1967 annual rieport

for the fiscal year ended June 30, 1967

Publication No. 55

INTERNAL REVENUE SERVICE - U.S. TREASURY DEPARTMENT
I

11

J, -

Pictured above is the Secretary

*

of the Treasuryqs

"Award for Excellence in Improving Communications

and Services to the Public, Fiscal Year 1967"

which was presented to Commissioner Sheldon S. Cohen

forthe Internal Revenue Service

by Treasury Secretary Henry H. Fowler.
U93 ~Uftg1@o17T

Internal Revenue Service

Mg)@NRg~(D[109 9@ 9@2220

Hon. HENRY H. FOWLER,

Secretary of the Treasury,

Washington, D.C. 20220

DEAR MR. SECRETARY:

I am honored and pleased to send you the attached 105th annual report of the Internal Revenue

Service. The record clearly shows that the Service did indeed achieve significant improvements in tax

administration in fiscal year 1967. 1 am personally appreciative of the vital role you played by giving

us your wholehearted support and encouragement.

The following brief comments relating to only a few developments will serve to illustrate progress

attained. These developments and many dthers are covered in detail throughout the report.

Gross collections reached $148.4 billion-15 percent above last year's record. The 49 million

refunds, worth $9.6 billion, were likewise, in both number and amount, far in excess of past results.

Collections and refunds were processed faster and more accurately than ever before.

Throughout 1967 Service officials gave highest priority to improving service to taxpayers. New

programs were undertaken, existing programs were expanded, a variety of innovations were introduced to meet taxpayers' need for service, and training courses designed to improve the skill of

employees who assist taxpayers were revamped. These management actions brought about a better

understanding of filing requirements and caused a significant reduction in errors made by taxpayers

in preparing their tax returns.

Culminating 6 years of intensive effort, a major event in the annals of tax administration occurred

when the automated Federal tax system became a national network on January 1, 1967. By bringing

computers with all their capability and versatility into our administrative structure, the Service is

equipping itself to cope with a workload that is constantly growing and tax laws that are ever changing and increasing in complexity.

With kind regards,

Sincerely,

SHELDON S. COHEN,

Commissioner of Internal Revenue.
Letter of Transmittal, V

Report on Operations

Informing and Assisting Taxpayers. 3 Collections, Refunds, and Returns Filed, 11 Automatic Data Processing, 17 Enforcement Activities. 22 Supervision of the Alcohol and Tobacco Industries, 39 Legislative and Legal Activities, 42

International Activities, 47 Planning Activities, 54

Management Activities, 62

Organization-Principal Officers

Organization of the Internal Revenue Service, 76 Internal Revenue Regions and Districts, 77

Service Reading Rooms. 78 Principal Officers, 79

Historical List of Commissioners, 83

Appendix

T xpayer Publications, 86 T:x Form Activity, 88 Selected Regulations Published, 88

Sig

n

ificant Revenue Rulings and Revenue Procedures, 89 Significant Announcements of General Interest, 95 Alcohol and Tobacco Industry Circulars, 96 Technical Information Releases, 97 Court Decisions, 97

Statistical Tables, log

Index, 137

Notes: All yearly data are on a fiscal year basis. unless otherwise speci.

fied. For example, data headed "1967" pertain to the fiscal year ended

June 30, 1967, and "July I" Inventory Items under this heading reflect

inventories as of July 1, 1966. 1

In many tables and charts, figures have been rouncled and may not add

to the totals which are based on unrounded figures.

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

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

Vil
The mission of the Service is to encourage and achieve the

highest possible degree of voluntary compliance with the

tax laws and regulations and to maintain the highest degree

of public confidence in the integrity and efficiency of the

Service. This includes communicating the requirements

of the lawtothe public, cleterminingthe extent of

compliance and causes of noncompliance, and doing all

things needful to a proper enforcement ofthe law.
"Give light, and

the people

'

will

find their own way."

Informing

and Assisting

Taxpayers

Introduction

In recognition of the fact that the American ta -

payer has the primary responsibility for preparing

his return, the Service utilizes all communication

media in its efforts to provide taxpayers with the

information they need to meet their tax obligations

with a minimum of inconvenience. The Service has

thoroughly equipped itself to carry out its public information role and is constantly striving to respond

more effectively to specific taxpayer inquiries and to

improve the process of disserninating information of

general import to the taxpaying public. Described

below are some of the operations carried out by the

Service in meeting the public need for tax information.

Courtesy and Service

The President's program to improve Federal service to the public was recognized from its inception in

1965 to have very special importance to the Internal

Revenue Service. In July 1966, the program reached

full stature. One new feature was the introduction of

a reporting system providing for the quarterly collection and dissemination of new ideas and fresh

approaches to better service arising anywhere in the

organization. Hundreds of improvement leads were

exchanged. The program has included such improvements as less formidable forms and form letters

to taxpayers; pleasanter reception areas; quicker

and more private interview service; more courteous

telephone service; and more readily available tax

information and assistance. I

I

Public Service Enhanced

'

~ Through Training .

Internal Revenue Service employees continued to

receive a wide variety of training designed to increase their skills in the public service aspects of their

jobs. This training, which is built into most technical

courses, gives employees a better understanding of

the skills involved in sound relations with the taxpayer. Illustratively, a special course was developed

to help personnel in public contact jobs better understand the Service's data processing system so that

they may more effectively help taxpayers who receive forms and notices produced by the computers.

Good public service, in the form of better letters

to taxpayers, also was emphasized in a continuing

program to provide writing improvement training

to a major portion of Service employees. This pro3
ANNUAL REPORT - CHAPTER ONE

gram for managers, reviewers and letter writers, attempts to provide all levels with a clear understanding of agreed-upon standards for good writing.

In addition to internal training, the Service providrs training opportunities for the public in various

aspects of tax return preparation. One of the most

sizeable of those programs is the "Teaching Taxes"

program, which provides training materials each

year to more than 3 million high school students

throughout the country. Through this program,

which has grown approximately 10 percent each

year,.teaching materials now are sent on request to

approximately 80,000 teachers in nearly 25,000

schools. A portion of the program has been converted to four V2-bour sessions for use on educational TV in South Carolina, and is being evaluated

for possible use in'other ETV systems.

Taxpayer Assistance Facilities Upgraded

As part of the President's program for improving Government services to the public, the Service

has promoted a series of trial installations in taxpayer assistance areas of district office buildings.

These tests in nine cities have proven immensely

successful in permitting the Service to give taxpayers more rapid and convenient assistance during the

filing period. Waiting time, long lines, and confusion

during the filing season rush have been sharply reduced at the test sites, and with the use of fewer tax

assistors. Next year, design and layout standards

developed from these tests will begin to receive

Servicewide application. During the coming year

there will also be tests of a new uniform series of

clear, easy-to-read directional and information signs.

Another aspect of improved public services is associated with the efforts of the President's Commission on Employment of the Physically Handicapped.

The Service has been working with the General

Services Administration and the Post Office Department to remove architectural features which

hinder handicapped taxpayers and employees. The

Service cooperated with the General Services Administration to strengthen office occupancy-guide

requirements for first floor public contact locations

and meet the necessity for clevatorservice in multiple

floor buildings occupied by Service offices.

Accurate Taxpayer Information

Encourages Accurate Returns

A self-assessment system needs well-informed taxpayers, just as a democracy needs a well-informed

electorate. This becomes especially true as tax laws

grow in complexity and as account processing is

taken over by automated equipment. In this past

year both conditions prevailed, with important tax

code changes introduced and with automatic data

processing extended to all taxpayers in every State.

As described in the Commissioner's address to the

National Industrial Conference Board in New York,

supplying the public "more information, better understood information, more casilv accessible information" has become one of the major aims of the

Internal Revenue Service. With accurate source data

so vital to computer processing, errors on returns assume a critical importance. To avoid the necessity

for costly correctional processing, taxpayers must

have both information and motivation to file accurate returns. This goal was the dominating theme

of the 1966-67 information program.

How Did the Error Reduction Program Operate?

'

The err or reduction program was built around

the compilation, by regional service centers, of

weekly totals in six major error categories: Arithmetic, tax table, social security number, signature,

Form W-2, and schedules. District offices were provided 10 master news releases which they could

adapt and issue on a weekly basis, emphasizing different types of errors as their frequency war-ranted.

The point of the releases was that taxpayer refunds

were being needlessly delayed by easily avoidable

mistakes.

The main er-ror categories publicized in the business return area included the employer's identification number, business code, depositary receipts, and

arithmetic. These errortotals also were large enough

to justify news interest and publication on a wide

scale.

During February and March this campaign was

pressed through use of the slogan "Take Another

Look" (before mailing returns) on postal truck

posters, in broadcast spot announcements and other

mass communication. Evidence indicates that generally most taxpayers were exposed to the error reminder message several times during the filing

period.

Early Planning Ties Field Experiences Together

Since it was clear that an expanded information

program would be required to meet 1967 filing

period needs of taxpayers, planning teams set to

work during the summer of 1966. As a result, by

September work was underway on much of the

scheduled program: Technical and general news releases (which could be adapted for timely local use

by individual *district offices) ; feature articles and

photographs; TV and radio films, scripts, and tapes.

The quantities involved were generally above those

of any previous year.

By using task forces made up of district information specialists, the experiences of a number of district offices could be taken into consideration in

planning and drafting the filing period publicity.

Then, too, on this team basis, it was possible to find

the most practicable dividing lines for each type of

material between Servicc~Aride standardization and

local flexibility.

The National Office, in addition to issuing news

releases on Servicewide developments, provided

"fact sheets," reprints of speeches and articles, and

other background items for field office use in local

informational programs.

District offices continued to find I-day seminars

for representatives of the several Service functions

very productive in identifying effective ways of working together to meet the local public's needs for tax

information-39 such seminars were held in the

large metropolitan locations.

Increased Use of Television and Radio

The growing importance of television and radio

in reaching the American public was reflected in a

considerable increase in planned use of these media.

More than 90 percent of all TV broadcasting stations, and 78 percent of all radio stations, used spot

messages provided by theService.

The nationwide filing period program included a

"how to file" film narrated by Dave Garroway, 12

color TV spots, and a series of color slides on tax

topics of common interest. In addition, more than

800 TV programs were developed by local offices

working directly with individual TV stations. Panel

question-and-answer periods received heavy audience response.

In radio, a series of eight 5-minute tape programs

brought informative question-and-answer programs

to the listeners of more than 1,500 stations. More

than 100 spot announcements-- 10 to 90 seconds

long-were prepared in Washington as nationwide

supplements to the 3,000 radio programs originated

by local offices.

Top officials, including the Commissioner, frequently appeared on network and local programs,

sometimes as individual speakers, often

as

members

INFORMING AND ASSISTING TAXPAYERS

of a discussion panel, occasionally as interview

principals.

Use of Question-and -Answer Column Grows

The weekly series of question-and-answer columns

continued to be an extremely popular news feature.

During the 1967 filing period, these columns were

regularly published by more than 800 daily and 1,300

weekly papers. Their subject matter was governed

by weekly reports from field offices on the trends of

taxpayer queries. For the first time, the "Q and A"

technique was extended to meet the special needs of

Americans living abroad. Five columns of such information were provided 70 newspapers and magazines circulated among these taxpayers.

CarryingOut the Freedom of Information Act

In accordance with Public Law 89-487, commonly called the Freedom of Information Act, the

Service established public reading rooms in Washington and in each of the regions. The purpose of

these facilities is to make informational materials

conveniently available to the public. They will also

serve as inquiry points for any other official information which can be released to the public underthe

law. For list of reading rooms by location, see page

78.

New Programs Spur Increase in

Taxpayers Assisted

Telephone Requests for Assistance Show Largest

Increase

Over 26 million taxpayers voluntarily sought and

received assistance from the Service during 1967.

This was half a million-,2 percent-more than last

year. Almost all of this increase was in telephone requests, with 17 million taxpayers, or 65 percent requesting assistance over the telephone. This was a

satisfying response to the Service's efforts to encourage taxpayers to telephone for assistance whenever

possible. In this way, the Service is able.to quickly

provide the high-quality assistance required, but at

a lower cost than a personal visit entails and with

minimum inconvenience to the taxpayer.

Typ,

Taxpayers assisted

Total taxpayers assisted ... .........

Talephoee assistarc,.... ..

AnistanCe to Off- vlsl1ors_:.. .. _-...... ~.. ...---- :

1966

25,755.437

1967

26,267.833

I

"

61

5

311 1 179:D9

:

801

9:140:069 1752 032

P...rt

,hliril.

2.0

4 5
ANNUAL REPORT * CHAPTER ONE

The busy Manhattan office found that

parents

waiting for tax

assistancegst:ded no a way to keep their

of youn he ..It,, occupied. A portion

"8

m m was designed

for th a, to the children's

obvious pleasure.

These scenes are typical of

Philadelphia taxpayer

assistance during the busy season.

A visitor won't normally we

the assistors answering telephone

inquiries, but the activity

is an every-day occurrence

throughout the

taxpayer assistance organization.

When the Tucson Office of the Phoenix District moved

into

.

bu

I

Iding which formerly housed a bank, it saw the potential

of the drive-in window It inherited. Now

Tucson taxpayers am the first in the Nation to be able to obtain

tax forms without leaving their cam.

Centralized Telephone Concept Test Continues

The potential benefits from telephone assistance

has stimulated the Service to pursue avenues which

might bring further improvement by this means.

Major among these is the concept of centralized

telephone service. Known as Centiphone

'

it enables

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

away. Controlled tests already conducted in the

Baltimore, Little Rock, and Los Angeles Districts

show that certain benefits may result both to the taxpayers and to the Service from centralizede telephone

assistance facilities. As a result, the Servic -

,

plans fur

ther tests to determine if the benefits to be derived

justify the cost involved in providing Centiphone

service.

Service Streamlines Information Flow for Better

Taxpayer Assistance

Recognizing that the most cffectiv~ assistance to

taxpayers hinges on the timely availability of tax information desired by the public, the Service initiated

two major programs designed. to streamline inforTnation flow from point of origin to point of need. One

involves a nationwide program, begun on January

1, 1967, to sample the nature and frequency of tax-

.payer inquiries. Information thus obtained has

given new insight into the problems of taxpayers in

filing Federal tax returns, highlighted information

gaps in forms and public use documents, and provided a basis for developing job-related training for

personnel detailed or assigned to the assistance program. The 25 most frequently asked questions are

s~mmarizcd monthly and disseminated to Service

activities involved in improving communications

and contacts with the public.

The second program incorporates the concept of

a rapid internal tax information system which

disseminates urgent "need-to-know-now" tax information to all Service employees dealing with the public. Providing information to employees immediately on such items as forthcoming technical information releases and taxpayer error data enables them

to assist the public more effectively. This program

has been in operation continuously since February

1967, and will be maintained on a permanent basis.

Extended Office Hours Still Being Tested on

Expanded Basis

The experiment conducted last year to determine

the nature and scope of tax assistance the public requires on Saturday (normally Service offices are

INFORMING AND ASSISTING TAXPAYERS

closed Saturdays) was expanded from 14 to 89 headquarters and district offices. If the results indicate a

substantial demand for service during these hours,

arrangements will be made to further extend taxpayer assistance service.

Forms and Instructions Provide

Major Link With Taxpayers

Tax return forms and the related instructions provide the primary, and frequently the only, direct

line of communication between the Service and most

of the Nation's taxpayers. The success of the selfassessment system rests largely upon this link.

To provide for active -participation and guidance

by the Commissioner in this important activity, the

chairmanship of the Service's Tax Forms Coordinating Committee has been made a part of the Commissioner's immediate office.

The goal of making the various tax forms and instructions casily understood by a multitude of users

may never be full), attained, but efforts toward improvements in the content and format continued

throughout the year. Of the 300 tax returns and

related forms, approximately 100 must be revised

annually because. they. bear a year designation.

Others are revised when changes in the statute or

regulations require revision or when means for improvement can be found. In revising the return

forms and instructions, consideration is given to

many suggestions from within the Service and from

outside sources such as the various professional and

practitioner groups.

Approximately 1,700 forms and form letters arc

used in a wide range of Service communications with

taxpayers. Continued improvement in the appearance and content of these form letters is a matter

of much importance. A consulting firm has been

engaged to review ~§pccially the computer-generated

notices and form letters, which present particular difficulties in proper wording to make the message clear

while avoiding a harsh automated tone.

During the year, five new forms were issued and

three others were eliminated, as listed on page 88.

The enactment of the Foreign Investors Tax Act

of 1966 required major revision of income tax return forms used by alicns. Other sigirtificant revisions

were required by changes in the manner in which

corporations make estimated income tax payments,

by changes in the depositary receipt rules for cmpioyers; and withholding agents, and by several new

income tax treaties and protocols.

7

6
ANNUAL REPORT - CHAPTER ONE

Banner Year for Tax Forms Distribution

New la~iethocls of insuring timely delivery of tax

forms to all Service offices are constantly being xplored. In 1967, in cooperation with the Government Printing Office, a method was devised for

making split shipments. As a result, a preliminary

Supply of "must" tax forms arrived in all Service

offices nationwide by December 1. This was achieved

by having 30-40 percent of each form produced at

the Government Printing Office, regardless

of

the

ultimate source of production for the balance,

thereby insuring an initial supply in the pipeline.

The balance of 60-70 percent was produced either

at GPO, depending on production capabilities, or

by commercial contractors. Splitting shipments in

this wav assured field offices of early receipt of sufficient forms for filing requests from groups such as

the tax practitioners who need forms ahead of the

filing period.

Publications for Guidance in Filing

Returns

The nontechnical-language booklets and pamphlets published by the Service are an important part

,of the total effort to furnish the information needed

for voluntary compliance. These publicationS bring

together and present in easily understood language

the technical requirements of the revenue statutes,

regulations, and officialrulings.

The best known of these publications, Your Federal Income Tax, explains and illustrates the tax laws

for individual taxpayers. It features a filled-in return that is keyed to text material where readers may

find explanations and examples. Numerous topical

headings and a topical index make it easy to locate

material in specific areas of interest.

Ta~ Guide for Small Business and Farmer's Tax

Guide are examples of publications addressed to

particular segments of the public who may have special problems under the tax laws. Others deal with

special subjects such as casualty and disaster losses,

child care and dependents, and medical and dental

expenses. Altogether there are more than 80 of these

publications, and new ones are developed from time

to time as the need arises.

Teaching Taxes is a special purpose publication

that has attracted wide-spread interest. Last year

80,000 teachers used this publication to instruct over

3 million high school and college students in the

preparation of Form 1040 and Form 1040A returns.

The Service also works with other Government

agencies in developing publications, such as Employer and Employee Tips, I.R.S. Publication No.

478, which was prepared in cooperation with the

Social Security Administration. Other illustrations

of such cooperative efforts are found in the Department of Health, Education, and Welfare publication, The Visiting Teacher, Instructions for International Teacher Development Program Grantees;

the Department of the Navy publication, Federal

Income Tax Information forService Personnel; and

the Peace Corps publication, Tax Guide for Peace

Corps Trainees, Volunteers and Former Volunteers.

The Department of Agriculture provided valuable assistance in developing realistic examples and

illustrations relating to farm tax problems for use

in various publications, including the Farmer's Tax

Guide.

Further information about these and other Service publications starts on page 86.

Technical Interpretations Are

Published to Inform All Taxpayers

and to Promote Uniformity

Published rulings continue to play a vital role in

the administration of our self-assessment tax system.

Voluntary compliance is based upon the compliance

capability of the Nation's taxpayers, and that capability depends in large measure upon the timely development and dissemination of technical interpretations of the revenue statutes and regulations.

The publication of administrative interpretations

involving substantive tax law provides guidance to

taxpayers and tax practitioners both in planning

transactions and in preparing returns. Published rulings also promote uniform treatment of issues in the

examination of returns because they provide precedents to be cited and relied upon in the disposition

of other cases. This uniformity serves to sustain and

strengthen public confidence in the administration

of the revenue statutes.

These interpretations are published weekly in the

Internal Revenue Bulletin, which has been the authoritative instrument of the Commissioner since

1919 for announcing official rulings and procedures

of the Service, as well as for publishing tax legislation and related committee reports, regulations, tax

conventions, certain court decisions, and other tax

items of general interest. The rulings and other matters of continuing research value are consolidated

semiannually into a permanent CumulativeBulletin,

INFORMING AND ASSISTING TAXPAYERS

which becomes the primary reference source for this Letter Rulings and Technical Advice wide range of Federal tax material.

During the year, 415 Revenue Rulings and 53

Revenue Procedures were published in the various

tax arm, as shown in the table below.

Memoranda Interpret and Apply

Law to Specific Sets of Facts

The National Office interprets the tax law and isRevenue Rulings and Revenue Procedums published sues; letter rulings on specific sets of facts in response

Type Number toinquiries from individuals and organizations. Some

of these requests are received directly from the taxTotal ....................................................... 468 payers or their representatives, while others are rcAchninkitati Alcohol and ------------------- tobacco taxes-----------------_-

----------------__---

__.........

53 ferred from the field offices because no published 23 Employment

Estate and gift

tax

taxes..

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

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

22 precedent can be found to support the issuance of a 23 Excise taxes- ~ -------- ...... ------------------------------------- 44 "determination letter" by the district director. In ...pt .,g.mlx.tl.pa............. ....__ ------------

t ......... _ ------- ---------------------- ....... 2254 5 reliance upon the conclus'ions stated in these letter Pension trusts -------------------------------------------- 22

IT Self-employment tax--------------------------------------- 2 rulings, the taxpayers to w

'

orin they are issued may

complete proposed transactions. The more significant Revenue Rulings and Reve- District directors request technical advice from

nue Procedures are summarized on page 89. the National Office on technical or procedural ques- To eliminate unnecessary research and to reduce tions which develop during the examination of re- the possibility of erroneous decisions by taxpayers turns or claims for refund or credit if they cannot and tax practitioners, rulings published prior to be resolved on the basis of law, regulations, or a

1953 are being reviewed and more than 2,600 have- 'clearly applicable Revenue Ruling or other prece- been listed as not being considered determinative dent published by the National Office. New pro- w t respect to uture transact ons.

Fourteen of the 62 announcements of general interest listed the names of organizations, contributions to which are no longer deductible under section 170 of the Code; five listed disaster areas in

which losses qualify for the special tax treatment

under section 165(h) of the Code; and two an--

nounced tax administration agreements with the

States of Mississippi and New Jersey. Other significant announcements of general interest are described

on page 95.

Alcohol and Tobacco Industries Notified of

Technical Changes

In a continuing effort to promote understanding

of tax laws and thus ald industries in complying voluntarily with the requirements of laws and regulations, the Service issues circulars to members of the

alcohol and tobacco industries.

Thirteen such circulars were issued during the

year. Of these, three announced the substance of

Revenue Rulings and Revenue Procedures in advance of publication in the Bulletin; one advised industry of the text of a ruling immediately after publication; two announced forthcoming hearings for

the presentation and discussion of proposed amendments to the regulations on labeling and advertising

of distilled spirits; and the remaining circulars called

attention to specified requirements of regulations

and procedures. Circulars of particular interest are

described on page 96.

cedures were announced in Revenue Procedure

67-2 ( Internal Revenue Bulletin 1967-1 ). The

major change responded to desires of tax practiioncrs that they have the opportunity to seek a review at the National Office of a denial by the district

office to request technical advice. Under the new

procedure, a denial by the district office will be reviewed by the National Office upon request of a

taxpayer or his representative, and all examination

action will be suspended (unless such suspension will

prejudice the Government's interest) until the National Office notifies the district of its decision. This

review is solely on the basis of the written record

and no conference is held, in the National Office.

During the year 25,393 requests for letter rulings

and 3,175 requests for technical advice were processed, relating to th~ tax categories and subject

matter shown in the table below:

Requests for tax rulings and technical advice processed

S.b1oct Total Taxpayers' Field

requests

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

.......... 28,568 25,393 3,175

Accounting methods,. ........

Ac.upting periods.-. ...............': : ::: a 9 63

Actuarial matters........................... 149 32 ......... 10

Admin

istrative ...::: ---

165 108 57

Alcohol and tobacco t .....

.... 5.022 3,733 1,289

Earnings and prolme...

..........

556 556 --------

"

pl,,menl and a 412 io

E

.. ring ques

-------- 52312 119 lion

Estate and gift taxes.. ... ............ c.).-.--- 549 412 13' '? Oth Lxompt organizations. -----------_- 3 333 2 951 392

a.u. t ......... _ ----------------- 626 450 176

ponar Income tax matter............... : ::::- 5.133 4 559 574

too trust,.............................

:

683 '442 241

8

21"86 0--67-2

9
ANNUAL REPORT as CHAPTER ONE

Determination Letters 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 and custodial accounts. Such letters

are based on published principles and precedents

which are applied to the facts in the cases considered.

During fiscal year 1967, 19,884 plans, exclusive of

self-employed individual plans, covering 1,236,583

employees were held qualified. The number of plans

approved during the fiscal year was more than

double the number approved in any year prior to

1962 and shows a significant increase over the immediately preceding year. Data as to this activity

appear in the following table:

Det.-Imall.. letter. Wood .. employ.. Is.n.0t plem.

It..

Ditemination letters Issued with respect to- I.

Initial qualification .1 plans:

P. 'In.

2. 1 b.m"11, Ir.r..dl~=!d

Go,. Bon 'hand as without Issuance of deternnina.

left$ ................. ........

P.R.

sharing

plan,

332: 1 '513'

630

923

Pension or

nn.ity

plan,

10 947

U2: 388 176

602

M

Stock

bonus

plans

22

21,682

1

6

In addition to the foregoing, 14,086 plans which

include self-employed individuals, covering 21,374

participants, were held qualified. Among those participating in these plans were 15,420 self-employed

individuals. The number of approved plans was almost double the number approved in the previous

year. The details appearin the following table:

D.I.-Irustirm. Issued ers la.mallf pliam, for W.-pi.yc! isaarsort.

Determinations I issued with resFacl to-

'u"'n't"' "

I

b. Plan. disado 2. TI

Cases nation of plan...........

closed without issuance of deferral.

nations.............................

N.M.

h.,

6"A"46

110

134

Pension

plan,

1

267

13:974

6' 13

357

Bond

purchase

plans

357 4

54

21

28

District directors also issued 14,486 determination

letters to organizations seeking to establish exemption

from Federal income taxes under provisions of the

Internal Revenue Code which authorize a taxexempt status for qualifying nonprofit organizations

including those engaged in charitable, religious, and

educational activities. Of the total determination

letters issued, 13,672 were letters of approval and

814 of disapproval. In addition, 2,136 cases were

closed without the issuance of a determination letter.

Regulations Provide Interpretation

of Internal Revenue Code

Regulations issued under the Internal Revenue

Code, being expressly authorized by the Code, constitute the most authoritative administrative interpretation of its provisions. These regulations provide

guidance for both the Service and taxpayers, and are

binding upon Service personnel.

Normally, the process of issuing regulations begins

with the publication in the Federal Register of a

notice of proposed rulemaking. Persons interested in

the proposed regulations are given an opportunity

to comment on them in writing and at a public

hearing if one is requested. After consideration of all

comments and incorporation in the proposed regulations of any appropriate changes, a Treasury DeciSion containing the final regulations is prepared.

This document is signed by the Commissioner, approved by the Secretary of the Treasury or his dclegate, and published in the Federal Register.

It is sometimes necessary or appropriate to depart

from the usual procedures and omit the notice of

proposed rulemaking. For example, if taxpayers

must make important decisions under a new law

soon after its enactment, temporary regulations published without notice might then be necessary. These

regulations would be followed by permanent ones

issued in the usual manner. Notice may also be

omitted if unnecessary or impractical or where the

needs of the public are better served without it.

Twenty-eight final regulations, three temporary

regulations, and 22 notices of proposed rulemaking

relating to matter-s other than alcohol and tobacco

taxes, were published in the Federal Register during

the year. Ten public hearings attended by a total of

approximately 335 persons were held on proposed

regulations.

Five Treasury Decisions were issued in connection with the administration of alcohol, tobacco,

and firearms regulations.

Some of the more important regulations published during the year are listed on pages 88 and 89.

"Thata people so numerous, scattered and

individualistic annually assesses itself with a tax

liability, often in highly burdensome amounts,

is a reassuring sign of the stability and vitality

of our system of self-government."

Supreme Court justice ROBERT H. JACKSON

Collections,

Refunds, and

Returns Filed

Tax Revenue Continues to Rise

Tax revenue continued its upward movement of

past years. Revenue increases were recorded for the

year in all of the major classes of tax except estate

and gift taxes.

In fiscal year 1967, gross internal revenue receipts

were $148.4 billion-an increase of approximately

$19.5 billion (15.1 percent) over fiscal year 1966.

The total amount collected and the amount of increase were the largest in the history of the Internal

Revenue Service. The increase of $19.5 biDion is

COLLECTIONS CONTINUED TO RISE

EXCEPT ESTATE AND GIFT TAXES

69.4

1967

1966

10

TOTALS

148.4

128.9

CHANGE +15.1

13.4 14"

3.1 3.0

E=]IIIIIIIII L__

corporation Individual Estate and Eudu, t.a.,

- . acom,

~rruc..

sift a.

taKeer t....

0

CHANGE FROM 1966

+33,

1

-2.6

11

10
I

ANNUAL REPORT 9 CHAPTER TWO

larger than total internal revenue collections in 1942, p. 119). Gross collections by class of tax for 1966

when $13.0 billion was collected (see table 4, and 1967 are shown in the following table:

Gross internal revenue collections

lln thousands of dollars. For details see table 3, p. 1171

Source

Grand tot.1 ........................................................... ---------

income taxes. total------ ........................................... ................

Car ration...

Ind.pl'idual , I.1af .............................. .......................... .............

Withhold by employers I.. ........................................... ofher ......................... ....... ---------_----------------

Emple(dment 0 a, and disability insurance, total-----........

Federal S.1f.m fir-imus contribution ----------------- ..........................

ployment insurance contributions- .. ---------- ..............

timers

p loy'

ant insurance ....................

Railroad retirement.. ..

: ----------------------

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

Exist and III tax............ __ .......

Exels: taxes, let.]........................

Alcohol........ _. ...............................................................

Tobacco ............ .......... _

Other. __._..............

Percent .1

1967 collections

100.0

70.3 1

23.5

46.8

1966 1967

Increase or decrease

'

collection, or. adjusted to exclude amounts I ransferred to the Government I Guam.

For details .. table 1, ?!,and

in'

, 5 p. I Is.

F.1imxtd.--r.IIext%

,

indi'Ma

1.

in~om. box withheld or. not reported sepa.

rately from old-a a and disability In.

coil tions of Indf,

.... on ..a. and cals,lon. Sinnilarl

vidual income tax n Id are not reported separately from olp

go and disability insurance taxes on self-employment income. The amount of old-age

Individual Income Tax Is Top Source of Revenue

The tax on individual income, withheld by employers and paid by the individual with his return,

continues to be the biggest single contributorto Federal revenue, representing about 47 percent of all

collections. This class of tax increased $8.1 billion

( 13.2 percent) from 1966 to reach $69.4 billion in

1967. A portion of the increase was caused by the

rise in withholding rates effective in May 1966.

In June 1967, new deposit dates became effective

for agents withholding income tax from payments

to nonresident alien individuals, foreign partnerships, foreign corporations and from interest on cer_

tain bonds. Prior to that date a single payment, covcring the preceding calendar year had been made

annually with the filing of Form 1042 due on March

15. Deposit for the first five months of calendar year

1967, the period of transition, became due on June

22, 1967. The first regular payments under the new

regulations start in July 1967. Agents whose monthly withholding exceeds $2,500 will make semimonthly deposits; agents who withhold $2,500 or

less but over $ 100 will deposit on a monthly basis.

Corporation Income Tax Collections Show Gains

Corporation income tax payments, next in order

of importance to individual income tax in amount

12

128,879.961 148,374,815

Amount

19,494,854

13.2

11.11.14

1

7:

.. 1

5 3:

1 1 ": 3

0

61,297, 51 69 37 595 1 8:07'1:043 13 2

34.0 41: is 111 4 311 1 11.81411 114 7,376131:411 11. 1

86:

1,. 1.

1

S:721

12.7 551 2.0

1

.2

. 2

16.0

1

: '4

.5

2: 9 15

2.7

5: 4

I's rt

11:1~5 133 2 24

"

ul .8 6 1: 6 72~ 7: 11501

5: 4 25: 562 3. 5 31

'

1 1.7 17 11.6

":ID

5

.48

9

6:

'1: '227

16

09 .0

15. 1

1,3 112

: '91: But

3,814,378

':

073 .956

7 509,777

3:

0

4:

14 113 '

- 7' '1' 74'8 1 7

1

5:636

4.075,723

2,079,869

7,958,156

261,345

"'

13

448,3

7,

-2:5 31

6.9

6: '0

and disability imuls- tax .1lectim,

'

based ' a

x 0, sec. by the

0 S'

Socu

Secretary of the Tre

...y pursue"

11 the

p"T'n

201(a ocl. I rity

Act a, amended,

. n

d includes all

.1d..'s and disability insurance taxes. The estimates

shown for the 2 classes of individual

inconea

taxes were derived by subtracting the

old-age and disability insurance tax estimates fro, the comb

ined

tots

I

s reported.

of revenue produced, rose to $34.9 billion in 1967,

a $4.1 billion ( 13.2 percent) increase over the prior

year. A contributing element was the acceleration

of estimated payments. Beginning in April 1966, the

first and second installments were computed at 12

percent. In April 1967, the estimated tax installments due each quarter increased to a rate of 25

percent. This liability refers only to that por;.tion of

the tax liability estimated to be in excess of

$100,000.

Procedure Instituted for Direct Payments to Federal

Reserve Banks

A new deposit procedure instituted in 1967 requires direct payment of corporation income tax to

Federal Reserve Banks or member banks, reducing

the processing time of tax payments. In 1967 only

estimated tax payments were affected. The amount

of deposits was $7.2 billion. The new procedure,

which will be extended to cover other business tax

payments in 1968, is discussed more fully in Cbapter 9.

Investment Credit Restored

Public Law 90-26, June 13, 1967, restored as of

March 9, 1967, the investment credit and accelcrated depreciation that had been suspended on October 10, 1966. This incentive to business expansion

may have lessened income tax payments slightly in

fiscal year 1967 and will continue to have an effect

on future tax liabilities.

Employment Taxes, Rates, and Total Payments

Increase

Employment tax collections, as a group, went up

33.1 percent or $6.7 billion in 1967. These taxes

represent funds which are set aside for the payment

of insurance and retirement benefits. Rate increases

and an increase in the amount of wages subject to

the tax, as well as expanding employment, played a

part in the rise in collections.

On January 1, 1966, rates under the Federal Insurance Contributions Act (FICA) (old-age, survivors, and disability provisions) increased from

3.625 to 3.85 percent plus 0.35 percent for the

medicare provision of the law. Employers and employees are each taxed at the same rate. At the same

time the maximum taxable wage was increased from

$4,800 to $6,600. These rate and base changes affected collections during the first part of fiscal 1967.

On January 1, 1967, there was a further increase to

3.9 percent for FICA and 0.5 percent for diedicaric,

which affected collections in the second half of fiscal

1967. Total FICA collections (including medicare)

increased by $5.7 billion or 31.6 percent in 1967.

The tax on self-employment income, up $0.8 bdlion (91.5 percent) was affected by the following

revisions:

January 1, 1966; Rate changed from 5.4 to 5.8 percent

plus 0.35 percent for medicare. Base

changed from $4,800 to $6,600.

January 1, 1967: Rate changed to 5.9 percent plus 0.5

percent for medicare.

Railroad retirement tax also followed the trend

of higher collections and rate increases. The rate

changes (applicable to both employer and employee) on taxable wages as defined in the Railroad

Retirement Tax Act, as amended, were:

January 1, 1966: From 7.125 to 7.6 percent plus 0.35

percent for medicate,

January 1, 1967: To 5.15 percent plus 0.5 percent for

m.di-e.

In addition to these rate changes, Public Law 89-

699, approved October 30, 1966, added a supplemental tax on railroad employers of 2 cents per manhour effective with wages beginning in November

1966.

COLLECTIONS, REFUNDS, AND RETURNS FILED

During fiscal year 1967, there was no change in

the rate of tax under the Federal Unemp)oyment

Tax Act. Nevertheless, the $603 million collected

represented an increase of $36 million (6.3 percent)

over the prior year. Increased employment was primarily responsible for the rise. In past years substantial added collections resulted from the reduction

of credits allowed for ernploycrs~ payments to the

various States. In 1967, however, additional collections were only $19.3 million or 3.2 percent of total

revenue for this class of tax, compared with $25.5

million (4.5 percent) in 1966 and $144.6 million

( 18.4 percent) in 1965. The decline in recent vears

is attributable to the decrease in number of itates

affected by reduced credits and a drop in the rate of

reduced credits in Alaska.

Excise Taxes Show Gains

In spite of the numerous excise taxes reduced or

eliminated under the Excise Tax Reduction Act of

1965, revenue from excise taxes represents a substantial part of total collections. In 1967, the Service

collected $14.1 billion from all kinds of excise levies,

a gain of $0.7 billion or 5.3 percent over 1966. Two

years ago in fiscal year 1965, excise revenue was the

highest ever, $14.8 billion. Collections in 1967 were

only 5 percent under that peak year.

It is interesting to compare the amounts received

in taxes on the following excise tax leaders in 1967

and 1966 (see table 3, p. 117 ) :

Selected excise taxes

(In millions of dDIIarSI

1966

GFsolme_ ............. _ .......

Optil

C led pult-_ ....... -------

Ran.fies. ................. !__

Automobile chassis .....................

2,924

2.810

,

00

1:4962

1967

2,933

3,007

2,023

1,414

P-et

change

3.8

7.

a

.8

-5.3

t,-10 ~ercert throulb June 21. 1965; 7 p....nt th ih December 31, 1965: 6 p... nt

roug March 15, 1 66; 7 ponert through March 31, 968,

Administrative Budget Receipts

A distinction must be made between gross collections and "administrative budget receipts"-those

funds available for financing the operations and

programs of the annual budget. Administrative

budget receipts include gross collections of internal

revenue, customs duties, and miscellaneous receipts,

13
ANNUAL REPORT as CHAPTER TWO

reduced by transfers to trust fund accounts, inter- presents the source of gross collections, deductions,

fund transfers, and refunds. The following table and administrative budget receipts:

Gross collections, deductions, and administrative budget receipts

[in thousands of dollars]

Gros Trust fund luterfund Adminisball"

source collections transfers Refunds transactions bulF;ts

lrdi,lduril income tax.,:

Wit beld._ ....................... --------- 5D.520.874 ......

Other................ ......... ......... 18,849,721 ......

IN 0 12

7,114 111 11 121 1"1

Es"o, :91 , .

946:

468

3,:,, :3

57

Excise faces:

Hi

I

trust fund ................................ ................................

* 1

4.347,541 4,134,756 212.785 -----_------- ------- ......

o

Ir1 1 . ........................................... ............................. 9.766,207 =~=mm=mw=~~a~~ 182,012 .............. 9,584.193

Total................................. a ............................. a ....... ... 14,113,748 4,134,756 394.799 9,584,193

Ennpk,rd.az~.t o . fares:

Inodi"Iffilly ins ramse ....................... w_ : _ ::::::::::::::::::::::::: 25,562 638 25 280.482 282,156 ........

s.il..d

r. is

rimstnt. . ~ ................... 792:858 79 28

'

165 ----w_::::

Unemployment insurance.............. ww..::::::::::::: .......... ............. 602.745

:

596 542 6,202 ------------- --------------

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

26,953,241 26 667 306 298.524 ............

----- ------ Ecud. . no lift ------------------- I ................. w .......... w ............................... w .......... 3.014.406

_ . ~

... .... 36.095 ---w........ 2 978,311

Total internal revenue ..............

-

148,374,815 30,802,062 9, . -------------- III

' '

I ,

G6 Adjusted ini ;i to conform with "Statement of Reeuir~,;

..

+308 747 .. -N: 7 4I .art .............................

Adjusted total internal revenue..... .................. .. 11 14--------- 374 III

.

31,110 Bog

-

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

9 510 195

..... :::::::

IG7.753:511

mi ona. ::::

Il.mmus easipt ------------------- .......... _

1:9 :.

oo

1 6.876,422

__

----- ----

: :~

71.085

107

---- w. ---

ifi,'i23

1.9DD,715

6,194,592

Tout ............................. ................... .................. ------ 75- 7.223, 037

1 .

31,110,8119 9,581,6&6 681,723 115.948,817

Refunds Continue to Rise

Approximately 49 million refunds of overpaid

Federal taxes were made in 1967, totaling $9.6 billion including interest of $120.4 million. Each of

these items increased over the previous year. The

number of refunds was up 3.9 million (8.6 percent), while the amount refunded, including both

principal and interest, was $2.3 billion (31.7 percent) larger. Principal refunded increased $2.3 billion (31.9 percent), while interest paid increased

$16.4 million (15.8 percent).

The largest increase in both number (5.1 million) and amount ($2.1 billion) of refunds occurred

in individual income tax. A contributing factor was

the increased rate of withholding from wages, beginning in May 1966, under the Tax Adjustment

Act of 1966.

Excise tax refunds accounted for a large part of

the interest increase-$7.7 million. The large

amount of interest in many of these cases involved

unavoidable delays, such as claims deferred pending

court decisions. Interest costs also increased by $3.9

million for individual income tax and $3.6 million

for corporation income tax refunds. The following

table shows refunds by class of tax for 1966 and

1967:

14

COLLECTIONS, REFUNDS, AND RETURNS FILED

Internal revenue refunds, including interest

Ito, refunds by region and district, see table 5, p. 1211

Number Amount refu ad (Principal Amount of interest included

Type of tax and interest-thousand dollars)

I

thousand dollars)

1966 1967 1966 1957 1966 1967

Total refunds of Internet 1-pul - 2--------------- --_------------ 45,106,265 149,004,545 7,314,599 9,630,864 103,931 120,370

Corpc'ation income taxes------_----------_---_--- ------------ 7 2 11

1 I

11 113 BIG 99

a

1.019,829 69,782 73,360

Individual income and employment taxes, total I...................

7 : 2 66

4 3, 64

,8,7 :

83 099

.1,,:

140 8.166,952 29,869 33,819

Excessive prepayment income tax 2 ...... ---------------- 42,436,224 47,719 58

0

12 7 59 008

3 1 09 1

949

Oth r income tax and old-ageonit dirobilivinsurance-. ............... 1,178,131 H

:

1,02 9 91 3

1

251 31 567 286 8 2

04

20:

Rallnuid retirement... ---- 5BO

Unemployment insurance 32.603 3- 33,32477 5,813 11

IN

6,490

3

227

3

289

E late tax ---------------------------

----------

7.321

"75

Z9 111 3 91

' 1

Not 4,216

Gift tax. . -----_------------

791

735 1:477 2: 660 55 264

Excise fare,, total ------ ------ :: ............... -------------- 1,333,630 182,973 337,591 403.510 IAZ2 8,711

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

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

8,77

7

8,728 '1 427 11 771 7 9

Tobacco taxes 4. --------------- - . 831 437 ::H7, 1 : 0751 Manufacturers' and U1 retailers' anise taxes, total ......................... 1,277,602 17,157

2 111,

7,337 179 S

G so ins used on forms. ------------- 1,239 711

I_

I

"

... ... .............. ........ . . G:obline, nophighway.. --------------

25: 2,2

21"70

7

1~1 0

12: 519 .............. ..... ........

Others-_---------_----

.....

12,643 7,157

111 313

3I3 115 639 179 0.241

Ali other ..ciu, favor ----------- --------- --------------------------

-

46,420 66.651 24,679 17,329 836 461

andI Figures haw not been reduced to reflest reimbursements from the Federal Old-A

Survivors and Federal Disability Insurance Trust Funds 9

I' or

121 27'.

lghw.y

st Fu

'T"Tis I

to 3,1111,1~0

in 1967 and $227 675 000 In 1966; firm in Tr

u

Ill H nd am ntin,

037 in 1967 iin~ $H9,931,000 in

, .it from

is the Unemployment Trust Fund

mourtino to $5,971,809 In 1967 and $5,55DOO in 1966.

ourI Net of 92,703 und.0wrtibleacolleclis total us $9,274,000 in 1967 and 199,082 undellver-

. checks totalmaT.245,I),

n

1966

, I

nocludes, sells

is not otherwise hiiiiii.d."

4 Includes drawbacks and stomps redons lions.

In, sulu.d:, d littirlcot is ng oil used for mn- f'I'lielil, pc,,, .

_U . silver. agering

a

so and stamps), cooltal stock, and other

.."I" to.

at

is

do.

Eo,I.d,,

""'

ine tax refunds.

include,

excess

FICA credits.

Laos than M.

15
ANNUAL REPORT 9 CHAPTER TWO

Returns Filed Still Increasing

More than 105 million tax returns of all types

were filed in 1967, an increase of more than I million returns from last year. The largest increase was

in the number of Forms 1040 which increased by

nearly 2 million to a 1967 total of 52 million. The

following table presents data on returns filed by type

of return in 1966 and 1967:

Number of returns filed, by principal type of return

Iniperes in thousands. For details, see table 6, p. 1221

Type of turn

,ID4, 072 105,433

81,502

1966 1967

Grand total....................... _

In... tax, total.... ...................................

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

Individual-illizars and resident aliens, total.

Fo; 2,m: 10,480W--------------------------------------

All other Individual and fiduciary........

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

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

Corporation ...................___ ..... .....

partnership-...................... ...............

Corporations....... ............

Other.................. _

Employment tax. total. ........... ..................

Em pj.o;:;s 1,rT 1,42,

E.

p ': Far

Emr,loyers' Form 943 (agricultural am Joy a

He] read Winuencrt, Farm, CT-1, CT-3......

Unemployment insurance, For. 940 .....

Estate I- .....................

Gift tax. ~ ...........

Excise tax. total. . ...................................

M0 un"720. at! I0%l --- ----- ------ - ----

'

I

a

a

""'

I

..""'fa

-

"e""'

-

'I

-

'

-)_

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

Alcohol

Too.-..- ---------------------------------

be; iii .. ...............

, Revised.

,79,104

69,724

68,632

50,054

18,578

1,092

-6,349

16,322

27

962

1,502

567

,22,248

"

132

:

~,S

14

634

I, ".

103

134

2,284 1 ,

003

17322

2209

57

72,224

71,080

52, ODO

19,080

1,144

6,233

6,202

31

956

1.526

562

22,039

I

':

464

4 3 7

590

J , St. 20

113

137

1 ,

642

981

356

22

2237

54

INDIVIDUAL, FIDUCIARY, AND CORPORATION

RETURNS INCREASED

72.2

affl

TOTALS

I9e7 105.4

1966 104.1

CHANGE +1.3

Individual Declarations

P'-'.hip

Corporation Employment Excise and

and of e,t,..t,d all other

fiduciary tax

0

CHANGE FROM 1966

_M-1.7 7

-20.5

chapter

"The Greatest Change in a Century of Tax

Collection-Automatic DataProcessing (ADP)."

LILLIAN D~Ris, The American Way in Taxation

Automatic

Data

Processing

Introduction

The automatic data processing (ADP) system of

the Service is one of the most complex applications

of its kind in the world. The system must handle

annually hundreds of millions of transactions, with

every proper regard forthe intricacies of the tax laws

and regulations and sound accounting principles.

The acid test lies in the systems' ability to produce

timely and accurate outputs, whether in the form

of refunds, bills, or other notices.

It is virtually axiomatic that some difficulties will

be encountered in installing a large-scale computerized processing and accounting system. Although

the Service has had its share of such problems, the

error rate has been lower than in comparable commercial applications. During test periods in the pilot

region (Southeast Service Center) progress has been

made to the extent that an unusual number of problems no longer exists. These improvements have

been built into the system as it expanded into other

regions. The experience thus far has been most gratifying due in no small measure to the understanding

of the public and the professional tax community.

Extension of ADP System to Entire

Nation Brings Good Results

Master Files Installation Completed

An important milestone was reached when the

Business Master File (BMF) became nationwide

in scope on January 1, 1965. The second high point

was reached on January 1, 1967, when Individual

Master File (IMF) covetage became nationwide.

This was accomplished by the phasing in of the

Midwest and NorLh-Atlantic Regions, and the Detroit, Los Angeles, and San Francisco Districts of the

Central and Western Regions. All individual income

tax returns and accounts (except tile Office of In.

temational Operations (010) ) for calendar year

1966 and subsequent periods will be processed under

one system-the ADP Master File Plan. Master

file type 010 returns will be included in ADP op.

erations beginning in processing year 1968 to achieve

complete coverage.

To attain uniform IMF operations in 1967, estimated income tax accounts for calendar year 1966

established by the former area service centers were

transferred into the ADP system. Thus, validation of

16

17
ANNUAL REPORT - CHAPTER THREE

TAXPAYERS

Individuals, Corporations, etc.

AUTOMATED FEDERAL TAX SYSTEM

Tax . Information

nd Assistance

LF.rresp.rd..c.

T~ Tax I.I.ran.ti.nd

Returns

Payments

F.

rrespondence

Tax Returns

Payment

Information

T x

Adjustments

Actions

OF11

1k

'DIS

T

To

'

DISTRICT OFFICES (58)

Taxpayer

Assistance

Deposits

Enforcement

Activities:

Collection

Audit

Intelligence

Bills

Tax Forms and

Instructions

Process Tax Returns:

Transcribe data from tax

returns to magnetic tape

Check tax returns for

mathematical accuracy

Issue Bills and Delinquency

Notices

Identify Returns for Audit

Process Taxpayer Corre.

spondence and Account

Adjustments

'UTax Returns

Enforcement

Information

Taxpayer I

/Directories anXd

Status of Accounts

Payments

18

Correspondence

Co

,'-Data to Update

Taxpayers

-1-A counts-~,-~~-~

Data for Collection f

of Delinquent T

7)

bilis, Tax Notices,

ailing Lists and

f~~ZEnforcement

Information

Internal Revenue Service

Maintain ADP Master Files

of Taxpayers Accounts

Produce Data for Collection

of Delinquent Taxes (including

identification of Non-Filers

and Duplicate Filers)

Prepare Taxpayer Refund

Data

Produce Bills and Notices

Data

Identify Returns for Audit

Prepare Taxpayer Directory,

and Returns-Document

Index

Refund ,

Check Data

Business Tax

Deposits Data

AUTOMATIC DATA PROCESSING

TREASURY REGIONAL

DISBURSING OFFICES (6)

* Produce Refund Checks

~ . . i . . . . . . . . . . . .

FFIC OF THE TREASURER

OF THE U.S.

Prepare Business

Tax Deposits Date

rayment.s~ ..t

and

e

p.r

19
ANNUAL REPORT - CHAPTER THREE

estimated tax credits on all returns is being accomplished by ADP processes. Any underpayment of

estimated tax also can be identified on all accounts

in a uniform manner.

Transfer to the IRS Data Center of non-master

file programs formerly assigned to regional service

centers was also completed. The Data Center now

processes all non-master file programs such as payrolls, Statistics of Income tables, the Taxpayer Compliancc Measurement Program, and other management information studies and reports.

All taxpayer correspondence and adjustments relating to both IMF and BMF returns and accounts

are now being processed in the regional service centers. Returns are selected for auditreview nationwide

using ADP programed criteria. To reduce manual

processing of prior-year delinquent accounts all

business taxpayer open accounts from 1962

'

and

individual accounts from 1963, are incorporated on

the master files and processed under ADP procedures. Before nationwide ADP processing, BMF

and IMF account% had been governed by the year in

which the several regions and districts were brought

under ADP.

In brief, all objectives of die ADP master plan

became effective with the nationwide processing of

individual income tax returns under one system. The

gradual phase-in was done on schedule and without

major difficulties. The BMF went from 5.7 million

accounts at the end of 1966 to 6.2 million at the

close of 1967, and the IMF from 36.9 million to

70.4 million.

Direct Filing Legislation Passed

Public Law 89-713, enacted on November 2,

1966, authorized the Internal Revenue Service to

require taxpayers to file their returns directly with

service centers. Prior to this, such filing was optional.

The change in filing requirements will be introduced

gradually with total installation scheduled for 1970.

Optional direct filing of individual income tax

refund returns was further extended in 1967. Only

the North-Atlantic and Midwest Regions and the

State of California have not yet been brought under

the system. From January through May, approximately 83 percent of the refundable Forms 1040

and 1040A received in regions where direct filing

was permitted were. filed directly with service centm. In the Southeast and Mid-Atlantic Regions, the

direct filing of refundable returns increased from

approximately 82 and 81 percent respectively in

1966 to 85 and 86 percent in 1967. The optional direct filing of refund returns will be extended to 0

regions in 1968. In the Southeast Region mandatory

direct filing of Forms 1040 and 1040A will also be-

-gin in 1968.

The filing of selected business returns with the

service center was made mandatorv in the Southeast

Region beginning with certain first quarter returns

due April 30, 1967. More than 90 percent of these

returns, Forms 941, 720, CT-1, and CT-2 were

filed with the service center. The direct filing of

these business-type returns will be extended to the

Mid-Atlantic, Central, Southwest, and Western

Regions in 1968 and will also be extended to Forms

940 and 11 20 in the Southeast Region at that time.

ADP Verifies Taxpayer Arithmetic and Estimated

Tax Payments

January 1967 saw incorporation into the Individual Master File of taxpayers' returns filed in the

two regions not previously under the system. Mathematical verification was accordingly extended to the

returns filed in these regions on the same basis as

in all other regions. Verification includes not only

the validation and corTection of taxpayers' arithmetic, but also the verification of the estimated tax

credits claimed by individuals on their returns.

In 1967, for the first time, the estimated tax

credits claimed by individuals filing Form 1040

were computer verified on a 100-percent basis. This

was possible since the estimated tax credits for these

taxpayers in the last regions and districts to be

incorporated were preestablished on the master file

prior to the implementation of individual returns

processing in January.

The above verifications resulted in an estimated

net yield from ADP processing of $71.8 million and

an additional estimated $6.9 million in penalty assessments for taxpayers who failed to make sufficient

estimated tax payments.

System Helps Identify Nonfilers

A nationwide check of individual taxpayers who

have failed to file returns will be possible in 1968

when all regions will have processed returns for 2

years. At the present time this check is made in

regions which do meet this requirement. The cases

of nonfiling identified for tax year 1965 in the Southeast and Mid-Atlantic Regions are currently being

processed. This check has been integrated into the

current information documents matching program

for tax year 1965, which identifies nonfilers as well

as those who do not report all income.

Under the system used previously, certain taxpayers could receive more than one notice for the

same filing disciepancy. Another advantage of the

new system is its ability to eliminate many cases of

apparent nonfiling through discriminate analysis of

all data available from information documents and

the master files.

Unpaid Liabilities Deducted From Refunds Due

Before the Service authorizes a refund for an

overpayment of tax, the taxpayer's master file account is searched for an), unpaid liabilities. If any

are found, the overpayment is appropriately applied

and any remainder then refunded. This is the year

in which it first became possible to make this offset

on the accounts of taxpayers in all regions.

Also effective in January 1967, the offset procedure was expanded nationwide to cover nonmaster-file accounts in delinquent status. From

January through June, 27,674 overpayments totaling $2.8 million were applied to these accounts,

many of which had been considered uncollectible.

Refund Duplications Caught Before Issuance of

Check

The ADP system permits the identification. of

taxpayers who file more than one return requesting

refunds. Many of these duplicate returns are filed

because taxpayers mistakenly file a return for each

withholding statement received. Others file another

return when they want to inform the Service of a

change in name or address. Before ADP, each of

these returns might have resulted in a refund at

the time the return was processed, with the duplication being discovered only upon later processing. The

present system of identifying duplicate returns prior

to issuance of a refund saves not only the cost of

issuing a refund, but also costly recovery action.

During this fiscal year, $4.8 million in duplicate

refund requests were detected before refund action

was taken.

Information Document Matching Extended

For many years the Service has been testing

methods for obtaining the greatest use from inforAUTOMATIC DATA PROCESSING

mation documents reflecting wage, interest, and certain other payments. The power of ADP to store

and recover data has helped tremendously in making

use of the large volume of information documents

received each year.

The test conducted in the Southeast Region in tax

year 1963 was reported in last year's annual report.

Final results for tax year 1964, covering both the

Southeast and Mid-Atlantic Regions, show that over

17,000 amended or delinquent returns were secured

as a result of computer matching of information

documents with returns filed. Net tax, penalty, and

interest due totaled $1,074,700.

Selections for Audit Facilitated by ADP

Under the ADP system, all returns are screened

against audit selection criteria programed into the

computers at the service centers and the National

Computer Center. The criteria represent the conditions under which experience has shown that taxpayers are most likely to make mistakes. This computer process has a double function. It assures that

returns with the greatest deviation from programed

criteria will be selected for examination. Also, it provide-s relief to the taxpayer whose return was audited

in a prior year on a questionable issue and was found

acceptable, by bypassing him if only the same issue

arises again. The refined screening provided by the

system greatly reduces the time required by audit

technical personnel to manually select returns for

examination.

Redeployment Program Nears

Completion

The implementation ol~ the ADP program continues to be accomplished without adversely affecting

the several thousand emp levees , whose work is being

shifted from the district offices to the service centers.

Approximately 9,000 people have been redeployed

thus far. We are working to carry the program to

conclusion with the same high measure of success

achieved to date.

20 21
chapter

"Forooluntaryself-assessment to be both

meaningful and productive ofrevenues, citizens

must hot only have confidence in the fairness of

the tax laws, but also in the uniform and vigorous

enforcement of these laws."

President JoHN F. KENNEDY

Enforcement

Activities

22

Introduction

The prime objective of the Service's enforcement

activities is to insure that each taxpayer's tax liability is correctly established and that all taxes due are

paid. The confidence of the American citizen in the

Federal tax structure and his acceptance of our selfassessment system is largely dependent on the Service's ability to achieve this objective. In recognition

of this important relationship the Service's enforcement programs strive to promote maximum voluntary compliance through fair and impartial administration of the tax laws and regulations. Narrated

below are the results from enforcement in 1967,

ranging from verification of simple arithmetic to

investigations of complex schemes to evade payment

of taxes. Related activities, such as research on compliance patterns and legal work in court cases are

covered elsewhere in this report.

Mathematical Verification Yield

Continues High

About 65.4 million income tax returns of individuals filed on Forms 1040 and 1040A were mathematically verified during the year, an increase of

4.6 million or 7.6 percent over the preceding year.

The increase in 1967 resulted primarily from a 3.6-

percent increase in the number of returns filed and

the accelerated processing of returns intrinsic to the

data processing system.

The mathematical correction of returns helpsto

insure that each taxpayer will pay the proper amount

of tax, neither overpaying nor underpaying his tax

liability. This year about six percent of the taxpayers

erred in the preparation of their returns. Some of

the most common mistakes which lead to erroneous

tax computation are failure to (I) use the proper

tax table or proper column from the tax table; (2)

enter amounts on the proper lines of the return; and

(3) verify the computations on associated schedules

and the transfer of these amounts to the basic return.

The correction of taxpayers' mathematical errors

resulted in a net yield of $113.3 million (the difference between $207.6 million in increased taxes and

$94.3 million in decreased taxes). The results of

this year's mathematical verification program arc

shown in the table below:

Individual income to. turn, incithamnatically verified

ENFORCEMENT ACTIVITIES

Item

T.t I For. 1040 firm 1040A

1966 1967 1966 1967 1966 1967

.......thousands-- 60 72

1

65.361 44.211 20

'1 ' "H"

17,156

------------do.

..

Returns ith increase:

3:

46 1 3.895 2,405 " , o55 9D4

Number -------------------------- .......................................do--.. 2,050 2 389

1 456 1 852 594

537 4,amont ---------------------------------------------------- .--thousand dollar,-.

h

186,244 207:605 141:692 167:865 44, 552

'

39 740 Atiot'n,

vit d,c a.:

Numb .................. ---------------------------------------- thousands 1 411

'6

949 1.139 462 367 A

mount ---------------------- ................................th.iiiind delta,,

Net yield:

81:954 94 28 1 60.387 76,161 21,567 18.120

T tal ------------------------------------------------------------------ -d

A t if

114 211 113,324 81,305 91 704 22 8

- 9 ,

21, 6 0

ied -----------------

...... . ~~l

verage per re urn ver ----------------- all.,

,

.72 1.73 1 1.84 1 i .90 1 .39

1

.26

Audit Program Keeps Pace With

Expanding Economy

Initial Screening of Returns for Audit Becomes

Fully Automated

The essential first step in the audit program is the

identification of those returns most in need of

examination. 1967 marked the first year that all

regions used the computer system to classify returns

with audit potential. The addition of the Midwest

and North-Atlantic Regions completed the final step

in the initial phase of utilizing ADP to classify

returns.

Through computer screening of most income tax

returns filed, it has been possible to reduce the number of returns manually handled by more than 50

percent since 1964, despite an increase in returns

filed of 7.3 million. Of the 81.8 million income,

estate., and gift tax returns filed during 1967, 12

million were manually classified compared with 25

million in 1964. Technical manpower freed as a

result of the screening process was redirected to

examination work.

Advanced statistical and operations research techniques are being employed in developing a. new

classification technique called "discriminant func.

tion." This technique, by weighing significant return characteristics, permits the ranking of selected

returns by magnitude of potential tax error. This

method will further reduce manpower required for

classification and, by more effectively identifying

returns with greatest error potential, help to ensure

the most efficient employment of the audit manpower of the Service. Meanwhile, current selection

criteria are continually evaluated and updated to

gain the benefit of the most recent Service experience.

The number of tax returns examined by type of

return follows:

Number of tax return, ..caralmad

Intion., 1. thrituard,1

Type .1 return rate F1 Id Office

1966 11967 1966 1967 1966 1967

In-Grand let.]......... ....... 3 -1 21, flat 767 731 ~,I. ~,2377

tax, total._.. ............ 3,273 2,942 59D 590 2,683 2,352

Cor Zatiop__ ............ 168 162 166

160

2 2

IndFActuat and fiduchry.._.. 3,092 2

'

768 411

417

2

,

681 2 351 Exempt organization .......... 13 12 13

12

6 (i)

Estate and gift tax ........ 38 1 40 35

35

Excise and employment ta-.::. 169 ~ 127 112

106

26 20

I to. than 500.

Audit Job Becomes More Complex

Responsive to the changing demands on tax administration in a burgeoning economy, the audit

program expanded activity in the larger, more complex return area while maintaining quality audit

standards throughout. There was a 10.7-percent decline in returns examined, from 3.5 million in 1966

to 3.1 million in 1967. Continued high quality audits

plus shifts in audit concentration to larger cases resulted in additional tax recommended of $3.3 billion-the highest ever. This was the second consecutive year additional tax recommended from audits

exceeded $3 billion, bringing the total for the last 5

years to over $14 billion.

Through upgrading of skills in office audit, employers assigned in this area were able to keep pace

with an increase in relatively small business and

nonbusincss returns. In 1967, the Service increased

the number of office audit returns examined by interview methods, rather than by correspondence.

Use of the interview technique makes possible a

better examination, permitting office auditors to personally counsel taxpayers in the interest of avoiding

repetition of er-rors. As expected, this approach

brought about a decrease in the total number of

office audit examinations.
ANNUAL REPORT 9 CHAPTER FOUR

3,480

3,108 3.092

-24.9

Greater accumulation of personal wealth and

greater audit coverage contributed to the increase in

tax recommended from examinations of estate and

gift tax returns-$565 million in the current year,

marked increase over last year's $416 million.

