev. Rut. 65-271,

C.B. 1965-2, 161; and Rev. Rut. 66-46, I.R.B.

1966-9,9).

Wages paid to a farm employee do not constitute gross income from farming, and the employee is

subject to the requirements for the filing of a declaration of estimated income tax within tffe time presc;ibed by section 607 3 (a) of the Code (Rev. Rut.

65-280, C.B. 1965-2, 433).

Cost depletion is allowable on ground water extracted by taxpayen; beneath their land for irrigation

purposes in the Southern High Plains of Texas and

New Mexico from the Ogallala formation under

facts similar to those in the case of United States v.

Marvin Shurbet, et ux., 347 Fed. (2) 103 (1965).

(Rev. Rut. 65-296, C.B. 1965-2, 181) (T.I.R.

780,11-19-65).

The sale of special motor fuels (such as liquefied

petroleum gas) in general purpose portable containers that can be attached to a motor vehicle,

motorboat, or airplane in such a manner that the

fuel can be used for its propulsion is not subject to

the retailers excise tax imposed by section 4041 (b)

of the Code unless the purchaser indicates in writing to the seller prior to or at the time of the sale

that the entire quantity of the liquid covered by the

sale is for use by him for a taxable purpose as a

fuel in such motor vehicle, motorboat, or airplane.

If such a written statement is not furnished by the

purchaser, he will be liable for the tax on that quantity of the liquid he uses as fuel in a motor vehicle,

motorboat, or airplane or which is sold by him in a

taxable transaction (Rev. Rut. 65-301, C.B. 1965-

2,415).

On or after Febuary 1, 1966, the importation

under described conditions by a resident of the

United States of an automobile not previously sold

in the United States is not considered to be "incidental" as that term is used in the regulations and,

therefore, the U.S. resident is held to be an importer

of a taxable article and his use of the automobile is

subject to the manufacturers excise tax imposed by

section 4061 (a) (2) of the Code (Rev. Rut. 65-

317, C.B. 1965-2, 422, as amplified by Rev. Rut.

66-66, I.R.B. 1966-12,12) (T.I.R. 803,2-28-66).

A casualty loss deduction arising from the destruction of timber by hurricane cannot exceed the

adjusted basis for determining loss from the s ale or

other disposition of the quantity of timber which by

fair and reasonable estimates is found to be unfit for

use because of the hurricane. Adjusted basis in

such a case does not include any portion of the basis

attributable to the land, other improvements, or any

timber not rendered worthless by the hurricane

(Rev. Rut. 66-9, I.R.B. 1966-3, 5).

95
ANNUAL REPORT *APPENDIX

A qualified plan must provide for commencement

of distributions of an employee's interest no later

than actual retirement after attainment of no-mal

retirement age, stated age, or occurrence of a specified event, and completion of service and uniform

requirements, except, in the case of an owneremployee, no later than age seventy and one-half

(Rev. Rul. 66-11, I.R.B. 1966-3, 6).

The qualification of plans established for only a

specified class of employees rather than for all employees was discussed in a series of four rulings (Rev.

Rul. 66-12, I.R.B. 1966-3, 7; Rev. Rul. 66-13,

I.R.B. 1966-3, 9; Rev. Rul. 66-14, I.R.B. 1966-3,

11; and Rev. Rul. 66-15, I.R.B. 1966-3, 12).

Only one-half of the administration expenses,

funeral expenses, and all other ordinary expenses

connected with the management or division ofTexas

community property are generally allowable as a

deduction for Federal estate tax purposes. Expenses which can be specifically allocated to the

decedent's share of the community or incurred

solely to determine the estate tax liability, however,

are deductible in full (Rev. Rul. 66-21, I.R.B.

1966-4, 15).

Where a corporate shareholder received stock in

another corporation as ~i result of a merger but was

required by a consent decree entered in 1965 to

divest itself of such stock within 7 years, the continuity of interest requirements of the reorganization

provisions of the Code are satisfied if at the time of

the reorganization the corporate shareholder has no

preconceived plan or arrangement for disposing of

the stock received. Ordinarily, theService will treat

5 years of unrestricted rights of ownership as a sufficient period for the purpose of satisfying the continuity of interest requirements of a reorganization

(Rev. Rul. 66-23, I.R.B. 1966-5, 8).

To clarify and supplement the application of the

formula authorized by Revenue Ruling 65-92,

guidelines are provided for computing annual additions to reserves for bad debts by banks for taxable

years ending after December 31, 1964 (Rev. Rul.

66-26, I.R.B. 1966-5, 5).

Various situations are presented for claiming refund of, or taking credit against income tax for, the

manufacturers excise tax on gasoline used otherwise

than as a fuel in a highway vehicle after June 30,

1965, and the tax on lubricating oil used otherwise

than in a highway motor vehicle after December 3 1,

1965 (Rev. Rul. 66-48, l.R.B. 1966-11, 6).

An upland cotton acreage allotment is an intangible pfoperty right which qualifies as a capital asset

under section 1221 of the Code, ifheld by a~taxpayer

who is not a dealer in such allotments (Yev. Rul.

66--58, I.R.B. 1966-11, 12) (T.I.R. 800,-,2-17-66).

The full value of property held by a husband

(who furnished the entire consideration) and wife

as tenants by the entirety is includible in the husband's gross estate where a determination cannot be

made other than that they died simultaneously.

Where the Uniform Simultaneous Death Act is applicable, however, the husband's estate is entitled

to ZL marital deduction on the one-half interest passing to the wife (Rev. Rul. 66-60, I.R.B. 1966-11,

14).

Truck chassis, designed to be equipped with highpressure pumping equipment for use in furnishing

pumping services in oilfieldi, are subject to the

manufacturers excise tax imposed by section

4061 (a) (1) of the Code (Rev. Rul. 66-61, I.R.B.

1966-11,16).

The applicability of sections 892, 893, and 4382

of the Code to an organization separate in form but

wholly owned by a foreign government will be determined by the organization's purposes, functions,

and activities (Rev. Rul. 66-73, I.R.B. 1966-13,

10).

Where a corporation is liquidated under section

333 of the Code (I month liquidation) and the

shareholders continue the business of the corporation

as a partnership, a portion of the basis of the shareholders' stock must be allocated to the goodwill of

the corporation where the goodwill has value in the

hands of the shareholders (Rev. Rul. 6641, I.R.B.

1966-14,9).

In accordance with a prior conclusion that the

sale of a production payment retained from the assignment of an interest in oil, gas, and minerals in

place is a "conveyance of realty sold" within the

meaning of section 4361 of the Code, the documentary stamp tax imposed by that section also

applies to a transaction of the kind commonly described and known in the industry as the conveyance of a carved-out production payment (Rev. Rul.

66-88, I.R.B. 1966-15, 12).

Further guides are furnished for resolving issues

in connection with deferred compensation plans

established by professional services organizations

(Rev. Rul. 66-92, I.R.B. 1966-17, 6).

96

ANNUAL REPORT 9 APPENDIX

When used real property, such as a building, is

acquired for a lump-sum amount, a unified structure is purchased rather than separate components

of the building. The basis (cost) of the used property cannot be allocated into separate component

accounts in order to determine a composite fife for

computing depreciation allowances. Rather, an

overall useful life for the building must be determined on the basis of the building as a unit (Rev.

Rul. 66-111, I.R.B. 1966-19, 6).

The amount of a refund or credit will not be

limited under the provisions of section 6511(b)

(2) (A) of the Code where the last day of the limitation period is a Saturday, Sunday, or legal holiday and the claim is filed on the next succeeding day

which is not a Saturday, Sunday, or legal holiday

(Rev. Rul. 66-118, I.R.B. 1966-20, 18).

The management of health and welfare plans for

a fee by a business league, exempt from income tax

under section 501 (c) (6) of the Code, is an unrelated business subject to tax (Rev. Rul. 66-151,

C.B. 1966-22, 20).

The qualification for income tax exemption of a

"garden club" depends upon its form of organization and method of operation (Rev. Rul. 66-179,

I.R.B. 1966-26, 10).

Procedures are set forth for the application of the

regulations under section 7701 of the Code, relating

to the tax classification of professional service organizations (Rev. Proc. 65-27, C.B. 1965-2, 1017)

(T.I.R. 770,10-6-65).

An administrative procedure is provided whereby

cash basis taxpayers may expeditiously obtain consent to change their accounting practice of reporting

payments received under the U.S. Department of

Agriculture 1963 Wheat Stabilization Program and

the 1963 Feed Grain Program (Rev. Proc. 66-1,

I.R.B. 1966-2,16).

In examining returns filed for taxable years beginning after December 31, 1964, by employees

and self-employed individuals, the Service will accept the use of a simplified method for computing

deductions for costs of operating passenger cars (including vehicles such as pickup or panel trucks) for

business purposes. The method may be used irrespective of whether the taxpayer receives a reimbursment or allowance (Rev. Proc. 66-10, I.R.B.

1966-10,19).

Based upon data obtained from manufacturers of

rear loading compaction-type refuse collection

trucks, the Service will, in the examination of highway use tax returns covering such trucks, accept

without substantiation the exclusion of 3,000

pounds in computing their "actual unloaded weight"

(Rev. Proc. 66-15, I.R.B. 1966-15, 50).

Manufacturers of tobacco products have the initial responsibility in determining whether a roll of

tobacco is a cigar or a cigarette and to taxpay it

accordingly. Samples of reconstituted tobacco

intended for use as a wrapper for rolls of tobacco.

and of the finished product and the package need

not be submitted for a tax determination if the

manufacturer is confident that the wrapper material

is a "substance containing tobacco" and that the

product is clearly distinguishable as a cigar or clearly

distinguishable as a cigarette (Rev. Proc. 66-5,

I.R.B.1966-4,23),

Stills, beer, wines, or distilled spirits shipped to

any possession of the United States on or after July

1, 1965, shall be considered to be exportations for

any purpose within the purview of 26 CFR Parts

196, 201, 240, 215, or 252. This ruling modifies

the definition of "export" and "exportation" contained in the above cited regulations (Rev. Rul. 65-

182, C.B. 1965-2,487).

Interest is payable on the amount paid in excess

of that due with a bottler's deferred payment re.

turn, Form 4077, only as to the amount in excess

of the total outstanding liability for distilled spirits

tax; and underpayment on such return is subject

to interest (Rev. Rul. 66-109, I.R.B. 1966-18, 22).

Two additional meters were approved for metering beer in breweries, and 0 approved meters, to.

gether with related control, installation, and testing provisions, were incorporated in one issuance

for ready reference by interested individuals (Rev.

Proc. 66-14, I.R.B. 1966-13, 22).

SIGNIFICANT ANNOUNCEMENTS

A pamphlet, entitled "The Excise Tax Reduction

Act-Some Questions and Answers for Consumers," may be ordered from the Superintendent of

Documents, U.S. Government Printing Office (Announcement 65-59, I.R.B. 1965-30, 35).

The Service has undertaken a project aimed at

more effective taxpayer guidance regarding the deductibility of payments by patrons who are thereby

entitled to participate in events conducted to raise

97
I

ANNUAL REPORT @ APPENDIX

funds for charity (Announcement 65-61, I.R.B.

1965-31, 28) (T.I.R. 747, 6-30-65).

The National Office Technical Organization has

been realigned to provide better utilization of its

manpower and improved service to taxpayers (Announcement 65-62, I.R.B. 1965-33, 50) (T.I.R.

751,7-2G-65).

Exempt trusts are requested to cooperate with the

Service in updating its records prior to conversion to

automatic data processing (Announcement 65-69,

I.R.B. 1965-37, 54) (T.I.R. 758, 9-1-65).

Cash basis farmers who have reported diversion

payments under the 1963 Agricultural Wheat and

Feed Grain Programs in the year of actual receipt

rather than in the year of constructive receipt may

request a change in accounting practice under Revenue Procedure 64-16 (Announcement 65-72,

I.R.B. 1965-41, 34) (T.I.R. 762, 9-20-65).

New procedures have been developed for processing cases reportable to the joint Committee on Internal Revenue Taxation (Announcement 65-77,

I.R.B. 1965-43, 41) (T.I.R. 763, 9-22-65).

Ile Index-bigest Supplement to CumulativeBulIctins 1961-64, a compilation of digests of all matters appearing in the Cumulative Bulletins for those

years, is available from the Superintendent of Documents, U.S. Government Printing Office (Announcement 65-80

'

I.R.B. 1965-44, 41).

A gift of money, land, or other property to programs designed to conserve the Nation's natural

beauty may qualify for a charitable contribution

deduction (Announcernent 65-86, I.R.B. 1965-50,

42). 1

The Special Enrollment Examination given on

September 23 and 24, 1965, for persons other than

attorneys or certified public accountants, who wish

to practice before the Service, is reproduced in the

Bulletin (Announcement 66-5, I.R.B. 1966-3, 18).

One edition of the Bulletin is devoted to the publication of an index to administrative and procedural

matters (other than those on alcohol, tobacco, and

firearms taxes) which have been published in the

Bulletin since 1952 (Announcement 66-13, 1,R,B.

1966-7).

Beginning January 1, 1967, computer produced

magnetic tape reports of payments of income will be

accepted by the Service (Announcement 66-16,

I.R.B. 1966-8, 61 ).

A brief summary of the various records required

to be retained for Federal tax purposes is included

in the curTent "Guide to Record Retention Requirements," which has been published in the Federal

Register (Announcement 66-25, I.R.B. .1966-13,

24).

'

11

Tbe proposed revision of Form 3646;_1hcome of

Controlled Foreign Corporation, includes a schedule

relating to earnings and profits of controlled

foreign corporations (Announcement 66-37, I.R.B.

1966-19, 21 (T.I.R. 813, 4-20-66).

ALCOHOL AND TOBACCO INDUSTRY CIRCULARS

Industry Circulars 65-30 and 65-31 (Nov. 1,

1965) advised alcohol and tobacco industry members, qualified for extended deferral, that when the

last date for filing a return falls on a Saturday, Sunday, or legal holiday, such return will be timely filed

if it is filed on the next succeeding day which is not

a Saturday, Sunday, or legal holiday.

TECHNICAL INFORMATION RELEASES

One of the primary means of informing the public

of the enactment of new legislation or steps that

taxpayers must take under recently enacted legislation is by the issuance of Technical Information

Releases. Among such Technical Information Releases issued during the year were:

T.I.R. 750 (July 15, 1965) announcing that extensions of time for filing excise tax returns and

paying the tax would be granted to certain taxpayers

entitled to credits or refunds Under the Excise Tax

Reduction Act of 1965 (Public Law 89-44). '

T.i.R. 772 (Oct. 12, 1965) explaining the liability of surety companies with regard to gasoline

and lubricating oil sold priorto July 1, 1965, because

of amendments to the Code by Public Law 89-44.

T.I.R. 790 (Dec. 20, 1965) instructing taxpayers

about changes in references to the Federal admissions tax on tickets for admission to theaters, etc.,

because of the repeal of the tax on admissions made

by Public Law 89-44.

T.I.R. 808 (Apr. 1, 1966) announcing alternative formula tables for withholding of income tax

to assist employers in complying with the Tax Adjustment Act of 1966 (Public Law 89-368).

T.I.R. 809 - (Mar. 29, 1966) calling attention to

the changes provided forin Public Law 89-368 with

respect to the communication services tax imposed

on amounts paid for local telephone services, toll

ANNUAL REPORT e APPENDIX

telephone service, and teletypewriter exchange

service.

T.I.R. 811 (Apr. 5, 1966) pointed out that section 102 of Public Law 89-368 provided that for

taxable years beginning on or after January 1, 1967,

self-employed persons must include their estimated

self-employment tax intheir declaration of estimated

tax.

SUPREME COURT DECISIONS

Civil Cases

The Court, in reversing the Second Circuit in

Fribourg Navigation Co. v. Commissioner, 383 U.S.

272 (1966), held that depreciation was not to be

disallowed in the year of sale, as a matter of law,

merely because the sales price of a depreciable asset

exceeded the adjusted basis of such asset at the beginning of the year of sale. By tying depreciation

to sales price, the Court held that the Commissioner

had commingled two distinct and established concepts of tax accounting--depreciation of an asset

through wear and tear or gradual expiration of useful life and fluctuations in the value of that asset

through changes in price levels or market values.

This decision does not, however, preclude the Cornmissioner from requiring a redetermination of useful

life and salvage value of an asset where they are

found to be erroneous.

In Commissioner v. Tellier, 342 U.S. 690 (1966),

the Court held that legal expenses incurred by a

securities dealer in an unsuccessful defense of a

criminal prosecution were deductible as ordinary

and necessary business expenses. In upholding a

decision of the Second Circuit, the Court rejected

the Government's contention that the deduction

must be disallowed on the ground of public policy.

In Hollywood Baseball Association v. Commissioner, 383 U.S. 824 (1966), the Court followed

its decision in Malat v. Riddell, 383 U.S. 569

(1966), also decided during the same terin, and

remanded the case to the Tax Court to determine whether baseball player contracts were held

"primarily" for sale in the ordiriary course of taxpayer's trade or business. Malat had resolved a

conflict among the Courts of Appeals with regard to

the meaning of the term "primarily" as it is used

in section 1221 (1) of the 1954 Code. In Malat,

the Court rejected the Commissioner's "dual purpose" construction of the term and held that it is

to be given its ordinary, everyday meaning, that is,

"of first importance" or "principally."

In Estate of Leyman v. Commissioner, 383 U.S.

832 (1966), the Court vacated the judgment of the

Sixth Circuit, 344 F. 2d 763 (6th Cir. 1965) and

remanded the case to the Tax Court for computation of the civil fraud penalty in accordance with

Public Law 89-359, a private relief bill. That

statute specifically amends section 894(a) of the

1939 Code to provide, consistent with the corresponding provision of the 1954 Code (sec. 6653

(b) ) and contrary to the pro-Government holding

of the Sixth Circuit, that the fraud penalty for filing

a fraudulent estate tax return is to be computed as

50 percent of the total deficiency rather than as 50

percent of the entire tax, as provided in section

3612(d)(2).

The Court, in Fortugno v. Commissioner, 353 F.

2d 429 (3d Cir. 1966), granted taxpayer's petition

for certiorari and agreed to review a Third Circuit.

decision which held that an advance payment constituted a deposit rather than a payment of tax

for purposes of determining whether interest is due

the taxpayer on a remittance in excess of the finally

determined liability.

The Supreme Court denied the Government's

petition for a writ of certiorari in Estate of Borax v.

Commissioner, 349 F. 2d 666 (2d Cir. 1965) and

Wondsel v. Commissioner, 350 F. 2d 339 (2d Cir.

1965). The taxpayers (husbands) had obtained

ex parte divorces (Borax in Mexico and Wondsel in

Florida) which, at the instance of their first wives,

were declared invalid by the New York Supreme

Court. Marriages entered into by the husbands

following the divorces were also declared invalid.

Despite these declarations of invalidity, the Second

Circuit held that taxpayers may treat the divorces

and remarriagcs as valid for tax purposes.

In Malat v. Riddell, 383 U.S. 569, decided

March 21, 1966, the Supreme Court rendered a

significant per curiam decision adverse to the Govemment in a very frequently litigated area of tax

law. The question presented was whether property held for either rent or sale, whichever proved

to be the more profitable, should be treated as proper-ty held "primarily" for sale to customers in the

ordinary course of a trade or business under section

1221(l).

The Court resolved a conflict on this question

between the circuits, arid held that the word "pri98 99
ANNUAL REPORT * APPENDIX

marily" should be construed in accord with its

ordinary, literal meaning as "of first importance."

The case was remanded for fact findings as to which

purpose, renting or selling, was primary. In addition to its importance under section 1221 (1), this

decision could also affect the interpretation of other

Code provisions using the word "primarily" or substantially the same language.

On the same day as the Malat decision the Court

also decided The Motorlease Corporation v. United

States, 383 U.S. 573, against the Government on

the authority of its prior decision in Fribourg Navigation Co., Inc. v. Commissioner, 383 U.S. 272,

which involved the same question.

On March 23, 1966, O'Malley et al., Exrs. v.

United States, 383 U.S. 627, was decided in favor

of the Government resolving a conflict among the

circuits on an estate tax question arising under section 811 (c) (1) (B) (ii) of the Internal Revenue

Code of 1939, the predecessor to section 2036 (a) (2)

of the Internal Revenue Code of 1954. Thecascinvolved an irrevocable inter vivos trust where the

settlor retained the power to accumulate income for

the remaindermen instead of distributing it currently

to income beneficiaries. The Court held that not

only the trust corpus, but also the income which had

been accumulated under this power, was includible

in the gross estate. It rejected the argument that

the decedent had only transferred the corpus and had

never made a "transfer" of the accumulated income

within the meaning of the statute.

United States v. Catto, 86 S. Ct. 1311, was decided on April 26, 1966, in favor of the Government. In doing so, the Court reversed the Fifth

Circuit and resolved a conflict between its decision

and other circuit court decisions, including United

States v. Ekberg, 291 F. 2d 913 (8th Cir. 1961),

regarding the question of the validity of section

1.471-6(f) of the regulations. This regulation requires that accrual basis farmers and ranchers electing to use the "unit-livcstock-pricc method" of inventorying animals raised for sale, draft, or dairy

purposes must use the same method for inventorying breeding animals also. The result is that the

cash method cannot be employed by such taxpayers

in the case of raised breeding livestock in computing capital gain on tile sale of such animals, and

cash basis taxpayers are able to obtain a substantial tax advantage on such sales not available to

accrual basis taxpayers. Notwithstanding such

acknowledged tax differential, the Court concluded

that the regulation was clearly valid. As a result of

the decision, consideration is being given by the

Treasury Department to requiring cash basis ranchers to capitalize raising costs thereby kemoving the

advantage which they presently enjoy,over accrual

basis ranchers.

The Court on December 13, 1965, in the case of

United States v. Ray Speers, Trustee in Bankruptcy

of the Kurtz Roofing Company, 86 S. Ct. 41 11 affirmed the Court of Appeals for the Sixth Circuit

and held against the United States. The Court

held that under section 70c of the Bankruptcy Act

(II U.S.C. I I Oc) the Federal tax lien is invalid as

to the trustee in bankruptcy unless a notice of Federal tax hen is filed prior to the commencement of

the bankruptcy proceeding. The Court relied on

the legislative history of section 70c and congressional action on bills, which would accomplish the

same result, to support its conclusion. The specific

question presented was whether a trustee in bankruptcy is a "judgment creditor" within the meaning of section 6323 of the Internal Revenue Code of

1954.

On June 6, 1966, the Court decided the case of

United States v. The Equitable Life Assurance

Society of the United States, 86 S. CL 1561, in favor

of the United States, reversing the Supreme Court

of New Jersey. The Court held that a Federal tax

lien was entitled to priority over claims of an attorney

for fees. The Supreme Court of New Jersey had

awarded priority to the attorney's claims on the basis

of a State law which provides for the allowance in

a foreclosure action of an attorney's fee fixed by

statute as a certain percentage of the amount adjudged to be paid the mortgagee and taxed as costs

in the foreclosure action. The Supreme jCourt of

the United States decided that since this New Jersey

law had not been invoked, much less applied, to

establish the liens for such costs at the time when

the Federal tax lien attached, the Federal lien was

prior.

The Court on June 13, 1966, affinned the Court

of Appeals for the Fifth Circuit in part, reversed

in part and remanded the case of Nicholas, Trustee

v. United States, 384 U.S. 678. The Court in

reversing held that the trustee in bankruptcy was

not liable for interest on Federal taxes~ which were

incurred by a debtor in possession during an arrangement proceeding under chapter XI of the Bank100

ANNUAL REPORT o APPENDIX

ruptcy Act where the arrangement proceeding was

terminated and a petition in bankruptcy was filed

before such taxes became payable. Ile Court further held that interest on cabaret and withholding

taxes was not a trust fund. The Court in affirming

held that the trustee was liable for penadties for failure to file timely returns for such taxes. Penalties

are necessary for enforcement and no legitimate purpose would be served by permitting the trustee to

escape the unburdensome task of filing returns. Inasmuch as the case of United States v. Kalishman,

Trustee, 346 F. 2d 514 (8th Cis. 1965), decided

adversely against the Government by the Eighth Circuit Court of Appeals involved the same issue but

only as regards interest, certiorari was held in abcyance pending the outcome of the Nicholas case. In

conformity with the decision in the Nicholas case,

the Court on June 20, 1966, denied the Government's petition for certiorari.

In the case of Segal v. Rochelle, Jr., 86 S. Ct.

.511, in which the United States was not a party, the

Court on January 18, 1966, affirming the Court of

Appeals for the Fifth Circuit, held that refunds resulting from a loss--carryback based on losses occurring during the year of bankruptcy were assets of

the trustee in bankruptcy rather than the taxpayerbankrupt, even though the refunds were not payable

until after the close of the taxable year. This decision will have a substantial effect with respect to

the collection of taxes from bankrupt taxpayers.

On June 6, 1966, the Court granted certiorari

over the Government's objections in the case of

Hades v. United States, 355 F. 2d 746 (2d Cir.

1966). The Court of Appeals in this case had overruled the district court and held that Federal tax

liens were superior against certain mortgagees and

purchasers. The decision is very significant insofar as the collection of the revenue is concerned in

that under the Circuit Court's reasoning and decision a Federal tax lien has no specific time limitalien on its life and survives so long as the underlying

liability is enforceable. Under section 6502 (a) of

the Code, the tax assessed may be collected by a

proceeding in court begun within 6 years of the assessment. Therefore, the institution of a suit to

enforce the tax liability extends the life of the tax

lien beyond the 6-year period. The judgment keeps

the underlying liability enforceable and therefore

"serves merely as a measuring rod for the life of the

lien." The court held also that the tax lien does

not merge into the j u d g m c n t but exists

independently.

Actibris of Lower Court

In response to the Service's recommendation, the

Solicitor General has filed a petition for a writ of

certiorari in Stidger v. Commissioner, 335 F. 2d

294 (9th Cir. 1965). The Ninth Circuit held that

amounts expended for meals by a military officer

stationed at his permanent duty post to which he is

prohibited from bringing his family, constitute deductible "traveling expenses" incurred while away

from home in the pursuit of a trade or business

rather than nondeductible "personal" or "living"

expenses. Ile Ninth Circuit's decision conflicts

with that of the Fourth Circuit in Bercarv v. Commissioner, 165 F. 2d 521 (4th Cir. 1948). The

decision also conflicts with other appellate courts'

interpretations (i.e., the Second, Third, and Fourth)

of the term "home" in the travel expense area.

This issue is of importance because there are approximately 25,000 commissioned officers serving

overseas at permanent duty stations to which they

cannot take their families.

The Seventh Circuit upheld the Commissioner's

position in Rev. Rul. 57-377, C.B. 1957-2, 146, in

Commissioner v. Indiana Broadcasting Corp., 350

F. 2d 580 (7th Cir. 1965), when it reversed the

Tax Court and held that a television station's network affiliation contract (with Columbia Broadcasting Co.) for a 2-year term, which was automatically renewable for successive 2-year terms, was

not a depreciable asset. Ile network affiliation

contracts had been purchased with other assets of

the station.

The Service was successful in a. case involving a

net operating loss carryover and a section 482 allocation issue. In Pauline W. Ach v. Commissioner,

358 F. 2d 342 (6th Cir. 1966), the Service reallocated 70 percent of the 1954-58 income of a dress

business from the Ach Corp. to Pauline. Thedress

business had previously been transferred to an inactive family corporation having heavy net operating

losses. The sole purpose of the transfer was to give

a tax benefit by routing the income of the dress business through the corporation and thence back to

Pauline or her husband in the guise of tax-free repayment of otherwise unrecoverable loans earlier

made by the husband to the corporation. The

Sixth Circuit, holding that the term "ownership?' in

101

I

I
ANNUAL REPORT * APPENDIX

section 269 of the 1954 Code included "beneficial

ownership," also denied the corporation the use of

certain net operating loss-carryovcrs sustained prior

to 1953 in the operation of its creamery and dairy

business.

in another section 482 case the Commissioner

successfully included in the parent corporation's income a portion of the commissions paid and discounts allowed to the parent's wholly owned foreign

subsidiary. The commissions paid and the discounts

allowed by the parent to its subsidiary were far in

excess of the commissions and discounts that had

been paid or allowed to the parent corporation's previously existing independent agent in the same country and to the parent's independent representative

in another country. OilBase, Inc. v. Commissioner,

17 AFTR 2d 1280 (9th Cir. 1966). The Court

upheld the arm's length bargaining standard of the

regulations and effectively limited its prior holding

in Frank v. International Canadian Corp., 308 F.

2d 520 (9th Cis. 1962).

The Commissioner's attempt to establish legal

support for collateral estoppel as fulfilling respondent's burden of proof in support of the civil fraud

penalty has met with mixed success. The Fourth

Circuit in Amos v. Commissioner, 360 F. 2d 358

(4th Cir. 1965), initially added unqualified appellate court approval of the Tax Court's newly established position, that conviction for criminal tax

evasion results in collaterial estoppel as to the fraud

issue in later civil proceedings. However, the

Fourth Circuit subsequently modified its decision

in Moore v. United States, 360 F. 2d 353 (4th Cir.

1965) and held that the wife, who had signed a

joint return but had not been a party to the criminal

evasion action, was not estopped by the husband's

conviction and could litigate the fraud issue in the

civil proceeding.

Taxpayer's attempt to deduct his State's income

tax on his share of business income from a partnership in computing adjusted gross income as an ordinary and necessary business expense was successfully

thwarted in Tanner v. Commissioner, CCH par.

9537 (4th Cir. 19613). Significantly, the Tax

Court's decision was affirmed by the Fourth Circuit

which had previously allowed a deduction from adjusted gross income for legal and accounting fees

incurred in controversies with respect to Federal income tax deficiencies, and interest thereon, as deductions "attributable to a trade or business carried

on by the taxpayer" in Standing v. Commissioner,

259 F. 2d 450 (4th Cir. 1958).

In John G. Moflatt v. Commissioner, 17 AFTR

2d 1290 (9th Cis. 1966), the Ninth Circdit affinned

the Tax Court's holding that, under sq4ion 356 of

the Intemal Revenue Code, the transferee corporation acquired "substantially all" of the assets of the

transferor when it had the use and benefit of all the

assets relating to the operation of the transferor's

business even though certain norroperating assets

were retained by the transferor's stockholders (i.e.,

35 V2 percent of the book assets of the transferor).

It specifically adopted the position in Rev. Rul. 57-

518, C.B. 1957-2, 253, to the effect that no specific

pcrcentage should be controlling in determining

what are "substantially all" of the transferor's assets.

This decision refutes the oft-cited principle that 86

percent total net worth is sufficient (Commissioner

v. First National Bank, 104 F. 2d 865 (3d Cir.

1939) ) but. that 68 percent is insufficient (Arctic

Ice Machine Co. v. Commissioner, 23 B.T.A. 1223

(1931 ) ) tomeetthe "substantially all" requirement.

In Uinta Livestock Corp. v. United States, 335

F. 2d 761 (10th Cir. 1966), the court held that

execution of a Form 870-Ad promising not to claim

refund did not estop the taxpayer from thereafter

suing for refund. This decision represents another

in a long line of conflicting decisions on this question. The question of binding effect of a Form 870-

Ad is of great importance administratively because

of the numerous "agreements" entered into by the

0(,rvice with taxpayers using these forms.

Tbe decisions in Jerome Moore v. United States,

360 F

.

2d 353 (4th Cir. 1966), and 0. K. Arm

strong v. United States, 354 F. 2d 274 (Ct. Cl.

1966), resolved in favor of theGovemment the very

important question of whether a

'

prior criminal

conviction is binding on a taxpayer under collateral

estoppel principles in subsequent civil proceedings

involving fraud penalties for the same year. TIM

decisions are consistent with several other recent

decisions to the same effect.