Altogether, additional tax was recommended in

1.6 million of the returns examined and 96.2 percent

of the adjusted returns were agreed to by taxpayers.

The primary responsibility of the audit program is

to determine correct tax liability. While the bulk of

examinations result in the assessment of additional

tax, equivalent effort is expended in casts where it

appears that the taxpayer has assessed himself with

a greater tax burden than the law requires. In 1967,

Service examinations disclosed overassessments of

24

NUMBER OF7AX RETURNS EXAMINED AND ADDITIONAL TAX AND PENALTIES RECOMMENDED

EXAMINATIONS DECLINED-AMOUNT RECOMMENDED HIGHEST EVER

'a' 174

r-'sesseek 38 40

c-leaeS

169 127

Corporation Estate Ei.

and and fit and

.-of employment

.'annicativii

3,314

Total Indi.1dal Corporation

and ad

fldu.l.ry

=an

565

104 92

r~11111111111111

radius

and

employment

$190.6 million. This is exclusive of claims for refund

initiated by taxpayers. Overassessment recommendations made in the last 2 years are shown in the

following table:

Overassessiments of tax exclusive of claims for seefund

Type at tax

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

Individual and fiduciary income. ------------_---

Corporation Irwin -

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

Estate ..........................................

Eas .................................. -------------------------------------

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

Amount recommended

(thousand dollars)

1966

154,548

48.779

89,093 11.

478

932

4,049

317

1967

19D,648

53 273

1211:3U

972

1:

151

2,487

07

Large Case Audit Techniques Contribute to

Improvements

In the years since World War 11, the corporate

economy has undergone dramatic changes. Large

corporations have grown tremendously in size, number, and complexity of organizational structure. In

the face of such developments it became obvious

that the Service's traditional practice of "one man,

one case" was outmoded and insufficient to carry

out a realistic audit of the tax affairs of these corporate giants. Many of these audits involved more

than a single IRS district and sometimes crossed

regional boundaries'

The large case audit program introduced the concept of a careftifly planned, highly coordinated

audit using a Learn approach with each agent given

specific assignments according to a formal overall

examination plan. In general, the program is designed to cover very large corporations including

ENFORCEMENT ACTIVITIES

greatly reduced the number of requests to extend

the statute of limitations but also enabled taxpayers

to know the status of their Federal tax accounts at

an earlier date. Since a more current audit workload permits assessment of additional tax or refund

of any overasscssment at an earlier date, both tle

taxpayer and the Service are benefited by lower interest accumulations.

In the large corporate tax area, the team audit

techniques discussed above have significantly reduced the backlog of old returns by reducing the

time span of examinations.

Exempt Organizations Master File Assists Program

Planning

Tangible benefits are beginning to be realized

from the exempt organizations master file which

ultimately will provide information by type, size,

and other significant characteristics of all exempt

organizations. Th's file, On tape at the IRS Data related entites, and other corporations or taxpayers Center, will assist in planning a more effective en- that are appropriate for coordinated exami.

nallon forcement program. because of highly complex operations and a hislory The Service continued to give considerable atten- of complex tax issues. Since its inception in July of tion to exempt organizations during 1967. A primary 1966 the program has proved successful in achieving Objective in this area has been to assure that orga- better overall quality of large case audits, a high

.

er nizations receiving the benefit of tax exempt status degree of uniformity of issues raised, as well as their

co finc their activities to those allowable and other- resolution, and shortening the time span of examina- wise comply with the provisions of law under which tions. exemption was granted. Revocation of tax exempt As a subsidiary feature of the program the Service conducts periodic conferences of . . status of 260 organizations was recommended by

oexamining examining officers in 1967. agents and coordinators to consider pr blems and

other matters peculiar to specific industries. These Increase in Claims Examined

conferences serve a dual purpose of improving co- District audit divisions completed action on

ordination and communication within the Service 443 059 claims for refunds, an increase of 4,049 over

as well as with industry and promoting uniformity in last'vear. Individual (including fiduciary) claims

treatment of issues common to a specific industry. accounted for 85.4 percent of the total acted upon

Concentrated Effort Successful in Reducing and corporation claims 7.q percent. The balance of

Inventory Backlog claims are primarily in the excise and employment

tax areas. Agreement Was reached in 437,598 claims

Vigorous efforts to place the field audit examina- involving $562.9 million of which $268.6 million

tion program on a more current basis proved suc. was allowed. The remaining 5,461 clairms in the

cessful this year with the inventory of individual and amount of $178.8 million were unagrec4. In uncorporation older year returns registering a 22-per- agreed cases, district conference and appellate procent reduction during the past 2 years. This not only cedures are available.

27C-586 0-67-3 25
ANNUAL REPORT as CHAPTER FOUR

Claims far .f..d disposed of by district audit division., fiscal your, 1966 and 1967

Closed by audit divisions L

Class of tax

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

Individual income ------------------------------------------

C.

wWwn inor------------------------------------------

Elhat......................... - ---------

Gift .......... ------------------

Ou. ..........................

Employment...............................................

Class of far

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

I ndivictial insce, ........... ...............................

Corporation inceme -----------------------------------------

Wall.....................................................

Gift ............................

Enot. -------------------- ------

1966

Number

433,507

358,360

32,291

1,111 283

27.236

13,392

1965

Number

5,503

2,563

1, 578

13'

53

7

all 391

1967

437,598

375,679

33, 571

1, 111 353

15.997

10,136

1967

5,461

2.876

1.352

7

32'

34,

184

Claimed by taxpayer

1966

512,631

146,209

254,709

21:6137 2,

80.324

3,717

1967

562,941

151,515

244,130

242 161 5

135, 02

4,641

Wallowed

1966 1967

Amount (thousand dollars)

1966

Allowed

1967

214,368

IG4,497

76,042

7,611

23,652 - 1

2,235

268.616

13:696

i04 gag

S, 979

38"', 498

1,504

Proboted-translarred to appellate divisions

Claimed by tr.p.y,,

1966 1967

95,896

12.308

70.101

1.13

'

al

8

3.937 50

2

178,942

19,440

122,109

"20:'5'96'

3,754 2

62

Amount (thousand dollars)

1966

298,265

141 713

78:667

17,386

2 34

56:6733

1,483

294,326

37 829

139: 141

15,186

63

9, 395

3,138

Recommended by audit divisions

Allowed

4,781

$02

3,%6

3303

1112

1967

12,970

Disallowed

1966

91,114

,1,1: 1

535

8'

300

415

3.119 4

89

1967

155,87Z

J 1: 21

045

4174

2"

3

18,238

111.064

'

2:274

20

582

3,411 259

Includes claims .0med in full without formal examination of the return: 1966-273.8 thousand returns and $94.8 million; 1967-298.3 thousand returns and $109.5 milli3n.

Training Programs Meet Changing

Needs

To meet the challenge of increasingly complex

taxpayer automated accounting the Service

developed a new training coursesystems' for revenue agents

in the latest techniques for auditing these modern

systems.

The marked increase in the number of estate and

gift tax returns filed highlighted the need for additional training in methods of asset valuation. A new

course is now given examining agents to better equip

them in determining values of various types of real

and personal property.

Appeals System Provided for

Taxpayers

Taxpayer Has Opportunity for Independent

Administrative Review

In the examination of over 3 million tax returns

each year it is inevitable that some taxpayers will

disagree with proposed adjustments to their tax

liability. It is essential that the Service provide taxpayers the opportunity to resolve these controversies,

without litigation if at all possible, on a basis which

is fair and impartial to both the taxpayer and the

Government. The appeals system set up for this purpose gives the taxpayer a prompt, convenient, and

independent review of his case and, in an overwhelming majority of cases, results in a mutually

agreeable resolution of the controversy. While there

were approximately 3.1 million returns examined in

1967, only 76,000 disputed cases were received by

the appeals function of the Service, and only 1,340

cases were tried in the courts-799 in the Tax Court

of the United States, and 541 in the district courts

and the U.S. court of claims.

Taxpayers Given Early Hearings

The appeals procedure of the Service is designed

to achieve the disposition of tax disputes at the carlicst opportunity with minimum inconvenience and

expense to the taxpayer. Accordingly, the appeals

function is decentralized and operates through 58

district conference staffs at the district level and 40

appellate division offices at the regional level. Conferentes for the purpose of resolving tax disputes are

available in all of these offices. The Service also provides other conference opportunities by periodically

sending conferees to locations where full-time conference staffs are not maintained.

The principal difference between the two appeal

levels is that the appellate division has complete authority to settle tax controversies and may, therefore,

consider the trial hazards in the case (that is the

respective chances of the parties to prevail in the

event of trial), whereas the district conference staffs

resolve cases solely on the basis of the facts.

During the year, 41,154 cases were closed at the

district conference level. This represents an increase

of 2,131 cases or 5 percent over 1966 with essentially the same number of district conferees. Taxpayers agreed to the conferee's recommendation in,

65 percent of these cases-the same rate as last year.

A higher percentage of taxpayers who disagree

with the examining agenCs findings are electing to

use the district conference, and indications are that

this pattern will continue. The downward trend in

taxpayers bypassing the district conference and

going directly to the appellate division of the regional

office reflects success in concentrated efforts to encourage taxpayers to use the simple and inexpensive

district conference appeal procedure.

To Imen the burden on small taxpayers, conference procedures were modified during the year so

that no written protest is required if the amount

of tax at issue is less than $2,500. The previous limitation was $ 1,000. Other measures are being considcred to permit quicker, less expensive disposition of

contested cases.

District conference activity is set forth in the following table:

District conference .... -riclemid

Field

audit

Office

audit

C pa".q.m' ad 11!! .1:......

Conferences N completed -------..........

A,""' read a,".r`p".

Co.,, Pending June 30--- --------------

10 018

4:806

756

1:552

59

9,532

Total

3 464

14:962

15 39

10:9998

207'

13 482

39:768

4261:154

551

J2,11'W

Appellate Division Disposals Rise

Total case receipts in the Appellate Division in

1967 were very close to case receipts for 1966,

36,664 compared to 36,720, but total case disposals

ENFORCEMENT ACTIVITIES

were 9 percent higher in 1967. Appellate conferee

manpower increased only 1.4 percent, reflecting a

significant increase in chective use of manpower.

The total number of cases on hand at June 30, 1967,

was 3 percent less than the year before, and the inventory continued in a current condition.

The following table shows the Appellate Division

processing of all types of cases considered:

Appellate division processing of all

Status

Pending July 1. ...............................

RessualmC .......... ...............................

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

Pending, June 30.......... ---------------------- _

Number of caaa

1966

32,139

35,770

34.7Z3

34,136

1967

134,188

3:7 '755

33,097

I Income. i, d, estate, gift, excise, and employment tax so, and offers i co.

n led . .,I t,on, ocke us reporting system a, automated on July 1, 196'S', and Pphy,:'e.1

total .1. Inventory ishotilbud 1. im, a of 52 .a.,.

Nondocketed Case Disposals Continue to Climb

Nondocketed cases are those in which taxpaycrs

have filed protests

.

Against the findings of the examin-

.

ing officer, but have not yet filed petitions with the

Tax Court. More than 80 percent of the cases handled by the Appellate Division fall into this category.

In 1967, the Appellate Division disposed of a greater

number of nondocketed cases than ever before, continuing a trend of increased dispositions over each of

the last 5 years. The percentage of cases closed by

agreement (83 percent in 1967) has also risen

steadily over this 5-year span. Approximately 95 percent of the nondocketed cases considered involve income, estate, and gift taxes. Activities during 1966

and 1967 in the processing of these cases are shown

below. (For additional information, see table 15,

p. 129.)

Appellate division processing of prolestiod income, estate, and

gift tax cons not .1 before the Tax Court

Status

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

Received ............. _ ................

d

"b"ose ol' total ............................ .......

By

off,.... of..............................

1.1migneed evareoussurrout and claim

By=~West ILI~bl

I

'ffflissl~rxsllsa~---

By o the T.

_N ',arm .N., to ocluthel

PendIng J '3'0. .................................... -------- *-------------- * ---------

Number of us.

" INS

271:3. 2

944

26,372

22 233

'552

1,125

2,462

22.966

1967

1 22,9JG

28,207

28.430

24 121

'586

989

2,734

22,693

in I Nandfacludend reP,,frtJr2 I system was automated July 1, 1966, and physical count .1

.me, met., an 9 t us ur. .,.tied In an muers, of 50 ..as.

26 27
ANNUAL REPORT as CHAPTER FOUR

APPEALS--(INCOME, ESTATE, AND GIFT TAX CASES) METHOD OF DISPOSAL

I NOT BEFORE TAX COURT'

24,121

22,233

552 586

i

-M - __M

989

Agreed as Unnamed Defaulted an

:rauxessm3ent

ed d.i 1=

rejection

1 UMBER'OF

XASES

0

CHANGE FROM 1966

313 297

Dismissed

or

defaulted

+17,9

+8.5

+6.2

-12.1

- Fonnorly ShMs a pre-90-day and 90-day cases.

Docketed Cases Processed

Docketed cases are those in which the taxpayer

has filed a petition with the Tax Court asking for a

redetermination of his tax liability. Settlement negotiations between the taxpayer and the Service may be

conducted even after the case has been docketed for

trial. Almost 90 percent of such cases were disposed

of without trial in 1967. The following table shows

the Appellate Division processing of cases which

were petitioned to the Tax Court. (For additional

information, see table 16, p. 130) :

28

Appellate division processing of income, estate, and gill tax

cases petitioned to the Tax Court

TOTAL

1967-32,916

1966-430,144

CHANGE +9.2

I

PETITIONED TO TAX COURT

5,195

6,124

Agreed

Status

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

Resmiyed, total. -------------------------------------

Petitions filed in napph" t- ,

District directors statutory rutim, .

Appellate di0slons statutory r0tJxDisposed of, total------------------------------------

By stipulated gnsermmt T~ ....... -------- 'Yer djtau~lj

By dismissal by the as Court .1 talp,

Tried before the Tax Court on the merits ---------

Pending June 30 ------------------------------------

726 799

Tried on

..

it,

N-bact.s.

1966

6: 3. "14

4 489

2:385

6,234

313

726

ID,024

1967

10,024

6.488

3 931

2:557

7,220

6,124

297

799

9,292

Mifterence from number shmn as petitioned in precmbyng table is mused by instances in which 2 or more nordocketed uses are 0

"red

I petitims.

Other Appellate Division Information

An automatic data processing system for records

and reports keeping on nondocketed cases has been

in use in the appellate division for the past year. A

similar system on docketed cases has been developed

and the first case tables on a test basis are expected

in October 1967. It is hoped that the system will

become completely operational by June 30, 1968.

Prior to 1967, final closing agreements were reviewed for acceptance in the National Office of the

Appellate Division. During 1967, the authority to

review and accept such agreements on district director and regional appellate division cases (all but

about I percent of the total) was decentralized to

the appellate division branch offices. This will result

in more expeditious handling of taxpayers' cases

which requireafinal closing agreement.

Streamlined Procedures for

Processing Joint Committee Cases

Prove Effective

Refunds or credits over $100,000 in income,

estate, or gift tax require a report to the Joint Committee on Internal Revenue Taxation before final

action is taken.

By eliminating certain special documentation and

some intermediate levels of review, the average processing time for Joint Committee cases has been reduced from 12 months to 5Y2 months. The result is

better public service, in the form of earlier refunds

to taxpayers, as well as savings in interest and operating expenses to the Government. Although annual operating expense savings are estimated at

$800,000, the high degree of quality continues.

A total of 757 cases involving overassessments of

$499.8 million was reported to the Joint Committee

in 1967,

Changes Occurring in Delinquent

Returns Program

The Service secured 766,000 delinquent returns

representing $262.7 million in unreported tax, interest, and penalties during the year. The vast majority,

some 721,000 returns valued at $206 million, were

secured through the established delinquent returns

program. The remainder were secured as a byprod.

uct of audit examination. Although fewer returns

ENFORCEMENT ACTIVITIES

were secured than last year, there was an increase

of $16.0 million in the amount assessed.

More Programs Adapted to ADP

The entity concept initiated last year was in full

operation all during 1967. Under this concept, only

one delinquency notice was issued to a taxpayer regardlm of the various kinds of delinquent returns for

which the taxpayer was liable. This red uced the

number of delinquency notices issued by 18 percent,

without any sacrifice to enforcement effectiveness,

since all returns due at the time of the investigation

aresecured.

Broad plans, based on.tests currently underway,

have promise of narrowing the noncompliance gap

through improved methods of identifying taxpayers

who under report income or who fail to file required

returns. This program, known as WAID (Wage and

Information Document Matching Program), involves information from returns filed which are

input to the ADP system and, by so doing, provide

numerous areas which can be matched internally

within the data system to uncover potential tax

vio atom.

Taxpayer Delinquent Accounts

Program Continues to Reflect

Changing Pattern Conditioned by

Phased Transition to ADP

As expected and forecast, only 2.8 million delinquent accounts were established in 1967, a decline

of 6 percent below last year. Despite the drop, the

amount of the delinquent tax involved, $2,132 million, was $117 million more, due in some part to

several unusually lar,ge accounts. The decrease in

the number of delinquent accounts was caused by

two factors: (1) The imbalance of withholding

which had generated additional accounts last year,

and (2) procedural changes made possible by tran.

sition to ADP which permitted monitoring of delinquents either by the ADP system or by the direct

use of enforcement personnel, depending upon need,

emphasis, and nature of delinquency. As a result,

certain delinquent accounts which, under former

processing procedures, would have been established

during 1967, were instead monitored and controlled

by the ADP system. In this way, enforcement per.

29
ANNUAL REPORT - CHAPTER FOUR

sonnel were able to cover a wider range of delinquency areas than would otherwise have been

possible.

Over 2.8 million delinquent accounts were closed

in 1967; virtually the same as the number closed

in 1966 despite fewer accounts issued. More significant, the $2,066 million of delinquent accounts

closed in 1967 was $112 million greater than

closures in 1966.

TAXPAYER DELINQUENT ACCOUNTS

VALUE OF ACCOUNTS CONTINUED TO INCREASE

Im

Established

+5.8

2,132

Closed

CHANGE FROM 1966

0

+53

inventory June 30

+9.3

Reduction in Inventory Achieved

The high number of closures reduced the ending

inventory to 748,000 accounts, 16,000 below last

year's 764,000 accounts. The value of the inventory totaled $1,325 million, $112 million higher

than' last year. Here again, however, because incorporation of individual income tax returns to ADP

processing for the last two regions has had a direct

impact on the inventory position, the statistics do

not fully reflect the inroads made both in terms of

number and of value. An estimated 44,000 delinquent accounts were established at the last

minute and are a part of the inventory, since not

enough time was available in which to close them.

In addition, a previously delayed cycle of delinquent

accounts was established in June, which further

served to increase the. yearend inventory. Thus,

inventory reduction was more significant than is

readily apparent from a statistical comparison.

Utilizationof ACIP Has Enforcement Payoff

Now that nationwide transition to ADP has been

accomplished, future enforcement efforts in the delinquent accounts program will be enhanced by

management's ability to utilize the system as a strong

additional deterrent to delinquency. programs initiated along these lines last year are already having meaningful payoffs. For example, this year for

the first time on a nationwide basis, names of individuals owing income taxes or business taxes for

periods prior to ADP were fed into the system.

Where a refund was due these taxpayers, the prior

liability was deducted before the balance, if any, was

sent to the taxpayer. At last count, this program had

automatically collected almost $12 million on prior

liabilities. Equally important, the program freed

enforcement personnel to be used on other delinquency areas requiring personal contact.

The above application of refund against prior

liability is only one area in which data processing

can serve. Actually, because the system has the capability to record and monitor delinquency, it preBents management with a full range of possible

procedural innovations that can be undertaken. In

time, these can yield a combination which enables

management to select and to tailor different kinds

of enforcement efforts to confront different types of

delinquency elements. This entire area is under

intensive study.

As indicated last year, one of the real benefits

to be derived from data processing involves the

quantitative data required to manage and control

.

the entire delinquent accounts and returns area.

During the year, systems and programs for retrieval of the data were -devised and since November

1966 machine reports have been output for those

accounts in the system. The program is still in a

testing stage. Within the short-term future, it will

be possible to develop a complete reporting system

capable of replacing the costly and more limited

manual reporting system now in existence.

The delinquent accounts activity is shown in the

following table:

Status

Taxpayer delinquent accounts

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

By typellot On sell r:

......... Addl ......-

OthIftelapnels'......... ---

Pending June 30, totaL. --------------

Number (thousands)

1966

~3119

2~850

2,292 ------

462

764

1967

2 818

2: 834

2,368

---ib748

Amount (thousand delta.)

1966

t 2 015 369

- 55Y,417

1,067,611 46,919 643,701

1,212,451

1967

2 1032 6~,0511

2~ 658

1. 5D3,999 45,955 515,704

1,324,807

ENFORCEMENT ACTIVITIES

and the assessment finally disposed when careful investigation has determined that one of two conditions

prevail ; (1) either the taxpayer is unable to pay the

full amount of his tax liability, or (2) substantial

doubt exists as to the amount of the liability. Up

until last year, both these conditions were handled

by Service audit personnel. Study revealed, however,

that more effective public service could be provided

if those offers in compromise involving inability

to pay were administered by the collection staff,

which handles all other tax matters related to irl

ability to pay. In this way, the public would benefit

from dealing with the particular Service specialist

who is most experienced in each of the compromise

areas. Thus, on January 1, the collection staff began

to administer those offers in compromise which

pertain to the taxpayer's inabilitN to pay while the

audit staff continued to handle those offers on which

substantial doubt exists as to the amount of taxpayer

liability.

Some Decline in Offers in Compromise Disposals

The overall number of offers in compromise cases

processed during the year declined by 16 percent

from last year. Total liabilities amounted to $88.5

million, a drop of 13 percent below last year. Coincidentally, offers accepted liabilities also dropped 13

percent.

A comparative summary of compromise cases

closed in the last 2 years follows:

11.1bincludes recelpts and/or closures from the reselerated collection of underpaid 111this and dishonored chacks. in 1966 under this frogram, number reaceived was l=damounfing t . to $273,715 thousand: 96,000 to 11facted amounting to $195,186 This program not applicable in 1967 Includer disposals due to uncollectibility, ar~d erroneous and duplicate assessments.

Change in Handling of Offers in

Compromise Permits More

Effective Public Service

The Internal Revenue Code provides a means

whereby a taxpayer's liability may be compromised

Type of tax-or Penalty

Off.. 1. essinjamumlia, disposal.

1966

Often accepted, total----------------------------------------------------------------

,it 11 taxes,; Employ righoliflis, l"`m`4VtT4 iei ------------------------------ ::::: -::::: Alculsol taxes__ ................... Other anise taxes,.... ...................... ...... ....... ---------- Delinquency penalties an all taxes_ .............. ---------------- Specific penalties .............. _ ............................

Often rejected or withdrawn, total ............ ---------------------------------------

: : --- : ------------------------------------------ a;1"w~jtVh".fdi`Z,'iixji

t ..x ........................ Other anise taxes Oil SWIlimency P,,,rn,..,,,'It as on elf ----------------------------------- taxes.._. ....................................... * ------------------... tie

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

Rovind.

Number

10,707

,, ,92RG7

67 673

1:

920

6

3,798

1,572 1 20

, 69 234 75835

1967

9,260

776 650 72

61: 130 291 341

2.989

1,252 86854

172 62221

Amount (the ....d dollits)

46

Liabilities

'26.585

745 6" 393473

995 1

15

74.725

'56 997 11:124 226

5,647371

1067

23,185

115:1533

294 2.170 1,105

65,32

48 320 8:297801 7,063 789 .......

1956

off..

6.865

31:993 S41 129 438 232 126

13,259

9 799 2:68930 574 1642

1967

6,493

3,858

1,782so 505

27145

9, 59D

7, ODD 2,0635 13J411

18

31 30
ANNUAL REPORT as CHAPTER FOUR

Tax Fraud Detection and

Investigation Procedures

Modernized

The intelligence mission of the Service is to encourage and achieve the highest possible degree of

voluntary compliance with the internal revenue laws

through investigation and prosecution of those who

would attempt to commit tax fraud. Two basic programs are conducted to satisfy this mission, the general program directed at all suspected criminal violations of our tax laws except violations by racketeers, and the program devoted specifically to known

racketeers.

In the general program, attention was given at all

levels of the Service to the investigation of cases of

major significance. A special task force functioned

during this period studying ways and means of making the Service's fraud detection program more

effective.

Special emphasis was also placed on exchanging

information between districts to keep pace with the

mobility of our populace and today's rapid means of'

transportation, which enables individuals to carry on

financial transactions in arms distant from the district in which thev file their tax returns.

Coordination with automatic data processing

was stepped-up with a view toward more fully uld

izing information available at regional service centers with respect to omissions of income from re_

turns and failure-to-file situations.

In the racketeer program, procedures and organizational structures were revised to bring the Organized Crime Drive under the line supervision of

field officials. In addition, greater selectivity in the

identification of Organized Crime Drive subjects

was provided by improved coordination with the

Department of justice.

Tax investigations made during the year involving racketeers resulted in numerous members of the

32

hierarchy in organized crime in the United States

being arrested, and/or convicted.

A summary or investigations by special agents

follows:

Tax fraud investigations

Type 1%6 1967

Full-scele investigations, total ---- --------------------

Prosecution recommended, total --------- --------

Fraud -----------------------------------------

Miscellamm-------------------------------------

Prosecution not recommended, total -----------------

Preliminary investigations, total. ----- --------------------

F it and mi-II-mis ............ ------------

Wagering and coto-opersted gaming devices............

3,772

2,418

1~!"7"

45

33

1,354

ID, 436

8,988

1,448

3,193

2,015

I

"1 a

50

1,178

10,663

1

:309

354

Broad Program Coverage Obtained in Prosecutions

In accordance with Service policy of obtaining

broad program coverage of all types of violations,

taxpayers were successfully prosecuted during the

year for income tax evasion, wagering tax violations

and failure to file tax returns, as well as for engaging

the following types of fraudulent schemes: false

withholding (W-4), false claims for refund, false

estimated tax credits, failure t

"

o remit trust funds

collected, false statements and perjury.

A total of 865 income and miscellaneous criminal

cases, with prosecution recommendations involving

859 prospective defendants, were for-warded to the

Department of justice. Compared with the prior

year this was a decrease of 14 percent in the volume

of referrals. In 1967, indictments of such cases were

down 11.7 percent and the total disposal of cases

in those categories in the district courts decreased

4.4 percent.

In income, excise, and wagering tax criminal

cases 928 defendants pleaded guilty or nolo contendere, 145 were convicted after trial, 50 were

acquitted, and 233 were dismissed.

A comparison of indictments and court actions

for the last 2 years follows:

Result, of criminal action I. to. fraud ...a

Action

Total

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

Manuals, felt ------------------------------------------

Plea, guilty or note contandere..,. --------- -........

Convicted after trial----------------------------------

Ac?uittedid----j, . -.' - - ~. ~ ------- ----------- -------

No -pro. ., arm- I ........................ ....

Income and miscellaneous cases 2

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

Dalvisaile, total ------------------ ..........

rut. ce timdwa --------------- --------

Copy is, trial.."

Acquitted— ----- .......... * -------- --------------

Not-timseed or dismisiii;--- -------------------------- * -------------- * -------

Wagering tax uses

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

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

Copirp Pl... heDly.toteint,hil- oIo co n tanit a a ----------- ....

NAcquitted of- ----------- ressed or dismissed --------- ------------- .....

No bar of

defendants

1966

1,660

1,616

1,147

177

66

1967

1,342

1 1 11g 1.

15450

226 233

767

728

531

~N

as

893

888

616

'2"7

138

677

696

520

32~

83

61,60,

408

93

19

150

I Includes uses dismissed for the following reasons: 19 because of death of principal defendant, I because of serious illnen, and 24 because principal defendant had pleaded ,111,re*1, hed been convicted in a re ated case. it income, entate, gift, and excise taxes other than wagering, alcohol, topince, and firearms tax..

Organized Crime Drive Prosecutions Have

Beneficial Results

The Government's Organized Crim Drive was

initiated early in 1961 and many of the major c racketeers were then classified as subjects for investigation.

The intelligence activity of the Internal Revenue

Service has played a major role in this drive by

conducting income tax and wagering tax investigations of a number of major racketeers. Successful

prosecutions have been obtained in many cases.

To determine thc effect of these prosecutions and

the attendant publicity, -,I survey concerning the

average gross income r'cported by major racketeers

in one of the Service's larger regions was made in

1967 covering the 6-year-period from 1958 through

1963. The survey disclosed that after the inception

of the Organized Crime Drive in 1961 these same

racketeers reported an average gross income of 57

percent more than they reported during the 3-year

period prior to 1961. The deterrent effect created

by successful prosecutions and widespread news coverage is apparent from the substantial increase in

income reported by the racketeer fraternity in that

region.

Criminal Prosecution Cases

Total additional taxes and penalties of $99 million

were involved in cases received in the Chief Counsel's

Office with recommendations of criminal prosecution.

An analy's is of criminal tax cases of all types (other

than wagering-occupational tax cases handled at

the district level) flowing from the Assistant Reional Commissioners (Intelligence) through the 9

Offire of the Chief Counsel to the Department of

justice follows:

Receipt and disposal of criminal cases in Chief Counsel's Office

status

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

Reuived, total... .......................................

With recommendations lot prosecution. ................

With requests for opinion, etc,. .......................

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

Prosecution not warrarted.- ........ -.. ...........

PDepartment of Justice declined ............... ........

D piers soculmn-.... it .............. ......

Praline, , .11--cf.

A

Pending June 301 ..................... .................

1966 1967

2.336

1,490

1,363

127

1,463

180

72

5

"7~1 1.

2,363

2,363

1,212

-1,099

113

111

113

79

33111

08

2,351

--Includes b., , ..a~Iing action in Department of Justice exclusive of wagering tax

as referred y Intel nifence Division,

Additional detail on legal workload involved in

the prosecution of criminal cases by Service attorneys

during the past 2 years isI

provided in the following

table:

ENFORCEMENT ACTIVITIES

Tax and penalty and number of tax years Involved In criminal

f,ad .,. disposal.

[Exclusive of wageni,g and com-operated gaming device usual

Disposition

1966 1967

Tax years Tax and penalty

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

Prosecutions.----------------

All other closings .............

4,141

2,895

1,246

1967

3,628

2,9675

53

I Includes cases declined by Department of Justice.

1966

$108,993,554

41:431:410 5~

562 064

$72,339,471

4,4:1371:108 , 10

263

33
ANNUAL REPORT se CHAPTER FOUR

Summary of Additional Taxes From

Direct Enforcement

The enforcement of internal revenue laws and

regulations has both civil and criminal aspects. The

civil portion is best known, and affects the greatest

number of taxpayers. When there is a mathematical

error on a return; when a tax exemption is questioned; when itemized deductions appear to be out

of line; when a return is due but not received; when

information documents indicate that a taxpayer has

received more income than is reported on his tax

return: then and in many similar cases will civil

enforcement action be started by the Service.

Enforcement action of any sort seldom goes be

yond the civil phase. Routine mathematical errors

are easily corrected; questioned exemptions or

deductions are normally easily resolved; unsettled

areas of law or regulation may go to the courts before

a final resolution can be obtained, but in most cases

the question is one of civil tax liability rather than a

criminal case.

As a result of civil enforcement action, additional

taxes, penalties, and interest totaling $2.7 billion

was assessed in 1967. This represents liability determined after any appeals action or court litigation,

which may delay final closing of a case by a year or

more.

The following table shows the source of additional

tax, penalties, and interest assessed during fiscal year

1967:

Tax, penalties, and interest resulting frear direct enforcement

fin thousands of dollars)

2,862,817 2,729,37

5

1966 1967

Additional tax, penalties, and Interest assessed, total.

From examination of tax ratu-n. total -----------------

IKDMG tax, torsi.. ...........................

Corporation.................................

Ind.,Id.,l and

Preretund fiduciary

add,,

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

Regular audit...........................

Earpl:ginig,i~xx '11, rd to ~--------------

Exx- I hum' 'a

F

-----------

Fmm mathemat,id~e I

verification of Income tax returns

MM National ntity File_ ............. _...

....

From delinquent returns secured. total---------

.....

--------

BYBy district collection divisions.........

district audit ifivi,scrin._ .........

Claims disallowed, total---------------------------_-

By district audit dwisind,_

--- regional appellate divisions ----- --

Delinquent to ... selected. MUL ..... ................

2,427,329

2,096,2D1

1,275,567

93,000

727,533

269,279

51D,081 1,769

186,244

2,548

246,696

202,697

43,999

401,IZ2

2.1

2,

2~1,1

1, 3D9,716

1, 42,119

1,

1

5D,638

,

68, us

23,214

254:1502

13

0

46,242 7:50

20

2

2716

262,665

206,118

56,547

392,199

1~174:31'

073

1,549,954

ADDITIONAL TAX FROM DIRECT ENFORCEMENT

TAXPAYER DELINQUENT ACCOUNTS COLLECTED SHOW LARGEST INCREASE

2.257

1.550

263 208

Fricam Taxpayer Delinquent Mouth

.am nation delinquent returns verification

e

CHANCE FROM 1966

+ 18.3

+ 11.4

+6.5

-7.0

Workflow in the Service and the

Courts

The tables which follow provide information on

the processing at each administrative level for the

years 1966 and 1967. It should be noted that the

tables reflect work completed by the Service during

the year, and do not indicate action with respect to

the same returns; for example, a return filed in fiscal

year 1966 might be examined in 1967, and if appea1ed or petitioned to the courts, action at that level

might not be completed until 1968 or later.

The major administrative workload involves income, estate, and gift taxes, hence the following

tables are confined to these taxes except for returns

filed and internal revenue collections. The unit count

at the returns filed and audit levels are recorded on a

return basis; processing in appellate, intelligence,

.-at, .-.it

11 l d

ENFORCEMENT ACTIVITIES

and the courts is on a case basis. A case will frequently include more than one return.

Worleflov, in the Internal Revenue Service and the cwd,, fiscal

years 1966 and 1967

Item

Tax retu na filed, total. . --------------------

I ndividual income.. . --------

Carper tion income. ----------

Ext.t. Ex,re ad

Ermalaysimm"I'

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

Othmi ----------------------------------

1%6 1 fI.7

Returns

1104,071, 812

69 724 148

1:511:776

2 237 059

22 :447:558

293,666

877,605

INCOME, ESTATE, AND GIFT TAXES

Number of returns eumined.. ------------- ......

Returns wit adjustments imposed by audit

divisions.' ------------------------------

Disposed of by audit divisions:

Agreaed,,rfid, or defaulted ------------------- :

Sur

c

Tra=recdtatiomas-p-p-e-il-a-t-e- -------------------

Oth ...................

Civil uses

105,432,742

72 223 773

1:

526:209

249 810

22,039:001

752

7':'2: 75 97

Astratintit of to, ....

i-cilvad .1 ..,h larval of the to. systion, Rural

years, 1966 and 1967

IMIllism, of dollaril

111, 1

69,371

1966 1967

.............., dissfimis, 1*1,1 -_------------------- _

Individual income Usia, 1-111 ........ --- ------------

Withholding.. .......... __ ....

Olh-_ ---- --_-------- -----

Corporation income taxes... ........... ....

Estate and lift taxes ................... Era loyment frux.._ ...............

Em. is." --- ....................................

INCOME, ESTATE. AND GIFT TAXES

Civil cases

Additional 'I, tax and p rd u,, ... Itirs in cosers diisposed of in audit ditons by Snommint, payment, or d1s. I.~ ......... .....

Additional to. and p...Ill., In carud, speed at in appellate

2.969,433 divisions by agreement, payment or

airs

.

Additional tax end penalties dartarm nodabysuitsettlement ......

in Tax

2,059,340 Court

Additional --- eas ---i-------------------- determined by Tax Court* ---- de.

1,707 979 cisions:

291:310 Dismissed ............. _--------_---------------

53 770 Decision on merits

6:381 Additional tax and

"

and courts a appeals--_--_------

A.Count refunded to taxpayers or Is result of Midnd....... suits.....

Cases Fraud --

- Difficiturides and penalties in asus disposed at In intelligence

20,207 divi lims: Prod, ulkn rftGMmended,...... .......

25,696

p

res'sacu Ion not warranted and cases declined b y '0 -

marnmint at - ------ --

---

Total received in app,,elIatd.divisions_ ........... 27,844

Disposed of by agpe at. 111sums:

Ga. Agreed, psi , 11 delaulted -------------------- 23,910

its of original jurisdiction:

To

a

Court: Total,patitioned to Tax CourL. ------------

Grain tied--_---------_------------- "'13 345

lelll:dd lb; x1.ipd,1a.1,1,n,,,,,,,, - ------- 5,104

So b

T a it _

------- 778

far Decided by Tax Court IiC~ appealed ........ 332

D rict cad is and Court of aims:

Total filed in district courts and Court of

1,

Claims ---jwt.. .. .................. _ 508

allied in rcl court, and Court of

C C Mrs.. ---------- ------------ 819

.,road by district courtr and Court of

Clot---------------------------------- 506

of appeals decision---- ------ 373

S lFrivorable to Government ----- 2,121

Favorable to toupay is. ----

Modified

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

21

Decided Suprembiv courts at Appeals but reviewed by

Court-- -----------

-

10 supreme Court: Settled by Supreme Court decision ------------- 10

-

Fraud uses I

Received far full-scale investigation in intelligence I'll'S

itNixie.......... ---------------------------

isposed by intelligence divisions:

I

Plot of

lion rato

1:125

timsoution at numi

ocu recommended.

DivisPud of by Office of Chief CTMI-1:1 it mrsiscutimi not warrants , 1 uning uses

declined by the Department art

usbu,_

252

prosecutions. ----------------------- 995

R.,i,.d.

Includes Iscres to. costs,

3,311,131

2,275,658

I,..

211

262:359

171:7 3

252

315

6,27

"1241

1,436

852

541

128133

74

56

4

4

i"'t

1.91910,

IN83

1 Includes isucts- taxes.

61,293

42,811 I

30': a"34

2r: 2%564

13,398

1,371

334

112

8

46

49

60

50 521

18:850

34 111

2,3:0J4

958

1

1 4

4,11

1,370

256

85

9

63

44

28

Federal-State Cooperation Reflects

the Increased Use of Computers

Reflecting the increased use of computers by the

Service and the States, arrangements were completed for the Service to make available annually to

States a set of uniform data elements in tape mode

from the Individual Master File. As of the end of

the year, 25 States had expressed a desire to participate in the initial tape program which will cover

individual income tax retaims for tax year 1966.

Add~itionally, the Service 'Continued to respond to

State and local government requests for data from

the Business Master IF& on a case-by-case basis. At

the same time, the longstanding practice of exchanging audit abstracts and other data on a manual basis

I

continued unabated.

34

35
ANNUAL REPORT * CHAPTER FOUR

During the year, cooperative exchange agreemerits, which provide for the exchange of tax information, were concluded with the States of Mississippi and New Jersey, bringing to 43 the number of

agreements in force with the States and the District

of Columbia. At the end of the year, negotiations

were under way for completing an agreement with

the State ofAlaska.'

There was increased activity in providing training

assistance and special statistical services to the States

on a reimbursable basis under section 7515 of the

Internal Revenue Code. Thirty-one tax personnel

were enrolled in Service-conducted training classes.

Additionally, there was a significant increase in requests for classroom training and correspondence

course materials. At the request of three States and

one city, four reimbursable projects involving the

preparation of statistical tabulations of data from

Federal tax returns were completed during the year.

Alcohol and Tobacco Tax

Enforcement Broadened on Several

Fronts

Main Thrust Directed Toward Elimination of

Commercial Illicit Distilling

In prior years the Service brought under control

the production of illicit distilled spirits in many

areas, particularly in the metropolitan areas of the

Eastern Seaboard States, where operations in highproof alcohol of commercial quality had previously

brought about huge revenue frauds. No resurgence

of this activity has been found. The continued success in limiting commercial scale violations in these

areas again enabled the Service to strengthen the

enforcement program in the Southeast Region. In

1967, 83.8 percent of the illegal distilleries

all

d

93.3 percent of all mash seized were in the Southeast

Region.

This intensified approach to liquor law enforcement, known as Operation Dry-Up, was launched

in one southeastern State in 1963 and was extended

to an adjoining State in October 1965. The program, aimed at eradicating commercial-type illicit

distilling, includes among its principal features: (I )

A substantially increased investigator force exerting continuous pressure on the violator, (2) the use

' Agreements are in effect or in process of negotiation wi

all States except Alabama, Connecticut, Georgia, Louisiana, th

Nevada, Rhode Island, and Texas.

of mass information media to alert the public to

the true criminal nature of the moonshiner's enterpfise, including the dangers to health, and (~~) close

liaison-with prosecutors and law enforcement officers

at all levels of Government to secure their active cooperation in meeting the program's objectives.

The success of Operation Dr~-Up in the firstState

is evidenced by the virtual disappearance of largescale illicit distilling, leading to an estimated rise

in Federal revenue of approximately $2.4 million

annually from increases in sales of taxpaid liquors.

In the second State, reports disclose a decline in both

the number of violations and the scope of illegal

operations. As a result of these successes, Operation

Dry-Up will be extended to a third southern State

in 1968.

Seizures and Arrests Decline

Seizures and arrests resulting from investigative

work in 1967 are compared with 1966 data in the

following table:

Seizures and arrests for alcohol, tobacco, and firoarens violations

ner, 1966 1967

Seizures: Dis illerie-------------------------------umberSills at distilleries --_---------------------do.-

Norlexpaid distilled 'Pirits_ ---- :

-------!!d"*'

de",------------------------------------ number- Property Arr,st'..._ .......... (appoomedvalue)- ......

,bar::

5,273

7,695

3, 53,062

664 980

1: 705

21133 6DO

6:880

":

63

6 608

131,800

31125 442

1: 65D

2.052 906

5: 507

I Includes 351 ii-sit, lor li-rros violations, 6 arrests for tube.. indtions, and 2

for other violations in 19G7 compared with 251 for firearms and none for tobacco and

other violations in 1966.

Note.-I ncludes seizures and arrest, in .1.1 adopted, as well as originated. by the

Internal Rainom, S,r,i.,.

The 1967 decreases of 12 percent in illegal distillery seizures and 5 percent in arrests are largely

attributable to the success of Operation Dry-Up in

selected areas in the Southeast Region and to the

further inroads made against unlawful distilling in

other parts of the country. An additional contributing factor is the diversion of manpower initially

planned for liquor law enforcement to the Organized Crime Drive and Firearms Program.

Investigative Effort Expanded in Campaign

Against Racketeering

Tbe Alcohol and Tobacco Tax Division has provided material assistance, including both manpower

and equipment, in furtherance of the Service's

drive against organized crime since January 1961.

In 1967, this division's role in the Organized Crime

Drive was substantially elevated by the initiation

of an independent program geared to the intensive

ENFORCEMENT ACTIVITIES

investigation of syndicates, conspiracy groups, and

racketeers engaged in illicit liquor activities or suspected of having hidden ownership or concealed

interest in legitimate liquor enterprises. Another

prime objective is the perfection of crimifial cases

against hoodlums, racketeering elements, and combines for violations involving the manufacture,

transfer, or possession of illegal firearms.

This program, which is closely coordinated with

the Department of justice, has led to the initiation of

30 formal invrstigations since its inception in December 1966. Court action is pending in two cases,

and indictments have been returned in four others.

Of the remaining 24 cases, 22 are still under investigation and 2 have been closed without recommendation for prosecution.

Indictments and Disposals in Alcohol, Tobacco,

and Firearms Cases Decreased

Recommendations for prosecution were presented

to U.S. attorneys in a total of 3,421 cases involving

5,294 defendants as the result of actions taken

against violators of the alcohol, tobacco, and firearms tax laws.

A comparison of indictments and disposals for the

last 2 years is shown below.

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

Number of

defendants

1966 1967

Action

Indictments and informations-----------------_---------

Disposal, tatel.-_

Ples, guilty or nef1p,_canmendere- --------- ------

Convicted after tria --------------

ti

.1-P

61

1

15

6

3,256

569

202

588

':

930

1 7115

2.590

485

161

469

Chemical Analysis Gives Strong

Support to Law Enforcement

The National Office laboratory is placing increasing emphasis on its studies of advanced instrumentation so that improved techniques can be applied

to the analysis and examination of specimens in the

areas of alcoholic beverages, industrial and commercial non-beverage products containing alcohol, miscellaneous nonalcoholic products subject to excise

taxes, tax depiction substances, and in the broad

field of scientific crime detection. Special attention

is also being given to automated techniques which

have the potential for increasing the productivity of

the laboratory staff.

In a recent criminal case, precedent was established by the Service by the successful introduction

of physical evidence analyzed by atomic absorption

spectrophotometry, a technique for the determination of chemical elements which is particularly

useful in conjunction with neutron activation analysis in the examination of samples not amenable to

other methods because of matrix problems or instrument limitations. Since 1964, when neutron activaLion analysis was first accepted by the courts, the

Service, the Bureau of Narcotics, and other State

and Federal offices have shown growing interest

in the use of this technique for the examination of

evidence. Neutron activation analysis was used in

the examination of 1,765 samples in 1967, compared

to 1,006 such analyses in 1966. This work involved

tile examination of such diverse evidence as illicitly-produced alcohol, soils, safe insulations, wheat

pastes, metals, and plastics.

Field office laboratories analyzed 6,450 samples

in connection with alcohol and tobacco tax enforcenient work and 5,197 samples for the Bureau of

Narcotics in 1967. During the preceding year, these

analyses numbered 7,531 and 5,088, respectively.

Firearms Workload Shows

Substantial Increase

,The objective of tire Firearms Program is to prevent weapons from falling into the hands of criminals, while preserving the rights of law abiding citizens to legitimately purchase and possess firearms.

In the pursuit of this objective, the Service is using

a variety of approaches. Complementan, to the primary effort to apprehend and prosecute willful violators of the taxing, registration and interstate commerce provisions of the, firearms laws, the Service

is systematically conducting inspections at the premiscs of persons and businesses holding Federal Firearms Act licenses.

The purposes of these inspections are to weed

out licensees who are not bona fide firearms dealers,

to assist reputable dealers in avoiding technical violations by thoroughly explaining regulatory requirements, and to uncover criminal violations which

might otherwise remain undetected. Another significant aspect of the program calls for close liaison

and a high level of coordination with other agencies

and local governments. As an example, procedures

I

36 37
ANNUAL REPORT * CHAPTER FOUR

are now in effect whereby the Department of Defense notifies the Service regarding applications for

the purchase of surplus military firearms disposed of*

through the Civilian Marksmanship Program. Following appropriate records checks, the Service, in

turn, furnishes the names of applicants to local

officials.

Continuous surveillance is also being maintained

of individuals and extremist groups who attempt to

accumulate stockpiles of weapons in violation of

the Federal and National Firearms Acts. Large

quantities of these accumulated weapons were seized

in'1967 in various sections of the country.

Manpower expenditures on firearms enforcement

increased approximately 80 perccht over 1966. Investigations of violations of the Federal statutes

led to 720 criminal cases and the seizure of 3,787

firearms in contrast to 466 cases and 839 seizures in

1966. In addition, 36,050 firearms records inspections were made at the premises of dealers, as compared to 13,783 such inspections last year. As a

direct result of these inspections, 12,442 information

referrals were made to State and local law enforcement agencies, and 921 criminal investigations were

initiated involving suspected violations of Federal

laws.

I

chapter

"The pages of history contain considerable

evidence that the public interest requires

government regulation of the alcoholic beverage

business . . . . The principle is well established

that certain anti-social conditions inevitably

flow from the operation of this business

if uncontrolled by government."

FRom REPORT BY THE JOINT COMMITTEE

OF THE STATES TO STuDY ALCOHOLIC

BEVERAGE LAws.

Supervision

of the Alcohol

and Tobacco

Industries

Distilled Spirits Regulatory Studies

Continue

In June 1965, a Distilled Spirits Standards and

Labeling Survey Committee was established to reappraise the various regulations issued under the

Federal Alcohol Administration Act. In 1967 the

Committee continued its program for improvement

of the regulations in 27 CFR Part 5. The comments

and suggestions submitted by interested persons in

response to the Committee's informal proposals (Industry Circular No. 66-9.1 dated May 25, 1966)

were carefully reviewed and evaluated. In addition,

the petitions of several distillers requesting consideration of various proposals to amend provisions of the

regulations applicable to the labeling of domestic

whiskey stored in used cooperage were considered.

As a result, it was determined that sufficient

grounds exist, based on the petitions, industry request and consumer interest, to justify proceeding

with a series of public hearings. At the close of the

year a notice of proposed rulemaking was being prepared in regard to changes in the labeling of whiskies and neutral spirits stored in used cooperage.

These proposed changes were requested by the distillers and members of the cooperage trades.

A number of other studies made during the year

with the view of simplifying and updating regulations in accordance with current trends in Government and industry procedures have resulted in initial drafts of proposed amendments of regulations.

Public Hearing Held

A hearing was held i4 January 1967 to give interested parties an opportunity to present their views

concerning allegations that certain wine products

bearing "distilled spirits type" generic names were

misleading consumers. A Treasury Decision is now

being drafted to clarify the regulations,,in this respect.

Actions Taken Relating to Industry

Operations

Alcoholic Beverage Labels ProcessedAdvertising Monitored

The Federal Alcohol Administration Act (27

U.S.C. 205 (c) ) provides that bottlers or importers

38 39
ANNUAL REPORT * CHAPTER FIVE

shall obtain a certificate of label approval, evidencing compliance with the labeling provisions of the

Act, covering labels affixed to alcoholic beverage

products bottled or imported. A certificat~ of exemption from label approval is issued for products

sold only in intrastate commerce. During the year,

56,385 applications for label approval, and exemption from label approval, were processed. The increase in this activity from the previous year (53,341

applications processed in 1966) is due to the continuing increase in private labeling activity. Much

of this activity results from new State laws relating

to pricing of such beverages.

The same Act imposes certain requirements applicable to the advertising of distilled spirits, wines, and

malt beverages. As a control measure, a sampling

is made of advertising published in a selective group

of newspapers and magazines of general circulation

in various regions of the United States. In 1967,

advertisements in 18,852 newspapers and magazines

were examined.

Distilled spirits are not generally advertised by

radio and television. However, both media are employed for advertising wines and malt beverages.

During the year 1,235 broadcast or televised commercials were reviewed. In addition, 966 proposed

advertisements and projected advertising campaigns

were reviewed and commented upon as a service to

industry. Four hundred and six letters of technical

advice concerning advertising were issued to the

alcoholic beverage industry. Seven communications

furnishing instructions and advice were issued to

field offices.

Two advertising cases were closed upon the acceptancc of an offer in compromise pursuant to section 7 of the Federal Alcohol Administration Act

(27 U.S.C. 207).

Trade Practices Regulated

As a result of the Service's review of trade practices, 18 cases were closed with the acceptance of

offers in compromise. (Federal Alcohol Administration Act (27 U.S.C. 207) ). These cases involved

such matters its the furnishing or giving of equipment, services, or other things of value to retailers

by alcoholic beverage permittees.

The Federal Alcohol Administration Act (27

U.S.C. 208) imposes restrictions on the holding of

office by an individual in more than one company

engaged in business as a distiller, rectifier, or blender

of distilled spirits. Provision is made for the holding

of such office upon approval. The Service approved

16 such interlocking-directorate applications during

the year.

Permits Issued, Formulas Processed

In the National Office, 36 permits to use tax-free

spirits and 16 permits to use specially-denatured

spirits were issued to Government agencies. The

National Office processed 872 formulas for rectified

products and 248 formulas for wine during the year.

Plant and Permittee Qualifications Continue at

High Rate

In the seven regions, the Service approved 19,653

original and amended permits, notices, and applications authorizing various types of business in the

alcohol and tobacco industries.

On-Premises Workload Increases

Tax determinations at distilled spirits plants requiring Government supervision have consistently

increased over the past few years. During the year

these plants produced 873.0 million tax gallons

of distilled spirits. Tax-determinations of spirits

amounted to 221.2 million tax gallons and tax-free

withdrawals totaled 610.4 million tax gallons of

which 564.5 million tax gallons were denatured.

Distilled spirits in bonded storage at the close of the

year amounted to 1,1 16.4 million tax gallons. The

production of rectified products totaled 103.2 million proof gallons, and 275.3 million wine gallons

of distilled spirits were bottled during 1967.

For the first time in many years applied manyears of on-premises supervision increased-from

395 in 1966 to 399 in 1967 or a rise of 1, percentalthough not in proportion to tax determinations,

the key measure of on-premises workload, which increased 2.7 percent in 1967 from the preceding year.

Trend Toward Audit-Type Inspections

The inspection program provides for on-site

examination of records, equipment, processes, and

premises of 18 different types of establishments. The

program operates 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 31,112 inspections were

completed compared to 31,080 in 1966. Of the

total, approximately 42 percent were conducted at

SUPERVISION

revenue-producing establishments while the remaining 58 percent were regulatory in nature. Continuation of the preparation and use of plant accounting

profiles in which crucial audit trails arc identified

has accentuated the trend toward the use of more

refined, audit-type sampling devices by inspectors.

Production figures for distilled spirits plants are

given above. Production at other revenue-producing

plants during the year was: Breweries-1 16.6 million barrels (31 gallons each) of beer; wincries247.0 million gallons of still and effervescent wines,

5.4 million gallons of vermouth, and 17.2 million

gallons of special natural wines other than vermouth;

and tobacco products factories-6.9 billion large

cigars, 420.8 million small cigars, and 572.8 billion

Cigarettes.

Chemical Analyses Made for

Regulatory Work

Among the more than one hundred categories of

materials examined by the National laboratory are

OF THE ALCOHOL AND TOBACCO INDUSTRIES

fermented alcoholic beverages, distilled spirits

products, narcotic and other drugs, toilet preparations, lubricants, flavors, alcoholic food products and

tobacco.

During 1967, the National and regional laboratories analyzed a total of 38,568 samples. This represents only a slight change from the previous year's

total of 38,645. Of the 1967 figure, 21,476 represent analyses made in connection with regulatory

functions. The remainder were required for enforcement and narcotics cases. (See p. 37.)

In the National laboratory, 4,364 formulas for

products manufactured with specially-denatured

alcohol were examined together With 4,572 samples

and 13,413 labels. The - previous year, 4,551

formulas; 5,656 samples; and 10,606 labels were

submitted.

Manufacturers of internal medicinal products,

flavors, and alcoholic food products submitted for

examination and analysis 2,600 formulas and 671

samples as compared to 2,671 formulas and 772

samples the year before.

40

276-NO 0-67--4 41
LEGAL AND LEGISLATIVE ACTIVITIES

chapter

"The ever-increasing complexity of our society

and the increasing number of variations

of business enterprises of necessity require

many complexities in our tax laws."

WILBUR MILLS, Chairman of

House Ways and Means Committee

Legal

and

Legislative

Activities

Introduction

The legal work of the Service is performed in the

Office of the Chief Counsel. The legal staff contributes greatly to the Treasury Department's legislative program (see p. 44). The Office prepares drafts

of proposed regulations implementing the tax laws

and participates in the rulemaking process involving

these regulations. For a discussion of the regulations

program, see Chapter 1, page 10. In the technical

area, the Chief Counsel also renders opinions to officials of the Service on substantive legal questions.

In the litigation area, the Chief Counsel represents

the Commissioner in trying and helping to settle

cases docketed in the Tax Court of the UnitedStates.

The legal staff also furnishes advice relating to refund litigation, collection litigation, criminal enforcement, alcohol and tobacco tax, and firearms matters.

Criminal prosecution cases are shown under Chapter

4, Enforcement Activities. Statistics on legal activities

are shown in tables 18-24 on pages 131 to 132.

Important court actions are listed in the Appendix

beginning on page 97.

Decrease in Caseload Inventory

Caseload receipts in the Chief Counsel's Office

during 1967 were 25,982, down 1,233 cases from

1966. The disposals of total caseload were 26,685,

an increase of 415 from 1966. At the end of the year

the pending total caseload was 23,090, a decrease

of 703.

Civil Litigation

The Supreme Court rendered two decisions in

Tax Court cases during the year. The Court decided

both for the Government. The Supreme Court

rendered two decisions in refund suits. The Government's position was sustained in one case and the

taxpayer won the other.

The Government won, in whole or in part, 339 of

the 413 civil tax cases decided by courts of appeal

(exclusive of collection litigation and alcohol and

tobacco tax legal matters). See table 2 1, page 13 1.

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

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

losses, and partial wins appears as follows:

Trial court cases won, lost, or partially won by the Government

Action

Won..... ------------_- _ ...........

Lost.. ------------------- ...........

Partially won......

Percent won or paritaily-won --------

imm

32

3510

55

247

159

42

65

CASE DISPOSALS BY OFFICE OF CHIEF COUNSEL

DISPOSALS INCREASED IN TAX COURT

AND ALCOHOL AND TOBACCO TAXDECLINED IN ALL OTHER AREAS

7,623

4,403

4,593

: -1111111

Tax Court

1966 1967

207

79

150

82

230

77

125

82

1966 1967 1966 1967

269

127 SI

73

37

17

4

71

TOTALS

1967 26,685

1966 26,270

CHANGE

+1

.6%

_j 862

'I

Cal action Tax

litlinitimn Court as

Alcmlml Enforcement Refund Other

x "I'll

In the trial or settlement of cases in the Tax Court

$269.6 million was successfully defended. In refund

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

courts, $47.7 million was successfully defended. A

total of $317.3 million of revenue

was

thus saved

for the Government in these cases. At the end of

the year, $1.6 billion was involved in taxes and

penalties being contested in trial courts (see table

below).

Taxes in litigation

[in th.....six of coll.sl

Tax C"`

't

Refund

Status Total

Deficiencies Overlitigation

payments

P July I

R=..... " " 2' aS

Dil,,I,d

543 :121

111 1 11

M:116

311 I11

to 5

1 1 111

J : 3

.rd,n, Ill,07"

P

Amount saved... .... .....

1,633:o 67

317,348

1, 1,S: 272

258,490

9: ~

64

11,124

13'

47:734

Tort Claims Activity Changing

The Service disposed of 134 administrative claims

under the Federal Tort Claims Act during the year,

compared with 167 such claims last year. The Service also acted on 51 claims under the Military Personnel and Civilian Employees' Claims Act of 1964;

an increase from the 18 claims acted on in 1966.

Public Law 89-506 became effective on January

18, 1967, as to claims accruing on or after that date.

Under this amendment to the Federal Tort Claims

Act, claims, regardless of amount, must be submitted

to the administrative agency concemed for consideration before suit may be instituted. The Service

participated in the drafting of Treasury Department

regulations to effectuate these amendments. It is

believed that this new law will result in a substantial

increase in the number and dollar amount of tort

claims to be processed by the Service. However, the

full impact of the new law cannot as yet be

ascertained.

Collection Litigation Legal Services

In the collection litigation area, the legal work

for the year continued at about the same general

level as for the precedinj year, but there were slight

decreases in both receipts and disposals. There were

11,288 cases receivedcluring 1967 ascompared with

11,565 cases received during 1966. Disposals for

1967 were 11,081 as compared with disposals of

11,491 for 1966. The inventory of pending cases at

the end of the year stands at 5,372, an increase of

107 cases over the 5,165 cases pending at the end of

1966. For detailed statistics on case receipts and

disposals, see tables 22 through 24 on page 132.

42 43
ANNUAL REPORT * CHAPTER SIX

There were a number of significant decisions by

the courts of appeals during the year. These decisions

relate not only to the issues arising in connection with

the collection of federal tax claims and tax liens but

also relate to issues arising in cases involving the

civil enforcement of internal revenue summons. Civil

summons enforcement cases continue to be a major

area of litigation at the appellate level. Summaries

of some of these courts of appeals cases may be found

starting at page 98.

Revenue Legislation Assistance

Provided

The Service continued this year to provide extensive technical assistance to the Treasury Department and Congress in connection with tax legislation. Among other things, its personnel attended

public hearings and congressional committee meetings, aided in drafting of bills, and prepared information and technical reports to inform legislative

committees. In addition, various tax abuses, inequities, and administrative problems were studies, with

a view toward the development of corrective

legislation.

The Service also evaluated a great number of

legislative suggestions made by Congressmen, taxpayers, and its own employees.

A number of draft reports and technical memoranda were prepared for the Treasury Department

on legislative proposals in the alcohol, tobacco, and

firearms area. The Service prepared comments for

departmental use on eight other legislative proposals

in connection with alcohol, tobacco, and firearms

functioni.

Important Legislation Completed During Year

One of the most important tax laws enacted

during the year was Public Law B9-809, title I

of which was designated as the Foreign Investors

Tax Act of 1966. The provisions of title I effected

a comprehensive revision of the Federal income,

estate, and gift tax laws applicable to foreign persons, the first such revision in more than 30 years.

This revision removed various tax barriers to foreign

investment in the United States and provided for

more equitable tax treatment of nonresident alien

individuals and foreign corporations.

Title 11 made several significant amendments to

the income tax laws, the most notable of which

concerned ( I ) the transfer of property to investment companies controlled by transferors (swap

funds), anj (2) the removal of special limitations

with respect to deductibility of contributions to

pension plans by self-employed individuals.

Title III provided for the establishment of the

Presidential Election Campaign Fund from which

disbursements might he made to the political parties

of presidential candidates under certain circumstances. Appropriations to and disbursements from

this fund were suspended by Public Law 90-26.

which was enacted later in the year.

Public Law 89-800, another important tax law,

was intended to restrain the inflationary trend and

monetary pressures which were causing concern at

the time of its enactment. It suspended as of Oc.

tober 10, 1966 both ( I ) the operation of the credit

for investment in certain property, such as machinery and equipment, and (2) the availability of

accelerated depreciation methods with respect to

buildings not eligible for the investment credit. Certain exceptions to the suspensions were provided.

With a change in the economic conditions which

prompted the suspensions, Public Law 90-26 was

enacted terminating the suspension period as of

March 9, 1967, and making the suspensions inapplicable to property ordered during the suspension

period but acquired or begun to be constructed after

May 23, 1967.

Public Law 89-713 was of great importance to

the Services efforts to streamline its operations as

the ADP program advances. Under prior law tax

returns were required to be filed in one of the 58

offices of the district directors. This Act, among

other things, amended the law to permit the issuance

of regulations requiring taxpayers to file theirreturns

at one of the seven regional ADP service centers.

Congress enacted a number of other public laws

relating to tax matters, some of the more important

of which are listed below:

Public Law 89-495, relating to the priority of

liens in bankruptcy.

Public Law 89-496, relating to limiting priority

and nondischargability of taxes in bankruptcy.

Public Law 89-570, permitting taxpayers to elect

to deduct certain exploration expenditures in the

case of domestic mining.

Public Law 89-621, relating to the effect of disclaimers on the allowance of the marital deduction

for estate tax purposes and to the disallowance of

double deductions.

Public Law 89-719, the Federal Tax Lien Act of

1966. .

Public Law 89-72 1, relating to the disallowance

of interest on refunds of overpayments of-income

tax made within 45 days of the date the return was

due orfiled.

Public Law 89-722, relating to the allowance of

deductions with respect to reserves for certain guaranteed debt obligations.

Pending Tax Legislation

Among the tax bills awaiting action by the Congress at the end of the year were the following:

H.R. 5710, the Social Security Amendments of

1967.

H.R. 6056, relating to the deduction for personal

exemptions for children of parent% who are divorced

or separated.

H.R. 6098, the Interest Equalization Tax Extension Act of 1967.

S. 18, relating to the establishment of a Small Tax

Division within the Tax Court.

S. 1863, the Small Business Investment Company

Tax Amendments of 1967.

More Effective Regulation of Traffic in Firearms

The President, in his message to the 90th Congress

on the National Crime Commission Report, again

recommended the enactment of further legislation to

control the interstate movement of firearms. The

Servicc participated in the drafting of S. I, Amendment No. 90, and H.R. 5384-bills introduced in

the Senate and in the House of Representatives to

incorporate the President's recommendations.

*

These

bills are entitled the State Firearms Control AssistanceAct of 1967. As indicated by theirtitle, the bills

are designed to assist State and local authorities in

controlling firearms within their respective jurisdictions and to prevent State and local controls from

being evaded or nullified through the use of interstate channels of commerce. Hearings were held

before a subcommittee of the House judiciary Committee on H.R. 5384 on April 7, 1967. No other

affirmative action has been taken by the present

Congress on these firearms bills.

Legislative Implementations

The Service plays an important role in the implementation of tax laws after their enactment. It

LEGAL AND LEGISLATIVE ACTIVITIES

issues news or technical information releases publicizing the provisions of new laws and develops

appropriate amendments to the regulations reflecting legislative changes. It revises tax forms and instructions, revises its publications, and issues special

instructions and procedures to its field offices. (For

a fuller discussion of some of these programs, see

Chapter I and the Appendix.)

Interpretative Activities Continuing

High

Interpretative activities remained at a high level

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 totaled 761 as compared with 763

last year, while dispositions totaled 749 as compared

with 759 last year. In addition to the regular referrals, which included 302 proposed revenue rulings,

an experimental procedure was continued throughout the year in which proposed revenue rulings were

submitted to the Office of Chief Counsel for informal

clearance immediately prior to publication. Approximately 40 revenue rulings were handled each month

under this procedure. A study is now being made

to review the effectiveness of this procedure and to

examine alternative methods by which the Chief

Counsel might furnish legal assistance in the Coinmissioner's publication program.

Legal Staff Increases

As of June 30, 1967, the Chief Counsel's Office

employed 1,304 persons, with 645 attorneys and 659

nonattomey employees. This represents an increase

of 29 attorneys and 24 nonattorney employees from

last year. Attorneys, are assigned to the National

Office and regions as"follows:

Nuntber of

Office U.-,yu

National Office --------------------------- ---- 258

Central Region-------------------------------- 44

Mid-Atlantic Region---------------------------- 57

Midwest Region ------------------------------- 55

North Atlantic Region-------------------------- 69

Southeast Region ------------------------------ 47

Southwest Region------------------------------ 42

Western Region-------------------------------- 73

44

45
ANNUAL REPORT

- CHAPTER SIX

~

.1fk I&

11 IN

Ml r,I

5N

Z. r.-i IN I

,c

-G

Yu1, 1'.NO,, I

lu I'll . . . r E!

UFIE

0MV.V

1!%.

Internal Revenue Service library facilities were consolidated

and relocated during the spring of 1967. The library is

now located in about 10,000 square feet of renovated

space, is

com

pletely air-conditioned, and has new equip.

ment and furniture. Library holdings am now approxi.

mately 45,000 volumes.

chapter

"Taxation is the most difficult function of

government, and that against which their

citizens are most apt to be refractory. The general

aim is, therefore, to adopt the mode most

consonant with the circumstances and

sentiments of the country."

TnOMAS JEFFERSON

International . Activities

Introduction

International and foreign tax matters received

considerable Service attention during the year. The

overseas affairs of the Service divide into three broad

areas. These are: (1) Administration of the tax

laws as they apply to U.S. citizens living abroad,

nonresident aliens, and foreign corporations; (2)

negotiation and administration of tax conventions

with foreign countries, established to prevent economic double taxation of individuals and corporations subject to taxation by two or more countries,

and (3) providing assistance requested by developing countries in upgrading and improving their tax

administration system.

Foreign Tax Assistance

The Foreign Tax Assistance Program extends

technical assistance in tax administration toa number of developing countries, at their request. The

program was originally developed in 1963 in response to needs emphasized in the 1961 Charter bf

Punta-del-Este, which established the Alliance for

Progress, and is conducted by the Foreign Tax Assistance Staff incollaboration with the Agency for International Development, Department of State. Additionally, the Staff maintains continuing liaison with

international organizations having programs in this

general area, such as the Organization of American

States, the International Monetary Fund and the

United Nations.

Inter-American Center'of Tax Administrators

Established

One of the most significant developments this year

was the creation of the Inter-American Center of

Tax Administrators. The Center was established in

May, ata meeting held in Panama City, Panama,

which was attended by 43 tax administrators from

21 countries. Commissioner Cohen was elected

President of the Center's Executive Council and as

such is the chief executive officer of the Center. The

other members of the executive council are from

Guatemala, Ecuador, Venezuela, and Brazil. At

present, the Center has 39 members from 19

countries.

46 47
ANNUAL REPORT

- CHAPTER SEVEN

The Commissioner and the Director,

Foreign Tax Assistance Staff,

with tax administrators from

17 nations of the Western Hemisphere.

The Center developed out ofa proposal made

at the Seminar for Directors-General of Taxation

held in Washington in May 1966. It is intended to

providea permanent forum for the exchange of

ideas, concepts and experiences for the improvement

of all phases of tax administration among tax administration executives of the Western Hemisphere

within the self-help concept of the Alliance for

Progress.

Overseas Assistance Expanded

Long-term, on-site tax advisory teams provide one

of the major avenues for extending technical assistance by the Service. This year, two new tax advisory teams were assigned, one to Turkey and the

other to South Vietnam. The team previously assigned to Ecuador has been withdrawn for the time

being. There are now 21 teams assigned to foreign

countries, 16 of which are in Latin America. Current team locations are Argentina, Bolivia, Brazil,

Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, India,

Nicaragua, Panama, Paraguay, Peru, the Philippines, South Korea, South Vietnam, Turkey, Uruguay, and ROCAP (AID's Regional Office for Central America and Panama).

At present, 82 long-term advisors staff the oversea teams. From time to time, the teams are supplemented by short-term advisors in specialized subjects.

This year, 34 short-term advisors were assigned on

41 missions to 15 countries.

Foreign Training Programs Continue Vital

The Service was visited this year by 291 foreign

tax and financial officials, representing 59 countries

and one trust territory. Of these visitors, 121 participated in the regularly scheduled International Tax

Training (INTAX) seminars and courses, designed

and initiated in 1965 primarily for the managers

and decision makers of the tax agencies of the de.

veloping countries. This training series covers the

development, operation, and management of tax

programs. The courses were for the most part conducted in Spanish with the exception of those given

in Portuguese for our visitors from Brazil.

On-site training by mobile instructor teams was

provided this year to Vietnam for audit techniques

and to the Dominican Republic for collection techniques. Also during the year, for the first time, a

mobile instructor team in basic investigative techINTERNATIONAL ACTIVITIES

niques was formed. This team provided on-site training in these techniques to Panama.

Since the inception of the Foreign Tax Assistance

Program in 1963, over 1,000 foreign tax officials

have been oriented or trained by the Internal

Revenue Service.

Review and Evaluation of Program

The first appraisal from outside the Service of the

Foreign Tax Assistance Program was conducted during the summer of 1966. The central objective was

to evaluate the current approach, and to propose

measures which would heighten the effectiveness of

the program. The review and evaluation team was

made up of four outside consultants and

a member

of the Agency for International Development.

The team examined the programs in Peru and

Panama in depth and, for reference purposes, also

took soundings of foreign tax assistance activities in

Chile and Colombia.- In general, the review and

evaluation team completely endorsed the basic approach the Service has been following for the past 3 years and the manner in which the Service is

organized for theprogram. The team concluded that

"the United States has an effective technical assistance program in the AID/IRS joint tax administration projects in Latin America. The

succem

of this

program constitutesa major achievement within the

general field of technical assistance . . . "

New Tax Conventions Negotiated

Attorneys from the Office of the Chief Counsel, as

representatives of the Commissioner of Intemal

Revenue, assisted the Treasury Department in negotiations with seven countnics concerning bilateral

income tax conventions. In six cases the negotiations took place outsidelt the United States.

Income tax conventions were signed with Brazil

(March 13, 1967) and Trinidad and Tobago (December 22, 1966) and the proposed conventions

were transmitted to the Senate for consideration

witha view to ratification.A supplementary income

tax convention with Canada was signed October 25,

1966, and it too was sent to the Senate. The Senate

ratifieda protocol to the United States-United Kingdom income tax convention and the instruments of

ratification were exchanged on September 9, 1966.

Instruments of ratification of an income tax con48

49
ANNUAL REPORT * CHAPTER SEVEN

vention between the United States an& the Netherlands were exchanged on July 8, 1966.

Alcohol and Tobacco Tax Active in

International Field

Council of Europe Meetings Attended

A representative of the Service's Alcohol and

Tobacco Tax Division participated, as an observer

delegate, in a series of deliberations of the Committee of Senior Officials on Wines and Spirits of the

Council of Europe and of the two groups of experts

appointed by that Committee to work out definitions

and labeling requirements for wines and spirits to

facilitate the free movement of goods between the

18 member nations of the Council.

The United States' interest is twofold. It is interested in the proposed standards, as an importer,

because it desires assurance that products produced

under Council of Europe standards will meet U.S.

standards if exported to the United States. It is also

interested, as an exporter, because of increasing exportation of alcoholic beverages.

Another important interest of the United States

was to persuade the Council of Europe to recognize

bourbon whisky as a distinctive product of the

United States-in keeping with the concurrent

resolution of the Congress of the United States

(Senate Concurrent Resolution 19-Passed by the

House May 4,196+).

Alcohol and Tobacco Tax Laboratory Provides

Training on International Scale

Because of its international recognition in the

fields of narcotic drugs and tobacco and alcoholic

products, government chemists from many countries

visit the National Office laboratory ,to receive firsthand training in advanced analytical techniques.

These students come under sponsorship of the Service's Foreign Tax Assistance Programs, World

Health Organization and United Nations Fellowships. Chemists from Chile, Venezuela, Singapore,

and Thailand have received training for periods up

to 6 months. In addition, the laboratory regularly

provides instruction and laboratory exercises in

narcotic drug identification to participants in U.S.

Bureau of Narcotics training schools for law enforcement officers. Seven schools were held during

this fiscal year including one all Spanish-speaking

class from Central America.

International Operations Continue

to Expand

Fourteenth Overseas Taxpayer Compliance

Program Completed

The Service completed its 14th annual overseas

taxpayer comphance program during the 1967 filing

period. Seventeen field agents, four office auditors,

and one assistant revenue service representative

visited 116 cities in 51 countries plus Guam,

Okinawa, and the Canal Zone to assist U.S. taxpayers abroad,

As part of this assistance program, the Office of

International Operations (010) and the judge

Advocate General of the Army jointly held fourteen

I -week military tax schools at I I sites for 900 student-instructors in Eumpe, the Far East and, for the

first time, the Panama Canal Zone. These tax

schools were conducted by agents who participated

in the overseas taxpayer comphance program. They

taught a completely revised text specially prepared

by the Service for military tax schools.

The Service advanced its overseas "self-help"

program by publishing a brief document entitled

Answers to Questions Most Frequently Asked by

U.S. Taxpayers Abroad. This document was distributed through the State Department to each embassy and consulate overseas for their use in contacts

with the public. The revenue service representative in the foreign countries participated in the dissemination of the information to the public through

television, radio broadcasts, and newspapers. In

addition, a number of pilot seminars and lectures

were held by the revenue service representatives at

their posts in England, France, Germany, and Italy.

Additional tax assistance is provided year-round

through corTespondence by the Washington office as

well as by the overseas posts. A total of 14,555 replies

to taxpayers' inquiries were answered by the Washington office during the 1967 filing period.

Increased Activity at Foreign Posts

The Service maintains overseas offices in nine foreign posts located in Bonn, London, Manila, Mexico

City, Ottawa, Paris, Rome, Sao Paulo, and Tokyo. Revenue service representatives who have

responsibility for each of these offices and specified

surrounding geographic areas perform functions for

all branches of the Service. In addition, these representatives maintain close liaison with tax authorities

of foreign governments on the administration of tax

treaties, exchange of information and other matters

of mutual interest. One of their major functions is to

assist U.S. citizens overseas in complying with their

U.S. tax responsibilities. As a normal part of their

duties they audit returns, collect taxes, hold conferences, and carry on other similar district functions.

Growing investments and activity by U.S. persons in all areas of the world have generated additional workload in these foreign posts. An assistant

revenue service representative has been assigned

to each of the previously one-man posts of Bonn,

Mexico City, Rome, and Tokyo. With this increased

staffing, there will be 21 technical personnel assigned overseas, and each foreign post will have at

least two permanently stationed representatives.

Foreign Investors Tax Act Changes Tax Concepts

On November 13, 1966, the President signed the

Foreign Investors Tax Act, which made comprehensive changes in the concepts of U.S. taxation

of nonresident aliens and foreign corporations.

These changes have a dual purpose: to provide

more equitable tax treatment of nonresident aliens

and foreign corporations and to stimulate foreign

investment in the United States. This Act establishes

new standards to evaluate the tax effect of transactions of nonresident aliens and foreign corporations, and is resulting in material changes in the

administrative and enforcement activities of the

Service.

The Act introduced the "effectivelv connected"

concept. This concept subjects all United States

sourced and certain foreign sourced income which

is "effectively connected" with a nonresident alien

or foreign corporation's trade or business in the

United States to the same rates of tax which

apply to U.S. citizens and domestic corporations.

Any hxed or determinable annual or periodic income

not "effectively connected" with the alien person's

conduct of a trade or business will be taxed, as

before, at the 30 percent (or lower treaty) rate.

Three new forms have resulted from the tax concepts introduced by the Foreign Investors Tax Act.

Two of these forms were designed to facilitate compliance with the new "effectively connected" concept of this Act. Form 4224 is filed to claim exemption from withholding on U.S. sourced income if it is

"effectively connected" with the conduct of a trade

or business in the United States. Form 1040ES

(010) is a specially designed declaration of estimated income tax for nonresident aliens to place

them on the same cur-rent payment basis as U.S.

INTERNATIONAL ACTIVITIES

citizens and residents on income reportable to the

United States not subject to withholding at source.

Form 4277 was designed for use by withholding

agents in making quarterly remittances of income

tax withheld at source from income paid to foreign

persons. Regulations now require withholding

agents to purchase depositary receipts semimonthly

or monthly and to forward these receipts quarterly,

along with a remittance covering any withholding

not covered by depositary receipts. The amounts of

tax paid with the Form 4277 will be reflected on a

line added on the annual Form 1042.

The requirements for filing the Form 1040ES

(010) and Form 4277 accelerate receipt by the

Treasury of over $100 million in taxes which previously were remitted after the close of the calendar

year.

Safeguards Established for Tax Treaty Rates

Under each tax convention, provisions are made

for an exemption or a reduced rate of tax to be

withheld with respect to certain types of income paid

to residents of the other treaty country. Most conventions provide that the treaty partners will safeguard these treaty provisions by collecting, on behalf

of the other country, any additional tax due from

persons not eligible for the other country's reduced

treaty rate of tax.

In the past, foreign countries have looked only

to the recipient of the income to establish that th

taxpayer was a U.S. resident to qualify that person

for the reduced rate of tax under the treaties.

I The growing volume of income flowing to the

United States from treaty countries is causing them

to propose new methods of assuring proper allowance of the reduced treatY tax rate on income paid

to U.S. recipients. In the case of Germany, Italy,

Luxembourg, the Netherlands, and the United

Kingdom the Service~'has agreed that the U.S. district director will certify that the U.S. person filed

a return with the district to permit our residents

to obtain the reduced treaty rate of tax. '

The Service will propose a standard form for utilization by all countries requiring certification.

In addition to the certification procedure, the

regulations under the renegotiated convention with

the United Kingdom provide new withholding requirements for U.S. withholding agents. For the

first time under any U.S. tax convention, U.S. persons who are not beneficial owners who receive

income from the United Kingdom for persons not

resident in the United States are required to withI

50 1

51
ANNUAL REPORT * CHAPTER SEVEN

hold and remit any additional tax due. By election,

these remittances can citler be made direct to the

United Kingdom tax authorities or to 010, which

will periodically forward this additional tax to the

United Kingdom. A new Form 4198-UK has been

issued for use by the withholding agents in forwarding an), additional tax withheld.

This requirement in the regulations is similar

to the arrangements in effect in the United Kingdom to assure that U.S. treaty benefits do not enure

to persons not entitled,to them.

Competent Authority Activities Continue Growth

The Director of the Office of International Operations, who is the appointed official to carry on

negotiations with treaty countries regarding double

taxation and other administrative matters under

the treaties, was extremely active in this role during

the past year. Continued growth in international

investments by U.S. persons in treaty countries has

generated increased workload in competent authority activity. Attention was also focused on the exchange of information on an automatic and specific

request basis as required by the treaties. For fiscal

year 1967, the significant issues under consideration

involved foreign treaty countries of Canada, France,

Greece, Italy, New Zealand, Sweden, Switzerland,

and the United Kingdom. The issues involved estate

tax, income tax, reciprocal collection, and specific

requests for information.

A document detailing policies and procedur-al

rules to follow in applying for relief from double

taxation is now under consideration by the Service

and Treasury.

Programs Stressed for Identification of U.S.

Taxpayers

The growth of investments in foreign countries

by U.S. taxpayers continued during the year. There

was also an increase in numbers of U.S. persons

residing abroad. These increases, coupled with complex international laws, have required the development of specialized programs by the Service to

identify U.S. taxpayers in foreign areas and activities. This will provide the necessary information for

the Service to measure the compliance of these persons with U.S. tax laws.

Form 959 is filed by U.S. persons owning a 5-

percent or more, interest in foreign corporations or

by U.S. persons who are officers or directors in such

foreign corporations. During the fiscal year ending

June 30, 1967, 6,426 Forms 959 were filed by U.S.

52

persons who are officers, directors, or stockholders

of foreign corporations. These fornis identified

2,919 new foreign corporations with U.S. persons

owning at least 5 percent of the stock. The cumulative total of foreign corporations identified under

this program up to June 30. 1966, was 32,123. The

information on these forms is compiled by automatic

data processing and circulated throughout all districts offices for use in their classification and examination program.

In cooperation with the Department of State,

the Service in 1966 initiated a program designed to

identify U.S. citizens residing abroad. Under this

program an information document, Form 3966, is

completed by U.S. citizens when they apply for or

renew passports at the consular offices abroad. The

list of U.S. citizens identified under this program

will be compared with the master file by ADP to

identify whether returns have been filed.

Economics Important in Section 482 Allocation

Adjustments

In determining the correct allocations of income

and expenses between related entities under section

482 of the Code the application of economics is

playing an increasingly important role. The economists have assisted the draftors of the proposed

regulations under section 482. In addition, a procedure has been established whereby they will attend conferences with taxpayers when they assisted

in the development of the case. A pflot-seminar was

conducted to acquaint field personnel with the economic aspects of section 482. The seminar proved

to be of value and additional seminars are planned.

Economists have offered expert testimony in court

cases and are assisting the Department of justice in

developing economic approaches to be used in cases

pending before the courts.

Foreign Investments in the

United States

Over 12,000 Form 1042 returns were received

by 010 in calendar year 1966. Form 1042 is used

to summarize all income payments and tax withheld at source by the withholding agent from income

payments to nonresident aliens and foreign corporations, and to forward information documents, Form

1042S, which identify the recipients and the nature

of the income paid to nonresident aliens and foreign

corporations. More than 425,000 of these information documents were filed in 1966.

These information forms are used by the Service

as one of the means of carrying out its responsibility

in securing compliance from alien taxpayers with

U.S. tax laws. They are also used by Treasury in

making fiscal projections and planning programs

in the international area.

In addition, the Service has exchanged these information documents with treaty countries as required under the automatic exchange provisions of

the treaties to assist in the administration of their

tax laws and the tax conventions. Certain treaty

countries in return send the Service the equivalent

information for use in the U.S. taxpayer compliance

program.

The table following is an analysis of the tax withheld from nonresident alien persons. The column

headed "Tax from Foreign Governments or Withholding Agents" represents additional tax remitted

to the United States in excess of the effective treaty

rates on income received by persons not eligible for

the reduced treaty rates of tax. The significant

amount of $13 million additional withholding received from Switzerland illustrates that this coun~

try is used as an international banking center by per.

sons not resident of that country.

276-586 0-67-5

INTERNATIONAL ACTIVITIES

Tax withheld from payments to nonresident -11@n Parsons Of treaty

and nontmary countries, calendar year 1965

Country

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

3.1111m.

Canada ----- ........

Denmark.

I.nor . .................

Worst MOOD- -1

Gnisce-__ Gem'py ---------- -_--- Rod....._

,,land--

Italy

).Pan

Nothedand

a

N

N: Zoilmul ..............

Swaim,.....

Union Of South United Kingdom and mr.,

'a territories.

_

.. ......

Nont"Ity

muntrim; by For..

104ZS ....................... Treaty and nontreatY countries

by upon bond Information

doctmmot,..............

Number of

Information documents

425,025

,

91

1:002

6.992

183 189

1:528

233

12,314

10, 2, 1

2:1131 "'

6,439

1 647

:869

4

683

~443

718

3,

667 114

263: 93919

782

47,551

66.602

31,447

Thousand dollar,

.Ithh:]'d I by

domestic

nithholding

agents

Ior:1','n',Temm.nb or

wIthholdial .Santa

ID5.332

293 1

37

1 926

22:325

19417

3,153

1,406

182

391

872

%D

456

5 594

3~206

47

215

14

19, 743

447

245

28,903

14,186

905

I Amount too small to report. Included in the tot-is an its first line.

311 29,214

14,186

805

53

14,659

.....6....

194

963

5

Q)

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

202

24

Total

i!E

293 1

37

2,120

23,198 1

9417

3,213

1

*

406

IV25

39

171 560

3~ 456

796

Z30

21517

14

743

32

'

447

245

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

............
il

chapter

"There plainly has to be a continuous arrangement

for planning and installing improved

systems . . . There must be an organized and

systematic approach to the discovery and the

application of better ways of-doing things."

DAvu, E. BELL

Former Director, Bureau

of the Budget

Planning

Activities

54

Planning Is Essential to Effective

Tax Administration

The size, scope, and complexity of the Internal

Revenue Service mission make extensive planning

a prerequisite for effective management of Federal

tax administration. Planning activities concentrate

on developing a balanced program forthe most beneficial use of limited manpower and dollar resources.

The comprehensive, mutiyear program and financial plan, developed as a result of these planning activities, reflects the Service's objectives and resource

requirements. This plan forms the short- and longrange basis for integrating into unified programs

the variety of separate Service functional activities.

Organizational Planning

Concentrates on Modernizing

District Processing Activities

The transition to full operation of the automatic

data processing system continued to be of prime concem in organizational planning. During the year,

numerous consultations took place between National

Office and regional officials to determine how and

when to phase out the residual data processing responsibilities of the district offices after the transfer

of the primary data processing workload to the regional service centers. It was concluded that these

residual functions would not be large enough to support continuance of the separate returns processing

and accounting function previously maintained in

the districts. In accordance with the Service's longstanding redeployment practices, a system was

adopted for gradually consolidating these residual

functions with the delinquent accounts and returns

functions of the district offices. These consolidations

will take place in each region within 6 months after

the region adopts the direct filing of individual income tax returns at regional service centers as authorized by recent legislation.

Research Activities Keyed to

Improving Compliance

The Service maintained a broad range of research

projects during the year. These projects touched

many aspects of tax administration, especially the

improvement of taxpayer compliance with the law.

The research program also was designed to foster

cooperation between the Service and other governmental bodies at various levels--Fedcral agencies,

State and local governments, and countries with

which the United States has tax treaties. Some Of

the principal research projects included:

Utilization of Information Returns.-Several

projects were conducted during the year for the

purpose of improving the usefulness of existing information returns (particularly those relating to

wages, dividends, and interest) and exploring new

potentials in information reporting. Among other

things, this research activity included: ( 1) Analysis

of different methods of matching information returns with the corTesponding data on tax returns;

(2) methods of obtaining better identification of income recipients; and (3) possibilities of extending

the use of magnetic tape instead of paper information returns.

Retention period for master file dala.-The Service adopted a new policy for retaining master file

data as a result of a cost-benefit study. The new

Service policy strikes a balance between the needs for

computer-retrieval of tax return data and the

mounting costs of retaining such data on a progressivcly lengthening tape file.

Under the new master file retention policy, tax

settlement data will be retained for 27 months beyond the posting date of the transaction that brings

the tax account to a zero balance or frees the account

from any prior holding condition. Tax base data will

be removed from the master files annually after

completion of scheduled computer runs for Service

programs (e.g., mathematical verification, information document matching, audit selection, State tape

program, etc.). This new retention policy relates to

data on master tape files and does not change Service policies for retention and disposition of tax returns and related source documents.

Other projects.-Among other projects during the

year were the following:

(a) Developing a program for the Service and

the States to exchange tax information data by

means of magnetic tape;

(b) Planning a system for accelerating the remittance of taxes withheld from nonresident aliens and

foreign corporations;

PLANNING ACTIVITIES

(c) Cooperating with the U.S. Civil Service

Commission in the development of instructions to

assist annuitants in determining the taxable portion

of their annuities; and

(d) Coordinating implementation of new rules

for individuals authorized to represent taxpayers in

tax

in.

tters before the Service.

Systems Development Concentrates

on Reducing Data Input Costs and

Designing the Next Generation

ADP System

Major attention was devoted to the evaluation

and testing of new techniques for data conversion.

Present methods involve sequences of separate steps,

i.e. transcription, verification, conversion, validation, etc. Prospective methods would permit the consolidation of several of these steps, and should result

in substantial reduction in the cost of preparation

of data input to the Service's ADP system.

A long-range study of a data processing system

to meet the needs of the 1970's has been initiated.

The existing ADP master file system was designed

within the technological capabilities of the early

1960's. While it is performing well, it lacks the ver.

satility and responsiveness achievable under current technology. Progress in the computer and communications fields makes it possible to plan for an

ADP system which will not only meet objectives of

the present system more effectively, but will also

meet demands for improved management information and more rapid and complete account and

taxpayer status informition.

Search for Lower Cost Input Methods Continues

Optical scanning.-Scanners, as a means for converting typed and printed documents di

.

rectly to

magnetic tape, continued under intensive study. The

Service has been testing a single-font scanner in

the Southeast Service Center since late in 1966. This

relatively inexpensive machine was designed to

handle bills and other notices typed or printed on

Service equipment using a special American Standards Association approved type font. Under actual

operating conditions, the single-font scanner has

successfully met the Service's acceptance criteria for

I
I

i

1

L___

ANNUAL REPORT - CHAPTER EIGHT

reading typewritten documents. Acceptance tests of

doctuDents prepared on the Service's high-speed

printers have not yet been completed. A decision on

acquisition of single-font scanners will be made

when the tests for printed documents are concluded.

Also investigated during the year was the possibility of acquiring a scanner capable of converting

data from information returns (Forms W-2, 1099,

and 1087) directly to magnetic tape. Since these

returns are prepared by payers on a wide variety of

typewriters or printers, a more complex scanner

capable of reading a number of different typo fonts

is required. In response to an invitation to propose

a multi-font scanner, three manufacturers submitted

proposals. After careful evaluation, it was decided

that none of the proposals offered sufficient economic

advantages to merit an award. The Service will keep

informed of progress in the industry, and will make

further studies.

Direct data entry system.-Ten proposals were

received in response to the Service's invitation

to propose equipment to perform the functions of

the present key punch system. The principal objectives of the direct data entry system are manpower

savings and sufficient dollar savings to recover the

cost of new equipment within three years. A pilot

system was selected from the proposals, and in March

1967, this system was installed at the Southeast Service Center for acceptance testing. Basically, the system provides keyboards coupled directly to a small

general-purpose computer. Direct communication

between input stations and the computer provide

error detection and correction capability as data are

being entered. Operators arc notified of errors

through a video tube display at the input station.

The system provides for direct recording of the verified data on magnetic tape which can be read directly

by IRS computers, thus eliminating the formerly

required step of converting data from punch cards

to tape.

Pilot testing of a small scale version of this equipment is expected to be completed early in fiscal year

1968. Results of this test together with the results of

simulation studies of the full system will determine

whether this new system will replace the present key

punch method in regional service centers.

Progress Made in Designing ADP System for the

1970 Decade

Design of a new ADP system to replace the

present master file system early in the 1970's is well

56

into the first study phase, that of definition of information requirements. Potential users (Collection,

Audit, Intelligence, Data Processing, etc.) arc defining and cataloging their requirements with respect to such characteristics as significance, urgency,

volumes, frequency of occurrence, and frequency of

demand. This catalogue, free of duplication, will

indicate the total processing and storage require.

ments of the system. As the study progresses, continuing cost/benefit review of the overall design

-will be conducted. Simulation techniques will be

used in both the design phase and in the evaluation

of proposals of manufacturers which will be solicited when design specifications are firm.

Major benefits anticipated in the future system

include: (I ) Faster entry of new information into

master files, (2) direct access to information on

file by revenue officers, revenue agents, and other

Service technicians in the field, (3) inclusion of

more comprehensive data on file in terms of both

historical and current information, (4) rapid, selective, and properly formatted retrieval of information,

and (5) better management through improved allocation ofresources.

Further Increases Expected in

Number of Returns Filed

Long-range planning and estimates of future

Service workloads rely on the projections of the

number of tax returns to be filed in future years.

The steady upward trend in the volume of returns

filed in recent years continued during the 1966

calendar year, and the expected growth in the Nation's population, economy, and labor force indicates additional future increases in the number of

tax returns. The impact of an expanding national

economy is reflected, for example, in the rapid rise

in the number of individual tax returns with adjusted

gross income of $ 10,000 and over. The number of

returns in this category more than doubled between

1961 and 1966.

During the 1966 calendar year the total number

of returns filed exceeded 103 million, an increase

of more than 12 million during the last 10 years.

Recent projections forecast a total of 114.5 million

returns by 1970 and further gains to 126.1 million

returns by 1975. The accompanying table shows the

national projections for selected types of returns.

Selawned types of netums flied in 1966 and projected for calendar

years 1967, 1970, ad 1975

(in thousands)

Type of return

Total returns........................

Individual, total ..................

11 end

AGI

$10,rl.rde,

,000

Corporation, total. ---------------

For. 1120, totalA...is end,, $50W

Assets $50,660 umdW

$1000000

Asseis Si.`66,166

Forms 1120S and! 1122 --------

E.=.nt

All

Actual

1966 ~

103,261

68,739

"

7211

lf~019

1,529

1,327

$81

663

83

202

21:6317 10

87

projected I

1967

ID5,998

1970

114,509

71,488 77,606

58.702

12,785

1,595

1,375

596

694

84

220

22 031

10:894

17~ 111'~

1,762

1,494

642

7619

268

23 471

11: 671

1975

126,103

86, D46

6

1

130

24,916

2,096

1,714

729

fill

D4

82

25 331

12:631

Data by sibre class are extimated.

F,

t,

us a" revised each , r.In "' addition In to Forms 1040 d 1040A, includes Forms 1040C, 0. Nit, NB-a, PR, and

ss.

I Includes Form 1120 with assets not reported.

$includes Individual desiarations, corpotat;,odn declarations, partnership, ect-t

I'd

a or'

union

'

11,111 -,abon i Wag, and excise tax returns, an

1enL

,],.

Forms 1120L and M and 104 .

Annual Benchmarks Relating to Income Taxes

During 1967, the Service published in the Statistics of Income series, four regular reports and

three supplemental reports. The list appc~ars on

page 104. The information and statistical data contained in these reports are useful for: (1) Revenue

estimating, (2) tax and financial research conducted

by Government agencies, businesses, private research

organizations, and universities, and (3) supplying

financial and economic data used in the preparation

of the National Income and Product Accounts which

show all contributors to the Gross National Product.

A few summary statistics related to topics covered

in the Statistics of Income program follow.

Among the annual reports now available, the 1965

Individual Income Tax Returns Report present%

new information on dividends, on capital gain distributions, and on nontaxable return of capital distributions as reported by individuals. Of the $15.0

billion in dividends and non-taxable and capital

gain distributions, $13.6 billion represented dividends eligible for exclusions which can, as a result

of the Revenue Act of 1964, amount to as much

as $200 for a joint return if both husband and wife

received eligible dividends. In fact, one out of every

two joint returns with eligible dividends which

filed in 1965 reflected dividends received b~ were both

husband and wife.

The summary figures shown in the table on page

58 were derived from the 1965 report. They indiPLANNING ACTIVITIES

cate, for example, that the number of returns with

itemized deductions increased by 962,000 in 1965,

after declining by 1.2 million in 1964. The increase

was to be expected as returns with itemized deductions stabilized following the initial impact of the

minimum standard deduction introduced by the

Revenue Act of 1964. Prior to this change, the number of taxpayers itemizing deductions had been

increasing substantially each year.

In the corporate area, information about controlled groups was obtained. According to preliminary estimates, one out of seven corporation tax

returns for 1965 was filed by a controlled group

member. There were almost 215,000 corporation

returns identified as members of controlled groups,

compared with 182,000 corporate returns in that

category for 1964. Some of the increase may be

the result of more complete information for 1965,

since the return forms filed previously by corporations did not provide complete controlled group

information.

In connection with the Statistics of Income program, advance estimates of financial data from

business tax neturns; for 1965 were delivered to the

Commerce Department for use in revising the gross

na.tional. product and national income series. The

first estimate of corporate net income for 1965 was

$74.2 billion, up sharply from $61.6 billion in 1964.

Income tax before credits rose to $31.8 billion in

1965 compared with $27.9 billion in the previous

year. The foreign tax credit amounted to $2.6 billion

or 13 percent more than in 1964, while the investmerit credit of $1.7 billion in 1965 was 16 percent

higher. Key income and deduction items by industry

from the business and farm schedules of F~rrri 1040

Individual Income Tax Returns and Form 1065

Partnership Income Returns also were sent to the

Department of Commerce. Profits of sole proprietorships were 9 percent higher and partnerships 5 percent higher in 1965 than in 1964.

Statistics of Income Supplements

In addition to the annual Statistics of Income

reports, three supplemental reports were published

during the year:

( I ) 1963 Supplemental Report for Farmers'

Cooperatives.

(2) 1962 Supplemental Report on Sales of Capital Assets Reported on Individual Income Tax

Returns.

57
ANNUAL REPORT se CHAPTER EIGHT

Individual Income tax returns: Number of returns, sources of income, and ittimixed deductions

Itern

A. Number of reform

Income year

1

962 1963

(Thousand,)

All individual returns. total. --------------------------------------------- ...............

Taxabl ..............................

risen...bit ..........................

Returns with itemized deductions, total... ............................................

T xable~............... .........

Nontaxable-... ... ................

Returns with standard deductions, total' ....................................

Taxable........................

----

Nontaxable I ........................

8. Sources of income

Adjusted lines, imoorine, total... ........ ........... ................... ...............

III .......... ...... ....

and ...................... .........

i justed areas i...e-. ..................... :

Is

dends

-

ad

it ... :

D _

I n"nnt ni'iv.

P mhip. ........ ..............

C:'p'itai gains. ...............

Other I morme ................

C. Itemized deductions

Itemized deductions, total........................... ...................................

TaxesIntere

Contribution ..._ ...................

Medical and dental cap .......................

Other deductions.,_... -------------_-------- _-------------

61,499

583

'2:917

25,262

23 258

2: 004

36,238

11:9115 10 13

329,961

266,9.

22,630

':G" S 83

:949

7' 621

8,187

62,712

1'2,'6201

26,451

24 351

2:

1

00

36,261

21:14

1

10

520

348,701

283.373

23:1201

1,lss

14

5':771'

9,491

38,391 41,661

Iftl tabulated13 D45

10:174

I

'..

I

16

4:9747'

63,943

'111: '089

53.701

13,896

27,872

65,376 67,5%

1'2':6' 20

29,154

2 828

2 326

35,789

21:495 to

294

(Million dollars)

368,779

2 443

21u:

152..

9,212

3,191

1: 4

9,037

(Million dollars)

46,053

IN., tabulated.

26,910

2 OW

1:900

38,466

26 297

12:169

21:9111 1 15

39,724

27 744 11:930

429,201

35:1 347,E6

628 2 95

11, 917 961

10,125

9,731 11 6,02

8,055

9 55

7,131

'N"I

46.832

457

R

3

1~4:.'.V

7:095

4 U2

50,739

Mot tabulated.

N.te.-Returns classified as taxable are those reporting income tax after credit,.

includes returns w

F 1" "' '"I""d " ".

r " "

deld by ick Pay amd ...tain smile so business expenses. For 1964 and 1965,iross salaries are shown. z

E%IZI. diLdonds and interest re%ded on Forms 1040A, solfor 1961, excludes certain Form 1040 wit ess than 1200 of divide it or ime

' '

ad

"d

b

y set '

a

o , rest

,.Pon,. deduction 1.

1;~41o.y.edd Penn n toction for 1963 and by sell-employed Pension deduction, auckpay excluslon, employee business expense deduction, and employee Moving

r 1965"

(3) 1961 Supplemental Report on Foreign Tax

Credit Claimed on Corporation Income Tax

Returns.

The 1963 Farmers' Cooperatives Report-the

first report of this kind since 1953-presents complete income statement and balance sheet data for

nearly 9,000 exempt and nonexempt cooperatives.

These marketing and purchasing cooperatives, representing an important part of the agricultural

sector of the economy, had receipts of $14 billion

and assets of $6 billion. Almost two-thirds of the

cooperatives were allowed special statutory deductions from income resulting in a substantial tax

savings. These so-called "exempt" cooperatives reported tax liability of $1.9 million, while the nonexempt portion reported $13.2 million.

The 1962 Sales of Capital Assets Report presents

detailed data on the gross sales price, cost and expense of sale, depreciation, and gross gain or loss for

25 different types of property or capital distributions. Classifications are by size of adjusted gross

income, size of net capital gain or loss, period held,

and State. Most of this information was made available for the first time in this Statistics of Income

supplement.

The 1961 Foreign Tax Credit Report is the first

with information on the countries in which foreign

income was earned and to which taxes were paid

by U.S. corporations. For example, the report reveals that four countries-Canada, the United

Kingdom, Saudi Arabia, and Venezuela-accounted for more than one-half of the total foreign

income of $3.6 billion and foreign taxes paid of

$1.8 billion. The data in this report along with the

ones being prepared for 1962 and 1964 are designed

to aid in assessing the impact of the Revenue Act of

1962 which introduced major changes in the taxation of income earned abroad.

Tax Models Provide Data Needed for

Evaluation of Legislative Changes

The Service continued to make extensive use of

Statistics of Income tax models for tax research.

The model concept was developed to provide quick

and reliable estimates of the revenue effect of proposed changes in the tax law. A typical tax model

consists of a magnetic tape file of the sampled returns

and makes use of generalized computer programs

which are capable of simulating the probable result

of a wide variety of proposed changes in tax law

or in economic conditions. For example, the model

for individuals has been used extensively to evaluate

proposed legislation in the areas of ( I ) taxpayers

age 65 or over, and (2) the deduction for State

income taxes. The model for sole proprictorships has

been used to provide profiles of individuals having

large business deductions and losses.

Three model files are currently in operation. The

model based on individual income tax returns for

1964 contains all the important items of income,

exemptions, deductions, and tax for a sample of

95,000 Forms 1040 and 1040A. The model for sole

proprietorships contains most of the receipt and deduction amounts for a sample of 147,000 Schedules

C and F, Forms 1040 for 1964. The 1964 corporation model file contains the complete income statement and balance sheet as well as other tax

computation schedules for a sample of 51,000

returns in the Form 1120 series with accounting

periods ended July 1964 through June 1965.

Statistics To Assist Taxpayers and

Tax Administrators

For several years now, taxpayers who itemize deductions have been provided tables which the), may

use in determining a reasonable allowance for genera] State or local retail sales taxes. Sales tax tables

for States and the District of Columbia were ineluded in the Form 1040 instruction book for 1966.

Three States passed sales tax laws in 1966, and tables

were prepared for them for the first time. Eleven

tables were revisions of the 1965 tables. In addition,

a table of allowable deductions for 1966 State gasoline taxes, based on mileage and State tax rates, was

provided for inclusion in the instruction book for

the first time. Inclusion of sales and gasoline tax

tables in the instruction book has reduced the Service's taxpayer assistance workload by eliminating

PLANNING ACTIVITIES

-any thousands of phone calls which would have

been placed had the tables not been available.

Computer Selects Returns Used for

Statistics of Income Sample

A computer application developed to select tax

year 1965 Form 1040 and Form 1040A returns for

the Statistics of Income sample at the Southeast

Service Center was extended to include three other

service centers--Mid-Atlantic, Southwest, and

Western-for the tax year 1966 program. Utilizing

programing techniques and computer capabilities,

each return in the individual master file is examined

to ascertain whether its income size or other characteristics qualify it for inclusion in the Statistics of

Income stratified sample. Not only does the new system speed up the selection and statistical processing

of returns, it also improves the selection procedures

through increased accuracy in the identification of

returns designated for the Statistics of Income

sample.

Effectiveness of

Planning-Programing-Budgeting

System Grows-as Service's

Long-Range Planning Tool

The Planning-Programing-Budgeting System,

now in its second year in the Service, has become

the major tool for projecting long-range trends in

Service programs and resource requirements. Special studies, which are an essential part of the PPB

system, provide manaVment with the analytic basis

for choosing from among alternative courses of

action.

Service task for~ces started work this year on sevcral special studies of significant activities to assist

management in making program choices. Systematic quantitative analysis, as well as traditional qualitative analysis, is being used to develop alternative

objectives and alternative means to meet these objectives. Quantitative analysis assists in evaluating

the practicality of alternatives by providing calculations and comparisons of the relative costs and benefits of the alternatives being considered. The results

of these analyses will be presented to Service, Treasury, and Budget Bureau executives for review and

decision.

58 59
ANNUAL REPORT * CHAPTER EIGHT

Measurement of Taxpayer

Compliance Aids in Program

Evaluation

To permit optimum program design, operation

and evaluation, and to meet the demands for a

long-range research program which would further

the objectives of the Planning-Programing-Budgeting System and other tax administration requirements, the Service installed a Taxpayer Compliance

Measurement Program (TCMP) in 1963.

TCMP is gathering new data in four tax administration areas: (I ) Delinquent accounts; (2) Delinquent returns; (3) Individual returns filed; and

(4) Corporation returns filed.

Substantial progress has been made on the various

phases of TCMP: (I ) Outputs from 1963 delinquent accounts and returns programs have been

tabulated and analyzed; (2) outputs from the 1964

delinquent accounts program have been tabulated

and are now being analyzed; (3) the 1967 delinquent accounts program is in process; (4) field audit

work for the 1964 individual returns filed program

has been completed and some of its outputs have

been tabulated and analyzed; and (5) the input

phase of the 1966 program of delinquent returns is

nearly complete and its output tabulations are cxpeered in 1968.

The 1966 program of individual returns filed is

still in operation. Additionally, two new programs

are in the planning stage: A new segment of the

delinquent returns program covering farm operators,

and a corporation survey covering small corporations

filing returns with assets under one-half million dollars or without balance sheets.

Tangible results have already been obtained from

the 1963 delinquent accounts and delinquent returns

programs as described in the 1965 Commissioner's

Annual Report. Additional benefits from the delinquent accounts study have been realized in fiscal

1967 through the use of master file processing controls to reduce the time spent by field collection personnel in handling small delinquent accounts. When

these benefits fully accrue in fiscal 1969, it is estimated that annual savings of $1.6 million (202 manyears and 196,000 fewer taxpayer delinquent accounts issued) will be realized.

The delinquent returns prograrn results have been

put to further use in designing a procedure for effective use of master file information to increase the

60

productivity of revenue officers in canvassing operations.

In anticipating the availability of TCMP data in

fiscal 1967 from individual returns filed, the Service

started a new research project in 1966. Mathematical techniques will be used to develop a more effective ADP procedure for annually selecting for

examination those individual returns filed that most

need examining. Utilizing previous research data,

two selection (discriminant function) formulas were

developed for selecting low-income single proprietor

returns, and a field test was installed to ascertain the

effectiveness of these formulas in comparison with

existing selection procedures. Results of this test will

not be available until fiscal 1968. Anticipated results

would indicate, however, that the use of such formulas could produce such large gains as: (I) A

reduction in the "no change" rate; (2) an increase

in the average tax change resulting from examination; and (3) a substantial reduction in manual returns classification requirements.

Viewing the discriminant function technique as a

key method for attaining a substantial payoff from

TCMP, and in the light of available data gathered

in the 1964 individual returns filed program, the

Service is developing formulas for the four highvolume low-income classes of individual returns

(namel~, Forms 1040A, nonbusiness Form 1040,

and farm and nonfarm business Form 1040 with

adjusted gross income under $10,000) for possible

inclusion in the 1969 computer selection program of

returns for examination.

The major uses of TCMP data will be: (1) To

develop cost-yield relationships (average and marginal) in delinquent accounts and returns and returns examination operations for PPBS inputs and

requirements; (2) to measure the levels of compliance and tax administration gaps for determining

the Service's long-term enforcement policies; (3) to

determine changes in compliance levels over a period

of time for proper direction of enforcement programs; (4) to develop better selection procedures to

improve the effectiveness of enforcement operations;

and (5) to identify alternative methods of operations; to achieve greater operating economies.

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 70

million individual returns filed annually. In addition to the improvements outlined above, TCMP

will help clarify overall tax administration needs by

PLANNING ACTIVITIES

providing new data indicating the size of the various

kinds of filing delinquency problemZ among farm

.and nonfarm business taxpayers, and the tax error

problems of both individual and certain corporate

income taxpayers.

Over a longer period, TCMP will indicate

whether the methods of tax administration are associated with decreasing, increasing, or constant

levels of taxpayer compliance.

61
11

chapter

"I don't suppose we will ever get to the point where

people are pleased to pay taxes, but we owe

it to them to see that the collection is done as

efficiently as possible, as courteously as possible,

and always honestly."

President LYNDON B. JonNsoN

Management

Activities

62

Service Sets New Savings Record

The Service continued to make significant progress in reducing costs and improving the management of its operations. During the year, record savings of $16.5 million were reported ~y managers and

supervisors throughout the Service. This represents

an increase of 14 percent over savings reported last

year, and exceeds by $2 million the savings goal for

1967 which was established a year ago.

The savings achieved in 1967 are the result of

thousands of actions ranging from individual employee suggestions to major, Servicewide projects

involving the efforts of many people. The more

significant achievements are presented below and in

other chapters of this report.

Future Savings Goals Are High

Looking ahead for the next 2 years, the Service

is projecting a continuation of concerted efforts to

improve efficiency and reduce costs. Accordingly,

saving goals for 1968 and 1969 have been set at

$16.6 million and $16.7 million, respectively. These

goals will challenge the initiative, ingenuity, and

creativity of all Service personnel in carrying out

their responsibilities effectively and economically.

Awards Program Supports Economy Drive

The Incentive Awards Program of the Service

reflects the Government-wide emphasis on economy

over the past year. Savings resulting from adopted

suggestions exceeded $1.2 million, a new record for

the Service. Seven employees have received recognition under the Civil Service Commission Economy

Champion Program which honors employees whose

suggestions saved $10,000 or more. There also has

been a 50-percent increase in the number of employees receiving performance awards.

A new publication, the Pocket Guide for Supervisors, should help to ensure greater uniformity in

the performance awards program. It outlines the

requirements for granting performance awards, and

will increase supervisory awareness of the various

types of awards for which they may recommend

employees.

New Procedure Installed for Handling

Undelivered Refund Checks

Many times refund checks mailed to taxpayers

are undeliverable because the taxpayers failed to

notify the Post Office or the Internal Revenue Service of change of address. These checks are returned

to the Service and, prior to this year, had been deposited to the taxpayers' accounts on the master

file awaiting change of address notification. New

checks would be issued upon receipt of valid addresses. Beginning in March 1967, a new procedure

was implemented which delays the redeposit of undelivered refund checks. This means that the refund

checks are available for immediate issuance and will

not have to go through the costly process of reissuance. While awaiting new addresses the check is

manually compared with the taxpayer's return to

insure tl~at the name and address on the check have

been correctly transcribed from the return. If errors

are found, the check is immediately corrected and

remailed.

Federal Tax Deposit System Initiated

A new method was initiated this year for corporation estimated tax payments and will be extended

to other business tax payments in 1968. In this

system, each taxpayer is provided with preaddressed

punch cards which he will complete when paymerit

is due, and submit with his tax payment directly to a

Federal Reserve Bank, or a Federal bank depositary

which then forwards it to a Federal Reserve'Bank.

After depositing remittances to the Treasurer's account, the Federal Reserve Bank forwards the punch

cards to the Office of the Treasurer where the data

are converted to tape. The tapes are then sent to

the National Computer Center where the taxpayers'

deposits are reconciled with the amounts claimed

on the returns. Primary benefits accruing from this

system include: (I ) The deposit of tax payments to

the credit of the Treasurer of the United States is

accelerated; (2) the taxpayer is relieved of the

necessity of attaching validated receipts to the tax

returns; (3) the new deposit form simplifies bank

processing; and (4) the system eliminates several

processing operations in the service centers and

leads to manpower savings.

Preaddressed Label Proves To Be Effective

Taxpayers filing Form 1040 (individual) and

Form 11 20 (corporation

'

) returns are mailed forms

to which a two-part "piggy-back" mailing label is

attached. The two parts, bearing the taxpayer's

name, address, and account number as shown by

the master file, are affixed one on top of the other.

If the taxpayer does not use the form sent to him,

he is requested to remove the top label and affix it

MANAGEMENT ACTIVITIES

to the return he does file. If he is required to file a

declaration of estimated incqFne tax, the instructions

tell him to remove the top label and attach it to the

declaration, and file the Form 1040 or Form 1120

return with the bottom label. Experience in five

regions where the labels were used for the 1966 tax

year indicates that 50 percent of the Form 1040 taxpayers filed returns with the preprinted label, and

about 3 percent of those filing declarations of estimated tax transferred the top label to their tax year

1967 declaration. Taxpayers are encouraged to file a

return with a preaddressed label attached because

it lessens the chance of error, speeds up processing,

and contributes materially to keypunch savings.

Magnetic Tape Used for Reporting Wage and

Interest Payments

Magnetic tape, instead of paper documents, may

be used by payers for reporting wage, interest, and

certain other payments to individual and corporation taxpayers. The program is designed to capitalize

on the capabilities of electronic computers in business

and government. During 1967, about 7 percent

of the information documents furnished the Service

were tape records. One of the major uses of these

tapes is in the wage and information documents

matching program covered i'n Chapter 3.

Service Center Operations Expanded

With the implementation of ADP nearly completed, the Service has determined with a fair degree of certainty what returns processing work

should remain in district offices, and what could

better be performed in the service centers. A timetable, compatible with both the direct filing and

redeployment programs, has been developed for the

movement of work to service centers.

The movement of ndn-master-file tax returns processing and related accounting operations to service

centers, begun in;

,

tthe Southeast Service Center in

1966, was extended into the Mid-Atlantic and other

regions during 1967. However, Forms 943, Employer's Annual Tax Return for Agricultural Employees, for calendar year 1966 and Forms 942,

Employer's Quarterly Tax Return for Household

Employees, beginning with first quarter 1967 returns, centers are now manually processed in all service

,

including transmittal of employee wage

schedules to the Social Security Administration.

A special mailing, indexing, and delinquency

check tape file has been set up in each service center

to expedite these operations for Forms 942 and 943,

63

L
I;

ii

ANNUAL REPORT as CHAPTER NINE

also Forms 1065, U.S. Partnership Return of Income, and 1120S, U.S. Small Business Corporation

Income Tax Return, showing no tax due.

Revised procedures have been issued to simplify

manual processing of non-master-file returns and

accounts in the service centers. Transfer of all manual accounting operations to the service centers will

be accomplished during 1968.

More Responsive AOP Servioe Sought

Major emphasis is being placed on making the

ADP system more responsive to the taxpayer and

more effective in taking care of the increasing number of public contacts attributable in substantial

measure to the expanded capability of the new system. A private consulting firm is assisting in an

all-out effort to simplify the language on the many

letters, notices, and forms produced by the system.

Special. attention is being given to streamlining the

procedures and techniques involved in handling the

large volume of correspondence received from taxpayers

about their tax accounts and in making necessary adjustments after their returns have been filed.

A new organizational element, known as the Taxpayer Service Division, has been added in the service

centers to further this objective.

Personnel-Training Programs Meet

Staffing and Development

Challenges

The personnel and training programs of the Smice were focused on the problems created by the

necessary expansion of Internal Revenue Service

functions and services during a period of strong

demand for high-caliber recruits by both the public

and private sectors of the economy. Working within

this context, the aim has been to adequately staff

the Service without compromising the primary

objective of providing service of the highest quality e

to the Nation and its taxpayers. Consequ .tIy,

emphasis has been placed on new methods of

recruiting competent employees from every available source, and on career development and maximum utilization of existing human resources.

Recruitment Reaching New Peaks

Recruiting for the Internal Revenue Service in

1967 remained a major task. Many kinds of people

were recruited or reassigned to accomplish the mission of the Service:

64

2,000 Revenue agents, to examine accounting records and investigate other sources of information

to determine a taxpayers' correct Federal liability.

935 Revenue officers, to take necessary enforcement actions insuring that all taxpayers meet their

obligations.

230 Special agents, to investigate suspected or a]-

legcd tax fraud.

700 Tax technicians, to interview or correspond

with taxpayers in explaining tax issues and determining tax liability.

110 Alcohol and tobacco tax investigators, to

track down liquor law violators in backwoods dens

and big city stills.

60 Internal auditors, to conduct management

audits.

Plus administrators, to coordinate and direct executive functions, and clerks, typists, key punch operators, and others to give logistic support.

In addition to recruitment for the permanent

workforce, the Service has an annual task of hiring

temporary employees during the peak months of the

filing season. Approximately 15,000 seasonal employees were used in regional service centers this

year. Overall, service centers had to hire 74 percent

more seasonal employees at the peak of employment

this year than last year:

1966 Filing season 1967 Filing season Percent increase

7,154 12,711 74

Midwest and North-Atlantic Service Centers both

began processing Individual Master File (IMF) returns for the first time this year. As a result, peak

seasonal employmentrioubled at North-Atlantic and

quadrupled at Midwest. Western Service Center

took on the processing of IMF returns from California for the first time, as well as the optional filing

of refund returns, while Central took on the processing of IMF returns from Detroit and optionally

filed refund returns. As a result, Western's peak seasonal employment increased 2V2 times and Central's

doubled.

College student recruitment has become an important source of service center seasonal manpower.

In the last year, the number of college students

employed at service centers during the filing season

more than doubled:

1966 Filing season 1967 Filing season Percent increase

563 1,143

1

02

Man-years realized during each of the past 2

years and employees on rolls at the close of 1966

and 1967 are shown in the following table:

Personnel summary

14-yeare Number on roll'

Location and type

real ad at c n... the,

1966 1967 1966 1967

Service, total.............................. 63,508 65,S46 61,689 65,122

Permanent---------- ---------- ------ 58,511

58 628

57,365 .640

Temporary---------- ----------------- 4,997 7:318 4,324 6,482

National Office ---------- 3 11 13,894 3,626 3,852

Field service, total

: 5

59 62,052 58,063 61,270

Dats processing, totaL-------- --------- 18.839 20,378 17,499 9,468

Collection, total_ ---------------_----- 10,088 10,268 _T774__ _T_0,029

Revenue officer,- 6 121 1 17 5,989 6,027

Other---

3:963 4:

171 3,785 4,002

Audit, total.. _------------------_--- 19,970 20.56D 20,137 ZD,924

Roth'. ... hasu ,,nls--, -----------_--- 12,473 12.878 12.561 12, SU

d iturs a n ths tach hicia ns. . . 3.093

3

12

1

3

Othe0.................. -....... 4,404 4: 55 IS 3

4:

537 4:797

I at.1lig.a., WaL --------------------- 2,343 2,346 2,350 2,380

Specie

I

agents. .................... 1,732 1,726 1,721 1,740

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

611

~

620 629

640

Alcohol and tobacco ha, total... --------- 762. ____ 2,611 --i-- 118 -2,637

I naestillSiDis .... ~ ----_------ _ 937

964

i 939 968

1 nspectots gmmra _

::

459

4

44

4

,,,,,; 53 442

Imp.t..

Pro

Z

4

11 416 410 426

Other -------------_-------------- 813 787 796 801

Appellate, total. --------------------- 1 112 1 617 1 111

Appellate conferees ................ 717 735 731

A dila- ......................

Other ........................... 1

72817

'6751' 1

76512

Adrumi,tration ---------- 2,113 8 6 2,653 2,78

Regi.m.1 c..... I..............

742 7

51

761

"'

Roil

mml inspection...... --- : ...... 639 658 644' 713

Includes terminal leave

Includes office of Internet me"...... ,.1 lipsin~.Itpti" som, SNational ... its Computer Center, and IRS

Data Center.

3 Includes overseas employees hired lociOly (6 in 1966 and 7 in 1967).

Recruiting Goes Nationwide

In an effort to obtain the highest quality possible,

districts are now helping meet the recruiting needs

of other districts as well as their own. Under

the program, offices willingly accept applicants recruited for them by other offices. Eligible candidates

are referred for positions according to their work

location preference, rather than on the basis of their

place of residence or school attended. An important

feature of the program is concentrated attention

,

in

recruiting and referral, on designated locations

wherc the supply of high-quabity eligibles is insufficient to meet immediate hiring needs or anticipated

,advance commitment needs.

Hundreds of Schools Contacted

Recruitment brochures, a direct mailing campaign, advertising media, on-campus recruiting,

and participation in college career days were again

used extensively. Trained recruitment teams went

to most major colleges and universities. Prominent

National Office officials, including the CommisMANAGEMENT ACTIVITIES

sioner, Deputy Commissioner, and Assistant Commissioners, also phirticipated in the field recruiting

effort by visiting colleges and universities and speaking to groups of accounting students. Speakers concentrated on substantive aspects of tax law and on

what it is like to work for the Service.

To tap the manpower reservoir of the future,

Careers in Tax Work brochures were mailed to

12,000 high school guidance counselors during the

past year. Thousands of copies of the brochure were

also distributed in the Teaching Taxes kits for high

school teachers. Treasury Enforcement Agent and

Careers and a Sense of Purpose brochures were

mailed to 5,900 college and university guidance

counselors. In addition, 20,000 copies of Careers in

Tax Work were distributed to the Accounting

Career Council for inclusion in their career guidance

packages.

Student Trainee Program Aids Future Accountant

Recruitment

The program of hiring undergraduate accounting

students as trainees, for development into internal

revenue agents and internal auditors, produced substantial results in the first full year of operation. This

included the participation of 152 students and the

negotiation of work-stud), agreements with 74 colleges and universities. These accomplishments are

especially significant in view of the strong competition from private industry, State and local government, and otherFederal employers for such students.

Field offices enthusiastically received the program

and consider it an extremely useful recruiting and

college relations system. Further expansion is

planned for the coming year, along with certain

refinements and improvements in administration.

Special Salary Rates Approved a

As in previous years, the competitive recruitment

market in a boor~ing economy created difficulties

in filling vacancies for accountants (including rcvcnue agents and internal auditors), special agents,

and estate tax examiners. As early as 1963, special

higher minimum salary rates were approved by the

Civil Service Commission for revenue agents and

internal auditors, grades GS-5 through 9, in California. The situation became so acute that special

rates for these positions were authorized nationwide

in 1966. In March 1967 payment of travel and

transportation expenses to first-post-of-cluty was

authorized for new appointees. To meet private

competition, a furtherincrease in rates was approved

65
t

!I

:I

11

ANNUAL REPORT * CHAPTER NINE

in June for Grades GS-5 through 9. Similar pay

rates and travel and transportation payments were

approved for estate tax examiners.

Requests were pending at Civil Service Commission, at fiscal year's end, on special salary rates for

special agents GS-5 through 9 in intelligence, and

on paying their moving expenses to first-postsof-dut%.'

Recruitment Shortages Met by Utilization

Techniques

A recruitment survey, to be fully implemented

next year, will provide the means for a continuing

analysis of job performance of recruits in the Service's nine major occupations. The study will help

identify job applicants with the best potential for

rapid progression to journeyman levels and for quality performance at these and higher levels. Subsidiary to this is identifying the kinds of applicants who

are of high quality but who do not present turnover

problems.

A smaller scale version of this recruitment study

was completed for the revenue agent occupation in

1965. The findings have been translated into a revised revenue agent recruitment examination guide

for interviewers. Most of the new factors are being

incorporated in an accountant auditor examination

guide now under review by the Civil Service Commission.

To help meet recruitment goals for special agents,

a major internal recruitment effort also has been initiated. Bv this means, the Service expects to identify

and select from employees already on the rolls a

number of individuals for careers as special agents

in the intelligence activity. This will be one of several

future efforts to expand and extend the talents and

experience of employees by offering them additional

career development possibilities.

Employee Retention and Utilization Receives

Prime Attention

"Almost a miracle," were the words used this

year by Congressman Wilbur Mills, Chairman of

the House Ways and Means Committee, in describing the Service's redeployment program. This continuing effort retrains and finds other placements

for district office personnel whose returns-processing work is moving to the service centers. Of the

over 9,000 personnel redeployed to date, 1,368 were

accounted for this year. A number of these employees have been reassigned to service centers or other

' These requests were approved early in fiscal year 1968.

66

IRS jobs. Others left voluntarily to go to other agencies, private business, on into retirement.

Complementing its vigorous recruitment effort,

the Service has given added emphasis to retaining

employees. This is based on recognition of conditions

in work design and work environment which might

prevent employees from doing a truly professional

job. Their help in identifying possible roadbocks

to increased professionalism resulted in a number of

changes; for example-private interview rooms for

discussions with taxpayers, and additional dictating

and other office equipment to reduce clerical work

of professionals. These changes, designed to make

jobs more attractive, will assist in attracting as well

as retaining good employees.

The Service has become increasingly aware of

the fact that numbers of professional employees

erroneously believe production is being used as a

principal factor in selection and promotion. This

pointed to a serious need for better management

and employee understanding and interpretation of

var%ious officials guides. A number of actions have

been taken to bring about fuller understanding, including short training sessions for supervisors and

employees to make them. more aware of opportunities for career advancement.

Special attention was paid to the revenue officer

occupation. Interviews of several hundred revenue

officers, supervisors, and line officials made up a part

of the effort to analyze the working environment

of this key group of employees.

Employee-Management Cooperation Expands

The pbLst year again saw an increase in employ e

organization activity; approximately 8,000 additional employees are now in units represented by an

exclusively recognized employee organization. By

the end of the year more than 35,000 employees in

45 districts and three service centers were exclusively

represented by four employee organizations.

In addition to consulting with recognized employee groups, the Service negotiated its fourth and

fifth formal collective bargaining agreement?, in the

Portsmouth District and the Kansas Citv Service

Center, The Portsmouth agreement contains the

first advisory arbitration provision negotiated within

the Service. Other negotiations are underway in .

Detroit, Los Angeles, and San Francisco.

Technical's Blue Ribbon Study Nears Completion

One-hundred and eighty-four employees (including 77 first-line supervisors and managers), have

been interviewed in a coordinated study of personnel

and training operations under the Assistant Commissioner (Technical). B~Istcring these interviews are

280 reports of specific work occurrences gathered

from among 750 employees serving in Technical. A

study team analyzed and evaluated this and other

available data to develop means of improving personnel and training programs. Preliminary findings

point to the need for functional work assignment

criteria, improved operation of the grade structure

change and control program, flexible staffing patterns, more realistic entrance levels, establishment of

a student trainee and a college recruitment program,

improved personnel selection techniques, increased

participation in training activities, and improved

supervisory practices. Action on resulting recommendations will be initiated in 1968.