However, in the Moore case the circuit court resolved another important aspect of this problem

in a manner unfavorable to the Government. It

h'Ide that the wife who filed a joint return could

still relitigate the question of her husband's fraud,

since she was not a party to the criminal case. The

court did not discuss the question of whetherthe wife

102

ANNUAL REPORT * APPENDIX

and husband could be considered to be in privity for

collateral estoppel purposes.

In Morrison v. United States, 355 F. 2d 218 (6th

Cir. 1966), cert. den. June 13, 1966, the Government was successful in upholding its position that

an uncompensated casualty loss had to be offset

against a section 1231 (a) gain before any loss could

be deducted under section 165 (c) (3). This issue

affects numerous taxpayers. The court declined to

follow the previous decision for the taxpayer in

Maurer v. United States, 284 F. 2d 122 (10th Cir.

1960), involving a similar question.

The year saw two more adverse decisions concerning the property status of the cash surrender

value of a level premium life insurance policy in lien

foreclosure suits, the cases being United States v.

Home Life Insurance Co., 355 F. 2d 86 (2d Cir.

1966) and United States v. Miro§, 353 F. 2d 481

(7th Cir. 1965). Earlier adverse decisions were

in United States v. Mitchell, 349 F. 2d 94 (5th Cir.

1965); Mutual Life Insurance Co. of New York v.

United States, 343 F. 2d 71 (9th Cir. 1965); and

United States v. Sullivan, 333 F. 2d 100 (3d Cir.

1964). In rejecting the Govemment's arguments

the Third and Seventh Circuits have held that a

policy loan is not a direct loan, but rather an advance to the insured of the cash loan value sifice

the insured is merely drawing down money deposited with the insurer which he has no obligation

to repay. These was not a lien priority question,

as contended by the Govemment, since the insurer

was a debtor of the insured, not a creditor. Further, as to the effect of a notice of levy, the Second,

Third, Fifth, and Ninth Circuits have held that

while a tax lien attached to the power of election

held by the insured to cancel the policy and receive

the cash surrendervalue, thelevy alone did not exercise the right of the taxpayer to demand the cash

surrender value. Petitions for writs of certiorari

were not filed in any of the cases.

A significant decision with respect to the collection of taxes by suit was entered by the Fifth Circuit in the case of United States v. West Texas State

Bank, 357 F. 2d 198 (5th Cit. 1966). The court

reversed and remanded the district court decision,

holding that the State statute of limitations did not

apply in a suit brought by the Govemment on a contract under which the bank had agreed to assume

the debts and liabilities of the taxpayer corporation

in consideration for a transfer by the corporation

of all of its assets. The United States had brought

suit as a third party beneficiary to enforce the contract and the circuit court reasoned that since the

action was one to collect taxes the Govemment was

acting within its sovereign capacity and was therefore immune from time restrictions imposed by

State law.

In the case of United States v. Silverstein, 344

F. 2d 1016 (2d Cir. 1965), cert. den. 382 U.S.

828 (1965) the Court of Appeals affirmed the District Court, holding that a general partner in two

real estate syndicates was not entitled to invoke the

fifth amendment privilege against self-incrimination

as grounds for his refusal to produce the syndicates'

books and records where it was found that the syndicates; were of a character so impersonal in the scope

of their membership and activities that they could

not be said to embody or represent the purely private

or personal interests of their constituents, but rather

to embody their common or group interests only.

The Court of Appeals for the Seventh Circuit

had occasion to rule with respect to two suits

brought to enjoin the district director from using

evidence for purposes of asserting deficiencies, which

evidence was unlawfully seized by State officials and

then turned over to the Service. The Seventh Circuit in Zamaroni v. Philpott, 346 F. 2d 365 (7th

Cir. 1965), affirmed the district court in dismissing

the injunction suit against the district director,

agreeing that there was no jurisdiction to enjoin

the Service from using certain evidence in the determination of a tax liability. The Court did not rule

on the question of whether the exclusionary rule set

forth in Elkins v. United States, 364 U.S. 206

(1960), applies to civil proceedings. In Kennedy

v. Coyle, 352 F. 2d 867 (7th Cir. 1965), the Court

affirmed the district court's dismissal upon the

grounds that the taxpayer had an adequate remedy

at law. The Court again refused to resolve the

question of whether the exclusionary rule applies

to civil proceedings.

In the case of Illinois Redi-Mix Corp. v. Coyle,

66-14 STC par. 9435 (7th Cir. 1966), the question

presented was whether due process requires that

attorneys' and accountants' fees for services rendered

and to be rendered in contesting jeopardy assessments for income taxes be paid out of funds of the

taxpayer which are subject to Federal tax liens.

The Court reversed the district court which had ordered payment of the fees, stating that the constitu103
ANNUAL REPORT * APPENDIX

tional question of due process was prematurely

decided.

The Government obtained another significant

decision in the case of United States v. Montreal

Trust Company, 358 F. 2d 239 (2d Cir. 1966),

cert. den. 86 S. Ct. 1366. The United States instituted suit in the district court in New York against

the estate of the taxpayer, a deceased resident of

Canada, to reduce to judgment income tax assessments arising from income realized by the taxpayer

from various New York transactions. Smite was

made on the taxpayer's Canadian executors under

the New York "long.-arm" statute which confers

"personal jurisdiction over any nondomiciliary or

his executor or adminL;trator," as to causes of action

arising from the transaction of business in New

York. The bank, one of the executors, challenged

the jurisdiction of the district court alleging that

service was not authorized under the New York

statute. Ile district court held that the Government had not proved necessary jurisdictional

facts. The Court of Appeals decided that the taxpayer through the activities conducted by his agents

in New York had transacted sufficient business in

the State to establish prima facie proof of the jurisdictionalfacts. The Court remanded the case for a

hearing on the merits, stating that the threshold

jurisdiction established for purposes of utilizing the

"long-arm" statute does not relieve the Government

at the trial on the merits from proving the facts

upon which jurisdiction is based by a preponderance

of the evidence.

In the case of Brown v. Lethert, 360 F. 2d 560

(8th Cit. 1966), the Court affirmed the order of the

district court denying an injunction against the coIlection of Federal taxes. The taxpayer sought the

injunction on the basis that the Service had not

complied with the statute requiring notice of determined deficiencies in income tax. TheCourtfound

that the notices of deficiency were properly sent

to the taxpayer's "last known address" and held that

the failure of the taxpayer to receive the notices was

not relevant because a notice sent by registered mail

to the correct address is adequate under the statute,

whether or not it is received.

The Seventh Circuit Court of Appeals in the case

of Tillotson v. Boughner, 350 F. 2d 663 (7th Cir.

1965), reversed the district court and held that the

attorney for an undisclosed client was not in contempt of court for refusing to divulge the name of

the person who employed him to make a voluntary

payment of taxes. This case involves the situation

where an attorney transmitted a cashier's check to

the Service for over $215,000 and refused.to divulge

the name of his client. In 1964 in the decision of

Tillotson v. Boughner, 333 F. 2d 51~ '(7th Cir.

1964), the Court of Appeals affirmed the district

court order holding that the Service had the authority to issue a summons to ascertain the tax liability of

tl~e unknown taxpayer. After the attorney's petition

for writ of certiorari was denied, he still refused

to disclose the identity of his client, raising for the

first time the attorney-client privilege. The United

States moved for a contempt citation and the district court held him in contempt and fined him $100

a day until he purged himself of his contempt. On

the appeal to the Court of Appeals, the Court held

that the attorney had not waived the right to claim

the attomey-client privilege and further, that under

the facts of the case the attorney-client privilege

includes the identity of the client. Certiorari was

not sought by the Government. As an additional

matter of interest, the Court of Appeals in the case

of Rayunec v. Schulze, 350 F. 2d 666 (7th Cir.

1965), cert. den. 382 U.S. 919 affirmed the district

court, holding that the records of the bank from

which the attorney purchased the cashier's check

for the undisclosed client were not clothed with the

attorney-chent privilege and ordering that the bank

produce its records.

Of special interest were two cases in which taxpayers convicted of income tax evasion were later

detected and convicted of willful attempts to evade

payment of the same taxes which they had evaded.

Harold C. Trownsell, Chicago, Ill., was found

guilty by U.S. judge J. Sam Perry of willfully attempting to evade the payment of corporate and individual income taxes for the years 1946 to 1953,

inclusive. Trownsell was sentenced to 5 years in

prison,. with the proviso that the court would reconsider the sentence if within 60 days, Trownsell would

take some action towards the returning of $500,000

from Switzerland. Trownsell has appealed his conviction. In 1954 Trownsell pleaded guilty to cvading the income taxes of the Trownsell Chevrolet

Sales, Inc., and Chicago Avenue Chevrolet, Inc., for

the years 1946 to 1948, inclusive, for which he was

sentenced to serve 3 years in prison and fined

$10,000. In the recent trial he was found guilty

of attempting to evade payment of these corporate

104

ANNUAL REPORT e APPENDIX

income taxes, as well as income taxes for other years,

owed by him and the cprporations. The evidence

showed that as a part of the scheme of evading payment, the defendant had sent in excess of $500,000

out of the country to a Swiss bank.

Charles R. (Ruby) Stein pleaded guilty to willfUl attempted evasion of the payment of his income

taxes for the years 1947 to 1950, inclusive, and

willfully evading his income taxes for the years

1960 and 1961. judge Weinfeld of the Southern

District of New York, sentenced Stein to serve 4

years in prison, concurrently, and to pay fines totaling $30,000. In a prior prosecution, Stein in 1954

pleaded guilty to evading his taxes for the years

1946 to 1949, inclusive, and was sentenced to serve

a year and a day in prison together with I year's

probation. As noted above the recent prosecution

was partly based on willful evasion of the payment

of taxes for several years covered by the prior cvasion case. Newspaper publicity referred to Stein

as a "loan shark's loan shark."

Perhaps the two most significant decisions in civil

cases in the alcohol and tobacco tax area were

handed down by district courts. In Wood v. United

States, 250 Fed. Supp. 995 (D.C. S. Car.), the court

clearly and squarely upheld the Government's traditional position that the alcohol contained in ftrmented but as yet undistilled mash found at the site

of an illicit still is taxable as distilled spirits. Although this has been the Government's view for 100

years, never before has the issue been squarely and

definitely presented in a reported case.

The other district court case of outstanding Significance involved the judicial forfeiture of the mail

order weapons purchased by Lee Harvey Oswald

and used in the assassination of President Kennedy

( 15 U.S.C. Ch. 18). Forfeiture under the Federal

Firearms Act was sought on the gro

I

und that the

weapons were involved in a violation of the Federal

Firearms Act (15 U.S.C. section 905(b) ) in that

Oswald, by ordering the weapons under a fictitious

name, caused the dealers who sold the weapons

(though unwittingly) to make false entries in the

records which the law required to be maintained.

In a strong opinion (U.S. v. One 6.5 mm. Mannlicher-Carcano Military Rifle, etc., 250 Fed. Supp.

410) the District Court decreed forfeiture of the

weapons. The claimant, who allegedly purchased

the weapons from Mrs. Oswald, has appealed and

231-691 0_66-8

the case is now pending before the Court ofAppeals

forthe Fifth Circuit.

Another wagering tax forfeiture case of significance, One 1961 Lincoln Continental Sedan v.

United States was decided by the Court of Appeals

for the Eighth Circuit in May of 1966 (360 F. 2d

467) when the Court reaffirmed the position that a

substantial amount of currency is required in the conduct of a wagering operation and is therefore subject

to forfeiture as is an automobile which is used as

an active aid in the business. Of greater significance, however, is the Court's rejection of a contention that One Plymouth Sedan v. Pennsylvania,

380 U.S. 693 (1965) requires that the Government,

in a forfeiture case, prove its case beyond a reasonable doubt. The Circuit Court said "overwhelming authority unequivocally holds that the esssential

facts must be established by a preponderance of the

evidence and not beyond a reasonable doubt."

Perhaps the largest sum of money subjected to

judicial forfeiture in recent years was invloved in

U.S. v. $305,64426, Civil Action No. C65-403,

decision dated March 8, 1966, in which the District

Court for the Northern District of Ohio forfeited the

money seized from the operators of a large scale

"numbers" operation in the Cleveland, Ohio, area.

United States v. George Fisher, as claimant of one

1954 Cadillac sedan, 353 F. 2d 396 (5th Cir. 1965)

is of importance primarily because the Circuit Court

supported the Government's contention that a hand

stock gun designed to fire fixed shotgun ammunition was a "firearm" in the "any other weapon"

category under the National Firearms Act and not

a pistol or revolver which types of weapons are not

subject to the act. This decision will be helpful

in controlling commerce in this type of weapon

which has proved troublesome in the past.

There were two significant criminal decisions in

the firearms area. In United States v. Forgett, 349

F. 2d 601 (6th Cir. 1965), the Circuit Court upheld

the conviction of Forgett for shipping in interstate

commerce 52 firearms which had not been registered

as required (sec. 5841, I.R.C.) in violation of the

National Firearms Act (sec. 5855, I.R.C.). Forgctt had contended that the registration provisions

of section 5841 violated the fifth amendment, relying on Russell v. United States, 306 F. 2d 402 (9th

Cir. 1962). The Court rejected this contention,

pointing out that the offense was the unlawful transportation, not the failure to register, and that, in

105
ANNUAL REPORT * APPENDIX

any event, registration of the firearms by Forgett

prior to shipment would not have incriminated him.

Certiorari was denied by the Supreme Court on

February 28, 1966,.3B3 U.S. 926.

. The precedent effect of the refusal of the District

Court to consider a sawed-off shotgun a firearm under the National Firearms Act because the firing

pin was missing (U.S. v. Thompson, 202 Fed. Supp.,

N.D. Cal., 1962) was weakened by U.S. v. Cosey,

244 Fed. Supp. 100 (D.C.E.D. La. 1965) where

the Louisiana District Court, although disclaiming

any intention to criticize Thompson, after a courtroom demonstration as to the case with which the

gun could be. fired by using a nail, held that a sawedoff shotgun, minus a firing pin, was a firearm under

the National Act.

The power of the Service to annul alcoholic beverage permits secured through fraud, niisrepresentation or concealment of material fact has been

considerably strengthened by a decision of the Court

of Appeals for the Eighth Circuit. The Circuit

Court in White, et al. v. U.S., 355 F. 2d 58, affirmed

an administrative order annulling an outstanding permit because of the concealment of the continued interest in the business of a person whose

connection therewith had resulted in a denial of an

application in 1955, 13 years earlier. In a decision

of considerable precedent value, the Court finally

obviated the possibility that the law might be

thwarted through "a game of successive subsequent

transfers" under section 4(g) which provides for

the continuation of a transferred business pending

consideration of a timely filed application for a new

permit (cf. Mid-Valley Distilling Corp. v. DeCarlo,

161 F. 2d 485 (3d Cir. 1947) ). The authority of

the Secretary to complete proceedings for the annulment of an outstanding permit notwithstanding the

filing of an application by an alleged transferee of the

business was specifically confirmed. The decision

is also of importance in that the Court made it clear

that an administrative order may be validly sup.

ported by the accumulative effect "contextually, in

the whole situation," of a series of "evidentiary details of testimony, documents, memoranda, admissions, act and circumstances" each of which may be

capable, separately, of opposing implications and

inferences.

Criminal Cases

In the case of United States v. Kohatsu (C.A. 9,

1965), 351 F. 2d 898, the Ninth Circuit Court

of Appeals affirmed the conviction of the defendant

for willful tax evasion and for willful falsification

of income tax returns under penalty of perjury,

rejecting his contention that the Suprer

'

fie Court's

theorem of the right of an accused to,an attorney

as announced in Escobedo v. Illinois' (1964) 378

U.S. 478, was applicable to investigations by a

revenue agent and a special agent. In effect the

court sharply distinguished the arrest case and its

"custodial and accusatory aspects" as covered by

the Escobedo decision from an investigation by the

Service the purpose of which is to determine whether

in fact a crime had been committed and, if so, by

whom.

On June 20, 1966, following its decision in the

case of Miranda v. State of Arizona, the Supreme

Court denied Mr. Kohatsu's petition for a writ of

certiorari. In the Miranda case, (1966) 384 U.S.

436 the Court indicated that the rationale of the

Escobedo case applied to cases involving "custody"

of the accused, or deprivation of his -freedom of

action in any significant way ~ Mr. justice Douglas

found with respect to the Ninth Circuit Court of

Appeals decision in Kohatsu, no violation of the

principles in Miranda v. State of Arizona, 384 U.S.

436 and was of the opinion that certiorari should

be granted and the judgment below affirmed.

The Supreme Court on May 23, 1966, in.the case

of the United States v. Blue, 384 U.S. 25 1, held that

the pretrial order of a U.S. district court dismissing

a criminal indictment charging income tax evasion,

on the ground that the defendant had been compelled to incriminate himself in civil tax proceedings,

was a decision "sustaining a motion iri bar," and

hence that the Government was entitled to appeal

directly to the Supreme Court under the Criminal

Appeals Act.

Afterthe defendant had been advised by the Scrvice that criminal charges might be brought against

him for violation of the Internal Revenue Code,

jeopardy assessments were made against him, his

wife, and his wholly owned corporation. Assets

were seized and tax liens recorded. The defendant

contested the proposed deficiences alleging errors in

the determinations. Over a year later, the defendant was indicted on various income tax evasion

counts involving the same years as the jeopardy

assessments and the consequent Tax Court proceedings. The defendant contended successfully to the

district court that he had been compelled by the

106

ANNUAL REPORT * APPENDIX

civil proceedings to come forward in the same matters involved in the criminal proceedings to testify

against himself. The Supreme Court reversed the

district court, and in part, referred to the Government's argument that the Tax Court pleadings filed

by the defendant were no more than denials of underpayments and did not constitute incriminating

evidence.

In addition, the Court held in effect that even

if they assumed that the Government did acquire

incriminatory evidence in violation of the fifth

amendment, a defendant would at most be entitled

to

suppress the evidence and its fruits if an attempt

was made to use them at the trial. The remedy

at the trial of exclusion from evidence of illegally

s

c,

ized material does not of itself include barring

the prosecution altogether.

The conflict in the Circuit Courts of Appeal for

the Fourth and Sixth and for the Fifth Circuits as

to the constitutionality of the statutory presumption

(sec. 5601 (b) ( I ), I.R.C.) that defendant's unexplained presence at the site of an illicit still shall

be deemed sufficient evidence to authorize a conviction of the crime of having possession, custody, or

control of an unregistered still (sec. 5601 (a) ( 1 ),

I.R.C.) was resolved against theGovernment by the

decision of the Court in United States v. Romano,

382 U.S. 136. In United States v. Gainey, 380

U.S. 63, the Court, last term, had upheld the similar presumption (sec. 5601 (b) (2), I.R.C.), applicable to a charge of carrying on the business of a

distiller without having given bond. In Romano,

it distinguished Gainey, on the ground that, although

there is a reasonable connection between the fact

proved; i.e., presence at the still, and that presumed;

i.e., carrying on the business, since one who is found

at the still site is likely to be aiding and abetting in

the illegal operation in some capacity, this coAcction is too remote and tenuous when the performance of a specific act or function; i.e., possession,

custody, or control, is sought to be inferred from

defendant's presence atthestill.

Thirteen petitions for certiorari were filed by

defendants in alcohol and tobacco tax criminal cases,

nine such petitions were denied and three were pending action at the end of the term of court.

STATISTICS OF INCOME REPORTS PUBLISHED

Individual Income Tax Returns, 1963 (208 pps.,

$1.25).

Corporation Income Tax Returns With Accounting Periods Ended July 1962-june 1963 (422 pps.,

$2.25). .

Corporation Income Tax Returns With Accounting Periods Ended July 1963-june 1961, Preliminary (38 pps., 300).

U.S. Business Tax Returns With Accounting Periods Ended July 1962-june 1963 (406 pps.,

$2.25).

U.S. Business Tax Returns With Accounting Periods Ended July 1963-June 1964, Preliminary (24

pps., 200.).

Fiduciary, Gift, and Estate Tax Returns, 1962

(108 pps., 650).

Depletion Allowances for Mineral Production Reported on U.S. Tax Returns, 1960 (62 pps., 400).

Statistics of Income publications may be ordered

from the Superintendent of Documents, U.S. Govcrnmcnt Printing Office, Washington, D.C. 20402.

107

-

--t -
-4 U)

r4L
Notes: All yearly data are on

a fiscal year basis, unless otherwise

specified. For example, data headed "1966" pertain to the fiscal

year ended June 30, 1966, and "July I" inventory items under

this heading reflect inventories as of July 1, 1965.

In many tables and charts, figures have been rounded and may

not add to the totals which are based on unrounded figures.

,

Internal revenue districts are listed in this section by the names

of headquarters 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 83.

Ill

11

STATISTICAL. TABLES

COLLECTIONS, REFUNDS, AND RETURNS FILE6

Table

1. Internal revenue collections by sources and by internal revenue regions, districts, States,

Page

and other areas .............................................................. 112

2.

1

nternal revenue collections by sources and by quarters .............................. 120

3. Internal revenue collections by sources .............. ...... ..................... 121

4. Internal revenue collections by principal sources, fiscal years 1940-66 .................. 123

5. Internal revenue refunds including interest .............. .............. ..... ..... 125

6. Number of returns filed by internal revenue regions, districts, States, and other areas ..... 126

7. Internal revenue tax on manufactured products from Puerto Rico .............. ...... 127

ALCOHOL AND TOBACCO TAXES

8. Establishments qualified to engage in the production, distribution, storage, or use of alcohol

and alcoholic liquors ............................................. : ............ 127

9. Establishments qualified to engage in the production or exportation of tobacco products. . 127

1

0. Permits relating to distilled spirits under chapter 51, IR Code ........................ 127

11. Permits for operations relating to alcoholic beverages under the Federal Alcohol Administration Act .................................................................. 128

12. Permits relating to tobacco under chapter 52, IR Code .............................. 128

13. Label activity under Federal Alcohol Administration Act .... ....................... 128

STAMP TAXES

14. Number of occupational tax stamps issued, by class of tax and by internal revenue regions,

districts, and States ........................................................... 129

CASES RECEIVING APPELLATE CONSIDERATION OR IN LITIGATION

Appellate Division

15. Receipts and disposition of protested income, estate, and gift tax cases prior to issuance of

statutory notice (pre-90-day cases) .............................................. 133

16. Receipts and disposition of protested income, estate, and gift tax cases in which statutory

notices were outstanding (90-day cases) .......................................... 133

17. Receipts and disposition of income, estate, and gift tax cases petitioned to the Tax Court

(docketed cases) .............................................................. 134

Office of the Chief Council

18. Processing of income, estate, and gift tax cases in the Tax Court ...................... 134

19. Receipt and disposal ofTax Court cases in courts of appeals and in Supreme Court ..... 135

20. Receipt and disposal of suits filed by taxpayers in Federal courts and actions by the United

States for recovery of erroneous refunds .................................... ..... 135

21. Decisions of courts of appeals and Supreme Court in civil tax cases .................... 135

22. Receipt and disposal of collections, injunction, summons, and disclosure cases ........... 136

23. Receipt and disposal of insolvency and debtor proceedings ........................... 136

24. Receipt and disposal ofmiscellaneous court cases, lien cases not in court, noncourt collection

litigation cases, and appeal cases .............................................. . 136

25. Caseload report ................................................................ 136

COST OF ADMINISTRATION

26. Obligations incurred by the Internal Revenue Service ......................... ..... 137

27. Obligations incurred by the Internal Revenue Service, by activity ..................... 138

28. Quantity and cost statistics for printing ............................................ 139

110 J."I
I

ANNUAL REPORT age STATISTICAL TABLES

Table I-4afternal revenue collections by sources and by internal revenue regions, districts, States, and other areas

l1rith-undsefdolla.. See table 3, P. 121, to, tax rates and further breakdown of national totals by spurcenta, indwid ..I loloin. and inchpley-pt tax.

Internal revenue regions. districts, Stjti3 and other areas I Total int .... I

(States=6t by single districts initiated in On~enthesen;

revenue

colliulin.,

Corporation

incohne Us ,

In'... tax

not withhold

In... to.

withheld and

if

Railroad,

U111111Y.

0 her S , fi

far. hO.n at button. . U a)

Total

..it iaff.

:.Ploy

old-ate and

diset! ly

l,

r allrenrehM ..of

. I..... ne

ptin;

ps.- . . .

c.

(1) (2) (3)

(1)

(5) (6) (7)

luedbeed stathea. leenal............................... 1211, M.261 so, am, all al. us, us is, all, an U, at$, an an, an .67. m

eadexh-A"anin, 31 M 122 6, SU 322 U, In 4411

d'"en? "'"0. M

U4. .3 M,M

Albany

..

42Z 706 730

que.

261

T M 112

2

oaten and ----------------------- `2

11) ........ ------ J"1207 M511:1L'932 2, 2": IRS `14712'

SIB: 314

99

171 : 824

2 4

.. 39

3 21

1 497

1: 7 1

17.278 : ~~ b:1:

B.Oklyn ------------ ,Ul 33. .74 2 "

"

62 203

I

35 :412 :2

7:4

99 13.119

: c b

B0.1- ........... on,

, n

"'If * 1' ..... ........... ...........

2:

4,3, 73S

'33

.: S.

19,147

. :

:

108,428 08

341:141

30 592

1.2161:311

7

07 17,1 11,1221 69

H.Mo .

rd ....D.0 ..................... 2AN188 32 133,513 1,699 472 432

1 56

I

241 641 7 7I1 1 121

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

'"nouth.

eh

.

.......

.........

'* P `

17,065,622

281.375

6,615,561

44.898

4

9,029, 70

224,357

1. 657: 916

53 DDIS

: 769

7:21

'

86: Sol

55

8:

289

1

-1

donce-::::::::: ~F hod.fII.ndi -----------

27

577,2

1

us 27,601 411,269 93 277 3 11 979 13 3,000

Mid-A

-T

...........

Bell laryltnd rni 2:112:314 - 333 ""' 351: I'll

U.7U,4n

2 2()L 12l

2. M, Sol

417.739

I,- an

1,66D 496

an, &M

42,910

n "I

I re ii~ ). 10.394

No ink- N

1

4,309, 26

J",2

66

2: 7 : 511

64

1

60,341 11968 123 4

..

71

'

fifixtitughnS .........-

644,

':227,412 W 1 ol':447" 74, 1 32:0:9'N'

M9

'723:0 3 1 112

: gSa

TI:G24.3.04

oi~

732

3

324

22 84

55

'6

B,

Ir,, Wn

W i

92

204:282 ` "'

311:113 ,S 2

14

1, I53 531

14 332

316,426

2D6 745

782,168

3D4 493

32:056

3

:

7

3 201

.

no ngto

od,thadat Reaslao ........ --------------.......

1 11n

r

9'477'" 1,694 099

l.ads

3 64: 2,4 9

Mi 163

1 087

,

1. 1. "1

211 W

.

4.11U7: US 1: 61

1

13

.

191:11 116

1, ,

a nifii,W:::: :::: a Libe ia). -:::::::::::::

445 1

48,693

2

248 1 9:0,11 443,219 6,595 5 392

C,

1' ' ''

615 111 1 4 7 141 131 Il 111 232 324 112 1. 4:305

a . rth

1"

jacKsort -.............. -

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

:

2,999

2 771

31~1: 7,07a

07

6,X : 31,

~1G: 1979 go

1,111~6' ,

1.5,4 ll:,06320

:7,

293

4

S59: 103 9273

815: "2

11gli31

1,

042

2,:71

208

to. T1 1

NnhAll ----------- In..-.) ......... -------- Z

1:

119,804 227,145 825,153 249,969 S&A, 729 1,428 7. C26

Ciml Raw........ -.......... ------------- .........

t S d b l 3 11 196 'M'= 71

11

I "I. "1

4

20

2 617

2.1136~ Ux

5C

1 :%:103115 :154 SO11:173

6&2

ncinna ow)------ :

.

Ct. i. . ......... ( ao ~ ~ e

SU it below).--

-- ::::::::: 1 035:

5 "

1,283:992

3 ~

'59

'

13'. 788 2,402,115 31.11 21 22

Dart. I ..... 9:974, 4 11 3, 71 311 4 111 141,333 3.1311.112 5

2

8, 51

33 :

312

I

l.dia.arli.- ....

- India.

nt k L i il K

61

2,755,

1 981

'"

5 :.77

09

218 488

1: 1,9:

77

606 9

8-

3111 but '1 " 4' 315:204 20

,76

15 3

1

6

9

10.34

4 282

1

e uc v I— .... y) ..................

Parkersburg ol ........ War Virginia) -----------

.

421: 152

,

64,561

,

331.250 95,825 231,078

,

$1 4: 297

Mid-,

Atd d`=7 -

ad,-

ISO: *34"5 a .-18:'750 '11"20141 2""' 47 -423 I IF- Us 806

1

-

U.M

, -

711

261: 21 2,111:1 13 1, 111:15

4

,

1, 17111:141 4

,

1314

"

4 1:1.5 III1:12

So

10,558 3

Do. 7

F, North Dakills? ...................

966 1

53

135.DD3

19, 70

807

7 14

58

116,262

2 ,

Whoon"p)- _ 48,276 17,29 20 170

M

'-80 ..

516

"

1,41,114 321 311

1,

11 641 11 11 "1

Ribnaide) .. -

0

fill ---------------------

RLou 's n

697:021

2: 36 41St

'954:

127.95.

46G..: '

494,073

71: 13

1

9

'

9

1:33 7 7

1,6:5~5

442.953

288 23

5: 52,

.3

386.428

(05 33

1 7

29,042

3 3,797

361:2

2:974

193:11

'

S Pan Min esota) ------

Springfield " (See (b) below)...

1

2

1,479,301

959

321,657 816,371 265: 139 ' 545:218 811 5,2 0 3

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

a- '2*57: "

,

2

E

6 ..

1

.'-' 2. 893a

"

as

in.. 12 122 :"n`"` 146,051 - "5 1 314

Ault

, 4,

, .1. 7

:,

H 99 1, 560:411 501,576 08 1

('41 6

3,396 11,35

Cray- ............. (Wycinning) .... 17

"2 '1 1

17 274 31,685

5:

4 137

7

445

(I be -----

0

Coloo~.)!-)-

2: :

092 111

386 29

,

415: 17

225

1,

1,502: Sag

1,115 23

461,7:3114 1 7

1

.,03155:gGL 1 1:115 S

930

1,1:US91

Lit 1. Rock ... .......

1

386:105 1: 794 302:386 110,229 189, SOD 206

New Orleans-.. ' ' 5' ---- (Louisiana). ------------------ -

klahoma City.

0 "`

1,101.11, 059

1'138

11.54:112

07

131,1:111

62

214:131 '92

189

141 4 4:3'491 7382

4

8

:

1 3 4

1

787

With ~ 2.UIn 767:026 141.479

581,

346 197,910 345,181 34,964 3:292

*-a- .......... -----------

R"I"

no. 633 2,398,7011 U, 12 In. ung 69,339 72,607

Anchorage— ......... (Alaska).... ...------- 81.83

7

771 71,791 18,787

5

2'260 ----------

a. Ali '44

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

min,tana)-----

245,743

111 713

48 736

30,674

117 St,77 4155:17,11 131:130396

'9216 7

Hereto

In ... ",*Ilih - ---

323:6

14 63 '23 2'2 2 4 '

64,420 176.179 112

o

' LolArqp,!iC.:: ;I;

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

6.316,1 7 980; 071 4,611 :1 7 9 1,239,754 3 3 7 52

1 1

1,

936 31 165

Phourn

A

-----

'.,it.

"- -: nd ('0 O"n)'

421:5 a 33

83 353

1 3 3

41:237

57:23

647 73'

0

119.128

196

5:

23 .6

"1

2

'

129

11

2.389

4.11

Ron,. ........... (Naxad.)- -------

211 4 51

1

3 ''

177.4

11

:780 1 21: 353

So

.h

------ It Uk. City full ? -.. .......M7:7 1 11 : 141 243,671

5 '7 63

, So nci ~S.. F .) b low ,

' i : )

at .. 4 768 283 709.349 3.435,131 926: 939 2, 438. 4.2 49 462 2 26

S. ttl Wnhi.jrt n).

---------

1:5

70:457

' " *

287, US

49

'''

1,156,156

313 Me

:

289,303

res Us

:

..".

no

655 7 :480

P orto Rico................ U

Other- . ------------- .........:::-::::::::: ---------

.41stributod:

1 31 0

343,580 0

210

44,185

75 644

277,620

5

197,215057 6797.156 1,197 111

D.r1pu`Y

rn int' -------- --

----------

l

1,693,379 ....... ---- 1,78C,973

",--------

T, If 1,790,672 -9,699 ...... -

,ad to vernment of Gulne. ...........

.

Withheld to an of Federal employeas,....-..............

-4,133

1 257,462

---------- ::

----------

1 1:.16323

257

1

::- ...... 1 133

257:462

Calitourl-------------

linnis . . . -------------

N

-

Ohio York........... - -------

7rea. ..

........... I .......

So. frotecithis, On p. 123.

112

Table for States not shown above

11,095, 101)

2~1: I 75N.: N.U

87f: 11

1

211 2

7 :

4,773,940

1,689,423

.8I"DIN73

1: 991, 81173

769.

,

946,875

8,094,710

'

2:11

LOS. 730

15: 031 51511

89:

1

3,062,959

2,166,692

12:31Sol:

135

1, M109: 252

968,680

5: 1%201~ III

4

18,

10,681,392

4: .284 U

3

8:1811

2,059,749

7

1.2P0.7

17:461

1

0 ago

931 056

2: 291

15: '762

"

:71

32 1.

31,:3

2 2381

I ANNUAL REPORT as STATISTICAL TABLES

Table I-4internal revenue collections by sources and by internal revenue regions, districts, States, and other arata-Contlinued

[in thoUnnds of dollars. See table 3, p. 121, for tax rates and further breakdown of national totals by sourceil

Alcohol taxes

Internal revenue 1.9i.na, district,. States, and

.the' ron I

Excisetoxes,

total ht. Distilled spirit, rose,

"Ut. tax Gift tax of

crig

UMns

(States thi represented by single districts Indicated in

rrt n u o;;3; totals for other States shown at

11,26.3 34, 42, 471: Total

m or '

of o m a

blix) and 65) Total

r' t d Domestic '

R.""- 1-u11

0.1 r

C by

u.t...)

colm I li.n.1 ,

(10) 11)

(1

2) (13) (14) (15) (16) (17)

twited Itiat", -L----- ------------- 2,646~11611 444,954 U,392,U2 3, Ina,378 2,SM.M On, M 2, ass. am 27,4" U'real me

~,nxl,

A

A

be

So' I) below)

an

1'3' IS

2'

Image 416.7.2

.I'a.

M. Too 2, ago 2. US ,

Bosto

August . ..

.....

.....

)

-

- -

...

'

""

11.412 968

1,132

1,937

311

1.691

----

1

1 '

316

23

3

n------ ------

Brooklyn ---------

-cc

J!

""Nx~ "m?

liG12:531146 151: 520786 111: go 3~,U, 96:011S

64 "'

83,853

a

21,297 6 :173

3 676

7 15

286

310

631

7

1

B

fOID..............

B l

below

11 677 1.1 113.717 71.1-3 31:

, 2

V) 517 3

..t

ui t odon.. ----- ...

.rtf- -------------

H

"

r

(V-r- ---- (Co..- '-)- -

5:

207

04. D93

I

305

12 391 11%5:473247 856 963,819

3.790

94.656

3:755

7

10 28

.... jj,~jj. .....j,- 2533

- ------- filinnhaft n-----------

I

Ports ..1th

be'..) 'N .(d 1 ;

241:114 44 528 1. 13., S1 Il, 300 .911.66,11

I a

51: 77

,

45.563 793 425 1

.is

"

re

------- -

Ptovidirrice (Rhode o l d"

I

,

157

7

493

2

:4 7' 22' for ... . IN 21 3' ---------- (1) an ). ...

Mid-Al --------------- ---- I

..it D C )

1 ,675

T-' 71 144

518

'I : 291

2

0 164

"':'

14.210

T:Ta

2,310

11 1"

i,.66665

an, 111 . 534111.1

5

1,1111

1 05 2.6011,1

In

. . ---

Newark--- - ------- .

L ,

13 11 1 1 15

319 13.

311 244

222

.. ' 17

1.: 264

2 71

1

22,265 165,041 6.574 376

8 it hll-- b o

S

2: ir.7 10: 03

8

:

442 117: Ill

,

1 2:7 6

127: 331 7

55 1 4 1

759

7

63 :,

:: b

.)......

IIII.b. th ~S

r

1

0

3 44 2 31 31 77 111 , 117 11 43 741

98

736

88

ll5 181

d..

R....

n ........

(' '

D

11 12

: 70 1

2

421: 17, ,: 599 4

5, 14 1 217 : 3

4

L.

Wilphingtoin 10 23 (D.I-gra) ........... 31,945 30,556 2.335 62 60

... .... ..

....

.. - 51

----------------------- 1 Affarta-- ~"1110- 33: .02 '4': "9218 " '12'8: '172 n, it,

11,152

4.

6:0961 "2: '122 " "3:162 '" NIs I376a

.

111 Alto. . j

1 7 214 1 1 21 1 1 3.9 1 24. 1.135 41 ........ 42 30 ~I*Ith G l.: 9IS : 4 21 17: 2. :

591

:

190 13

1

113 N off

-raociru--- -----

nI,, ---------- -

":2""` ` ----- (Mt-'

28,770 5

.115

26.702 678 1.228:,374 1

04

1.985

213

1.62693 ......... 1:42. 497 ----

21

60

21

2S i II -

1 , n~ 1f.- . . (Fi ri

'3 12 117 11 11 1 11 018 21 211 19,151 1 208

-

NUbvill 5 248 44 ----------- - (Tennessee) ---:::::::

'94 15: 3:

694

37: .

91

it: 9

09

14 : 7.8

844

3:

952

-- _

- 52 40 ~-l R .................

C ncinnati (So : :--- 1 4N 7 . 1'n.'"7 l'IN' "I .' -' IN . W

I,- l d -. ---------

C ..,an

' d )

6

R' 3

5 223

11 17 7

187: 341

957

'17

132:"2 54 255

383

... 38 : 727

33 87 0

1 11 :11 1

4 '

1:

"

31 3O

L3

7212

net .11 --- Michl ,.. d

1: 1 22 3: 4D2

2.

068.312 61,197 27,09 109:813 16 :41 2 3

24 '1 7

Ir I.npD,.Iu---.---- (Indi...)... 27 11] 3. 21 15 116 211 11 21 1 11 4 38

1

25 26

0

5,719 3 0 30 ,

IW.n,1t,Vil,,), 1

P.rk..b

25 : 8 ,

13.100

B

2.25258

1

:742

129

15,789

577: 196

2,752

564: 789

2,308

11:

565

.......

:

55 1 082

2,258

1,992

. .

'

139

3

1512

ftlld=='!~- - - ---------------------------

` "

Us :4411 11. Ing 1,5

" a'

M, 4. 220,170 56,322 314 612 6ii 1 2 953 23 ---

Chi.e.... --- (".'f( So b ) belp.)j- k*u`

4

1.

155,931

170

16,713

6: 34D

'12 623

100

121,925

60

101,760

-

.......

41,089

.....

.....

5

9 ,

.. ---- 60

131

, of

Del olnes.- ----- - fl-a~ ------------ F

29,840 1.734

: 9

27 51

111

"

1,112 --------- 1: 701 161 ........ orth,------

MilwaukU--::-:--:::

Ouribe N b k

:621

321:65249

5, 198

929

4 111

98 472

197

21,7SO

123

3. 82S

53

2. 542

...

111 1~1

65

.21

......-

a)

. ........

-------------- e ras

........ -

14.347

67 17'

BIG

7 13

'

59,942

' "'

3

7: 92

: 2

385

128

23.449

....... -

7 991

.....

-- --

14 694 46 -

126

3 2 5

:31 1

:1

3 31

1

10:056

4

413

3

682

8'

,

4 5

- ' 1

,

3

3 ' 5 1

130 Springfield ---------- .. (b) be 39.528 1.952 299,793

a

9

2 5: 82 240.282

---- .

- -- - 236: act 3,21 3 266

1

A, ----------------

- no.

M

21, in 112271 M an, ISO 33. M n, Me 9. "1 2 1, US 74 A

If

dw , ,ce) 5:-------

1', 691 8,454 93

1

u 1 i o be Ch genne. ----------- Wyoming)— ---- :::--

3: 027103 11L: 131

015

611,.56

7,035

46,059

46

12,4

U37

12,120 215 l

307

11 i

Do Its-.-. ----------- (So. Mbid-)- 61 1

'1

6 SOL11 1 31 627 328

.........

--- -----

.. ........

242

.....

.... 94

........

2 D Colorado ::::::

fil ~ a )

9

is

6

6 2: 268

D4: 89 1

958

2 076 .881 195 (9 L e R A 1k.. U j::::: ......

New Orleans--

- ' -

8,353

H 0''

962

' 7

22.611

26 2

455

31 2'1

1

6

"11

---

'01

7

1 41 2

48

171 1 01,11hrun. City

thus

:: : : : rUkiah 28: 220 5: 63 0 2W: 340 1 172 7. ------

.

6 ........ 55

1,

Within .......... -..

kerses) .

W-

......... 20,408 2,188 21.665 740 648 ......... 574 ........ 73 1 Rest- ------------ -- ------ ----

ks

all,

' "Na. .'an M1n &3'"s In'T I-M 28 EkKU- -_-:--------

~Idibu)! as ----

,

207

3

88

3'

al

a W

146

P

I 11all .... 11 3913 ...f;,--

H:I.n. :: ::::

6:: : ,, " 2 , ) -- -

S

:30 246 3: 1, O 95 ... ......- 92 ........

H

nOIuI ::: H .W 11) :: 5,672 2,639 9,733 3.549

2 171 2 0 04 " 1 6 7 --------

Los Anjele-- ------ (See (a) balm):::::::

Ph

196,514 12,

1

" 411 451 113 211 7 7: 904 37 :03 5 39.6 95 124 1,0 3 12 P oenix I --------- -- (Ahrens) ............. !nd -- fO,,,*,) ------

V

17,961

15, 108 983 a"

: 255

27.479

1: 1 49

8,257

222

4,400

30

1. 921

... ......

2 489

........

...

193

OR

........

2

::: ::: :: )::

D

N ..

R do 1 1 1 21 13,966 102 95

...

- -

,

- -----

....

95

....

Salt FLake City— ----- (Uuh)~ ------ 1

S :3 27 :

258

11 1 70' 1 1 - ----------- 11 C) S1" rgn1I-:::-::-: (

ttl I-(*) I*I,*

!

1

50 588 14 7. 4 :151 238 ~ 593 163,1 1 26,963 135,261 778

9

05 5

ea e - ( UhIn, :::::::

for)- Ore. as 1

p=!I~ 0""`l'"'-------------

:

29 725

N,462 5:596

UO

91,893

so, an

51.921

at

17,495

'' '

1

5,749

-

11396

" ,

1

1

.

, 329

--

Puen .-

-

1

93 2 54,261 42 :954 42:1 78 ------- - 41:817 :Be]

: :

.......

-----

Und,st',but;a: --------------------------------- Dtha'- 20,468 338 968 22 7 7 ...... - ... ---- -------- -

"

-87.

Ifillibild.7t..,-.7F. 0 d1 ..1;l.Pj.YU-- ...... ........... .. ...... ------ ........ ........ - ----- ........ ...

Trials for Star. of shown above

Huron-

) C 11 `137 12 2 11 M9 1

936,903 3

S"'U

14 131

-

174 943 b) 11 ruil, 9 5:45 1 1 8: .5 902,421 387,906 3421:816 041 11 2% 4

0

3

1'

:

I

1

c) N ew York. ---

7" " 70' '

1.

3' "' 15' '94

~

2 0

4 2"

l

&8:018 pj 2,3

1

j

iR

894 s cl~ Ohio ...

'3: :'D

298

76:

I

.7:2"

I a I

S : . 33..70

oi

1:

t

3 743 94 =yl,xn .. ....

M .......

147.740

.30,193

93.481D 1

16.679 1

771.990

717,234

2461:810 ,

687

181.741

12,814

37, 134

12,120

140.848 45 2- 235. 1,304 2

14

221

Sour ficiptontrus on P. 123.

113
I

ANNUAL REPORT six STATISTICAL TABLES

To ble I ~lnterrmol revershe collections by sources and by Internal revenue regions, clishricts, States, and other area-Continued

[I n thousand. of dollars. So. table 3. P. 121. for fix Mtn and further breakdown of national thritals by sources]

Alcohol tim.-Unfi-cl

matmol I. ""a.' dInfl ' txt*a 1h '

I

'

"

: g dic: x

Winn. cardi.13, etc., taxes Bear Iin b 'cla In , d n

Star. represented b x

I

in

i,

p-rilheses; total, or It or Star. shown at but.

T t

' a'.. d'

D sti -'cx ',',tIa"' Total it D.rmvs~tc 1O'cxv:,tTr'I to.

I

table) o al

b~cCE I'

y bit ')

ome c ~ X

by C.1to.11

(18) (19) (2a) (21)

(Z2)

(23) 121) (25)

thultess Statev I ...I ....................... M,574 10, su ag, -9 2.2ag 132.Ban 5, ass -,M "7.

iseth-Ati-In Fivalen ................... 24.10 6 4"

x

..

n' 11' ID1

17

A

I

berry. w) ..........

00

c

In

15 411 1 797 ------- _ 7: 6 91

A

at

n

0)

"7 177 ----------

78 is .......... 62

8

star

a

is usett.).

6 -----

.bkllm___ b

See

1:065 2

..

489

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

571

2' 3"

F

7

11,092

7 11

ISS

------- _

10,93

7 4

1 '

3

401

w)

11.11.10 ....... b.10 ::::

Sao

12,186 152 12,031 3

:

22 263

lgi~ 1:

2 3

03

1

54

It

I)_

5 .....

t

lurli 11 --::::: ----

Coup at

m

a

1 615

35

1-)

,, ------ i-iw1

8 5

D9

2

23

.........

7ji 438

' ... _

....

below)... ..

::::

a

Manhatta

a

c

So

T

5:

619 4. 1,, 2'.. , 1 5 10,017

31

2,241 7,

01

172

38

.mpbub)

fte'Ideme, -------------

abode

I

'land)

.

....

Parts Oath------------ New

.......

143

.....

69

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

74

. ..........

0 11,786

......... .

i4

........

11,759 3

-Jese.. ................... 12,W . 11, 447 2110

'Is IN

.05 is,

"1

Six

N gawlMend.~ Is raI D..)..... i

.

895

6 632

4

59

4

00

6 632

36 V) 27: 232

------

26:93

71 111

63

1 1

, . t .

- , ....... -

o* *I _--

,

1,203

---------_

401 2: 799 3 37: 071 -- H3

,7,

36,

1

g 15 5 it . ~:~ b:, ::::

Pittatur

9 8

*Z

I

9 ' 7! *)

23 1 194

Richmond ........... (Virginia). ............ 1,863 38 616 210 :32 2

1:

198 04

Wilmington.......

(Delaware)... ........... I ----------- ............ 1 2 --------- -- ------- 2

Atlanta_

2.M

734 NG

1.679

6DI

M

87 '4,''33"2 7 4 239 96

~Alatb .. 13 13 ........

128 31

------------ 97

....... (South Carolina).

G...hsb.r..........

2

135

1

127

..

2

120

121 11.IS 1

3

22

103

13

J: k nFlprid.)

1

6

1 704 469

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

929

6

306

119

18,054

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

187

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

17 741

1 19

, ___ .........

125

N.0 111h, --- Inmers,M).__ ---

,

6 6

........... 1.)

:wat ------ 11

I ............ 3. 214 .99

Clivin ~d~ b "' 1" a1 "1 "B

CI ...I"d it Zms~::::: ..... ji

631

535

160

116

12,81 s

14 13

------- -

55

1 2: 79

14,470

4

Detroit 1,717 314 1,291 192

:9

an.) 9 37 92 481 37.495 25

13 26

......

...... I I

20 'Ll ------------ '0

31

Louisvil a... Kentucky) ........

Parkersburg.- rit ::::::

..

11189 43

....

776

...... -----

I :

2: 3

426

1 2:321

328

68

98

,,, :::

..........

- - no I ago

7. a 20

"1. M In

.

291~

6111

An=..........

Chic ' .;fD~; W I re

D

1,518

91

......

--ilif (7, 521

87

----------

4

3

14 6497

317

--------- -

20

-- ......

------

li, 6

201

39

33

1 6

as . an . . ma ............ ...

14*11 Dakota)..........

I.)

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

(.) ------------

-- I ......... 74

--

61

1

sig 2

a -::

:::

223 185 33 4 124,702

7 264

84 124.454

1 227

164

31

He r..,

OrMts ..............

St Louis M

.........

2 711

. .........

138 ----- 601 ------- -----3

,

86,196

------ ..... : 0.8

1'

105

. ~

St. Paul.

fj e

,2

54 93 111 (1 1 14 6471

25: 98

4 4 316

25:679

155

Springft S. (b) be 19

kBoarkweve, Ressaw.__ --------

A---------- A man

2

.

-----------

.40 341

2

113

0.102

....... _

(.)"2 U

'

Be

2

ll

A

.....

502 278 24 33,072 109 419

Chey............... _ ~Tnnlmg) -----

~ Zbll**) ---------U- ----------- ------------ ---- 66

9

233

33 935

---

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

7

-----

33J.

9

101

44

C ' ir)

0

eve

n f(

47

350 329 A

,

Ar 43 43 1. Back------------ ulmsk;

I'll ----- (Louisiana)1' .......

R*

148

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

137 10 1 21.2-1

---------_-

17

-----

2i,iiii,

1

is

1'2 Oklahoma City..._ 'kill*

it ~K --h`

---_------ ----_------ 1,113

92

... __ _

961

.. 92

-

wich ------------- ------------ ----------

373 Us.

..

sold,

533 Arch ...

.....

..

:::: 463

--- --------

46

an

-----------

11.1"K

--

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

----- _

98

2

-----

24

He

L."agar ~Sxa(-?i .........

33

3,253

32

673 ,581 -----

1,343

42,0S3

103

474

240

41: 406 204I

Phowill ------- (Avivin.).. 54

......... 73

V) 859

3 615

14

45

0"'

It L.k.

st ll 111

1

111

V

40

65

124

193

3.674

1,696

20 945

14

21

1

,

050

A

125 a

Sir "Br' - ......

.ttl................ (W.Minghm)._. --------

,937

963

479

64 53'7199 33:573 15 33:497 31 "!:

ovwMtMw,._._

-----

go

71

is T.

71

..... .....

Puerto Film. ........ ............

0" `---------------------------

. ....

..........

15 ............ .........

)rdl,trIbUMd:

=arydrm1gt`ax ---------------------

----- -1---- ------------ --------

rt toG mh,ht of Us._ -----------

Withhold taxes of federal

-----------

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

Totais for States not shown above

5 .9. ~ 1,151 5 746 ~ 61,911 35228

520 gas 4,5277 193 ~ 4602:928 267 0 40.025

Now York_ 7a 49 5' 17.35 JED 94,101) 819

J~ Ohio ...... 9:7 12 '133 1'67 276 27.- 55 2

9

1 07 64 3

10 1

5 4

P.nhvyl.nl 3.21 4 2,799 957 53 :3 5 3

f)

1 T ........... 56,7 278 (1 2813 '0: 33 305 109 _32,677 520

Saw hundred. an 1. 123.

114

I

I

ANNUAL REPORT a STATISTICAL TABLES

Table 11-Internal revenue collecilions by soumes and by internal stvannue regions, districts, States, and other caugho-Contrintred

( In thousands a dollars. See table 3, 1. 121, for tax rates and further breakdown of national totah; by sourcesl

Internal revenue regions. districts, States, and other

Tobaccotaxas Stamp taxes on documents and other BM., invtr~ Ib -1

(States represented by single districts indicated In

an.-

Sales by

parentheses; totals for other States shown at bottom Total

iddr-

...'s lectured the, u Total Set., by district

of table)

"o-co

astmasters diretuture

(26) 27) (28) 0(29) (30) (31) (32) (33)

U-Ibed 5---. Mued ----------------------_ 2,03, 954 2'ages'.99 57, m .,m i'm go, n7

N... Ad.."t. theal....... 91 333 .8 ..3 ".43J, U. a. AlbamY,:::::j::_::::: ((Sao

C)

below) ....... 29 29 ......... .. ...... ---- 123

......

Augusta I I

_ Maine)... ------------

Boston...._ --------- (Mamchusetts)-. -------

2 21; 1

to - ---------- 4

12 3,226

off -

1,749 1,436 2.313

Buffalo" -------- I-:::: ---- ((SS:~'c~ 10

1 1 ----

70 17C

1,,Iln an ------

26 1 2 14 1,1173 1: 7~ .

aid _:::_

(Con..tJ,~l;::::::::::: 216

H

Of " ('or"") --------fij- ---------- F 4. 1

67

110

51

Manhattant. ---------- (See (c) below) --------- 45,M 2 IN 43 10M Pod3mout .. --------- ~1M0.dv.1mp1hlM)_ ....I 569 so 124 20 311 32 H

Rh --------- .... 263

1

65 Providence ------------ land) ------ ....._ 'ff ---- -----I'l-i----3

298 feldr-AAW.U. Regfinn- _ ~ ..................... 117, M I 1 65 ...a 1. Is

Baltimore ------------- ~M.iylsmd and D.C.) 28 ............

...

-------

I

as "

M

T

Big To

28 2:343 1:409 933 Newark--.

Pi

............ Jersey) ......... 1,820 ............ 1.443 358 19 b:lo,,)-_:-- 1 1: S1521 2 590 1,33( P'Nag.'Fa

----- )b 11,111 _ 2 25,953 177

2 ....

2.552

'T.-

(Sea ~:) ..... ...

7 1') ~:~ 2

1

729

gl~hmmh

IN - I.

,G 1:280

1

797 11 , ------- I (Virginia)--, -------- --- 378,986 376,iiU I,R3 994 1921 Wilmington.... _ ------ (Dnlsw...)--_-----_- ------------

........... ............ ............ ...... ..... 431 293 IR

----------- .......... ------ :: 1, 211, 75S 1, 114, U7 U. -

3. "2

426

': "'

2, son ------- (Georgia) --- 673 --------- 670 2 1 676 1: ,

Birmingham.. 3131 141

"D

V) 927 14

113

-:':::'! ""a") :::: ':Z

... Columbia-.-- South 2 ((,j 2 17 .... Greensboro. North Care in - ---------

1:0

....545 1,688 In 20C 1".7,220 1,1 051 1 2,623 294

1.

244 51

.... ...... .... 533

as

3 94 1J:cck son,ill, (Florida) - ------i,-578 - --------- 9-- ------1,-411- ----- 2" 2

(

-

*

,

Nashville ... (Tenhavanne)_---------- 792 ---------- 5- ) 9 335 M 84

2

720 7.

1:

05 2" evel- ------------- -------- 454,14 .5. 5.111. 1. Cincinnati.. b:j* n7s a 11 M 25: "A

123 .1

------------ 116 3,467 081 MIN b

0. .....

Cleveland --- ~d

"6

------------ 1,104 44 4 1,412 ...... 1,412 Detroit_---------- _ Michl ---- " 550 381 a 3,851 F5,18" 2.282

a

gan)... ------ 934 V) lrd~ .... li.,: 'K",d~itlul~lk)j;----------- 722 .... ----- _ 7Z2........

. j . ...... ..... 1.494 1:091

Lou 403

",It._

----------- 449.565 445.712 2,281 I,j7

1 977 603 371 Parkersburg ........... Met Virginia) .......... 650 V) 237 411.........

331

g

1'. j ".370 3

All-ext ----------- a? 17 on

10'7"

fiber=1~7

-------- (South Dakota) --------

.........

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

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

208 183 R

"I"

b (.)619 4

1

627 1 11 7, 9831 Do, J.0,-~iw 'a w.T_ ~ a,-) --- :::::: (.) "' ----...... ....

1173

1:070

F.11D Mjl.,~k,;__--- (North Dakota) ----------- -- ------- : - --------- 165 147 11

jj' 28 7 i

1.

649 1,12' 32 Our.h.-------- Nebraska) ........ .... ............ ---- - -------- ----

659

SL Louis... 202 Missouri)--------- 402 2.4

57

St. Paul...- (MI 1

817 1,7474 00 b) bwj,;5::::..... (*) ----- ---- 4 1. SO 54 Springfield.::::::::-:: -

(axote 4 1:095

(Sao

.... 21, a11

.... ....

- ------

99

(New

M1x"10'____::::::: --------- jj- -----~W)----- ---------j; - ----- ---- ----------j- .397 218

.

........ 234 -------- 2.~34

B.N. W.,.(T1r,.To!~-::------- -----ff.... 132 116 16

gas 1) 31:981 2,492 1,5499Dan............. .. (Cahead f ....... 307 802 05 little ------

-----------

522 171 147

N

.01. L.

lama). ------------ 116 1-) 116 ......

1.31,

964 653 Oklahoma 'hit . ... Cl,--------- .... ~011~1. He h*,mx)------------- ------------

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

---- V)

INI

---- 221 666 555

- ----------i - ---------ii - ------- 431 a,- U.M arch ---------------

........ 773 613

W.".

160

8 V)

112

(to -------

-... (

1!.

(21" ...... 300 25279 71 Helen---------......... ... ........ ......

55

Honolulu_ --- ::--::: :::

-

:

-

::::

- ( .) ... ~.; .... .. ......... ...... V) 10 264 2511

Pho' I belost)......... If I --------- 4 21 9,063 ........ 2

~(SA

48

--------

282 261

.41%)_ -

9,063

Portland --------- ....

Or

V) 1,929 2S_ 603

Rem, -------- (Navsd".))::

--------- ---------- _ R

... ...

420 93 190

1 n

(Utah) ........... ----- -

......... . ........ 94 Iss 339 Salt Lake Cityr:::: -----

------

0

S:

ttl.~ (Sal (a),bano,

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

10.111,

112 204

I, in

to 4 (-1

om-P of lanheivistlevill ...... ..... ..... ...... 4

7 7,7191 2

. 749 Be

t"L"! !k":-

B': '74,6, 8:746

.0

53 0

------

......

.......... ------- Urdlostributed-

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

(*) ----

:: ........ .......

Dem"Itiryd""'pt.

-----------_

------

Transterre to Government If G..rW::::-Z_:::::

Withhold taxes of Federal ..play..$

Totals for States not 1i above

I.) California_. 2 26 21 :199

4 9 727

17 194 182:004

634

:647 BIG

l"'

62-1 ...... 7 609 (f)

1

26:

?d!)

Now York--

Ohio ...... 1'2

47 C28 2.128 45

.

570

279 -------- .2. 4g~ 1 4

2

P

1 1 2

T:Z~S'y"-rI 26,221 2 040 177

'am 9 :711

4 1

1:372 3

----------- 99 V) 95

93 '03

1

6 215 2.492 3,734

See firdth.t. an p. 123.

115
ANNUAL REPORT * STATISTICAL TABLES

Table 1-Internal revenue collecti6xis by sounten, and by Internal revenue refficans, diddch, States, and other arear-Continuord

linthanerands of dollars, See table 3. p. 121, for tax ratenrind further breakdown at national totals by nor=

M.cct.ct do. I....

Internal .... no. '.glons, ". ".b~cts dll, ,

M

and in

(Slad. ",,led by of

C.

:ncl~:~. In

th. for other States shown at bottom

of t2l.) F

et

(Sa) ~) "I"'

.1,11catin

all, etc. '

IS

(3~5)

~y I.1 lut -1)

rmortubes

and tried rubber -1 (37)

..I.,

.hi,ll"

cluats"

b'd'IanS""

(38)

Radl. and

television

an, phornaVanon"W" h -

(39)

I,...

mcclltlomars~ etc.:616c"Ic. P.,..d Ppll.cc.allra (40)ther

41)

U.1- a-. tsee........ 6'sta'sons 2. M. m is, "A MIM 2. W.-0 -2, yet. 5'saM as, An

surs an, .17

11'755 1"'m 26' "'305 -S'm19 -I'm22 so'"' 86

August ftre . ............

3,486

138

n

1.813

7

M 1') 143 70 ......... V) 12

.too assinfivi.th) 8.7D4 3:304 30 128 24'

51

2, 966

8

ook

'

His

1'

His ~'Of

66

3

019

:

4 4 -340 264

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

B.flatl (Ime

ftrl~mfb," ------------

g

2!1,

a.

25, 868

495

55 8S4

62

6 429225

1 6

60

1') 18

8:

059

32 166

2,623

'a7

'

732 -592

0 396

3,324

14 797 He rd . no ,

M It

n 59 1: 473 499:047 17,473

,

66.0713

2

1

1: 123

2

0

985

5

195

,

13,607

57

u, ar'shh.)

Par me

Providence.----------- (fin.d. 3,86179

661

1,981

...........

_......... Z38 1,336 1

1

1

21

Mid~Mltl. proplean. --------------------

':' ... ' "

is.-

...

so. on

' 3'

92~ M

93

-2.1721

'7'

1, no12 41% kr. Heaver. :nI 1"I 8.111.

":.'Yj'

.7) 51

81,317 405

29, 039

IS, 430 1, 294

15

1: 158

41 1 2

60,138

11233

- 1, 201

-1 571

-9

-311

1,518

31 Philodoill I*:%1

am

b:l**

Pitaburl

227:1 166 SO

111

1416:1

20

fig, 4: a 2;0. ~

5, 33

,

5 1,511 2,623

Rich'... 7,300 5,648 75 98 1,13

5

17 V) 327

WlInning! 463 428

(.) ...... _ _

31 3

"'Imawat non" -----------------

3 "i594

"

'

m

9: 142

up

74 a

an

1: 107 "

40

2: 934 1

all. 2

37

Ahsbaorij

""

,

,

70D 4,609 1 1,307 4,631

6

South 32

n!" -

Cal am

ii,

1"

7 137 144 53

244

V 21 368

Gr.emsboro_ North Coloiln

I

2 802

: gra5

17 138 399 2, 412

-1 _118

7

1

"*'- NV

---------- ': de

103:131 4

6

2 4429

6:9 1

1

135

17

SO 2 281 54D 26

-36

23

41

721 J , O I )

Nashville .............

10,993 7,736 173 165

2:

378 4 599

162

;w.l';;.................. ............ 26 771

'

UP M

3n

05

"T I%'

1"'8 4'24 "", 1 Cjm,ln

d S:: ~dd~bb:j w

15:

472 513 969

111, 23

'22 5

i

2~281

10

172

311 117

379

53~11 9 7

1 0

123

903

-1 199

91 7

fin .

9,243

C

'

.........

'

Detroit

,

IID 115

,

957

370

, 247 1 8DO 652

1275

,

1,525 2, 91 ....

Indi.n. .11-- - ------- : .)

1: 56,

'

,

693 518 22 lZ 292 366 -214 -373 f

toulsvil I_ :___

-

.7,

4SO

152

a'

2,947 34 1,212 -1,243 3,364 8!

Park ..bar&----------: 477.

:

2 350 148 60 204 5 4

fightweent Pxe[on ......... ...................

'"

'"'

442, W le, an 237

1, "' "'

1, an an .7 an

A ardson ------------- (South Daloole).. Cb

l I,or

0

3

32' '41 159 44:77143 3 ,7845 -568

164

66,849 51 iN

(

804 I ?, p! .

1:

eg

D. Main.

1 t1 11

543

117

14'

11,451

1 391

173

29

.)228 2,538 206 -W 491

(WP; .rD,1.)

Mi

820

42.

,

29,967

1

75 74

1

1

2,194 14 so

2

5.