Blind Taxpayer Assistors Successfully Employed

A dramatic, if modest, beginning was made in

the employment of the blind as taxpayer assistors.

Three blind persons were trained as fully qualified

taxpayer assistors in a pilot program and were scheduled to enter on duty in the Little Rock District

early in fiscal year 1968. The Office of the Services

for the Blind, Vocational Rehabilitation Administration, supplied a grant for the experimental project,

and the actual training was done through the

Arkansas Enterprises for the Blind. The Little Rock

experiment is an example of what can be accomplished when agencies work together. Employment

of the blind in the Service offers a potential source

of manpower in tomorrow~s labor market.

Economic and Educational Opportunity Programs

Boosted

Following established Executive policy, the Service actively continues to provide employment for

young people who qualify because of economic or

educational disadvantage. As of May 1967, the programs had 1,054 enrollees, representing a 5 1 -percent

increase over last vear's total of 696. Participation of

minority groups lias remained high.

These programs, mostly funded from non-IRS

sources, provide each enrollee with a specialized introduction to the world of work in addition to direct

financial benefits. Because many of the young people

hired are inexperienced, a permanent aim of these

programs is to increase knowledge of and motivation toward opportunities in Government and business. To help the enrollees compete in today's complex society, each appointing office has designed and

MANAGEMENT ACTIVITIES

conducted its own training programs. These usually

emplIasize orientation in basic office skills and practices, plus training in such subjects as typing and

business English.

With an added year of experience in handling

the program, supervisors have reported improved

results from the participating personnel. Remaining

problems, arising from cultural and economic diversity of the participants, are not easy to solve, but

progress is being made with the added use of new

personnel techniques.

The Service was again active in furthering the

goals of Operation MUST (Maximum Utilization

of Skills and Training)-a Governmentwide drive

aimed at countering the effects of labor market

shortages while, at the same time, providing increased opportunities for the disadvantaged. Among

the more important achievements this year have

been: (I ) The establishment of GS-4 recruitment

and training programs for many professional and

technical occupations, and (2) the development of

a National Office pilot program for hiring and

training GS-1 and GS-2 office aids.

Equal Employment Opportunity Efforts Advanced

As a prelude to progressive understanding and

familiarization in achieving equal employment opportunity goals, Service and Treasury officials participated at conferences in 17 cities with many top

executives of the Service.

The Action Plan for Equal Employment Opportunity, published in May 1967, pinpointed the

responsibilities of key officials and reemphasized the

President's goal of achieving "Full and equal opportunity for per-sons of every race, color and creed

.and nationality in every part of the United States."

Specifically, the plan 61led for: ( I ) Continued cooperation with other agencies through Federal executive boards anij associations in spearheading community action projects which affect employability,

and (~) the development of comprehensive regional

equal opportunity action plans. I

An Equal Employment Opportunity Handbook

implementing the program was completed and

scheduled for publication in early fiscal year 1968.

The Handbook sets forth responsibilities, objectives,

procedures and guidelines relative to the program.

Two issues of Employment News dealt with success

stories of minority employees.

Equal employment opportunity seminars continued throughout the Service. They stressed positive

ways to improve the total program. National Office

67

1~~
il

ANNUAL REPORT * CHAPTER NINE

seminars included one for divisions directors and

above, and another for supervisors and managers.

The seminar program is to be completed by the end

of the second quarter, fiscal year 1968, when virtually all supervisory personnel will have received

Equal Employment Opportunity training.

Technical Training Increases

Major increases intechnical training resulted both

from expanded recniitment and the need to train

employees to deal with changes in tax law and other

aspects of their jobs. Since 1965, the number of recruits trained increased by more than 100 percent.

Recruit training is expected to continue at a relatively high level, as the need for recruitment of technical employees increases.

Other developments in technical training have

resulted from major changes in the tax law and

technological developments which have added to

the complexity of employees' jobs. Illustratively, a

course for revenue agents assists them in following

;in audit trail in organizations using computerized

accounting systems. The course introduces the expcrienced revenue agent to the concepts of data

processing, and gives him practical experience in

applying the principles he learns to a case built on

a model computerized system.

A 2-week course for 'higher level revenue officers

has been developed to provide advanced technical

training that will increase their ability to deal with

more sophisticated and complex issues involving

collection and returns compliance. Revenue officers

also received training in the provisions of the changed

Tax Lien Law, and a new course was developed to

teach them how to handle offer-in-compromise

cases, since the responsibility for many of these cases

was shifted from revenue agents to revenue officers.

The Service has adapted a computer manufacturer's training materials to its own needs and is conducting specialized training courses for prospective

card punch operators inservice renters. Nearly 3,500

people who received this training were hired as

permanent or ternporary card punch operators during the year.

Developmental Efforts Increase Managerial

Efficiency

Emphasis continues on the systematic selection

and development of supervisory personnel. Many of

the concepts originally associated with the Executive

Selection and Development Program have been extended to supervisory and managerial jobs throughout the Service. Specially tailored courses are being

developed to provide supervisory and management

training in each of several functions such as appellate and field audit.

Training Methods and Operations Improved

The year 1967 marked the opening of the NorthAtlantic Regional Training Center, which is housed

on the campus of Hofstra University on Long Island. The Central Regional Training Center was

relocated from leased space in Detroit to the new

Federal Office Building in Cincinnati. To provide

higher quality and more uniform training, the Service will establish additional regional training centers during the next 2 years. A Western Regional

Center has been operating successfully for the past

few years.

The National Training Center continued its work

in development and updating of technical training

materials for field use. These materials are used in a

variety of technical and professional courses.

The center also continued to experiment with new

methods designed to make training more efficient

and effective. Successful initial application of the

EDEX automated teaching system to one of the

service center courses in returns processing has led to

EDEX adaptation of several other related service

center courses. This reduced average training time

from approximately 16 days to 11 days for each of

the 3 000 people involved. Eight experimental

EDER tax law units are intended for multiple use in

several courses. If the field test is successful, this also

will result in a saving of training time.

Other experimentation involved using closed circuit television in training programs for employees

who have extensive contact with the public. TV

is also used in instructor training to help trainees

critique their own instructional techniques.

Deputy Commissioner Smith Honored by National

Civil Service League

In April Deputy Commissioner William H. Smith

was named as one of the ten Outstanding Federal

Employees by the National Civil Service League.

Since 1955, the League has selected annually ten

Career Civil Servants who represent the highest

ideals of public smice. Mr. Smith was the third Intemal Revenue Official to receive this honor. The

League's Career Service Award was given to him in

recognition of the leadership, imagination, integrity

and devotion to duty that he has displayed throughout 21 years of civilian Government service involving three agencies.

Mr. Smith's contributions are apparent from the

awards bestowed on him by the Service and the,

Treasury Department. In 1960 he shared in a group

award for the development of theService's automatic

data processing system. In 1963 he was given the

Commissioner's award for his role in achieving economies in tax administration. And in 1966 he was

presented the Secretary's Meritorious Service Honor

Award for the quality of his work, his personal integrity and his dedication to public service.

Improvements Produced Through

Facilities Management

New Office Space Provided for 9400 Employees

The Internal Revenue Service is one of the largest

single users of office space in the United States, with

approximately 65,000 employees occupying 11.3

million square feet of space in 1,259 buildings located in 1,067 cities across the Nation. About 52

percent of this space is in federally owned buildings which are managed by the General Services

Administration. The remaining 48 percent is leased

by GSA at an annual rate of $19.3 million.

During 1967, the last three of seven ADP Service

Centers (Andover, Mass.; Covington, Ky.; and

Ogden, Utah), occupied newly completed buildings

that were specially designed to accommodate both

their massive paperwork flow and their complex

electronic data processing requirements. In addition

to the 9,400 people moved into these modern facilities, 2,931 more employees in major Service field

offices moved into new or largely renovated quarters.

Less substantial improvements and alterations were

made at 58 other offices housing 10,395 employees.

These improvements were part of a Servicewide

program to provide employees with a modern, clean,

professional working environment and furnish the

taxpaying public with convenient, efficient places

in which to meet Service *representatives with appropriate ease and privacy.

The Service will continue working on the placement of all employees and operations in good,

efficient space. For tfiose offices which deal with the

public, additional efforts will be made to give taxpayers the convenience and dignity which is due

to citizens. As part of this program, the Service

will press toward solutions for the relatively few

offices remaining in unsatisfactory space.

The four most significant unsatisfactory locations

continue to be the district headquarters offices in

Chicago, Indianapolis, Newark, and Nashville.

27G-580 O-G7-6

MANAGEMENT ACTIVITIES

These must wait upon new Federal office buildings,

scheduled for completion during the next several

years. All other district headquarters offices are in

good space. During fiscal year 1968, 16 larger

Service offices and 36 smaller offices will move

into new or significantly renovated space; 202 other

offices are scheduled for less substantial improvements.

Furniture and Equipment Improved

Having virtually completed a 4-year program of

replacing obsolete and dilapidated furniture during

1967, the Service launched a two-pronged program

aimed at replacing worn out and inefficient office

equipment, and providing up-to-date machinery

necessary to handle large volume, complex programs.

Plans call for eliminating all unsatisfactory office

equipment as rapidly as funds permit. The replacement program is geared not only to get rid of old

and broken equipment, but also to provide additional equipment in offices with too few machines

or inadequate equipment.

A concentrated effort to provide the most efficient

and economical equipment for processing the large

volume of paperwork flowing through operational

organizations has resulted in converting manual typing to automatic typing systems in audit and appel- I

rate, thus releasing many employees for higher

priority duties.

Telephone Calls Save Service Manpower

Telecommunication costs continue to rise as a

result of increased telephone use, rate increases,

improved communications systems, and additional

emphasis on timely and responsive communications.

Considerable progress has been made in identifying

the source of these rising costs and determining

resultant benefits. As part of an in-depth comparative cost survey, ~ pilot stud), of telephone calls

made in one district office demonstrated that the

telephone call is an especially effective and economi.

cal method for meeting the communipation needs

of the Service. The study also indicated that manpower expenses for a personal visit or for writing a

letter are greater than those for telephoning.

Automobile Travel Plan Produces Savings

The Service continued its effort to establish

fair and reasonable mileage reimbursement rates for

privately owned vehicles used by employees on official business. A sliding scale plan was adopted by the

Service last year to give high-mileage drivers the

69
4

ANNUAL REPORT A, CHAPTER NINE

option of driving a General Services Administration

(GSA) car, or their own car at rates approximating

the rates paid for GSA cars. The sliding scale plan

was amended this year to provide for 10 cents a mile

up to 500 miles a month, rather than the former

rate Of 10 Cents a mile up to 400 miles a month.

Further, employees may now prorate their monthly

mileage over the full year for reirrhursement on an

average monthly basis. Lower rates are paid for mileage after the first 500 miles per month. The sliding

scale plan saved over $500,000 when compared to

a flat rate of 10 cents a mile. The General Accounting Office and the Bureau of the Budget estimate

significant savings in future years through application of a sliding scale plan by other agencies.

Records Disposition Highest in Ten Years

More records were sent to Federal Records Center

storage or destroyed this year than any period since

1957. Almost 300,000 cubic feet of records were

removed from Service offices. Space and file equipment valued at $1,066,000 was made available for

reuse by retiring or destroying these records.

Forms and Form Letters Standardized and

Improved

Forms management efforts continued to result in

improved and standardized paperwork operations.

The inventory of forms and form letters was reduced

by 1.6 percent during the year. Most of this reduction was the result of consolidating and standardizing forms on a regional or national basis. Equally

.important were improvements in forms and form

letters to make them more generally usable and,

in the case of those sent to the public, more courteous

and understandable. The table which foll6ws summarizes the results of this year's forms management

activities.

Forms and form letters

Prescribed by

Opening

I-m.

tory

=

ped

Efirm.

t.d

Closing

inven.

tory

Net

change

Total ....................... 16,633 2,123 2,395 16,361 -272

N ional d

0""'

atearn. t"d I)

Ad

_ .

5,394 423 161 5.656 +262

Real... I offi-(.,ad by regional

,,a, I ..*,,nl, ) ....A, 2.. A,

=`dzNkt

...

of.,

7,990 707 1,178 7,519 -471

CIA,~Iict afficta (..Ad by 1-1 di,-

A Icts and their subordinate

1 7'

8

2' ' 7"

351

1

-221

Service

"

~ 57R

599 if

5 ~ 666 +88

Data Center-... .

.............. : -- 99 106 36

1

69 +70

Disabling Injury Rate Continues Low

The Service has maintained without change the

14-percent reduction in disabling injuries made in

70

its safety program during the first year of President

Johnson's Mission SAFETY-70. There was an encouraging 27-percent reduction in the disabling

injury frequency rate during the first 4 months of

calendar year 1967 over the comparable period in

1966. There is reason to believe that this improvement will continue for the remainder of the year,

sparked by interest in prevention of falls.

Safety awards were presented to 26 district offices

and service centers in recognition of either one or

more years' operations, or I million man-hours of

operations, without sustaining a single disabling

injury. Employees of the Cheyenne District Office

received the Commissioner's Safety Award for

having completed 12 consecutive years without a

disabling injury. This is the longest record in the

Service and represents an exposure of over 2 million

man-hours during that period.

Vehicle Safety Improves

"Take Time to Think," a Service-developed training film, has been shown to over 17,500 Service cmploym who drive on official business. This film, designed to improve driver awareness of the constant

need for caution, continues to receive a large share

of credit for the 10-percent reduction in the frequency rate of motor vehicle accidents during

calendar year 1966 over 1965. Approximately 96

million miles were driven during calendar year 1966

with only 702 accidents reported. The motor vehicle

accident frequency rate of 7.4 accidents per million

miles driven is one of the lowest Service rates recorded, and represents a significant improvement

over the 1964 and 1965 rates of 8.5 and 8. 1, respectively.

Transfer of Functions to Data Center Completed

The IRS Data Center at Detroit, Mich., became

fully operational on January 1, 1967, and now performs all computer operations not directly related

to ADP master files. Special projects processed at

this facility include: the Statistics of Income Program; IRS payrolls and payrolls for certain other

Treasury offices; Taxpayer Compliance Measurement Programs; IRS management information

reporting systems; and the Exempt Organization

and Pension Trust Master Files.

Financial Management Aided by

New Programs

Over the past several years the Service has taken

a number of measures toward achieving maximum

utilization of resources in accomplishing its work

programs-an effort which continues to challenge

the imagination and ingenuity of all Service officials.

These measures include the Planning-ProgramingBudgeting System and related Special Studies Program; the Taxpayer Compliance Measurement

Program; the annual operating financial plan; the

position management system; the master file automatic data processing system; reorganization and

consolidation of offices; work planning and control

systems; and the decentralization of management

and control of resources to the lowest feasible operating levels.

During the past year the Service devoted considerable effort to improving these measures and added

several others described below, which should furthcr improve management of IRS resources.

For fiscal year 1967, Internal Revenue Service

was authorized an increase of 1,369 people and

$36.6 million, over fiscal year 1966. This increase

was especially significant since Congress authorized

it within an extremely tight fiscal environment for

all Federal programs.

Resource Ceilings and Restrictions Imposed

Management of the financial aspects of Service

operations was particularly challenging during the

past year, requiring supplementary controls, analyses and reports, and increased attention of Scrvice officials. Faced with sharply rising commitments

in a number of Federal programs, several tight resource ceilings and restrictions were imposed on most

departments and agencies to partially offset increased costs elsewhere.

In view of the revenue-producing nature of Service work programs, the ceilings and restrictions were

applied with a great deal of prudence-to maintain

revenue production while reducing costs. Through

special studies and economy measures the Service

is continually seeking to reduce travel, communications, procurement and other costs in ways which

will not adversely affect its tax enforcement activities.

Overhead and supporting staff is always critically reviewed and allowed only where considered essential

to the Service's primary mission. Special emphasis

was placed on these measures again this year. As

disclosed in program reports on other pages of this

Annual Report, the Service was able to substantially

carry out its planned work, programs, thereby maintaining revenue production while holding costs and

MANAGEMENT ACTIVITIES

personnel levels within approved ceilings and

restrictions.

The distribution of obligations in fiscal year 1966

and 1967 is shown below. For more detail bN appropriation and activity, see table 26, page 134.

Appropriations and obligations

fin mile., of A.111111

Appropriation

Salaries And expenses. ..........

Revenue amount

i

Co.asmg~~i rnpla .................. ng and proc-

------ * ............

In ....1.role196i yl~~1w...... --------..

Appropriated I

1966 1967

99.5

99.8

99.9

99.8

Obligated P tr

obligat

196G

18.0

162.9

447.6 6285

1967

173.0

473.2

17.5

159.4

444.5

1967

18.8

172.6

472.5

1966

97.2

97.8

99.3

-;8-9

1 1nc]Ud as adjustments tor appropriation transters and pay increase supplements Is.

Man-years authorized and realized by appropriation for fiscal year 1966 and 1967 (exclusive of

reimbursements) are compared below:

665.1

+36.6

563.9

+42.5

Man-years authorized and realized

Appropriation

Authorized

19667 1967

Reafi,.d

1966 1 1967

Salaries and expenses.. ------

Revenue .~..rrt!n

om."i

g__ !~.md ......

Compliance—— .............

Total— ..............

Iorre,se 1967 over 1966. .....

1,436

20,485

42,019

63,940

1.484

":

201

,2 624

+1,369 ';S' 309

1.413

204 494

1: 440

63,347

1,459

22 012

42: 332

.65,803

+2,456

P.-t.g.

realized

1966 1967

98.3

103.8

__!9, 100.83

98.4

100.0

". I

99.1

(For more detail by appropriation, by activity,

and also obligations by districts, regions, and National Office, see tables 25 and 26 on pages 133 and

134).

Studies Under Way T6 Improve Reporting of

Resource Utilization

The Service re~iews its financial program continually throughout the fiscal year to reevaluate the

original allocation of resources, to reprogram them

as necessary to meet changing conditions, and to

achieve their most effective utilization. Studies are

now under way to identify specific resource utilization data which management needs for timely and

meaningful decision making.

Payroll Operation Consolidated

In prior years, payroll operations were divided

between the North-Atlantic Service Center and the

Western Service Center. In 1967, the transfer and

71
ANNUAL REPORT * CHAPTER NINE

consolidation of payroll operations to the IRS Data

Center in Detroit was completed. The eventual result of the consolidation will be a more economical

operation and better service to both management

and the employees of the Service and other Treasury bureaus who come under this payroll operation.

Payday Advanced and Direct Mailing of Salary

Checks Scheduled

Procedures arc being developed to provide for

direct mailing of salary checks and bonds to addresses designated by employees, at their option.

Implementation of direct mailing is planned for

early in calendar year 1968, with direct mailing of

bonds to follow thereafter.

Payday was advanced I day during 1967, reducing the time between the end of the pay period and

the receipt of pay checks from 10 days to 9 days.

The advancement also reduced the crucial time

available for processing the payroll, but it is anticipated that this can be recovered by direct mailing

of checks and bonds.

Employee Reimbursement for Moving Expenses

Liberalized

Ile Service has issued operating regulations implementing the new moving allowance law, which

liberalized reimbursements to employees who change

official duty stations in the interest of the Government. In addition to the increased benefits for employees under this law, the Service stands to benefit

through greater mobility of its management officials.

Federal Tax Lien Revolving Fun~ Established

The Service requested, and Congress approved,

capitalization of a revolving fund for use in purchasing real property on which the Service has a tax

lien and under circumstances where it would.be advantageous for the Government to buy the property.

Procedures for using the fund are effective beginning

in fiscal year 1968. Itis anticipated that the fund will

provide significant improvement in the Government's ability to insure maximum collection of

revenue.

Inspection Continues to Guard

Integrity of Service

To aid in maintaining the public's confidence, the

Service has for many years had an inspection service

to provide the Commissioner and other managemerit officials with timely, factual, and objective

information on any matter that represents a potential threat to the Service's fulfillment of its public

trust.

A protective and constructive service is furnished

the Commissioner and all other levels of management through a comprehensive internal audit program which provides continuing independent review

of all Service operations. The results of these audits

not only permit management to appraise the degree

of compliance with established policies, procedures,

and controls, but also provide a basis for appraising

their effectiveness. As an additional safeguard to integrity, internal security investigations are regularly

conducted on various matters, particularly character background investigations of new appointees to

positions of trust, and investigations of complaints

of misconduct on the part of employees. The prompt

and thorough investigations made protect the public from those who have violated the high standards

required, and at the same time protect Service employees who have been falsely accused of misconduct. Investigations are also made of reports by

Service employees of actual or suspected bribery attempts by taxpayers or their representatives to influence Service actions in tax matters.

Internal Audit Program Emphasis on Collection

and Enforcement

As an integral part of the Service's management

control system, internal audit examined and reported

on the major activities of the Service which are most

closely related to the collection of the tax revenues

and the enforcement of the tax laws. During the

fiscal year, over 85 percent of the direct internal

audit staff time was spent on data processing, collection, audit, intelligence, and alcohol and tobacco

tax functions. An additional 12 percent was spent

on integrity matters.

Management's actions on deficiencies reported

and on recommendations made as a result of internal audit represent a significant contribution to the

maintenance of an effective Internal Revenue Service. Programs and procedures were improved,

systemic errors were corrected, and internal controls

were strengthened. Many of these actions had the

effect of improving taxpayerrelations and enhancing

the image of the Service. Some of them also had an

impact on the revenue. A conservative estimate of

the results of such actions during 1967 totals more

than $37 million. Included' are such items as

management's actions on specific cases; the assessment of tax, penalties, and interest not - properly

assessed; the recoupment of erroneous refunds; the

securing of delinquent returns; and the acceleration

of collection action on delinquent accounts.

One example of program improvement occurred

when an internal audit disclosed that computer

programs were not detecting taxpayers who failed

to report their self-employment tax liabilities.

Prompt management action initiated computer program changes which are estimated to produce several million dollars in additional revenue each year.

In another instance internal audit reported on

the inconsistency in the Code which provided that

agents withholding taxes from nonresident aliens

remit the amounts withheld annually, while at the

same time the Code required domestic employers

to remit amounts withheld at least quarterly.

Changes were made in the Internal Revenue Code

and Regulations to provide for the more timely

deposit of taxes withheld from amounts paid to

nonresident aliens which will result in estimated

interest savings of $4 million annually.

Breaches in Integrity Investigated

Indications of breaches in integrity involving

frauds on the revenue, committed by employees, or

through collusion between employees and nonService people, are investigated by teams of auditor-,

and investigators.

One such joint investigation disclosed that a district office. employee had been paid by taxpayers

for preparing approximately 100 tax returns. The

investigation disclosed that 32 of the returns were

fraudulent and the employee was subsequently prosecuted, convicted, and sentenced to 18 months

in prison. This investigation also disclosed four multiple filer refund schemes perpetrated by individuals

outside the Service which were referred to the Intelligence Division.

In another instance investigation of allegations

that cases could be "fixed" disclosed collusion bebetween an office auditor and a tax practitioner.

Fraudulent deductions on tax returns prepared by

the practitioner were allowed by the auditor in his

examinations of returns, thus permitting the tax.

payers to avoid full payment of their income tax.

MANAGEMENT ACTIVITIES

Both the employee and the practitioner were tried,

found guilty, and placed on probation for 3 years.

In both of the above cases examinations or reexaminations of the fraudulent returns resulted in

assessments of substantial amounts of tax and

penalties.

Record Number of Attempts to Bribe Service

Employees

The success of the voluntary self-assessment system of this Nation requires continuing public confidence in the integrity of Service employees. Nothing

demonstrates this integrity so credibly as the prosecution of persons who attempt to corrupt honest employces through offering bribes. A large percentage

of Service employees engage daily in official contacts

with the public of a nature which presents tempting

possibilities to those unethical per-sons who regard the

offering of.a bribe as an acceptable solution to any

difficulty. The Service program to bring these

corruptors to justice received renewed emphasis during the year by a special message from the Commissioner to all employees urging them to report bribe

offers. During 1967, employees reported a record

number of bribe attempts-50 percent more than

last year. In the past 2 years, 16 persons were convicted or pleaded guilty to attempted bribery of Smice employees; at yearend'prosecutions were pending on 32 defendants for this crime and 68 cases were

still under investigation.

Internal Security Case Production Increases

Internal Security investigations of all types conipleted during the year totaled 12,373-a 25-percent

increase over the priodyear. In addition, police rccord checks were made on 4,491 employees considered

for short-term ter4orary appointments. Faced with

the highest workload in its history, and with only a

nominal increase in authorized staff, streamlined

procedures were adopted in midyear in one of the

major inspection case categories-character investigations. As a result, reductions were achieved in investigation costs and the length of time to complete

cases.

One of the most rewarding aspects of inspection's

work is that many investigations result in exoneration of wrongfully accused employees. During the

fiscal year, the majority of accused employees were

cleared after investigation.

72

73
I

11

ANNUAL REPORT

- CHAPTER NINE

There followsa tabulation of the types of investigations completed during the past two years and the

resulting disciplinary. actions:

Investigations and disciplinary actions

Type of investigation and action

9,864 12,373

10,027

1966 1967

Total investigation, closed----_--------------------

Peniorml immetig.1i...

Number at can, closed, total -------------------- --------

Che Nr and ~eaulty investigations

Conduct: :,:::,:

Special inquiries................. -----------

Actions taken by Service milq'a menabingffic garment als asa .suit of

person dre

Disciplinary action,, total.................................

Separations. total 1_--------------------------------

Bribery. extortion, ., collo'kin --------------------

Embecalement or thrift of Government funds or

=Wlpl-*-,-,-,- or it,, I-o- -p-.-, -p-.-r-t-.x--------- :::::

F ililicatiDn lortion rnm nt repo

Go"

a its'

Failure to discharge duties

Refusal to cooperate ......

Divulgence of confidential1 rformatio r....

Accept pincogra, .11... or trefoil!..............

and other misconduct .............:......

Suspersid~s from duty and pay ......................

Reprima iris, warnings, reassi.gnments, transfers, or

do

inot

I

as_

Nord

,

,iplin.ry

Morin...ligetimis

Number of uses closed, total.. ..... ----------------------

A%liartions for admission to practice before the Internal

,an

"S

.

Charge,. g.r"_sl :: ::: :: ::: :: ::: ----------

Federal tort I.i ....................

Atlemptal bribery,...-

Investigations for other ~resxury ---------- bureaus.

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

7,340

3,430

3,101 8-

770

239

22I20I

473

6, 57D

2,524 7t

13'

2D4

85

1,407

1,414

'911 132

57

257

17

goa

12

65

48

384

9,370

2,346

902

107

45

1.190

02

Includes i=j.n,, retirements, or other separations while.em P!oy., were

units

' i vast

r be ore administrative decision was made on disciplinary action

where investigation disclosed derogatory information.

Assistance to Other Government Organizations

The Service also occasionally lends internal audit

assistance to other Government bodies. One assignment, undertaken at the request of the territorial

Governor, involves assistance in the development

and installation ofa modern tax system for the

Virgin Islands. Adoption of the recommendations

made to date has enabled the Virgin Island Tax

Division to make substantial improvements in operations and has contributed to substantially increased revenues. Tax collections for 1966 totaled

$25.4 rindlion, over two and one-half times as much

as the $8.9 million collected in 1962, when this program had its beginning.

Internal security continued to furnish assistance

to the Secret Service in connection with the protection of the President and other dignitaries. Over

74

1,100 personnel investigations were conducted for

other Treasury bureaus.

Advisory Group Helps Keep Service

Informed

The Commissioner's Advisory Group is appointed

for the purpose of suggesting ways in which the

Service can improve its operations, and to provide

constructive criticism of Service policies, procedures,

and programs. Membership of the Advisory Group

includes outstanding attorneys, accountants, business executives, economists and educators from all

parts of the United States. The Advisory Group provides a means for frank interchanges with individuals outside the Service, and helps in keeping the

Service constantly attentive to the opinions and desires of the public.

The Advisory Group appointed in July, 1966 and

listed in last year's report met with the Commissioner and other top Service officials on four occasions during the year. The following individuals have

consented to serve on the Advisory Group for 1968:

Bernard Barnett

CPA

Apfel& Englander

347 Madison Avenue

New York, N.Y.

Carl W. Brieeke

Assistant Treasurer

The Kroger Co.

1012 Vinc Street

Cincinnati, Ohio

Edwin S. Cohen

Professor

University of Virginia

Charlottesville, Va.

Raymond E. Graichen

CPA

Lybrand, Ross Bros.&

Montgomery

Philadelphia, Pa.

Harding L. Lawrence

President, Braniff Airways

Exchange Park

Dallas, Tex.

Leonard Lesser

AFL-CIO

Industrial Union Depart81 To nt 5 l6th Street NW.

Washington, D.C.

A. Byrne Litschgi

Attorney

Shackl

c

ford,' Farrioi, Stallings, Glos & Evans

Suite 711 Marine Bank

Building

Tampa, Fla.

Max E. Meyer

Attorney

Lord, Bissell& Brook

135 South La Salle Street

Chicago, 111.

John S. Nolan

Attorney

Miller& Chevalier

1700 Pa.

Ave.

NW.

Washington, D.C.

Edwin J. Reimann

Public Accountant

Remiann, Wuraten, and

Lewis

2063 McCldland Street

Salt Lake City, Utah

Ernest L. Wchner

CPA A'thur Andersen

& Co.

Houston, Tex.

Robert M. Winokur

Attorney

Taylor& Winokur

351 California Street

San Francisco, Calif.

OrganizationPrincipal

Officers

Organization of the Internal Revenue Service

Internal Revenue Regions and Districts

Service Reading Rooms

Principal Officers

Historical List of Commissioners
Internal Revenue Service

7 Regions * 58 Districts

Dqd.~ .

zt,

Afb,-,~,

Okid- My

,P] 91 9 S

S.. P.1

11timill I d.,y

labid landlry

IiiOuv .1 ble'.4 Inem,uti-I cminim,11mvid a

ishicl aind.,

3.1c. cm,

b1i I C.P.tt, Clout (Ilblimbeq. Il. TI)

HIT flu Celia (Ildneit. Kick)

a

lk"'w"h Is

-Lm

o0l

Imign Posts,

Office of

,

nturnational Operations

BONN

LONDON

MANI LA

MEXICO CITY

OTTAWA

PARI S

ROME

SAO PAULO

TOKYO
11

Internal Revenue Service Reading Rooms

(Locations of reading rooms same as mailing address unless otherwise indicated)

NATIONAL OFFICE

MailAddress:

Director, Public Information Division

Internal Revenue Service

I I I I Constitution Avenue NA'.

Washington, D.C. 20224

CENTRAL REGION

Mail Address:

Regional Public Information Officer

Room 7106

Federal Office Bldg.

550 Main Street

Cincinnati, Ohio 45202

MID-ATLANTrc REGION

Mail Address:

Regional Public Information Officer

P.O. Box 12805

Philadelphia, Pa. 19108

Location:

401 N. Broad Street

MIDWEST REGION

Mail Address:

Regional Public Information Officer

17 N. Dearborn Street

Chicago, 111. 60602

NORTH-ATLANTic REGION

Mail Address:

Regional Public Information Officer

Room 11 02

90 Church Street

New York, N.Y. 10007

SOUTHEAST REGION

MailAddress:

Regional Public Information Officer

P.O. Box 926

Atlanta, Ga. 30301

Location:

Federal Office Building

275 Peachtree Street

SOUTHWFSTREGION

Mail Address:

Regional Public Information Officer

11 14 Commerce Street

Dallas, Tex. 75202

WESTERN REGION

Mail Address:

Regional Public Information Officer

Flood Building

870 Market Street

San Francisco, Calif. 94102

Principal Officers of the Internal Revenue Service

As of June 30, 1967

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

Chairman, Tax Formis Coordinating

Committee ----------------- J ames N. Kinsel

Assistant to the Deputy

Commissioner ----------- Donald C. Dawkins

Director, Foreign Tax Assistance

Staff--------------------- L. Harold Moss

ADMINISTRATION

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

Assistant Commissioner------ Edward F. Preston

Director, Program Staff----- Julius H. Lauderdale

Division Directors:

Facilities Management-- Daniel H. Hollunis

Fiscal Management----- Gray W. Hume, Jr.

Personnel--------------- Albert J. Schaffer

Public Information ----- Joseph S. Rosapcpc

Training--------------- Stanley Goldberg

COMPLIANCE

Assistant Commissioner------ Donald W. Bacon

Deputy Assistant Commissioner--- Leon C. Green

Division Directors:

Alcohol and Tobacco Tax --- Harold A. Serr

Appellate--------------- Arthur H. Klotz

Audit---------------- Singleton B. Wolfe

Collection-------------- Harold E. Snvder

Intelligence ------------- William A. Kolar

Office of International

Operations ---------- Clarence 1. Fox, Jr.

DATA PROCESSING

Assistant Commissionci----------- Robert L. Jack

Deputy Assistant Commissioner- Garrett DeMots

Division Directors:

Operations -------------- Clinton L. Walsh

IRS Data Center,

Detroit, Mich ------- William E. Palmer

PLANNING AND RESEARCH

Assistant Commissioner -------- Albert W. Brisbin

Division Directors:

Planning and Analysis ----- Marius Fariolctti

Research --------------- James R. Turner

Statistics ------------------- Vito Natrella

Systems

Development----- Lancelot W. Armstrong

TECHNICAL

Assistant Commissioner------- Harold T. Swartz

Deputy Assistant I

Commissioner-------- Richard J. Stakem, Jr.

Division Directors.:

Miscellaneous afid Special

Provisions Tax--------- Linder Hamblen

Income Tax---------- John W. S. Littleton

Technical Publications I .

and Services ----------- August F. Poldig

OFFICE OF CHIEF COUNSEL

Chief Counsel----------------- Lester R. Uretz

Deputy Chief Counsel------- Richard C. Swartz

Executive Assistant to the

Chief Counsel----------- Thomas McP. Davis

Special Assistant to the

Chief Counsel--------------- Arthur B. White

78 79
ANNUAL REPORT - PRINCIPAL OFFICERS OF THE INTERNAL REVENUE SERVICE

NATIONAL OFFICERS-Continued

Special Assistant to the

Chief Counsel------------------ Lester Stein

Special Assistant to the

Chief Counsel------------- W. Dean Mathis

Technical Advisor to the

Chief Counsel----------- Samuel R. McClurd

Technical Advisor to the

Chief Counsel------------- Robert B. Jacoby

Division Directors:

interpretative ----------- Richard M. Hahn

Legislation and Regulations_ James F. Dring

Operations and Planning-- William P. Crewe

Associate Chief Counsel-------- Rudy P. Hertzog

Executive Assistant to the

Associate Chief Counsel--- E. Riley Campbell

Technical Advisor to the

Chief Counsel------------ Paul E. Treusch

Division Directors:

Alcohol and Tobacco Tax

Legal-------------- John W. Goggins

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. Davi's

Appellate -------------- G. Waldron Snyder

Audit----------------- Michael A. DeGuire

Collection ---------------- William J. Grabo

Data Processing---------- Wayne S. Kegerreis

Intelligence ---------------- Harold B. Holt

District Directors:

Cincinnati, Ohio 45202 ------ Paul A. Schuster

Cleveland, Ohio 44199--_ Frank S. Turbett, Jr.

Detroit, Mich. 48226 ---- Ambrose M. Stoepler

Indianapolis, Ind. 46204 ------ James E. Daly

Louisville, Ky. 40202 ------- Gilbert C. Hooks

Parkcr~burg, W. Va. 26101 ---- Hugh D. Jones

Director, Central Service Center,

Covington, Ky 41019 -------- Everett L. Mcck

Regional Counsel------------ Clarence E. Price

Regional Inspector--------- William A. Costello

Mid-Atlantic Region

All Regional Offices at 2 Penn Center Plaza, Philadelphia, Pa. 19102 unless a different address is

indicated

Regional Commissioner --------- Dean J. Barron

Assistant Regional Commissioners:

Administration ------------ Leo C. Inglesby

Alcohol and Tobacco Tax-- Charles R. Peterson

Appellate ----------------- Victor Cuniglio

Audit ---------------- Dwight L. James, Jr.

Collection -------------- William F. Culliney

Data Processing ---------- Anthony L. Carrea

Intelligence ------------- Amerigo R. Manzi

District Directors:

Baltimore, Md. 21202 -------- Irving Machiz

Newark, N.J. 07102 -------- Joseph M. Shotz

Philadelphia, Pa. 19108 ---- Kenneth 0. Hook

Pittsburgh, Pa. 15222 ---------- H. Alan Long

Richmond, Va. 23240 -------- James P. Boyle

Wilmington, Del. 19802 ---- James H. Kennedy

Director, Mid-Atlantic Service Center,

PhHadelphia, Pa. 19155 ----- Earl L. Torgerson

Regional Counsel-------------- Cecil H. Haas

Regional Inspector,

Bankers Securities Building,

Walnut and juniper Streets,

Philadelphia, Pa. 19107- Emanuel M. Schuster

ANNUAL REPORT - PRINCIPAL OFFICERS OF THE INTERNAL REVENUE SERVICE

REGIONAL AND DISTRICT OFFICERS--Continued

Midwest Region

All Regional Offices at 35 East Wacker Drive, Chi- District Directors:

cago, 111. 60601 unless a different address is indi- Aberdeen, S. Dak. 57401 ---- William C. Welsh

cared

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 ------------------ Roger C. Beck

Data Processing--------- Norman B. Bergeson

Intelligence -------------- William B. Maves

Chicago, 111. 60602 ------ Eugene C. Coyle, Jr.

Des Moines, Iowa 50309 ----- Ernest W. Bacon

Fargo, N. Dak. 58102--- Frederick G. Kniskern

Milwaukee, Wis. 53202 ----- Walter S. Stumpf

Omaha, Nebr. 68102 -------- Richard P. Vinal

St. Louis, Mo. 63101 ------- Edwin P. Trainor

St. Paul, Minn. 55 101 ------ George 0. Lcthert

Springfield, 111. 62704-------- Jay G. Philpott

Director, Midwest Service Center,

Kansas City, Mo. 64170 ----- Arnold S. Dreyer

Regional Counsel-------------- Frank C. Conley

Regional Inspector-------- Gordon M. Anderson

North-Atlantic Region

All Regional Offices at 90 Church St., New York,

N.Y.-10007 unless a different address is indicated

Regional Commissioner ---------- Harold R. All

Assistant Regional Commissioners:

Administration ------------- John E. Foristall

Alcohol and Tobacco Tax ------ Edward J. Fox

Appellate -------------- Stephen C. Volpone

Audit------------------ Alfred L. Whinston

Collection -------------- Elmer H. Klinsman

Data Processing ---------- J. Orville Tuescher

Intelligence ------------------ Alan McBride

District Directors:

Albany, N.Y. 12210 ------- Donald T. Hartley

Augusta, Maine 04330 --- Whitney L. Wheeler

Boston, Mass. 02203 ------ William E. Wflliams

Brooklyn, N.Y. 11201 ----- Charles A. Church

Buffalo, N.Y. 14202 ----------- John E. Foley

Burlington, Vt. 05402 -------- Fulton D. Fields

Hartford, Conn. 06 115 --- Joseph J. Conley, Jr.

Manhattan, N.Y. 10007

Edward J. Fitzgerald, Jr.

Portsmouth, N.H. 03801 ---- Frank W. Murphy

Providence, R.I. 02907 ------- John J. O'Brien

Director, North-Atlantic Service Center,

Andover, Mass. 01812---- Norman E. Morrill

Regional Counsel, 30 Church Street, .

New York, N.Y. 10007 ------ Marvin E. Hagen

Regional Inspector, 50 Church Street,

New York, N.Y. 10007 ------- Sidney M. Wolk

Southeast Region

All Regional Offices at 275 Peachtree Street NE.,

Atlanta, Ga. 30303 unless a different address is

indicated

Regional Commissioner----- William J. Bookholt

Assistant Regional Commissioners:

Administration---------- Zachary T. Johnson

Alcohol and Tobacco Tax-- William N. Griffin

Appellate ------------------ Vance N. Bates

Audit------------------- Harold B. Bindseil

Collection---------------- William H. Loeb

Data Processing------------- Claude A. Kyle

Intelligence ------------- Allen T. Hollinrake

District Directors: '

Atlanta, Ga. 30303 ----------- Aubrey C. Ross

Birmingham, Ala. 35203-- Walter T. Coppinger

Columbia, S.C. 29201 ----- Harold'M. McLeod

Greensboro, N.C. 27401 -------- John E. Wall

Jackson, Miss. 39202 ----- James G. Martin, Jr.

Jacksonville , Fla. 32202 Andrew J. O'Donnell, Jr.

Nashville, Tenn. 37203 ----- James A. O'Hara

Director, Southeast Service Center,

Chamblee, Ga. 30006 ---- William H. Weaver

Regional Counsel--------- Henry C. Stockell, Jr.

Regional Inspector--------------- Earl L. Fiross

i 80

81
I

I

ANNUAL REPORT * PRINCIPAL OFFICERS OF THE INTERNAL REVENUE SERVICE

REGIONAL AND DISTRICT OFFICERS-Continued

Southwest Region *

All Regional Offices at 11 14 Commerce Street,

Dallas, Tex. 75202 unless a different address is

indicated

Regional Commissioner-------- B. Frank White

Assistant Regional Commissioners:

Alcohol and Tobacco Tax ---- James G. Carroll

Appellate ------------------ G. Clifton Witt

Audit --------------- Lawrence M. Stewart

Collection ------------------ Alfred N. Kay

Data Processing ----------- George M. Oliver

Intelligence ----------William E. Beloate, Jr.

District Directors:

Albuquerque, N. Mex. 8 7 101 - William M. Coard

Austin, Tex. 78701 ------------ R. L. Phinney

Cheyenne, Wyo. 82001 ------ Richard L. Hutt

Dallas, Tex. 75201 -------- Ellis Campbell, Jr.

Denver, Colo. 80202 ------ Arthur A. Kennedy

Little Rock, Ark. 72203 ----- Fred W. Johnson

New Orleans, La. 70130 ------ Chester A. Usry

Oklahoma City, Okla.

73102--------------- Clyde L. Bickerstaff

Wichita, Kans. 67202 ------ Harry F. Scribner

Director

'

Southwest Service Center,

Austin, Tex. 78740 ---------- Ervin B. Osborn

Regional Counsel, 1025 Elm Street,

Dallas, Tex. 75202 --------- J. Marvin Kelley

Regional Inspector, 1511 BryanStreet,

Dallas, Tex. 75201 ------ David 0. Lowry, Jr.

Western

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-- Brenton G. Thorne

Appellate ------------ Gardiner B. Willmarth

Audit ---------------- Raymond F. Harless

Collection --------------- Charles D. Moran

Data Processing ---------- Willard L. Pierson

Intelligence -------------- Herman F. Kuehl

District Directors:

Anchorage, Alaska 99501 ---- Lewis J. Conrad

Boise, Idaho 83701 -------- Calvin E. Wright

Helena, Mont. 59601 -------- Nelson L. Seeley

82

Region

Honolulu, Hawaii 96813 ------ Evan S. Lloyd

Los Angeles, Calif. 90012 ---- Frank S. Schmidt

Phoenix, Ariz. 85025-- George D. Patterson, Jr.

Portland, Oreg. 97204 ----- Arthur G. Erickson

Reno, Nev. 89502 ---------- Warren A. Bates

Salt Lake City, Utah 841 10--- Roland V. Wise

San Francisco, Calif. 94102-- Joseph M. Cullen

Seattle, Wash. 98121 -------- Neal S. Warren

Director, Western Service Center,

Ogden, Utah 84405 -------- Robert H. Terry

Regional C6unsel,

447 Sutter St.,

San Francisco, Calif. 94108 --- Melvin L. Sears

Regional Inspector,

1076 Mission St.,

San Francisco, Calif. 94103 ---- Henry A. Feltz

Historical List of Commissioners of Internal Revenue

Office of Commissioner of Internal Revenue created by act of Congress, Yuly 1, 1862

Name

George S. Boutwell --------------

Joseph J. Lewis -----------------

William Orton ------------------

Edward A. Rollins --------------

Columbus Delano ---------------

Alfred Pleasonton----------------

John W. Dougla's

Daniel D. Pratt ----------------- --------------

Green B. Raum

Walter Evans -------------------- --------------

Joseph S. Miller ----------------

John W. Mason ----------------

Joseph S. Miller ----------------

W. St. John Forman ------------

Nathan B. Scott ----------------

George W. Wilson --------------

John W. Yerkes ----------------

John G. Capers -----------------

Royal E. Cabell ----------------

William H. Osborn -------------

Daniel C. Roper ----------------

William M. Williams ------------

David H. Blair-----------------

Robert H. Lucas ---------------

David Burnet -------------------

Guy T. Helvering ---------------

Robert E. Hannegan ------------

Joseph D. Nunan, Jr ------------

George J. Schoeneman ----------

John B. Dunlap ----------------

T. Coleman Andrews ------------

Russell C. Harrington -----------

Dana Latham ------------------

Mortimer M. Caplin ------------

Sheldon S. Cohen ---------------

State From

Massachusetts ---------------

Pennsylvania----------------

New York ------------------

New Hampshire -------------

Ohio -----------------------

New York ------------------

Pennsylvania ----------------

Indiana --------------------

Illinois ---------------------

Kentucky-------------------

West Virginia ---------------

-----do ---------------------

-----do ---------------------

Illinois ---------------------

West Virginia ---------------

Ohio-----------------------

Kentucky- -_ ~ ---------------

South Carolina --------------

Virginia --------------------

North Carolina --------------

South Carolina --------------

Alabama --------------------

North Carolina --------------

Kentucky -------------------

Ohio -----------------------

Kansas ---------------------

Missouri --------------------

New York-------------------

Rhode Island ----------------

Texas ----------------------

Virginia --------------------

Rhode Island----------------

California -------------------

Virginia --------------------

Maryland -------------------

In addition, the following were Acting Commissioners during

periods of time when them was no Commissioner holding the

office: John W. Douglass, of Pennsylvania from Nov. 1 1870,

to Jan. 2, 1871; Henry C. Rogers, of I?Qsylvanla, fro~i May

May 10, 1883, and from May I to June 4, 1907; John J.

knt'ox, of Minnesota, from May I I to May 20, 1883; Robert

Williams, Jr., of Ohio, from Nov. 28 to Dec. 19, 1900; Millard

F. West, of Kentucky, from Apr. 12 to May 26, 1921; H. F.

Mires, of Washington, from Aug. 16 to Aug. 19, 1930; Pressly

July 17, 1862

Mar. 18, 1863

July 1, 1865

Nov. 1, 1865

Mar. 11,1869

Jan. 3, 1871

Aug. 9, 1871

May 15, 1875

Aug. 2, 1876

May 21, 1883

Mar. 20, 1885

Mar. 21, 1889

Apr. 19, 1893

Nov. 27, 1896

Jan. 1, 1898

Mar. 1, 1899

Dec. 20, 1900

June a, 1907

Sept. 1,1909

Apr. 28, 1913

Sept. 26 917

Apr. 1: 1920

May 27, 1921

June 1, 1929

Aug. 20, 1930

June, 6, 1933

Oct. ' 9, 1943

Mar. 1, 1944

J61y 1, 1947

Aug. 1, 1951

Feb. 4,1953

Dec. 5, 1955

Nov. 5, 1958

Feb. 7, 1961

Jan. 25,1965

To

Mar. 4, 1863

June 30, 1865

Oct. 31, 1865

Mar. 10, 1869

Oct. 31, 1870

Aug. 8, 1871

May 14, 1875

July 31, 1876

Apr. 30, 1883

Mar.'19, 1885

Mar. 20, 1889

Apr. 18, 1893

Nov. 26, 1896

Dec. 31, 1897

Feb. 28, 1899

Nov. 27, 1900

Apr. 30, 1907

Aug. 31,1909

Apr. 27, 1913

Sept. 25, 1917

Mar

*

31 1920

Apr. 11 1921

May 31, 1929

Aug. 15, 1930

May 15,1933

Oct. 8, 1943

Jan. 22, 1944

June 30, 1947

July 31, 1951

Nov. 18, 1952

Oct. 31,1955

Sept. 30, 1958

Jan. 20,1961

July 10, 1964

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

R. Baldridge, of Iowa, from May 16 to June 5, 1933; Harold

N. Graves, 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; Charles 1. Fox, of Utah,

from Jan. 21 to Feb. 6 1961 ; and Bertrand M. Harding, of

Texas, from J uly 11, 1964 to J an. 24, 1965.

83

M

1!

I

I
I!

0

Appendix

Taxpayer Publications

Tax Forms Activity

Selected Regulations Published

Significant Revenue Rulings and Revenue Procedures

Significant Announcements of General Interest

Alcohol and Tobacco Industry Circulars

Technical Information Releases

Supreme Court Decisions

Actions of Lower Courts

Statistics of Income Reports Published

276-580 0-67-7 .
I

Appendix

Taxpayer Publications

Your Federal Income Tax, IRS Publication No.

17, deals primarily with the various problems encountered in filing individual returns. It is revised

annually to reflect new legislation, regulations,

official rulings, and court decisions.

The 1967 edition, which follows the pattern established in prior years, is designed to help taxpayers

find answers to questions arising in preparing income

tax returns for the past year. It contains a filled-in

sample of a 1966 individual return keyed to page

numbers where detailed explanations of the tax law

and examples can be found. An index also assists the

user in finding answers to particular questions

without having to read material in which he is not

interested. Among the new features of the 1967

edition are a special chapter on "Income from

Tips," a chart for use in figuring deductions for state

gasoline taxes, a section on "Servicemen's Election

of Survivor Annuities," a chart showing the effect

of marital status on computing base period income

for income averaging purposes, 4 discussion of the

income tax credit allowed nonhighway users of

gasoline and lubricating oil, and information regarding additional withholding allowances permitted

in 1967 for certain taxpayers who itemize deductions.

This publication continues to be the "best seller"

among Government publications with sales of 847,-

711 copies. In addition, 257,450 copies were used in

the Teaching Taxes Program, the Taxpayer Assistance Program, and in various training programs.

It is available at the Government Printing Office and

all local Internal Revenue Service offices for 50 cents

a copy.

Teaching Taxes is issued in three parts: Publica.

tion No. 19, a teacher's guide; Publication No. 21,

a student's text, general edition; and Publication No.

22, student's text, farm edition. These rotogravure

tabloid publications, designed to appeal to teenagers,

are used by more than 80,000 teachers to instruct

over 3 million students in high school and college

classes in the preparation of individual income tax

Forms I G40 and 1040A.

86

The general edition of the,student text, used by the

majority of students, contains step-by-step explanations and illustrations for the preparation of returns

of taxpayers who have the usual types of income

and expenses. Also included are practical problems

in filing income tax returns and supplementary

problems and questions which may be used as the

teacher desires. Introductory sections discuss civic

responsibility, U.S. tax history, and the Federal

budget.

The specialized edition for farm students contains the same material as the general edition with

an eight-page additional section explaining how to

file farm returns.

A total of 1,250,000 copies of the Farmer's Tax

Guide, Publication No. 225, were distributed free of

charge by Internal Revenue Service offices and agricultural extension agents of the Department of Agriculture. This booklet deals with the tax problems of

farmers and 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.

Liquor Laws and Regulations for Retail Dealers,

Publication No. 30, (Rev. 5-65) explains briefly

and nontechnically Federal laws and regulations

relating to retail liquor dealers. Each retailer on

entering business is furnished a copy of this pamphlet

to promote voluntary compliance with laws and

regulations to enable him to avoid technical violations.

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 19~4 to date. Tables show such details as

the number of establishments, materials used, production, taxable and tax-free withdrawals, stocks,

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, Washington, D.C.

20402, at 50 cents per copy.

Cumulative List of Organizations, Publication

No. 78, revised to December 31, 1966, contains

names of approximately 100,000 exempt organizations to which contributions are deductible under

section 170 of the Internal Revenue Code of 1954.

Bimonthly supplements contain cumulative lists of

new organizations, name or address changes of

existing organizations, and a list of those organizations the status of which has been changed or

revoked. Biennial revisions, together with supplements issued since the last revision, are sold on a

subscription basis by the Government Printing

Office.

Machine Guns and Certain Other Firearms,

Publication No. 232 (Rev. 2-67) This publication

is designed to acquaint the public with the requiremerits of the National Firearms Act and contains

the regulations issued thereunder.

Tax Guide for Small Business, Publication No.

334, deals with the problems of sole proprictorships,

partnerships, and corporations. Numerous examples are used to illustrate in nontechnical language

the application of the rules with respect to income,

excise, and employment taxes. A Check List, of particular interest to new businessmen, shows at a

glance taxes that might be incurred and what actions should be taken. A Tax Calendar for 1967 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 257,000 copies

were sold and 95,000 copies were printed for internal use by the Service,

The Service's Publication No. 341, Methods of

Analysis for Alkaloids, Opiates, Marihuana, Barbiturates, and Miscellaneous Drugs was revised and

reissued during the year. This publication of 147

pages, designed to serve a training function, is available to law enforcement agencies and crime laboratories throughout the world.

ANNUAL REPORT - APPENDIX

Distribution and Use of Denatured Alcohol and

Rum, Publication No. 443 (Rev. 1-67), deals with

the procurement, use, disposition, and recovery

of denatured alcohol, specially denatured rum, and

articles containing denatured spirits. The current

issue mav be secured from the U.S. Government

Printing Office, Washington, D.C. 20402, at 25

cents per copy.

Tobacco Tax Guide, Publication No. 464, is

a compilation of basic reference material which has

been up-dated to assist manufacturers of taxable

tobacco products and 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 the public with

the most frequent signs of illegal distilled spirits

production and unlawful traffic in firearms and to

solicit cooperation in reporting possible violations.

A Guide to Laws, Document No. 5173 (Rev. 7-

66). This pamphlet is designed to acquaint law

enforcement officers, particularly those unfamiliar

with the traffic in nontaxpaid whisky and alcohol,

with alcohol and tobacco tax laws enforced by the

Service. It provides basic examples of substantive

violations and evidence often connected with them.

The Looseleaf Regulations System, which is divided into five Services, is a current -compilation

of the regulations on Income Tax, Estate and Gift

Taxes, Employment Taxes, Excise Taxes (other

than Alcohol and Tobacco Taxes), and Procedure

and Administration. Each Service contains the relevant Internal Revenue Code provisions, as well as

the regulations, and hits its own table of contents

and index. The separate Services may be purchased

on a subscription basis from the Government PrintingOffice.

Dual-Status Tax Years of Alien Taxpayers, Document No. 5584, was developed to assist any taxpayer who has been both a resident and ;i nonrcsident alien during the same tax year. This pamphlet

describes the classes of dual-status taxpayers and

discusses the tax treatment for each class.

Sixty-one other free taxpayer information publications, ranging in size from 2 to 28 pages, and

three which were available for purchase, are listed

below.

87
ANNUAL REPORT * APPENDIX

Publication

Title number

Tax Guide for U.S. Citizens Abroad

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

54

F trots's Gas Tax Credit--_ 308

Law and Regulations Relating to Employee Pension,

Annuity, Profit-Sharing, Stock-Bonus and Bond Purchase Plans Including Plans for Self-Employed

Individuals (price 60 cents) -------------------

Federal Use Tax on Trucks, Tmck-Tracton and

B~ es --------------------------------------

Pension Trust Procedures and Guides for Qualification

337

349

(price 35 cents) ---------------------------- 377

Federal Gas Tax Credit or Refund for Nonhighway

and Transit Users--------------------------- 378

A Guide to Federal Estate and Gift Taxation (price 25

cents) --- ---------------------------------

Travel, Entertainment, and Gift Expenses-----------

448

463

Document

number

P rsonal Exemptions and Dependents-------------- 5013

Employee Expenses, Educational Expense,---------- 5014

Sick Pay -------------------------------------- 50

1

6

Selling Your Home ----------------------------- 5017

Retirement Income and Credit------------------- 5010

Medical and Dental Expenses-------------------- 5020

What Is Income------------------------------- 5045

Tax Calendar and Check List for 1967 ------------- 5046

Self-Employment Tax --------------------------- 5047

Sales and Exchanges of Assets-------------------- 5048

Depreciation, Investment Credit, Amortization,

Depletion----------------------------------- 5050

Business Expenses------------------------------ 5051

Child Car------------------------------------- 5052

Contributions --------------------------------- 5053

Excise Taxes for 1967--------------------------- 5054

Rents and Royalties Income---------------------- 5060

Losses From Operating a Business----------------- 5062

Interest Deductions ------------------------------ 5074

Taxes --------------------------------------- 5075

Filing Your Tax Return------------------------- 5107

Installment and Deferred-Payment Sales ----------- 5

1

08

Alimony -------------------------------------- 5 I 09

"Page 2" Itemized Deductions--------------------- 5110

Estimated Tax and Tax Withholding -------------- 5111

Disasters, Casualties and Thefts------------------ 5174

Accounting Periods and Methods ----------------- 5175

Bad Debts------------------------------------ 5176

Repairs and Improvements---------------------- 5178

Partnerships ---------------------------------- 5179

Corporations ------ -------------------------- 5180

Sale of a Business ------------------------------ 5181

Community Property --------------------------- 5192

If Your Return Is Examined--------------------- 5202

Tax Information for Visitors to the United States---- 5371

Condemnations of Private Property for Public Use ---- 5383

Decedents ------------------------------------ 54-46

Tax Tips for Homeowners----------------------- 5447

Investment Income and Expenses----------------- 5448

Cost or Other Basis of Assets--------------------- 5516

Foreign Tax Credit for U.S. Citizens and

Resident Aliens ------------------------------ 5517

Importance of Adequate Records and a Guide to In.

formation Available for Preparing Federal Tax

Returns ------------------------------------ 5518

How to Apply for Exemption forYour Organization_ 5551

Highlights of 1966 Tax Changes------------------ 5552

Income Averaging------------------------------ 5553

Sales and Other Dispositions of Depreciable Property- 5554

Document

Title number

Tax Benefits for Old& Americans ----------------- 5569

Information Reporting Requirements of Sponsors of

Contests or Sporting Events -------------------- 537-9

Income Tax Deductions for U.S. Government Civilian

Employees Stationed Abroad------------------- 3583

Social Security Coverage for Clergymen and Religious

Workers Abroad----------------------------- 5586

Preparation of Form 1040B---------------------- 5587

Tax Advice for Foreign Scholars and Visitors on

Official Education and Cultural Exchange Pro.

grams -------------------------------------- 5588

U.S. Tax Guide for Aliens ----------------------- 5589

American Scholars Abroad and U.S. Income Tax

Including Fulbright Scholars ------------------- 5590

Retirement Plans for Self-Employed Individuals ----- 5592

Credit Sales by Dealers in Personal Property-------- 5593

Reporting Your Tips for Federal Tax Purposes------ 3640

Tax Forms Activity

Five new forms were issued, as follows:

For. No. Title

W-2 (Optional)-- Wage and Tax Statement.

W-4, Schedule A-- Determination of Withholding Allowances for Itemized Deductions.

1040-ES (OIO)__ Declaration of Estimated Income Tax

for Nonresident Alien Individuals.

1040-Q---------- U.S. individual Income Tax Return

(Questionaim Version).

4277 ------------ Quarterly Transmittal Return of Tax

Withheld at Source.

Three forms were eliminated, as follows:

754------------- Notification to District Director by

Lesscrr where Lessee is Responsible

for Collection of Federal Tax on

Admissions.

755------------- Application for Exemption From Col2948------------

lection of Federal Tax on Achnissions.

Medical and Dental Expense Statement.

Selected Regulations Published

Income Tax Regulations

Income tax regulations under various sections of

the Internal Revenue Code were amended or added

by the following Treasury Decisions:

Treasury Decision 6888, relating to group-term

life insurance purchased for employees.

Treasury Decision 6892, relating to the treatment

of blocked earnings and profits of controlled foreign

corporations.

Treasury Decision 6894 and Treasury Decision

6909, relating to consolidated returns of affiliated

corporations.

Treasury Decision 6900, relating to charitable

contributions.

Treasury Decision 6904, relating to the one class

of stock requirement for electing small business

corporations.

Treasury Decision 6908, relating to the withholding of tax on nonresident aliens and foreign corporations and the filing of returns with respect thereto.

Treasury Decision 6914, relating to the deposit

of corporation income and estimated income tax

with Government depositaries.

Treasury Decision 6916, relating to certain reacquisitions of real property.

Treasury Decision 6917, relating to the nonallowance of deductions for certain amounts paid

or credited by certain savings institutions on deposits or withdrawable accounts.

Treasury Decision 6918, relating to the deductibility of educational expenses.

Treasury Decision 6922, relating to the return and

payment of tax withheld on nonresident aliens and

foreign corporations and tax-free covenant bonds.

Regulations on Procedure and Administration

Treasury Decision 6920, relating to the procedure

to be followed by Service personnel upon receipt of

a request, subpoena, notice, or other order for disclosure of internal revenue records or information.

Excise Tax Regulations

Excise tax regulations under various Code sections

were amended or added by the following Treasury

Decisions:

Treasury Decision 6910, relating to the scmimonthly deposit of certain excise taxes.

Treasury Decision 6915, relating to the filing of

certain excise and employment tax returns with

service centers and to semimonthly returns for certain excise taxes.

Employment Tax Regulations

Employment tax regulations under various sections of the Code were amended or added by the

following Treasury Decisions:

Treasury Decision 6893, relating to the time for

filing returns to accord with regulation provisions

on semimonthly deposits.

Treasury Decision 6903, relating to the amount of

social security taxes and withheld income tax which

necessitates semimonthly deposits thereof by employers.

ANNUAL REPORT - APPENDIX

Temporary Regulations

The following temporary income tax regulations

were promulgated:

Treasury Decision 6907, relating to exploration

expenditures in the case of mining.

Treasury Decision 6912, relating to the passive

investment income of electing small business corporations.

Alcohol and Tobacco Regulations

Treasury Decision 6901 was issued on November

22, 1966. This amendment clarifies the proviso in

27 CFR 6, Sec. 6.21 to negate any implication that a

supplier of distilled spirits furnishing a window or

other interior display to . a retailer may not at the

same time sell the retailer a reasonable quantity of

merchandise to fill out the display and make it

presentable to public view. The amendment will

clarify the gray area surrounding the intent of the

present regulations.

Treasury Decision 6923, published June 30, 1967,

liberalized provisions relating to removal of concentrate from volatile fruit-flavor concentrate plants.

Statement of Procedural Rules

In addition to the Treasury Decisions published

during the year, there was signed and filed with the

Federal Register this year (published on July 1,

1967) an important amendment to the Statement

of Procedural Rules. The amendment implemented

Public Law 89-487, commonly called the Freedom

of Information Act. In general, it describes the information of the Service to which that Act applies and

tells how members of the public may obtain the

information.

I Significant Revenue Rulings and

Revenue Procedures

The retention by a subsidiary corporation of any

property, no matter how small in amount, for the

purpose of continuing the operation of its present

business or a new business will prevent the distribution of its remaining property to its parent from

qualifying as a distribution in complete liquidation

within the meaning of section 332 of the Code (Rev.

Rul. 66-186, C.B. 1966-2, 112).

Pursuant to the syndicate agreement, the taxexempt bond interest received by a syndicate formed

to acquire and distribute an issue of tax-exempt

municipal bonds is allocated only to those memberg

88 89
ANNUAL REPORT - APPENDIX

who advanced the funds used to purchase the bond

issue. The special allocation of the bond interest has

"Substantial economic effect" within the meaning

of that term as used in section 1.7G4-1 (b) (2) of

the Income Tax Regulations and will be recognized

for Federal income tax purposes (Rev. Rul. 66-187,

C.B. 1966-2, 246).