581 1381 10 48:259 " " 1 I928" 1~ 231

556

"319

46

9

a 11391 491

S Paul Minniza

t I

,

11 41 37 992

,

.-.. ----------- 967 149 (1 338 -7. 56 3,034

S Ingfield --------- _ See (b) be -

11

1_5

2~ 0

74

~ ,

0,470 69 22 1,544 273 3 4:

.thweat Ressee.......

------- ------ Us pes

12,

- -I.

S2 221

Allum, i

- N Par

4:489 :423

5

2

1 03

22

5 282

41

1 157

V)

2 40

I

2(

A IS.. ( below ----

! a -

539,024

: 8 '

143:900

9

8,8 ( ,

17

6 , 5

263

1.)

3ZS 72

1.)

231 ::::::::::::: (f) ::::::

Do

Px..

'do)

"''N

16 5 5

2 1

311

39 320

111:

545

233

76

2

9,259 1:299

-

2

1.)

131

41!

man,:::::::::::::

Little 1 A I

New Orl....-

6: 1

653

k ' '

11~:4

719 491'3

14

2

72'

726 15

2

3

1

7:

3: Oklahomans City..::::::: 0 26 13

8

255,985 8,571 7

24

1, 56234

1 9

1

Wich tm._.. .......

Mo..)

__-_-

Wesiva" .......... ..

12,42 1 11,366 423

34, 1,1411 is,"

14

Val ax,

A k

1.

0 B

I

dab 1 971

19

"IS5

1

....

75---

(

41

17

5

---

131 lent ..........

.a

2na~

,

355

367

31 1

6

~

1 6

54

2

270 F

11

3 !

se

(

below) _ ......... 243,11 217,497 756 1.50 13.ZD3 999 670

1

1, 42 :

1

'Do

A ------ I ------ 248

77

1

77 1

1.-i 27

124

126

9 194

5

3 57

1 0

r.

P i . . ......

a

R ds

N

I

n)

"42 7 415

1 , 9

1 ---------

-

1

Utah

J~

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

a.-

92

"I 101:99112'

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

4~ IDI I

1 2411 1 218044 (*) 31

1

17 71

So.

a

a

Seattle b ) 5

'154: 4'S7 5,335 14

,

54

,

91905 6 13 13

areas, eq Infronsiational

....

26 1 ....... _ ... ............ 7

4 It

Puerto Rim_ -----------

Other_ ---

Undistributed-

"-V~"""' ---------- ------------ ------------ ------------ ------------ ------------ ------------ ----------- Transfer ad a Gave

Withheld taxes of Feder.,

employees ::

Total$ far States not shown above

3 7j III 3Z2, 48 ~ 11 856 2,711 1~'131 If, 117 2, IND

871 Z U6 a

4 6

S7S

343

"1

No. York 93t 504:940 7..a

07

7

Man 93 1 319, 233 395 to

1 59

3.

478 353: '14.1 Z3 B. 4. 55~ 1,56

T

3' 1

Taxes

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

95

,

79 53,220

5 0 5

2,036 5,539 _3276 -67 2547

So. tootrotas an p. 123.

116

0

I

ANNUAL REPORT as STATISTICAL TABLES

Table 1-Internal revenue Collection by sourCes and by Internal revenue tersions, districts, States, and other arecri-Contlyrued

fin thousands of dollars. See table 3. p. 121, for fix rates ad further b,.Pkdnw. at mill."I total, by scurceil

Retailers'excin taxes Mi-ilimence., ..,I. U...

Ad.i.knox

Internal revenue regions. districts. States, and other

.1.1 Toilet Club do..

Total Luj~.!., Jorky, Far. proper.. Total ..r and

~Stites re stated by single districts indicated in ban,

fir.", to or.

1101 n

pro

or

can_

Parenthetic; to. totals for 0, table) th States shown at bottom

(42) (43) (44) (45) (46) (47)

In' I"~

(50)

.........................._ M,

"s

sis 42,21,1 3.In so, as a, Us, Inso PS,413 35.no fir, m

North-Axontle Realwa. ............ --------- U.M M 10, M 2,Us 13, UP 362, n: 17,5M 6,M 111. M

Albany- (Sao (0 below) ----- 501 69 229 SO 173 4:

17

APg.,tP:::::::::::::: (Maine)------------------ __ 193 1 1

31

98 8 47 1 597 V 1121, 11512

Boston --------------- (M-hux1tj).__:__: W -------- 3:489 770 1,,310 26 282 53

'9

511 1

25 77 787 :99 719 9 1:

~1 1:

......

.. 4

:2 2 1 14

((S,:: ~2) 'b'.Ima ------ 2,137 337 1,178 015 5217 13,8070 928 696 1,321

Burlington-

~,'mrafi _::

------ 1-1 ----- 86

15 49 1 15

60 24 89

No

Can .. ti)~;ij.

" - S-I

17 7.3 20:11 17 315

1

1: 371

Manhattan ....... Sao (c) below). ,'791 4, In !1, 499

nI

943 256 667

8,

8851

Z 3

7

3 175

PortsmPuth.-::::::,:: (11na ParnIp,lirl--- 111, 17 1 5 27 965 237 43 101

Providence- (Rh.d stand) 51 98 218

12

In

1.

310 205 170 306

Mld- Mis, 4,260 M,ft. .. 3."3 7

11 Iy1j1.1'd I I.Q_-~__~::::: 2 733 2'460 1: *2'0'9 78 995 33, 2DI 1,331 1.369 1 :601 "1

Newark ....

~N:w 'j")_

.... : ....... :: 2 132 49'

1

177 1,03S 50,034 1, 819 1.349

1

'51

,do ha:-: ------- 2: 83S 547 1: ?.7

I"'T

600

sta. 1:797

"

h__

Pill (So. Sao ~.)) 1: b 3 339 785 7' 16 678 18 801 414 223 1:213

me

r"

--

------ 1: '2 '

266 11, 1

Rich nd 74 189 a

'T29 '119 111: 1' 331

45

Wilmington--------- Do aware) ------------------- 233 . 192 34 70

My 1. Ma im

---------- -- 11: '.03 39". 3'

a

--------------- 3'797 US 59 11

einninghano ...::::::: fal.bflima) .1 ................. 927 145 437 53 292' 5: '885 92 149 534

Columbia Ca'a 1, 31, ............. (South Cirolln, 41 11 22 3 188

a 132

101

3 95;

:2"

1"

121 341

493 631 20 527 16 123

424 83 4 147 2: 17' 21 13

27 954 24

75 950 1,99

I kem,lII.__........ (Florida)--- 1 Ply 4 7 1,451

2 1 1 '

8

.............. (T.nn..ee)_,.__. ---------- 1:4114 3082 172 10 360 7.867 264 173 01

.-tvad

4.97.

Iss, - :'311 :'539 6: =

ir'n.fi --- ---------- Chne (_ S' b",f.'w") sa: Too 6, "523 1: '1OR 23 1,015 15 4 113 1 or,

2 467 377 1,142 51 a ..

897

52:307

.106

4 829 72.

694 787 1,740

1

Z

Chive Derrell'd-::::::: -:: 05 47:0121 1,3541 1: : 07

led!.,, li,::--- I,fS4 247, 252 33 6221 28

57 49

Lml",Ir 458 64i

14

IS

3"

22 20 12

IM

499 256 611(

Parkersburg .......... (West Virginia)................ 493 75 219 7 1828

':798 257

.I.- so 39,

or I ........................... 11, . 4,173 1, .1 5'an 7, -

Aberdeen . --------- _ (South DakoU)-.- 171 23 so 4 64 2~023 63 71

" ""'

I. a 5,

C111 7,11 1,0114 ti,

,

Do, J. 7 921 432 2 197 29 2,509 1,737 2,95,

Ila .362

2" a

19

117

351 481

Far,, --- North 189 22 97 4 65 307 9

67 23

1,190 195 536 49 420 96 41

22

634 444 763

N ,b ".,,I- ------- 559 7"

98

2S8 35 117

1

331:61 1 17.1 22:

St.

L..,,: Misse I)!:

------ 3,940 1,343 1,231 '2 194

0 M 725 6 9

1, 3fif

St. Paul.............. (Mincesot.)_.- 111 12 11 611 (~' 211 1491 113 111

Springfield- .___ (See (b) 6"981 102 3356

9

244

1C

349

16

523 531

seiathweat Prelm.. ....................... all G'qyr

Air, 211 31 121 4 103 3 7' 340

'or"'--

or Manca ..... "D 2A

Austin ....

~N:. (f) halt.)_ 2~'

ch.

S 2,389 41077 1,14136 130 736 1.650 7138 465 1. 0

D.fillmr!:: ------ ,(T)i "1.) 100 4 35 642 73 5:

7' 1

858 371 2,595 13 311 1. 24

" ':'

go

Denver------------ _ (Colorado) 674

98

327 23 1'2'7 52 3 7 31'7 7 641

Little Rock-_ ~Aur .......... 499 85 195 7 21 14,492 155 1148

314

76 4

New Orleans-- --- 1:098 239 465 4 391 6.738 73!

Oklahomg C

1

7 151

fly-------- (Oklat 024 130 6211 232

354

5 413

0'91

1

Wichita ---------- (K-3)............... 614 96 269 9 240 7,149 79 91 771

Press- AP,h:,. 'a 4 5 1,638 Us 27 133 1 ffgj_~ ~A i 12

71 fid

sake ....... 14

be). 211 29 U 2 2.291 22 151

Helena... ------------ 228

26

104

6

12 1,173 131 211 1

. ... ... ....

. ( "' 235

1

111

5

09D

16

77, 141

" ------ -

: (H-H`).) _ --------- 409 63

Sa

Los ,hpari. An let- - - (So. I.) below 7,5496 1,145 3,052 2 3,137 163 5,247 2,493115 3, DO!

----- ~Aftnx)_

..

12 66 254

16

2 i9o 3,515 159 391

Portland.. n) 823 103

"a

22 351

6,

470 261

7n 47,

0'"

)~:: 1

2.

Reno_ -------- 6-d 261 26 129 7 00 605 134 2,929 al

S

n Francisco (D,,);f_6; .......... _ .......

523 57

169

86 1.

3

'26,

,,, ",' Hy: _ (

4 29

" "S 6

a S as (

10.)----- I --- I ----- 4.304

579 1'

975 665 121:120 2, N] 8 2,28625 60

Seattle.......... (Washimitem).. ........ _._ 1,263 173 537 41 512 31,262 316 624 69?

offlea of xvirwaventleauss owees'sen....... _ -------------

36

7 13 1. 3 375 1.) 0

Puerto Rim... ........... __--- _ : :::~ ------- F.561

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

Undistributed:

%P,0,$f.t3r T , yjecemli I.......... __------- .........

..

to

to

Government of UPor----------------

Withheld boxes of Federal amploymers.. ------ ......... ..... .... ..... --------- ------- ---------- ..... .........

(a

) 1,1,1.~.rnia

~b) III

_.::

a) No. Ya,k_ ----------

fed)) Ohl .........

Pon', wri

(f) T ...

S60 foutoOtO on P. 123.

Totals for Stites not shown above

I

I: &Dof 245

25.543

4: 6"72'

6,247

1

724

2:105

5, M

U6

5

3: '2257

7:

2 7' 223

1,992

3,711

241

74

206

144

4

2: "A]

1: M912

I :

5811

1 613

171

'177

283.274

'7: 011%3

94

50.628

'2 :379 6

141: 376

2,080

1,235

1

71

2':2

1

6

31:991

923

793

5'

616

3:491 6

964

2,801

3:

"If

3 537

117
I

ANNUAL REPORT ss STATISTICAL TABLES

Table I.-Internal revenue collectiors; by sources and by internal revenue regions, districts, States, and other arecar-Candinued

[In thousands of dollars, SO table 3. P. 121, for tax fares and further breakdown of national basis by sourml

aftwellfiftein "cice taxes--Continued

Internal revenue rosions, districts, States, and tllr at.,

(States represented by single districts indicated in parentheses; tot-Is

lot

...'

States shown at bottom of table)

Tall1litm.,

wurr, at..,

imd~im.lpXOI 'Imus

(51)

TrOmports.

thm of

(52)

Us. of id.

riepost

...

(53)

"""' and

pro.based

(54)

,

Sugar,

(55)

Dj-ll oil

cousWpecial if

u'I'

(56)

Insured siesse, eved --------- ------------------------ "71n? saing, a,.. ar a.- gag' aresent... suddl. Realwe..................... ____....................

"' a ' 4 " us

an "'No ""9"

Alba.

......

Y b low) ... __......

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

S

l, 518 ( Y 17 1

7

A.gu,U .... ... ___ ......

39 694 1 938

7

69

1

4753

125

1 792 Boston............

IMH_

,

30

, 1

22 72 1

, 5

rocklyn. ............. 13

Buffalo ............................ S: -"~ hot..)_____ 193 166 44 52 1,562

.u'Im

"t -------------- ----------

:, 1

62 3 0 280

N rd nu t I ............ .......

t

I

724 9 36 2 1

list*.) ...................... ' 3 Manhatti

S T -

T

130' 65' 22 39'818

193 36, 889 13~ 9219,

Portsmouth- N - .

providence- Rhod. land) P' -_------- ------------------ ------ ...

1

34 A

Mid At

Is R."'" ------------------ - ._ J- ... :' an37

I S'an

36 232 OM99 Be firrar.... ...... ------: New I fee d D C

N k

, ')

223

3618 639

4 411

25 81 ---

,

3.59 S __.

ewar .... .......... .........

bII,d,I 11 ...............

,

45,904

11

71 1

--- -

5,17D 4,

181

r

SO p hatio ;

SO below -

Richmond ---- .......

4,524 13,256 V)

3

45

23 1

Z.

470

Wilmington..... -----

C

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

I

a a

(.)

JAS

5

IN 1

------

are

130

' ' "

Sewthawn ItNown

...... G -----

sets

- ---------

n

R'702

K

11 094 20 4 US 4 337 ...................

Abillsm) 960

;

15

a

1:

216 323

North C-lin

2

1 223 15

.12clumn

2"

if.~,

17 047

1

9

34

Jacksonville Flor N) ........ 1133

Nashville- -------------

8.

1,463

$87

a"

53

61

20

,

19 2,141

1

224

30

1.7741 971

Cleveland .... =b~dI bg*.w- - --------- -----

618

.. Ififi' .) ... - . 36, 255 3 56 --------- Z32 104

Detroit................ :::::::

' .32,

060 at 7 1,471 173

.......__ ........

Imliamirlis...................... Inch...I........

Loullwil a ..............- Kentucky).-.-.. ------------

17 ,

069

3 11 1

414

1

3814 ----- ----

29 4,114

536

P.,k..b.rg- ..... (West Virginia),-. ---------

5 :5 81 11.) 1

10

(~j

:

wardwess Iad ............. :::

At = (South '", 4HI's

no 323. H M 22~ 234

723 biu ------------ --- ......... ...

Chic

"

(b) below).....................

n''

54,003 28,952 1118 6 6

2

8,495 z

106 DO I W.) .........

Fargo ".r1h Dakota),-

I

454

737 1

8

351 ~ 2

422

........ .................. b k. 1 '3' Orr'h.

35:

009 1 14 1.. 1:4 2

St. L..i...................... ..... Missouri)------ 79,858 I~ 549 53

31

2 542

2

3,455 Z

095 3 Paul__......... gilnuesour) ....

Springfield --------_----_---

SO (b) below)............ ......

2,373

5,815

746

10 26 21

M

1,541

.........................M........................ KS3

A b

New

Me".)

49,934

343

S'ma in

7

1.

4'

7 A.,i. l .m. S

(

1,

187 964 36 -----(~~j ---- 194

I~

271 _

-

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

0

1)_

Ch youn. .........

Y

In

63 ------------ 3 ------------

el-i

.. ..

0.11.......... ------ f) b ------ -----

S

"

4,801) 33 V) 2 460

do)._---

buinw)

....

Denver ................. ------ .........

Li Is Rock ................. CA 0

New Orluns.-... ................ :::

1

31,54

873

454

761

3

5

16

`5

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

;

5,159

1:

313

1 131

701

1

1.

Oklahoma City .................... _

Ilk: home)

717

2 595

20

22

1 7:321

1

931 Willit...................... ......

M suni

...

,

us M

12 1811 no

Anch - ------- ----- '968

.

2311

3 ...

.N.

Idaho)................... 181 1 4 V)

I'D

12 .... 313

1 7

5

127

9 .........

No 4 114 H -if). .... .......

A All, I Lee S b. ------

:

21

826

9,W

82 7 1 97C Phu

imic Afirms.) . ................ 214

" its

9 13

21

---- 17

Peru. d 1:5 R

...... 126 596

5

------ 774 .

no ---

Salt Lak, 308 a 5

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

----------

-----

748

6

....... 1. DOE

San F" im...

11 2 :

649

82

1

32

37

r

1

1

d

368 :442

164

1

$.at

til-

~4;~'

4 226

6

5

4"

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

US 411 araid, .1 1 Nan Rice 7"' O'"weris.............

3

2~ 559 ---------- o -.

Oth., .......................

......

_ ------------ ----------- iij ------

Undistributed:

tT'" '31T"''

:::::::: ---- ------------ T l.r . . s

Withheld tnn of Federal employwas ------- ............................. . ......... ------------

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

Total, for Star. net shown has

(a) California. ........... _ ----- ...

if ]..I ....................... _

it New 0 York ...........

Pith, .... ....... __ ...........

Oney ris ....................

if

Tomi... ...........

Saw foctnates, an P. IZ3.

118

109, B33

, "

919

1,7:337

44,873 W, 32a

9.

268

29~ 876

41,106

4

13

5.664

214

144

326

87

125

69

10,375

28

36,947

272

5,171 3,496

17,311

10,036

16,17'

If

075

11, 997

,7.943

I

ANNUAL REPORT is STATISTICAL TABLES

Table I.-Internal revenue collections by sources and by internal revenue regions, districts, States, and other cureat-Continued

[in thousands of dollars. See table 3, p. 121, for is, rates and further breakdown of national totals by sourml

Mi HO ...I ...Is. tnir-Confirued

Internal revenue region,, districts, r States, and other

ul I.- Un

lynaluff Is.., Us. ts.

on 1111d b .an., munlibed opine';d

all."

b ,

If.r -1 iccim

(Star. naVaUnted by amid, districts indicated

in ImAmflu,

"",:

Non"S

up,

.or

'a

0'

parentheses; totar; for other States shown at bottom

of table)

diwile ] I,., at,. vehicles

(59) (60)

'R.'

(63) (64) (65)

U.'sed a-, 1-1 _----_--------_--------- 1, ass 326 16,498 us 765 S,m IN. 2" as, a. 37.913

-.-Atun. 1. Frearl-.......... .............. SO 74 8

46 2.1 sale 12~ an Ka. 37,

Albrm~---------- ----- (SO (c) below) ---------

Augur, --------- (M aI1:1

64

2

3 ........

4

2

C)

2

1

35

------- -

747

414

32

11

41

~ 13

Bmi

Is

M .

1, 19

69 5 13 ji

3

2. 68 689

1', 53~

Brook"" JS .. ~,~ IRS 1 21 31 41 1 111 4" 1. 111

I.fialo_: -----------_----- See r bel

0~ n

" -- Vermont)---

44

I

23

-------

11

V)

... 7

-_ -

61

------

1:9,5

183

1

is

12

~

30

. 31 Hert Id .. :: Con

"'1' of

I

3 2 57 33 1,268 711 19.892

Man So. (s) bril. 59 14 1 5 3

2

62 3,19 1 17,435 827

Not NO, H=0-------

Providence. ------ I -------- I (Rhode

2

5

1')

2

9

.........

..........

V)

1

22

10

11

23

345 35a '33

1

Mid-Atilsett- she

-'"---------------------------

:::::::: ads 0 2,nd 2% Is "? U, 132 ..01 23,10

Delimit,...... (Maryland and D.C.)-----

-

*

17 8 2,203 2 a 92

1,

) 683 at 4.042 Newark------ --- -------

I,tri d h - b

al t 1Now Je 54i

179 59 62 6 4 17

3~

498 972 13,429

ow

e p -------_----

Pittibur gh------------

ow

1S ea ~ ee~beI

9

11

1

131

4

1

so

21

26

231

4,760

' 7

1,215 432 11,037

1

Vrfflr'a)~

~

-----------

) w

Richmond.. ----------------

0;~

_

Wilmington -------_------- ----------

I ale

23

I

7 V)102

1 63

2

10 5125

:737

1 347

76

31

3, 121

17

sounsweat jon...- ----------------------- ------ a. 25 2,011 .0

Atlanta rl ''' " '

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

('", a 21 4 322 4 5 58 1 : 406 1 3

C.Imubi------- -------

~mnh

IS

7

3

2

1

656 41 2 "37

1 .

472

772

19

3

-643

9

J

Gnumabb ri, -------------- No,.

C

15

2 25 2

2 9 2,871 20 -643

,,,In ---------_----- Missfici -----------

4

3

42,

57

6

69 636 27

-7

,,,-

Jackson ii.- -------- glorld.) -------------- Nnhirfll-------------- mmsci -----------

17

is

9

2

15

645 4 17

2112

74

21: 52

7288

158

28

3.

M970

Can— a .Iaw.......... ................ ----- 149 27 1, am 23 97 1, a" is

, "

417

Cincinnati............ 1 :: d ~ b

:!'w~

I4 1 13

1

2 89 1 ~S '~ 7 0 39 17,658

CI... land--- ........ d b .w :::::::::

Detroit ----------- --------- Mich On)..

,

40

111 734 17 20

11

241

1"'

41:91260 1,210 -31:1151,

Indlarm.1N.---------- __ Iudhma).- 54 3 290 3 15 703 3 17

0

~ 69 - 227

Louisville .................. : 11

lpirkersburg.......,_ ----- West virLul.). ---------

7

4

4

2

208

451

3

2

a

10

279

191

1:

57 1

700

16

11

6

-35 Midwest _ ~....... -----_----------------

Afraid .................

12: :

126

2

ad

ary.

iilms) 137 ........ . 1 lag2 17'"1 55 1' an8 "I"m-3

:I~C

C"' - - -

::::

ON

a 28

8 1

123

5

.

2

11

4

140

a "

707

1:794

1,023

16

35,414

7 9

l 5 2 1 13 248 4 -11

'% V

I' I I 1 1 2,11

9

456 1,3 3

Onsh......... ------- N. ,. k 93

SL -.... Missouri)-----------

St P ul

i

43 4 114'3 2 10

50

1,290

Z9 8

21 6J53

. a --------------- . (b) be Springfield... ---- s.

1~1 1.3 3

54 23 137 252

27 0

2~11333

941 3 -1,729

599

"wassevat ftasso........-..........................

All,g,mm., Ov

1.

'

Me ) -------

Us2

Sa

1

1. .7

11 a.2 0)

.

: 1

I., an

2

46

in ..... 7 --r19 A I**( Nlor -__

C

L;

33

1

7

92

34

5

.......... 4

90

7

3, 496

313

145

2

401 18

g, (f~brflms) 25 3 ....... 1 1 11 4 11

'2'

2

1-171

Im.

Denver............ ------ _

~

) 33 15 2 4

2

43 IZ

69,

Littlellock............. ~::: Arkansas

Now Orleans --_--------

L"Is""

'I

0

I5 SO

992

1

2

5

16

192

54 ':1 "109 '401, `-577 Okhr cout City.- .......... Oklahoma).: ----------

wichh 1 3 21 1 14

63

2

2

4

1114 1:61

344 3'25 -

13,

-31 ROI 4. a, us n am rn Kim 2,72o -1.&S Anchorage..- 0,1'.-

.... I d:'bko')! 2 ~:~

7D

..... ....

... _ .

...... 4 35

2

102 33

1

7

5

-171

2 Helena ::::::: N11w1rmI . -------- 2 8 47 1 IT 26 492 28 "knolulu.-_

H

3 V) 97

(') (')

389 19 26

Los A.S.)as ....... ---- be 5 4

12 7 109 4,194 524 39,328

phiumf portrind--------...--------

Oregon).

.........

6

2

3 'It 306 3

2

1

is

6

UD

1,849

42

74

3

69

N

Ran.

..it.)--_---------- 1 3 6,624

6 I.IZ3 188 15

23 Sell Lake Cll,::-::::---

San Fraud,. ::::- Is ------------- I-) --------- is

5

239

4

1

108

2

32

Start ...................... Washington) ........... 13 2 711 2 87 364SO "1,62, '04, " 4, 51429 -"D9: '9'4431

am. we 0 areow

p"do --------------------------------

!

......

Ollur.------------------------------------------ -

Undistributed;

---- .......

. . ir

*

=N'r'A-"'; -

l

-17.19

T u . . Gove Wnwit ::::::::: ::::: --------- Witfifieldtaxesof Federal amployen... __.......... .......... ... ...... ----- ........ .......

.....

I... .........

New, York

d~. Ohlu~ ------------

P....YfmmI---------

f) T..................

SO IntruCtle on P. 123.

Totals for States not shown above

103

34

354

43

95

58

14

21

497

13

10

50

377

2762

152

34

239

388

106

25Sif

22

7116

1429

198

334

262

228

9,887

6,041

7~

77:7 12

11' :056

17,994 160

1.648

573

36': m' 012

2.961

91949

11 gal

22:280

119
ANNUAL REPORT ey STATISTICAL TABLES

Table 2-Internal revenue collections by Journal and by quarters

lin thameamistif dollars]

Quarter eadedSource .1 r...... Sepl.30,1965 (1) Des.31,1965 arch 31(3 ,1966 ) o .T30,1966 11

4)

Grand tatal... ------------------_-_---- ----_----------_ ------------ ---!6,642,965 23,361,274 3,533.0112 5.342.720

o, erinin in... tax I

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

S. 445 391 g 447 072 4" 475 1 442 305

Id vidual income and employment fuel, thital... -------- -----------_--- 16,872:965 3:919:213 1:082: 726 9:678:781

~rhxcs _------------ __------ -------- 2 111 141 59,904 111 312 -10 680 454 morn: U. Ithh.ld and old-ing. ..it disifillity in....nc. x ------------ I ......-

Railro it retirement @.-..-----_----- --------------------------

1 :

3:141 052 70 390

,

899.651 156 293

:

'51: 816426

166

:798:674

190,096

Unemployment insurer..--. ---------- ---------- -----------

:

5 687 :364 47:406 1557

xt. is Is----------- -------

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

2,955 8 077 9.329

lIt tax.___---- ------- - -- _ _--- ------- --- - - --

lders fee., oil .... ------ __----_------ --------- ....... 68147: '37'4' 393.31580,244 626 606

:957

3,178,768

,579

3,173,726

Aficti taxes, tell[ __-- -------- ------------ --------- ------- ----------- -- 935.274 1,094,072 35,372 49.661 is

Distill. ---------------------_-- ---

=

S3 37

9

64,289 2,131 9 979

win.. 1.1 at, .......................... 24:96 7 1,907 21 7

' '

:983

Be., .................... -------- _ ------------ -------------- :.:_ --- 257,028 197,976

95:

3 1 4 41,699

Tobacco t .. I, byal I~ -------------------- ----------------------------- -------- 537,842 496,461 89,478 50,175

C!1frettaxi .... ------ ------------ --------------------------------- 518,272 477,039 11 394 104 C - ------------_---- ------------------------------------

'C--

5,171 009

':

34

3

,139

O r ------------ -_------------_--- ........ _ ------- ,399 413 51 3

Stamp taxes on documents, other instrunneria, and playing cards, total.._ ............. 46,424 51,059 9, MO 9,133

issues and transfer, of bonds of indebtedness or capital stock, foreign insurance

rd deal, of 111wilillcl: ""~xab

P

y

almost..._. ...... So , ,

Sales bVistricidirlictere__ ------

2 655

33 768

2 2

39 7:47 15: 4411515 5In to0:436

I'l

ling

car , liver bolhic, trarrif ............ ------------- 2

.

2

Manufacturess'excil. tax.. total. ........................ ------------- 1,578,513 1,304,413 ,414, 1" ,311,03

Glarollo-------------- -------------_ 708,495 756,497 05 247 53 96D lutiricafin 'i (ass.11,% 11x-----------------------6 ........ ort tit rubber) inner , In to is and tread rubber 817

12i'495

,458

113 143

:851

121 1 11

650

7 141

nge y

p , .................. vehicles, , Motor sh ggI, 1 dh". ,,1 , " l ----,

7 1 11 ,61 0 a

3 3 7

57

:

3

91, fieleffign as6,o a.ipep~,. .

Radio and am Petrels, 6 755

6

78 1 .393

Refrigerators, freacent, di-onditioners, etc.; electric, gas, and oil appliances. ... --- 6,294 377

"

:

8,a" ,O1

I,

x

Other I ..---------- ------------- __-_--------------- ............ 2.108 27 542 ,493 24

Retailers- excire taxes. total. ._ .......... .................. --------- 90,595 7.749 -8,929 -94

Lc j Z~ .......... ............

------ -----

8 633 .708 1 7

J ' '

J. !rIry" .

Fors, ------- -------

9 502

2:557

013

286

1

3

302

31

31

Toilet preparation ............ ........ 30,902 2,741 ,

98

Mignil..... ..If. taxes. WUL-- --------- --------_----------- - .......... 506,095 398,547 61,647 37,074

Adishal a: Threaten. concerts, athletic contexts. etc."_ ...................... 15 361 537

, 1

2,253 17 Root gardens, caborals, etc,GIs

re b core nd initiation to... ....... .......97

23 686

1 : 53

15,623

,045

fS3

M

741

1 399 Telephone, air., at,, no ruipment sonvices_ .................................. 290,291 20 50 01: 90595. 1

t 216

Tremerfortrihimimiginann, .......... ------_----------

Una satedieposittlon, -----

_ - - __ ------------------------

Jr,7

11:77

,073

45

,232

47

3311 C p, P ii.t .nof P th . r . 9. ta,LIo iili p - ad 9

2

6

-

25,169 27.934 6.2

-

23 4

Dr., ............. --- --------- '

kerosine and marlhunin3 im, lin ,

" -ZZ ' ..---- -------------------

, M

31

,542

208

540

223

: 5

4 Go am wers.,t P st . 529 In"pionated d In, do, Iu! ............ --- - 2 131 0 4

9

420 Binding alloys, Pool tables, .1,-_------------------------ ....... Walter Ing Ulu.J~f

o 2 0 7

C~cspla all ion.l._ ---- __.. --------- M...... _................

115f 1, 11

65

, ..,,D1 U P.

" x on highway met., vehicles.

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

3 7,575 6,705 .896

the",....... -------------

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

3,097 1 1,201 ,645 ,192

UmxIxai nciss, ie.: Unapp led collections ---------

r

961 902 . 2 !6.394 Undist ibuted depository receipt, 1_8,

334 , 042 1: 5

-

,153

EG

E

Sea foortmotes on P. 123.

120

ANNUAL REPORT 9 STATISTICAL TABLES

Table 3-Internal revenue collections by sources, Itaccil years 1965 and 1966

[In thousands at dollars]

Source of revenue

Grand total, all sources. ---- ----------- ------- _ ------- ----------------- ......... -------- ............. ----

Corporation income taxes, total 1 ---------------------- -------- ------- ....... .......................

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

: ........

Individual income and employment taxes, total----------- --------------- -------- ------ 1 --- .......... ....

Income tax not withheld and sell-amn1loyment tax

lislant.talwithhIldimfluld-u- disability insurance, tobli"";v - ----------------------------- ...

Received with i:turrx..,_. ----- --------------------------------

......

----- ------------------ --- Undistributed it positary receipts 7 ............... ...

Railroad1.3drebr:menp ~Y,Join,

------j-------61" Be to tax; emplayers'tax 7JJ percent, ornployets' tax M percent both impose on tarn a portion of wages:

Received with returns-. --- ------------------ ------------------------- ....... ......... ...... sidistinpulad ilepositary receipts I..----- _--------- ............_. ......................... __...... _

Rrillrud employeas representative tax, 14 ~i percent on taxable portion at waga_........... _ ......... .............