Amounts paid to a real estate investment trust as

rentals by tenants of a trust property will not be

disqualified as "rents from real property" because

the independent contractor who manages such

property is also a tenant thereof; that is, the rent

paid by the independent contractor will not, for this

purpose, be considered income received by the trust

from him (Rev. Rul. 66-188, C.B. 1966-2, 276).

Distilled spirits plant proprietors who rectify and

bottle only products which are exempt from rectification tax may be relieved of filing Form 2527,

Rectifier's Return-Deferred Taxes (Rev. Rul.

66-192,C.B.1966-2,532).

Due to a continued shortage of brucine and quassin, authorized denaturants for specially denatured

alcohol Formula No. 40, the use of specified optional

denaturants is authorized indefinitely (Rev. Rul.

66-194, C.B. 1966-2, 535).

Where a corporation leases property and receives

annual rents and a fee interest in otherproperty from

the lessee, the fair market value of the other property is income to the corporation as an advance rental

(Rev. Rul. 66-209, C.B. 1966-2, 299).

An organization which is exempt from Federal

income tax under section 501 (c) (9) of the Code

may reimburse its member's for premiums paid under the medical benefits program (Medicare) provided under the Social Security Amendments of

1965, Public Law 89-97 (Rev. Rul. 66-212, C.B.

1966-2, 230) (T.I.R. 824, 6-29-66).

Amounts paid in accordance with the "Medicare"

program as self-employment tax (under section

14GI (b) of the Code) and as employee tax (under

section 3 101 (b) of the Code) do not qualify as

amounts paid for insurance for the purpose of the

medical expense deduction provided by section 213

of the Code and, therefore, may not be taken as

medical expense deductions on returns filed by individuals for an), taxable year (Rev. Rul. 66-216,

C.B. 1§66-2, 100).

An organization which otherwise qualifies for

exemption under section 501 (c) (3) of the Code will

not be denied an exempt status mere]), because the

creator (if a trust) or the grantor retains control of

90

the organization (Rev. Rul. 66-219, C.B. 1966-2,

208). -

An organization the primary activity of which is

maintaining and operating a volunteer fire department for the benefit of the community is exempt

from Federal income tax under section 501 (c) (4)

of the Code even though the principal source of its

income is from operating social facilities for its members and holding regular public dances (Rev. Rul.

66-221, C.B. 1966-2, 220).

Local banking holidays, as well as Saturday, Sunday, and legal holidays, shall be excluded in determining the "three banking days" limitation applicable to certain deposits of employment taxes (Rev.

Rul. 66-230, C.B. 1966-2, 494) (T.I.R. 835,

8-1-66).

A casualty to a personal residence must be real and

actual in order for any loss sustained thereon to be

deductible under section 165 of the Code. The loss

cannot be a hypothetical loss or due to a mere fluctuation in value. An appraisal made immediately

after a flood showing a decline in value based on

short-lived buyer resistance causing a temporary fluctuation in value is inadequate to prove a deductible

casualty loss (Rev. Rul. 66-242, C.B. 1966-2, 56).

The Service will not follow the decision in Sherwood Swan and Company, Ltd., et al. v. Commissioner, 352 F. 2d 306 (1965), affirming 42 T.C.

299. The court held that if, when adopted, an employees' profit-sharing plan and trust meet all the

requirements of the Code and regulations, the trust

continues to be exempt from tax even though contributions to the trust cease and even though, because

of employee dropouts, most of the benefits upon

termination of the trust are likely to be received by

the group in whose favor discrimination is prohibited. The Service will continue to reexamine any

plan which, though adequate in form, fails for any

reason to comply in its operation with the provisions

of section 401 of the Code (Rev. Rul. 66-25 1, C.B.

1966-2, 121 ) (T.I.R. 817, 5-4-66).

Where an organization described in section 501

(c) (3) of the Code, or a public school, establishes

an annuity purchase program for its employees under section 403(b), such employer may undertake,

as part of such program and by means of an agreement with an employee and the insurance company,

to pay future premiums on an annuity contract

originally purchased by the employee or by a former

employer of such employee (Rev. Rul. 66-254, C.B.

1966-2,125).

A nonprofit organization created for the purpose

of elevating the standards of ethics and morality in

the conduct of campaigns for election to political

office by publicizing its code of fair campaign practices through newspapers, radio, and television, and

by furnishing aids to political science and civics

teachers for use in school classes, may qualify for exemption from Federal income tax under section

501 (c) (3) of the Code (Rev. Rul. 66-258, C.B.

1966-2,213).

The source of funds used to acquire foreign stock

or debt obligations is not relevant in determining the

applicability of interest equalization tax under section 4911 of the Code (Rev. Rul. 66-268, C.B.

1966-2,479). ,

The provisions of section 39 and 6424 of the Code,

relating to claims for credit or payment with respect

to the tax on lubricating oil used otherwise than in

a highway motor vehicle, are clarified (Rev. Rul.

66-276, C.B. 1966-2, 276) (T.I.R. 784, 12-8-65;

and T.I.R. 819, 5-16-66).

Only the portion of the price attributable to business supplies is deductible where a taxpayer elects

to pay an additional amount for such supplies in

order to obtain premiums for his personal use (Rev.

Rul. 66-289, C.B. 1966-2, 43).

The source of a prize awarded a nonresident

alien contestant in a puzzle contest conducted in

the United States by a domestic corporation is determined by the place where his activities in solving

the puzzle are performed (Rev. Rul. 66-291, C.B.

1966-2,279).

When a life insurance policy is assigned to a

leasing company and leased back under an agreement which establishes no indebtedness on the part

of the lessee, no portion of the payments made by

the lessee is deductible as interest under section 163

of thti Code (Rev. Rul. 66-298, C.B. 1966-2, 48).

The manufacturers' excise tax imposed on automobile truck bodies and chassis applies to certain

models of such vehicles as the "Bronco," "

jeep,

and "Scout." If a particular model of such a vehicle

is taxable as a passenger automobile when sold by

.the manufacturer, but the vendee installs a trucktype cab enclosure on the vehicle, the vendee is considered to have manufactured a truck and is liable

for the higher rate of tax imposed on trucks, buses,

etc. (Rev. Rul. 66-308, C.B. 1966-2, 467),

Self-unloading, tank-type bodies used primarily

for hauling animal and poultry feed to farms and

unloading such products (but which have no special

design adaptation for hauling on farms) do not come

ANNUAL REPORT - APPENDIX

within the exemption from the manufacturers excise

tax provided by the Excise Tax Reduction Act of

1965 for automotive bodies primarily designed to

haul feed, seed, or fertilizer to and on farms (Rev.

Rul. 66-315, C.B. 1966-2, 463).

No interest is payable under section 6601 (e) of

the Code on the portion of tax originally offset by

an investment credit which is eliminated by reason

of a net operating loss carryback (Rev. Rul. 66-317,

C.B. 1966-2, 510).

Notwithstanding that a partnership had filed a

timely election under section 754 of the Code, where

the collection of accounts receivable represents income in respect of a decedent, the provisions of

section 743 of the Code may not be applied so as

to give the estate of a deceased member of a personal

service partnership the benefit of an adjustment to

the basis of the partnership's accounts receivable

(Rev. Rul. 66-325, C.B. 1966-2, 249).

A domestic corporation whose business and income is derived, for the most part, from the performance of services on the high seas cannot qualify

as a Western Hemisphere trade corporation (Rev.

Rul. 66-340, C.B. 1966-2, 283).

The interest paid by a taxpayer as a result of an

additional excise tax assessment, due to the taxpayer's failure to have obtained exemption certificates for sales of gasoline to municipalities, can be

refunded under section 6416 (b) of the Code where

properly executed exemption certificates are subsequently obtained. The restriction on refunds or

credits of interest as contained in section 6416(b)

refers to initial over-payments of tax and does not

refer to the interest paid as a result of additional tax

payments (Rev. Rul. 66-343, C.B. 1966-2, 503).

The exemption from United States income tax

provided by Article Id of the United States-France

Income Tax Convention with respect to "the exercise of a liberal orlofession" may apply to French

residents employed as teachers or professors in the

United States (Rev. Rul. 66-357, C.B. 1966-2,

564). 1 1

Where the acquiring corporation pays cash in lieu

of issuing fractional shares to shareholders of the

acquired corporation who are entitled to fractional

share interests and the cash is not a separately bargained for consideration but merely represents a

mechanical rounding off of the fractions in the exchange, the "solely for voting stock" requirements

of section 368 (a) (I ) (B) and (C) of the Code is

satisfied. In reorganizations defined in section 368

(a) ( I ) (A), (B), (C), and (D) of the Code, cash

91
I

ANNUAL REPORT * APPENDIX

so received will be treated under section 302 of the

Code as having been paid to the shareholders in

redemption of"the fractional share interest to which

they were entitled (Rev. Rut. 66-365, C.B. 1966-2,

116).

Tips are wages subject to the Federal unemployment tax when reported in writing by an employee

to his employer and taken into account by the employer in determining the employee's compensation

under a minimum wage law (Rev. Rut. 66-369,

C.B. 1966-2, 451 ).

An employer ostensibly on a 4-week payroll period but making advance payments at the end of

each second week in such period is required to

withhold employment taxes from the advance payments and make semimonthly deposits under the

provisions of section 31.6302(c)-l of the Employment Tax Regulations (Rev. Rut. 66-376, C.B.

1966-2,495). '

Where a producer-patron of a nonexempt marketing and purchasing cooperative purchases crops

marketed by the cooperative for other producerpatrons, the purchaser of such crops is not dealing

with the cooperative "on a cooperative basis" and,

therefore, is not a "patron" as defined in section

1. 1388-1 (c) of the Income Tax Regulations, with

respect to such purchases (Rev. Rut. 66-380, C. B.

1966-2,359).

The exemption from communications tax provided by the Excise Tax Reduction Act of 1965

with respect to nonprofit hospitals applies even

though the hospital passes the burden of the charges

on to the individual patients (Rev. Rut. 66-382,

C.B.1966-2,474).

An organization formed for the purpose of encouraging basic research in specific types of physical and mental disorders, to improve educational

procedures for teaching those afflicted with such disorders, and to disseminate educational information

by the publication of a journal containing current technical literature relating to these disorders,

may qualify for exemption from Federal income

tax under section 501 (c) (3) of the Code if it meets

prescribed conditions (Rev. Rut. 67-4, I.R.B.

1967-2,15).

An association the activities of which are primarily devoted to preserving the traditions, architecture, and appearance of a community by means

of individual and group action before the local

legislature and administrative agencies with respect

to zoning, traffic, and parking regulations may be

exempt from Federal income tax under section 501

92

(c) (4) of the Code but is not exempt under section

501 (c) (3) of the Code (Rev. Rut. 67-6, I.R.B.

1967-2,18).

An organization which has been denied exemption from Federal income tax by reason of having

engaged in a prohibited transaction described in

section 503 (c) ( 1 ) of the Code may not reestablish

exemption until the loan which was the prohibited

transaction has been repaid or adequately secured

(Rev. Rut. 67-9, I.R.B. 1967-2, 22).

Interim guides for issuing advance determination

letters on pension, annuity, profit sharing, and stock

bonus plans designed to integrate with old age and

survivors insurance benefits provided by the Social

Security Act, as amended through 1965, were provided pending the development and publication

of the final rules (Rev. Rut. 67-10, I.R.B. 1967-3,

12).

Amounts paid by a mutual casualty insurance

company for accrued bond interest are not included

in the cost of bonds for purposes of computing the

amount of bond premiums to be amortized under

section 822 (d) (2) of the Code (Rev. Rut. 67-17,

I.R.B. 1967-3, 14).

Where a life insurance company values its life

insurance reserves on a preliminary term basis, it

should not reduce its insurance in force and life

insurance reserves by the amount of insurance in

force and the reserves attributable to reinsurance

ceded on a yearly renewable term basis before

revaluing such reserves under section 818 (c) of the

Code. However, the total life insurance reserves as

revalued must he reduced by the portion thereof

attributable to the net value of risks reinsured on a

yearly renewable term basis (Rev. Rut. 67-43, I.R.B.

1967-6,15).

In accordance with a program to identify and

officially declare obsolete all rulings published before

1953 which are not considered determinative with

respect to future transactions, various lists were published (Rev. Rut. 67-45, I.R.B. 1967-6, 49; Rev.

Rut. 67-46, I.R.B. 1967-6, 54; Rev. Rut. 67-97,

I.R.B. 1967-13, 15; Rev. Rut. 67-112, I.R.B.

1967-15, 23; Rev. Rut. 67-123, I.R.B. 1967-16,

25; Rev. Rut. 67-140, I.R.B. 1967-18, 39; Rev.

Rut. 67-199, I.R.B. 1967-25, 13; Rev. Rule. 67-

21 1, I.R.B. 1967-26, 20).

The value of nonvoting stock transferred in trust

is includible in a decedent's gross estate for Federal

estate tax purposes if, at and after the time of the

transfer, the grantor (now deceased) held the voting

stock and either the grantor was the trustee or the

trustee was restricted in some way in his power to

dispose of the stock. The grantor is considered to

have retained for a period, which did not in fact

end before his death, the power to designate the

per-sons who shall possess or enjoy the transferred

property or the income therefrom (Rev. Rut. 67-54,

I.R.B. 1967-8, 10).

For purposes of computing the manufacturers'

excise tax on foreign-made automobiles imported by

U.S. residents who have not physically left the

United States, the term "total cost of acquisition"

does not include State and local use taxes or fees

paid for the privilege of operating an automobile

on State highways, such as registration fees and license tags (Rev. Rut. 67-56, I.R.B. 1967-8, 13).

For purposes- of computing the manufacturers'

excise tax, the price for which an article is sold

may not be reduced by an amount equal to a warehouse "handling-out" charge incurred by the manufacturer for having the article moved from the

inner storage area of a public warehouse to the

loading platform of the warehouse (Rev. Rut. 67-

59, I.R.B. 1967-8, 15).

All direct costs to the consumer, such as mailing

and handling charges, are an integral part of the

retail price of a single cigar under section 5 701 of the

Internal Revenue Code of 1954, with the exception

only of the exact amount of State and local taxes as

specifically provided for in the statute (Rev. Rut.

67-60, I.R.B. 1967-8, 18).

The formula provided by section 163(b) of the

Code, relating to the deductibility of interest, applies

to service charges paid by customers of a department

store on purchases made under a so-called "budget

charge account" where the service charge is added

ifthe account is not paid in full in a specified number

of days after the billing date (Rev. Rut. 67-62,

I.R.B. 1967-9, 8).

Where, as required by an agreement between the

partners, the surviving partner of a two-man partnership purchases the deceased partner's interest from

his estate, the partnership terminates under the provisions of section 708 (b) (I ) (A) of the Code at the

time the sale is consummated, and the surviving partner is deemed to have acquired by purchase the

assets attributable to the deceased partner's interest

in the partnership. In determining his holding period

for the assets deemed acquired by purchase, the

surviving partner cannot include the period such

assets were held in the partnership (Rev. Rut. 67-65,

I.R.B. 1967-9, 14).

A nonprofit organization created to improve a

ANNUAL REPORT - APPENDIX

public educational system is not exempt from

Federal income tax under section 501 (c) (3) of the

Code where it campaigns on behalf of candidates

for election to the school board (Rev. Rut. 67-71,

I.R.B. 1967-10, It).

Where the Service makes adjustments under seetion 482 of the Code allocating income or deductions

among members of a group of business entities under

common ownership or control, corresponding adjustments must be made with respect to the related

corporations from which the allocations were made

(Rev. Rut. 67-79, I.R.B. 1967-11, 7) (T.I.R. 838,

8-2-66).

A contingent contractual right to receive only

additional voting stock provided for in a plan of reorganization satisfies the "solely for voting stock"

requirement of section 368 (a) (I ) (B) of the Code

where the number of additional shares to be issued is

determined by a formula based on the future market

price of the shares of the acquiring corporation (Rev.

Rut. 67-90, I.R.B. 1967-13, 8) (T.I.R. 889, 2-27-

67).

The unadjusted basis of property acquired by an

individual from a decedent's estate through exercise

of an option to purchase the property at an amount

below its fair market value, provided for in the will

of the decedent, is the sum of ( I ) the basis of the

option under section 1014(a) of the Code and (2)

the option price. The provisions of section 1234

of the Code which allow a loss on the failure to

exercise an option are not applicable on nonexercise

of a testamentary option (Rev. Rut. 67-96, I.R.B.

1967-13,12).

If a qualified stock option is amended to delete

the requirement that an optionce must represent that

he is acquiring the stock for investment, such amendment is a "modification'i of the option under section

425(h) (3) of the Code (Rev. Rut. 67-102, I.R.B.

1967-14,11). ~i

Used cars taken in trade as part payment on ihe

sale of cars by an automobile dealer may be valued,

for inventorT purposes, at valuations comparable to

those listed in an official used car guide as the average

wholesale prices for comparable cars (Rev. Rut. 67-

107, I.R.B. 1967-15, 8) (T.I.R. 892, 3-15-67).

Where a grantor irrevocably assigns to a trust,

established for a term of 5 years for the benefit of a

college, an overriding royalty interest owned by the

grantor, there is no anticipatory assignment of income. The grantor is not taxable on the income of

the trust, even though the term of the trust is less

than the economic life of the lease, provided the

93
I

ANNUAL REPORT - APPENDIX

grantor does not retain such dominionand control

over the trust corpus as to he considered its substantial owner under sections 671 through 677 of

the Code (Rev, Rul. 67-118, I.R.B. 1967-16, 16).

Legal fees incurred by a corporation in securing

advice on the tax consequences prior to the consummation of a merger with another corporation, a

subsequent stock split, and proposed distribution in

redemption of a portion of the outstanding stock

under section 302 of the Code are expeditures which

are capital in nature and therefore not deductible

as ordinary and necessary business expenses. However, in the event the proposed redemption of stock

is subsequently abandoned, the capitalized fees

attributable to such proposed redemption are deductible in the taxable year of abandonment (Rev.

Rul. 67-125, I.R.B. 1967-17, 6).

In computing the deduction for death benefits,

etc. under section 809(d) (1) of the Code, a life insurance company must include the full amount of

its reasonable estimate of losses incurred but not reported and must reduce its life insurance reserves by

the amount attributable to such losses (Rev. Rul.

67-129, I.R.B. 1967-17, 11 ).

For purposes of section 956(b) (1) (A) of the

Code, "tangible property located in the United

States" does not include property in transit from one

foreign point to another which is being transshipped

through, or temporarily stored under customs bond

in, the United States (Rev. Rul. 67-130, I.R.B.

1967-17,13).

Acquisitions of debt obligations of the World Bank

are not subject to the interest equalization tax since

that organization is not a foreign issuer or obligor

(Rev. Rul. 67-132, I.R.B. 1967-17, 15).

A taxpayer may claim as a depreciation deduction

the paym~nts he made on the purchase price

'

of U.S.

patents and U.S. patent applications, where the

inventions covered by the applications will be issued in the normal course, if the purchase price is

fixed as a reasonable percentage of the annual earnings of the patents and applications over the period

of their remaining lives (Rev. Rul. 67-136, I.R.B.

1967-18,9).

A nonprofit organization created to provide instruction and guidance to low-income families in

need of adequate housing and interested in building their own homes may be exempt from Federal

income tax under section 501 (c) (3) of the Code

(Rev. Rul. 67-138, I.R.B. 1967-18, 12).

Gem and mineral clubs and a federation of such

clubs may qualify for exemption from Federal in94

come tax under section 501 (c) (3) or 501 (c) (7) of

the Code depending upon their forms of organization and methods of operation (Rev. Rul. 67-139,

I.R.B. 1967-18, 13).

Railroads using the "retirement method" of accounting for depreciation of their track account

assets must value their recovered track materials at

their fair market values at the time the materials

are retired or replaced and transferred to supplies or

scrap accounts (Rev. Rul. 67-145, I.R.B. 1967-19,

7).

A dealer in personal property may continue to use

the installment method of accounting with respect to

its installments sales after adopting the accrual

method for book purposes, if the differences in such

sales for book and Federal income tax purposes are

reconciled in permanent auxiliary records (Rev. Rul.

67-147, I.R.B. 1967-19, 9).

The liability for retrospective rate credits based

on experience with respect to different types of insurance contracts issued by life insurance companies

is treated for Federal tax purposes as a reserve for

dividends to policyholders as distinguished from unearned premiums or return premiums. However, reserves for dividends to policyholders do not include

any amounts attributable to potential rate credits

with respect to contracts expiring after the close of

the taxable year (Rev. Rul. 67-180, I.R.B. 1967-

22, 16) (T.I.R. 902, 5-10-67). -

Packages of cigars or cigarettes bearing the required mark and notice may be enclosed in outer

containers which may be sealed, or such packages

may be overwrapped, including overwraps for special occasions such as Christmas or Father's Day.

(Rev. Rul. 67-184, I.R.B. 1967-23, 17).

A new member of an affiliated group joining in the

filing of a consolidated return is not required to annualize its income for the short period prior to affiliation in filing its separate return for such period

(Rev. Rul. 67-189, I.R.B. 1967-24, 14).

Acquisitions of certain participation certificates

sold by the Export-Import Bank of Washington are

not subject to the interest equalization tax since that

organization is not a foreign issuer or obligor (Rev.

Rul. 67-190, I.R.B. 1967-24, 15).

Income of a foreign corporation from the mining

and processing of a mineral at a site within a foreign

country and its sale in the United States without

further treatment or processing outside the foreign

country is gross income from sources without the

United States (Rev. Rul. 67-194, I.R.B. 1967-25,

5).

Literary agents must report on information returns the gross amount of royalties received from

publishers prior to deduction of commissions, fees,

and expenses (Rev. Rul. 67-197, I.R.B. 1967-25,

11 ).

An "overcleposit" of employment taxes for a semimonthly period may be applied to reduce the amount

of such tax required to be deposited for a subsequent

semimonthly period within the same calendar quarter (Rev. Rul. 67-198, I.R.B. 1967-25, 12).

Where a winner of the Irish Sweepstakes reports

his income on the cash receipts and disbursements

basis and, by reason of being a minor, his winnings

must be held by the Irish court until he reaches

majority, the economic benefit doctrine applies and

requires the inclusion of the present value of the

sweepstakes winnings in the minor's gross income

at the time the funds are paid over to the Irish court

(Rev. Rul. 67-203, I.R.B. 1967-26, 8).

A transitional procedure was established for use

by certain employers to avoid penalties while changing over to the new requirements for deposits of

certain employment taxes on a semimonthly basis

(Rev. Proc. 66-31, C.B. 1966-2,1212) (T.I.R. 820,

5-17-66).

The Service announced certain operating' rules

which have been developed by the Reorganization

Branch for determining whether a ruling will be

issued in certain types of cases and the conclusions

which will be expressed in such rulings (Rev. Proc.

66-34, C.B. 1966-2, 1232).

A renewed request for an identifying number

must be made by any person who has requested, but

has not received, such number from another person

(Rev. Proc. 66-47, C.B. 1966-2, 1255) (T.I.R.

866,10-26-66).

An administrative procedure was rstablishd

whereby an individual whose income is derived from

certain limited sources may expeditiously change his

annual accounting period from a fiscal year to a

calendar year (Rev. Proc. 66-50, C.B. 1966-2,

1260).

The Service published in updated form its general

procedures relating to issuing rulings and determination letters to taxpayers and entering into closing

agreements as to specific issues, with an explanation

of the rights and responsibilities of taxpayers (Rev.

Proc. 67-1, I.R.B. 1967-1, 5) ; furnishing technical

advice to District Directors of Internal Revenue,

with a detailed explanation of the rights of taxpayers (Rev. Proc. 67-2, I.R.B. 1967-1, 16) ; processing applications for exemption from income tax,

ANNUAL REPORT - APPENDIX

revocation or modification of exemption letters and

determination letters, and rulings involving prohibited transactions (Rev. Proc. 67-3, I.R.B. 1967-1,

22) ; and processing requests for qualification of

pension, annuity, profit-sharing, and stock bonus

plans and the exemption of related trusts (Rev. Proc.

67-4, I.R.B. 1967-1, 27).

A program for the review of rulings published

prior to 1953 has been established to identify for

public listing those which are not considered determinative with respect to future transactions (Rev. Proc.

67-6, I.R.B. 1967-6, 66).

An administrative procedure was established

whereby taxpayers may expeditiously obtain consent

to change their overall'method of accounting from

the cash receipts and disbursements method to an

accrual method (Rev. Proc, 67-10, I.R.B. 1967-9.

123) (T.I.R. 883, 2-7-67).

Procedures for reporting certain "other compensation" on Forms 1099 and W-2 were clarified

(Rev. Proc. 67-19, I.R.B. 1967-16, 30) (T.I.R.

882, 1-30-67).

A new beer metering system identified as the

Potter beer monitoring system, Model SY-81-600,

may be used in breweries with the Potter Flow Meter; all previously approved beer meters and

metering systems are listed (Rev. Proc. 67-20,

I.R.B. 1967-19, 18).

Section 204 of the Foreign Investors Tax Act of

1966 (Public Law 89-809) eliminated the special

limitation on the amount allowed as a deduction for

self-employed individuals for contributions to certain

pension, etc., plans and provided a new definition

of "earned income" from self-employment, effective

with respect to taxable

,

years beginning after December 31, 1967. If plansare amended only to conform

to the new provisions of law, previously issued favorable dcterminatio~ letters will apply to the plans as

amended (Rcv. Proc. 67-26, I.R.B. 1967-20, 44).

Significant Announcements' of

General Interest

In disposing of pending cases involving educational expense deductions, the Service will take into

consideration the fact that the proposed amendments to the regulations clarifying the deductibility

of such expenses were not available for guidance

(Announcement 66-50, I.R.B. 1966-32, 42)

(T.I.R. 829, 7-8-66).

95
ANNUAL REPORT - APPENDIX

The Service requested the views of interested persons with respect to developing a formula for integrating pension, annuity, li~ofit sharing, and stock

bonus plans with old age and survivors insurance

benefits provided underthe Social Security Act (Announcement 66-58, I.R.B. 1966-38, 87).

Refunds due on joint income tax returns will not

be delayed because of the missing signature of the

husband serving in the armed forces in Vietnam

(Announcement 66-6 1, I.R.B. 1966-39, 33) (News

Release I.R. 842, 8-31-66).

Form 4136, for use in computing the credit for

tax on gasoline and lubricating oil used for nonhighway use, is available; taxpayers are reminded that

the credit will be allowable only on a timely filed income tax return ~Announcemcnt 66-62, I.R.B.

1966-40, 16) (T.I.R. 845, 9-14-66).

Suggestions are invited on proposed guidelines for

taxpayers and- their represcrittaives in connection

with requests for advance rulings required under

section 367 of the C~cle on certain types of transactions involving foreign corporations (Announcement

66-63, I.R.B. 196-40, 17).

The Internal Revenue Code has been amended

to permit the Treasury Department to require the

filing of returns with Service centers, but the new

legislation will not affect the filing of 1966 returns

(Announcement 66-76, I.R.B. 1966-31, 49

)

(News

Release I.R.-845, 11-10-66).

Form 3468, Computation of Investment Credit,

has been revised and must be used for computing investment credit on property placed in service on or

after October 10, 1966 (Announcement 66-79,

I.R.B. 1966-51, 51 ) (T.I.R. 868, 12-6-66).

The income tax exclusion for combat pay of cominissioned officers serving in Vietnam has been raised

from $200 to $500 retroactive to January 1, 1966

(Announcement 66-77, I.R.B. 1966-52, 77) (News

Release I.R.-847, 11-29-66).

Revenue Procedure 66-49, outlining the appraisal format to support claimed fair market value

of donated property, is available as Document 5672

from the Superintendent of Documents, Washington, D.C. (Announcement 67-1, I.R.B. 1967-3, 2 1)

(News Release I.R.-852, 12-2G-66).

The United States-Honduran income tax convention was terminated as of December 31, 1966, and

will not apply for taxable years beginning on or after

January 1, 1967 (Announcement 67-3, I.R.B.

1967-4, 21) (Treasury Department Release F-729,

1,24-66).

One issue of the Bulletin is devoted to an index of

administrative and procedural matters which have

been published in the Internal Revenue Bulletin

since 1952 (Announcement 67-8, I.R.B. 1967-7,

4).

A new statement of organization and functions of

the Service, effective January 12, 1967, has been

issued (I.R.B. 1967-9, 27).

The $3 a month payments by senior citizens beginning July 1, 1966, for supplementary medical insurance under '~Medicarc" are deductible as medical

expenses on their 1966 Federal income tax returns

(Announcement 67-12, I.R.B. 1967-10, 20) (News

Released I.R.-868, 2-7-67).

The proposed amendments to the regulations

under sections'512 and 513 of the Code, published

in the Federal Register for April 14, 1967, reflect

conclusions reached by the Service in a study of

unrelated business income tax applicable to certain

exempt organizations (Announcement 67-18,

I.R.B. 1967-19, 43) (T.I.R. 899, 4-14-67).

"Retirement age" has been defined to clarify an

ambiguity in the definition applicable to disabled

retirces; who otherwise qualify for the sick pay exclusion (Announcement 67-23, I.R.B. 1967-23,

19) (TJ.R. 905, 5-18-67).

A special enrollment examination for accountants

and others who wish to practice before the Internal

Revenue Service will be held on September 25 and

26, 1967 (Announcement 67-25, I.R.B. 1967-24,

19) (News Release I.R.-888, 5-25-67).

Alcohol and Tobacco Industry

Circulars

Winemakers are advised of the more frequent

errors or omissions found in requests for approval

of formulas and processes for making wine and of

applicable regulatory requirements (Industry Circular 66-20, Oct. 6, 1966).

Industry members are notified of proposed hearings in response to petitions to amend regulations

governing the labeling of domestic whiskies as

affected by cooperage. The hearings will consider,

essentially, petitions to allow age statements to be

made on labels affixed to distilled spirits stored in

uncharred or used charred oak containers (Industry

Circular 67-3, April 21, 1967).

Brewers are cautioned that it is their immediate

responsibility to assure that all beer reported

destroyed is, in fact, destroyed. Any such beer

diverted to beverage use becomes taxable (Industry

Circular 67-5, April 19, 1967).

Technical Information Releases

One of the principal means of publicizing new

tax legislation and regulations and their effects upon

taxpayers is by the issuance of Technical Information

Releases. Some of the more important of these releases issued during the year are the following:

T.I.R. 829 (July 8, 1966), announcing proposed

amendments to the income tax regulations on the

deductibility of educational expenses.

T.I.R. 868 (December 6, 1966), discussing the

suspension of the investment credit by Public Law

89-800 and announcing the revision of the form

used in computing that credit.

T.I.R. 873 (December 22, 1966), calling attention to the provision of Public Law 89-719, the

Federal Tax Lien Act of 1966, which requires persons to notify the Service of sales on any property to

be sold as a result of foreclosure action where the

United States has or claims a Federal tax lien.

T.I.R. 878 (December 30, 1966), announcing

the finalization of certain regulations, and the proposal of other regulations, relating to consolidated

returns of affiliated corporations.

T.I.R. 881 (January 30, 1967), calling attention

to the provision of the Federal Tax Len Act of 1966

which specifies the place in which the Service is to

file a notice of Federal tax lien with respect to real

property.

T.I.R. 899 (April 14, 1967), announcing pro.

posed rekulations dealing with unrelated business income of tax-exempt organizations.

Supreme Court Decisions

Civil Cases

In Commissioner v. Stidger, 386 U.S. 287 (1967),

the Supreme Court agreed with the Commissioner's

position that the military taxpayer is not "away from

home" when he is at his permanent duty station

whether or not it is feasible or permissible for his

family to be with him. While the Supreme Court

has settled the meaning of "home" insofar as military

personnel are concerned, the question as it affects

civilian taxpayers still remains unresolved. However,

two of the reasons given for its decision, i.e., the

Commissioner's longstanding and judicially approved interpretation, and Congressional approval

ANNUAL REPORT - APPENDIX

of this interpretation as indicated by Congrm' carving out an exception to cover its own special travel

expense problems, would have equal validity when

applied to the nonmilitary taxpayer.

On June 5, 1967, the Court tendered a most significant decision in favor of the Government in Second National Bank of New Haven, Exr. v. United

States, 387 U.S. 456 (1967) affirming the decision

of the Court of Appeals forthe Second Circuit. Commissioner v. Estate of Bosch, 387 U.S. 456 (1967)

which involved a common issue was also decided in

the same opinion. Apart from the substantive estate

tax aspects of the cases, they both involved the issue

of the effect to be given a state trial court decree

determining an issue of state law in cases where a

Federal tax question-is dependent on such

'

underlying issue of state law. The Supreme Court held

that such decrees should be given "proper regard,"

but no binding effect, where the United States was

not a party to the state court proceeding. In such

cases, the Federal courts must apply what they find

to be the state law and must, in effect, sit as state

courts themselves. The Court relied on the famous

decision in Erie R. Co. v. Tompkins, 304 U.S. 64

1938). It rejected the approach taken in Gallagher

v. Smith, 223 F. 2d 218 (3d Cir. 1955), which the

Government had been fighting vigorously for years.

The two cases involved Connecticut and New

York trial court decrees adjudicating property rights,

which had become binding on the parties when they

w re not appealed. The Supreme Court actually

went beyond the position argued by the Government in concluding that a trial court decree would

not be binding even if it resulted from a bona fide

adversary proceeding. It stated, though, that the

decision of the highest court of a State would be

binding. This decision should greatly restrict any

opportunities in the fuiure to alter or avoid Federal

tax consequences through proceedings in the State

courts.

In Northeastern Pennsylvania National Bank &

Trust Co. v. United States, 387 U.S. 213,(1967),

decided May 22, 1967, the Court reversed the Third

Circuit and held against the Govcnment in another

estate tax refund suit which reached the Supreme

Court because of a conflict with United States v.

Citizens National Bank of Evansville, 359 F. 2d 817

(7th Cit. 1966), cert. den., 387 U.S. 941. The Court

held that a bequest in trust for the payment of a

specific monthly sum to the decedent's widow qualified for the marital deduction under section 2056

(b) (5) of the 1954 Code where the widow had a

96

97
i

ANNUAL REPORT * APPENDIX

general power of appointment over the entire trust;

and that the "4actional or percentile share" definition of a "specific portion" contained in the Estate

Tax Regulations, section 20.2056(b)-5(c), improperly restricted the scope of the deduction as intended by Congress in the context of this case. The

Court rejected the actuarial approach and approved

the capitalization method for valuing the interest

passing to the surviving spouse.

Criminal Cases

The Supeme Court continued until next term

the two cases raising the issue as to whether the

registration and return provisions of the wagering

tax law violate the privilege against self-incrimination guaranteed by the fifth amendment, Marchetti

v. United States, 35 U.S.L. Week 3436 (U.S. June

12, 1967), and Grosso v. United States, 35 U.S.L.

Week 3436-7 (U.S. June 12, 1967). InitiAy, the

grant of certiorari was limited solely to the question

whether the Court should reexamine its prior holdings in United States v. Kahriger, 345 U.S. 22

(1953), and Lewis v. United States, 348 U.S. 419

( 1955), with respect to tile fifth amendment issue

in view of its decision in Albertson v. Subversive

Activities Control Board, 382 U.S. 70 (1965). In

1953, the Supreme C

'

ourt held that the registration

provisions of the wagering tax law did not infringe

upon the fifth amendment privilege against selfincrimination because the privilege relates only to

past acts and under the registration provisions an

individual subject to the tax is not compelled to

confess to past acts, UnitedStates v. Kahriger, supra.

This holding was reaffirmed 2 years later in Lewis v.

United States, supra. Although these two cases were

briefed in accordance with the grant of certiorari

and the oral arguments were held on January 17

and 18, 1967, the cases have been set for rearguing

during the 1967 term in order that two additional

questions can be briefed and argued. These are:

(I ) What relevance has the required records doctrine, Shapiro v. United States, 335 U.S. I ( 1 948),

to the validity under the fifth amendment of the

registration and return requirements; and (2) Can

the occupational and excise taxes be satisfied without filing a registration statement and wagering

excise tax return?

In April 1967, the Government filed a direct

appeal in the case of United States v. Arnold Habig

and Jerome Schoering, No. 1311, October Term

1966, from a district court's order dismissing two

counts of an indictment because of the statute of

98

limitations. These counts charged both defendants

with tax evasion and aiding and assisting in the preparation and presentation of a false tax return, respectively. The lower court's order took the position that the statute of limitations started to run on

the date the subject returns were due without regard to extensions. In support of this order, the

district court cited Hull v. United States, 356 F.

2d 919 (5th Cir. 1966), and United States v.

Scheetz, 224 F. Supp. 789 (S.D. Ind. 1963). The

Government's position is that, with respect to a

return filed subsequent to the statutory due date,

the statute of limitations begins to run from the

date of actual filing.

No alcohol and tobacco tax cases were decided

by the Court. Three petitions for certiorari filed

by defendants which were pending at the beginning

of the year were denied; nine petitions were filed

during the year, of which eight were denied, and one

was granted (Haynes v. United States, 372 F. 2d

651 (5th Cir., 1967) ).

Haynes involves a conviction under section 5851

of the Code for the possession of a firearm which

had not been registered. Convictions under this

section have previously been upheld in five circuits,

and certiorari was denied by the Court in three of

those cases.

Actions of Lower Courts

Civil Cases

In a case involving an issue which will ultimately be decided by the Supreme Court of the

United States, the First Circuit, in Commissioner v.

Bagley, 374 F. 2d 204 (Ist Cir. 1967), upheld the

Commissioner's long-standing "overnight" rule by

reversing the Tax Court's holding that taxpayer,

a consulting engineer, was entitled to a deduction

for meal expenses incurred while traveling to and

from several job locations even though he was not

"away from home overnight". The First Circuit's

holding conflicts with the Sixth Circuit's recent

decision in Correll v. United States, 369 F. 2d 87

(6th Cir. 1966) and the Eighth Circuit's decision in

Hanson v. Commissioner, 298 F. 2d 391 (8th Cir.

1962). The Supreme Court has granted the Government's petition for certiorari in Correll and the Government has recommended acquiescence in taxpayer's petition for certiorari in Bagley.

The Commissioner successfully litigated two

"corporate reorganization" cases in the Fifth CirI

cuit. In Davant v. Commissioner, 366 F. 2d 874

(5th Cir. 1966), the Fifth Circuit held that where

taxpayers owned the stock of two corporations,

Warehouse Company and Water Company, and

transferred their Warehouse stock to a third party

pursuant to a plan whereby the third party dissolved

Warehouse Company and transferred all its operating assets to Water Company, the transactions re-

,suited in a reorganization under sections 368(a)

(1) (D) or (F) of the 1954 Code. The Commissioner did not make an "I"' reorganization argument

in the Court of Appeals because, under Service

position, the combination of brother-sister corporations does not constitute an "F" reorganization.

Nonetheless, the Court found that the reorganizationqualified as an "I"'. The Court further held that

taxpayers received a dividend to the extent of the

earnings and profits of both Warehouse and Water

Companies. The same Court, in Reef Corp v. Commissioner, 368 F. 2d 125 (5th Cir. 1966), found a

complicated transaction involving. the sale of the

assets and stock of Corporation A through an intermediary to Corporation B, for the purpose of liquidating the interest of one of Corporation A's original

stockholders, to be both a "D" and an "I"' reorganization under section 368. As a result, the notice of

deficiency sent to CorporationBas successor in name

to Corporation A for a full fiscal year was valid. The

transaction was not a sale of stock to the intermediary and the transferred assets took a substituted

basis for depreciation purposes.

In a case involving a net operating loss carryover, the Sixth Circuit held that the statutory provisions of the 1954 Code applied, even though the

purchase of the corporation and the change of busine;~ both occurred in 1952. Frederick Steel Co. v.

Commissioner, 375 F. 2d 351 (6th Cir. 1967). As

a rrsult,.the corporation was entitled, under section

382,(a), to carry over its losses from 1952 and

earlier years to 1954 when a new profitable business

was acquired. The relevant year for consideration

of the two factors mentioned in section 382 (a) is

not the close of the year for which the carryovcr

deduction is claimed, as the Court of Appeals held,

but instead, the year when the change in ownership

and change in the nature of the business occurred.

Certiorari was not requested on the transitional

rule issue despite a conflict with Frank Ix & Sons v,

Commissioner, .375 F. 2d 867 (3rd Cir. 1967), due

to the few pending cases and the declining importance of the issue.

ANNUAL REPORT - APPENDIX

The Third Circuit held that, where the parties

to a transaction involving the sale of a business have

entered into a written agreement spelling out the

precise amount to be paid for a covenant not to

compete, they should not then be permitted, for

tax purposes, to attack the tax treatment such provision is accorded by the Commissioner in the absence of grounds necessary for an action between

the parties to the agreement-i.e., proof of fraud,

duress, or undue influence. Commissioner v. Danielson, 378 F. 2d 771 (3rd Cir. 1967). Oil the other

hand, the Commissioner can attack such a provision

on the ground that the form of the agreement does

not coincide with the substance of the transaction.

In a case of first impression, the Third Circuit

permitted a partnership to deduct an allocable portion of certain "rcpair'~ expenses incurred by the

partnership in readying two barges for transfer to

a newly-formed corporation. Since the barges were

used by the corporation before being repaired, the

corporation was permitted to deduct the-remaining

repair expense. Estate of Walling v. Commissioner,

373 F. 2d 190 (3rd Cir. 1967). The Court rejected

the Commissionees contention, and the Tax Court's

conclusion, that the repairs were incidental to the

transfer of the capital assets oil which the), were

made, and Were, therefore, capital expenditures.

The Court in effect related the repairs to past use of

the barges by the partnership and the corporation

rather than to their prospective use by the partnership in its business. The Tax Court had sought to

guard against any unintended tax benefits which

repair prior to sale or transfer of a capital asset ma,%

provide to taxpayers.

The Court, in Dinkins v. Commissioner, 378 F. 2d

825 (8th Cir. 1967), held that the Commissioner

had overcome the rationale of Fribourg Navigation

Co. v. Commissioner,'383 U.S. 272. In Dinkins,

depreciation was disallowed the taxpayer on the basis

that the estimated dseful life and salvage values were

adjusted as a result of comparisons with the past ex.

perience of this particular taxpayer, (citing Massey

Motors, Inc. v. United States, 364 U.S. 92). The

depreciation had originally been disallowed on both

the invalidated Fribourg approach and the Massey

Motors approach.

The Second Circuit, citing Kneisch v. United

States, 364 U.S. 361 (1960), upheld the Commissioncr~s position that the prepayments of interest on

loans obtained to finance the purchase of Treasury

Notes did not represent "interest on indebtedness"

within the meaning of section 163(a) of the 1954

99
I

ANNUAL REPORT - APPENDIX

Code so as to entitle taxpayers to a deduction in the

cor*putation of their net income. Goldstein v. Commissioner, 364 F. 2d 734 (2d Cir. 1966). In so

holding, the Court rejected the Tax Court's finding

that the transactions involved were "shams".

Major developments in the area conceming the

dcductihility of expenses of transporting tools and

effects to and from work are portended by the decision of the Second Circuit in Sullivan v. Commisst.oner, 368 F. 2d 1007 (2d Cir. 1966). The Court

held that taxpayer is entitled to deduct that portion

of his reasonable driving expenses which is allocable

to the transportation of his tools. The Second Circuit's decision is contrary to the Tax Court's holding

in Tyne v. Commissioner, 1966 P-H T.C. Memo

~66,214 presently being appealed by taxpayer to the

Seventh Circuit.

In Coastal Club, Inc. v. Commissioner, 368 F. 2d

231 (5th Cir. 1966), the Fifth Circuit, in affinning

the Tax Court, held that a duck hunting club which

had entered into several oil and gas leases of its

property which provided three-fifths to two-thirds of

the amounts expended for operations, repairs, maintenance, and improvements was not exempt as a

social club -under section 501 (c) (7) of the Code.

The Court found that it was not operated exclusively

for pleasure, recreation, and other nonprofitable purposes because part of its net eamings inured to the

benefit of its shareholder-members through such expcnditures.

In Scott v. Commissioner, 374 F. 2d 154 (9th Cir.

1967), the Ninth Circuit held that, under Califor-nia

law, a wife's heirs who succeeded to her community

property interest in an insurance policy on her

husband's life had an interest in the entire bundle of

rights in the policy, not just in one of the rights, the

cash surrender value, so that on the husband's subsequent death there was excludable from his estate

that part of the proceeds proportionate to the heirs'

interest in the policy and not just the cash surrender

value of the policy on which the wife's estate paid a

tax.

The decision in EliLilly and Co. v. UnitedStates,

372 F. 2d 990 (Ct. Cl. 1967), involved a major

test of the Commissioner's powers to reallocate income between related corporations under section 482

of the 1954 Code. At issue were the pricing arrange.

ments between Lilly and two subsidiaries engaged

in international trade, one of which was a western

hemisphere trade corporation entitled to the benefits of sections 921 and 922 of the 1954 Code. Lilly

had priced its products at cost, without even in100

eluding research and development costs, resulting in

a diversion of taxable income to the western hemisphere subsidiary. The court held that income could

be reallocated to reflect prices which would have

been charged if the corporations had been unrelated

parties dealing at arm's length, notwithstanding that there were valid business reasons supporting the actual pricing arrangements.

The Court of Claims approved the reallocation in

spite of the fact that it resulted in reducing the benefits which would otherwise flow from the subsidiary's

qualification as a westem hemisphere trade corpora- tion. Significantly, the court did not accept taxpayer's argument that the reallocation should be disapproved because the method actually employed by

the revenue agent in aniving at arm's length prices

was arbitarary. The court in Lilly held that the taxpayer has the further burden of proving that the

method produced an arbitrary and unreasonable

result. ItIalso invoked the rule that a taxpa

.

yer in a

refund suit must not only prove arbitrary action by

the Commissioner, but also the correct amount of

tax and resulting overpayment, citing Helvering v.

Taylor, 293 U.S. 507 (1935).

In Skelly Oil Co. v. United States,-F. 2d-

(10th Cir. 1967), the Court ofAppeals held that the

taxpayer, which had taken deplcoon deductions on

income received in the year 1952 through 1957 and

held under a claim of right, was not required under

section 1341 of the 1954 Code to reduce its deductions in a later year for refunds made to customers by

the amount of such depletion deductions. The court

treated the question as a question of interpreting section 1341, without reference to other sections of the

Code, and could find no statutory support for limiting the deduction in the year of repayment.

The adverse decisions of the Court of Claims in

Metropolitan Life Insurance Co, v. United States,

256 F. 2d 835 (1967), and Equitable Life Assurance

Society v. United States, 366 F. 2d 967 (1966),

cert. den. 386 U.S. 102 1, constitute important precedents in the field of foreign tax credits, In these

cases it was held that the premiums taxes imposed

by the Dominion of Canada and various of its provinces on mutual life insurance companies were to be

treated as "in lieu of" incomes taxes and were, therefore, available for the foreign tax credit under sections 901 and 903 of the 1954 Code. These decisions

represent a liberal and nonrestrictive interpretation

of the requirements of the foreign tax credit provisions. The Govemment sought unsuccessfully to

persuade the Supreme Court to review theEquitable

decision.

In U.S. Thermo Control Co. v. United States,

372 F. 2d 964 (Ct. Cl, 1967), the court had before

it the question of whether truck and trailer refrigerating units are subject to manufacturers excise tax

as truck parts or accessories under section 4061 (b)

of the 1951, Code. It held that these units were

exempt from the manufacturers excise tax. The Government views the decision as having misinterpreted

the ruling position of the Service on the question and

as applying erroneous principles in interpreting legislative intent. A petition for certiorari has now been

filed by the Solicitor General.

A significant decision with respect to the "first in

time, first in righe' rule of allocating involuntary

payments on a taxpayees unpaid tax accounts was

handed down by the Court of Appeals forthe Second

Circuit. In United States v. Pollack, 370 F. 2d 79

(2d Cir. 1966), the Court of Appeals in affirming

the judgment of the district court held that a creditor has the right to apply sums received from a debtor

in such fashion as to give the creditor the utmost advantage of such security as the creditor may possess.

In absence of any other creditor who would be prejudiced by the allocation, the courts must respect the

"first in time, nghts of the secured creditor. The

first in right" rule only prevents the Goverrimcrit

from using the security of a prior lien to satisfy subsequent liens when such action would be to the detriment of an intervening or competing creditor whose

security is superior to that of the Government with

respect to its juniorliens. In the subject case the Government was pennitted to apply the surplus proceeds

of a mortgage foreclosure sale of one parcel of property to its later liens in Order to preserve its earlier

liens against other property representing security

forthe balance of the tax liens.

Inthe case of In the Matter of Quakertown Shopping Center, Inc. v. United States, 366 F. 2d 95

(3d Cir. 1966), the Court of Appeals considered

the question whether the District Director may validly serve a notice of levy on a chapter XI (Bankruptcy Act) receiver to attach the claim of a taxpayer against the debtor in bankruptcy without the

pnor permission of the Bankruptcy Court. The

amount due the creditor taxpayer from the debtor

was substantially more than the sum sought by the

Federal tax levy. The district court in reversing the

Referee in Bankruptcy held that the levy was unauthorized without the prior permission of the Bank276-586 0 - 57 - B

ANNUAL REPORT - APPENDIX

ruptcy Court because the funds were in custodia

legis. The Court of Appeals reversed the district

court judgment and held that the levy did not invade

the jurisdiction of the Bankruptcy Court or interfere

with the administration of the estate. The levy was

held to be valid and enforceable and payment was

ordered to be made to the Government from the

dividend due the taxpayer creditor, plus interest

to the date the chapter X1 petition was filed.

The highest court of the State of New York, the

Court of Appeals, in the case of In re the Estate of

Feinberg (1966) 18 N.Y. 2d 499, affirmed the

lower Supreme Court appellate decision and held

that the filing of a proof of claim for unpaid Federal

taxes with the representative of an estate constituted

the commencement of a "proceeding in c6urt"

within the meaning of the Internal Revenue Code

thereby tolling the statute of limitations with respect

to collection from assets of the estates. Section 6502

(a) of the Internal Revenue Code provides generally

that an assessment may be collected by levy or by a

proceeding in court if begun within 6 years after the

assessment or prior to the expiration of any period

for collection as extended by agreement. Proofs of

claim for Federal taxes had been timely filed with the

estates (two estates involved in this case), i.e., within

6 years from the dates of assessment, and more than

6 years after assessment applications for final accountings were filed by the Government. The estate

representatives charged the applications were barred

as not being timely, but the New York Court of Appeals held that under New York law the filing of

the claim was the commencement of a proceeding

in court sufficient to toll the statute of limitations.

Although this decision involves interpretation of

New York law, it is considered to be a significant

decision on a point of law vital to the collection of

taxes from estates.

In the case of United States v. John McKay, 372

F. 2d 174 (5th Cir~' 1967), the Government petitioned the district court for enforcement of a civil

summons directed to the executor-attorney of an

estate

to produce a certain appraisal report which

he had obtained covering property of a corporation

whose stock was owned by the estate. The Federal

estate tax return was then under examination. The

district court denied the Government's petition and

sustained the argument of the executor that the

appraisal report was protected by the attorney-client

privilege or as his work product as attorney for the

estate. The Court of Appeals reversed after the Govemmcnt appealed and held that the report was

101
I

ANNUAL REPORT - APPENDIX

not privileged from disclosure. The attorney-client

privilege was held inapplicable because the work

product rule was not applicable since the work was

the product of experts employed to prepare it and

not that of the lawyer. The Court of Appeals concluded that the Service was entitled to inspect the

appraisal report and remanded the case to the district court with directions to grant the petition of

the United States to enforce the summons. The

Court noted its view that the power of the Commissioner to investigate the records and affairs of taxpayers is greater than that of an ordinary party to

civil litigation.

In the case of Goodman v. United States, 369

F. 2d 166 (9th Cir. 1966), the Court of Appeals contrary to the Government's argument held that, in the

absence of a pending criminal proceeding, a suit

seeking the return of property and its suppression as

evidence is an independent civil proceeding and a

district court order denying such relief is final and,

therefore, appealable under section 1291 of the

judicial Code. Subsequently, in Parrish v. United

States, 376 F. 2d 601 (4th Cir. 1967), the

Fourth Circuit Court of Appeals held that a

district court order dismissing a similar type suit

was interlocutory and unappealable where a criminal proceeding was, in fact, commenced while the

appeal was pending. The unsettled nature of this

type of suit, as independent or ancillary to a criminal Proceeding, is a recurring problem and further

judicial clarification of the bases of appellate jurisdiction in such suits is anticipated.

Criminal Cases

With the denial of certiorari last year in the case

ofKohatsu v. United Slates, 351 F. 2d 898 (9th Cit.

1965), cert. denied 384 U.S. 1011 (1966), the

Supreme Court left undisturbed the Ninth Circuit's

holding that a special agent of the Internal Revenue

Service was not required to warn a taxpayer of his

right to counsel at the investigative stage of an

examination. The First, Fourth, and Sixth Circuit

Courts of Appeal have now followed the Ninth Circuit's holding. Morgan v. United States, 377 F. 2d

507 (Ist Cit. 967), 67-1 USTC 9449,19 AFTR2d

67-598 (Ist Cir. 1967); United States v. Mancuso,

378 F. 2d 612 (4th Cit. 1967); United States v.

Maius, 378 F. 2d 716 (6th Cir. 1967).

In the case of Siravo v. United States, 377 F. 2d

469 (Ist Cir. 1967),67-1 USTC 9446,19 AFTR2d

67-601 (1967), the Court of Appeals for the First

Circuit affirmed the conviction of the defendant on

102

three counts of wilfully making and subscribing false

tax returns in violation of section 7206 (1 ) and one

count of wilfully failing to file a tax return in violation of section 7203. With respect to the 7206 ( 1 )

counts, the taxpayer reported income only from

wages subject to withholding and did not file a

schedule C pertaining to his business of assembling

jewelry components as a subcontractor for various

manufacturers. The Government in presenting its

case relied on total receipts from these manufacturers, but offered no proof of expenses. The defense contended that 26 U.S.C. 7206(l) described a

form of perjury and that the failure to attach a

separate schedule C reporting "gross receipts" was

neither a constructive misrepresentation of taxable

income nor a false statement. In rejecting this argument, the Court held that "true and correct" as used

in the statute means "both accurate and complete".

As for the section 7203 count, the Court stated, with

respect to establishing the legal duty to file, it is met

when the Government produces evidence showing

that receipts exceed cost of goods sold by at least

$600. The Court then held that the evidence of unexplained receipts shifted to the taxpayer the burden

of coming forward with evidence as to the amount

of offsetting expenses, if any. In so ruling, the Court

limited its prior holding in Winkler v. United States,

230 F. 2d 766 (1st Cir. 1956), with respect to this

point.

In the case of United States v. Frazier, et al., 365

F. 2d 316 (6th Cit. 1966), the Court of Appeals

affirmed the conviction of Frazier and Reed for attempted evasion of income taxes due and owing by

Frazier. The Government by means of the net worth

and expenditures method proved Frazier substandally understated his income by handling transactions

in the name of Miss Reed and that she aided in the

concealment of his assets. Atthe trial, the prosecution

introduced into evidence a computation wherein

Frazier and Reed were treated as an economic unit.

As part of its proof, the Government undertook to

establish that Miss Reed did not have the financial

ability to acquire the concealed assets with her own

funds. The Sixth Circuit's affirmance was by a per

curiam opinion and on March 20, 1967, the

Supreme Court denied certiorari, 386 U.S. 971.

On January 29, 1967, former Senate Aide Robert

G. (Bobby) Baker was found guilty by a jury in the

U.S. District Court for the District of Columbia on

seven counts of a nine-count indictment. Among the

charges for which he was convicted were: attempted

evasion of his income taxes; aiding in the preparation of a false and fraudulent return for another taxpayer; larceny; transportation of stolen money;. and

conspiracy. On April 7, 1967, judge Oliver Gasch

sentenced Baker to serve not less than one nor more

than three years on each of the seven counts in which

he was convicted. The sentences are to run concurrently. A notice of appeal has been filed.

There were no significant decisions in the alcohol

or tobacco criminal field.

Several significant cases involving firearms were,

however, decided. In United States v. Kokin, 365 F.

2d 595 (3rd Cit. 1966), cert. denied 385 U.S. 987

(Dec. 12, 1966), the Court of Appeals for theThird

Circuit decided that the transfer of a carbine, itself

not a machine gun, together with all of the parts

necessary to convert it to a machine gun, constituted

transfer of a machine gun as defined in the National

Firearms Act.

United States v. Lauchli, 371 F. 2d 303, (7th Cir,

1966), upheld a conviction of violations of the National Firearms Act and of the Federal Firearms

Act by a persistent firearms violator. Some idea of

the extent of the operation involved may be inferTed

from the fact that, during the investigation, $17,000

in Government money was turned over by. undercover agents to the defendant in the "purcha~c" of

weapons. The money was recovered at the time of

arrest.

United States v. DePugh, et al., 266 F. Supp.

417 (D.C.W.D. Mo. 1967), denied a motion for

• new trial filed by the leader of the Minutemen,

• major right-wing para-military organization, who

had been convicted on several counts dealing with

the illegal possession of firearms. The same defendant filed a motion to dismiss the indictment in a

related case brought under the Federal Firearms

Act. The motion was denied, 266 F. Supp. 453

(D.C.W.D. Mo. 1967). Both cases have been

appealed.

In United States v. Leavell, et al. (D.C.S.C. 1967,

unreported), several defendants were convicted of

violations of the National Firearms Act. The case

arose from the seizure of almost 300 tons of machine guns and machine gun parts from the defendants.

ANNUAL REPORT - APPENDIX

The Court of Appeals for the Fifth Circitit in

King v.-U.S., 364 F. 2d 235, reversed a district

court decision (U.S. v. One 6.5 MannlicherCarcano Military Rifie, etc., 250 F. Supp. 410),

forfeiting the weapons involved in the assassination

of President Kennedy because they were involved

in a violation of the record-keeping requirements of

the law, i.e., the recording of the purchaser under

a fictitious name. The circuit court found no evidence to establish that Oswald had had any knowledge of the requirements that firearms dealers record

the names of the purchasers of their weapons and

therefore could not, by ordering the guns under a

fictitious name, have knowingly caused the dealer

to falsify his records. The court in its decision referred to the fact that special legislation had been

enacted authorizing the Government to retain Pos- session of the weapons if it compensated the owner

therefor.

The same circuit court affirmed the administrative annulment of a wholesaler's basic permit which

had been issued on the basis of the applicant's representation that an ineligible person had severed his

connection with the applicant and had disposed of

his interest. Some years after the issuance of the

permit, the company was involved in violations of

State liquor laws which were engineered by this

individual, allegedly only a salesman. The court

found ample evidence of record to support the

Director's reversal of the Hearing Examiner's initial

decision in favor of the corporation on the annulment issue. (Valdosta Distributing Company, Inc.

v. Serr, 375 F. 2d 770 (5th Cit. 1967) ).

The District Court for the Middle District of

Pennsylvania has pointed out once more that acquittal of the owner on the related criminal charges

of accepting wagers Eloes not bar forfeiture of the

money seized on the gambling premises. The court

pointed out that~~not only is the quantum of proof

necessary to support a conviction different and more

restrictive than that applicable in the civil forfeiture

case, but also that knowledge on the part of the

defendant of the registration and stamp require.

ments need not be established in the forfeiture proceedings, U.S. v. $2,813.37, 264 F. Supp. 394 (Dec.

26,1966).

i

103
ANNUAL REPORT - APPENDIX

Statistics of Income Reports

Published

Individual Income Tax Returns, 1964 (192

pp., $1.25).

Individual Income Tax Returns, 1965, Preliminary (25 pp., 2W).

U.S. Business Tax Returns, 1963 (237 pp.,

$1.50).

U.S. Business Tax Returns, 1964, Preliminary

(25 pp., 200).

104

Sales of Capital Assets Reported on Individual

Income Tax Returns for 1962 (153 pp.,

$1.00).

Farmers' Cooperative Income Tax Returns

for 1963 (58 pp., 400).

Foreign Tax Credit Claimed on Corporation

Income Tax Returns, 1961 (73 pp., 5W).

Statistics of Income publications may be ordered

from the Superintendent of Documents, Government Printing Office, Washington, D.C. 20402.

21-H . - 11 - .
106

Notes: All yearly data are on a fiscal year basis, unless otherwise

specified. For example, data headed "1967" pertain to the fiscal year

ended June 30, 1967, and "July 1" inventory items underthis heading

reflect inventories as of July 1, 1966.

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

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 77.

Statistical Tables

COLLECTIONS, REFUNDS, AND RETURNS FILED

1. Internal revenue collections by sources and by internal revenue regions, districts, States, and other

Page

areas.. ....... 109

2. !nternai 'revenue collections by'sourcas* a-nd...by'q*ua'rt'ers'.'.'.*..'...'..,,.,.,..,.., .......... ...... 116 3. n

a

rnal revenue collections by sources, fiscal years 1966-67 ......................................... 117 4.1

nternal revenue collections by principal sources, fiscal years 1940-67., .............................. 119

5.

1

nternal revenue refunds including interest. . - - - - .. .. - ... .. . . . ... ............ 121 6.

Numbe

r

of returns filed, by internal revenue regions, districts, States, and other areas .............. 122 7. internal revenue tax on manufactured products from Puerto Rico ................................... _ 123

ALCOHOL AND TOBACCO TAXES

S. Establishments qualifi-ad to engage inthe production, distribution, storage, or useof alcohol and alco.

holic liquors ............................. ... .. . .. .................... 123

9. Establishments qualified to engage in the production or exportation of tobacco products .............. 123

10. Permits relating to distilled spirits under chapter 51, IR Code ........................... .............. 123

11. Permitsfor operations relating to alcoholic beverages under the Federal Alcoholic Administration Act. . 124

12. Permits relating to tobacco under chapter 52, IR Code ....................... ......................... 124

13. Label activity under Federal Alcohol Administration Act ............ .............. ... .... .......... 124

STAMP TAXES

14. Number of occupational tax stamps issued, by class of tax and by internal revenue regions, districts,

and States ...................... .......... - - - - ...... ... - - - . .... ............ 125

CASES RECEIVING APPELLATE CONSIDERATION OR IN LITIGATION

Appellate Division

15. Receipt and disposition of protested income, estate. and gift tax cases not before the Tax Court

(nondocketed cases) .................................................. ................................ 129

16. Receipt and disposition of income, estate, and gift tax cases petitioned tothe Tax Court (docketed cases). 130

Office of the Chief Council

1

7. Processing of income, estate, and gift tax cases in the Tax Court ...................................... 130

.8. Receipt and disposal of Tax Court cases in courts of appeals and in Supreme Court .................. 131

19. Receipt and disposal or suits filed by taxpayers in Federal courts and actions by the United States for

recovery of erroneous refunds ........................................................................... 131

20

.