1 aningloyment Imordance, a in,Ployers of 4 or more Persons taxed 31 percent on taxable Pont an of wages. vlocti ve I anuary 1, 1964, credit allows up o percent of in for contributions to late unemployment funds.. .......... ____ ....... -----

tax 3 Perc 11 st $5,000 of net estate in useas of 36D.000 exemption to 77 percent on portion over "`11'000X,~~-Ildidt 'It" h-mr S,,t,ent,ntr

$10, , 00 allowed to death as ------------------------------------ ----_----------- Gift 0 . 1,111ger.1 1,11hIld$5,000of retillftsin excess of $30,000-mixtionto 5731 pelcen on portion over tagriedl~ uSu an i

$10. '00

ins

P. a ...... 1- ......... __1.....1-1--- I .............. -1.1 ... _1 ....... Excise fee., total----_--------_------ ---------------- ----------- ........ -------_------------- -

Alcohol taxes, total --_--------------------_----- __ ------------------_ ........._...... ---------- ...

Distilled spirits taxes, total.-------------------------------------------------- .............. ...................

~o to

unis is or Proof firfics

...... ch.

DIPpIned byrules lsl.om,,,,,Ie,,

"- "

domestic) --------------------- .........

Rum c ....................... 111.51 Par P ..I ". in

inkneifinger. mine gallon when below proof I_- gxcfi~

-------------- ------_------

spirits. $25, W. $100 per year... ...................... ........ ............ RectJO

Less the, 11,'D.111 $21010 per "at -------------- :..:.. ......... ------- t.1210,000 proof

fionpre".1 "rol".1iZ a.,

par y

R. IdIfinal spirits, $54 "'I'ir1s.."r 'd"'1,,P'IT55

.'

Wholesale 1. ------------- __ -------- ....... _------ ....... ......S

M...fission of still,, j55 pl,"goor.............. -----_-------------- __.......................-:-: Saturn, penalties. etc--------------- ------------------- ................... ---------------

--

tills or condensers manufactured, $22 --------- --------- --------------- -...................

Winn, cordials, etc., tion, total------- ---------------- ------------- .............. - ...................

p.ned (collected by Customs, at as ... as domestic) ---------------- ------- ----------- ------------- Domestic (Still-win. 17 cents. 67 cents, $2.25 per wine gallon; sparkling wines, $3,40; aruftchilly carbonated li $2.40; liqueurs, colifiall, $1.92).- ------ ----------------------- ----------------- ----- occul.athfindastaxes:

Whifleari in annes or in initial and beef. L4 ;2,,5jur --------------------------------------------------

deens in wines or in wines and beer, per year.................................. _.........

Beer taxes, total-------------------- ---------------------------------- ------ ------- __ ........ _ ........

ID.P.lt,11d (collected by Ctiat .....In unna as do.. i,)_ --------- ............................... .......... gressl u ic, 39 per barrel of 31 gallons ---------- t ------ - ....... -....... -- ................ siganioul re I xes:

I.:

r year-------_---------_-------- _ ......... ........ ..............

W'_O bX1 aI!T, b..r a"i1'1'0' P:r

Rate Weildniall. bu,604 perryur"in a' clo---------- desfirsiled------------------------------------------------- rataildellerain inuon bexr,$2.20per month)_ -- ~_:_-_ lecilledealessin eer,$123peryear ............ I ---------- ................................. - ......

Tobacco taxes, total ---- -------------------------------------- ----------_-------- .......... ----------- .......

Cigarettes, total----------------_------ --------------------------------------------------------- --------

Class A $4 1;, thousand------------------ ------- _------- _.......... __ .............. Man B (large), $8. 0 per thousand ~ ---_--------------- _------ __ ... __ __.......... -,::::::::: Prepayments.... ----------------------------------- -------- ------------------- ........ -------

Cigars, total. -------------------------------------------------------------- ...... ........ .........

Large cigars, classified by intended retail Prices, total I ..... _ ---------------_--------- ----

C11" A

in 11 %J%er.211 cast, ncli, $2.50 Par thousand ...... __ ......... --------- C

.8 %V.r'2~1, .. 13 red __: -----------_--------_------ (lier1cents *111ex6lentsuch),$4 is (0.. 6 canrds~ "

P

I cents a" )' IP thousand ..... .

S

not 'or a C . came each), $7 Par thousand------- 1l5cent~m, ,,is t ... 15 cut, each), $Joe., thousand ....... ...... ---------- '!:,'a E 20,=

not ever

h) $1 P,,thP..nd.-. ---------- _ --------------- .... ...... Cie. G (Over 20 cents each), $20 par thousand ................................................... ........

71 c!n.tl.,.,

Prepayment Shia" "I'"ai ------------------------------ MhToba~ofif materials, P fiDbaccis products, and cigarette papers and tubes (CUSIOMS5 ii-------------------------- C,~~N~rldtDb..~,11,1,enplprl,rr""dlp-.-r- ------_-------------- pairs I and tub. ,a , can,

ToC,. materish-Violation, sec. 5731, Internal Reumn, cast CmJ.Tf" 19SSo--------------------------

See lootmOtis on p. 123.

Fiscalyfur

114,434,634

26.131,334

26,12 635 2 699

7G. 764,989

115~:6,6 111: 16

249

61 '29,' 5119,393190

635,734

594,755

40,954

25

622,499

2.454,332

291,2DI

14,79Z 779

3.772,634

2,749,994

558,576

115 2

241:61'26

81

21,

13,857

76

S85

5

112.432

9,644

100,509

2,092 187

910,319

5 969 M: 961

1966"

(2)

128.879,961

30.834,243

30,831.126 3.117

81, 553,68i

101:8113 116 89:524

57-098 1;70:672 85

683,631

693,297

-9' 63939

567,014

2,646,968

.3. 3"6:1' 98 112

3,814,378

2.8D9,777

2, '13': 5'

27,077

92

A

14,024

753

934I

6

112,574

10,334

99,449

3

"M17

5,861

881,458

26

3,628

934

2, 148. Slit

2,069,695

2,069 695

(.) ,

60,923

60, 547

528

2

14I: '57

29,6,7

34323

320

3:40D

33

46

605

716 6

54

(*) 7

3, US21 963

Z 073,956

2,006.499

2 006 498

(4

57,662

57,313

13: 32

1

1

797

96

5.929

27.628 a

31:47041

328

21

477

8 694

634

1 2 1
ANNUAL REPORT as STATISTICAL TABLES

Table 3~bctemcsl revenue collections by sources, 1117cal years 1965 and 1966--Continued

lln thousands of dollars]

S.U.. of .......

Excise tax". tot-1--confinued

Stamp taxes, an documents, other instruments, and playing cards, total- _ ------------------------------------------

Issues and transfers of bonds of Indebtedness or capital stock, for'!Iln into re Ice Policies, and deeds If con,eyance:-

by =r"r:: - -------- :__~ ------ .. .....

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

I --------- -

Sit.. Playintor a, 13 cents p pack as., - ---------------------- -----------------------

ullion transfers, !g percent o i --- proii---------------------------- t; repealed, effective June 5, 1963.------------ -------------------------------- ......

Manufacturers' excise taxes, total...................................... _-----------_----_ ------- --------

Gasoline. 4 coutts Par Wkin ... ---

Lubricstims oil, etc., 6 cents par galfan; ----------- cutting oil,-i --- con~6------ per if,------------------------------- g

a one --------- --

Tirn (Wholly or in part orirubber), inner tubes, and fruit ub at:

Tues. 111, P, cents P.1gded,

of

he,

,

highway iiglias): I .It Par In 5 cents per, pound except Isminated it (other the. type u,!.d In

...... ~ . ----..........I------------- -

_ _ __

Inner tubes 3

er

-::..............................

------

T

d rubbjil%cel~tbx Motor ru Iper Po:ndd-.:: p --- ----- ......... ------------___ ------------

inehkfin, chassis, badin, part. and Pa. a a 'a'

It'

hod I ----------------------------------------

Trucks tc., 10 girce.L.------------------- ----------------

Parts and accessinift for automobiles, III s,etc.,8psrctnta_.

Radio and hen ----------

Rstill orators, rearen, a Tfo'N'114 I --cmindifioning units, 10 percent as Electric I.,television -utr

and oil appliances, 5percamt

Pistols ;rd

r

" P"ce"'U-

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

Phonograph

""

do, Lop.rc..t ------------ ------- ........... Musical Instruments, 10 percent u.- -------

--- .

---

SFr,IJm&

good, (other ~han fishing ods, create, etc.), 10 percent,ta. -------------------- ----------

chins

.do. free

"'

.

I,

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

Builefors ad at.,.

C....... I. con, IiI in 1, 16 P. prosiaters, 5 par 1m.t 11 ------------ __ _-_--------------

Electric F litht bulbs and tuba, 10 percentis -- -------------------_--------- I --------- --------_----------------

.,.a the, the. Pinolaand .I I

h M 0 t ; .0s. and confidant, I I percent- -----------------------M:,hsr1.1 pruidle. penu, I p.,c.I light- 10 cents par lights, (Ill I, or..; percent Qns than 11) -----------

tiles, 2 cents Par thousand (b, I not to exceed 10 Percent of selling price): f ncy waxen or colored stem, 3`6 cents per

timpund -1-------------------------- __ ------ _---------- --_-------------- -------------- .........

Retailers' excise taxes, total a__. ... . ------- _----- --- ------------------------ _----- _ -------- _------------

Lurupl ., at,.. 10 p .... nt........ __......... ............................. -------_--_---------

Jewelry' are., 10 p ......t............... ........ ...............

Furs, ID percent ----15-------f ...................... ............. 11-1-- .... ..........

TOM inst,...tions, p I ............................................ -------------------------- .........

Miscellaneous excise taxes, total................... 7 ......... -----_------------ - .............. _---------- ......

Admissions taxes, total At ---------------- I., ---------- --------------------------------------------------

Theater&, ",art,

'

.01-tic ..felt., tc.:

Achrl"'

"'

I ornfor each 10contsor major fraction thereof oftheamountpaidin excessof $1 ......

Ticket broker.' sal.., 10 Pouter .1 ....It. 1. ..1- of box aftice P, II-------------------

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

if be

Losses

olboxosorsests, IDporcentit t amount for which similar ccoommodstions are sold ----------

AdmissionsIsbarg sold by or. , =t.1 ...h as,

I

~Imra in a...1 established price,

50

cas __ --------------------

Roust raiders, ts,stc., DP-rcertaf total paid for admission to ................ -------

-

Club dun and gpaun ! fees or 1. a,-.1 $10 par year) .................. __ --------- Initiation to., 2D Pont If a 0 -

T.11pher., wine milar., inc., sarriii,ex, room, wore and equipment unno, 8 percent--------------- .............

Trans

""It"' I'-

0

11 or pipeline. 41, percent;

persons. 10 Percent I an n, transportation which was reduced to 5 Percent-- five , .Pa. ad. do"' ----------------------------------------------

limpalli.1.1lgo, I It 10M,*,1;c1aP11.1,.a1Is!1 -1 .1hillb.il 4 cents

par

for; repeated, ff.t

is. Aug. 1.

is

So ---

of to nos, I at -------

Coconut I.. other relatable .11, processed. 2

" " I' 'a

Sugar PP I Pound --------------------------------- -------------- ----------------- -------

Dkqmi..q",'1'*'d ".,.it. . =-tortuels,4 ants per gallon (in some instances 2 Into par gidlar)_ -----------_----------

Id .:,Ih...... total ..................... _------------------------------- _------- ---------------

Narcotise, ................ ____----

MuthI.he ..............................

r:tl:d =.nl,~dlql~, 10

Coin Pit it IgIgir

, nkm~', suar!" C,ln:.,,P:,or it- ;rs~'.. I ----------------------------------------------

Bowling alloys, ocal tables, etc., $20 par after, or tab ., per yrar as......

Wanterrims to..:

occupational 10 tax, $50t per Year-.. It . ----_-----_------------ __........... ----------

We,,, pourcer", , ,*,I was ..it ----------------------I----------------- ------

U.

. I highway noter

vehicles Weighing over 26,000 pounds, $3,00 per 1,000 pounds per year (installment privileges

for

__

- -Iiiiii-IiiijW;

-i,;iw

dql~rallted)- i jWj

-

A stated but ji;iiasiia ;

Firearms transfer and ocap.ti.e.1libtiistii;y to.. -I _---------------------

later rivallatiso ..............................

For,e,JM1nt

is I

I. .................................

ad

...

Is. to..:

Unix plied callectiones-------------- ------------ ......

UndF, tribunal depositary receipts 2. - . ~ ----------------

See fwtmtn an P. 123.

Fiscal year

1966 u

(2)

136, M

154 212

23:947

a' 1282

6,418,145

2,

":

135

76 095

391, 5138

'4: 14

24

295

1 , U7:691

125 361

2"

74

221: '7,9

11: so PS7

3

Z 2DG

A

692

25

2 810

" "

7

7.373

7435: 42,

095

42,754

20,201

9,468

4,440

513,181

III

204:572 31.390 "

195.1111)

,1,786,056

95,591

5D, 531

596

517

323

43,623

1. 07j. 79 67

9371

34

125,890

215

7,480

29

97, ID9

15Z lag

1,366

1'28977

4,363

15~ 01

4,7788

6D3

071

3

7

5

102'038

2.~, M_5

210

146,457

50 317

96:136

2

5,613,869

2,124.111

90,

77S

430,235

27:

24 3"

1

70

1,496~ 22,

069

196,

-3,76154

137

3:01708

14

-1: 512

2.311 7

, M

6,745

1,064

6,230

2

4: 2 344 133

1,147

108,155

"

114

43:

403: 898

1,603,364

81,404

43,610

56

34

35.736

52 571

907:917

16

139.62115

9D2

102.93217

15' 326

1:341

1,212

129

326

16,498

248

5,705

689

104,240

3

63

23:

653

2 775

T:87 NI 595

I

ANNUAL REPORT as STATISTICAL TABLES

Table 4-intrional revenue collections by principal sources, R=l years 1940 through 1966

Ito thousands of dolinal

Income and profits taxes

-

Fiscal yet, ended June 30

Total inter.

net hu. Corporation individual Employment Es ate and Alcohol Tobacco Manul,clur. Ail other collection$ Total and I-es, Us., - Profits lift t...a t...I I t...I - are' t ....

to.. I

tax., I....

(2) (3) (4) (5) (6) (7) (3) (9) (10)

1940 ......... 5 340 452 2 129 609

'

1 147 592 982 017 833 521 360 071 624 253 608 51

'

447 098 337 392

1941_ ------------------ 7: ' 37C: 108 3 471: 124 2:053:469 1, 417: 655 925:956 407:058 820:056 698:077 617: 373 430 564

1942-------------------- 13 047 869

.

006 884 4 7" 083 3 262 800

1

85 362

1

43 54

2 0

1 C4 , 517

8

780.982 771,902 2

J 1

94L ------- ------ ....

44

2

2:371:386

1

6:

298: US 9:668:956

6:629:932

498 : 705

:

:

447 496

1:

423,646 923 957 504 746 274: 048

19 __ ---------- ----- 40,121.760 33 027,802 11,766,796 18.261,005 1,738.372 511.210 1,618,775 9U: 493 5a3:462 1.733.655

43 1 3.8 35 D61 526 16 027 213 1 11 313 79,177 643,055 I.M.866 932 145 792 511 2,292 108 944 ,:,72:

097

: 2M : 13,

31

12: ,3 :602 1 8: 7 :

53

7

'a "

676,932 2.526.165 1

'1

65.519

,

922,671

,

2.421,944

1117:: --- ------ 31 1 ,1 11 21 111 7 11 1 176.459 19,343, 797 Z,02 :36 5 771 21 1 1 414 7 12 1 237 761 1 421 21 2 41 1. 1

94

41:864: .2 31: J7,: lit: 17

20 117 71

1

U,

342

,

89

2:2.:3,, :300: 2.~ : 9

64 :234

: :8

1 206 23

949 ----_--------- ... 40,463,125 29.505,491 11,553 669

1.: , :

05 822

2:476:

113 796,538 2,21D,607 1.321,875 1,771,533 2,290,969

1950 -------------------- 38 151 2 7

6'9 1 1"

17 3

IS "

575

'

71 27

3

2 112

'

311 464

' ' "3

2 1 4

115

1: ------------

:as 5:

50

686

:,

37 3 7 1 :337: 69 2:!)17:3. M

1,

3:627:4

: 0

729 73

~.

:

5

"

.

2 46:

.0: 9

1:3 3 6 2 : M38 : 677

,2

N2 :719 95' 195

2 - 1 101 111 11 141 1 1 1 21,411,11P 251.174,107 4.464.264 933.147 2.549,120 1.565,162 2.348,943 2.507,933 1953 ------

1954 :

6 ~: ...: .~ So: 1. :732

21 114 511 311 117 4 7 1~ 1, 191 11 2 780 9

21

1 454 91

1

Z 8162 798 2 647 412

--------- _ __ 69,919,991 54,360,014

21 : '22

546:

:,,

32,813

1 5: 1 0 6

23

:

935 121

2:7

93:0 12

, : :

580 229 2,689: 133

: 8

2:464

59

1955 -------------------- 66 298 11 41 4 2" 720

is

3 1 1 11

'

1 211 "1 131 117 2 742 "D 1 571 213 2 885 016 2 018 966

1956_ ------_---------

75 : 112:. 9 6: :

5 63 164

U:

21:2 522

: . 2

35 :337

7:29 : 784 1,171: 23, . ,

2 120 174

, .

1 113 411

, .

3 411 113

, .

1.119.3.0

10 1 7 M

1

1 11 42 1 2 1 131 113 11.19 171 7.5.0,522 1 377 999

2: 973:195 1 :674:050 3 : 761:

925 2,243,956

1958

79 :9 4

:

76

71

59: J01:874 2 0:533:316 5

38,568: 59 8,644,386

:

9"

946 461

'

1.734,C21 3.974,135 2,166,675 1959 ---------- 79,797,973 58,826,254 18.091,509 40.734,744 8,853,744 1,352.982 3: M. ON 1.806.816 3.958.789 1.997.292

960

1

774 11

9

7 125 2

" 1 '

12 414

1"

44 I 1

J`1

1 1 11 1 121 141 3 111 714 11 1 4 1 1 1 119 2 004 394 1961:401:086

94

:9 1

67 7:941

I

:

9 a

2 :71A 4

6: : 1

4 153 00

12:502:

451

1:91,:3

92

, :M1

3.212

1: 991: 117 ,:8 9 6:8a, J: :

963 S

1962

:::::::

----- 1

99 440

'9

71

"

2 1 711

'1

11

1 1 2 7" 2 ' 3 T " '41 .. 2 ' 73

5,12C,340 2,

2

63 64 81

:::::::_

2':395

1"j

5

7 :323: 714

: 1

22 :3 3 34

:

2 98 :581 5:004 4.1 : 117 :457 :44 :656 : 071 ; 13 1 ,610.309 . 2 7 8. 536

1964----- ----- J2 2 .N7 78.1191.2111 24.300,953 54.590,354 17,10102,5114 2.416,303 3,577,499 2,052,545 6,020,543 2,299,645

114 434,634 79,792,016 26,131.334 11 61 683

0

17 104,306 2,745.532 13,772,634 2 41 194

"

6,418,145 2,453.406

66

1

23:079,961 92,131,794 30. 834, 243

,1: :

297 552

2

20 56,133 3,093,922 3,914,378

2 : 3:

07 56 5,613,969 1,895,90

Ses foattent03 below.

Footnotes for tables 1-4

N=.-Calcricar year figures, by migions, districts, States,

and other sureas, for selmited types of taxes, may be obtained

from the Public Information Division, Internal Revenue

Servim, Washington, D.C., 20224. Floor stocks taxes am

caported liectlime-T:al.,Iy L~rj ,nl III h periods in which the

mounts. Relatively small

amounts collected in subsequent pcriocl, we merged with

the amounts shown for the related class of tax.

*IA= than $500.

Revised.

The receipts in the various States do not indic,atc the

Federal tax burden of each, since in many instanem tax"

we colleveted in one State from residents of another State.

For example, withholding taxes reported by employcris

located near State lines entry include substantial amounts

withheld from salaries of employces who maidin in neighboring States.

2 Includes tax on unrelated bulincous income of exempt

organizationds.

1 3 Collections of individual income tax not withheld include

91,31-age and disability insurance taxes on self-emplayment

/111income. Similarly, the colleetions of income tax withWill

we reported in combined amouiIiia with old-age and dis,

ability insurance taxes on salaries and wages. Estimated

separate national totals for individual income tax and for

old-agc and disability insurance taxes are shown in the text

table on p. 10 and are used in obtaining national totals for

individual income triaccis apdbemployment d itmea in table 4.

Amounts of old-age and , isa ility insurance tax collections,

classified by States, am ecunpiled by the Social Security

Admini tration a; a byproduct of its wage and income

-co'

ing operations and we published in the Annual surnIZI'Supplement of the Smial Security Bulletin.

I Effective for taxable years beginning after 1960, a&-

ggpl,.~y,X,,.nt and taxes imposed by the Federal Insurance

ct are applicable with respect to Guam and

A-imn Samoa. Amounts of such taxes collmted in

Guam and American Samoa arm combined with sirruilar

ta. m reported for Office of International OperationsOther.

$Beginning with fiscal yew 1957, the United States total

is adjusted to exelude withheld individual income taxes

transferred to the Government of Guam in accordance with

the provisions of Public Low 630, approved Aug. 1, 1950

(64 Star. 392). This adjustment amounted to S4,133,068.43

for 1966.

6 Includes railmad em ployment comperiantion tax and

tax on railroad employee repirvescintatives.

7 Tax payments made to banks, under the derwitary, I

mccipty system, we included in internal revenue, co lections

for the period in which the depositary mecipts am issued.

However, such payments am not classified by internal

reventre districts (nor by tax subclasses to which

cae""

tax payments mlate) until the depositary receipts

mccived in the intermill mvenue officeir with tax returns. we

Acco'cfing'y the items shown as "Undistributed depositary receipts,

'

rteisecrt

the amount oftiepositarry mceipts inued,

,_

the amount

of

depositary treecipts; received with returns

and distributed by district and tax class.

8 Amounts of internal mvenue taxes collected on Puerto

Rican products tramp(,zted to the United States or consucceed in the island refunds, drawbacks, and expenses)

am covered into the Treasury of Puerto Rico under provisions of sces. 7652(a)(3) and 5314(a)(4) of the Internal

Revenue Code of 1954. The grefts amounts we included

in overall collections moults (tables I through 4), beginning

with 1955, and we shown areparatcly in table 7.

1

Includes occupational tax on manufacturers; of stills,

cectificri, wholesale liquor dealers, retail dealere in liquor

or medicinal spirits, and nonbcvcrage manufacturers, of

spirits.

10 Includes scizures, penalties, etc., and tax on stills or

condersixons manufactured.

11 Includes occupational taxes on wholesale and retail

dealers in wines or in wines and becr.

122 123

ILA-
I

i

.1

I

I

ANNUAL REPORT 0 STATISTICAL TABLES

Footnotes for tables 1--4--Continued

13 Includes occupalfomd taxes on bmwerf and wholesale

and retail beer dealers.

13 Includes taxes on cigarette papers and tubea, and court

fine~, nalties, and taxes on leaf tobacco gold or removed

in violation of sQ. 573 1, Internal Revenue Code.

I' Includes stamp taxes on issues and transfers of bonds

of indebtedness or capital stock, foreign insurance Policies,

and deeds of conveyance, playing cards, and silver bullion.

Is Includes taxes on pistols and revolvers; phonograph

records; musical instrumerm; sporting goods, fishing to&,

crecia, etc; businese and store machines; cameral, lenses,

film, and projectors; electric light bulbs, and tubes; fircarmus,

shells, and cartridges; mechanical pencils, pew, and lighters;

and match".

u Includes taxes on ticket brokers' sudea, on lemes of boxes

or seats, and on admissions sold by proprietors in excess

of established prices, as well as general admissions tax.

17 Transportation of persons: Rate 10 percent, repealed

effective Nov. 16, 1962, except on air transportation which

was reduced to 5 percent.

Is

Includes taxes on interest equalization; adulterated

butter and filled cheese (imported and domeatic), process

or renovated butter and imported oleomargarine; tram

portation of roperty and oil by pipeline (repealed effective

Aug. 1, 1958F; and firearras transfer; and occupational taxes.

10 Corporation income: tax rates: Effective Jan. 1, 1965,

first $25,000 of net income, rmternal tax of 22 percent;

net income in ~ cans of $25,000, combined normal and surtax

of 48 percent. Normal tax and surtax also apply to net

income derived from i:~rtain exempt organizationts from

unrelated trade or business. Calendar yew 1964, rates

were 22 percent and 50 percent, respectively.

20 Rates of tax are m follows:

Individual income

Tax:

Effective Jan. 1, 1965, gradnoted rates from 14 percent on taxable income not

over $500 to 70 percent on amounts of taxable income

over

$100'000.

Calendar yew 1964, ratca were 16

percent. on taxable income not over $500 and 77

percent on

amounts

of taxable income over $200,000.

Old-age and disability insurance taxes on selfemployment taxable income, 5.4 percent for taxable

years 1965 and 1966.

21 Rates of tax are as follows:

Income

'a'

withheld: Effective May 1, 1966, graduated

withholding, 1.4 percent to 30 percent of wages in

excess of exciriptions (Public Law 89-368). From

Mar. 4, 1964, to Apr. 30, 1966, 14 percent. Old-age,

survivors, and disability insurance taxes, and hospital

ineurance taxes on scilaTica and wages: Employers'

and employees' tax each, 4.2 percent, (3.85 percent

for old-age, survivors, and disability insurance plw

0.33 percent for hecipital insurance benefits), effective

Jan. 1, 1966, bc th Imposed on taxable portion of

I

Prior

to

Jan. 1, 1966, Lax was 3% percent each

toMployers and employees.

Collected by Customs beginning Oct. 1, 1961, as

authorized by Part 275.62 of Title 26, Code of Federal

Regulations.

as Repeated, effective Jan. 1, 1966 (Public Law 89-44).

24 Issues and transferal of stocks and bonds, repealed,

effective Jan. 1, 1966 (Public Law 89-44). Tax on foreign

insurance policies (I cent, or 4 cents per $1 of premium)

payable by return on and after Jan. 1, 1966 (Public Law

89-44 and Treasury Decision 6868). Deeds of coAveyance:

$100 to $500, 55 cents; each additional $500 or fraction

thereof, 55 cents.

25 Repeaded, effective June 22, 1965 (Public Law 89-44).

1. Cuff' oil (3 percent), repealed Jan. 1, 1966 (Public

Law 89=.

27 Rate 10 percent through May 14, 1963; 7 percent from

May 15, 1965, through Dec. 31, 1965; 6 percent, Jan. 1,

1966, through Mar. 15, 1966 (Public Law 89--44). Under

thc Tax Adjustranent Act of 1966, rate restored to 7 percent,

effective Mar. 16, 1966 (Public Law 89-368).

Is Automobile parts and accessories (except truck parts),

repealed[, effective Jan. 1, 1966 (Public Law 89-44).

11 Air conditioners, repealed, effiective May 15, 1965.

Refrigerators and frec"n, repealed, effective June 22, 1965

(Public L- 89-44).

40 Sales of light bulbs for incorporation in articles upon

which the manufacturers' tax was repealed, effective

June 22, 1965 (e.g., refrigerators), will be free of tax on and

after such date. Tax on all other light bulbs and tubes,

repealed, effective Jan. 1, 1966 (Public Law 89-44).

I Repealed, effective noun, Dec. 31, 1965 (Public Law

8~1

.1 General and toll telephone and teletypewriter service

reduced to 3 percent, effective Jan. 1, 1966. Priva I,

communications service, telegraph service, and wire equipTricot service, repealed, effective Jan. 1, 1966 (Public Law

89-44). For gencrad and toll telephone services and for

teletypewriter exchange service, th~ rate of tax on amounts

paid on bills first rendered on or after Apr. 1, 1966; for

semcm maidered after Jan. 31, 1966, is increased from 3 to

10 percent of the amount paid (Public Law 89-368).

va Repealed, effective July 1, 1965 (Public Law 89-44).

34 Narcotics, I cent per ounce; narcotics order blanks,

$1 per hundred. Marihuana, $1 per ounce; marihuana

order blanks, 2 cents each. Amounts shown also include

otcupational taxes levied on manufacturers, dealers, and

practitioners. For classes and rates of Occupational taxel,

see table 14.

u Adulterated butter: 10 cents per j.vound. Process or

renovated butter: ~'4 cent per poun . Domestic filled

cheese: I cent per pound. Imported filled che- 8 cents

per pound. Imported adulterated butter and olcomarg me:: 15 cents per pound. Occupational Taxes we levied

or' manufacturers or dealers in these producer and are

included in the anamints shown.

36 Trawlers of roachineguns, short-borreled firearms,

silencers, etc., $200 each; certain gum with combination

shotgun and rifle barrels, and other special types of firearms,

$!I each. Occupational tamca we levied on manufacturers,

importers, or dealers in fimarner and we included in the

amounts shown.

37 Negative figures due to prior yew adjustrifent.

38 Negative figures (excluding unapplied collectiom and

undistributed depositary receipts) stem primarily from

fl-t stock credits taken on certain taxes repealed by the

Excise Tax Reduction Act of 1965.

124

ANNUAL REPORT a STATISTICAL TABLES

Table 5-4ritemal rennue refunds including informal

[in thousandsoldoll-I

Individual Income

Interns I revenue region, di.tllcb, States, and other areas

Total -

Carper* -

fien

and

employment t ...

Estate Gift E.Ii.. I

.,art eses;t.tal,

In M

I-..

for other States shown at bottom .1 il.) E.,..i

Is

lure.

(1) Q (4) (5) (6) (7)

U.Ited Istates, -I................................. M, m =0."S I. M.M 2"'m as, m 1, 4" 1.7'es,

Nevith-Att-ti, Realm

Albany_ .................. ......

=674 M no m

2:367

m 1,11

57:562

23 in

'940

son

216

151

3

Mass

933 Augusta -_------------ (main.)-------------------------- 31 543 2 615 27 919 592 73

5C Bontm. ................. (stU$aC1m3Gtt3)___- ----------- 205:011 17:0%

1

75:562

5.

297 us 36 1 171

Imold~n (':: ~0 b:l**~------------------- 231, 113 14. 834 20D 235 4 226 2 120 5

9: 69

bft.,. C, b

B

r) ma

B ---------- ------

164 911 a 881

'

1

38:901 3:302 808 9 13.011

Heurl ------- I -----------

III

Go..

c~,j

11:450

118 610

458

15 37 "

M

fil: 7 1

21

2 97

31

25,

----------_------

Manhattan

(See (c) below)

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

------- I----_

3

33:273

1

8

44:1 20

1

6

48, 109

, 5

13 815

'

897

3 267

'

11

92

7,68

23 780

Portsmoutli

He2t 61 3

5

l 55

2l, G74 809 ID3 1 471

Providence ----------

-----

Rhad.

Nad-Athunti, ii;j;..

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

0.1 (filar las and C )

.

3 01

0

17 79

35 Us

e, 7 96

:

Is an

30 .

7D5

:

Ulm

902

ad

1

316

44G

l'on

1

47.

159

y 45s'771 . -------------

N.werk., UN. ................ -------- ~N.vv J.-T) ......................

0

1

S

2 3~ 179

16 128

20 651

136 208

234 706

1:17 9 1

295

I,G,7 714 65

94

l17,, 311

545

d,

Mitil, below

b

i l ia 1 ------

27'

146,'5093

30:645

0 259

227: M

ISO, 237

7,623

3,563

592

352

1111

14

604

978

rg n , ,,------

Wilmington-

.........:: ....... 131 294

23:169

1 2

OD9

7:910

110 864

13:872

31:426

000

241

54

2

22

3,9523

12

awthaus. Ill"I................................. ............