Decisions of courts of appeals and Supreme Court in civil tax cases ................................... 131

21. Receipt and disposal of collections, injunction, summons, and disclosure cases ........................ 131

22. Receipt and disposal of insolvency and debtor proceedings ............... ...................... 132

23. Receipt and disposal of miscellaneous court cases, lien cases not in court, noncourt collection litigation cases, and appeal cases ............................................................................ 132

24. Caseload report .............................. ........................................................... 132

COST OF ADMINISTRATION

25. Obligations incurred by the Internal Revenue Service ................... 1 ........... ........ I ... I ..... 1. 133

26. Obligations incurred by the Internal Revenue Service, by appropriation and activity .................... 134

27. Qjantity and cost statistics for printing .............................................. ............. .... 135

107

I
ANNUAL REPORT as STATISTICAL TABLES

Table I.-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas

if n thousands of dollars. See table 3, P. 117. 1or tax rates and I, rthar It... kd.- of national Islas by sourcesi

I t l i di t i t St t

Individual income and employment taxes

n erna revenue reg on, s r c s, a es, and

.th.. ....a

Total

informal Corporation 'no--- tax Iocarn. to,

(states represented by single districts indicated in

revenue

cc 11.

Bonj income tax I

Total

:*I*illllld

and t

I

withheld Ind

J 1 ",soI

Uneminple

I

parent"

,I,; totIls for oth

,

r States no,, it bottom pa se

-

f

"

-=,,,,no 11 ruir r

an

I

m

of IS I

ble tax P17.- I r-rinc. a I I

aun-

(2) (3) (4) (5) (7)

Unittaid Steft., -I-------------------- an. "a, fris U. 117. 113 $6,328,11se so. M, 63, 71, 10. SU 7112, 868 tax, 70

Nowsh Ati-th, RNA------------

Albany (See (c) belowi -- - - ----

as. -, Us

1 632 932

U. n. so.

17 ------------- - - --

n. 10, 4,1114 11 11 In. age 142.748

A ugu,ta .......... (Maine) ........

-

. .

341 171

46 076 42 5

'

,172,4

19

'3

45:388

7 4

: BIG: . f I

'' 3

a

2.9 8

7 131

Boston------- chusetts)-

If: 239

4 06 S55:763 2, 833: 799 633:37 , 2A71:"4f 4 24G

I:'~

Brook lyn. below)::

B it lo (S (0 l

1 ~711 :112 411 11 2 113 17 7 141

1 '

:

7 35

2

13

w

--------- ee be

Burlington (Vermont)

2 4 S23

86

111 486

8.,:

1,15

: 1 : 89

1 a 1 5 54 509

,: 512

a ----------- ----

: 14 163 1.706

H rt ord (Connecticut)

f

7, ,

2 7 263

22.259 124. 271

3 3

007

'

1,

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

199 7% M .

anh atte n See (c) below)

. .

19 291 496

596.346

7 763 495

,5

1.886. 4IG: 37B I. 4M: 568

2

1

-.. ------ ~ --------

537 10.977

Portsmouth - ......... New Hampshire)

.3 27 ,

.

32

1

. ,

53,835

10,1205.69818

26 .

5

"

51 Il

604,6113

l

8,366

.

to]

21 111

.2:

626

1

3

7 508

80

P d'

toy] once ---

-- ---

(Rhode Island)..........

MaId u tl gh l

674.312 166,743 472,293

~

89:

4 3 : 2

ga sun e we we ----

79 58 67 3 320

--------------- --:-

it

ronor. ----------- (Msq~and and D.C.)

n In. 5 US786

3: 08. 426 15

1

11. 90, 517767

2- '

2. na, US

3 7"

10. .12. N

'3:89'5

.

aik an Us

New -----------

Phil d li iia:: - - :' Se" b

412

:

:

1 11 .2 3 G~a:771 IN: 56 j 3

0

32:"

66,

e

a . n h ( , (0

Pittsburgh (a) be 0~): v,

,

Sal,

7

5:7 3 2944 488

: ,1.

3.659,309 745, 122

810:

2.

9

6 5 78 7

7

24, 24 5 0,

chmond RV! gura)

,

2 157 311

86 :122 3~'

3303

2: I74S:IS111 316:887 2.0411, 759

9

10,87

1

W,, ------------ 7

norolifim

.. . ....

Delaware)-------------

. .

1 112 588 556 3tg

' 32 3

518 537

3a

351

112 006

941.970 55,283

8:

310

------ -:~- :- ::::::

Af ` `` So i)

. .

'2: '02'5: "1821

.

2. 101 an

,

7. .7. SIT

.

I"" *1

403.096

1 1" '

6

20

1'

3,430

' "

. -

BI ~ a ~ jhjW:: ---- iCata!rn.5- 177 17

3

432,970

176 042

1. 391. 6114

757 916

293:77 3

19 34

: 0115: 830 : 26

2

82 5

.

hurintal............. (South Camfinai;-

708 :

998

,

145 573

,

531 211

9,5

132 068

546,447

4

1.2

Greensboro... (North Carolina) ---

11 ' '* 1

3,226. GS2

.

671.010

.

1,329.803

,

3D9 265

39 ,592

1 007 803

149

1

59

4 :40

: 11 7 :

f

':c'k"*. 1 "Wile, (Florida) M ........ ---- :~:::::

0 8 6

2 :44 g 311

13: 91 319: 1 2 8

1 .

21 12t

. ,

234,856 126

.77

2 1 2 1 ----

(Tennessee)

. , 6

1 348 748

S 3D

3

268 998

I..53 6,,

1 013 714

to:

3 21 141

1:

1 505

4

11:B2 ~

a R -----------

"I-

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

Cirsin'.

, )

,

,

2S: 111: 1"g

,

1. 571: 11

. ,

Jus: ...I .1

292,94,

2,1111,112

3

91

7

It. W.41s

f:748

3

7.630

Cleveland R

' ' ' b: low) : :

: :

0 ~3 3o

,1 941.11

2

8'2 0 IS

1 471 111

1 2

982, 03

1 714 120

396.185

111 411

1,563.035

1 11

'75

5:41 12:5 1 C

h i, a h) -

-----------

''ll ('

d

10 :

264,027

3: 35S:3

53

5: 2 : 214

12

~26: 705 4: 24

,

:3

16

81:813S

f ":9342 35

~ :

of (

.) .

I 1 n

Louisvillo (Kentuck )

3,301.770

2 79'

595,

066

'.

310:

3" 1

32

1

7 14

:

1

10.876

----- ---- y --

Park br,- IN estVifginia).

,

4711 11: 53.

11170:41 31

89

2, 0

7 47

378 535

to:

2 31

103 314

9~9

491:

270 924

Naldivaid 4, 73 4 16' sawalwo

A d S o- t ~

sa, 10, 231 5. Sn, 362

,

U, 731. luta

.

J, M. 114

,

31, 250, Us

57

236.362

1:2

40

be -... -------- $4 .

( i l

ChI" , (I (L b

167

.

498

18,668 138.

149

" 0" '4 3"

2 ,

as j.IW', s. ) ........739

D e to,,) 0

9.865.453

1 118 597 21: 1

14

"": 1

1 115:~57

1

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

5.011:824 113.386 42 111

Felt ................ (North Dalkota)- . ......

. .

154,113

1 3 7

1 436

63

R4. 3

134 998

o'

3 :7110

53

114

132:4'~ .0 1

2,41224

4: If

Mi W

l,aukee.. --------- ( i,,onsir)---

- 2,111.072

.

7o4.152

,

1,7311,042 364.581 1,361,476

IN

688

555

0 :::::::

Stm,h,. L ------------ . (Nebraska)----

Mi

'

982

'

130,469 590,137

1 7

"

395,281 34.314 2

1

ou

----- ( ssouri) ------------

St Pxu;s- 1' - :

'MI

3. 5 :

1 4 7'' '1 7? ' 3' 4 '1

112:

2 1 7 " No

. . . . 42.854 14. 719

Seringfiell. ( mIU`b.Lj:::~:--:::

S a

2':4ii ~ . 7 72

46.062

S 3: 22

336.541

I : .1: 26

965.481

315,525

285.619

: 2 .:

673.2G7ZB

4 :93,

Saxathninwit i .1 105 45G4 7 Plast.1--,

Alb IN;;; wiWo~y :::

11, M.ran 2. M. SU S. per,

3M

2.154,S26 S. 816.

Us

its.

.1 uquerque -

Austin .. ... . (See M behi

283,

112

3 11 1 1 1 1

27,363

117 111

210, 7

1 842 152

0

6 :111 171:111 7 1:319 h .. ... ... - : ------

C everre............ (Wyoming)

. 0 In .6 , 8 .

212

, 3:

' 7''

3

I7G

5432 082

'.' 5

11 11

3. 077 12.254 Dallas -----

slow

: .......

r: f'' (2da )

2

.432:677 145:1114 1.7 14.717

,

514.385

51,218

23

S

1 7

81

5

10 046

426

11

"69

Denve :: C.1. 1 ) - :: ........

Li l R k

1,632.682 149.605 1,343,5D6 4

1 '" a?

.

.

87

'

9

" '.

,

6,779 4 32 Hett e oc ..... ..... (Arkansas) ---------

w Orleans L i i ::::

451:110 64,711 354.725

:

2 4 l 227 .787 250

:

C,,, I( ou s

2 541 ana)---------

Oklahoma 0

1

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

1,30s S113

1,37.

"

211:71.1 '77 '2 1711:41 7 693

0

2.1~1:117 2 58. 191~:91155

'%

9

985

64

1.~113S,

Wichita ------ 5

----

k.

r.')

------ ........ 920.751 177.147 693,233 215,990 429.257 44.556

3 :530

W--arks"wo-...... ----------------

A h

"'I

2~ sn~. surs

'" " 10'317

nc 15.333 Ti 97. orage 1

B ---------

He (M nt

58

284,457

5.757

53.969

5

220.465

274

54"655

65.760

6 "

1 ' ? '

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

33 1

94

1,502

o ana)-. -----------

Honolulu .....

(HL

'*'1' )

2

10.293

34' -84'

31.535

0"

170.066

;

61:113

57,

6 a

.

1 : .s

208 258

9 0

2

.

878

Los Angeles .......... (Sea(.)

Ph [

7,145 040 1,110:723 5,65 :4U

1

226, SS5

,

.!,n

4.396 260 1,533 32 814

a............. (Arif.r.) ---------------

P ti G

496:483

1

71 4 4

" 0

1 6 .

2 503

299 214

'33

arn.al ----- 2 112

( N reg

R

140 43, 153:87

7 :

746

1

71

1

"' 51 14'

3,57

:8~2

4

. (

Sall Lake Gn- ...... (Utah) -----------------

23 8:

962

337.316

30:171 52 ,

"

IS1,596

263 828

52: Of 7

56.162

137 : 31

204 623

1

487

1

1:219

56

S n Fire I........... (See (a) help.)---

S a

1 113

I'D

811.9

"

:

4.

0

74 $92

9

'f 1'"

,

3 079.437 57 :313 11 1 77

e ----- -- (Washington). .

Offle it lu t tim l

1: UI:

764 2~ 04

;

33,696 32 : 5

,: 1

03.300 648

a :5 ~

7

a, w n ',ne a opanatla-----------

Pue, v Ricin., reas U 4

1` '' is

3.1.9

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

Othel- ....................................

Umfiesilotied:

59,776

388,274 5G.5852

47

310.OG4 97

6:3 1 1

217,833

:

90,.4"1" :!i

3

.055

114

TDepositary

'e-i"t......... ........... -

3 068 433 .... 1. L4 3 1 10 2,230.242 13,139 With transferred 4 to Government of Guam ------

f

i;7 4

~1

7 : A I

1 44 1111, b o Federal if emiployees

G flV ti

7 72 111 1 71 ......

of : .

72 ..............

u , d

aa. , " 'Ca ngoi,an excess FICA credits k 479,728 76A29

:' ~'

408

.OIL

....

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

(.)b) C-lil-rola 111m.1 ........... . ... ... .

(c) I New York ----- - ---

d) Ohio-

-

(I) Penn,'

(

1) T- ---------------

See Ichatimbe, s. p. 119.

Totals for States not shown above

13.098,149

11 : '5~11

"

26 .

:M1

"

'71:

9: oil "

I

13'3

5.651,336

2: 1 .658

2

"1

':311:211

.1

337

1,133,126

9.732.385

7:3'1:14

"

15

If

. .

3S

5:

1

6 36 4

133: '33g

3,616.869

2,144.150

1 7 575

:I I:

ISS

1 770

986 641

1 1

1

42:008

1.057,561

7 7

'

:6' 7

5: '723

1

.3

12,345.868

4.674.530

4.859.724

2,522,462

1;. "I"39,

93,129

40,613 fig

5

5

13: 1123

1":1 5"' 77

104,958

14: " 441 750

23,723

109
ANNUAL REPORT - STATISTICAL TABLES

Table 1-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas-Continued

11, thousands of dollars. See table 3, u 117, or to, rates and further breakdown at national totals by rounces]

Alcohol taxes

Excise taxes,

Internal re,eade regions, districts,

to,, ":'

Distilled spirits taxes

States, and other areas i Estate tax Gilt tax of '.d s

State, core .. ed b 1 , dis icts indicated 1,

,

sing

31: B: ~30T let l . ,h

nth

I.,

: box or ar States show, at

9';' '

and 53) Total Domestic I acclift Occims Other

by Cos. cafti"

, "mr,

I

. 1.hn .1 table)

~

turns)

(a) (9) (10) (11) (12) (13) (14) (.5) .6)

Unled -- I............ .......... 2. In, SID 2-,.n A4, .13.go. 1. -1. 'Is 1.NS. .1. 2,221,611 ass. .11 15, .11 TIS

Coirth-Atreatt. Rimlod .................. 610,323

4

IS, 417

5

2,95317: 27 U

as

171: a 1

7-1

41,2711

N 23.' 1 '

`52 2. M

Albany ...... ~SM!,. (c) below 4 2"57a is

.

, , ,) . . ........

2 .536

12,482

1, 1 9

407 1.1111 2,07 1, 112

a

- ~

--

77 1

1

--------

1' '

1

(*'

M:,, cb .a

Boston art,) .......

..........

94,842 0

1 1 1

2

13,08127

1. 1

170. 753

81. 547

100,679

68,754

87.587

4.121

21.1

---------

,0

61 : 4

3,508

~ 16

275

7.4

32

I

B w) a

BUH31

ff i

(1

, :

786

7 1 11

7,399

114

~11:

11

5 7 1

6,

71,: 111 48 3,1: 311 .83 344: 1481 is

2 ... _

- 11

3'

,

4

i iss on: (

=,j:::

Hart

a

it-- Go

Mashatt.... .. ..... (So, (a) below), ......

g2 : ' .~

27

'. "'

"'

9"

1,011.3. '3' 551

7

22a1: '4012' 211'1: 125" Ia3: 10 ENN

...

47,238

22i"

932

363

431

4

V.1tiamoub. . .... (New Hampshire) ----- 11 .2a 9. 2: 111 319 231 ---- ---- 244 6 3

1

,rh,hd~n ...... . ... (Rhode Island)

Mid-A lantic la.glon..........................

17,467

ASI. 033

147

47. 5131

a....17.111.. ..2:,. 13 117

1.21 7"4

"

'72 .07 4211,4904 GS2 2,11

So

in

B Itinals,........ ... (Maryland and OC.)_

1 M

301: 800 221,243 191:12 7 2?: 513 164. JU0 3: a9a 11 2 4

Ne.ark.-_ . ... (No. 1y) 7 I

9 664

IT 590

10 740

311.2"7

507

211:~1433 'g, 1

1~13' 314135 38 _50 13a 04' In

439

1 1.1

C~

1"

81

Philadelphia... (See (a) b

Pittsburgh (Ste (e) below)

8.

68 491

.

12 63Z 5 : 515

32

68 921 44: 573 . 43 Z91

,

. .. ...... - . 782 still J2

Richmond ..... .... (Virginia), -- ---------

,

37.241

. 2

3. 1

5

460,657

,

9.459 5.992

.... ...

1,646

.

4,200 23 22 .

W

it

i rangtm, (Delaware).... ----- 28.829 6 79

a

1 11

4

54 50 --------- ----------- 50 --------

I-es gyami-::ri::

------- T: a5'1'5

'

4n

'2

:

2 4.

1. :

0

gas to

T ''

811,967

'3 '

$1,470

' 6

N

"

1

:1'3'5 '! 2..

'

11

2123 11

A 109 ...72

V'."`,agha,::: lC ',,'br ----------- 130.111

.

1.386 ~U: 1 48 16 .s . 112 1,166 43 -------- 42 3

C humbis ... ... --- (South Carold 12 717 a

1 '2

1 1 23'

1 1 1 1

1:202 1.064 4 ........

58

7

G (Hart Carol n.

'o:0~~

1: 1 2

I'Li, : 9

2 4 : . 37 1.111 1.311 29 34

10 1

Jackson

..

zicks-01I, ..... ... (F`1'o`ri'd"m`d) - ----

10.044

92,289

845

9.728

ii.813

4

1

7

"'

236

11 D11

111

21.757

...

26.715

23

672 3

58

341

3 3

2e

N,,h,IlIe . --- __ . (Tennessee)-- .. .... 25.301 2,343 3a:392

la : a

c.. 17.827 ------- 56 28

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

Cincinnati. . . b l,*)

"

ads .719

of

35,93S

7 m"

3, MO, Us

"' U

145 ft

' '

1. no, an

"I 'C

278,588 1, 019, on

I'D

51

2

1,1181 32

'

2,212119 11

add ... : .

C -1 (See'~d'1 73 513 7 :6 23 632:..1 .4, S

5,

go: 6a 6:661 5: 117 75 667

Detroit ........ ..... (Michigan)--- ~

Ardian .fix... ... (Indiana).-

7141:738

86

'3:4 5 28554

1. 6N. 436

356.997

182,

292.5,19 2fiB ...... 12.

11

2a2' :

2 'M

31

5.

869

112 32 1 1

g 2

L. !,,it ...... .. ... (Kentucky)-,

. . .

a

20~208 1,400 711

""'

421

go'

113 ... 591, 636 1.801 136 2(

Ikarlb.19 ... ... (West

seld

- R" An ~ ........

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

Ab S h

14,189

3:.6d

1"7024

"' 133 7

14

5

:4

1.6%.247

2 3

1,

an: 320

114

416.

11512

__6......

I

..1,117

IS

. .

--------

4, on

30

I

""52

21

51

C lercl.......... ( ao t Dakota)

" I"-

~Jovi

C ..... - ( S , ( * 11

149,223 16,286 646:259 .42.4a2 123 7 70

.... ....

44.3

...... . ...

77.914

..

881 3!

m.is;; ........... D : ::: ( IO.% )

,Fargo e ------------ - ~North Dakota)

Mil k

23.129

2,963

151

1.915

166

3 111

27.813

4,551,

209 511

1,774

111

113 659

1: 42.

100

4 383

39

2 681

1,26 --

823

.......

----Jai'

159

wau ee----------- 17~

Oman............... (N~tbdaxlra)_

31:2 6 15 ,~" ,

11 303

,

1 111

,

I

,

S ... . . .... 1 11

1. L................ (Missouri) ------------ 63,700 7,039

ga: ,

09

fig:~

go

".2 . .2. . 3 ~ Z

'

,-Ia),,):::: ::

(Mi San (b) be] : '279 .3"345

5 7

1: 747 A2 3'152:345 21781: a775"

8,835

IM,01

4:031

.........

4:515

247.993 3,1189

220 3

07

thwelit Steel ......... ------------------ 11 In " I

S

1. ads '1 1 16,1 52 .,.$ 10,431 1 $1, sa

Albuqu

'

rode ......... (Now Mexicd)-_ .....

Austin _----------- (Sol (1) balme)

6: 15

63,431

:

1 302

14, 591

7:o1

651,283 56.014

8 0

15.056 14, 6W - - _M 401

C eye

"

me 3 5

8

1 1 4 2 ' ' ''

4

Dallas (f 0 ... 40 -- ----

Den,d............... (Colorado).. ..........

1 1:1 1

21 411

15, 7

1 117

1 5: 21 1

1 1 1

.4

a,211

40,543

33 5

170

:

--------- (') --------

So

170 ....

LQII, FT k ........... (Arkansas)---

a: 3

08

: .35 24 :

427 466 58

6 ------ %7

0 .

New I I-, (Ed an.) ---

Oklahoma vi City Mlamlra). ..........

I t K

23,117

33,255

26 711

1,301

1:51~315

67.937

22121:,6211

40,939

1: 1.7111

19,81468

971

9,038

8955

4

::::::::

3

4

786

A

(') I!

c

r a... ......adsax)... ,

4", Six 32.336 1.178 71 A", Is' Itul

....

97,113S 219,ISS 6 2, In I'

Anchnag ............ (Alaska).... 31

10 2:

003

"1

103

44 ---

B 1, 011h1l---- 6 G43

3 7"

83 - ---------

8

3

He

I

Montana) ------------

Had [old ------------ (Hawaii) ---

4.747

6,205

284

411

1 g6Z

9:679

1.081

4,327

21g

2,

37'

2

237

'

169

87

--------

5

7

45

Los Angeles ......... (See (a) below). . . ---- 2Q5,823 15,615 37 1 311 115 7 1 1 17

'

231

77

4.:

a

45 323 95

I'D,, 1

P, ..i

- .......... (Alzana)_ ......... 11 787

" "'

5: 4,, T: 3 7 7

211 25

____ ~ _ _

18, :

Portland--:. B -------- (Oregon)--

- - ------ : -:::::::

4:

4.'1''52

91D

1,160

25.31D

1 2'079

8,69292 4,6

3,

88 ... 1,568 2,993

..... -

..... :_

--------

74

8B

.......

So,, C;Vj~jf;

h

U ' ) - - _ _ . . ...

2

5' D6 5 50

5 686 2,153 10 ....... ........

San F,D.,.o.:::: fSEe (a) beI,)*)_. 143 211 9. 399 613:604 288.222 202 230 31 984 169.733 515 99510

Seaftle ------ ------- (Washingto

d .... 3,:,00

2,635 111.937 57,

7, IS: 7

Is

16 : 1

orm 37 1,850 7 34 1

20, No

2 23 IS olN

111 So5.:41'2 4'

so.

51 334 a's . 13:1 4g 3S1 111 99

__

-------

0

the

Undistfilitu"t;a:* --------- .............

20,05. 3 7

1, Igg

9

,

9

....... .

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

.....

.......

-- ----

Deposit

"' "'lot' I—— --------- ---------

------

-----

825. 053 .......

Transferred to Government 0: Guam- - -- . _. ----- ....... - -----

-

:

Withheld taxes at federal employe

a,.:: : :::

:::

Gasoline, air. Mmig .,I, add

red

it

-

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

Totals to, States lot shown Iran

dis'.

,--

4

'o'

2 13 1 911 gP 4N

Do' .. ..

'2 7"

214

0'

2 113 2

C ::

.

7

a~

a

11:2

~5,: Do,

2315 375:2115

:3

325:%1 31

V

. I.

a

ji

To He ' i,. :

try OhZ '

----

455 111

7 11

"

14 6 2 "9

7:,7,11,

.02 1

7~2:

2 ..

,

.2 22ol

,

I

i 03

3

7 1

(e) P,amyWima

: ~

167 55 23:372 133. 13 1 211 11 174

(1) Texas ..... ...... 124,052 20.764 7

7 ,2,

56,

~5:2

54

15

211

P

Seetooducte-, p. 119,

110

ANNUAL REPORT 9 STATISTICAL TABLES

Table I.-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas-Continued

(in thousands of dollars. See table 3, p. 117, for tax rates and further breakdown of national totals by sources]

Alcohol taxes-Contintrihi

.,a., - Win., confiets, of,., to ... Beertaxes

,.ran

far a

d at bottom

(State, .presented by single districts

Indic fir in

lhe a,; total ther States Show

'

it Occultist

in"I

mported cC.P.fi .

0, Elfi

e) Total by toxes Total collected by

=ris

Cusco

(21) (22) (23) (24) (25)

U.BW S"I"" 71~ ------------------

M,M 111 10. n7 2,632 ..,loss 6, no S.. Sir

Marth-Atleati, RAgron ---------------

Albany -------------- (See 1, below)-

141 2 ,

1 0

5,762 23 292

1:21 1

93

1

21111, 354

252

1

.... !

-

August;: 8:17 ' ------ Ia,,

,

......

....

i_

Hi I ..... ......

1

74

...... . 82

62

.

Boston ----------- M

S b l 0"

495 574 13

f

1,010 175A Ai~ Brooklyn ............ _ ( ea (,) e ow)......

B ff t (S ( ) l ci )

3:761 -....

' "

71

1 Bu o... 6 60,873 .......... 61Y. 665 2 ------------ ea c b - ~ ---- __ 1

if n

Ve'mo

14,706 i~o :

5

14 34 1 22,039 812 21 0 a

I

1" (

ctjc

H.rt;.rd, : --- ------- (Conne :w:::::

59

1 1969 (-)

59

6

2

...

Manhatte 4

A,

-------- (So. (c) below)---------

,

6,895

201

4,820 2,063 12

827

2, 03

2

2 243 - - -

V

Portland (Newd Hadmal, I ire)------- 160

R

h

P id H l d

.... __.. ......... . ..... .... .....

:

11

.........,

-

---- - ----

----- ,

a

3

a . T

rov ed ( an ---------- 75

~i

33 jj jj:j6j

i.

Brain

a

...... (M~,yll,md---------- Ad D.C.~::::: 11-998, 5'"11 461 27

157'..

21 11

17, 1" 391

Newark

IN

erser

I

. ----------

b

S

6 484 ,

7~:132 ..... 161 2

a5:

2

5'2

,

S:e (a) e Ow)- - -------

Pitt bur h (I o e) b l

397

3:

2: S63

3 37,060 126 36 813

I

s g ............ e ow).........

Richmond (Vlgma)

I .........

- ------

1 21 347

...

------

24: 25T

W ------------ --------------- 14

ilaningtori ------------ (Delaware). ------------

2,254

3 ------------ ------------

8.

3

1:3 13

1

E, 1.",

103I

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

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

Atlanta (Georg

3,205

T M

Ga. INS, I

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

IN

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

21 .S

'

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

Bilinghold ----------- (Alabord

.

7

74

6

52 5 571 4,807 1

21

33It

I

4 73 65

11

'in.

Cot in sa... ---------- (South Caro -----

N

37 3 25 237 112

105

Greensboro --------- - ( orth Camlinm~ 16 ..... 89

ss.0p,

146 19 2 125 140 27 ............ 113

)__

~:,k". da)

'I a:

(Flolsl

ll 2

5

-

........ L,6

-- -------

i,

2 120

......

... .... 12

IT

.......

Nnhddl le ---------- (Tennessee)

1

---------

I'

3

------- -1 .

98

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

2

(.)34

20.8 5

7

117

212

........ .

20 530

..... . .

33

Ced,1111 11 are

Cinctrint'o" ----

2 ( ' :cw)----

6, no

869

che 3, on

745

III

124

son,fam

12 412

... .. ...

12:397

us

Cleveland- I.. (it)' b: )

aw ---------

1,297

--------

86

' '

,

1 4'

3

...........

34 13 337

5

1

a

Detroit ........... (Michigan). 2

1 i l I

i

2.13l 412

1, 5

5 222

:

3

5 9

57 475

,

35

''

nd anapo is... .... ( nd ana)--

La i il (K

I 5 ..... ........

1

1

24 21 1

....

24 : 17 4 40 s,n d ------------- edtuc~y)---

z

b

P k tV i d ::::::~::

W

174

: 'If: 3

06

1 ,ggg

,

ar els o19 a~ lg n ).

orld-I -.1on........

_

- ---------

.

It.11011,

........

"415,

f

is

NI'll's 141 ............ I 141

Aberdeen data Do at.) ate I'll, ---------

i ~f

...... . ...... ........... 38 -.........

,

chB n,------ e, (b) .... ....... 38

M i

.. 689 1,18 0 , 1 13, 01 1 310 12.1567 ndse .... (

x o

th D

K

T (N ;iu r

SI ...... ..

....

,7 4 25 5 .......... .

o go............. 1 141 114

__ or s)..........

MiMdk (Wi n i )

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

2 " ---- 1 ,

,o__ ------- sco s n -------------

(Brain

k

Omaha ... . _... a)

230 201 26 129. . 95 uviiir 15 1 . ---- ....

': ~M!" " ' !'_ ---

iij il"iii 4,

7,469

17

...... ----- 7:437

1211, ne,. ;

to 6~ ::::

235 92 143 7:11.1 6 37 555 250 pringfield ... ... ---- (See (b) lb.1 52 ..... 1

27,277 ............ 27,24 8 29 Iz.I----------------

-------

Allou qua

w M `

1.130

2

4ii .112 "1 .2,111

S '

as

sS,. (f ) bId.w)__

`_; 614 . ........2-4'1- 40,364 Hj 4132 ::,::Che --_----------

l,

(Wyoming).

... ......

Bil

- --- ......... to --- ........ ...... to

D (S (T "' w)-------

72 -----

4 1

8,7k4

19 enn .b ad

Littl R k A k 0 ... 2

... ............ 2 1:17f 40,330 4 ,

e ac ._-------- ( r ansas)

No. Ofle.n------_-- ...

o1daiIiinia City -------- (Okirfuld).

37 1

126

M

::::: .......

Ila

353

........7

17

~:))

38

2 "a

0: 1

44

.......

20,851

371

38

104

22 Wichita ------------ - (Kansas)

Ard-

( )

" Son 11,

a

1 M

...... !.. . 1

00

Anchorage... ------ ' (" 1 M

2

12 '"3

sjay

,

So 1 Sol Oise

B - (Idaho)-.. ......... --- ------------ -------- 1-1 .

-

...... ::::: .

--------

........ 44 ............

~ . 2

44

HelenA

M `"' !" ! ! ... ::: ---- '*) ---------- f 113

3

Ho

He

Wa1I) ::

A l eib

40 39 F 1 913 ag 1,.

13 Las nge i ......... e ( a ) b w)_ . -------

Ph ISA

3.234 814 2 421 45.310 496 44,644 185 oen x

(

rozona).

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

Noland -------------- ...... 165 36

....

..

-

1143

0

ago 121

3 131 1:838 3

130

4

,a.._

C l~, -6_....... (N-dr) ------------ ------------ ------------ ------------

4 ...... '

Salt i

'

tyF T,Te ----- ------------ ---- ------- -------- '

2, 148 2 10 A2

So

a arti- ( ea

Seattle ... ---- (Washington).... -------

675

940

54

960

17,111 838 i6i

5

27,317

38,285

224

34

26:964

38,719

129

33 M" of onewetion------------- _

,

'

G3 ____

::

fteds

Other "c" ---------------------------------

6 61 63 .....

Unit

I

ltflbal;~

Oelm,ft.,y receipts I........................... ............ ...

Transferred to Government of Guam ...... _ ...... ...........

eld taxes of Federal employees.......... ..

With

~, ............ ...........

Gaso

n

dju ticating oil, and excess FICA credits I -------- _

To tals [or States not shown above

C' "1

909 1 354

a

60'34

G6

,

72 127 710 71 309

h I I1 5 691

: ITT2

4

'D

7

2

~: 2. 1

4 310 39:915

608

1

"I

New I*rl:

2'

17 4,991 2 2B 1

a

3 7 3 054 89

8go

::: 632

(d) 0

hill Ig

2: 6

412

1

33 422

':

2

. 1

2 34 25:7M

14 a)

1 22" 1

3,31

1

431 2. 963

4 " 1 07

1

26

61,

-

215 ) 1 , , - . 11.

3

73

(

') 31 3 49 : 177 29 48, 536 512

Sao footnotes an p. 119.

III
ANNUAL REPORT as STATISTICAL TABLES

Table 1-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areers-Confirsued

[in thou;ands at dollars. See table 3, p. 117. for tax rates and further breakdown at national totals by sources]

Internal avroiu. regions, di,l,.t,, State,, ad

Jses Stamp b,,s a, document, and othe,instruments

.to', ,.as --- - - - -

- -

by Sales by

So'11

(S~:tes represented by single di&nict,.,.d.i,1b:d 1.

or motors; total$ forootle, States so,

t to

t

table)

1,111 Ci.J'at'-sx gall I T post

.::

ter, disthcri,

direct

(26) (27) (28)

(3

0) (32)

tual... Nn.I ----------------_----- 2. On, .0 2. 0., Ons. 0. Tss s. .0 say, as. 'O'ac; n.

Min1lo-Alifinati. Rael. ................. _ ------- 782 1.

Jr. 'it&

9.392 ..1 5 4, a

Albany (See (c) below) ---- 25

-

25 -------------

96

I

August

a

Maine) ----- ------------

Boston - . .

5

.

..........

. 4

(*) 216

1,776

ni~

1,276

f

50 Brooklyn. (See (a) hot..

0

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

890 ..........

89

NoIts- . (See (c)

8

U; ;n't'" ( %" l

1 14 7

1'42

8 .............. 733

H t . d tC n.1 ,.jj 222 ------- _._

- 1 U

1 114

11 Manhattan -- -- -- (So, (c) below)......... III 103

"I

ai 3: It

: 8

1.19

Providencethr

stand) .. .... I

___ _ .

. ....... :.:~ I

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

(*) '3247' Alldr-ausavorl. _. 23,1 .. I

_ ~ ~

::::

-

J43 'ag' no 216,01 a 2.11

6.11mad (Manylan-it ;rij 2 .......... 23 1 111 N"

D?

43

U

News . ...... . . (Me, I e ) ..............

Philad l hi (S 2

861

14 1.

.. .........

2

850

19 2:5 1

2.210

e p a --- ee (a) 0 w 3'

P

1 b h xv~::: ::.::::

Its u's (See (e) belo

. I

15

_ _ _ 24,056 2

! 5

1. .. ----

72

10 Richmond ---- (Virginia) 111,211 419,768 J'S 0 1,5" 1,411 W.ImhqD.r__. (Delaware) ...

ovinvoral

.

1.11640,72s

. . I --------

1, Iss, Za

...... ii- ---

are

---- ....

Gas

H3

1,112

So

" is s

65

IS 1

6 .. ..

698 1.3 3

1

"

1: 22

1

G.I.anbi. .

1, 562

2,197

.. .. . ..... 1,562

6

13

576 706 413

3

16

,6 . :

Gnmaina (North --- .146,516 .145,947 N ~~f 980

9,

4 3

W------ (Misaissippi)

Jack,onvil c ---- (Florida) -

4

- -------1-34 ....9"516 2.1831 45 1 2,'H711 71,

Nashville.. (Tennessee).

.....

7g

. ......... 9

C 70 1.042 814 2

-1

R

"Jan -------------_------------- 462,153 Aw. "1 5,

I I

31 a,

4'

i

(Sea (it) hot.

I ve an (See (it) below

3g

.,7B

.. ._ ------ 3

1,7

1

------ ---- 2 7if

'' '

2:259 45.

D

't

e .it ............ yMv:hrg.n) ..... .... 121 12 8 1 2.920 1, 6T

Indianapolis ....... (Indian.) --------------

IS .. .......

..

J.k

36 goo 23,

Louisville k .... .. . (K,rtarky)~ --------------

or,

bo

r,- (West Virginia) ---- -------

459,403

220

457.011 391

Z20 -------- -----

7

331 30'5

23~2

MHd

a

R.1- -------- -11 .......... I --- ar Its 2 1,121 s, S" 3, A

2 bndain,._~: 0 "Ift.) ------------

GOICJ i ...........

------------ --------- 4.

...... ... . III

ex 3,866 1.320 2, 55; o .... ... (

Iowa).... --------------

(North Dakota) .......

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

(1)

---

...

t

Be

144

834

Wisconsin) .. I.... :::::

is

18 ' 1,21. .,014 11

:

01

abox ...... .....

Nebraska) .......

St. LOu;s .......... (Missouri)----- :,:::::: ------------i - ------------ - ----------- I - ----------

J, 1

17

4

"

.

359

1,061

12

451

I

I. I

P

.. ........... (Minnesota). - -. 1,02 633 38; it I

Spring ..it (See (b) below)::: ::::::::

inxxv,.

re

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

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

2

---_---------

M

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

2

69

8, us

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

S.1111

6! a. ran

ustin- ---------

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

115

------------ . .......... HI

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

1

249

1,313

~149.

----- ..31! to

Chl.ly...I.......... (Wyarrong)...

...........

Us ............... (See (1) bel..)-.

..

--

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

2,8918

82

1,94

1

0 87,

gll% - ~--------- (Col.l.d.) ------

it . . . - (Alkiarilal _------------

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

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

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

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

-----------

----

---

---

99

412

660

211

2]P

0:

:: : ::: : (

N -------------

"' ......

Louisiana)

j 1, 1 1,016

!2 ,

Oklahoma Cry..... (Okla

frime _

W its..-. ........ (Kansas). . . ..............

=

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

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

1.37

.1.

55Z

478

121

21

R.Oi .................... 2, ovit 6, in "I

Anchorage.: dis.... f'1d1:~,k,!:_ )

B - ---- ----- -----------_

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

------- .

----------

............ : . .............. 1 '7'9

139

56

3

2;~

Helena............ (Monte.,)--- ---------- . ............

------------ 19 1

1

1,

1

~

Los Aaliii~;__ S:wal i)) 36 23 12

2 , 0

1, 4 31

13

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

19

5,43~

1 A ~

I

Pro 'I'-

to

Portland.: ~-l

......

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

, . 1

705

2

597"

491 1

Of Reno.............. (Nevada) .................

a

I 11

2City-

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

---- - ----

450 104

87

X

Sao .11

F- (I e

Seattle. ........... (Washington).

1

" ?

4

C,

) 1

5,19

L3271

4,350 1

586

1, 17!

spen . 741

at op"'I"-

.. asis ...... ' ...... $1350 .... its . .........

.

Puerto Me----------------------- -

other ......................

....

Undistributed:

--- -- 9.350

------

... ....9,350 ---- : --------- -51 - ---------

Depositary receipts 7 .................. ...... ....... .. ----------- - --------- -- -------------- -------------- ----------- ---- --------

Transferred to Government of Guam. ---

Withhold taxes of Federal emp eyes,.-.

l

~ :

---

... .....

Gasoline, lubricating oil, ad acZ3 FICA

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

Totals for States at shown above

h~ C1, Warm- ------

I n,,,

on h~

N

62

7

1

276

34I

':1N

4J:~Jo 2111

) ty. y,,,.: ... ... ... 626

4

"

164

J

43 307 5 3

"

5

it 0

f

P

...y

1:4

g02

274

go

.

.........

- '

M)

3

2

J

:33,

827

(f) Te..' ------------- -- 115 2 1 12 1 4 2,187

Se'loctooles.. p. 119.

ANNUAL REPORT as STATISTICAL TABLES

Table 1-Internal revenue collections by sources and by internal revenue regionli, districts, States, and other duroo-Conti...d

[in thousands of dollars. See table 3, ti, 117. lot ta, rates and further breakdown W national fairly by siourcesl

Manufacturers' excise faces

Internal revenue region,, district,, States, and

other a

,

.0

'i'.a( " I

at., TO I

"' in art

vehict , retailers

State, 1,01-atedl sharp 11 single mst i.ta indicated a in

et thei States shown at halt in

Total .-Iia. lublinfin

it, etc. inner

0 '.

b the dn,~ '"a'art

00006 ..ci,. tax., n

of table) ad tiled

rubber

,

no ,a'.

series

(33) (34) (35) (36) (37) (39) (39)

- ""L---------------------- 11, 's' ....-At -.,a Faston ---------- 1. ag I "

'

5311.903 as.

"a 967 '

24 U ou

Albany -------------- (Sea 3:676 2,

7

50 7 33 1 2' 236 34

Au goals ---- (Main.) ...............

Boston. ------------- (Massochuralls)-., ------

2.

403

18,369

'1b: 14 1 18.

8 1.19 77731 .2 575

rocklim. . ~ --------- (See (c) hot..)

- A .. ' "3

3.406 1.102 26a 125

Barrel No ------------ - . (See (C) tbeluw)~ - : ::::: :

alit n- flarannal) --------------

3i n

: So.

666

.1 : 113

' 2

39 8,51127 -211B 1.14

68

9

1

::::,:::,:

f

0

11. ra Connecticut)_ ........

Milatattin: ........

'a.

(c) hot., ) - ~ -------

Mi

'

5'

8

595

65123

.

5,145

494.421

4

18,440

30 7

64:351"

10. 676

837

14,466

7,515

- I

17C

Portsmouth --- ------ (New Hamp nxi -------

Providence (Rhode Iflaiid)_ ........

840

2.195

14

1, 1

68

7 -------

72

344

2

5

6

. 1 9 13

Baltimore.

__(Grylarw '4.:S 14"

'2

T:J3

.. "7

25,550

27 0 4

79.1s' 327

INS

17,3

7

Newark

pw -- -------

(New Jers72 -----------

Philinfid , (S , at 1 1 aw) .........

71.213

117,

D53 111, 23.247

8'

2.0(1

5,966

1:

"o281~1 41:'111 1.

34 R

7

714

8f

( : . , Is Pit tsburgh_

. S

o ~~) 0 W)--- 234.853 222.7 29 8.232 2,070 2.362 -537 13

Richmond Wit ---------- (Virginia)---------

mington_ ------- (Delaware) --------

5

4

gj

6

462 1

142

..........

42029 324 87

W.th at lil~i--------------------

Atlanta ...... ------ (Georgia). .

it" is.

14 24

8

ss' s.

..

Tu1

00

3,iii

3

1 of

a01.30

2

"'

93 1135

Bi'an Ingham ------ (Al,intaxia.) ------

Columbia ... -------- (South Carolina)--

0:

1 802

630

5.537

8.994

1

160

:413

14

:

71 3

"1

79

211

is

Give 2C

n .....

illloft~ Carolina 21499 21

1

13

"

5 8,1

1.412

37 C

litickwo (Mississippi) ... 3 111

3

:34

5

25 21 113

Jacksonville ---------- (Florida) T ------ -l

Nashville.. ---------- ( carente).

g:~ 15

1

0

.3

55

7.139

1 I 17

1~512

111

Ito

"340

1.596

i7

-239

29

6

Dra".. R.Ol- ---------- ---------- ----------- 2, vs, SJ

gari:

so 6, 7" 311.111 1. IF

s

13

Cl n ce .... (See (it) below)-

nati------ - l

4 747

41

"1 3 2J4

. . -41 21

C

1

and Sao

Detroit. ((Michigan) ---

482 ol

1,668:409

9 5:.45

33.652

2,583

346

340,376

-6.560

44.642

_.I,

2

6

2

Ind anapolis. -------- (Indian.) 21. 2

' .. ' ' 0

30

5 114 3g

Louisville.. ac ::::::

.... ". =ersburg.: ((West Virg) ------

8g

6.8

2:228

3 :9 83

2.20

3. 1 141

129

77

9

2

.J

28

_2"

107

7

-C

5

vud

"..1- ----------------

--------

sor, a

A

as, .67 1. 73a 3.325

it'luto

1'.11

Aberdeen. --- ------- (South Da"ta;- 4 614 3,988 20

.... .....

606

I V)

"

i,.go---- ------- (So, (b) beIavv):::::::: :

Des Moines- . ------- (Iowa) .........

30

5:

4

62

311

1

111J': I"S17 1,75f

14 3111

11:~G~2'1 2 596

292

1.80!

-3 1, (Iallh Dakota)-,:::::::: 3: DID 1,509 31 8 1,455

7

(

Mi

w

Wisconsin).... _

thl earasks) -----

31:1214 6 10 32~:6 G

220

202

7

"

107 5.697

268

472

St. Lou Missouri) ---- 11

SL Paul --------- --- (Minnesota) ----

Springfield--. ------- (See (b) below)-

60

43:1311

21.274

11.411 'gg

40

2

0:59f

J2 1

1:084

134

1.3. 2

N2

18

557

1:

104

1

1.316

3, I'm

43D

_785

_I(

_-_ sM.._____ ------- --------

A Imint.erq.-- ~ ----- ( it cw Mex ko)...........

Sao...,

4,746

sat 105

' 7R

as, .6

1 3

9.11.1, 1.

1

2.11

S (

Austin ...... - ----- (See (t~ below)---------- 563,662 137:13O 19,538 S,J1 1,031 2~ 14

Chi,ym,.........

(W'..

ng) --------------

1 11 , ( e "I) here ) ----------

3,371

41.007 31:1728 3081 340 4.2175

3

:.v~ (Ga 754 1!

a

M

ado

I

.

Little R

. .. ....

(A,1.n,ss)

"

31:11

I

..

18.831

17 11

2 9,762

17

1.25G

411

I

IS

608

Me. Idea ;; (Louisiana) ...:-::-: --- :

Oklahoma City -------

(

ow'..'a)

1,071

274,405

:

263,73(1 73'

151

I'll,

8

13

708

1,542 5'17

2d

....... ("a )--------------- 13.478 12,7G4 115

25

378 -3

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

An1h11111::,: ..'s. ((Alaska) ..........

Idaho) -----------------

M'8357

1,346

297"'.5

"37

10,253

..... ......

3. "1

50

33,185

111

a,

Hejere. .... ( J Man an,)-. ------------

[ '

17

9

52

1 ......

11

31 12

Honolulu_ How.!!) ----------------

Los Argala-.------- (Sea 0) bal.w).

4 1

173,1 44

4

156,5 13

------

4,220

82

11,673

328

P 11.052 -3141 110

anneals ...... ------ ~Ao ,it Portia, :. .......

98

9,750

77

1.2

37

15

80

A

R'no ----- ......... (Nevada) ............... 421 311

1

1111 Like Illy It '.J

(D

San 10) ..... ........... 3,596 1,704 55 i.07

Franc s (So, (.) below)---

Seattle < Washington) .....

- -

140 318

1 -1

130,744

5,066

1,117

12

1

9720

3H

102:71G

250

193 35

.1 Jones 0.... I -- ---------- l

...........

....

13 a. ......

I- ---------------------------

'a"m N

Othcr__ - ---------- ........... -------

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

i

--------

.............. ........ ..... i3' 1 ........ jD*

....... ...

..... ----

Uad,, d

a

I led:

apa'jtv~y ----------

T

ad ,posfer a G .... nonent at Guam------ ::::::::: .... ..... ........

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

..

... .. ....

W.rh . . ...

old [a as : F.d.1aI l'PiDyces

a ------------ -----

.... ..... .... ... ..... ........ : -----

:

-

I

:: ::

, I , d ,

Gasoline ul, ica Inge. .1 ... en CAcred,M4 ........ ....... .... .... . ... ..... ..............

1

.......

Totals tar States not shown above

(a) 'If

3 4

11 "1

..

11 l 17 3 13

1

13

(b)

:

311

71.

I-~ .47

~~ to

-

1,44

g ~

737

_'89

1,81,

(c) New York ...........

(it Orim_ ...

6271811 4,0

22

...

511,

111

192

fg

"4

2,625

~g'

34076:606

J

.3

1

47,957 t45B1

1315,

(e) Pennsylvania ------- 411 91 41 12

If l '

7 11 31 141 71

1 (1) laras ------------- :

~ :

D6

,

59

0 B

575: 3 g:B4(1 01

: .0

7 33

See loot an p. 119,

112 113
I

ANNUAL REPORT - STATISTICAL TABLES

Table I.-Internal revenue collections by sources and by internal revenue regions, districts, States, and other areas-Continued

In thousands of dollars. See table 3, u 117. for tax rate; and further breakdown at national total; by sources)

M-lancous ..'i" taxes

Ad

internal -enue agrees, districts, States. and theaters. ...... p" Telephone,

other areas I c0ince a a~ts

ic

-,. etc.

ad Tr,nspo,-

Us. .1 rate

depoid a

(States represented by single distret , od-t Di ..~

"d

th, Total contes equipment tape, of base, I- Sugar rface,

in parent eses; to;aIs to, other State shown ~t

be to. of table)

real

sexism.

cabarets,

re-er, persons i~

trials

at

atc.i,

(40) (41) (42) (43) (44) (45) (46)

.Wis. Staidia. luse,....................... 1. 7.2. lass trsi~ 851 270. 323 33 104, 203 1112v 147

-Asanti. Fivelan, ..........

a. U. Albany....

671 1. N 57.15, 22, "I'lls, 22 57 .. .... (Sao (c)

A

3:839 33 1:833 10

2

,

86C B=.1::::v~:::::. (yi......... V ------

Als'sardfie's Is)

1. 422

47.555

4

1

37

( 6

2,763

5

04

1 711 IS11 ~l l Is ---- 2,952 2 Sit 29 1772 , t2'

~' C '

B

*

I - -------

0

1

12,845 56 6,927

1,

943 16 i, saG

"

IVC 0 .a

H 2 t "a' i i

743 "

9

20 1

1 32

.

(

o i repect cul ------

Manhattan--,.. (Sao (c) balmx)- -------

21,007

252,466

1

207

17,817

128,695

.

52,546 20 38 .2.11

1,3

14 884 ,

Portsmouth, N w H, m fishing - . - , - . . 671

1 1 57 1

.) ,

240 it,

(Rhode Island)-. .....

fr "rr ' 'eW g7 . .

640 2a &

- - -

5 157

..... ....... V

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

ad i ti . . .

Bir pra , (Maitland and D C )

se,,

rad

34 775 fit

"",22 i. 71. ',"a a., 0.

m - . . ....

N-1 ......... . (New, )a

Phil d l hi

,

1 ': '58 ' '

42

41 173

.672

2.1

N

743

S

is

63

3.6 7

a e p a ...... b

Pittsburgh. .. . (See ir) belo -------

I 3 6 2 G

17,696

7g 5,354

1

6: 84

"

a

28

Richmond. . .

------- 11, 11 ;

31 185: 31 365 1') . 3,170 W paingto ------ (Delaware),

. . . . 6 1 6 7 -------

...

139 .Wash...I Fv,IWin,..............

A

203 035

a " "N

22

.. a "

3 11 1

j!n'1,~,,n

If

6

13' :

72

131 115 : I 14:415 1 575

' :' 0

an .n Ai arns) .......... ..

C hurabir .. .. ... (Smith

' -

5,731

' , 1

7D12 1 285

1.132

6

(*)

314

!:'1'641 G learlb- ... (North Carolina) 1 4 :295 -21 12,253 1. 348

1

2,336 Jackson I

is,ip,d) --------- --

ii :::: ~ 'M "'

2.549

"I .. '

7

' 1

h jn d - -. (

I

Florida)... V -----------

N

23,943 to, 10.07 6.241 l 119

'

2: 242 rs v 11a

..... .__ .

I

T.rn,a ----------

Cm-1 Ira,akan, .......... _ ............ ___

, 7,959

.' in

10

se4

2,469

131,677

to

Gel

18 i

I ses

2.420

o

42

U

Chatirmati. . . (So, (it) below) ..... 15

9

7

'

3

'

3

'

Cleveland.....

a

(it bra.) ------ 56 :430 45 0 4

99

'

2 1 164 1 349

Detroit ...... Michell rs, ---------

I

3 122

1

94 43.407

9g

1,331 3 432 ndiarapah- he .... (Indiana)........

11161111a (K.q1.,fiy)_ .... :::: ...

':~

34

11.503

45

40

22.596

4.098

41 1

31

: S

4 14

pa ( 5,801 rkersti Woil Virginia).......... 9,264 4 6.873 N 1,101,

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

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

.." " Ra '

15. 534 S02 are, 397 63

f,

2,11 a.,

Aba ,de n . (South ( Dakota)

D lee (b) below). .

1

114,952 8" 2009

488

66.393 31,453

...

682

712

8,747 o, ....

to,,)

Fa ~lrs ..... 11, His 111,

"

").

8.903

1 21'

411

6

4,54

533 131

4

':)

2,380

44

krl .

:_:::::I:

Waukee.

I Wisrins

in).

'

"

:

542 1 413

I

2. 1 41 0. he ... ..... v ... (Nabraske)-_ ~: --------- 52. 99G 5

2:

4 73

1

7 3

St Lou

flm!"opfl)-------------

!"

122. 89G 78 00.296

1

4: 787 511 314

St. Poo

SPlimli----- -- (See (b) below)-

19, 852

11,260 64

1': 132,

71

9,77,2

4

2

':294

ra.-at rivet .. ....................... 162.sfl

2 ..

Sa

0 "T."" a' as' 2 ". ..

A 2 ~:111

123

21

263

1,474

5

1.096

-------

iviiii

-

IJU

15.726 Cheyenne..... ...... ("Yon".9) ------

' 7 sIT

3

7 5

--------- -- 1 2

11a

Da as

fG' ' 1' f 'r`o`)

30: S 4 10.466 6.

8 : 9

117

0 1. , d , :

i ".

4 4 1.056 14,839 L ttle Park ........... (Arkansas).

New Orleans ......... (Laprsiara)-::: ---------

431

I'6:1g3

17

49

1: H~3

12

......

911 Oklahoma City I11111 11a) ------------- 11,492

6

:::::: : an~. )_ 5 1 693

WIchit. K ---------- --- 6,651 35 3,234 8

We a.- ki.iI ---------------------_------- .6,331

17 ' "' is' 1

17,10, as a

1ncJpng,,__.__:::::_

""'

k,!:_~_:::: :: :: :: :::

It

,a'.

(Irish

of

' :

766

2 060

4

11

: 20

232

237 -------------- 38

Helena ....

..... . (Montana)

2

4

a

4

'

2

Lg

Aignim.: .......

4 1 1

54.193

7

211

5 12

21.17

55

4 ~ 477

Portland y.Mug'.n))- ---------

3S: 7

107'7 107

221

1 11

162

.

-

Ren*. ............... (N evada~. : :: :: : ........ 11.042 187 15S

2

534 -------- ---

DS

Il

S l,

a I Lake City _... - . . (Utah)------------- --- 9.760

2" (*)

7,375 1. "' l

F

'In '1md1c0- ... f1 ashl) 1111w) 14 314 7g ILL~

.. ""'

22

'1 '

Seartic.. :::: Wa a a ::

at a)-,

37

19 30,9

11

8M ') :63 1 .....

P.Zin"', .7

"fi,

2 71

I

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

pay

.......... .

saI

.......... .

I a, 7"

............ . 2,729 -- ---- Othe...... ..

ad istrouted

I:.8l . ... .

-------------- 46

Darsssit,,y receipts 7 ....... ... - -------------- - ......

Transferred to Government of Guam..... ----- --------------

:

--

_

is W, in II.Id 1 ~grol . Fort are mand.y-_---------- ------------ ............. ---

Gass e,

r

sties oil. and excess FICA credits I.. ........... ...

Totals for States not shown above

(a)

1N 1

71 I

1

14

' M

12

'

(a)

2 12

o'

1

,

3:1

I

3 :4,3~

~ ~' 1

(c) 1.042

Ofdo.1.1rk. :: _ _ _ 211, 11,2, III 117:~41' 1, 51'ju 2 3~ IB 1 1 2

3 166

.:

117~

Texas 3"11a '1:117' 7, lll~ 1 '

:

3 3"71S

g

44

~4:7

1

2

See footnotes on p, I g,

114

ANNUAL REPORT - STATISTICAL TABLES

Table 1-listernal revenue collections by sources and by internal revenue regiopi, districts, States, and other areas-Continued

In thousanq at dollars. See table 3. p. 117, for tax rates and further breakdown of national trial, by sourcesl

Mpurclancous excise I-s-Cm,finsed

Internal revervellglons, districts, Stairs, and 0IIII-s"

(Stat represent I by single district, indicated in

a'

Ns,cati" ad

mature, in.

Ceir-apenrgated

go

Wagering taxes i4isa, h,ity,

1

N" W

Un,la,aif,.d

, a, pro

pace has byar in State, shown at bottom of tod ing r,C,'uPa- itevicer i I

V an "as isac,le rare

table)

t1on a I ta;es

occupation

Opera

(47) (48) (49)

(50) (51)

(52) (53)

------__ -------- a, sour is, sis 5'.. ions, 172 .7.1. iss,

N-h-ar.11d, R.giWn --------------------------

Alban (S b l

SG 1" 12,3211 22,51i y- ee (r)) e ow)_-------

Au uaa~a_ ~~ (M i

69 ----- ..... 3 7 736 289 35C

no

g _ a

Boston.,-.-. 110

...... ~

0

485

341

6

111

Is

pro. 1 71 (Sao (c) tial..)_ -------

g , , S

I

1 ------------

16 1 3

U 2 2 :

o ea (c) her..) --------- 008 (

burleri a (Vermont) --------

40 1 3 48 1.885 14 3 2,334

----- .. ...

Hartfordm - - (""' c''caltL

ID -------- ~4- ------------ i

....&_

. ......

204 5

L

52

2

176

1 - 2I~

M.alsitt 1

( San (~ b .

P h ); :::

2

8

2 44 3 14,582

.

irtsmairt . 34 534 (Now Hampshi r j

P id Rh d

2 5

9

2111

.

S

rm, .n ......... Mr. ( o e Island)..........

11 -

4

i i -------

16 4 334 89 37 C

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

.9 ...

Baltimore-. . .

as.

6

m ll

2 030

as

1

21I a

' ' a 1 '

New If,----

P iIa dr,1 ph,, r, -----------

(S e ( ) I

1

12

, 77

I ' "

: 514

1''

1 5

24 611 If ,b ,, , .. ... a .

Pitft uripl ( e ( "e ) balow)) s " - 14

10

I 1

15 4:8.1 1: 70 :7

. ( V%rei ~'a) ~

Rich

and-

------------ 25

98

35

1 1

7

182

37

2,472

1,885

11161 2 1:'12~

N WOrningam (D'IaWwr)~ ------------

i

2 4 23~ 338 96 22

ariti

thria's Irx,g . ------

At (G

I

94 a.131

11

ido

as

sets alls l kp~aR .. ...... er,go)

mingham, ; . --- (Alati-- ----------- 12

2

06

1

10

9 11

1:705

71

'

18 9

21 7

-3. 31

-11 C.Irerb,---- -- ...... (South Cri~qjur

C . b (N th C

112 2 38 16

1 ' 1 29~ a e

,

per

ie. . e, .. ..... or

Oolp"ia'ip

' c " Pi)

12

1

19

34 9

3

'

So 3,201 88

il~

! a .Za%-ni

a

-.: IF

'i

1 9 16 1 4 97 2 '73 811 5558

- .

13 84 Neshivilir-

(

Tennessee) ------- 21 79Z 2

`

,

3 96

,

cent.1 Real N

CinrimrshWin ::

.9 - 6 98

its

a, -"I, as

__

-

Cleveland lla l l

I " " "

19

17

192 3 97 2. ]DO 13 - 1 S&I

~ b d

Detroit ---

g

, ns. o ! --------- .

I di l I i

5 62

4 117

287

1

4.713

1 9 1

258

278

b :

-3 31

n anapo is .. .. . ....( nd an.) -------_-----

L i ill K t

54 331 to 7 7 :133

1

25

5

4

11

ou sv e ---- - . ( ep e0y) ----- -------

Parkersburg Well Virginia) 15

10

370

111 4

17 .... ... ... .......... to

"

........ ...

"'=it ...........

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

--- (South Dakota) ..........

'.34

2 121 ..

12

521

193

3403

681

482

17

3.63211

86

53's" 1

Chip: ~Sae (b) be oW) .........

... ~W;

4 0 39 111 4,760 2.5 17

-9

78 06

Des Mai I...).................

8 2

I

9

5

1'8

73 .264

Fargo ------- _ ........ (North DakDt3)-. 2 5 76 7

-11 Milwaukee ------------- (Wiaconme)._ N ---------

O n

L2 2

1

4 2,670

103

2,034

ma .- adirar A) ...... ------

St. Louis:: ~M

I

k)

' -

11

41

34

123

1

2

8

5 " '

111 -I 114

~ -------------

St. Paul. ----------- MI r =ta) ------------ 13

7 0 3

44

G55

2 %8

it,

4

_ig: 3

64

it Swingfiel ... (See (b) below)......... 7 10 44 1:268

26

66

-94,11S

Weth- larns---------------- ----------_--

Altrequarque-. .. (New Mexico)........... 4 2

ST

2

15"Is" 4 3 5.79 7 1- Ausli------- __ ------- (See (f) below)- .......

3,

41 1 165

2

3.399

2 2

3 909 147 is

C ganne...... .......

-

63 4

5 350 ,

I G

De as

........... ___ (S..(I)l - :: :: :::

15 (.)

3 72 4.363 553

5d

19. 5

D,me ---------- (Colorado) ..............

Littl I I I 1 2 ' - '''e I ,, ---------- :: ((L.rumr'xs,))::-----

New Otte

a _ is a 20

7

'

3

3

34

113

15G 1:320

9

971

1 12

379 Oki home City---------- (Oklahoma)

'

1 44

4

48 1.601 89 -222

Wic hita ---------------- (K n,.,)--

a

------------- a 147

1

10 1 14 1 94 251 W-... Fixed am--------------

Anchorage

238 9. ra

12

11

7

g, res, : .

a, s ..112 as

af'7 .. . .

-- - ---

11 To13

1

14

1

2

...........

5i

.........i _ 4

54 37 13Z

-

3

. ... .. ... ( ".we")

3

". ............ 323

29 20

(See (a)

L'he i

12

3 AS 4. 277 1.330 6,387

ap Iit------ --------- (Arrimp.) ............

Perlin _------------ (Oregon)..

------

11

13

97

'4 3

2 11 790

43

238

21. 147

Ria-__ ----------- (1-d.)_ ::: :: :: 2 7, 8 1 1 7 1.212 35 62 Soft Lake Pity---------- (Utah)........ _ -------

4

205 32

So 7 7 "'3

, F

rancisco Ile, (1) below). . ~ ----

S

64 5

1

5 5 S. BI 2.IE51 35.1SO (

eattle W.ah,agtod) ...........

re. .1 ..- "... to 's

12 746 99 476 1.714 823 -318 par', - .-

0 c'

i 1,r "I

Other ___ --- ---------- -----------

ndistrflbuted~ -- ---------- ---- ------- * ---------- ------ ------- -------------- ------------

~

..

2

..........

...

124

5

195

Depositary reemptS 7. ....... __ ............... ............. ..

--- 8 5 053 Transferred to Geyer ....t of Goa -------------

Wilhleldhe, ;exuba sre ed iployrrra . ~,

Gavoli

a rig at areas

64 cmdiis

~xf C

a

b Iffores- . ---------

---------

N law l,rl::

d) 0

h

a.- ~ . .

0 P:n.~,s y Ive ni.........

1) T x ---------- I ...

See footnotes on p. 119

Total, In, State. hot shown are...

187

47

3114G

92

48

59

238

254I

108

45

7

17

37

13

141'S

3.3

199

237

11:411 C o2it

7

"

6

: Bill

7.273

7, 763

4: 5113

83

341

2.105

4,472

41.547

79.055

11.21 . st'l

- 5:781

19.963

115

UL
ANNUAL REPORT as STATISTICAL TABLES

Table 2-linternal revenue collections by sources and by quarters

11. thousand, Of chilleml

Quarter, ended- 12

Source of revenue Sept. 30,1966 ~ D- I- Me,. 11, 1111 une 1, .%7

(1) 3)

~ :

a)

Grand total -------------------------------------------------------------------- 31,5 31,6151 27,982.4L5 1,051.131 0,795.G75

;oupo,abon income tax 2__ .................................................... ----- 031,045 .013,510 ,185,053 .688, 1~13

individual income and employment taxes, total ............ --------------_------------- 21,473,106 17,976,115 5,355.086 1.524,530

,thhold ------ ........... " '::a "" is . . pl~=l t ' ' ' - - - . - 1 . . .1 31 14 1 f 11 ' 23' 1 1 4" ..,Ithh ::::::: and .........

nca~ ~ ,d di y in s u ra nce 3 1 1 ........ 'fit ~

S: 4~:

.0 927: 241 19 381: .59 ~ 1 52: 8 94 Railroad Unemployment retirement 18 087 1: 329 t': 9113 2 829 05,160 585,830 9,748 9,757

__

late tax ............... ......

------- ... 2

T

3' "'

2 117 Wt tax. ........................ : 7: S3

13 : a22

:261

40: 90J

xcise taxes, total. ......... ................... ----------- ................... ..........~, 375224 1387. 010 3. 1,738 3.589,77ii

Alcohol taxes, total ..................... ......................................... __234,777 -

-

1,159.490 74,680 ,106.776

Distilled spirits --------------------------- 647,572 905.563 43,495 Wme~ cordials, etc.. ..... 10'056 A7 '

8,121 6,749 2,06

Beer 1_ ---------- --------_---------_-------- .: 120 215.807 -04.436 4.652

Tobacco la,us, fair I............................. ............................... F15 4-85 495,943 502.199 1 566, 242

CisaT a, ........... ............... .......... 501,376 480,802 11 1 3

'

6

Ciga ..... .............. 14,111 11 12: 4 07 14 939

Otha.................... ...... ::::: ..............................

226 273 j 42

SI,mp taxes on documents, other instrument,, and playing cards, total------------------ 23,250 13,050 5.695 6.26

Issues and isanslass of bonds of indebtedness or capital stock, and deeds of c-

"Laux,is

by posl7i ----- - ------ ------

14 44 ,674 0.276 8 Sale, %district di mtora... ----- ---------------- :

: 803

., ,371 ,418 67

PI

its car silver bullion transfets- -------------- : :: --------- ......... 2 5

Mamufacturan, excise taxes, toUI__ _.. ................ ........................... 1,425,795 -1,247,681 .479,634 ,325,237

G... Im................... 737.755 780,991 32 117 .131 Lubricator, Oil, at---------- 27,210 4,060 2452

20: 2 852 Tires(wholy or in pattol r Obber), inner tubes, and tread rubber --- 131 111 11 21 35.344 6,025 Mat F vehicles, chassis, beit ie,, parts, and amescaries.... --------- Radio and television sets, Phonographs. components, xt-.. ' ---- ~ -------------

'28 22: -3.0265

-3,5417 :4 3

"

a

2 24 ,338 2-

3' ,, Reffigene,ois, renters, 11-mmixtion-, etc.; a ectTic. gas. anxi oti api,ltaftes-------- 2,971 504 75 ,2 other. 10,836 8.575 ,035 ,983

Retailers' excise taxes, total ........................ _ ............................. 2,443 436 05 35

Luggage, etc ---------------------------_- 376 -111 - 2 5

J..&Y, .11- ......................

,

9714

'

60

TO,............................. :::::: T

Toilet p,.p.,atints ................ ::: ------ -------------------

1.

991 351

2

1

1

135

Miscellaneous excise taxes, .............................................. 386,266 56.934 82,466 06,396

Adims1i. a:" 1

-

Theaters, come,ts, athletic contests, etc. ............................... 114 70 86 12 Root gardens cabarets. Of-............. SN 91

E

04 556 Cluba due, ano initiation feas__. ........... Tel phone it., at,., and equipment s ................................

3

199,292 16.316 47 336,305 0449.940

7U=rtati.. .1 P xars 11_ .................. d it b 31 8,92231

,7575 ,7851 ,8548

epos oxes ....................... Coconut and other vegetable oil processed '~ *) 1 Sugar EL131 31 506 3 287 3,275 Di-I ... ............ Narcotics and marihuana, including courna

- -

ionaita,es .......

1.597 421 4:606 191

~745 242 ,199 485 Coin-opera[m, amuse nt and gaming dininnis ................................. 11,957 3, % 95 .357 Bawlingn .1Itoy, pri far, Ot_..................... ..................... 19 0 0

;

.

We' '61 15 3

Wagers............... 320 .

1,472 , Use 438 .30

no highway motor vehicle,----- tax

0,728 1,718 7 39 4

Other - --------------------------- 13 850 7 319 :

7 6

Unclassified excise taxes: Unspid im, collection,. ................ .......... 107 052 -124 735 82 12 1

313,623 Undistributed depositary receipts I...... ......... -19:844 338:211 24:737 81,948

Sea looteme, on p. 119.

16

ANNUAL REPORT as STATISTICAL TABLES

Table 3-Internal revenue collections by sources, fiscal years 1966 and 1967

fin thousands of dollars!

So. ne P I revou.

rt-,

1967

(2)

Grand total, all sources. -----_----------- ------------ ------------------------------------------------------- _

Corporation income taxes, total v_.. -------------------------------------------------------------------- ...............

Regular of .-------------------_--_ --- Exam organuation business Income tax. ...

Individual income and employment taxes, total ---- -------------------- ..................................................

j,,., net *Ithha.~Idd Pand a.11-mool.Vuent tax 3422.. ......x_~ .............................. ........................ withheld Id-ag. and disability insurance role .................................... ...... .........

R calved with returns--------------------_----- ------- ------- Undistributed depositary receipts I... ----------- _ ................

Railroad retirement. total ------------------------------------------------------- ...........................

Railm:d employment compensation tax: 24 R calved with return,........... Undistributed q,pusilary receipts T Railroad employees representative tax 25 ------------ --------_--------------------- ....................

UnmcreSiloyment 1 surance, emploiye;a at 4 or more popors, taxed 3.1 percent on taxable Portion Of Wages, allKtive Jan. 1. 1 964. talloweduP1090pennun o tax for contributions to State unemployment funds ............. .......................

Estate tax, du,ted rate, Imun 3 percent an first $5,000 of net estate in 8-33 Of $60.000 exemption to 77 percent on portion over $10,000,0V cfedit allowed lot State death taxes ................... .................. ......................... Gift 17 ....-

tax, eaduared rates tmm 2!, percent on fihn't $5,000 of net gifts In excess of $30,000 exemption to 57% percent on pot ion over $10,00 000; $3,000 annual exclusion for rac don......................................................... _ ..... ...... Excise taxer, total ............. .... ...... ..................................................... ......................

Alcohol taxes. total-------------- --- -- --------------------- ----------------------------------------------------- Distilled spirits taxes. total ........................................ Imported (collected by Customs. rates same as domestic).............. Rmilh. D ..sticiolilil n Dr.a, proof gallon or wine gallon when below proof .. ~ -------------- his per proof ga Inn I_...................................... Occupational taxes Nombever ge, manufacturers of splril~ S25, $50, $100 per year... .................................. Rmtffilla~ Less than 20,000 proof gallons, $110 per Year ----------------------- __ _-----_------------ ........ 000 22D or ve ............................................ Retail ad

I" 1

114 Pa.,.,! esale liquor deals ra, RS5Ip.,'ya`a`iI!!`. - - ------------------------------ .........S

Main; a

"

gus Of still', $55 Par Y. r ..........

at, Whol ri:lhe, etc..............................

ur"I PI

St 1,

I or .nit sers manufactured. $22 each

Wines, cordials, etc., taxes, total, ...................... ..................................................... ....

Imported (collected by Customs, tales seme as domestic). Domestic (Stlll-.ines cents, 67 cents. $225 Pat in. jilk~ &2.40: liqumiXals. $1.92) ------------------------ _: .................... :........................... Occucation tell it......

"' in wmesur in wines and beer, $54grSyear .................................................. Wholesale deal.re in win., or in wines and beer per year,.... ------ _....... __...................

Beer taxes, total ----------------- ------------- .............................................................

ImDthoPoertteldc, t;uIlected 9 b, by,Customs, I rates same as domestic). ...................

per site o 31 gallons I .......... .......................... O-gar. I L

.am. aO,: wers: 5L 500 barrels, $55 par year:::::::: ......... ass DO barrels than or more~_$110 par year. ---------------------------- -i ............... Retail dealers I, beer, U41jer year (includes iinilted retail dealers in Wines or beer, $2.20 Par month)... Wholesale dealer, in Pem, 123 on, year...............................................................

Tobacco taxes. total.----- _ .................. --------------------------------------------- .... .... ..

Cigarettes, total ...............................................................................................

C ez A((small)jil Porthousand__. -------- C! as 8 large), $340 per thousand I.... Prepayments... .... ------------- .... :::::........................................ ...................

cigars, lot.[.- -------------- ..............................................................................

Large cigars, classified by intended retail prices, total . - -- ---------- ....... ................ . Class A (Retailing at not over 2,L6 can% each). $2.50.

per

-

thousand.. ............................................. i

C!'.." C ((Oov:rr 4 "c'e."..t'~~In'.'~.*Ie,,c4e,e"l, r ~,ch). $3 par thousand----

Clan D (Over 6 cents, not over 8 c u's ), $4 par thousand -----

.... ... )j, '$7Xp.m`P..,n~~d_._._ :.: ............................. Cl:;: FE ((Over 8 cents, not over 15 arls ..P In

C over

15 cents, not Ovii, 20 art, ea,n), $15 Pat thousand Class G (Over 20 cents each), RD per thousand .................................................. .........

Small cigars, 75 cents Per thousand ................................. Prepay _............ ............. ....

Tobacco a ferial:s~ .;.cc. pmdij~jx~ ai~ij ciiarette papers and tubes (Customs) xF . ........................ .......... Mn ""t' - - - --- ---------------------------------- ---------- - - -- ... C rulactufad tob,c 10 cents Per Pound ........................................................................

"

11 -mcni

T b

iglrltt. pe 1, it u )as. papers ? j cent Pat 50; tubes I cent per 50...................... .bac. m.teria V,clat ions, sm.

S

73 1, Internal Revenue Code of 1954 ---------- Sao footnotes a, 1. 119.

128.879,961

30,1134,243

30,831 :126,

81,553,685

11t0:4193:516 88 521

1: 19t, '672

683,631

693 _9: 297 69

33

567,014

148.374,815

34,917.825

34.91 1 1

-

2:9

, 1,

%.328.936

.625.699 2' 74:3'0'7:5'31

7 07 .293 '2:2370,242

792,858

77913:11131 36

602,745

2.646.968 2.728,S80

446,954 285.826 13,398.112 14.113.748

3.814,379 2.809,777 634,868

2,131:~1111 2, 77

82

8

22054

14'a7 3

93496

112.574

10.834

99.449

2.113

177

892,028

885 111..

V) 16 3,729 963

2.073,956

2,006,499

2.006,498

57,662

57.313

I. 327927

10 27.:6'28'

4.301 3,474

32921 477 Ji634I

4.075.72

3, MS. 686 682.603 2. 3:619 124 637

76

1324

14,2748

685

7453

124.022

11,872

109.617

2.351 181

945,015

018 9346: 604

3

3,540 835

2,079,969

2,OZ3.090

2,023,090

55,736

55,414

I . 28627 211

1

26.'5:43

680 4:567 3

579

303

-

639

I

117
I

I

ANNUAL REPORT - STATISTICAL TABLES

Table 3-Internal revenue collections by sources, fiscal years 1966 and 1967-Continued

in, thousands of dollattl

Scum, of reyworm

Fiscal year

1966 -2

(1)

1967

(2)

68,260

Emom laxin- phmmd

Station

I

axes on documents, other instruments, and playing ends, total ------------------------------------

Issue, and Van,(,,, of bond, of indebtedness or capital stock, foreign insurance policies, and deeds of chavalentai~,.-

Sol a by

"I" -

,far

"'

Ids

=Is . . .. ... .......

in ff IkhribI3cents , per pack to - _ --- ------------------------------------------- ------- ---------------

Sit- 1, 11 snsfins, 50 percent of profit; befenflad, effective Jan. 5, 1963 ------------------------------------------

Manufacturers' emins taxes, total-. --------------------------------------------------------------- -------------- ---

Gasoline, 4 cents per galla---------- -------- i ... ----------------------- ....... .......... ------------------

Lubricating oil, etc , 6conts per gallon; cuting a 1, 3 centda p,.bbg.Ilpn ------------------------------ ------------ -----

Tion (.1botly a, 1. W11 .1 about,. inner tudines, and Ima to at: Tiny,

. highway type, 10 cents per pour, , other, 5 cents per pound except laminated t1res(other than type used a, highwaysiouilces), I cent pot pound ................................................................

Inn f uties. to cents pet pound .

- __ -

----- ----

labor

Tre:d rubber, 5 cents per po nd-..

at vehicles, chassis, bodies, parts, and accessories:

Passenger automobiles, chassis, bodies, etc . 7 parceirtu ------------ ------------------------------------

Trucks and buses, chassis. bodies, etc., 10 percent_ ...................................... .......

Paris and amenarie, to, automobiles, trucks, etc., 8 Parcernis ---------------- ----------

RRadio and 5 per television sets. phonographs, components, etc , 10 primantni... ----

Oftilgeratus, ............ Ineents. mr-conditioners, etc., cant: self-contained air-conditioning units. EP 10 perceot

:=jc, gas, and oil appliances, 5 cement 31 ...

sto s and revolvers, 10 percent-------- ........

Phonograph hasorch, 10 pertiont ex. ~ ......

Musical bastonsents. 10 percent ..........

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

,nfing old, lolhro, 111, Wine ad,, eb.1, 11 It car -------------------- ---

*it,, mels, pairocnt .....

... ........ *---- ---------

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

hanner,

and

state arm us

Percent . ................ . -----_----------------- ..... ..

Cameras. F ln,e,,,, film.;tc , 10 -int: household type Projectors, 5 cement x0__

"I"' ig

It

to is On tubes. If percentil.. ......... ......................

Fuearins (olthr than pistols and minolven). shells, and cartridges, 11 percent.................... ------- --- ------

MKh,,.c,l pencils, Paris, 10 percent: lighters 10 cents per It"mr($[ at mom); 10 percent (less than

Matches. 2

'

ents per thousand (but Pat to exceed

to

percent

M

oi price); low, wooden or colored stems, 5,-j cents per I

thousand 0---------- 1-1 ------------- - - --- .......

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

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

1 149,232

,":I I.,

5.613,869

2,824,189

90,776

430J231

27

24 IS

,

170

1,492.225

411.11 '9ti

6

-3: 7'61

1

37

1, W

31. 141 '12

1:311 .9

6,745

161:0230

1 '311

1.147

Retailers' excise taxes, total 9. ............ ---- ---- ------------------------------------------------------------- 1 103,155

Luggage, etc , 10 percent ....... .... . _.. _. -----

Jewelry, Too. I etc,, , 10 percent.. . --------- _: :::: . :

n

- -_ -_ -___ -

-

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

Toilet Ompar:ficts, ID Its in----------------------------------------------- : ---

Miscellaneous emne taxes, total ----------- -------------------------------------------------------------------------

Admissions taxes. total 11........................... ............ --------------------------------------------

Theaters. concerts othlefic Conte, x atc.:

20,814

43,211

3.

,1

40.998

,1,600,589

91,404

Admissions, I

I

cent lot each 10 centsOt star fraction thereof of the amount Paid in excess of 1I... ------------- 43,11

Ticket L brokers' sales 10 percent of mount excess of box office price --------------------------------- III1

ease, Of box,, at seats. ID percent at the

's in unt for

h ch comfir, accommodations are sold------- ---- 349

sub, Admission, sold by proprietors I, excess of established MO price, 50 percent of such excess..

gardens cabarets, etc., 10 percent of total paid tot admissions, services, etc.-.. ......... 35,'1131

Club dues and initial,., If.,. 20 percent ----------------------------

Telephone ,,, huhiago, tic , -can,

I~l dues Or lees are in exce s at $10 perjeci 21

Torsts. Percent; wau and equipment service, porment 37.. ------ -------------------

rta

floor .

oil lbyPipe

ine, 41 , Percent; epood, effective Aug. 1. 1950 ...... ........... ----------- --------------

16

'a'sons, I, TO

cent: repealed effective Novi 16

*

1962, ex4cepl on air transport

of

" "

am

ic'

we, ad .. d

to

5 p ment ---- 139.624

,at W a,coal

P

a,

d.

,call ,1 *1011 cents par I,,; repeated. lostI AP 1 1158 115

U

a

W

"

'""" '

10 per Oatx --- - ------- -------------------------- ------ .....

.

Pon'. .

.......

it ,

1.9

gy'i D2

lanivishat",

I~ ,

.......

an

it air,,

ellart I

a

Pirs processed, 2 cents per Pound; repeated, effective Aug. 31, 1963 -------------------------

17

,

is

sit

par Pan

n

d .... ...........

)02.932

D

in.

special re.

Or 1.

4

i and cents per galion (in wme 159,326

Narcotics and marihuana,

in

a,

i,

--------------------- ---------------------------------------------------- 1.341

but, In ..........

.. --------

212

Marihuana... ... .. ...... ...... ------- - _129

Con, operated abbu same at devices, $10 pe r device pet year 31 --------- 3F6

1211 fp,~ dryixe. par as-------------- 11,41

now

0 12D P.

alley or table, per year 31--------------------------------

2

41

Wagering taxes:

Occupational tax, $50 per ye .............................. -------------------------------------------------

"I

wagma

, 1

0

percent at amount

wa

,,ad ... -- ------------------------------------------------------- 1.62

tax

on highway motor vehicles w curbtog at 26,000 pounds, $3 per 1,1100 pounds "I year (installment privileges

,,r.itt7dd)...... .. . ......... ................................... ----------- ................ 104,24U

Adulterate butte, and tried cheese (imported and domestic), process or renovated butter and imported oleomargarine 11

FiceInn 1

ties

star

and

occouptlonsil is,,, .1 --------------

.

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

Interest equalization ......... ----------------------------------------------- 25.653

foreign in,u,a.O... ... ... ... . .... .. ................. ................ --- ::~ -----------------

kindass. ad e,,i,a la.-

thinppired collect . ....................................

I it ntobutud d,P.1,0,y miciOM 7 ---------------------------------- -- -- -----

See trichina, on P. 119.

118

T:.7 "'Il

41,:1 1

2 859

12

5,478,341

2.9

"1" 92 573

448 975

11: IS, 616

082

1.

411 :9111

4

Cg III

34

:G40

-1 329

-2.

1

10

-7

58

-2': M21

-1,349

3

11114

-4" _

341

-1.042

27. 8GG 378

5

3,619

1.643

20,

1,218

1,732,062

3,399

313

3

3,041

1, 1 (11: 11131

70. 32

1

133

'3

1'2

14

1.340

1,163

177

16~ 68041

ANNUAL REPORT - STATISTICAL TABLES

Table 4-Internal revenue collections by principal sources, fiscal years 1940 through 1967

Ih thousands at dollars)

TOW Inch.. and Profits taxes

.trwal Employment Ls ate and Alcohol Than. Man,fac. All other In

ve

true

Corporation Individual

"so' -

gilt taxes taxes I taxes I

forms' rose,

Fiscal year ended ]One 30

cal

i"toins Total income and

Poor is

income

(ax's .1

enise taxes

taxes I

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

1 41 2

"

2

'' 1 't' ' N

12

1 "'

Ifl 12

1

310 124 1 1 1 11 1 11 117

1"

111

"

7 1 . : 1.~

1 1 7

3

:471: .IT 1 :0 1~ 41

,

7: 11.

If :.~

6

0

4 7:iD5I

111: , P 5 ~ E .: 0,7 '17:1

73

:

x3n 564

1942 -- - ------ ------ IJ.047.869 8,DOI 114 1 111 111 1 212 111 1 412.14d

I

Wg~

517 7" N1 ... 7 "-

2

1943-. .... ' 1 _

1944-- ....

22.311.386 4

UJ21,760

: RSS

16,118

33.027.802

1 :, :9 6

s,

14~766,796

E:629:~32

18.261,005

.498,705

1.738,372

447.496

511,2113

1.423, 6

1.618,775 '1

9

23: 17

988.483

: 7

5014 503.462

1. 174 :

1,733.655

1945..

-- ---

43.1111 111 31 I11 111 11 1 1

7

.213 11. 034. ~ll 1.779,177 643.055 2. 3M. BIG 932,145 782.511 11292,103 1946 --- --- -a. III:~~7 ,: ,,1: 13~ :

2

5

;3.602 18.704,531 1 71

...... .. 6; ' "3' 2 ' '2 1 1 " "' ' '2 7 ' 2 4' "94 '

........

39:108.386

41,864,542

29.011,716

11 112. 111

1, G76. 459

11 171,410

19.343.29

11. 19 71 1

1:

024:115

2.311 342

7 1 : 1W

111 34

5

2:474 J 2

1. '5 1If

:217: 768

3 1 2

1 1"

I. 425:2fi0

41.13

' 1

2: 17 ,

', 105 113

1949 _ - ---------------

25

40,463,1

IS:~05 4~ 1: 1 6b9

53,

Nr , 2, 2,47, : 1,3 7 IT

9 6: 8 1, 210 :607

1: 3, : 8

1 75 1: 7 '33

..

2: 80:

1950 --- ----- -- ...... 38,957.132 29,007,659 10,854 311 1 7 1 13. 31 2 144 17 1 71 2bl 2 119 20 2 1 319.464 1.836,053 2.214,951

1951.. 445,686

50

37.384.879

: 5s9

14.387

22: S97 1

(Y1

:627:4 7 ~

3

: 7 7 u

29

: :808

54

:

380.396 2.383,677 2 312 71 1

! ... - ...

65: 1 581

2

11 111.011 11.456.111 29, 2 7 4: 1 I7 4 ,464.264 8 3 3. 141 549,120 1,565,162 2,348,943

: 50 :9 3

7

1

1954.. _153 ... 6':

53S

69.1 69,

919

991

54:,30

54.360:E124 11

594.515

'21:546.3Z2

31~536,217

32,813.691

4.718,403

5.107,623

891.284

931.111

j~;11,:"2 III b54. 911

580, q9

2.962.788

2.689,133

.7. 492

1955 .. ...... .. .. ... 66,288,692 49,914,826 18.264 7 20 31 111 11 1 21 9 665 936.267 21.742.840 1.571.213 2~885,916 2.01

71 1 12 141 56 63 Isl

6

:5 ,

21.298 .2

15: 337:b42 7 : 29 5 :

784 1~ 171.237 2. 92

0

I~: 7 1:9'r bft~ .574 1.613,497 3,456,013 2.01, 1&

560.425 21,530.653 39,029.772 7.580,522 1.377,999

9

2. 73,195 1,674.050 3.761,925 1 14 3. 11

71 171 %1 11 111 114 21 133 311 31 1 111 1 1 1 4. 1

G

1.11~ III 2.94E,461 1.711.011 3 114. 1 3 1

1: 6 '

59

71: 7R7:9 58: '2

826 54

: 5

1 dIf: 09

4. :,44

:734

a : . 5 3

174 4

35

. :982 3.002,09G 1,906,816

3:, 7 8 ,

58. 1.1!17:191

1960.

774

go

3

91

67 125 111 2? I 79.414 44.945,711 11,152,589 1.626,348 3.193,714 1.93 504 4 73 5 12 9 2

14

.394

13

: 01: 6

94 4 ipi 67 :917:9fl .: 764.940 46 153,001 12

.. 4'1 1 `1' 'N ' 1 2" "1

1:

N

I

' If

6 : 4:89 0

8 1

:

1 963.582

132 ol. 441.139 11 945 11)1 21 111 711 11.141 511 12 JI)KI.17 2. L31: ~ 3 . 0:2.2 2 : 25,73G 5.120,340 2.264,M7

1963.-.

f 1 925

.395 75:323 7

1 4

22j 21fiI3

1

2 9I7:,8j

'

9 5,004.486 2.187.457 3,441.656 2,079,237 5,610.309 2.278,53C

64. 112,260,257

78 891:

2 9

, 11

3 54:590.354

17

00? 504 2.416,303 3.577.499 2,052.545 6,020,543

1965-- . ---- --- 114.434.634 71 7 11 011 11.13 3

1 If

11. 111, 111 17.104.306 2_ 745, 532 3,772.634 2.148,594 6,418. 145 2,453.406

966.. 128,879.9

61 E2: f3i:

794

2

30.831 : a3 61.297.551 20, 255,133 3.093 92 2 3 814 311 2 17 1 11 1,613.1blie 1.1111. 9. 1

967 148,374.815 1104.288,420 1 34,917.

g

25 69.370,595 1 26,958.241 1

: 6

3.01

4 41

1

4: 075: 723 2 : ~1 ,. :

869 1 5,478.347 1 2,479,809

Footnotes for tables 1-4

NOT-C.denclar v,c;a figures, by regions, districts, f 1,

States, ad the, af,c~s, or ~ected type.o pl~ ay he

.btai from the Public: Inforniatiori nieciain, internal

Rev

`

S-ice, Washington. D.G. 20224. Floor stocks

taxes are jeoortc~d separately Only during th, periods in

%hich tire. c6flect-is ar, of significant amounts. Relati-ly

ouiall ant.isIris collected it, P.1-ittient period, ;I,,- I,cTg,d

with

,

tic ainounts shown for fill' Miated CIWS Of tas.

'rl-

,,a,, S.-

00

Revised.

I'lie receipts in the various States do not indicate the

Fed-al tax burden of cacb, since I

.

!I inany instances, taxes

ate -11c"'d in car, State IT.,,, aresidem, of another Stau:.

For example, withl Iding Tax", reported hy inplc~-

located near State lines inay nic ad- substantial amounts

withheld front salaries of employees who reside in n,igh.

boring Sim2 Includes tax on unrelated business income of exempt

-grun-tioru.

,

C:oilections of individ-il income tax not ithheld in.

riudv old-agc and disability insurance taxes on self-eniplovown

c

Siinilarl~ . file coilcetions of incorric uix

it d a - eported in corribined aniounts with old-age

and di,abifity in-laric, I ... I salaries ;find wages.

Estintated separate national totais for t individnal income

-~

:1

1(] for old-ag, and (istability iiisurance taxes :

I

,ho

The leal lablt, on 11. 12 and an ifacd in obtai it i!rg

if orals foir indi, idnal ir"inini I; ...!, art,] -il'I"ynt"'t

la-s in ,Ibl, 4.

Hem,. f ta-bl'. Ir"'inniov after Pkil. ,If-

,::~ ) It Ve, I-I ta-1-1 iInpl-d byth,Fvd,tal li-wance

non, A

't

at,, applicabl, with 1,, (;n~no

:,-1 A,n,,i(;;r, San a. A.a of -,It ax,-, in

Guain and Aincrican Sartioa me oinhined xvith sinjilar

U-, epoiterl for Office of hiternationol Opetatinto- (

-)fire,.

1 Beginning with fiscal year 1957, the United States

total i~ adjusted to exclude withheld individual income

taxes ciansf-ed to tire Gwerannent of Guam in accordance

with the provisions of Public Low 630, approved Aug. I,

11).7,0, (G4 star. :i!)-). 'rhis adjustment amounted to

W,144,497.07 for 1967.

I- IncludeP railroad. canployment compensation tax and

t..'ri:, o , rr~,,ihtiad employee, ,pice-tistives.

,ccrip's atowersts Inane to han1s, under the depositarv

system, I are included in the internal rc%,cnue cofJectiong for the period in which tire depositars, receipts

are issued. However. such p~ymcnts arre not' classiticil

by intcrnal revenue districts tnor by Tax subelassn to

which exciso: tax paynbents related) until the depositary

mccipts are. iccei%cd in the internal rc%"uc officcs with

tax ;-~Liurrns. Accord~nq!~,, tire items Phown as "Undistribnted cj,~sitary receipt% represent the amount of depositary

receipts issued, less the amount of depositary receipts

icceived with returns and distributed by district and tax

class.

I Represents credits allowable (,it inconit, tax returns for

certain ga.solini, and lubricating oil tax payinctits and for

useess Social Security payments under the Federal Insuranec

G-tributi ~, Act 0`16A).

Ainotints of internal revenue wxes collected on Puerto

Ri,; prodtic~(s 1. It,, Unitcd Statc, or ron- ,,,

at in"11 it. If Ic is If, nt,sa el ids, drawback,, and -p-ses) ,

covered izin, the 'I'seasurv of Poem, RiCU -der pro.

%isinas or se- 7652(a)(3) and ,314(a)(4~ of the internal

R.,-on, Oalv If 19-54, gross ziniounts are included in

-crall coll"'i r-,flt, uibl- I th-ugh -1). begi fing

wid, 1955 :nid att shown separatek, in table 7.

hicade, "c'-upation:0 tax ,is If ~snlls,

wholesal, liquor deaers, fetail dealers in lirinor

in, nbidnn.al pirits, ~I. I not.1--crap! Ina factur- of

spirit,.

119
I

ANNUAL REPORT re STATISTICAL TABLES

Footnotes for tables 1-4-Continued

it Includes seizures, penalties, etc.. and tax on stills or

conclenducas manufactured.

12 Includes Occupational

taxes an

wholesale and retail

dealers in wines or in wines and beer.

13 Includes Occupational taxes on brewers and wholesale

and retail beer dealers.

I

,

Includes taxes on cigarette papers and tubes; court

fires, penalties, and taxce '73 on leaf tobacco sold or rearoved

in violation of sec. a , Internal Revenue Code; and

manufactured tobacco,, repealed J an. 1. 1966 (Public Law

89-44).

fo;,,u1,acI;dc:Ltamp,tsx,cs V it . on deeds of conveyances and the

onger subject to stamp taxes: Issues and

transfers of hands of indebtedness or capital stock, repealed

J . 1, 1966, playing cards, repealed June 22, 1965, and

silver bullion, repealed June 5, 1963.

;. Includes taxes on fishing equipment, and taxes an the

fo lowing items which were repealed by Public Law 89-44:

Pistols and revolvers; phonograph records; musical imtruments; sporting goods (except fishing c tripment); business

and store machines; cameras, Ionics, flim, and projectors;

electric light bulln, and tubes; f-fres, shells, and rutridges; mechanical pencils, pens, and lighten; matches;

radio and television sets, phonographs, components, etc.;

refrigerators, freezers, air-conditioners, etc.; electric, gas,

and oil appliances.

17 Includes taxes on luggage, jewelry, fun, toilet

tions: repealed effective June 22, 1965 (Public Lav~PBr

,

'

Includes taxes on ticket broken' sales, on lescues of boxes

or seats, and an admissions sold by proprietors in excess of

established prices, m well ast general admissions tax. (ReP

aied effective noon, Dec. 31, 1965, Public Law 89-44.)

ci9 Transportation of persions; Rat~ 10 percent, repealed

effective Nov. 16, 1962, except an wr transportation which

was reduced to 5 percent.

1. Includes taxes on interest equalization; foreign insfuraince

policies paid by rettionse for liabilities beginning January

1966; adulterated butter and filled cheese (imported and

domestic), process or renovated butter and imported olec,

margarine; fircarmay transfer; and occupational taxes. Include' taxes on the following items which were repealed by

Public Law 89-44: Club dues and initiation fees; coin-op.

cratcd amusement devices; and bowling alleys, pool tables,

ciic. Alan includes taxes on coconut and other vegetable

oils processed (repealed effective Aug. 31, 1963) and transportation of property and oil by pipeline (repealed effective

Aug,~T,1958). I.

coration income tax rates: Effective Jan. 1, 1965,

first $25,000 of net income, normal tax of 22 percent; net

income in excess of $25,0DO, combined normal and sortcxx

~f 48 percent. Normal tax and surtax also apply to net

income derived by certain exempt carganizations from

unrelated as trade cor businests.

Rates of ttok aric as follows: Individual income

Effectiv Jan. 1, 1965, graduated rates from 14 percentI—on

itaxalih,imcome not over $500 to 70 percent on amounts of

taxable income ca,cr $100,1000. Old-age and disability ins.,

adruce taxes on self-emplayment taxable income, 6. 15 percent

far taxable year 1966 and 6.4 percent far taxable

year

1967

on income through $6,600.

,3 Rates of tax we as follows: Income tax withheld:

Effective May 1, 1966, graduated withholding, 14 percent

to 30 percent of wages in excess of excraptiorne (Public Law

89-368). From Mar. 4, 1964 to Apr. 30, 1966, 14 percent.

Old-age, survivors, and disability insurance taxes, and

hospital insurance taxes on salaries and wages: Employers'

and employees' tax each, 4.2 percent (3.85 percent far

old-age, survivors, and disability insurance plus 0.35 percent

for hospital (Medicare) insurance benctits). effective J ... 1

1966. For taxable year

1

967, a combined tax rate of 4.4

Kcrc!nt (3.9 percent for social security and 0.5 percent for

tropical insurance) applies. For both years the tax applies

to wages up to $6,600 paid by the employer and received by

the empl ce. Prior to Jan. 1, 1966. tax was 35,1, percent

each to czpl.ycrs and emplo -

24 Includes railroad cmplo~nicnt Compensation tax 8,1s

percent, Jan. 1, through Sept. 3U, 1965; 7!~ percent, Oct. I

through Dec. 31, 1965; 7.95 percent far calenclar ycu 1966

and 8.65 percent far calendar yew 1967. Tax applies to

croployen and employees, both imposed on tax,tIble portion

of wages.

25 Effective Oct. 31, 1966, includes (a) a tax on income of

each employee representative eq.'al to ~ccnte per man-hour

for which compensation Is paid to an; and (b) a tax

imposed on each employer equal t9 2 cents for each manhour for which compensation is paid to employees

26 Railroad employees representative tax, 16~~ percent,

Jan. I through Sept. 3G, 1965; 14~,4 percent, Oct. I through

Dec. 31, 1965; 15.9 percent far calendu year 1966; 17.3

percent for calendar year 1967, on taxable portion of wages

27 Collected by Customs beginning Oct. 1, 1961, at authorized by Put 275.62 of Title 26, Code of Federal Regulations.

23 Repealed, effective Jan. 1, 1966 (Public Law 89-44).

21 lassies and trarnefic. of stocks and bonds, repealed,

effective Jan. 1, 1966 (Public Law 89-44). Sales by directors for fiscal year 1996 includes tax on foreign insurance

l

licies (I cent cor 4 cents per $1 of premium) payable

y return on and after Jan. 1, 1966 (Public Law 89-44

and Treasury Decision 6868). Deeds of conveyance: $100

I a $500, 55 Cents; each additional $500 or fraction thereof. 55 cents.

30 Repealed, effective June 22, 1965 (Public Law 89-44).

31 Cutting oil, repealed Jim. 1, 1966 (Public Law 89-44).

3- Rate 10 percent through May 14, 1965; 7 pcrccnt from

May 15, 1965, through Dec. 31, 1965; 6 percent, Jan. 1,

1966, through Mar. 15, 1966 (Public Law 89-44). Under

the Tax Adjustment Act of 1966, rate restored to 7 percent

effective Mar. 16, 1966 (Public Law 89-368).

33 Automobile puts and acceanforics (except track puts),

repealed, effective Jan. 1, 1966 (Public Law 89-44).

34 Air conditioners, repealed, effective May 15, 1965.

Refrigerators and freezers, repealed, effective June 22, 1965

(Public Law 89-44).

33 Sales of light budbe for incorporation in arlicles upon

which the - manufacturer's tax was repealed, effectivi,

June 22, 1963 (c.g., refrigerators), we free of tasc on and

after such date. Tax on all other light bulbs and tubes,

repealed, effective Jan. 1, 1966 ( Public Law 89-44).

.. Repealed, effective nocon, Dec. 31, 1965 (Public Law

89-44).

37 General and toll telephone and teletypewriter service

reduced to 3 percent, effective Jan. 1, 1966. Private earnmunications service, telegraph service, and wim equipment

service led, ffT_J,-. .1, 1966 (Public Law

'T

general d

89-44): F telephone _-icc and for

teletypewriter exchange service, the rate of tax on amounts

paid on bills first rendered on or after Apr. 1, 1966, for

services rendered after Jan. 31, 1966, is increased from

3 to 10 percent of the amount paid (Public Law 89-368).

34 Repealed, effective July 1, 1965 (Public Law 89-44).

It 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

occupational taxes levied on manufacturers, dealers, and

practitioners. For classes and rates of occupational taxes.

ace, table 14.

40 Adulterated butter: 10 cents per pound. Process or

renovated butter: ~, cent per pound. Domestic filled

clicese: I cent per pound. Imported filled cheese: 8 cents

per pound. Imported adulterated butter and oleomargarine:

15 cents per pound. Occupational taxes art, levied on

manufacturers or dealers in these products and we included in the amounts shown.

41 Transfern, of machinegures, short-barreled firearms,

ailencere, etc., $200 each; certain gum with combination

shotgun and rifle barrels, and other special types of firearms,

55 cau,h. Occupational taxes arc levied on inanufacturcre,

importers, or dealers; in fimarms and are included in the

.encounte, shown.

42 Negativi, figures (excluding unapplied collections and

undistributed depositary receipts) atc. primaril) from

floor stock credits taken on certain taxes repealed by the

Excise Tax Reduction Act of 1965.

120

ANNUAL REPORT as STATISTICAL TABLES

Table 5-Internal revenue refunds including interest

[in thousands at dollars]

individual il smi 1 d

"I

In

Internal revenue nations. district,. .Play.;~a ~strip Was

lay

d

States'

an other aren Total Constriction let.

B

Gift .I

a

(States represented

by

single districts indicated in

meart.

parentheses; Wtaisf.r other States shown at bottom Es".d'.

of table)

p"pe

Y.,

ot,

(1) (2) (3) 5) (6) (7)

thateas soata, sathall I............... ------ a .30, as. 2, ass, 2. 1. sea. M sit. las 37.111 2, a - as, $I,

Adeath-Ansonti, Realm-------------_-

Albany (See (c) bale-; ---------

S12. 8 Us

1 08 M'n1 ' "7

s. 9,573 as.

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

Augusta ............. (Maine)................

1 3

36.379

3,808

3 516

75 036

31.787

i

1. fi~12

2

211 'so

12I

8

7 Boston--------- (M.-tairts)_ ---- 263,671

:

11 174 111 177 7 111 g41

s

1

3 67

ki

Brock

-~::_:: 2 ': ") 7 069

5,: 6 17 ..

I, 1

9 i

1

.

31

'

B Net

0

( b I

B Im 1

82 13.

1

171:

IN

5, G4 655 9 4: 761 .' ins ------------ ((Connecill 1-1"

H.rtf.rd--

ca

::::::

13,1113

143,29Z 7.601 364

12

311

IZ3.263

439 55

4,

1 3

1,7443

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

5

1

6 121 Marhattan ::::- (So. (c) below) ....

P :::::

t

411 11 1 111 711 1 1 7 114 11, 211 1,131 3 7

.

32,9 2; orlsmou

h~ ... ----- (MeHampshirs)..

----

P"'I'dol ...........

(Rhode island) ....

2~:8 4

4 1 413

2 :74,

1.1138

, 6 :2,5

37.334

6.7

854

80

42

1

14

5

37 ::

sind Ashanti. sta,ifian .... .............

__

Balt.mol------------ (Maryland and D.C.) -----

I, as~:.

st

255 528

1.. .2

18 850

1, ass , this,

216 932 5 a.496

4.709

798

11

9

as, III

if

..rk ------------- (New hnser).. ------ ph

I"

d ll

' 1

,

355,382

.

4 3 321

.

117 717

,

'

14

M J 1

11

13, 45:

11 37 l !a.- ...... ( :: ~:)) b:1aa): : :: :::

Pillsbargh

(S 13.111

208,893

0

4 :7 is

21.7D4

'll, :~21

178,991

D

:

4,060

.7 5

451

31

1

8:2,1

3 68. Richmond ----------- (Virginia).-----------_

Wilmingto- (Delaware)

175.268

23 712

20.952

2 646

147.503

19 62

3,098

8

545

1

,

NO'! -------- -------------

R ------

Atlanta

( r ,'

.

.34, ses,

153 897

.

as

. 1

7a1.11e

71

: "'

96

3, .

'

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

1 a 3 "

----

- a

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

Birmingham. (Ciablait )_... ------ _

,

103,788

12.239

11.006

133.716

89,375

4 244

2.963

378

198

13

1

3: 3 0

14 11" bdil,~ -------- (South 64

1

71

1

4

'

2 11

.1

41 .be

Green,

1 2:

3 371 s 74 1.5: 14 3 37 59

3

k 3,55: 4s.616 2,315 4Z,476 1,445 114 5g J.c 20i

.ntil

(F

N l

'

22.661 13,647 198.190 9.374 1.356

11 1 , ,

C as le------------ (Timunce...) ..........

h

vi 110.238 7, N9 97.297 2.573 412 5 37 :5 2

1

m

1.1 Rest----------

Ci i ti 1 , ",

96,4al 11245,819 ", 2641

1. 'U

?,a 1, 1111 nc nna -----

Cleveland ---- (I*, ~1) below) ---------

1 1. 69

311.13,

9.994

3 2

"

1

72.161

2 311

"

4.213

6.699

672

8

3 1

11

13

4.92;

(

Detroit. Michigan)--- .......

4,

1118.

: 5

47 05 373 :4 61 9.513 7 79

6 1

3 is

Indianapolis Indiana).---- ......... 215,177 7.987 193,124 5,276 430 41 8, 31! Lmda'il

I. (lealticly) ;~; :

~ -:: --::::

21

" I

3 711 84 233 2

"N 10 ? 9 !

(..'I 'Infl ).

Puk,esb q

M Id R.ashen .............................. _

IS

57 : 4

l..12.9n

:0

208.," 4 16 1. 51 558

an "1

1:

D

4' 1 1

5 30 1

403

20' ~

Aberdeen.. se M

11,lh Dakota) ----- 18,540 879 16

.

139 1: 48 3 20

,

( 2( Ch See (b) below)~ --------

D.M'wi~

487,203 117.734 336.492 16.195

3.

GG4 74 13,041

:::::::::

Fargo ------

12:731 Is .. 3,905

572

84 032

14:586

41: '897

2~

1270

I

7 332

GC Milwaukee ----- _---- (Wi=nsin)-. 7 1ill

I

11 172 1 41 1 03 901

3

463 43 3,001

Oman.........:-:::: ("e=1fa)__

2 : s

its

6 :

06

4~: 47

3:354 209

4

(M i , __ 23i St. Load

St. Pa.[. -.---------- (Minneamfa)___. ...

02.778

171.214

27.7fiZ

28.774

157.747

134,719

7.600

5.094

681

766

61

210

8,9ZE

d 1 651

Springlial ----------- (See (b) list..) --------- 103,862 4.833 93.685 3,473 371 4

,

1,491 astahwas, 61.1hain, ------------------------------

Al blif"Intle (N- ,ical,

.., as.

36 093

14, "1

1 297

..,41e

33 327 as as

1

86

. ::-:-. (M b. -----------

3.913 iss S.W

A

stim_ (S )

Ims) ..........

,

219.5G7

,

18,9 18

.

194,427 10,791

36

892

V)

45

46

4 495 C ----::: ----- f1l*md"t 1 2 71

5

Is

1 1 13 809

22

.

. 2

alles.

S. ) sit .7 0 :

741 18,837

136:

096 12.131 1,522 96

".

.an 110.............. (Colated.) ....

)------

96,467

41,811

7,770

2,633

83.631

42.467

41:548

335

246

74

'

2 269

N a. On. (L is ani ) ::::::: 1'

'

11 32

,

5 111 97.861 4.963

02

3

......

2 Oklahoma City.. (Oklahoma)-. ........... 3'0

90 73

:

12 338 7"37

1

' '

400 4 463

WiChIta._ ---------- (Kenna)............... 94:584

6.

452

6

73 47 4 : 109 225 a 304

av-sr. a .. ............ ---------- 1. .1

130,

-

L -at: " re, - 220

6

is, An,~Ihorage_ ........ (Alaska).. - _ -:::::::

0. --------------- (Idaho) ................

16,708

28.@84

75,

2.417

I,.

990

23,728 1.785075 S5 --------------

'

11218

21

-

173

93' 22121

444

1

13' 5 29 :::

H

an.,. 3

090 3.697 33 87 :507 59 2 152

Phoenix (,,a (Am n ......... 881.377 88,201 751,486 32 538 31653 136 5.364

... 68,996 3.110 62.607

2

:9 If

303

Portland ------------- (Oregor),_.::::::: ---

1111 .... ~ --------- (N.1ads) ---------------

89,585

32,449

1:,21 2

76

79,290

28,697

3.641

1,123

1

57

34

4

5

107

S 1, C 6 14

V' rV`c ~ - 47 3'

R 277 43.71

1 Dal

33 54 136

S F i ;::: :::: 475: 5%

' : 44f 4 4

0, 7~ 17:314 1,631 79

MatSeattle of hart.rassinewid ..............omwwn.__ (Washington - - 198.819

1-

41,494

61

"2

140.955

"1

5.361

3, us

233

.1.

36

.......

74f

Puerto

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

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

7,498

44,045

4

6.279

1 046

34,635

44 3

2.807

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

316

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

.... 10 is.swilia., .sda. d a-. FICA

I

. .IS . .......... .. ........ an

Is

Ituarins, of ~tahn._

Totals for States not shown have

Califo 1. 351 131 121 64' 60

1" '' 1

41

`2

'

2 4 3 113

1111mils-

~~1: .G, 22 : .

7

.:

43 f17

is

6

~

D

34

%

7

: Se I

14

(c) Now Y01, ...........

1 ...

21

' 7""'

2 3() 3 4 6

1

6

(d) Oliko_........ 503:7.0

: I.

33 443 46

ID

.91

as

3

1.

R

3 is 54

(a) P nnsylvania..-.,

_

sas

(1) T:

.__--------

55

39

463,012

320,523

12.260

22.9Z2

2

2

1,897

6.554

I Includes d1awbatk,

2 Figure, ha,e not been reduced to reflect relurbursem,nts from the Federal Old Age and Survivo. and Federal Disability Insurance Trust rumitansculnfing to $282,,156,250 In 1967 and S227,675,000 in 1966; tram thgeHighwey Trust Fund amounting to $211.507,037 in 1967 and $119,772,000 in 1966; and from the nompayment T.

Fund amo7u0nfirg to $5,971,809 in 1967 and $6.0(

0, 0 19

,. 1 66.

3 Net of 92, 3 updalwo,abl, checks deposited totaling $9,274.000. ,

Represent, credits allowable on income at return, or certain gasoline and lubriCatirg oil tax payments and for excess Social Security payments under the Federal

Insu-ce Contribution Act (FICA),

*Loss than $5DO.

-- 1~ - r7 ~ to

123.
ANNUAL REPORT ar STATISTICAL TABLES

Table 6-Number of returns filed, by internal revenue regions, distrids, States, and other area,

internal revenue regions

'

districts

'

State$,

and other areas

(States ,presented by I art, district, indicated in

paggnthe"s; totals for other States shown at bottom

of

I

let

otal

1)

Individual

income tax

2)

'or

income tax

3)

Partnership

4)

Declara.

tw Of

extimatild

all taxaand

the,

mc.an.

taxes

(5)

Employ.

ment taxes

6)

Estate

tax

7)

Gift

tax

8)

E.,i,I

taxes

9)

unit" inat... -.1 --------------------_- so st, III. as I. 111, 2. In. In 7. an, 1.1 . on,- I.

............................ 17. g.. a. .. na. .. 400, 07 131,002 1, 5. 3 - 1,111 211 1 S 11 2

A bary.... ........... (See (c) below) .........

1

1.

...... .. N' 912 NE

5 : 698

'

B,:79~ 1;3 27

725 1 39

Augusta. ............. (main.) --- Sal "

9 944

J10: 17 SO 3 .8 a2.85f .11,00 574 647 1: 954

Boston.. 8 ......... (M.-h.,

r.oktyP ............. (See (c) below)- ...

3,171: 134

3.693.213

2.231.152

2.538,955

60.382

7

13,610

3

' "

275:811 210 111 111411

7G4,716

1,631

1,211

00

4 311

36.1143

2 411

uffelo ... .......... (San (c) below). . 2.131 171 1.113 1

:

3 1 12

1

: 372 113.31 7 117 111 3, 0 11

3 :.34 g4 : 33a

on

'hngion-_ ........ (Vermort).. ...

Hartford. "'x` ---

2d~:,51

2' 224

16.:

152.818 `N2

1

3 738

28:927

2.038

12,946

4

17, 43

169,243

S8: 2,

331.296

2 .2

1, BID

I.

, fil!) 26:73.5I (S..(.) bal. 3:851:12. 2:077,90

1

44,341 33,8 18 4&2,321 1,056,469 4,553 9,215 41 181 PortsPrumth.. ....... 414,377 278,711 6,7452 65

.1 31 3 111

3

89 837 6: fiS,:::,:::::

Ir

OV

iden'a.. Rhod .......... ward-An-u. R"I...............................536,146

11, -1, an

359,104

I-, -'I. In

1

2

4D5

a14. 61114

2.737

115, 51111,

4

1:

1. 324

:

112 644

"' 1'1

480

1 `'

474

Jr. '"

6,978

Bethroore ............ (Maryland and D.C.). ---- 2.761.419 1,960.423 34 648 15,872 J71 101 5 3H:1Z1 :3 11 3.097 -'35.039 "'

Newark.......... --- (New I ...1

Phil

33: 1175 92 :114 111 1: 1, 157

718 772

11:

464

45 062

32,975

27 932

301, 1.3

324 202 796,381 741 942

4,101 74,

4

4:131 S JIS 41: 5 151

g

P

ff 321. 5. .

1 648.004 .

21,41.

,

24,124

1

79:167

.

414,908

,

1.911 2.108

7 9

34.864

Richmond 'giou.).....

(,l

2: '77 ,

to

:

505,942 24.361 13,430 131 111 411.131 1,06 1, 1. IS, 1.

wilmingto ( Delware). ! 293 1 172 111

71 l ' 2'

31: 398 95P

'

857 '78 2 275 th-st ft,gi......................13. ax.:

$Is

1 1 13 11

5

., : ..

I Pn

481 111

111 ~.

26 063

1111 :1 .

15 692

Us.-

IoG 591

3.-: 978

546 020

10.4

1 263

Is,asa 2 5

4'

:

122 731

" '

.... : - ::: : Atab

8

:4 7 2:

646

.

,

98

7

.944

,

15.394

.

17,807

,

70,169

,

359.291

,

824

1

523 19:%4

Columbia ----

M '1' C"0112~-----

1,145,875 765,899 13 411 11131 1 112 21f 411 812 973 18,461

Crearuls ( . ---- 1 h C..

. 1,30.1,7 1. ~- 24B

: 1

- 41

J 7

3 2'

1 :3ill

' '

57 : .7 1.5.o

jacksim (Florida) (NIglaxi, 2 1 11.221

-----

856,213

3 16, 855

~ '

46: 16

2

.031.637 9 .~38

''. '''

B: 761

2 1 4

41, 11(1

252 753

229, .49

79 217

4

121

4 113

781

5

921

18,101

46 13

N

01111-...........

1: 949,641 1 247,688 Ill. 67G 20 :3 5o

93: 80 :

4

442 64

1: 1

06

1

W3 24:

678

1 1,, pal11 (Sea

(a) "u" ----

2 111 114

I

1,115 11,

'

25.22, 14,932

rup.: '64 Shl2 1,141:8241* 4D7 1 12,117

' %

11.1al

1

1~, 1.

9 2

. ., : ~Smi

c (d) bel..~

: ISIS~ G92

3 2 13' 11 1 41 131 21 11 1 230,89D 596,719 3~ 52 3: 21 53: W adity

In,

4:53735 7n

2 I : 469

17.

3:07a

&28:450

48:.

32.9"

33

3 6: .7 .

19'629

295.&57

170,086

781.659

4

7 4 7

3 463

2: 7o

6 4:3" ,

06 4'1: 4"

Loutsvil .....

(Knithucky) ..........

Parkersburg .......... (Wen Virginia)_ ....

1,434,167

804.805

975,560

559,418

15.344

ID,077

7,222

7,762

88,341

38,64,41

3 13:6 7 6

171,895

1,212

558

1,43

631

11:~37

2B

ve saw" . ................................. It, *Is. 220 Is, IN, sea 210.272 1O.S11 1.2l.. 074 3, ahLe, her If. thas 22,153 2", 6"

AbF,d.P ............ (S a PIIt Da k

' 3'2 ' 1"

11 117

4 .. '

951

21

93

1

13 539

547 9 3

"

h

Ran 1

(1)

b

a)

4, ~4 : 7 .

1 617 143

2,

3

:

1 o4D 817 522

64: 146

17 237

4 1:154

22 593

34 :152

162 60

1411 3 o:68D 1 1:I33D 1.479

1 Ul

:

11 455

................. 7

Isg,................ (North Dakota)

. .

33 450

9

222,,

470

,

3,994

,

4,240

.

17

48 3 12 4''

,, 1, 2,6:~if35

M

waukee

.

:

8

33 2 17 1,570.148 1? 11 11 11

4

21: 3 3 454 : 2. 715 3 13'

'

a

..he.... . ....... 945,937 547,688

1 : 5

23

1:

963 63,997 190,022 1,567 :9St. 67 17: .

1

St

:4I 1:12

14

1122:71 1114 3124:77114 1

13

.111

6 683

111,828

9 395

526,426

1 61

2 2

D221

3

-

1

7D

41:17 3 11

1 . 1 S

pri,gillid.... ....... (See (b) beIow).. 1 111,70. 1.090,780 14.240

,

18,031

1 2

03: 79

346 :

4

111

2.

524

1

983

2

,:::::: 24,470

h I ~ -----------------------

Alb

' ' 1

tt~ :

117,1IT

4" ..

7"1"'.

3'1 "

111, ON

' "o

132,G74

4 ' 3

U4.023

26 428

2, 8",

IQI no8

57

9.

7s.

287

as

.

9

436

sIa.rin

uqir~ue7u.h..... _ :: -::. 8 56 Attar -(1) "hot.. " 3,05. :7.1 2, . 1! 393 31:2. S A :146,

1.5,554

,

7DO.83D

,

431

'

3

..

56 ,4

'16 Cheyenne...... ------ (Wychinfing)..... ...... 199,356 118,296 3.375 2,782 13 931 54,234

:

170 4JI 1:231

~S 11 be --- 21:4.3:,7, 11 111 1.117Iu:141

967

31:115 I,

ON

35,17D I

3.396

68:719

11 741

630,547

1 113

8ol

31

4J

v

Little ,,,an ...... 864.558 55 456

'

14

'

9,329 st 7:31, 2

21:379 556

i 21 M

(

He. Ode.

......he

Oklahoma P City........ (Oklahoma)

wic it ............... (Kirman) ...

111

14

..2l.:502 4'

993 :8o5

14:.341Hl

794

23:o89

16539 317

1

2:111 2

3. Ga13

11,3111 ~7

3.694

31 :4144

287 85

17D,113

799

382',

: 2

:5193

12

89

26: 327

2121:78,51

._ Ravel . .....................

Is'.9'.

112 312 In 154 al 1.3 1.211 Ithe J120 7a. 18,472 18,905 237.720

....... ' 1-

75:21o 1: 7

54

G~ 4:6

27

21:

4

11 2 '3

1

BOis,.. 3 11. 11 211 11 4 1IS 4 111 21,111 113.11o 32 391 92 : 1150

Helena ............... (Montana). ----- .............

=t) - - -

~q 7.5

364,D-267

2 : 5

2 44 81

'8 ..

5:

'86

' "1

,: ~

D6

3 3 18

11 225

23

'2:111 1

6 667 235

581

515.. 1

3

4:4"'

Los In ) b e low). . . 11

e

6.291.418 4.32S : 211~ 71: 739 7D:844 513,795 1,204,7"

If

"'

1.03' 1 5

7' K

Phr,en ::::::

-............ (Arizona)..

P.1turml ............. (Oregon).- ::::::: ...... I ~0'4'46: '506o 513:M154 653 14o:'3IA

7.612

14. 371 59.197 14 11

l6o.

2.4

11,314

1

,6114

u85

1 8

14

475

1

3: A

2

' 8 56

He idi

Safro. 1 ....... (News

I Lak, City ........ (Utah

2941 al 1:671

98

117:301 34~

769

4:5311 7 115

77

1:. a 1

96

14 : 1

.S151

n

7

41II:,l5,1 all

324

450

4SO

7 :6 8o

F, 12,147 is San ,nc (See a) below)... . 4,111,131 1 1 12 417 11 321 15,411 341,231 11 145 53

'2

5

42

1

71 4 1

1

Ile (

! ,h It

'" On - ----

7 4

I D3 24

1: 15P :. 2,: I3if 1 991 13S

511

:

134 11

1

:4 .2

1:

493

39: 7o,

,

oftiPu.1 now i

.,to R.P_ ...............

196 558

71 3

1

1.171

195

III

1

I'.

nx

N

1',

042

9 ''

2, 1

4

na

iff 21 722 he....................... 28i.285 23~

91o 2.384 .73 JI.639 9: 186 2 ool 33

2

660

(a) Catlin

,

flia ...........

Of 111-is.............

(0 New York--

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

Totais lot States nor shown above

ID,517, 548

6.148.429

5 447

96

......:2'

71

6: 252. 29

5. 528,7493

7:

160698

st

309,597

7: 1 t: 5112

3 848 2

4: 631

3 03: 141 ..

117 DII

79:196

N67.851..

66: 560

65 170

126: 266

5994,326 36,808 935

11

056

61~

9

16

863.030

450,

4

31

1,117 2117

4 2

354 503: 3"273

2 11: 303

156

9

111

2,:.3

'4':"' P 560

1 :331:37"7 T '

'

14

7: 1

1,

7

4,202

5: 1.1.1

3,282

I I Peaces 113,588 Forms 1040B, N B, N BA ~ PR, and V1 which are included ,P "All other individual and fiduciat y " returns i n the tab le on p. 16.

122

12:4

"

S

412

17,336

17: '231

7,35206

71:

49

25

151.443

2

10

: 171if

12

99,237

Table 7-4nternal revenue tax collected an I'verto Rican

manufactured products transported to the United States,

by objects of taxation

(in thousands of dollarcl

Objects at t..ti.n

51,700 59.803

41,311 '9t

63

1, 2

451

6, 2

348

1.3

145 R

..........

1966 1967

Total.... .. ~ ~ ---------------------------------

Distilled spirits --------------- ................

Distilled spirits, extificalm N -------------

Wine ....................................

Hear_----------_-------------

Clipin, Is, I:

Class A-- --------------------------------------

class B ............. ..................

Class C --------------

class D............ ........

Class E ............ ....... ......

Class F.. ------------------

Class G__

C

"I""-

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

Clgmftax, I.ri ..............

cigarettes, small ........... ----------

Manufactured tobacco (Chewing, smoking, and snuff). ---

41: IM17l

..........

C)

6,032

1,477 121

----------

'Less than M.

Note.-Amounts of internal revenue taxes collected on Puerto Rican tobacco and

(it. ll,,,r of.. mnTf,, n a I as) d th I

c,.'~hxx1'kx

spotimen.l.th, "Pited States,,or carcurned in thielish d

are overe Pto, t, ah,=ry 0 unit

Rico under the provisions of sm. 7652(aX3) and 5314(a)(4) a

ne

I Ravenue

Code of 1954. The gross amounts are included in ovemil collections results (tables

I through 4), bes,nning with 1955.

Table B.-Establithments, qualified to =in the.=c.

tion, distribution, storage, or use of and Ic

liquor,

Class at establishment

Distilluni air!

is plant'.'

Plants (net

number) ................ ............

Fadfltin

Production ....... ------------------

Worth ...ing ....

B.Iff~n. Dan. In land-::::::::: ,I

rg......................

Taxinall R bottling............ ---- :: :::

11 yan

Denaturedu'anldl tax~free ---------------------------------- Products (dealers, use", etc I;

Dealers __in.................. specially denatured at holanddrhrat~red

Users of specially

mch._---------_------------ --...........

eprocessors, rabottlers, etc., or sinmially denatured

alcohol articles .....................

sets of tax-free alcohol...............

B,en Wines: Breweries ------------------_-------- ......

Bonded wine cellars---------------------

Taxpeld wine bottling houses..

...........

Vinegarie Bevirs V.egaT factories using v.phri,mg proccess.....

dealers:

IW2001fters, . -------------------------------------

Whole. -1: d msr' inI ' Ibee

Retail dealers In liquors .......................

Retail dealers in bee- --------------------------

Other:

Manu acturats of nonthaverage Products (draws c I

Fruittvor concentrate plants-....._

....

Battle manufacturers ..........................

A, of June 30-

1966

347

168

281

57

1 S2

46

III

49

3,615

11:460 '28 1

79

42G

1,902

63:68

722

286

,

222

141,526

T41

III

1967

349

2165

8656

152

50

138

44

3,548

971

7,429 1

67

427

13

1

3: g25

281: '17141

.136,244

815

49

109

ANNUAL REPORT - STATISTICAL TABLES

Table 9.-Establishments qualified to engage in the produc. tion or exportation of tobacco products and cigarette

paper, and tube.

Clan at establishment

Manufacturers of tobacco products ........ _ ..... .....

Martulactu .... Of cigarette paper, ad tab ..............

Tobacco export war.h.P,n................. I ......

As of Jun. 30-

1966

3083

155

1967

282

3

170

Table 110-Permits relating to distilled spirits under chapter

51, Internal Revenue Code 1954

Sec.

511.71, R Sec. 5271, I.R. Coda

Code

Dealers

Use" atStatus Total

2 1;

iin

p,- 1 il

spirits

cla ,y

it..

So,.

plant, natured after., "'Ily do*

stored natured a I

alcohol rum

(1) (2) (3) (4) (5) 1 (6)

Bect July

6

n ti 1' 1 6

335

1 "

no ___ __ 211 49 3,589 26 7,460

ed . ! ::

591 16 2

310 1

2

62

Terminated, this[. .... 696 374 4 293

RI,.k.d........

......

....... I ........ ....

othemise ter.

Palmitin! ....... 696

1

374 4 293

In effect Jan. 3

1967---- ~ .. 0: ..... 11,230 2. 44 3, 525 23 7,429

Amended..... : ----- 618

- .

-----

2 12

-

394

123
ANNUAL REPORT as STATISTICAL TABLES

Table 111-Permain for operations relating to alcoholic beverages under the Federal Alcohol Acliminishation Act

Distilled spirits plants I Win. P,

Grand doers an Wine Importers WholeState, total Warehous. blenders bind- Is,.

Tout I Distillers ing and

bottling

Rectifi...

(2) (3) (4) (5) (6) (7) (8) (9)

n affect July 1. 1966 ------------- 13 105

"T 18? ...

113 356 47

1'902

ID 404 :

..ad

]:a

L141 1 13

1

4

-- L1

3 310 J: 082

Terminated, total......................

___ _

1,608 32 -15 15 12 27 5 257

-

1,287

0evoked__.... ................

themim terminated. .............

3

1 101

-----------

31

- -------

11

--

11

---------

11

~

__i 7

2 7 3

1,284

I n effect Juno IM7 ...............

30

J71 777M 155 41

'SS

10,11, ..

Amended..... ~ ................ ---- 234

10

'IS

.21

Excl permit, for C.curns manulacturinI banded ..,,on., since such establishments am not no ui ad to qualify as disulled spirits plants.

Colurn

n

(2) does nor represent the sum of (4), and (5) arms I

permit may over more the.

Table 112-Permits relating to tobacco under chapter 52, Table 113-1-abef activity under Federal Alcohol Ad.

Internal Revenue Code, 1954 ministration Act

.

I

Manufaaar- Bonn

Total

ars

of toxacce werhosare

status products Prorldt-

(3)

n effect July 1, 1966. ............... 113 308

...

~

nued_ ..........................

6

33 ~16

terminated, total ................... so 59 21

R...Rod ....................... ............

Otherwise terminated SO ....... * S- ---- -----

In effect June 30, 1967 411

1~

1

~

2U

Amended ..........................

92

56 36

Type of label

Grand total ..............

Distilled spirits, total_ .........

...........

Wines, total. .... __ ---------

Domestic ------------------

Imported.... ...... .......

Mail be,...gas, total ...........

Domestic..,....