-

9.267

a

us

,

U 711 2, "1 an

1

Atlanta_ ~ G"", _ -------------_-------

G ~;:::------::::

795

6

A1. b j- 129 109:896 4 081 352 3 5:3V

C irmrngha

-

- --------------_--

olumbis-----------_- ~ ?So. n.

0901

ON

4:929

3 024

74 846

:490

2 290

1:734

100

218

124

1

911

~N. 1.355 GrUrabore ..............

rt' Carolina

OD3 977

1

633

to'

3 03 196 12 8,104

M,

J s

------

11 3

7'

1

' 8

37 :

1:

i 396 64 24 934

.ck.

. -

-

N.,h,ill------ _- __ (T nnE~ ..... ......

----- --

.

91:

1

464

103,961

2 47

151.393

16385

:712'1

005

':3 6

1,23

310

59

3

:821

,101

central "vwn_---

Cincinnati ........ ------

_ t~ ::

'144:352 "a 1"12:391 '" Us122:'179 2-z"716 "35'7 3 6: '70

Cleveland ftd below~ ............. ... -----

-------

Saa 245 475 30 800 201 80al 5:928 775 10

6 159 Detroit., _--- --------- ------- 322:524 43:478 253:607 7 235 669 5 17:529

lmli.,~ III

1.

L

InIr

)

ou.'

Kentuck

166 618

K

7 916

:

140 341

6

,:

312 341 3

I

13 711

y ........ _ ------------- :

Parkersburg _---------- (West Virginia) -----------

750,, 907

767

38 210

906

40,,72

64,1

2,219

L33

SIM

47

11

27

40

305

MN a linvall-_ ........

Ab.,d..n ------ ~S_-ouihDik'o_t_s') ........ 19,724 ' 715 13:733 1,012 59 4: "17 1

s. (b) below) --------- --------

..D..Ziiii.i. ........... - - I-)

379,922

7'

194

U

252,

711 11

'

967 1

91

11 38 9DG

- - -------- _............

Fgp_ ---------- %11 Oak *1? _------__ ...

-

44

18:153

0 ,

.

-

67,

229

12,

full

121

026

1'

170

38

3

1

12:145 4

417

i

.ra.) .

mi

dkW.

'

~

::

::

--------_------ 4D, 711 12,111

1

16,110 2,113 171 S2 1:111

0- he---- . ........ . .. 697 4 964 35 673 2 944 151

?

3

. . . . 946

St. Lew'...

St. Paul . ........._ ---- mimamot.).

3

656

9

1 047

8 :

829

i 2,763

1

1

27:124

(I 389

5:421

6.62

679

279

3

1

2

9

1:572

71

Springfield -----_------- See (b) below)-

91

168

3,

030

7g914

Z 562 327 17

1:

1

',1

sanor"weat Realan ...... ................ -----------

19

0. "If $96."a

' "11! All,1111mul m U. m_: _: ((S1 ,*(Ql %, I W) ------

A

Hn .....

to ------ ..... 19Z 22D

, 071

405

3

"

014

29

1:379

10,066

12

461

19

10

391

3,948

W,*

.....

~

:

9"

:

773 US 110

1 S 6110 ..

0.11 ...... 744 782

,

14 542

14

358

'

389 94 4 580

Denver._ .....

ads

.......

872

11

Sig

,

070

4 740 190 7 2:34

Lillis Rock .......

N

(LaIlIEsoma)......................

,w ="`1

821

6 0

299

g 300

87

.

36

065

532

:

2 9D6

4 175

65

23 1 1

682

1:434

~

(Old.brues)

0k C -------------- 69 901

,

lie

i~,

420

3:

523 299

6

1 526

..................... 73:511 5,534

Sk

286 3,959 320 5 5:41)?

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

(Alms)----------

1 434. larr

11 839

us. 896 us 1,ns.aaa

9.881 Mus ...... . ........

U, all

174

Doi

(,dirm)

24:90 Z816 11 133 416 77 (-) Go Helena--------- N * "1 ") -- ------ ------ 23.410 2,350 1

,,,

970 :556 41

11

a..11 :476

licnnrlilfti~ ......

---

22G

, '

3 672 98

5 1

265 55 1 249

Los Anple,_.......... (See (a) below).

Phoari- (A;icoru)

665: 347

59

268

73:

614

5 269

+

071

935

3

23:730

036

Z 232

203

38

1

5,661

- --------------- ~..... 923

Portland -- ------------- (Onfffrm)~ .....

'

71: ISO 61 878

:

3

647 159 1 1.226

Ran..... :: ~........ (N ...d.) ---------- 25,363 2 001 21: 776

1

.324 45 217

39 314

e,

503 X110 1 261 37 403

San .,1- if 003

29

217 6

304 24

13

---------- :931 1 902 56 10 ' 68 1 ~ (W.shmghcr).._:_ .......

5,9

10,

248

58,

101

'498

6 : 434 1 33 1, 65 5

M. ., hn- -olvanmaw..........

Puerto Rice__.. ..................

----

an

6:6gs

6,m

28

an

368

4 m

'

287

a'=

......

V)

....

ll

Olh

------------------_- ----------w: 1,12 5 13D 28,762 3,BD7 23

...'asur wfcwsbaww_.. ......_........... 1, gas

......

I ....

.

I ...........

I.... _

------

I

To tals for Shares not shown above

W Californis..__ ------- - 1 025 350

'

102 $31 964 ,3 7

1

(b 37 631 4 131 95 16 343

Illinois -------------- 473:159 79:214 g2e 6 6 13:529

1:518

58

2

,d 50: 24

New York ---------------------

Ohio_ ----------

791 219

399:927

170,

202

43,191

544 am

323 993

22.284

3 6"

6,410

1.132

1

I

00

14

47,416

12 M

111"'plylirl 426,152 40,904 358:236 11:186 m 302 14: 5M

If)

Trual

342,964 59,187 249. V2 24,03 850 104

S

8

.526

Ilad.doad-luck-rdII :tihm~re am deroptions.

I Finna he,. net b. to reflect reimbursements from the Federal Old-Ac and Survivors and Federal Disabilitt Insurance Trust funds ... .8 is

My 67~5nDBI) in 1966 and $191,690.000 In 1965; from the highway Trust Fund amounting $119,772.000inl266.~d$123.499,00 i~1265;..dfl.mth.U~.~pl'oty'ment

Trull F

Imm

tin2oit.$6.000,ODOI~1966..d,$7.609,000.. 1965,

ad.livalloh, checks Items led totaling $I8,245J)DO.

-I-than $500

125
ANNUAL REPORT * STATISTICAL TABLES

Table 6-Number of returns filed, by internal revenue regions, districts, States, and other areas

Int....I r...onn-glorm,diltri(la, States and other

en

(States repro by si aIs districts indicated in

p ..rth It-th.'stlul.h....tb0to. .1 table

otal

(1)

dividual mcome tax

(2)

ti rpo

n.n.o farr%,

(3)

p

(4)

n of aninurt d tax and I.11

me

(5)I... Declareol. Yart t-I(6)

s

xists (7)

Gift tax

US;

.,In

far.

(9)

U-Seene-assual- --------------- 1". M. U. 1", 743 , wass. rn 61, Stra ,9..- 4445,- war In

Alba 1:0"73':922 740:151 5 70 I.: n2' "7*5': Tal 74 "a204: '61'2

1 2 ?

6

1

A 27: "1

dZusta. ............. (Maire)_ ----

---- '7 '

1 717 7 1 1

2

13 149 4 894 2 - 371 Bosto---- - (MansuChumits) ::::: 8 ourklyn .......... 1% ~,) 11ll* --------- ' '

17 1: 237 3.741,163

:

.

1

32 648 2,548,973

6 1: ,

91,432

:

75 31,197 : 614 276.054 : 254 729 865 21 68 4 113 040 60 9615

be 63: 20

ftal. _............ .

.......

B.

1,,I*nil ......

3 "i" *'

329.573 242. 114 590 1 14 52:2992 570 3.330 523 2,062 ,356 705 16, 4995 59 73 2345349 3

19

78 (C. nrec . 7 199

u :: :: rtl ,d . 693,341 105,533 8 6 71 1 1 1 3 111 333 4

' NI

.

"

:

4

32 MP1.1",1111, -, - -:: --- : (111He. H h

...u

3.3111:1' 5

578 2. 9546:51 2 632

2 2

145 8

6.943

8: 2

11 2,045

8:

902 24,506

: 63

08194.995 4: M

419 1, 17B 375 2.32. Pro 9 663 ,idea ._....... Rhode Island)-------

'

xuaf~n 02,093 42,103 2,194 ,739 ,568 ,776 6 8 709 1-1. Fewer........ B lt..e I------------ 2:5 538"0: 568 ol: .7817: 9"151 oe35: "72'0 16: '169 1a: g.0 *6: '23P 0

4

It: 188 our: 48:491 N vark.--- --------- (New Jerse I. __:::::

r

'

4 : '722: 10 21i 2:9326:9 " 36'51

1

43 : I'D61

0

27: N445 n": "' 771 : 6145~ 3.2' 52 :1226 4. 13 1 1

phP iladelphra._. ----- ,

( " l'~ B11h.'enP. j'E'l.)- ---__-,214,016 2,14,4,350 43"1:2371 2: '2133 5'N.

1 020

1371: 49'134 :'1171 11: .1 362, 4 15

2

:60,

39.728

Wilmington--......... are) -----... ... 310,226 202,058 ,667 ,492 5,845 8.IZ2 8

54

. 3 221 t1wwat Real ------------_------------

At unit............... (G..r9yx)__ - :-- ':'134N'"BS 2T 411:715 ' "' "':"'

-

"5: 7"-31 04:15"1 '.'D:91'1 1: 1 S's

'ras

2 544 n s 33.20D irmarthamr.,.. 1,44 2,113 51,496 4,159 2,029 ,409 5,513 0 379 ,M

Columba_ ........... ((Iluth 1. Gre-tho ........... Hart C..."ll"in:l::::::::: :01823

1':3'1'3

5 ,,S311,:13~B2 28 111

:,74

495

3

.686

121

"a

20: 4422,

"

J.3 1 2 11212 111

,.,.n 43 903

,hu ---------_

W.) ...............

932,635

3,149,675

1915-

1,959, 133

2

64': 5' 23 731.952

:

0

111 71

1, INS

711 111

G

1,938

9

5,650

758

an 63 63

Nalnill . ............ ness.0............ 1.805,958 ,207,246 7,247 6,286 7:292 3

434 8 899

:

cm 0 679

............. ------- ;fov~j::

Ci d ) b

'

C nc, . ) : !fk 631 : a5"1: 19"5 :'5612 '5: '1 64: R1 '13:8'21 : 9.865 1:7.79 9:2m9O

.land :: ld bel-)::-::::::

8! 1l, h l un?

1

4 2111: 3 1,2W5 2 9196,159 9

1 1 14

654

41 l 21

780

31 111

.801

31 71

,262 J! I 311 2,10 2 71 .:111 62, ga1:911 79,

,.ga) :............

In 1nd

ll K t k

521,929

41 3 1

: 8 2

1:75

5

9

7 1 0

:not

14 193

: 12

11 11

95

164 7

" 217

," : 5 1,

311 11

: 47J

IDS

2 781

402

,938 Louisvi e. ------ ---- ( en uc y).. 30 802

Park ...but,-- (Wer.t Virginia). "1 11: B 52: 58

079 :

99

3,5 , :

795

,

3 5

,

. RnxrH___::::::::. .165

Ab d en * g' R5'12 .2'34:620"1 : 3' ' 3"01 TIk "IN TZ 0 M

r

-179

,

er e ..._------ .12: 56.6 Chicago------ (Sao (b) halt.)-:-:::--- 1 :4517 :112 . 025:838

D

,595

4

203

22 139

:780

4 417

:411

3S7 751

49

13

92

131

4724 D. Names-------- (Iowa) 11 : 21 North 0 skols)..........9 92,

339,505

99,

O S

21B.981

f 70I

3.636

, B

,33

. 8

16,524

,

,688

4160 , .56 9 , Wiscona 66 MO.. 1) .............

0, N.brnk

-)

.302.820

26 7"

512,829

'3' ...

,427

11 17

11

1,625

31

68:

491 1

201:3761

1:4564 J:SJ71 IS 012.1

St. Miswuuri) :::::::::::::

S

t

..........

. 37: 2

1.996,1051

59 1:

1,288.057068

7 :

21,31237' 1, 72"45

.136

133,467

,777

392,290

10

2,024

1:..1 . 7.11,

Sprl.gfi Id............ (So. (b) below).... ----

2

1,586,980 ,048,317 5.066 7.954 28,108 4.242 605 992 ,196

i; .......................

Albuquerque- (New 141lice)

n :wxI 149

469

,M.2

311,593

15:191

246

.

4:901

.7: -

047

-

107:778

,61118

244

91*

524 511

Austin C -------- (Sea (f) below)

h,,*,n, W,, Jn&) _ __

.1181:21

3

19

627

j05,11.2

19,771

ll

3.02

I

,722

1

137

01710

'4

01:4481 IS 161,5 1

384

:087

Delta, JS. m, ,.,). 087

D ....L .............. Cql-do)~ A ...........

2 :467,236

.99.117

855.141

22,464

5

059: 1'7

.771

1,7:. 141

4

01

130:

1

.195

0,:474

4' 765

.577

31; 16 11

2' 05

45

4955

1' "

2:3111 2 72

1 231

7 8109

31:303

2 5 1

'

Louisiana)::

N O'le.

----------

k

.

800 6 52

5

2 11 1 1 1

7

1 1 3 11 7 0

:

4 7:9 4

Okut Oklahoma)

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

M

Wi6i rrxass)~ ---- ---------

.

239:695

1.208.OD7

11:383

765,744

5 :

950

IZ,266

2 :

13,536776

4:

92,504258

8, :

161

289, 212

1 21

12

:

449

3 :174 f23

R.1aw .. .............. _.............. "1901110 Is. x`12. an 11 4.

as. In '-'m M "'m '"s

s

Bal Anchorage.. lA1 5'-

ld.'hkol.

I

3531':14".

Its

1117:11.7

:

4 11' 4 46' 566

5

193:701

1

85:261

3

11 10

4

13:

Helen (Montana)------- 2 -

3'

7

42 111 1 13 1 3 1

2

.11 286

'

He 5 6,1 34

(Hawaii)

-------

62

39 7 : H

: 9 5

278

5 5 :go8 3 355

30 5 D

'

9 3

0

57

Los ph An"I"::::: 'sea (a)

2 lAri. .)

..

6 16 4 53

7S

.7

~

108,450

505 060

277

9 895

272

7 246

:

320

51 317

1

22 5:1835 4 3

165

6467 4,8529 19 21:443 1.

. 7 . m __ 341

Portland-: ........... (Oregon).., ...

.

------ ' ~: 7.

.

17 441

,

3 112

.

,371

,

. OU

,

3,106 0 84 711

R....... lN -ad,? -- - -

S

217, 16

":3. 4 000

Uba~). : _.__ :::: 228 11 11 1 73 7 9 1 27

Sell Less

"1'

3 1 11 1 13 26

2,:

596

:

278 9 7

" "

5 .

low

San Frami=_._..__ (See (a) b

.......

............_ (Wnhirsbm).

,155 286

1.6 1,175

:

7

':1 106,339 -

:

21. 052

500

3

:44 2

947

1

30:651 "

651

350: 1"

,

43

1.345

0

5

1,450

102:431

::: 52.844

as Imanavuensl o"milew------ .57 6.

94:3

1

84

P art. Rica.. ~................................ it MS -las o 323916 21: 76a87 9"?- 4' 03

Other....................................._ 263,250 37, 060

.

037 01 3,035 080 898 1 8

b?, Min.l. ..........

riew York

d

OtHe

-----------

a) 1) Pennsylvania jesn__

.........

Totals for States not shown above

11*311,131

5.995.662

11.109.667

5.304./63

6,316,352

5.281,449

1,121,113

4,074

6,974:595..

3,647,944

4,31,121 326

3,328,

111,121

273: 6"400

70.216

1361:411

92

121,71745

"94:004

37,979

41:8 67 4

736

910 879

:888

1.0'51 38

397:0167 3

50 193

368:568

2,092.936

1,1131,653

2,460,135

1,027,083

1:200 01

310:0292

11,320

7,754

12,758

4:06 5

703

4,680

1 Includes 114,822 Forms 10408. NB, NBA. PR.ard VI which are included in --All other individual and fiduccary" returns in the table on p. 14.

126

634

,1:274

18.574

':' a 458

7,749

229 974

94:620

22JJ

3:'21.

134,721

132,896

ANNUAL REPORT * STATISTICAL TABLES

Table 7-Interroul revenue tax collected an Puerto Rican

manufactured products transported to the United States,

by objects of taxation

lin thourandsof dollaral

Objects of Exertion

45,100 51,700

41t:10,17I

I

1965 K~~

Total --- -------- ----------------

1):li::Id 1 1pir'11, ---_------------------------ Of I ad I U,rectiffestiortax...-

W! a-------------------- -------

B......... ..........

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

CIgrrCfx1..rg.: Cie. A::::

9

......

Class C ---------------

------

Class ...............

Cie. F::.......................... ::-:----

------

cits"." Cigarettes, Larg................

Cigarettes, Manot Mail. --_-------- -- .,fund tobacco (th.aring, smoking, and ruff)

11,917191

2 76

V)

than $500.

Note.-Amounts of Internal revenue taxes collectsed an Puerto Rican tobscc and liquor manufactures transported to the '"'I'd 11~:,,.m,1.n1gmw1 in the island (Iran refunds, drawbacks, and experms), are co d nb. .HaiTr of Puerto Rico under the Provisions of sexr. 7652(a)(3) and 5314(a

of the Internal Revenue Cod. of th1954.hTh- Von amounts are included in overall collection results (tables I mug 4), beginning with 1955.

Table S.-Estrablilihment, qualified to engage in the produc.

tion, distribution, storage, or use of alcohol and alcoholic

liquon

Class of establishment

Distilled spirits plants: Plants (net number)... ---------------------_-- Facilities: Production

'B'N"I'l,"'Is., 1; a::: ------------

Dan.

T as:j1d ----

Be I In -----

Denatured andIuNCoWirWi~C6-(cfiit,-r - ------ .

Dealers In specially denatured alcohol and users, mmatumd

lu- ------------------------

BeUsers of specially demitured a6iifiwd ~_Wlidclid,

rum ----------_----------------

he,., rebuff am, etc., of specially don lured

-.1 ................ -------

Be, Umn of tax-tree aIc;fi;= ......

': Wasn't-----------------_---

Win.:

Bmaled in. calls, ............. ----------

Ina&11,7 id wine bottling houses... ------------------

Vl~negfar I ctories bring vaporifing procen-.....

Beverage derelatia:

----j---j---------------------- cast

Wh.l..I: d.l:, Ibiqset_. ... .........------- _------------

11tall dl,l:, In

Rate done Is Ibde'r.on

Other:

Manufacturers of nombeherage Products (drawback) .

Born Imirflevor concentrat. plants-------------------

..nuf.,t-mrs-------------------_-_----

A, of June 3D1965

352

172

278

61

50

147

130

44

3,690

1.062

7,483

191

435

93

3

31: 886'

6

274:919'

139,987

874

1 "

07

E~~

347

168

21157

152

46

131

3,6154

028

7:460

173

426

85

3

3: '682'

6 7

296: 222

141,526

930

4

111

Table 9-Establishments qualified to handle tobacco

materials, or to engage in the production or exportation

of tobacco products and cigarette pap.. and tubes

Clan of establishment

Manufacturer. o; tobaccoeuroductI I.. ~ ................ D. as Igareft papasindbubes.....__ ...

in tobacco material . ..........................

Too.,. expert .,r.hdV ...................... -------

A..f I... 30-

.4548

1.991487

3039

------ M

j Effective Jan. 1, 1966, the Excise Tax Reduction Actel 1965(Pubilc L-89-44) Igrunted the tax an tobacco other than dpI and cigarettes and eliminated in. met revenue controls on tobaccer mated. 3.

Table 110-Permits relating to distilled spirits under chapter

51 Internal Revenue Code, 1954

S_

1. 5171 San. 5271. I.R. Code

R. Cq6

star., Total

Deal.,.

in ' a.

se" IOf 'tied , F, pIrlt, d 'e'll." l;*J.I1y cifly xplants tumd

an . . n

ree alcohol lured .1cohol hred rum lcohol

(1) (2) (3) 4) 5) 6)

I n affect July 1, 1965.. 11, 425 09 4 6611 2 5 48

bad ........... -

605

9 2 0

3

1

Terminated, total __ 695 27 7 55 2 04

R-k.d--------- -2

------- ------- Oth .I,. Immi.

ruted... -----

693

53 1 .4

Ireffect Jun. 30,1966- 3, US

-

7,460

Amended-------_--- 1238 93

127
ANNUAL REPORT at STATISTICAL TABLES

Table 11-Pervalts hor operations relating to alcoholic beverages under the Federal Alcohol Administration Act

Distilled3pirits plants 1

- P"da,'... in. Grand total -

ad blenders lenders mporters holustlers Sun., Total I Distilkne endarehousing battling ectifiers

(1) (2) (3) 4) 5) 6) 7) ) )

Igiled July 1, 1965 ~ ................ 1 276 " 986 05 53 6 2 891 4 ad .................. 1: 333 9 0 2 3 1 6 6 1

Terminated, total ...................... 11504 42 s 6 3 1 1 5 25

Revoked . ............ ....... ............ . ------ --- - -------- . Otherwise terminated I'SO3 42 6 6 ---- --- - - ----- -

1

i 205

-

. H;

la.ff.,tJu .30,1966..

.

13.105 96 SO

1

91 93 6 ~ 7 ~,902 ,404 A-died_ ............... 1,361 02 ...

........

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

.... 3

73

9 4

Ia Wind. lanaefts to, CuMman, armufacturinj banded mrshounes, since such establishments are net re,1.11.d to quilify., ditilled,pirit, plant.. Cof.crn (2) does not represent the sum of ( 1, (4), and (5) since I Permit may cover more than I activ ty.

Table 112-Pernalts relating to tobacco under chapter 52,

Internal Revenue Code, 1954

Man' P'

guru,

Total f.Wr.,;.f tobacco ,. h... proprietors products

(1) (2) (3)

in ftt July 1, 1965.................. 606 458 48

ad----------------------- ------- 53 22 1

Terminated, total. ........... ... 196- 72 4

Rmk.d-.

-, - ------------ -

-

0M.Mi.0 iiiiiiiiflu : ---------- :I l ~i i

n affect June 30,1966 ...... 308 155

Amended ..................

I

T2

I

7 5

Effective Jan. 1. 1966'the Echm, T.. Reduction Act of 1965 (Public Lear 89-44) ,.,"led the tax on tobacco other than cigars and cigarettes.

Table 13.-Lobel activity under Federal Alcohol

Administration Act

Type of label

Grand total --------------

Distilled spirit,, total-----------

'MPa ad

Wines, total ---- .......

1. ported

Mail bevusges, total ...........

Domestic Imported:

1 2 8

Applications acted upon

Total Approvals

53,341

19.694

17 718

966

31,573

22:111 1

488

Z 084

1 '542 542

Certificates iseened

51,860

19,140

171:317

an

30,668

1. 6158 22.000

Z 052

1,53319

Exioup. Han,

Eil

61

61

325

325

Dis.

app.,,d

1,095

483

340 143

92

498

32

ANNUAL REPORT as STATISTICAL TABLES

Table 14.-Number of occupational tax stamps issued, covering fiscal yea, 1966, or portion thereof, by cIan of tax and by

internal revenue regions, districts, and States

Distilled spirits

Tet.1 Rectifiers Retail claulac andfatclurems of

internal revenue regions, districts, and States

a

..bar of .,a. an..orneverale products

States represented by single districts indicated in p.r,:n. theses; totals for other State, sloven at bottom of fee

national taps

sum

ee. in

of stills,

t eh ole.

dealer,.

tai

issued $55

20or,

255

gall $1 den.r $54

-

(1) (2)

3

5)

6)

U.11" ...I ............... ------------ W.W 186 S 1749 s. M ds 171 0 . .

R.1- Albany-_ as1'2: '233 '1 ----- .a

.....

.

10 ry 4:542 S25 o........

s

.......

I

......

s

8

AuIusI1 -------- ---

21of 4 ' 9 1

1

5 ...... ..

- ---- 2

..,.a :::: :

0 (~M Brooklyn ------ ---------

::

2 3: 21 4

" "1

51 --- 1 . 6 D64 --- 4

Y

3

4 0 B 6 affalo_ (S b

adial n -------------- --------

25 3 5

2 504 6 ---- . ......

'

7

1

.So11. ....1 . . 1 ...I ..... 1 H. rdo C. a.

M.rnlh.tron ---------- __ (See (c) belonv)...........

14 :

32,5399 1 ......

i

1

3

78 176 7.097 i_

...

. ......

I

4

... :~

1

5

3

Parts Provlmd,Qratlh~ 2. 3,89103 ----- --- -.. ----

........

1

1

1

3

5

1,835 ......1

:

...

. s

Md_s-I. Rep. - ------------------- ........ us M a s s M

,

044 s 6

1 s

a."

- N..!."k a 1391 28: 4 D

-- 1 4

6

9

69 756 13.105 01 ::::: 12

1

2

s

Phi dl~ :~bb:ldvv 1

Pt'91ba Plh-. ' 1'-:: ------ :-:: (:: (S (

181: 313179 ... _7 _ _ ___ . 7I 3 1: 5502 51 3 1

1

2

.... .

2

..... .

8

I

Riclfimand....__.... gazin of ------ w1laringlarn._... ...... : ---------------

14.752 1,753 .......... : .

...... .

......

...... .

0

0

5

774 4 ..

. . 1

;,.-. le"I------------------------ *'

. . j

0

pliant------ " -

""I").... 11: 629 ---- _ . ...... 15

7

1: ::::: : . ..... 2 1 Birmingham,:::::::::::: Rate-) ....... C un'bla ............... (South CaroHna).-::::::::: of '1: 2"277 5

14 07 977 .......

4

.....

.

.

...

..... 2 Graensbaro_. ---------- (North Carolina). 11 719 ------- -_- --_

1

7 1 .... 1 ::::::::::

-------

imiss

J"k., --- Ns'hyllle -----------_-- Terms

:

280 21: 13 509....

i

--------

F

-------

::::::1

9

332

71 4,633 698 .... ...

2

1

..... 2 1

1. "1----------------------

' (S d

. a. 591 IS

1

11 032

a

110 . 4 780 0 3 6

6 0

Clenre"i.ad (S :: ~d~ bul.,v '

~

26: 585 4

......

2 1 2

.

0,217 ......

...

j 3 2 Il

Detroit----------- (Mkhilpm)__ .... 34,537 3 3 3 53 1 125 9 1 9

1 ndfim,1,rll1_: -::::: ~ 1K1.di'1.n1k),;:.......... ...

La

uW

7,552 9

'1If i

_ .

- i

3

4

0

o

5

611 885 -- ij- ::::: 1

t

1

. ... ,

Pak-burg __ (West vl'gW;;.::::::::::: : 125 1 1 ...... 3 3 ...... I ....

"Idvest script ...... ----------_--

age 7! .

Aber Chi. ,,IanaC (11f~hb11111)__ (Sea W-)--- ------- D

:754 31: 0' 1 ---- 41

122 52 15,124 - .13 14

.

i"1

.. .

i6 C

4

, '

o. .1mo- 13

36S

2

4 562

. M

...... 9 ....

Mil. 26:660

,

1 2 13 0 M Create St. Louis.. .............. Nab Misuari'

I

196: 2626 "

: :::::4 .... .

3

5

55 945 6,070 3224 84

.....

3

1

1

4

4

St. Paul..-. ............. nnovate) ---------- ...

Springfil to -------------- (See MWe.)..........

%

7,441 10,600 12 12 "41

5 031

4

.... .

2

7

2

1

.

.

----- -

3

_a- I

%,............. __ ........... am us r 4 .....

.

.... .

5

i s

Albuquer!ue, Austin,

---- IS".- M ' __).::: -::::::: 3'1:S77s

-------

3

2

----

------ 0

30

390 1. 1" . . ... ...

i ' ' --i - ---U

~W.,.,anI)in9) ............ Dallas.- bar-)... ........,785 14,586

.....

-

9

-

1 1

7

1 11C

::::::

1

:::::

2

..

1

..

ii, ::::: Deaver. Colorado) 9,311 19 2:

947 57 7 ..... Little R ((111-1 Navy 0,'1"'n 1 6,:21848 .......

........

......

1

...... 8

5

'

9

5,61

-----

..... ...

.

Oklahoma Wi 1 City ----------- (Oklahoma)------

'h

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

......

09:111 200 ::::::: .... :. 2 1

32

7

1,304 ...... I

---

....

.--. a

fee ..........

........... 14 mf1 s s

as

.. a 1 s w

Aa,hP,.l ~Al Id:hk.)*) ................:

3, 347"0 .... . .......

.

........

5

1

0

6" :::::: :::::: :::::. Helena-. ... .....

----- He It

L*,A,l 1 (S** (,) b,l*w)-

I2: 6"412

11 fin --------

----

2 7

'9

231

I '127

11.1 ::: --- i - --- V ---- i_ (Art,.P,

'

"'"mis!

Portland ------ ......... (Or,fpm)~

7:

126 10,164 ...... ...... ...... 7

59 815 1 249 ... .....

.

i

...

. ..

R no-------- (I( we ....... 1.2. 2 :479 ----- 0 ..... ... ...... SUtah S:lt Like City

n Francisco........... (Sea (a) Wlavv)---

,407 AD. 349 ....

ii R

2

06

2

;

Seattle..... ------------ (Washiall .......... 1 16.461 __--- ------- 1 28 :816 ..... 4 1 1

1.)b) Withwal -------------- Illinais._'. ......... 1,r'

6) Ohio...

--------

f)

.

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

Total, to, States at hP.n be..

98,979 42.508

to' 43:5

48,3166

46.163

131

90

7

12

480

206

'13

282

45

58

30,014

20,159

21:761 14 997

20.8111

3. 69

52

13

27

20

3

2

........

1

13

4

2

125

61

2

2

C4

5

1 2

3

1178

1 2' 33170

129
ANNUAL REPORT * STATISTICAL TABLES

Table 114-Number of occupational tax stamps issued, ccovering Fliscol refor 1966 or portion thereof, by clan of tax and by Internal revenue regions, districts, ars: Stat;;:Zontinued

Internal r ...no. ngiona, districts, and St.t.

(St estaprosented by single districts indicated In parent.

tha.'as ; totals toy oth

or $to

tea shown at bottom of table)

Wil...

Wholesale dealers Retail deal

Win. Win., a Wines',

Wines- $255 ..,d bear, , ndbon' 255 54

(12) (13) (14) (15)

Beer

Or

d:.I.r.

, d 1,

4 IT

Wholesale Off, Retail lirnmr

'T ""-I' do""

sal.,

I

dealers

$,,o,,. $123' $24

0. $24' %.20 Par

onth

(1

6) (17) (13)

(19)

(20)

U.11W stuates. '_u... ......................... 1:21, ass us ..con, an 7. an 2,1314112 12S 5, in

77!'7n-------

..

grr ".a 22 rage 3 .9 n" Alba

n.... _ .....

js;; ....... . .......

~

3

2 96

3:392 2 is

A

u

gusts . ....... _...... ~Malfs)_ --------- ..... .......... .......

--------

45 2,417

Boston.. : ------------- .......

M-ch ...IN) .. .......... Z2

1

23 .

"N""" ~S:: 'b:10.*.~: : ::::::::: 6- --------

41 85

12

6

6

266

208

8,822

5,944

47

_------- 3368 surl nit (Vermont) ...........

i ,

.......... 26 907 ---------- 2 149 ... Mart 4

or. (Connecticut)..

---* --- - -------- - ------- 3

1 41 2

..

17 1 ~mf (~b.Iow):::::::::::

Per mouth New Ire)

is

39 6 2

89 6 :

143 45 ............... . . -------

ProIld1m,a.. ............. (Rhode I 1.2d)------------

.........-

----

-

. -------

-------

2D 1,175

34

-----

....... .

.......

'I Mid-al

R ...........

io

2,

..

BlItinser ................. (Maryland an ....... 2 496 3 100 9 S5 -------- 560 Nvn'k-

................ No. I... .....

.......

...... ---

--------- .

1 6

145

'

46 57 Soo P ith

Ittalb.,

N

2 - -------- 3

906

794

1,009

53

5

..........

----

27

R 1,,nd I,Iln 3 45 2 55 2 77 3,987 -- ------- -------- ~ .6 W

iinnimit.; IS-)--- ........... ......... 3

......

- -----

8

13 2 37 "nuthessat save"" .............................. I ......

Atlanta ---

10

'

US

13

76

Is

",

iii

947 I

539.

a

9

Zia:, 93

0"

... ~

3 ...... ... ....... ------- 68 2,974 Columbia ----------------- South 1 33 ----- _::: 1.661 ....... 30

3,571 Nc --------- 21 ,th Carolina

3

7 50 Z 498 .... 73 4

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

In -- ------

p

-------

J: o"Id'.),

2

--- ---- ,

..........

57

9

..........

122

5,755

----

3

,

7

109

:

3 113

'4

178

104 Nr - . ....... . ....... . .......

88

4:319

-

ii 21

i Cl.n,,I.n, S1::

C and

~dd) 15

4

1S 1:.724 3

94

1

5

tQ217

15'1'1

M

11'3If

D Mich Ran) ----------------

I

8 51 7 3 260 8 129 154 1 180 11 -------- - 17

::: :: :: ::: 2:133 5 234 312 .......... 33 Lj

.... _

~ 1

4 117 2 176 1 29 t Virginia)............

.14'P

was ""7!

I

4

-------- ::

`1

----------

5

325

92

1

. 51

log

1.00

3: 354

2 M

.....

12

---------

2, IN Ab dean ------ ... .......... ...... - -- ----11.... ... ....

-

48 ~

3

11

..... _

I, ........... 13

Sea

I ....

!

i 219 2 ------- 534

... -----

F. ~90.---- North Dakota)...........

-

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

6

----------

11 15942 3,901

274

1

----------

9

4'1 7

W ---------------

1 1 a 1 12 26 403 4 111 ---------- $is 0. hus._ ............ N.brnk . .......

L :::

------ - -------- ------- 2 98

1:

'- -------- 1

SL ouis -------------- Missouri) ........

St. Paul

---

mi"~...U) .............. ....... ..

i

.... ---

,

1 3

6

11

124

298

4. 032 7,117 3

226

215 ... S . Of below)....._... ........ _ i

1 12 4

139 254

..........

345

............... ............. 3 33 G "33"

" I`no

arg'sas 3 132

A

I:b.

a.

. .

. b.','- --------

........

6

2

4,173

........ 3

4

4'

20

11,117

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

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

-_1-1 .. ........

8

4

Lif2

Dallas. 1, Of:._1 ......... ...... . ........2 .......... -------- :: 174

28

2

3

145

69

3

L:256 "'

........3 30

Little N R 3 2 229 ---------- 42 1,467

.. 1,1"n, JLulsians). ........ ....

Oki

ft .. Ci6: fro

-----

..........

- --------

..........

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

9

13

3

1

117

102

3.653

5.03 ::::'----- Ia Yffth', ...... ------------ Kamas)

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

5

90 3,578 --------

star.

Real— --------- -- ... i ........

ii iii 7..2 21 11,153 A Al.

But,.-- ------ ----------

'S

62

22

2,502

5

:

If lam ----------- ------- Montana)

------

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

------

1 73 596 3

So.

.I.I. ._ ---- __

"we

H

Los Angel. ..... -----------

---

-

2

........

29 3 7

L,7 31

998

.........

10

191

669

1 11

ape

1

Portland

-------

26 ..........

2 105

1 56 505 ---------- 148

Ngnad

S ....

Utah

Reno

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

.......... :ItL.ke try............

C

- -

...... ---

-------

:::::~

i_j

-----

_

1

13

31

113 --------- 7

~

S

ir Francisco .......... Sea b

I. ~

1

'pfluon)_ I 17 5 3 2M ----- .... 704 Soattle~........... __:::

iyxr

_. --- - ---------- 6 33 1,140 --- ~j 18

Isb~ CAlifornia. ...........

Illinois ------- ......

c)

No. Y?lk ........ d? Ohio ................

,:.., P in .me ......

US

... .......

- Include; 5 b,-.. of Iraos than 50D barrel, at $55.

Total, for Staftes not shown filrove

23

52I1

3

221

14

6

2,790

162 13

6`6184

5,047

113

15

14

312

358

1, 659

169

690

559

9,622

530

24,301

1:

070

18,053

49

3

879

477

341

27

56

!l~"

130

ANNUAL REPORT S, STATISTICAL TABLES

Table 114-Number of occupational tax stamps issued, covering firldsallear 1966 or portion thereof, by clan of tax and by

internal revenue regions, districts, an State;:Zontinued

Marihuana

M-f.r.

Internal revenue regions, districts, and States turars, t

Wlml t d

"'

. .it 1 'i L I'll

,

"I"

Plodur. P

States Fepre ented toy sint, Ie dist,irts indicated in

r

un axe tie n"do...' Ii.,

" "" dealer. no

a

P

re

P.

ra.

but

a

. 1"

ro .

facto 111, d

. Dealer., Ul

"

r t S

p

th

aren ..

; totals

to

be,

Late

S

shown at both.

of table)

ou

of

33 fit

th"

a

SY' ders

ounn. $12 $1

of

I

"'114' ;1

etc. 124

(2'1) (22) (23) (24) (25) (26) (27) (29) (30) (3

U.1two stat... -1------ _----------------- 1" 1. 69, M 3", 532 1,4.1 . 04 6 a 2 47 25

...ft-AU-1. R.1en ---------------

1

US ...as ... ... so

' -

5

Albany ...... (Sao %

1 7

601

3 311 _ :: ::::: :::::::: ----

Alfiu~~ (Main, ------- -------- - 4 254

1:'

44

1 1 ...... ..... ....

: (

I

at Massachusetts)

aroo ...

-----------

5

5

31

22 2:

111

1 345

1, 1

1

111

34

'

121: 11 5. ......3

2

16

L

'

211 :

I

1 11 20 11 ----- .. ....... . .

C. n. .

i~~tj:

lu,lin ~Iernxr,,.U

_ _::_

th.rd

_:::::::

2

11

ID4

93

7

23

1

a

12I :::::::: :::::::: ::-::: ..... : ...... .. .......

Manhattan-----_..---- (See W below) 1 21

"'?

17: 3

2'

131 31 1 3

P.r""--- Providence-. __ ::--:: :: ::: R'h.d. llla`~'d

----

1

1

3

7

U

307

970

1,926

1

26

2

1 ---

AU-1. R.",... ............. __ ----- 33 103 2,232 46,336 .1 as

fIe k ---- ((MN:.r,,,,.,d".and D.C.) -----

weI -----------

P ' 'w)

2

106

27

291 2

1,088

2:4241 26

8.062

1,1:913191 1

7

14

32

9

38

19

--------

--------

1

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

3

----__

2 3

Pittsburgh .. (S b: .w):: : ::: ::: 1 10 1,29

I

6 57 12 a

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

Richmond --------------- (Virginia)--------------- .

Wil.m tm (Del

4

9

135

5 :

50" . ........ ......: . .......

il ........... _ aware)

-vat R"I w,----------------- _:: i3 M

121

,

724

U. 0,

5

1.

1

31 ... ....

-------

........

--------

........

__--

I

-------

........

Atlanta

-

(Georgia) -------

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

...... 3

1

1: 117

" 3 5' L2

4 ...... .

lirningim,- (A,,,,, - -------- ---------- 12

"g

3: 77 7 3

.

Colo his __

: :::: ::: (South

......

Greensboro-..... --- __ (North Carolina

1 9

11

761

2

2.429 2

is ----- .... I -------- .... -------

9 639 2,150 12 -------- -------- -------- --- ....

::::

....

::

is, n

Nashville --------------- (Tennessee)------------

2

2.

L:7381

12

77.2

4: 6

21

2

1

7

Cmtml Seattle. ...................... 2.

"' , NE

So, ray 133 a

........ s ........

1 Cincinnati -------- (S..(d

d)

below)---------

(

5

6

27

31

N

1 132

6,290

9 1 1

24

1 124 :::::-:: ....... ::-:::::

3

4

.... _

......

Mich,R.n)----- 0 . 54

2: 282 12:9 1 9

43 11 ........ ...... :: ........ ........ ......

Indian.)----------- 15 27 1,297 6.323 28 10 ........ ........ .....

ky)

Parkersburg. ------------ (West Virg.

~ _ 3

9

929

374

3.592

2,100

8

1

3

wildwass "I aw ....... ___

------------------- 28

"1

9, In 43, 158 US i 2 2 1 1 2

Aberdeen --------------- (South Dakota).. ........

Chi.g------------------ (Sea (b) below).. ------

D W

....

7

5

31

222

2, 273

784

11 7 1

......

34

... . ..... ~i - -------

, -

es nes-,

Fargo.......

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

North IIkll --------

-----:::

-------

26

3

7

92

204

3:9

73308

.......... 18 ......3 ...... 2 _ ......

, ::

Mi -0-

in)_

A= 1 '110

12

1 1 - ------ -

------

Om.ha... Nebraska). ... ...

St. Louis_

-,

1

"

0

2 1

4

1,164

2: 27

7 111

5

41

4

13

1

---

i

--------

i

--------

14

--------

1

St. Paul- :: : ::

Springfield. (S. (d) below)....

3

2

0

13

991

788

: SOL

3.493

0

27

3

7

:::::

....

Swu'rwass, ............... 4 M ." U. 105 as

N1wfM..xu)___::::::: ...... __ 3 287 213

'

1.S,,n_ S . . i 4 .......

--- ---- "

I

,

610 7 : 9514 16 4 ........ ........ ........ ........ .......

C

W) IS ee M

So

-

2

3

28

119

413

454

_ ..... _ 7 05 -----

Denver.............. (Colorado) ------_----- ---------- 20

:,

722

3.

Little Rock '' , --- -------- -------- -------- -------- ......... -------- - 6 607 2: 177 2 1 New Off .........

L. 1. no j 17

,

049 4 794

2

1

Oklahoma City_ :::::. (Oklahoma)-------------

Wichita............... _ (Kamus)._... ----------

----------

1 156 726 ON

3:

2,969 50

0

2

2

........

-----

.

--- -- ------

VV_._ Its asaw --------------- ------------------ 12 1. 1, Gary 11.473 202 71 2

Anchor ....... ~A

tor.................

.in...

)

Idaho ........

...._ _

....... 23 21442

225

962 --------2 - ------ 1-

-------

~M '.4.) ---

---------- 4 11 1 01 1 1 volu

He. HawS,,) ..... .......... - -------- ----------

, '3 1 : 0 56 22 2

L03 phorm11,11" Sao (a) below).

(Arinna)...............

8

.......... 70

1

1

11

469

232:477 141 443 13

.....

......

....

.... 4

Portland R..o__ :: - :: -, : - ::: ---- ((NOn,X 3 15 576 3,638 1 4 ....... .

d.)_

Salt Lake City. ---------- (Utah) -----------------

.........~

---------- 10

146

276

589

1,528

1

----------

........

2 ------ -

.......

San

(S any

h n "'i"

1 38 855

1

16, 532 20 15

j

S of (ft. i erm ----------

23 0

1 : 18

5,

M 3

7 ........ ........ ........ ........ ........

T full, forStates fast shown above

~A) California_ 1 11. 4,131 11, U1 64 11 2

`

b) 4

Illimori------

9

49 3,061 16,238 61 17

...... .

(c) Now York----------- 72

"

1

0

~

4' '7'

13

' SO -------- - 6

~

f.d)) Ohio -------_------

1

17

58

39

2:615

3 563

93

1

5: 7

20 517

53 26

27

......

...... 1.

7

f) ... 2 3

Te ------

2

51

:

3 093 15:046 28 7 ........ ...... ------ _

.......

131
ANNUAL REPORT as STATISTICAL TABLES

Table 14-Number OF occupational tax dump$ issued, covering fisocal year 1966 or portion thereoF, by clan of tax and by

internal revenue regions, districts, and Stxxt;s11Zontinu*c1

National Firestone Act Gain-operated devices, billiud, pual and bowling alley premi ses, dul- t

felt

Man futoners Deal...

Billiard1

',

nn.m.

rocess

rated gering,

Irt ... district., and States .1 Import... Penn. he,

=j

r. nt noe d ic ffer, and 0

stanes .P,..nt.d bj single districts indicated In b t

rokers. Is. 3han

swn.

alers,

class 5,

wling allay p vice -bass'

v e

premises '

c led ar:pt . a.;tct.1, breth.'Statershowmat a tOrn

h l... 1 ... 2, DO " c bak 0 emises, 0 or, 50 par .bl.) , $500 25 lass 4, 20 per

vice u

$200 tab so,

(32) (33) (34) 35) 36) 37) 38) 9) 0) 1 1)

-

United sure'. twexl_... - 24

as

I s a- - d -

Na,th.AtuwU1Raw..- --------- ---------

` --- --- a

I

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

...... .

". ........

4

...

-

Al

1 --- --- -

-- ::::

.

2

.

Aug. 14

54 ......... it) r

I -------- 1 -------- -- as B Witty Buffalo

Sea c below I

I

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

........ ... ... ---- Bo rljn~rl ' : `a `b'_ _tj::

...

N. 3 ----- - ------ C n ., ,u

b

. ..... -- -------- ---- 3 Man 3 P t

'eaw, a %.aI hi4j:::

I N

i .... 8

....

or --- - 2 R hGde Island) ..........

Pro

.... i - ----- ---- ------

13 2

------ - - ---- o

Nlld~ollovtl. Reelm...._ ...........

a

I d

and I ------- - 9 2 23 A440 !

Newark Baltimore ......... ......

1 ::::::

.

::: -----

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

3

--------

---I------

-------- 1

62 -----

- -----

S

PhIlaft ~ii Sea ':I'W).........

S

Pitt b h ..~:~b ----- I 1

741

s urg .. 3 1 Richmond.. -

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

2 ... -- --------- 2 6 : Wilreingtor. D.I.-i........ ....... i . ....... --- -

I

--

a. ns 0

'

,

.-re

R" --------------------------

an

2 --------- --------- ------ 29 .. ---

1' 5! A,I,,t,

----- : ::::.... --- ........ ------- ....-------- I——

...... I -------- --- 2

'73

'

C.I..bi.....:::::::- South Carolina) .. ........ ........ -------

-----

----

58

9 Z

.........

J

".an_ Miss I;

)~-----------

:

It.,

........

- ......

.

..

::::::

---

------- i - ------ i- --------

I

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

4

41

.....

i.

,

a

cksonvllie.. Flat i

Ids) -------------- _-_- - 5 ---------

:

----- 167

........

.

N.vvill..._ On-..)............ ------ R l-

.......

.

.......

.......

-------

..........

-----

3 4

.

-I ea

-------~dr 2 --------- ------ _ 2 ------

i

s

Clo.land.. h

...... 2 3 ...... .... 0 3

5 6

Detroit... an).-. c

Indian.),-. ---- ..

l

.......

.......

__....

..

.. ..... 3 -- :::::

------

0

960 .

0

L. In

.......... Kentucky).....

P uk

...b

~q ast Virginia)..:::::::: a

::::::: ::::::" -

,

.. ....

I - -------- ....... 1, l

1 4" 13

6

, ......... 4

fixidweat ................. ---- .... I-------- i ...... : i - -------- - . 09 --- 1

i

Alperd . an......... ~Sc.th D. U) ..........

below) ----

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

------ - ------1, : ---- 9 . 5

Chias ......... I

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

'

-- ..... 11 -- --------- -------- ---- ...

I-

--------

--------

2

N

141~w'.Iik a M-nain"') - ------- - ------- 2120 (Hear, ------

-------- r 26 1 1 St. Mi is) .......

2 .........

nn... ............ St. Paul

Sea (b) below)...

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

--------

.

---------1 9 6 1

9

4'

us

Sewt.wert Real. ....... ............... 1 2 ..... ... .... 1 ......

Albo?U. .......... are Mexico) - ------- -- ------ 2

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

7

f

f

A., , . S

" anI nbl')'.!~- -::::: IWY-

....

i

.........

l

..........

4

I

_ I

~ pal as Col., 11, Q.~.b*)!!*)----------

D. ------------

---- -

--- ....

-------

.....

3

77D ------ 1

Little ~A,=, ---- -::: ----- 3 2 --------- 277 ......

.

L. V

New Orion .... ........ . 3 4

1

: 1 Oki.b....C.Ity 40kish.me .............

Wich is... ( Kimun)------

Weafrorn'lle.1en ......

......

------

......

. ...

s

1

I

--

..........

-------

........

--------

4 2

S'M1113

:::::

_. ------4

11N ........ .

B. t1d.b.)..... .........

. ........

. ........

.......

.......

..

.

....

.............. -----iii 3

i Monte..) -_------_-

::: ( 1 ---

78 ------- Hanolulu..__ _ 11- 0_ ----------- 5

4 Sea (a) bnl.-) 4 .. ..... . 7 ------- -------- --W: ::: 9

Los Angeles ~ ----__

pacer!.... .. -----------_ -------- ------ --------- - 3

"

-- --------

1

60 750 Portland --- :: .....

- :::

' ----

::: : .... 37 - ..... 1

R.nm---------- _: :

----- ..... 91 5

1:' ' ~~Uugb~;)-gjjc;,;j:: :--::: ::: :

: ::::::: :::::::

-- :

: ::

::~ :

2

1 2

89D ~

Seattle ........... S (Washinghm)........ _ --------

1 ,

----

Total, to, States at hown above

Is) Calliorni ------- 4 17 b) ...

6

C)

3 1 ------- ::: 7 New y

21

2

1

669

------ -

42

--------

; I~5: 21C

d) 3I1 ------ ------- 4 33 ------ N

1) P.mny 1 3 T

1)

asas ............... ........ .......

ANNUAL REPORT 9 STATISTICAL TABLES

Table 15-Appellate Division receipts and dispositions OF Protested Incormt, annate, and gift tcx Cases Prior to issuance OF statutory notice of deficiency (pm-90-day cagues)

A. Progress OF work

Statux

endi I

PRU.ne'dju ------------------ ------------ ----------------- ........

-

y

'

I ..................

Disputed at, total,... __

----------

...........

y agreement----------------_-----_------ ------------------

Bnagn. d -,rounaments and claims rejectinme U, -------------- y .... nuance a statutory nOtIC.3-transteried to 90-day Wtu, --------

Pending lure 30 ------------------_-- .. .....................

Method

lIuMber of uses

(1)

20,09S 27,652

26,278

21,455712

4.251

21,469

B. Results obtained in dispositions

Disposed of, total ----------

agreement

y

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

calreed OvOnassecoments ad claim 1-jetens ----------------- 8y humance Of statutory ...... retic-transterred tD90-daystibus,...,

Number Of ..a

26,278

475 21'552 4,251

Amount stated in no.. I. (thousand call.'s;n .,.part

Deficiency In tax

(2)

penalty

(3)

Onalcumussurrint

(4)

224,096

44.621

593 76:917

qu, 632

753 362

1: 146

228,124

1. 5U. 877

42 902 4i'.946

26,807

-

17,68334 9,090

57,041

Appellate detunlinainn (thocond dollars)

ftfid.nxy in to

(2)

Penalty

(3)

11,652

0,--..t

(4)

534,493 15Z 658

29~ 178

64 242,241

Table 16-Appellate Division receipts and dispositions OF Protested incOmc, 4111,01hat, and gift tax cases in which statutory

notices OF deficiency were, Outstanding (90-day Cases)

A. Progress of work

Status

......

..................... Pending July I .......... .... ...

.......................... Rauled, lotsl_..... __ -----

-----------

....

Statutory nation Issued by Appellate Division 1-_ ..... ........ Statutory notices i-.o by district directors and received during 90.-ily----- bari;dDisposed of. total --------

agreement -----------------_

S

y

.....

BYY =r1a he Ta

a

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

........................................ Pending Jobs 30....

Number .1 cans

1,299

4,443

4. fill

342

4,345

759 4125 2 62

1,397

Amount stated in statutory notice (thousand dollars)

Deficiency in to

(2)

56 376

258:340

234,84 3.

2 4982

248,691

14 333

24:244

210,114

Penalty

(3)

9,906 8.

8~3

75

8'7078

14,620

570 1,358 14751

0 ..asansiment

(4)

257

267

224

44

491

66,525

1 Difference from table 15--t-shanned to SOd.y eurb-15 caused by areas being combined or split for the purpose of iming the statutory notes, caso In tramelf,

B. Results obtained in dispositions

Method

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

By unmerL --------_- --------_------_-- ......... ------------

Byfly Wp,,.y*r P"N dl.OIL-- to the To

Number of

4,345

758 Z1,.162'2

Appellate detworinetm. (thousand dollar,)

D.Ixi.ncy in Us

(2)

246,334

parelty

(3)

14,388

3,60223 8,027

4,079

166.957

162.935 33 11:642

101,860

1504146 214 298

72

139 Up

33

0...a-,nt

UE

11 976

22410:244 114

(4)

278 12,1.3

751

79

13

230

132 133
ANNUAL REPORT 9 STATISTICAL TABLES

Table 17-Appellato Division receipts and dispositiom of income, estate, and sift tax causes petitioned to the Tax Court

(docketed cases)

A. Progress of work

status

AP='u, total.. ly 1 .............................. -------------

Minn. flind 1. 1. -to- District directors slatuto%notic- --------------

Appellate Divishm'sstati, rYm)timhs'-----.--- ---------

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

By stipulated ensionert., ---------- ........

8TY, r dismissal by the Tax ourt or xpagl.d.fixiilt ............

ad before the Tax Court an the meri .

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

Pending June 30............. .................. __- ------- ----------------

Number of cases

394 6 874

4,489 Z 385

6,234

5,195 3

72611

10,024

Amount stated in statutory notico(thousen9 dollars

Deficiency In tax

(2)

998 590 544:816

344 373 2010: 443

437,529

396 152 8:003 33,373

1, 1(15,977

Penalty

(3)

120 145 37:433

24 977 li,456

44,122

39 499 1:364 3

259

113.457

overwassment

(4)

3,937 -152

-311I

59

382

M63245

2.903

i Difference from table I&-tematerred to cascaded tt.-Iaantsed by excluding district directors' statutory noticft considered by Appellate in 90-day status, cases in tra a

rait, ft,

Method

B. Results obtained in dispositions

Disposed of, ....................... ----------------------

By stipulated agreemT6,0 ......... .. ..

By dismissal by the, Tri fix _eD_u-n-G_r_Ii~.`p_ay`s Ih er rd"_ , im-u-It---------------------

ad before the Tax Court on I . me is ........ ------------

i Represents amount, petitioned.

Appellate determination (thousand dollars)

Number atcases Deficiency I Overinsincian at in ta. Penalty

V (2) (3) (4)

6,234

5'319135 726

134,499

93 650 7:464 33,373

10.536

5 939 :331 13

4 746

4,67131

42

Table IS.-Office of Chief Counsiol-Processing OF income, estate, and sift tax Cases in the Tax Court

Status

Pending July 1 ..: 'd--------------------------------------- - --------- ------

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

Pending .......................

Number Of a-

(1)

17a

7: 13 6I:Z27 362

Tax

(2)

Amount in dispute (thousand dolims)

Deficiency

1250 13

if

a

7;2 2

1, 4 2,U5 1

0115, Go

Penalty

(3)

:12

3 1:'2 5"1 35 298 4

08: 52

0 ..Payment

(4)

116:535115

20 $74 52:993

ANNUAL REPORT 0 STATISTICAL TABLES

Table 19-Office OF Chief Cou~l-Raccipt and disposal OF To x Court com In Courts of appeals and In Supreme Court

InSupremaCourt

AryountInidtit uteI) Anhoun

".d) (tiamissad thpu.'nid"T.'1*1. ==

....I , Pgrg :d

Status Number J (to

d . .)

.... Number of ..a D.fi,i.n,y Over- Deficiency Over infbihhr'y 0'". Ov

P I. t ~

and ty youl and Permit P ty payment .net p.nd imulty ~ payment h payment

(1) (2) (3) (4) (5) (6) 1 (10)

Pending July 1, total .......................... 463 45,606 96 --------- --------- 9 5

Appealed by Commissioner-. ---

10 Apo. pp.l.d bby tax~y to 7 ------- _ ------- 7 1

A ad 3 9

8:

2 694

"

2 4 -- -------- -

y .

--------- 4 1391 05 ::::::: . ........ .

Appealed, total ---------------- 332 16,624 14 -- ------ -- ...... 3 4 ----- .. ........ ........

By Commissioner ................

tax

41 3 104 4 -- -------- I-I

By ,

-----

25734

J: 51 002a

6

:::::

--- - ------ 2 0

-

... Z, 1

14 --------- ---------

------

--------

Disposed Of, total----------------------------- 336 4,079 1 01054 7 a 3 .. ... 3 ........

F-hatil. to Commission.................. 191 1 1 1 1 1 . '

Favorable to texply.......................

9 a 3 3 46 2: 98 41 ... . . 7 -------- --------........

--

.......

Modified ---------------------

Settled -----

-----------

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

3

12 a 30

'

177 ------ i,

a

1

6

260 1 ------- -------

-----

------- _ -

--

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

- - - 4 : 042 9 .. _ ........ ........ ........ ........ ........ ...

Pending June 30, total .......... -------------- 459 8,IS2 29 4 35 -------- -------

Appealed by Cm.mistionsir.. ------

48

3 553 5 ----- --- ---- '

4 AnAp P'I:dd byby ',.,Vy 'a------------

3 58

9:

730 0 --- ---- ----- 3

9

2 ...... ----------------_ 53 ,869 14 ------_ - --------- ........ ........ ........ ..

Table 20-011fice OF Chief C*Unftl--Racelpt and disposal byOF suite filed b=.. I. Fdemal Courts and actions the United recovery OF erroneous refunch

status

PeridiC....! me Jul

Amount ----- number-.

send d*ll,,,-, Iscalled dlrl,, year.: on C-,--t---------------- number-- Amoun in disputethousand dollar,-- Disposed Of during ymur:

C -----------------

Amount In dispute

Refunded d

thousand doll.

Airmumurl" __mmr;--ad dollar, Pincentofformhuhtdilin ..d of.- Peruccing.j.h. as . 3D:

Amount -

------ number--

Ih.ua..d dollar,,.

Total

(1)

3,335

364, 044

1,512

135,767

J~.~61

41 ~1IS 411

3,487

405,716

R.fun it suits

other the cohoh tabacto, ,it rearms Win)'

Court of Claim,

(2)

510

200,013

126

36,640 1

.,o

151,~, 2,1

4116

200,614

District court.

(3)

2~ 9M

1 63. IB4

1,383

97,329

fi~:2,,

028

341)~I po

194,485

Erm. maxi. refunds

(4)

25

947

4

1.797

27

13

Z617

d ip*,*d =uflr't13 alulis t' It ir flumI a, 3I em

b

a-'=4 irc."Is'.

dared th rishohe year due too N.In

Y 11 1u II thn%ldCg.m, I. ";rfinn~d.fibm * rpdu.l rihdoto.r rable 1, rex, m

r

hit I. he Court T fir id li~tation of tax, etc,

Government, 17 aginst the G-1c. mu, 58. Of With 37 anir. for the

GO,.,nm..L In . dirbic Vat,dand 4 Partly for and partly eximit 5 "' 1 ' ft 24;

to

9 fsx~.n% the I..r -2d`,.tIy For dedidim, by the courts Of appeal$ and Supreme Court, see table 21.

Table 21-Officat OF Chief Courfaitt--Docisions of courts OF appeals and Supreme Court in Civil tax cases

Parfly Court Total far the Govern. art~.hi:ccd

Govuh.

nuint

r

' nd

X.1,!!.YI the Gin.". primit

(1) (2) (3) 4)

Tinal_ ................ 383 294 8 1

By courts of appeals. tonal__ 373 290 2 1

Jr. ---------- District courts .........50 123 2813 1 7

4

By Supreme court, total ........ to 4 6

0111 T1.1.1I 6truled, rI In...... -

O."N"."mcle%-.-

4

.......1_1

-

.........

........ 4_1

.

.

..........2

........

14T. 11.1,11himen. 'lull decided "nun R Ih,3,tdt.hd-,0QmmlnIcn-r and rimmirded be a ...Ime.11 oll.thilejlo tlt!p% P. fir-littforthatsinayers. Note.--Ginualcovered by tablasZ3 and 24sre not loccludind.

134 135
ANNUAL REPORT de STATISTICAL TABLES

Table 22-Officas of Chief Counsel-libecalpt and disposal

of collection, injunction, summons, and disclosure cases

status -

Pending July I---------------

Received-------------------- -------------- -------------

lemnim. J.'fii411 ------------- ---------------------------- ------ ------------- ----

Number of Ms.

1,909

2,593

2e, 629

963

Not. -This table Includes au, handled at national ..it regional levels which

un;,, wirild-tion for "At I, V. In Wt in Federal and Star. cxulta~ It

it- of Worts I.- Iblatinji to alwhol, tobacco, and ffirems, is... or to as in,

=,and debtor troc

,

(table 23), nor to appeal and other cases

.I.d.d In is 1. 24.

Table 23-01[ficat of Chief Counsel-Reciript and disposal

of insolvency and debtor proceedings

Status

Pending A

-

Win!"Ir.

Disposed P .1--

..dirg

Raoug.

rationnl'

Total proceedIRV ,

(2)

1 993 995

3: 142 1 296

076 1 020

Bankruptcy MR-1.

and

ro,

tairmus

I-! -f ship I ... Nancy is

rocefdrogs I proceedings 3

(3) (4)

1: 550 45,

166 680

129 669

W 469

I Proceedings Instituted und., the following secti

A I Sec77 (railroad IwIlis U.

on or chapters of the Bank.

eamirs.

ji-d-i adiedness),ifif (real proper.7 a

fs~ ,I .

Um

ad

.i_

,an

a direct

uion.,

'Rul"'I be.

far

be

.

P

"I

I

is

n

ir

as

1~d

.

in and

Mng,

or

State

am to

ns),

*"'

h

I

" n

"' ""'

M nors

g in

. In

'

".

or in.

a Rk,

g'.

`~-

v

.

..I- me

ad

I"'

a

be

of

"ir""

"it

M_

-

dl.

"'

U

R. to

I

.

I dow

m...""n"

n

a 'uni,"Ei,

d

h

*'r'in',

"d "Im"

n

for" as.

U

Ill. . d If

at.. "P's~ahp pro- Nolm.-Includes cuts handled at national and reliant 1.1".

Table 24.--C)Ffice of Chief Counni,-Rectipt and disposal

of miscellaneous court cases, lien costs not in court, noncourt collection litigation cases, and appeal cause

status

Total

Iffl.c.l.

laimmo.

court

Use

Mass

of in

Harcourt

collectiom

HURROdh

About

as . Man

court - 'an's

(1) (2) (3) (4)

Pending July 1

::

1 189

5:940

310

819

86

1 734

635

3 111

158

Received__ 17 7

Disposed 5 803

'

13 1:749 3:05

,

Pending June 1: 226 315

71

696 144

I Includes suits for foreclosure bWortgagers of other secured creditors, and

soll, to quintille to which the Unit

S.

tes is made . party.

I Primarily applications for discharge 01 property from tax liams.

in, on ccl~=n litigation matters from regional counsel h ..

no,

to district Zecio`rn

hld,"

or" it to wort proceedings or

lien cum I Includes can in Fail I and Star. Wallace Muth f6l8URg Insolvency a rd

debtor proceedings, Iterm cases In court, and collection, amernims, and Injunction

N.t.-Includes Clus handled at national and regional lanis.

Table 25-Office of Chief Counsel--Caseload riciport

Activity

Pending

July

I Receipts

(2)

DRIPmaill

(3)

P.RM3.1

Juus

(4)

-Total ----I --------- ....

22,948 27,215

-

26.270 Z3, 793

Administratio- ----_-------- -196 -14,

Al.b.1 and tobacco I........... 515 4 A40 4 AM

N.U.Rsl offil

Field--------

11

T IMI I., Z I

12D

- W

Collector, I UptIon........ 5,091 1, 568 11,494

National offic._ -------

Field ---------_---------

, 297

4 794 11,319180

-

11,117 37

31

4

,

847

-

Enformcment --------- -------- 2,336

-

1,485 1,463 -2-358

National offic

Field---

2. 71

Z57 1,400- J, 383110

14

274

Interpretative Division. ---

763 759 256

Joint committee Division 75 19 94

Refund Lifigabon Division_---- 335 1,512 ---------- 3, 487

To. Court 1. --------

- I IM 1 171 11 834

National mc..:::: ::::::::

Field...... _

10.472

576

345

7,013

344

6. M

473

11,361

No joint committee coses received

Nomiuk.b.cl ""' December 1965. Isroor not Included.

ANNUAL REPORT is STATISTICAL TABLES

Table 26-0bligationch; incurred by the Internal Revenue Service

[in thousands of dollars]

Personnel

Internet -1.u. office, district, or region Total co.P.R.U..

and laments Tr ...I Equipment Other

(1) (2) (3) (4) (5)

A. National Office and regional b1tal3linclurfirig district directors' offices and .."In

-

centers)

Total Internal Revenue Service I ................ ------------ ----------- 624.862 548,925 17,612 11,610 146,809

National Office -------------_------------- :_ --------- ------_--------_----

N th Atl ti 70 5% 39.320 134

'

o, - in ,------------------------------------ _---- 4 570 24 532

Mid-Atlantic -------:: ---- - ---

99: Dig 464

"

1:624 ,

844

,

----------------------------------- __ 3,036

Southeast ----------- ---------- --------------------------------------- ---

78.481 73:518 1,645 699 2,619

Central ---------------- - - ------- - - ----------------- ---_

60 472 54,765 3Z3 530 2.853

Miderest- ------------------------ -----------------------

70,757

76 5 1

65,015

1" ---------- 906 2,937

Southwest ....... -------------------------

--------

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

, 8

59

..

71.339 2.093 456 2.692

Western ----------------------------------

........ .

............. :__ : ' -: -----------

R i - ----- - ---------

,

90,610 54.529

73,

$55

2.076

2 473

710

607 2; 503

eg onal ourrai ............. _-------- ---------- ----- -- 3 674

.

. - . . _

n,11110,hl,_ ,,

'W':rolA ..............

7157

17:

a 1

"

2

6,828

, 1

.32' 39

23

,

3

A

1

'57 grmr,lo ,, ,J

0 ,, 6i: .. . ............ -- --------- ............

Nat o ull Co t C t

i

4

1"

r mpu er en er ... ------_-------

3,903 170 17 169 ... _ ...... _..... ____

IRS Data Carter

:

4 059

' 1 19 811 1 If

------------------ __ ........ _ .................. __ ........ 3,682 2: 521 92 397 673

8. Regional commissioners' officas (excluding district directors' officer and SerViCe center.)

North-AHWI ............. ----------------------- ------_---------

4

11,018 10,109 254

'

59

1

1111 11ahtlc ....................

Southeast ------------------------------ ---

10,496 9,498 368 102 527

Central 11,064 9.339 536

119 ------------------ ----------- ---------------------------------------- 1,071

Midwest----------_---- Southwest__ ..... ___-------- .....__--------------------- . ------- ___ ........

10,594 9,641 321 86 536 8.717 7,794 293 82 553

. ._..................... ___... __

Western -- ----- ------_--------------------- __ ...... -------- -----------

6:1

099

5,392

8,148

Z33

315

68

190 347

446

D. Regional costs undistributed

4u,",-AtIntic------_-------------------- .......... _----------

Mid-Atlantit....._... .......................

1,280 I ODO 227 44

S h

911

,

out east ----------- ........ ------- ---_--------_------- :::_ ----------

709 173 7 23

urtw _ -------------- --------- --------------------------------------------

91D 465 337 21 87

Villareal - - - - ------------ -------- ----------------_------ ..................

1,176 68D 293 15 lag

;.utheres"---------- __

1,013

807 69

56,I

276

220

5

7

37

Next... .............. -------- 1,074 585 403 --------------

20

86

District directors' offices and service centers

4onth-AtInfic:

AI~bgy --------- _........ ---------- _ .................. ...............

A

3 77' 523 100 50 97

- -

1:8

52

IZ 047

:

11,46-2 273'0 33It

347

Brooklyn. ........... --------_-------- ----- ................... ...... 23

Bulb].------------_--------- --------------

14.972 14,272 126 71 403

Broll gt n --------- _-- N ------------------

8,935 11, 350 200 156 Z30

.rff.,d ............ ----------- -----------_- __ ......... .. .... ....

Manhattan.......... --------------------- ------------------------- ---

944

6,576

26 570

a

71

6,257

25 779

38

215

13

8

4

751

28

156

Pruv=::::::::::- ::::

,

1,345

,

1,220 53 27

5

P

owtu III. --------- ----: -

2,171 2,081 34

1

N ......... ::::: .,th,All,n ---------- - ---_------------ tic Service Center l.ml, -----_--------- ----- ------__.......

104 4 1

Aid-At

. 7,523 6,714 29 291 489 ga

Urn.i._ ---------_---------_------- _-------------_--- _-

N

10 213 778

9'

129 70 2 6

3

-IL- ---- --------------- __----------------- _........

Phil.d.1ph .............. ........ ......... ...............................

e

14 7-43

0

14 , 031

13 931

222

Z35

66

79

339

Pi

hil"

-------------------- ------ --------- ----------_- Richmond 1

8..

69 5

a :

309 165 53 2195

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

Wiliningto n --- ...................................

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

_......

6,569 1 7976,019

1 702

202

31

82

14

176

.fMid-Atintic h Service Center __-------- -------- ---------

_t:

10, 3 ,

66

,

9,643

29

225 75660

Atlanta ---------_-- ---------------_----------- __-------------- _ ----

b1'7:::::::: --- -----------------------------------------

6,037

4.273

5,GD6

X 975

206

156

54

29

171

CoIunn . 113

G- tr

----

Z 863 Z 651 102

' 1

ors iou -----------------_---- 71

791 61306 265 44 176

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

588 2~372 130 it 68 - -

Nashville. ------- k :::::.

10,932 5.

484

10 02361

5:

7 359

1 '

42

55

3100

67 Sou

theast ....

:antral: 9,531) 8,754 17

1

17

6

22

III ..

------------------------------ 7

1

Cleveland 7 172 72 0 68

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

2: 112

1,:4

59 296

7' "Iff ------- ------- _...... Indian

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

14,947

9 097

14.040

7 642

334

240

1

27

66 346

`0 ....... ......... _----------

.

5,143

,

4 781 1111 50

149

P.Iursb 125

C.::! Regional Training Cant ------------------------- ----- :::: 3,004

1-

:

2 755

12

1

134

2

24

2

91

Can Service Centel ------------------ .... 7,1182

r

618 29 435

1

1

900

See footnotes at end of table,

r

136 * 137
ANNUAL REPORT es STATISTICAL TABLES

Table 26.-Obligatiou incurred by the Internal Revenue Service-conflnued

[I. the...rd, of delta,,)

internal revenue office, district, or ration

Total

(1)

.-naml compensation and benefits

(2)

avel

(3)

uipment

(4)

her

(5)

Midenest: 93 1,367 o D

Abind.- -------_--- ::: ---------- 1 20,134

I

9,368 33 2 ,

Chic

Dfr;ii

------------- __ -

.... ----_------ - --------- ----------------- Dan VO

----- -----

,035 ,711 8583

7

2

2 ....... 29 Fargo

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

0

7 002

186 6,605 2 6 9 - - -- -- --- - - - - Mil arau 42 0 3 034 5 0 3

an In............................

9:540 t 965 77 8 1 607

6

S

St. Lou .... ----------- -----------

I. Paul. .................. ... - ------

::::::

i,5 59819 219 5 148

0

194 4?

6

1 3 . VJ=ld...................... ......

Me, -------.......... ....... --- ........

C,

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

.

6,990 58 6 4 2

Scutineest: 2 17 '"1 06 2 9

A haq-qu..... ....... ......

11

0 : 1

75 ,411

,

5 2

A.1tin ......... 1034 38 9 0 7

7

1 C .Leon ...... ........

' '

28

9

36 5

0. ............ 8

Deaver .... ...... ------ 4: 257

2 966

3: 948 2,601 7

145 430 0

Little Reck..

.. ....

,

14

~

54 8 0 . N 0flearre, ...........

a

78 4 432

I

. 5 7 "

Ok he.. City 4,426 .063

I

79

1

1

!

Win Its ----------- 64

tS.A,.Crt,r ------- ............ ............ S th ,872 ,962 5 4 W dt ----_-

asturn: *. o 68 1 3 1 A . haring, ........... ------- : 11446 319 '

3

I

6 2 2

'I.. ... ...... ................... .. : ----------------

1 "7

1 4 7

'

1 He .. . . ............. _ X

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

d

i 1.

3

1 1 i

3 4

2 He

" "' M , 11

ff

21 4 5

ph.. I............ ...............

3,118

4 185

896

3 902

7

123

7

1

1

P.rti ed........................... ----------------- E

'

----

,

2,D16 :773 2 6 I

R.am !

------ ---------- CII -----------

,879 ,769 9 6 5

S. It Lak. ------ - E

F &L 8

5

1

4

..

0

J

H

S.

a -I ----------------------------------

S tti :211

:

93

,

7

1

ta .

.is ....... ................

W

77 7 as 721 7 E

.t.;n Service Center ------ ------- : ............ -----------

8,330 ,238

*L-th,11 . -

InINdes U% fee financed fine. "'.1hur".:nt"S.tvices Administration. I D... not include 3552,ODO rental transfer to Gen rat

Table 27.-Oblignations incurred by Internal Revenue Service, by appropriation and activity

[in thousands of dollars]

Appropriation by acti,ity,

Total obligations. ............................................. -

Appropriated fund,, total ............... ....... ............ -

Salad. and . Pa.,.:

T.W ............ ---------------------------------------------- ....

E.-til..di, ban ---------------- ......... ...... ....................

Internal uditandrescurity- ----------....---------____........

Revenue 'counting and processing:

Total ............ ...................... -----------_----------_--

District manual a n, enter ..=d

Statistical reporting.................................. ...................

Compiler.:

Total .............. - ............ .................. --------- ......

Audit of to. returns.lotntatount-s--s'ni-mu'ring-d.1-inq

n U! Collection at Win ................. - ------- -1 so ...

.

Tax fraud and special rwas . sit

F, warl- :::::::.......................

"ar 1% ".'P'p

............ __......... T

his imles ad

Rulimp, technical planning, and special technical Services ............... :::::

Legal arvicas......................... __ ............. .........

Reimbursements, total ................. ...............................

Total

-

1965

$97,397

595,047

16,511

7~ 1

004

151,339

84,25 6 10 1:11 5 728

427,197

211:1291 ,DO 5.

31, 235

34:77' 0

2 823

14,630 9,265

2,340

K~l

624,961

621,468

17,490

19: 812

159,449

724D: 541219 4 514

444,529

"103:088SO6

3 2~ 493

"

:4"

23 291

9 360

14:965

3,393

Paursoon.1 ses. nonstion and ban.%

EM

522,490

52D,607

14, In

17: Me

117'an

7411,'999 3. It840

388, 6515

2"SOV~ 0~21'

BE

1,1.3: 159483

1. U3

1966

50,825

546,065

14,878

k '-216'

128, 301

61 US j~ 544 4,099

402, US

1,120

'MI 'IB'6

71:'717

18,126 799

3,

Z 76D

N ots.-Amou nine shown do not Include appropriation transfer to GSA for rent of space m.unnual to U7,00D In 1965; $552,000 1. 11166.

138

Other

1965

74,897

74,440

2,393

3

1: 117

33,516

12,252 19,316 1.

sa

U, 541

14,802 10,

324D6

7

1,238 1:1708 7

457

1966

76,036

75,403

2,612

346

1 266

31,148

IZ 871 17,86

415

41,643

11:3Ifig31

4.3107

544

934

1,166

633

ANNUAL REPORT 9 STATISTICAL TABLES

Table 28.--Quantity and cod statistice for printing

1965 1966

Quantity housands)

Cast Quantity au..d,) ost C1.33.11 work 0h ul.hd (thousand Itern' packages dollar,) tems ackages .11... or sale or gets

(1) (2) (3) 5) 6)

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

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

-

9,436 - ---------- ,100

ax returns and instructions for major mailings to taxpayer, total ----- 64,720 6,574 ,521 ,682 ,186 79 Package I ~Forrn to m 11040 040, ndhidut, ,Ltms_2O Packets 2

I.B, .104p.g.) ...................... OES, and ...

instructions-32 p.g.,5 8475:226

640 .762 23 205 7546 16~3 345

704 15:

7

1 D4 . Sc,~ %Wau . J6 b; 1 -fiEs .

- -

nd p: P 1 6 1n.rt u cuu," 73 c, ,

6 4 1 5

.

7

0 811 68

291 ~ u as , , jDx .

,

fic

, 4

1

1 4 a d in'nu D

061 S h

p r '

5 '

3

: D

3 2

1 9 :

34 177'

:

3 10N 146 ad 1 SI~ an I. D

i16~ ne-16p esl,~::, ,m 12 dul. D~ drm b. P:,k.,: 6 (F*. he t

F

Vandhl 0 Mn ip--is,I;j 135

7 '

07

1:32 7

1

00 1 1 1 3

package 7 (Form 1040A, inshusimm'. end at Enrp 3(F - ........

toy 'nt tax packet-Pdb 39 or. 7018 941 W

4 : 610 ,805

9

2

171

a

0

38,720

1 :

70

. , , ,,

9,360 15 -2, 213-28 pages)---------- 7 ........ ...... ......... ,965 4,531 07

~

7,125 ,475 1

1 111 for - 1. .ad 1. rnph,.t or. ------ - d. In'% . ........... 4

- "

4 012 349,3211= -234

p

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

-----------------_-

_::::::: ---------

2, 1

392 544

,

. 1

13": 28 DSU

~ S

fee 4 1 ---- ----------------

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

. 3

1

67

8

2,360, qu 6

-1~ll.dldi~thi,figr.i,$467,ooof.,,h.G,.d..tedVAthh.ldi.,Pr~V...

139
INDEX

A

Acts:

Revenue-1964, 10

E-ise Tax Reduction Act-1965.

8,11,24,94

Federal Alcohol Administration, 40

Fcchr.l Fhe,irt-, 39, 45

Social Sceud,y Amendments

'

4 6'

Interest Equalization Tax Act1964, 46, 9+

National Firearms, 39. 45, J05

Tax Adjustment Act-1966, ~, I I

45, 55. 92

Administrative budget rcceipts, I I

ADP System Study Plan, 61

Advisory group, 79

Agencies. studies with, 59

Alcohol and tobacco tax:

Authorization of Industry Operations, 41

Chart on, 42

Chemical analysis and research, 39,

42

Committee labeling and advertising

regulations, 41

Court decisions, 105-107

Enforcement activity, 37

Vstablishments:

Inspection of, 41

Qualified 41, 127

Industry circulars, 7, 98

Label activity, 40, 41, 128

Offices closed, 63

Operation Dry-up, 37

Prosecution, 31, 36

Publications, 90, 91, 98

Regulations, 94

Seizures and arrests. 37

Supervision --p-ists, 41

Statistics on. 9, 37, 113, 120, 121,

127, 128

Announcements, 97

Appeals:

Appellate Division. 25

Charts on, 26. 27

Processing of, 25-28

Statistics on, 27, 28: 133. 134

Appendix, 90

AssessmenU, additional (See Taxes)

Assistance:

Foreign tax, 48

Taxpayers, 4

Overseas, 50

Legislative, 45

Attitude survey, 70

Automatic data processing:

Benefits to taxpayers, 17, 20

Data center, 16, 59, 65

Identification of taxpayers, 16 Savings on ADP Equipment, 64

Service 'I centers, 17, 63

'raining, 71

Vital Statistics, 15

B

Budget, administrative rcc6pts, 11

B.Ilctia, Internal Reve re, 6, 96

Business Master File, 15, 56

C

Career programs, 65

Chart, organizational, 82

Chief Counsel, Office of;

Analysis of cases flowing through,

34

Cases involving criminal prosecation, 30

Disposal of cases by, 43, 135, 136

Civil litigation, 43

claims. (See specific itern)

Collection litigation legal services, 35

Collections:

Alcohol taxes, 10, 113, 120, 121,

123, 127, 128

Corporation income taxes, 10, 112,

120, 121, 123

Disability and old-age insurance, 10,

112, 120, 121

Employment taxes, 10, 119, 12)0:

121, 123

Estate and gift taxes, 10, 113, 1 N,

121, 123

Excise taxes, 10, 113, 120, 12L 123

Individual income taxes, 10,

1

12,

120z 121, 123

Old-age and disability insuranrc~

10,112,120.121

Other, 10, 119, 120. 121. 1-13

Railroad retirement,

10 1

12

,

I n'

121

Stamp taxes, 115, 129

Statistics on, 10, 112, 120~ 121,

123.127,128

Tobacco taxes, 10, 115, 120, 10L

123~ 128

Unemployment insurance, 10, ln~

120, 121

Withholding wxcs, 10, 112: 1 _'0,

121~ 123

Commissioner:

Contest of suits, 99

Comnamioners of Internal Revenue.

86

Competent Authorii), cases. 51

Compromise, offers in. 35

C;..fctc,icc:

Procedures, 25

Tax administration, 49

C-per.ti.n, F,deral-Statc, 36

Conventions, W. (See Tax com-nticurs)

Coordination and cooperation with

bureaus and agencies, 50, 56, 78

Corporation income taxes:

Additional assessments, 34

Claims fee cfunds, 24

Collections, 10. 112, 120, 121, 123

Referuch, 12, 125

Returns:

Examined

'

23

Filed, 14, 126

Statistics on, 10, 12, 24, 34, 112,

120, 12 1, 123

.ircuit courts of appeals, 99

Of Claims, 44, 99

Supreme, of the United States, 99

The Tax, of the United States. 44

Uni(cd States District, 44

Criminal prosecution:

Analysis of cases, :10

Cases, disposal of. 30, 106

Results of, 30

Supreme Court decision in, 106

Current research program, 55

D

Data "mer, 16, 59, 61

Delinquent accounts:

Disposals, 31

Statistics on, 33

Delinquent returns and delinquency

investigations, 28

Additional tax from. 34

Analysis of, 28

Statistics on, 34

Determination letters:

Ent

ploy" b""fit

plans, 6

E.c,npt organizations, G

Pension trust plans, 6

Self-employed persons benefit plans,

6

Sta tistics on, 6

Disability instuance taxes:

Collection,, 10, 112, 120, 121

Refunds, 13

Disciplinary actions, 78

Dividends and i.tc,cst, 17, 56

Documents, 91

E

Employerient benefit plans, dcterminati letters on, G

Employment taxes:

Additional assessments resulting

from examination. 23

Aplu,11we Division poo-sing of, 25

Claims for otfunds, 24

14 1
Employment tv-s-Continued

Collections, 10, 112, 120, 12L 123

Refundsof, 12, 125

Returns:

Examined, 23

Filed: 14, 126

Enforcement activities:

Additional tax front, '13

Alcohol and tobacco tax enforcement, 37

Appeals, 25

Claims dis.R.-cl, 24

Delinquent accounts, 31

Delinquent returns, 28

Examination progr=, 22

Firearrim program, 39

Mathematical verification, 21

Offers in compromise, 35

Tax fraud investigations, 29

Estate tax:

Additional assessincritt, 34

Claims for refunds, 24

C.1leethms, 10, 113, 120, 121, 123

Refundsof, 13, 125

Returns:

Exarnined, 23

Filed, 14, 126

Estimated tax, declarations of:

Corporation, 14

Individual, 14

Examination, additional assessments

from, 23

Examination program:

Claims for refund, 24

Classification and selection of returns, 22

Oversusessments; of tax, 25

Returns examined, number of, 22

Tax recommended, additional, 23

Excise taxes:

Additional assessments, 34

Appellate division processing of, 28

Collections, 10, 113, 120, 121, 123

Refundsof, 12, 125

Returns filed, 14, 126

Executive selection and development

. program, 65

Exempt organizations, determination

letters on, 6

F

Facilities management:

Communications program, 73

Furniture and equipment, 71, 72

Printing (Withholding program),

73

Property and supply management

program, 72

Records and paperwork, 72

Safety mission, 72

Space, 71

Statistics on, 72, 73

Telecommunications, 73

Travel Costs, 72

Federal firearms regulations, 45

Federal State cooperation, 36

142

ANNUAL REPORT 9 INDEX

File:

Business Master File, 15

Individual Master File, 15, 32

National Identity File, 34

Field offices, reduction of, 63

Financial management, 74

Firearms program, 39

Fiscal management:

Cost of operations, 713

Programs, new, 74

Reimbursable services, 75

Statistics on, 76, 137, 138

Foreign language training, 49

Foreign tax assistance staff, 48

Foreign tax officials, assistance to, 48

Forms:

Cost of printing, 1219

Eliminated:

277, 92

729A, 92

741, 93

749, 93

752, 93

754, 93

755, 93

827, 93

928, 93

929, 93

2701, 93

2240, 93

New:

1001-L, 92

1001-SWED, 92

3646, 5, 92

4029, 92 .

4067,5, 92

4070, 92

SS-15b, 92

Revised, 5

Forms and forms letters, 5

Tax return program, 5

Fraud investigations. tax, 29

Gasoline taxes:

Collections, 116, 120, 122

Refunds, 13

Gift taxes:

Additional assessments, 34

Claims for refunds,24

Collections, 10, 113, 120, 121~ 123

Refunds of, 13, 125

Returns filed, 14, 126

Graduated withholding system, 45, 55

H

Ilonors, President Johnson's presentations, if

House Rulings, 44-46

I

Incentive awards program, 67

Income tax(es):

Additional, from enforcement, 33

All returns, 10, 112, 120, 121. 123

Corporation, 10, 112, 120, 121, 123

Individual, 10, 112, 120, 121, 123

Processing of protested cases, 25

Identity File, National, 34

Indictments, 31

Individual income taxes:

Additional assessments, 33

Appellate Division, processing of, 27

Claims for refunds, 24

Collections, 10, 112, 120: 121, 123

Mathematical verification of, 21

Refunds of, 12~ 125

Returns:

Classification and examination of,

22

Filed, 14, 126

Processed in service centers, 17

Individual Master File, 15

Information returns, number received,

17

Information system studies, 55

Input methods, low-cost, 59

Inspection activities:

Internal audit, 77

Internal security, 78

Investigations, 78

joint Integrity Program, 78

Statistics on, 78

Intelligence Division:

Statistics on, 29

Tax fraud investigations, 29

International Tax Training, 49, 70

Interest allowed on refunds, 13

Interest equalization tax, 46

International Operations:

Activities of, 49

Foreign posts of, 50

Withheld taxes, 52

Investigations:

Delinquency, 28

Disciplinary actions, 78

Personnel, 78

Prosecutions recommended, 29

Statistics on, 29, 78

Tax fraud, 29

Wagering and coin-opqrated gaming devices, 29

i

joint Committee on Internal Revenue

Taxation, 28

joint integrity program, 78

L

Laboratories:

Research, 39, 42

Testing, 42

Legal activities, 43

Legislative activities, 43

Litigation, appeals and civil, results

of, 44

Long-range planning (See Planning.

Programming-Budgeting System)

I

M

Magnetic tape, 20, 59, 64

Mail setting machine (.ut-ciwd),

20, 63

Maj., rininagen"n, ir"In.-crits, 62

M.n.gement -tiviti,,, 62

Management i-Incorinect program,

62

Mal) of Internal Re-nue regions and

district,, 83

M,,theiriaLical verification:

Additional tax from. 34

Statistics ... 22

Models, tax. 513

N

National Cornputel- Center. 17, 21)

Nation,al Identity File, 34

N.cciimplianct, studies, 55

N-di-iminaticn, program, 68

0

Obligations incurred, Internal Reve.

nue Service, 76

Occupati.rial taxes:

Collections. 117

Number of stamps is-rd by class

of tax, 129

Retu- filed, 14

Offers in omp-mis,. 35

Officers, principal. Internal Revenue

Service, 84

Old-:igc insuraii- taxes:

Collections, 10, 112. IM, 191

Refunds of, 13

Operation Dry-up, 37

Operational plan fin...ial, 59

Organization-principal Officers, 84

Organizational planning, 54

Other collections. 10. 1191 120: 121,

123

0,-s-sment~, 25

Overassessnictics reported to joint

Committee, 213

P

Pension trust plans, C,

Personnel:

Attitude surv~ys, 70

Career programs, 30, 65

Employee activity, 69

Equal employment program, 68

Executive selection program, 65

Handicapped, use of, 69

Incentive awards, 67

lirvestig.timis: 713

Manpomer utilization, 61;

Nondiscrimination program, 68

Opportunity programs, 69

Recruitment, 67

St.ffing and rvdcpl.ym-t, 15. 65

Statistics on, 47, 68

Supervisory guidance, 66

Utilization of manpower, 611

ANNUAL REPORT * INDEX

Plan: ADP System Study, 61

Pl-nicg-P..g,a niltig-Budgetitil; Sy -

tem. 53'

Planning activities, 53

Program managetnent, 5~;

Principal officers of Internal Revenue

S--k, 84

P-Se.ins:

Carve" 65

Economic and cducaticneil~ 69

Eonal cinployarent opportunity. 68

Executive selection and dcx:clopmerit. 65

Fin,un,ial nia-gen-t, 74

F.'eign tax assistance, 48

Identify U.S. taxpayers, 51

iocenti- awards, 67

Joint integrity: 78

Legislative advise,), 45

Nondiscrimination, G8

Reduction, cost. 62, 74

Reports, 64

R-ith. 55

Special identification, 51

Tax return forms. 5

Taxpayer amist-ce, 4

T..paye. cwnpli,mce u-surement,

56

Taxpayer publications, 6, 90

Teaching ta.,es, 50, 70, 90

Protested cases, ~ alimics on, 25-28

Public information proge,un:

Billboards, 3

Films, radio, and television. :1 New, releases, 4

Other. 3

Publications, taxpayer:

America,, S,h.l.s and U.S. I c

Tax Including Fulbright, 92

Credit Sales by Dealers in Personal

Property, 92

Farmer's Tax Guide, 90

Information on Tax Adjustment

Act of 1966 for Taxpayer Assistance, 92

Nlisce.Ilancous publications and doc-

.crients. 92

New Withholding System, 91

Preparation of Form 1040B, 9)

Reporting Y.., Tip~ for Fed

~r.

I

Tax Purposes, 91

Social Security Covei age for ClergyIn- and Religious Workers

Abroad, 91

Tax Advice for Foreign Scholars

and Visitors on Officials Educational and Cultural Exchange

Programs, 91

Tax Benefits for Older Americans,

91

Tax Guide f.i Small B.siness, 90

Tax Information for Visitors to tb,,

United States. 91

Teaching Taxes, 90

Your Federal Income Tax, 90

Puerto Ric., 127

R

R.il,..d ittirentent taxes:

10: 112, 120, 121 Ref-el, of, 13

Returns filed. 14

Receipt and processing of returns. 14

Receipts (See collections)

Rcc-ds holdings, 73

Rcuruiuin,nt~ 67

Redeployment, 15. 65

Reimbursable services. 75

Refund,

Claims for, 2-1

Duplicaw, 17

Excessive p"p,tynt'int, 1:3

Statistics -~ 13, 125

Regulations:

Alcohol and lob-c. w-, 94 Lxcise tr~, 93

Hearings on, 8, 40, 45

Income tax, 9:1

New, 46

Rel-es, News, and Technical, 4, 98

,corganizations:

Alcohol and tobacco tax, 63

Repin t.~ p, grain, 64

Requests:

Extension for filing, 14

Technical advice, 6

Revenue rulirig,, analysis of, 7

Research In.g'an" 55

Rc,ou,cc~ utilizati.n, 68

R,tu,ns filed:

Classification and sdection of, 22

De-i- in, 14

h-mination of, 17. `2

N her examined, 22

Proce-d in -6- centers, 17

Pr.jcctimis~ 54

Statistics on, 14, 126

Verification, 16, 21

Revenue rulings and procedures:

Analysis of, 7

P.blished, 7, 94

S

Self-eniplo)ed persons benefit

determination letters (in, 6

Sumin,ir, Inter-American, 49

Service centers, 17

Service to taxpavers, 2

Short-range w.;k 54

Space, 71

plans,

Starop taxes, -tistic, of, 115, 129

Statistical reporting, 57

Statistics, highlights! I

Statistics of incounc ek.-, 107

Studies, other agencies, 59

Supervision of the alcohol and tobacco

industries, 40

Supreme Court decisions:

Civil cases, 99

Criminal cases, 106

Other court actions, 101

Systems development, 59

143
I

t

U

r

I

!I

71

T

Tax conventions, 49

Tax Court, The (See also Appeals)

Disposals of cases, 44, 134

Tax laws, evaluated, 45

Tax models, 58

Tax(es):

Additional:

From delinquent returns secured,

33

From enforcement, 33

From examination, 33

From mathematical verification,

33

From National Identity File, 34

Alcohol, 10, 113, 121), 121, 123,

127, 128

Corporation income, 10, 112, 120,

121, 123

Disability inumnce, 10, 112, 120,

121

Employment, 10, 112, 120, 121,

123

Fztate, 10, 112, 120, 121, 123

Excise, 10, 113, 120, 121, 123

Gasoline and motor fuels, 116, 120,

122

Gift, 10, 113, 120, 121, 123

Individual income, 11), 112, 120,

121, 123

Ol&age insurance, 10, 112, 120,

121

ANNUAL REPORT ss INDEX

Other, 10, 119, 120, 121, 123

Railroad retirement, 10, 112, 120,

121

Stamp, 115, 129

Tobacco, 10, 115, 120, 121, 123,

128

Unemployment, 10, 112, 120, 121

Withholding, 10, 112, 120, 121, 123

Taxpayer assistance program, 4

Taxpayer asaistor positions, 5, 63

Taxpayer compliance measurement

prograrn, 56

Taxpayer publications. (See Publications)

Tax rulings:

Request for, 6

Statistics on, 6

Teaching tax" program, 51, 70, 90

Technical information releases, 98

Tobacco tax(es):

Arrests, 37

Collection, 10, 115, 120, 121, 123,

128

Refunds of, 13

Results of criminal action, 31

Returns filed, 14

Seizures, 37

Statistics on, 10, 13, 31, 37, 115,

120,121, 123, 128

T.rt claims, 44

Training:

ADP program, 71

Centers, 70

Foreign language, 49

Foreign tax assistance, 48, 70

Operational, 71

State tax assistance 36. 70

Supmisory and management, 66

International Tax, 49'

Treasury Decisions, 93

Trust fund transfers, statistics on, 12

U

Unemployment insurance taxes:

Collections, 10, 112, 120, 121

Refund. of, 13

Returns filed, 14

V

Verification, mathematicaJ, results of,

21, 33

w

Wagering tax cases, results of criminal

action, 31

Wines, tax" collected, 114, 120, 121

Withholding systern (Graduated), 45,

55

Withholding taxes, by employer, 10,

112, 120, 121, 123

Work flow in the Service and courts,

34

I