Imported

Total

56,385

1 9

. 6

1,533

33,173

10,693

22,480

2,563

1, Rips

975

Applications acted upon

124

Urfificatt, !..ad

Approvals

54,535

'050

1,400 '65'

31,951

9,914

22,037

1111p_ lin

847

142

142

705

705

2.534

1,690 8

54

Dis-

.ppmare

1,003

457

314

133

517

7

443

29

2tT

ANNUAL REPORT as STATISTICAL TABLES

Table 114-Number of occupational tax,= issued, covering fiscal year 1967, or portion thereof, by clan of tax and by

revenue regions, districts, and States

Distilled spints

Total Rectifi.. Retail dealers M.nuintum" .1 oninternal revenue regions, districts and States

0

h

fumber

pccu'a' Man..

beverage products

t'oral tax factul.

-

W""

Medi.

(States teprosented,by -gle th, isdistricts indicated a, in pa.f

zentheses; total, or of er S ates shown bottom o

stamps

-ed

era of

still

Less

than

11.1.

proof

.1.

dealers,

"""

A

an.1

Spirits,

No,

en ed.

Nor

exceed.

or.

than

ble) $5 ~ 2OX 9.4- $255 deal.,,

farj e 25 5

", "

50

p

gallons

or

more.

'Sa

~

sa-IS I , , got$1DOon

$11

0

$220

(1) (2) (3) (4) (5) (8) (9) (10) (11)

...oh.AU,:tw shastas total_...... ................... "I, an =4 so 89 2~ .6 M,"I gas 1,127 41 TO TV

mtl,R"Jm.-. ............. 157 us a6 a 1. Ila 45,111 27 a . 13 1. in

Albany -----_-------- --- (So. (1) be 12,997

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

12

25 ----

A -- (M I..) -------- -------

a

Me

Bo""t soon

"s"c"s'",

4,611

N '0'

2

.

I

1

13~

7 31e

... ---- ----

1 i 5

::::

7

2

41

Brooklm_

-

')

--- ( S (

34:I 11 ...... . 2 1 1.

:5~'

7

_.

8 flat....... ~ le -- - I N

()

below)--------- 25,056 9 2g 9,122 ........ i 2 2 1.

-------

----

y.rront)

HadPd ------------- .... (Connecticut).

_

Burl NOD

2 111

__ .

: ----- : - 1 3

1

37 5, 518265 .... I

...

I

~R

Manhattan-.. ............. (See (c) below).......

P t th R hi

33.053

3 3

1 1 IS 7.16 3 1

3' smou . 'nus r sand) a)

------

o`videmce.,:::::::::::::: Mw

Pro

Rhode 1

, 33

3,875

..... _

...

1

.......

1

20

7913

1. 2- ------ I

3

W-Atrantil lqaxkw,,~ ........... ----------

' ' .

in 1 7 10 132

1,Ifi l.1.,.ry'%hd d

'

k

i ...........

l hi S b

21',:52.

642

.....

9

1 5

5

1

I1'

1':7 1 7711

'

11

-

------ _

----- .

2

......

........ IR

ph

ade p a...-...-------- ( ee (a) e ow).. ...._

P,tt,bur,h- -- ---- ( I,, ( l) Is ---------

n.825

17,881

__ D

... .......

7

5 11.233

72

3

3 ----- -

1

--------

53

im :: ::::: ~: ( , Nrjn, R

,,,h.nnd

mington ------ -------- (Delaware)....::::::::: 1

1:8143 1

14

_ ......1

181

22

J

845

::::::::

10

4

.....

. ..... '

........

" "*

2 M 1,11,

. ii i ii

-- "!ua

11: 066 :::::::: 1 37 1,554 4 ........ 1

------ Ahlo ).............. 10

Columbia---------- ------ South MCarolina)

8.021

10,696

...

--- -:: . ......:: 14' 1,80'4 ------i. ........ ......

5

3

Gremnsboro_ North I ssipm CarR1I;ina) :::::: 13. -------- -------- -------- 56 15Z ........ 7 ........ ... 6

Jackson ..... :: ::::: :

m,il a--

I

M

I

ssi

a)_

Nashville" (To

On

resse

Jacksm

IF

in

~

.

2121:g127'

2

......

------

....... 1

1341

31

4,IM

61(1 3 ..... . 1

9

11

Caorstral Ross.

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

2. 12 21

'

ex

".

"a

. In

Cincinnati (Sam (d) below).

-----

16,639 14 ......

.

(Sao (d) 1 106 4 775 3 ........ 2 3 22

C ev.11nd 1*1**

........... (Michigan)

.. 213':0loll3 4

4

1

3

1

3

13865 1~635

14

..

....... 7 1

2

1

11

21

India Lmiiss'la... naplfil JfnAi'a.1..,) ...............

,) ' ..... -----

18.006

8.967 3

1

6

2

14

1.

76

S:

1,95-

29

is ..... ::: ........

.

...... 5

Parkersburg. .............. (West vir g ,his ) ..... 7.929 1 1 ------ - 3 51 ---- - I ----- - ------ , I

hold,wast Aberdo;~-__.. As ----_---------------_----

- --- ----- '

3.14

7

------- -

a j

------

an

18

as'_

994

iji

........ na

-

j;

------

j

I

'a

C 11------ ......

or below

::: : ........

D i

31.140 2 3 142 14.572

1

42 S

11

5

es o ne

Fargo ---- 349

3 1:034 112 1 ...... 1, ....... 4

fil------ ------ (Wisconsin)-------------

Ons no...... Nebraska).............

'

26.

G.233 354

........

...

I _.....

......

85

32

13,194

9

z

53

256

------

1 H

SL Lo I, ( Miscouri I ..............

"

19.433 52 2:00 1 957 2 52 13 1 31

S

t 1

P..I-::::: ............. (M mr-le) ........ --- 17.057 ...... . ........ 13 955 15 31 1 11

SpHngn d . .............. (So. (b) below)

~-xa,

asse Iass .......... ...........

a, "

10.096

a. .1 26

........

.

2

.....

69 17.4 887

am

2

1 U as

Albuqualo- ........._ (No. Mexico). ..........

Austin--

'

2.998

3 700

...... _

J.

I

..... ..

.....

........ '433 '

:17,1

2

Ni . ........ ...... 1,

Choy che::: :

1:7

32

......

- ------

703 ... . ...... . ...... . .......

(Ir (1) o.low) ... ...... 14,&60 i V '664 i(C '.d

D

1.

Little Rod, ................ (Ark9Rxn):::::::::::::

558

":149

........

......

........ ... 20 3,047

7 1.

.....64 157 ........ 6

......

.......

New Orleans ..----------- (Louisiana)-

' "

17,

1 ,

55 5,111 ..... 3

Oklahoma Ci (Oklahoma).

Wh,hHx.._"

-

(

Krmsas) ........

10 960

I 13

....

-------

20

1

920

1 221

........

-----

........

I

..E

.. ... 3

W - R am Iow

.............................. an:

son 7 12 25 "a

as : 1

ba

. a fur

Anchp.gil't------------

........

--------

......

13 677

113

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

flon.

,

4 1

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

H mil New .11)

Los Amle~" _ ----- (Sra ua1 1 .Imw)---------

:

49.387 I 3 7

28

232

1,176

'

2

46

I

Pro : : ( 'ic ..)b

Ports'n'd ..... ------- :::::::

- -

J: ...

969

~

:::::::-

...... .

------ : .

.

......

fir)

55

2 :8

1,20581

15 ......

1

..

Reno. ------- :::: :: : :: -------

so

2 A' "W

1.2 18

..

........

........

....

....

29 1.431

14.

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

d

.. : .. ........ .......

Sa~ Fr,nci. :

. ; 314~1W 6 1 17 111 1 1 311 11 1 1 41

Seattle_.. -------------- (Washington) ........ 16,725 .. ......

.1

--------

1 124 4 : 111 ....... . :::::::: I ....... .1 4

Totah for States not shown above

(a) California, 344 7 '4 4U 21 297 U. -----

" S

(b) pis 7 98

--- ::

::

Illin

~11 law 1mk__

41:236

11, 11

a

1

......

S

1

211

11

:

19 464

29. 113

44

27

~

1

5

10

I

6

11971

of ON.......

7

42: 59

2

2" '

1

1'

3 7

1

~

33

(a) P:nns'lvani'

(f) T

17~71 6

560

10

25

1

1

8

-

.

59

9:4.5

3,831

3

2

a

5

3

1 1

lit

14

125
I

ANNUAL REPORT 9 STATISTICAL TABLES

Table 14-Number of occupational tax stamps issued, covering fiscal year 1967, or portion thereof, by class of tax and by

internal revenue regions, districts, and States-Continued

Wines Beer

and States Internal revenue region& districts

Wayierale dealer, 1,11il dealer'

B"I"s

T,111,1

dealers . ,

I y 1 91, IN frills Indicated in

` ' ' ` ' 2 d b o s

Whoor

..

W,ncs

Wholes. c

500 daxf-~

Retail

do;lits,

dealers

a, in "o"

"

("" 11

'S ,

z,,nth ese,' tota1s7.,c the late thi own at bottom of table) wines

aed

d

Wines and

.

barrels

2 a 2

5255 ace ',

be.

....

$54 beer

$54

.1sit me

0'

I.i Par

month

(12)

(L')

(14) (15) (16) 1 (17) (13) (19) (20)

at'it" suatese, tests. - . . .........-..--------

106 477 .9 .0'..1 x77 6, V3 M, UQ sce s"'4

Hmeth Athenti. Regi - ----------- -------_------- .9 is 13 1, no

19 1

a.

% ":3 30"', s2

71

8

Albany..................... (Sea (c) below)---------

Au

Boston ""a M"! ' ----- ----

--------

-- ---- -

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

----

.

-----

5

47

23

2.

4D6

as

.... .....

Im

S:: g, , 1,* ~::::::::: 3 2 113 4

207.. '

.2'

5 625 -------

4

396

S .

C)

w

B (Ve t) l 25

.

929 .... 2

,

117

---

'C rmon -----------_- ---------- 4

ur ington ---- ----- .......

H tf d ( numertiCUL

---

- 14

..... .

1 41

o 157

ar or . ---- ------------ ... --------

Manhattan ... . . ..... (See to below

--- ..... j ------- 65 ........ .

92 SIM 43

. . .. eti

Portsmouth . . ------- ------ ("-I merso x)_-_ ----------

-------

------ - 21

1,

ad lal 1

Providence. -- ------ (Rho a and) ---------- ----------

-------

'D

34 mW_eadxmH.

Rev. M -------------- -----------------

: l d d D C )

7 37 1 3, M

502

31

a

"ra,

95

7.1 -

'"

..... se 1.s2

497 Had

tinno".. flary an an . .

Newark

New Jari-------

..........

----------

--------

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

'245

.

ii 55C

Ph"deI11 ... ... . .. ( S

a) bGI WI ... , , -

b6 av 990 ---------- 22 i!:, ( S::

Pltsbogh

_ _

be o* _ :: :::::

Vi inA 2

: : :::

33

F

2

i

3 298

82 7

5178 3.728 501 ---------- --------

_ ----------

Richmond........... ...... ( rg ~ ......

Wilmington....... ......... (Delaware) ---------_- ---------- 3

......... ,

------ ----- 8 13 J

-.-Realee, -----------------------

G 1

1"

13

47

12

10, 425

921 1

.76

60

'835

1 36

33

Ana

ots

.......... * .... ... ( .1! lat a) .......

Bjmnl1gh A x ree) ...... :::,:::

'

-- ---- i- ---------- -----

5 ........

- 69 Z,824 --------

- ------- - f th

Caliarobio __ Sou Carolina) ... ...... 34

2

1.533 ---- ---- 24

Onerad, to.. ...............

(North Carolina

o

3 32 2,11 1

'1

3 743 ---------- ---------

Jackson Mississippi).

( ------

6If

75 3:948 ---------- I

)a a

(He's.). ..... .......... F 5,706 3 107

8

4.059

3 918

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

V

N vjllr~ ....

ash ......... (Tennessee).

I

n

-V - _: -------------- 6H -6__

b

----------

as

10

------ 24--- -- -----

IN-35 2

--

4

735

"1

:

634

1 21

--------

12 I

C me nr i..

) C ... (S (d)b:j'.wy:__~::: .land ...5 5

-

18 4.085 13

5

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

Detroit.. .......... ........ (Michigan) 7

83

2 7 126 116 ---------

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

.

....... -

.

7 6 2:(NIO 34 233 115 2 294

056

-------- 21

2~

......

life

P k t (West Virg ... ... ....... .

I

..........

........

:m":-:::

2903

1 107

.

3,214 --------- ---------- it ers ater-----------------

Mld= Reexi" -------_-------------------- . 7 11 .1 a, '. n' "I

1

so 2,.Z

2; A Idato ... (Sao IN D kota)...

8

147

97

1,33

225

---

5~ : : : :: :::: :: : :

t) ........ 59 1

1

50 3,336 1

.

Nalbb

.

. . ..... ((W, Dakota) . .......... -------- - ---------- 17

nershn~- --------- 2 6 .......... Ii 23 311 4,045

70:

fg_k.) :::

O..h...................... 0 ..

2

........ -------- i- --------

4

- 2 86

'46

3 98053 1 1SI S ,,I . ..... ... (,MI,=6) ;:: _: : :: ::: ::

! P

2

2 A 182

.

6

,

635

11 2

'

(

au

n

S

.

u

(S , (b) be-) fe ld -------- 1 16 5 102 291 ---- ----- 37~

So ns e ................. o

Is I. R l- say 12 as 1,019 32,00 11 14 II ea -_------------------------

Affis urrique.. ............. (New Menlo).

------- -

......... .

I

394

....... .

12 19 ... . ......

2 io ,::::

All

A

..................... (See fly below ::::: 1 ID 4. 7 402

49

14,547

99 2;

Ch Merefing)_ ~ ........ -

-: -::: -: -: -:

so (f lbelaw) .. . . .

----------

.... I .....

-------- -

j

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

160

, 1 69

----------

3 3

~ . .. . .

De v.. .. .. --- ------- (Colors .) ---------

" - - -------- - ------- 3'

3 63 1: 268

a

.... . -

:

: mxax)---- : Litt lis R.k. . . ...... ( 1k,j 22 0

..........

45 1,463 ----------

2

4 , . ::::::: ( A.j'

.w On".

......... .......... 1 10

'

2I 114 3

5:11"67 Okbantams City.. ...... ..... (Okahmn .............

K

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

2 86 3,419

--------

Wi

chit.......... ...... ( enn ---------------

Re l

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

10 ?..is

.. '

15,90.

shot I a, om,

Awn (Alaska) ---------------- ---------- ---------- ---------- 16

62

9

I

1 532 Idaho).. ......... _-- --------

:_:' ::

-,

,

"0

2 --------

by

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

2 30

3

L 1

A

, - - -

o

IS 139 6,113S 7

Pror ngeles y

(A rural .

--------

i 64 1 411 iorit

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

Portland (Oregon)

.........

---------- 26 ...... ... 2,053

1 51 I 4

33 8 ---------_---

(Nevada) 13

36

99

151 S111 Ilk, S

`4

1 2 80

4

6 31:

"

71 San I

Seattle (Washinj 12

........ .

.

I~

1

481 5 311 1, 102 1 .................. -

,

a

(a) Celifireirda...........

(b) Illinois .............

(c) Now York.....

try Ohio.

_~Ia

:*::

(a)1 Pe roji;a _ ------

Texas --------------

I Includes 5 brewers of less than 500 barrels at 155.

126

ToIA13 for States not shown above

21 7413

15

921

2,804

116

6.11207'

5,4114

1'3

12a

249

309

289

654 1

1,61811

562

9,480

23,00516

'71

1,48,

17,716 3

919

'14

523

237

22

55

ANNUAL REPORT re STATISTICAL TABLES

Table 114-Number of occupational tax stamps issued, covering fiscal year 1967, or portion thereof, by class of tax and by internal revenue regions, districts, and States-Continued

Nimetu" Marihuana

Me

not,,,

..."s

Internal revenue regions, districts, and States

""ars,

Wh.l'-

In on.

MaeuImportant,

at.

Be." "c". based

Latin- to,. Carl. ducers Precti. Labora-

(State

represented Is4 al.9 x districts indicated I. u., an-

%

and

..

ct ) dealers, dealers, Honors, = fairies W 1.~. ,,, $3 and lio ers, heir .

theses; total, for r Sl s shown of bottom of table Pound,.

of opium

$12 $3

$1

$1

'to 5 2 4 mil ,

If;1

;I

31

etc., $24

(21) (22) (23) (24) (25) (26) 1 (28) (29) C30) (31)

unit W Istax-, 1-1 ----------_---------------- 117 11,71 54.1all M. 156 1,357 .30 4 4 2 so 21

.-h-At It[, Reel- .................. _ ..........

.

are M li a

900 6" 1

41b 7

.. Me

........ * ----------

(See, (c)) below)-..... ---

Augusta -- , ............. an- ----------------

1

---------- 4 5"24W

3:4

I. .15D

57

l I ...

_2 .

:: . . : ~ ..... ::. .......

Boston - --

T 1 1

: :: 1 27 1,117 11.211 11 11 ... 4 5

Brooklyn....... ( ..

1

22

2,376 15,131 132 14 ........ .

------ , Buffithe ----------- ------- (Sea c below).........

Burlington_ -------------- (V.mnort)_

2 14

2

1,178

1 ,

8,164

74

222

----- -

11

1

........

2

orectic ,,,:: ........ ....

Hart end- ...... (C.

f'

1 g 6,2

35 16 1 -------- - -- 2

Man h alta ------ Tbelow)--------- .......

Portsm uth (C""

I

61 253

1722 17,766

5

138 29

'

.

:i:::::

: :

: :::::

:::::::: 3

o ...... _:: C ------

Providence.: Rhmd ------ 1 7 2941 116 5 9 2S 2 : .......

..

........

........

........

.....

.....

Mid-Alibenti, Rasters, -------------- ----------- in

Bf :wthmore.. ar --------------- (Maryland N and D.C).:::: 2 21~ 1: 'I'I'l 13: '240 9 11 ...... . 3 ......

k ---------_------- ( 1*

Philadal ma (See (0) b

121 26

7

1,200

2 19

12.500

14 223

34

33

3923 ........ ----- -

lu -_--------- e

P Itff~b. rgh ....._ - .... below) ---------

(See N

1

313 , 7

1,311

,

e : : . 1 1 17 14 1

R (Virgin

I_

Wilmington------ --------- (Delaware) 3- '20

'33

114

S: 6

763

"

81 6

esethee,Vt Raii------ -........... : ----------- 125 7.6411 12, 6

Atlanta

---

---

----- -

2!1 1.211 1.993 1

'

(As . 2 ...... .

:: :: ....

Cc C "line)

... - -- ~'' lh

1

119 111 .8 1: 2 Q6

594

42

2 .

::: : : ~ .I

...

2 2

Jackson. ........ ... Mail

P, _:::::

----

-----

..........

8 118 1 185

- ------

Jac

Insinville -

Nashville

'_

Term's

"

-------- V

27

25

1,748

1,117

9.187

4.891

14

...... 23 7 ...... . ..... . .......

I start -------------- ----------- ........

H7

us

, ,

41.8= 130

ans . .. .

Cmcinra __ (See (d) below),.. 6

6

2 1: 1 93 6.317 21 9 ........ I ........ 6 ........

Cleveland ..... (,a, Id) bz~.,.w.)_:::::_::

Detroit - -

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

ClOchutian) 4a

SO31 1

:4"

2 233

41

1~:22 '

11

so

11 ::::1::: 1 -------- I

Indian,,;ol' ---- - -

--- (Indiana -------------

5 21 1,171 1 1 37 2 7 1 1 ........ ... - I -------

Louisville.. (hemlock

Parkersburg............... (West Veli ---- F 129

IH7

374

Ii: G5.

2,047

~

1

3

........

........

......

........

.ad... 24 IGS 8, " as, Last 1 1 47 ---- i . ......1 20

Aberdeen...............

Chleag ------------- ------ (Sao (b)

....... _

6

4

36

230

2,286

776

12.732

,

... ...

26

.....

Des main". -----_------ (I owa),

_ _'-

11 714 3.111 21 5 -------- -------- 3

Va;go...-. --- (North Dx~;i;j : ::

Rif wauke,__..*:::::::::::: (Wi=onsfl).------------ 4

2

17

20

1,125

735

6.475

......

i~

......

i, I

Omaha

------------------- (Nebraska) .... 1 10 505 2.353 5 4 1 2 1 16 1 St. Louis

-

9 27

1,252 7.DO3 44 12 ......

St. Paul Rhme ---------

S or f hrgfield~ (,,a (b) below) --------

-

1

3

24

18

96

6558

5,946

3,308

9

20

3

7

1

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

::::::::::::_

s.... _ ............: ........

1Reg1. 3

Alto er ue -------------- (New Mexiery.......... ... ""s as ~" "

CSee (f) below). .........

..........

..........

.1

23

1.~

1,647

I:129

IsZ4

'

1

1

.

4

(Wyoming).-------------

Dallas-------------------- (See

(1)

elow)----------

----------

1

3

23

123

1,505

45 1

7.147

...... .

R

...... .

i ........ ........ ........ ........ ........

Denver- ............... (Go

...

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

" ) -

: .......... 14 694 4,030 3 7 -------- ......

Little Rock --------------- ~Iak. n- j- ------------

fit. Orleans------------

( A '

----------

1

5

18

606

117D

2,184

4

S 17

Oki h..aCjty- (Okx r.a j.:: ------

Wilsite ------_------- (Kansas)...............

-------- -

1 '72 883 703

3 :5 53

3.155

9

3

2

linect.l. Reolve.- 10 us I".. 57'76s a? 76 ...... 5

ArFhma a ------

Boise.......... --- (Idaho)-----------------

..........

----------

........

2 241" 2"E192 ...... i ...

::::::::

...... .

........

........

........

........

Helena --_--------------- (thimen)a) -------------- ---------- 4 113 1 021 1 1

Honolulu ...... .......... (Ha.ai ...............

Los Angeles--------------- (See (a) below)- - _.. ---

..........

6

,

11

So

1.737

:

094

13 ID4

2

36 34 ........ ........ ........ .... 4

Phoenix.....

------------ (Arizona)-..............

Portland -------- ......... (Oregon)--. ............

..........

3

4

15

459

11,

, :,

25

3.131

3

1

3

1

........

--------

........

--------

........

--- ----

......

-- -

none ------------ ------ (No,, --- ~d a)

-----

5 14.

'~4 I .......

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

-

.......

:: -

(I Iah -

1111 Lake )- - -----

In

269 1.573 ....

-

3 --------

. S (

o

Francisco,

Sea (a) below)..

37

994

1 1' 1 " il

Snttll~ 1 8 .. ........

.................. (Washington) ... .......... : S: 4U

3 9

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

Totals for States not shown above

role

X*

7 4 73

1

40.730 52 52

' ,

rdy_

(b)

9

54

,

:94 16,040 46 19 :::::::: ::~ :::: :::

(c) New Yor ...........

(d) Olbba~ ..... ........

14

10

11'7 1

68

44 471

58

11

51 23 .....

5

12

........2

1 11 1 111 21 111 17 32

(f)

T ..a

.....

' :

152

15 :

387

a.

8

.......

127
I

I

I

I

ANNUAL REPORT as STATISTICAL TABLES

Table 14.-Number of occupational tax stamps issued, coveting fiscal year 1967, or portion thereof, by class of tax and by internal revenue regions, districts, and Shate-Continued

National Finumm, All

Arbil.

M f t

ColngTeP tented,

Internal revenue rations, districts, and States

anu ac urer, or

Importers

__ Pe.h.

Dealers

other

gaming

d,, ,

T, cefi

n * , ,,d l1, r

~Slxlris =,I ld Iresinliltart %rice Indilalext broker, than Dealers,

n I':s'

prer

but, . ,, i., 2g~

'an ; ,.. . , , '

P.

Class 3:

rxien. Class 5, $250 or, and filled

,

bottom of table)

Class

Ulail CI;Y52, $300 broken;, C ars 4 $10 device cheese

$200

(32) (33) (34) (35) (36) 1 (37) 1 (38)

1

(39)

United Staites, total .......... ------- ........... el 9 a I's is aa, its 37 5'st:

Nowth Athirst, Realm.,.. .......... .......... ---------

Z

13 6 2S4 .hy- ...................... (S. (c) blow).................. I I -----

--------

..... ...

~1' In,) - _--_-------

me ralb-it)

I -------- ------- -----

, S

---

~S.nr ~,) be ma)...............

.0.1._ Sin C) below)........ ------- -

I

------ 2

......

------ -------- j

Do

din n::: ......... remount)---- - ----------_-------- Cc H.rtf rd. tinecticut)-------- ..............---

........ .......... F -- ----- I

S

Manhattan... --- --------- .... So. P %balmy)............

t N h

1

------- 8 1 -------- - --------

or s ~R ; me P'P

hividtims :: :: ::: :::: : :::: Pride Island)'.) ------------------

I -------- -

8 :: 1 -

Aftax-Atieuml, 11a,lon_ -----------

_

............... . ..... --------- ---------- ----------2

'

--- 211

~

11ltmro!,__ ..... (NIglyland mt D.C.)................. I --- --------- 10 5 ':3 246 3 ,. (

Newark ................. -----

p hir_ ...... : ( be mv). ...................

Phllade~

3

I

--------

........

----------

..........

----------

..........

----------

3

46

27

----------

.........

I

I; u ah S.

Pittsb below) .................

I Richmond aldni.) ....................... I

Delaware)

------ 6 335 21 .......... - .....

Sawithaesk Resim. .................... _. ............... _----

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

ii

2

"M

..........

10

2;

Atlanta ------------------------ (Georgia)........................... ........ . ------ ---------- ---------- 2 310 ----- 21 (AIllamit) --------------

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

f 2E Carolina)---------- -- - -

Glrhrrltr.~j:................... (NVorth' Carofira).- .................

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

2 29 Jackson ................. I .... I (Mlicil"I

P

lack PI).... ........ . ........ . 945 ..........

Me, a ...ill---------_-------- (Florida)

mill- .................... (I irri .......

CwnxnI Real - ---------------------- ..........................

.

5

a

2,0329'

728

..........

381

Cincinnati. . ................ (See (it) below). .. .............. a

------ "

.

'

-6 ' Cliwllghml~ : .... . ... . . ..... .. .. ... (Sea auch~ ) hot-) ............ 2 2 .5D ---------- IV Detroit........................ (

in

r)---------- ........ 2 ... ---- ------- 3 5 12 1 at Incil... (Indiain).................... LouissID.. Kantucky)....- --- ........

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

I

3

........ .

923

2 1

----------

-------- -

551

Virginia) .............- '

........ . . 1,001

Midw 1 P27 , a

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

12 a 1.'" 2

Aberdeen---------------------- igo~il~

Ch

ri'low): ...

(Sow, V

::: ..... ........ ......... * ----------

6

----------

1

338

178

----- - ---

----------

1:

3! (l _

Fgo~ (North Dakota)..----------------- 2; Mi

Dinah.. V, as. N., na;lkia"))----------------------------

i F

St. Louis. ..................... (Missouri) ........................ r "V7

St.

PaU4 ----------------

S (Mimmsot.)................... ----

prirrifi.lil..................... (See (b) below)

-------- -------- ---------- 2

-

----------

----------

is

276

----------

1

23

42

All, ...... ............:..

Ausfin--- -------------------- (See (1) below)~.....................

........

........

..... -

........

----------

.......

.1

3

I

.......... 1, Ch.q.

M(W'e'mm& (1) 'firv;).----------- - -------- - -------- - -------- Denvai:::.. --------------_--- (Golorado)..... ----------------i

i

138 .......... 's Little Back --------------------- (Atkarras).... .......... ---- ::::: :::::::: ::: :: 706 3 117

New O,Wn .................... (Louisiana)... .......... ........... ........ ........ .......... .......... 4 2,298 _ ------- 233

Oklahoma City

k

lific - . ~O .......... ...... ..

lita... Karses)----_---------------------

........

--------

. -- ---

--------

----------

------

----------

----------

3

1

156

255

.... 117

17

.-- 61.1w, --------------------- ............. ------------------- I -------- ---------- 28 3 $11. x 2,979 Anchorage..................... (Alaska)............................

B ice ........................ (Id.m)_ .........................

........

........

........

........

..........

..........

........ .

..........

..........

..........

164

..........

----------

..........

131

3

Haleni .............. ......... Materia)_ .......................

Hopolulu... ------------------- Hawaii) ------- ----- __ -----------

. .

- :.

........

,

115 143 .... 41

1

Los Phoenix 11,111, (Stri is) below)-, - - -- ~ ------------ 5 20 :: -------- 63 3 La (A'ixims)...................

W-

.............. (Oregon)

Parti

2 6

----

----------

----- ....

151

832

----------

..........

26

12

Reno-- - ---------------- 2 .......... 1,698 ..... 1 43

S It Lake pity..---_----------- (We

an

--

Se Fixna.scas.................. S.

is -------- -------- ---------- ---------- I 13s .....

5 ~

7

-------- Seattle. .... .................. Mhingto).-................

3,731 ---------- 1

--

1.613

Totals for States not shown bP.

N0 C lif.'ria. ................................ Ifinnal .................................... Nm York...............

it)

Ohio

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

Pennsylvania --------------- - ....

Te ins ............................ :: ::: :~::

3

2

... .... .. .

----------

----------

i

3

----------

6

-.1 ---- ii40

202

~62

7

5

ANNUAL REPORT - STATISTICAL TABLES

Table 15.-Appellate division receipts and dispositions of protested income, estate, and gilt lox cosei not before the Tax Court (nondocketed cases)

A. Progress of work

Status

(1)

Ovaras"'.

numl

Number of

.,.a

Amount stated In revenue g.nt*s

(their ...it dollars)

P riding .1y 1___ ........................... ......... .......

R:coivedJ . ---------------------------- .... _ ::

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

By agreement.. .............

Unagreed ovarassessment and claim

By taxpayer dritsoll on statutory

net,, .....

By petition to in ...... ............. -------

a Tax Court-transferred to docketed status ---- _........ ...........

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

B. Results obtained in dispositions

Method

(1)

On

imunt

Z2 91

28: 2076

28,430

24.12

5gG1

989

2.734

22,693

Number of

.1.1

Deficiency

and

per.

fly

(2)

1 : 7": 467 0.1.

957,650

739,234

599

201:4385

2,257,811

(3)

":

8 2

is 627

45,036

Ei40

73

331

105,453

Appellate determination (thousand

doll..)

Disposed of, total ......

By agreement.. ............

....... U riagreed overassexament and rejection, . ----------------

By taxpayer

d

e

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

.1

-WI on statutory notice By Petition to the Tax Court-transternilDr docketed status.... ..............................

28,430

24,121

586

989

2,734

and""cie" mhnal~

(2)

451,749

239,704

204

15.675

196,166

(3)

58,757

57,963

80435

55

128

iL

129
ANNUAL REPORT * STATISTICAL TABLES

Table 16-Appellate Division receipt and disposition of income, extate; and gift tax cases petitioned to the Tax Court (docketed caseQ

A. Progress of work

Status

P nding July I--------------------

R=I.d, bital- ................. --------------------------------------------- ---

Petitions filed in tea rise thDistrict It dnrecm~s' !tatutury notion- ............ ................. --------_--------------_--

Apo. let. D x an , statutory he............ -------------------------------------------------

Disposed of, tot.l. ......................................................... ............. ---------

BY stipirsted agreement- --------------------------- I .............. - --------- -------------

C th

By dismissal

by the Tax Court or taxpayer Moan.... w ..................... --------- w .........

Tried before the la, ourt an I a merits................. ------------_--_ ----

Pending June 30----------------------------- W ...... W -------------------------------------- ----------

Derficituracy, 1. tax

and penalty

(2)

1,219. 9334

447, 94

258 I 981

89:014

402,269

334:6 '8 131311

9,179

1.265,059

0im-a-urt

(3)

2.803

-933

-850

-82

11131

848

19

264

740

Din ... nice from able 15, tir-f-ld to Jacketed status is c...ad by excluding district dirmetti statutory matices, considered by Appellate in 90~dlay status.

B. Results obtained in dispositions

Method

Disposed cf. total------------- .................... ---------------- ..................

BY stipulated agreement-. ------------------------------------------ _ -----------_-----------

By it1d;s; one~xsal by tTe Tax Court or taxpayer default................. ................. w ............

Trie corethe axCourtonthematits'---_......... W ......... ----------------------------------

Represents amounts petitioned.

Number of cases

(1)

10,024

6,488

3:13 , 5~

7I

7,220

6,124

297

799

9,292

Number of carm.

(1)

7,220

"297I"

799

Appellate detainfiration

(thm.surod d.Ii...

Deficiency in tax

and penalty

(2) (3)

7,491

overessarsament

150,793

8 009

S 605

59,179

Table 17.-Office of Chief Courosel-Processing of income, estate, and gift tax cases in the Tax Court

Status

Number of

ther.,

Amount in dispute (thu.saml dollars)

Tax

(2)

P,nling).Iy I or P I... ............ ------------- ...... -----------

amid

W

F

,cr

of ... ..........

0

Sam

f a.- ------------------------------------ -----

P

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

ending June 30 ..................... .................................

130

(1)

1 36

F, 2622

7,248

10,376

Deficiency

1,015,100

368,554

341.667

1,041,987

Penalty

(3)

108.452

24:3161

26

2S

106,286

7,208

19

264

Overpayment

(4)

52.983

11":73"33

49,645

ANNUAL REPORT e STATISTICAL TABLES

Table IS.-Office of Chief Counsel-Receipt and disposal of Tax Court cases in courts of appeals and in Supreme Court

locounsofillipleal, in Supmem, Co rt

Amount n dispute

O

Amount opgoved mount 1. dispute mount sagoved

Status Number

( mmurn dollars) thonsal

rd B

ars)

umber

thousand delta.) hougured allels)

of .'as of .,as

Deficiency Over. D.filla

"Y

- eficiency ver. eficiency a -

and payment and ayment .it ayment nd

p

m..t

penalty p ...Ity penalty enalty

(1) (2) (3) 4) 5) 6) 7) ) ) 0)

Pending July 3, total .... _ ----------- ------ - 459 38,152 29 --- ..... ......... 4 5 ........ ........ ........

Appealed by Commissioner-.-.

.......

A '13

5 ......... ....... 1 4 ........

A

a. ad b a's ----- -----

:::::

pp l d bY fi` lry

. 13. 0 ........ ...... 3 2 ......

.... ...

..........

.......

...

A ea e y o ..................... 3 869 4 ------ ----- .. ........ ........ ....... ........ .

Appealed, total_ ----_------------- ------- 249 8,896 5Z 2 8 ......... . ......

By Commissioniu------------------------- 33 1,352 1 ........ ..... 2 8 .... ..

ByBY tii.~Y'

hot

1

1

.13

1

9

13

,

T

. ..

....

Disposed of, total ----------------------------- 341 275 2,881 1 4 48 -- 6 ........

Favorable to Commissioner---------_-- 19G 8G5

"

3 1 0,893 1 o 6 ........ 6 ........

Falmrable In taxpayers-------- w ----- 39 3 544

24 3

...

- '

Marfi 4 5Z

Sedlefied,_:: : :~: ::: ::,

d--- 3

,:541

415

-----

1

9

1.309 ........

-

.........

. _

.......

Dismissed.

............. w ........ w ......

so

J.6lio ------

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

......

.......

Pending June 30. total-- ~ ------------------- 311 27 M 06 ---- ---- --- 1

5 ....... ....... --------

All:,I:d by --------

"'Y"i""........

V ,363 6 ..... 2 5 pp . d

by A Ou, Z

9

:

2

Appealed by War ......................... 31 '3: NO 91 RI S . . ------ ........ .....

Table 119-Office of Chief Counsel--Receipt and disposal

of suits filed lat taxpayers in Federal courts and actions

by the United tates For recovery of erroneous refunds.

status Total

1:1.,.n,,d

In hot. tube,. ("mr

and firearms

-

taxes) ~ rrome.

ous

refunds

Cou I of

District

Claim, coturt,

(1) (2) (3) 4)

Pending July 1:

--

Case .........uni

Amount in dispute

3.487 86 ,978 3

thousand dollars.. 405,716 208.614 94,485 ,617

Received during year:

Cases ------ ..... number.. 1,448 39 ,297 2

Amount in clWpalei

thousand dollars-- 140,513 2.519 7,913 1 Disposed of during year:

C se ------ ------- number.-

A.~..rt in dispute

,301 16 ,176 9

thousand dollars-- 111.079 61,627 9,331 21

Refunded during year:

Amount.. - -thousand dollar- 63,345 3 1 74 6,571 ......

Percent of an~

1

Pending June 30:

ount dispose o .. 57.03

5 4

.67 3.86 ---- wC a,.-

indikil~htii*

n.mb

thousand dollars ] 4~31', Mo34 off, fiD6' ,067 _9 .fi71.

' I Th. o

in

ch umber of lases disposed of does hot agree with the number of case,

no wh

i

decisions wide rendered by these courts during the rimr, due 'a

settleoi

ant by stou hor, annissals, and time required for rattle , iscomputahon

tax , etc. Inthe Court of Claims the number of decisions was 77, of which 32 were lot

the Government, 35 against th Governors

to

agins the Government. In the district court,

ot, aof I partly for and

64 cilions were tendered, p""'of

ch

2'9 wes In

. a nt, 121 adleir~1.1~ha Goveinmernicand 68

for and partly aga~rl~lf partly

Ill.*,Go r:.

of.

.

.~i bythe

'ou I

appeal, and

Supreme Court, see table 20.

Table 20-Office of Chief Cou rise [-Decisions of courts of

appeals and Supreme Court in civil tax cases

Furth, Afridoll

Court Total Coversmurrit

e

Goveir.

men

ainst the

overm.

mart

(1) (2) (3) 4)

Total.. ...... ........ 417 286 5 6

By.urtsof appeals, total...._ 413 283 4 6

Originally

""'

inTax Co.

District c.W~U::::::::: 19 9

1

33

97

By Supreme Court, total. . ...... I ..........

Original%triad irTax murt....---

"',

2 .......

District C ourt ofcourls.-:w C

hinn-------

2

-------- .

1

..........

V

.....

Table 21-001i"s of Chief Counsel-Receipt and disposal of

Collection, injunction, summons, and disclosure cases

Status

Pandin!dJuly I.. ........ w .......

Receive .. .............. ...

Disposed of.............. .......

Pending June 30.. ....................... ----

Number .1 cases

2

2,3115 '3'

1.656

Note.-Thss table im, it,, call, handled .1

national

are and regional level, which

under

consideration ~uor sat or ".

in suit in Fader., and State courts. It does

"i .....

....

"Wit, 11 llh,16~111-,:,n.d I insol

and debt., p-lifirris

('ahl:122). .

bi nol othe

...' h

10

in table 23.

131
ANNUAL REPORT as STATISTICAL TABLES

Table 22-Office of Chief Counsel-Receipt and disposal

of insolvency and debtor proceedings

Reergain- Banky

up"y "i"".

Total

alum

proceedffil- .Pamis

status ings m r' ' r~y

P

p o,,.d

lots iog, I

(1) (2) (3) 4)

P Point July I ............. 2.076

,

87

-

469

Received ..................

D,,p* iif

'

.47

9

3 1 2 6

.4

211

9

)ar~~ 741

Pending"

2: 42 9 1

262

I

.0

1

7

Proceedings instituted under the following sections a, chapters of the-Ranksspicy Ac :

Sao 7

isn'), Tganizatitins and ohs, X (corporate recirgamizir

I

(.raP 7 (Ian~rud Ine

indebtedness), X11 (real Proper

I;

Ill game. as

a unscou

ad

arra aemenall, and Xill I h(w,geedarSners' ! plans), which involvetaisclannsand other

diflifs' 1 Pit interests a I a Unite tater.

TOInligig Int, 'dat',P c=ld, P,1 and Federal or State receivership PreIrmin" . vir

Ive is, of he United Sales.

I a corporate dissolutions, insolvent bark,i. assignments

lar "s"din 11. s star a' at estates at decedents, whi h involve

Is, claims 11 the UK ad

S

Not-licluder case, handled at national and regional levels.

Table 23-OFFice of Chief Counsel-Receipt and disposal

of miscellaneous court cases, lien cases not in court,

nonscourt collection litigation cases, and appeal cases

Lien Noncourt

lammus uses collection PT, I

Status

orart

.,a, I

t in

court:

itigation

uses a

ses4

0 1 (2) (3) 4) 5)

-

Pending July

.

26 3 7

1 "

.., 1 1

.it ....

6

7' '

.

1 7 7 7 1

1

Disposed of ..........

Pending June 30..

5 6W

1,237

D

306

: 1

16

102

fill

63

1,9

s i f.Wdl= a, Imecluumsa. by martgatleas S or other secured v creditors, and

uzit,P to clins Off which the U red rate, .1 made s par Y.

r,.,,Ily application, I., discharge .1

3dPrimardilY, memarahndems on callection 'a- regional I. on a counsel

~st,i, eci is not stated to court inmeediniv or lien cases,

led,, in Fail I and State appellate courts relating to m'.I=t',:d

To

IT it I fact

debtor mcee it cases ings, an cases in court, and co nip, sumrrnm~ A A

NGe.-Includes cases handled at national and regional levels.

Table 24-Office of Chief Counsel--Caseload report

Activity

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

Administratio ........... -------

Alcohol and tobacco tax.........

National Office .............

Field .....................

Collection litigation -------_---

Nat anal Office .............

Fisto-------------_-------

ErhircinnaTt.... --------------

National Office -------------

Field- ~ -------------------

Inlefpratafive Division ---------

Refund Litigation Division

Tax Court -----------------

National Office ------------

Field-..... .............. :

Pending

July I

(1)

23,793

141

552

120

432

5,165

318

4,847

2,358

84

2,274

256

3,487

11,834

lf,161

Receipts

(2)

25.982

4.650

1,181

3,469

11.286

316

10,970

1.220

60

1,160

761

1,448

6.534

6,2213'

Di,w.lx

(3)

26.685

113

4.593

1,162

3,431

11,079

311

10,768

1,227

1.170

749

1,301

7,623

23,090

111

609

139

470

5.372

323

5,049

2,351

-

2.2h4

268

3,634

10,745

7

'31 1

5

Dij

268 311

PndPPj

June 3

(4)

I

flondockated cases not included.

ANNUAL REPORT as STATISTICAL TABLES

Table 25--Cibligations incurred by the Internal Revenue Service

[I n thousands a[ dollars]

,,""n,l

Total compensation

1

lpment ther

internal revenue offlice, district, or Teflon

I

ir

rid benefits

1

(1) (2) (3) 4) 5)

A. National Office and regional totals (including district directors' offices and service

center,)

Total Internal Revenue Service I ............... .................. ...... 667,080 89. D42 8,531 .645 52.862

N

a

timial Office -----------_-----

------

73 7

'

1 1

3'

13 , 0 12 11 1

N.rth-Ati,ntl,.

1 6:10

13

too: 07

5

0

830 3:

Mid-Atlantic ----------- '0'

So theast-------------------_--

651:614181 5,1:3131

22

7 02

2,354

4

460

641

3 11 2

Central-------------------------- .................... 74 19 171 71

~1 6

2:

l

Midwest

wwo'n ------------------------------- --- .......

62:7

Bit 3'193

5~

E:80 '0531

85

2:115 2

834

3

4D9

952

54

3 19'4

Regional counsel...., :::::::: ...... -------------------_-- 9,196 8,756

'0

.......... .

32D

RVional inspection- ...........

0 I t ti l O t

3 351 g V

ice a.1 n erna ona pera ions. ------------ ......

N

k.

Computer Cents----------

:

725

430

250

1

131 8

68

2

1, .11

IRS Data Center------_----------

:

7 126 S 700 8 5 283

6. Regional commissioners' offices (excluding district directors' offices and service

,enter,)

Nor"i-Allantic ............... ................................... 11,404 10.560

2 56

D4

Mid.Ale mi, ---------------------- ....................................

Southeast --------------------------- _..........................

0,594

1,047

.682

10,432

3 3

529

8

1

Central --------------------------------- ...... ...............

.

1

''

0,216 04 1 4

Midwest .... .................................................. ............. g J1q 159

1

2

southwest I 6 600

"

: 876 5 3

f

458 Western.9:

603 .7

35

72 1 35

C. Regional costs undistributed

North-Atlantic .................................................. 935 577 68 8 2

Mid-Atlitrilic ............................................ 909

51

3

Southeast. 3,111 3 '

Of

51 R ,179

Central ---

Midwest --------_---------------

918

17

0

7

56

3

374 8

1

41

Southwas ...---------------_----

Western ... .............................................................

2

1

6

99Z

45

47

5 al 3

37 211

8

52

0. District directions' offices and sairrice centers

11(irth-Atlantic:

Albany-

' '

3 31 DO 1 6

Augusta 1: 825

: 699

2

8

6

B ston-.. ----------------------

Brooklyn.-----------------------

440

i '5:

2

46

~1:17

581

3

156

0

'1

3

8 31

uffalo. . ~ .. .......................

Burlington ..........................

8.7110 9

07

,24

U

2

87

3'

48

4

6

ir 28

H ufford ~ -------------------------------- ...........................

6 4"

,

180

1

21 25

1

Man 9

Partshatts -----------------------------

outh.. ..................

m

.:284

319

1

,

L'2'09' 148

f6

2

7

Pro 50

den a.. --------------------- _.

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

li :

1

2 96 .09 0 0 o

Poeito Rico--------- _ .........

in If Tr

.....

N

ort

-A::,, I ini

0

45

7

5

a

..........

. 2.

nor. A

uS'

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

M

id-At

unt": 2 580 1.323 16 94

gain ..................... ......................

MOT ------- - ------ '0 Se4 0 ' '

0 2 1 I

Nmark

Philsofifiiii -- ------------------- ** -----------------------------------

I ------------- * ----------------

14:667

14.494

s 0 5

13.910

3 3

244

6

52

~'

3

288

Pittsburgh

- .. 51 1

2

Richmond---1 .............................. 1:2, 675 6 :208 31 0 '

0

7

Wilmirl r_-------------------------

Mid-Atlantic Service Center-------------

116

':

'81

13

2

121: 240' ' 91

S

34

1

136

3

6'2

Southeast

Attinta ---------- ........ 6 111 .840 19 2

Oir ingham ------------------- 1

:27

4

1

4

..

51

9

2

C.IP.b

Gm

2.862

6,70'

12 : 735

6 382

l

281

2

32

3

7

Jack as A ...... 2 111 :

4

'4 1

4

Ja,ksP 1

1

1: J75

ff,141 3 7 1 53 0

Nastiville_ .............................................................. 5,430

!''

GG

Southeast Service Center ---------------- .............................. 'I 4

Can

I

TV

12.301 I: 1 9 9 1 4 7 9

Cincinnati 7

' 3' '

17 1

C evehind ---- 2

2:

255

i

f: 6

54 .7

5

9

D in ran --------------------------------- 4,294 13,631 20 3

Indianapolis ----------------------- 3 1'

Louisville ------------------------- :::::: .......... -------------

Parkersburg ----------------------------------------------- ....

63

S':280

3,

069

,624

4 :

830..

0

5

137

25

32

14

4

13

78'

C Pj;aj Reg Jqrx 1TralnIng Center....................

:

2

M M

2

' ' C 7

C n e S ... at............................. , l ,154. 2 5 9

See footnotes at end at table.

132 133
I

I

ANNUAL REPORT as STATISTICAL TABLES

Table 25-0bligations incurred by the Interval Revenue Service-Continued

[in thousands of dollaul

I annual mfif affi.., district, ., 1,1w

~ Total

(1)

to Personnel

Pipinsirtion

and benefits

(2)

I

Travel

(3)

Equipment

(4)

I Other

(5)

0. District diractofs' offices and Service, center-Continued

Midwest:

Aberdeen ........................

...

469 1 14 1

94 7

Chicaj 20 201

4 830

19:

385

4 578

247

189

57

1

512

107 Ors .

........

F

1:

292

, 1

1 83 77 1 29 a go ------------- _ --------

Milwaukee -----------------------::::,:: ..................................

7. IMS

6:619 204 25

1

11 Ornall. ......................... _ 209

1

" 994

109

19 87

St Lo Is. .......................... : 634 :02

1

S 289 50 27'

t Paul, ......................

d eld .... ......

534

'5~410

6 169

5~038

179

198

19

32

'6

7

VidX ..... .... 142

Service Carl ................... -------------_--------- 11,591

10.440

37 355 759

Southwest:

A

"u

rout..........................

? .

2

A.,t n . .................... ...... S: a, 1:9" '2 !91 3? 77

, ,

1 204

942

313

71 4 33 Ch enne ........ __..........

D has 1010 1 9,419 3" N, 28 .--... .....................

D:nv,h_. ......... ......... ................... _ ..................... 4,172 3,943 12' 131 . .

Little Rock ........... .................... 2

"'2

2

"'

41 is 5

0"

an, 5:6 3

5:

324 154 22

3

183

209 . Ci,,.. .............

Okuld. 4

4: 32N

4.584

3 90

165

Withit, ......................... .............. __4 ......... 174 27 129

Southwest service Cam .................................................... ID,410

:

641 39 133 597

West... :

A holes ............ ............................................

,

969 946 65 4

1260 I__

8. .................

H 1

439

1:534

30

1:3921

74

so I

54 :I.n ................. ------- ...

" hel.1

1 212 1

44 9

ll

L

Afin~glas .............. I .........

03

24: 441 22:

878

657 99 si s

3'

Inn

Pho .......

P tl d

3:201

4

.. 2 945

3:814

1

146 27

1

33 or an ......................

R... :::::::: .. .. 2,235

1 9 , , 2

20 202 ............... ....... ........ .

Sa

ItLakis

IS

.............................. ........... '31

1

: 81 2 1

9 6C

San Fr= .......... 16 :599 15,394 438 87 680

Seasttl. ........................ 6,050 5.640 195

5

24 191 Wesu:m 52 S.9ional Trainfing Cimm,_ .................

13 2237 74

213

11 587 70 565 1,015 .

West . isvic. Intel ------_------- ------------- . ,

Includes $3.2 million financed from reimbursements.

Dan, hot Include $257.000 rental transfer to Ga...[ Sahvica, Ad.mistratiter.

Table 26-011sligations incurred by Internal Revenue Semice, by appropriation and activity

11 n thousands of dollars]

Total

P"" I .."T"i"

Other

A ro riation b activity pp p y

=d In nuffift

-

1966 1967 1966 1967 1966 1967

Total obligations-. ............... _ ............ ..................... 624,861 - 667,09D 548,925 589,042 76,035 78,038

Appropriated funds, total ----------------------------------------------- 621,40 663,953 586,365 75,403 77,488

Wed., and .P

Total_.. ........ _... -------------- .................... 17,490 18,817 14,878 16,012 2.612 2,805

Exac.ti . direction..................... 7.798' 9,465 6,452 6.992

20

1,346

1 266 1

47

1:332 Internal udit and security-. .....................

9,692 10,352 8,426 9.0 1

Revenue accounting and processing:

Total... ........................................... ................ 159.449 172.557 128,301 141,118 31,148 31,4

District manual operations ................

,4D.,,, a "111. ,

072

11:11 S2

544

4f:110 , 385 1127 71

162

11,058

19,687 Service center automated operations.

Slati.1.1 reporting ------------------------------------------------------ 4:515 5,317 4,099 5,123 415 694

-planc.:

Total ......... ............ ------------------------------- ......... 444,529 472,479 402,8116 429,235 41.643 43,244

Audi] of tax .turn. ........... .......................... 2 11

" 1

211 911 11 R21 1 2 7

' 41

311 i 48 1 ..

11 it - and u nff d,firelue"I return,

"' "

1 '

i

I

03: .6

'08:

342

:

91

1. , S

6: 7 4

1: I

68

f :

rfifajiun'..~~ r 597

o"

an,

I.-VIr.vd , ~=I.11 n*. ................... -

32 4" 33 2 3

28

'"

29

Alcohol 8 '17 VIE Ind 1.1-tax regulatory work. :::::: :: 3 1: 194 36: 21 29:29D 31:41 fi 194

44

G 172

1 13

R:,.,PSy.;cSn arinte, an .0misill

I h I

1 1

it

.......

.

h l l d t P 0 i es

2

93'2"3,d 2:337 to 01 '8':g'7 21

23,126

1 009

1.5

931

,04

'4

ec nica p anning, an Spec a ft 1 vorv c .. . .........

Legal ser,ices ................ ------------------------------------ :. .... 14:965 16.260 13,799

:

860

1

166 1:400

Reimbursements, total. ............. ................. 3,393 3.227 1 2,760 2.677 633

'

550

Note.-Amounts shown do not include appropriation transfer to GSA for rent of spece &mounting to $552,ODD in 1966; $257,000 in 1967.

134

ANNUAL REPORT as STATISTICAL TABLES

Table 27.-Ouantity and cost statistics for printing

1966 1967

Class .1 work Quantity (thousands)

Cost

Quantity (thousands)

(I Co t

hourand

-

-

s

(th.usest itIno. . I Package, dollars) Items or Package. dollars) ,at, at,

(1) (2) (3) (4) (5) (6)

Total. .

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

........ 11,100 ... =:L:L= -I I ..... II I I 21 111 Tax returns and instructions for major mailings to taxpayer, total-----------------

-

1,795

-

46D, 203 80,001

_

2,069

Packag 'I glo;nh 14401,,~nd inu,.",,fi*nS_,O p ....)

P

cii., in 10 had.

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

11 011 11d mu "Itions-32 p ...I

63,345

164 704

21 115

20 5&8

427

98

-

7 24

0: '

-

23 1

C: D a . ,,S tn 'o _ ..... "1 F.

040

S

and S, cf Package 3 (

, 0

IS;., 114 11I:d sm-4

d.2: 8 D F 104DES d i

t ; p '':'~

P"k" 4 (

,

: ' '

.

1 N

5

291

1

51

8

3

7 045

ot,

7,095

51,

, , , , an 382 ns ruct o no-40 p . ~ ,

P.skaj: 5 ( far. 1065, SchePula D, and instructions-16 pages) ..................

Packa 6 (F 111 1 d

34 177

5,100

3: 0

1,020

146

23

37:906 3

5, 5

1

3,446

1,070

186

23 1 c"

F

ge 1040~ lt rllal~l;'),~, 146.1~ Ind inalruclum-24 pages)..

.... Package 7 (F

, PS

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

- ' .

8""7200

1,370

19,360

44

125

3 49 0

3: 80

1 697

Employment 9 490 22. tax packag - ub. 393 (Forms 7018 4411ii, W-2: W4 ind Pub. 213-28 paties)_ .... _

------------------- a P ------- :~ ........ ...................

-

67, 411 151

'

'

'

68 250

-i" ..

4 55D 182

Other tax returns, instructions, Public-use forms Ind parrip

h

let

Administration forms anit Pamphlet,

1, 3

11: 1" ------ ..... 112323 1, 31 711 11,171

field printing .......................... ........ ...... ----- ...........

~

33 IS

128,850 ....

....

.~ 5

2,

I

"

L

5

45 '

8 74: 2~5

' ' " '''

E 3,066 6

"I' tax Stamps ----------------------------- ------- .................... 2. 936 2,Z 6 7 1 67 980

I Iischided In thi: : I MUDD fit; the G

2 1included in thi 11.2 il~ ""

DODO to imirallIdlIbuldWithlicildirti; Program.

opes use in major mailings to taxpayers, This Item not previously Part of printing statistics.

135
I

I

Index

A

Acts:

Excise Tax Reduction Act-1965, 13

Federal Alcohol Administration, 40

Federal Tort Claims, 43

Firearms, 37

Foreign Investors Tax Act-1966, 7,

44,51

Freedom of Information, 5

Military Personnel and Civilian

Employcc~, Claim, Act, 43

National Firearms, 37

Revenuc,57

Social Security Amendments, 45

State Firearms Control Assistance

Act-1967,45

Tax Adjustment Act-1966, 14

Administrative budget receipts, 13

ADP system, design, 5 5

Advisory group, 74

Alcohol and tobacco tax:

Advertising, 39

Chemical analysis and research, 37,

41

Council of Europe meetings, 50

Court decisions, 98, 103

Enforcement activity, 36

Establishments:

Inspection of, 40

Qualified, 40,123

Industry eirculans, 9, 96

Label activity, 39, 128

Laboratory training, international,

50

Operation dry-up, 36

Prosecution, 36

Publications, 86-88

Regulations, 89

Seizures and arrests, 36

Supervision on-premises, 40

Statistics on, 12, 36, 110, 116, 117,

119,123,124

Announcements, 95

Appeal,:

Appellate division, 26

Chart on, 28

Processing of, 26-28

Statistics on, 27, 28, 129, 139

Appendix, 86

Assessments, additional (See Taxes)

Assistance:

Foreign tax, 49

Legislative, 44

Overseas, 49

Taxpayers, 5, 50

Audit exempt organizations, 25

Automated Federal Tax System, chart,

18,19

Automatic data processing, 17

A

u

dit selections, 21

Direct filing legislation, 20

Identification of taxpayers, 20, 52

Information documents, 21

Master files completed, 17

Mathematical verification, 20

Redeployment, 21

Underpaid liabilities, 21

B

Budget, administrative receipts, 63

Bulletin, Internal Rcvcnuc, 8

Business Master File, 17

C

Car- programs, 64, 65

Centiphone service, 7

Chart:

Automated Federal Tax System, 18,

19

Organization, 76

Chief Counsel, Office of:

Analys

'

is of cases flowing through, 35

Cases involving criminal prosecu-'

tio., 33

Disposal of cases by, 43, 130-132

Civil litigation, 42

Claims (See specific item)

Collection litigation legal services, 43

Collections:

Alcohol taxes, 12, 110, 116, 117, 119,

123, 124

Corporation income taxes, 12, 109,

116,117,119

Disability and old-age insurance, 12,

109,116,117

Employment taxes, 12,

1

09

, 1

17, 118

Estate and gift taxes, 12, ll0, 117,

119

Excise taxes, 12, 110, 117, 119

Individual income taxes, 12, 109,

117, 119

Old-age and disability insurance, 12,

109, 117

Other, 12, 115, 118, 119

Railroad retirement, 12, 109, 117

Stamp taxes, 112

Statisticson, 12, 109, 116, 117

Tobacco taxes, 12, 112, 117, 119

Unemployment insurance, 12, 109,

117

Withholding taxes, 12, 109, 117

Com Mc q

icare, 13

m sioner:

Contest of suits, 97

Commissioners of Internal Revenue, 83

Compctent authority activity, 52

Compromise, offers in, 31

Confe nce:

Procedures, 26

Tax administration, 49

Cooperation, Federal-tax, 35

Conventions, tax (See tax conventions)

Coordination and cooperation with

bureaus and agencies, 74

Corporation income taxes:

Additional assewments, 34

Claims for refunds, 26

Collections, 12, 109, 116, 117, 119

Refunds, 15, 121

Returns:

Examined, 23

Filed, 16, 122

Statistics on, 12, 15, 16, 26, 34, 109,

116,117,119

Court (s) :

Circuit courts of appeals, 101

Of Claims, 43, 100

Supreme, of the United States, 97

The Tax, of the United States, 43

U.S. District, 43

Criminal prosecution:

Analysis of cases, 33

Cases, disposal of, 33, 98, 102

- Results of, 33

Supreme Court decision in, 98

Current research program, 54

D

Delinquent accounts:

Disposals, 31

Statistics on, 31,34

Delinquent returns and delinquency

investigations, 9

Additional tax from, 34

Analysis of, 28

Statistics on, 34

Determination lett rs:

tmployee benefit plans, 10

Exempt organizations, 10

Pension trust plans, 10

Self-employed persons benefit plans,

10

Statistics on, 10

Disability insurance taxes:

Collections, 12, 109' 116, 117

Refunds, 15

Disciplinary actions, 74

Dividends and interest, 2 1 Documents, 21, 88

E

Employment benefit plans, determination letters on, 10

Employment taxes:

Additional assessments resulting

from examinations, 24

137
I

ii

i

I

ANNUAL REPORT is INDEX

Employment taxes-Con.

Clreims forrefunds, 26, 121

Collections, 12, 109, 117, 119

Refunds of, 12, 121

Returns:

Examined, 24

Filed, 16, 122

Enforcement activities:

Additional tax from, 34

Alcohol and tobacco tax enforcement, 36

Appeal,, 26

Claim, disallowed, 26

Delinquent accounts, 29

Delinquent returns, 29

Examination program, 23

Firearms program, 37

Mathematical verification, 22

Offers in compromise, 31

Tax fraud investigations, 32

Estate tax:

Additional assessments, 34

Claims for refunds, 26

Collections, 12, 110, 117, 119

Refunds of, 15, 121

Returns;

Examined, 23

Filed, 16, 122

Estimated tax, declarations of:

Corporation, 16

Individual, 16

Examination, additional assessments

from, 34

Examination program:

Claims for refund, 26

Classification and selection of

returns, 23

Overassessments of tax, 24

Returns examined, number of, 23

Tax recommended, additionaJ, 24

Excise taxAdditional assessments, 34

Collections, 12, 110, 117, 119

Refunds of, 15, 121

Returns filed, 16, 122

Exempt organizations:

Determination letters on, 10

Master File, 25, 70

F

Facilities management:

Communications program, 69

Furniture and equipment, 69

Moving expenses, 72

Printing, statistics on, 135

Records and paperwork, 70

Safety mission, 70

Space, 69

Statistics en, 69

Telecommunications, 69 Travel costs, 69

Federal firearms regulations, 115

Federal-State cooperation, 35

File:

Business Master File, 17

Exempt Master File, 25

Individual Master File, 17 National Identity File, 34

138

Federal tax deposit system, 63

Financial management, 70

Firearms program, 37

Fiscal management:

Cost of operations, 71

Reimbursable services, 133, 134

Statistics on, 133, 134

Foreign tax assistance program, 49

Foreign tax officials, assistance to, 49

Forms:

Cost of printing, 135

Eliminated:

754, 88

755, 88

2948, 88

New:

W-2 (Optional), 88

W-4 Schedule A, 88

1040Q, 88

1040-ES (010), 88

4277, 88

Forms and forms letters, 7

Tax return program, 7

Fraud investigations, tax, 32

G

Gasoline taxes:

Collections, 113, 116, 118

Refunds, 15

Gift taxes:

Additional assessments, 34

Claims for refunds, 26

Collections, 12, 110, 116, 117

Refunds of, 15, 121

Returns filed, 16, 122

H

Honor, Deputy Commissioner, 69

House rulings, 45

I

Identity File, National, 34

Incentive awards program, 62

Income tax(es):

Additional, from enforcement, 34

All returns, 12, 109, 116, 117, 119

Corporation, 12, 109, 116, 117, 119

Individual, 12, 109, 117, 119

Processing of protested cases, 26

Indictments, 33

Individual income taxes:

Additional assessments, 34

Appellate Division, processing of, 26

Claims for refunds, 26

Collections, 12, 109, 117, 119

Mathematical verification of, 22, M

Refunds of, 15, 121

Returns:

Classification and examination of,

23

Filed, 16

Processed in service centers, 17

Individual Master File, 17

Information documents, 21

Informing and misting taxpayers, 3

Input methods, low-cost, 55

Inspection activities:

Internal audit, 72

Internal security, 72

Investigations, 72

Statistics on, 74

Intelligence Division:

Statistics on, 32

Tax fraud investigations, 32

Inter-Arnerican Center of Tax Administrators, 47

International tax training, 49

Interest allowed on refunds, 15

International opcmtiom:

Activities of, 47

Foreign posts of, 50

Withheld taxes, 51

Inmtigations:

Delinquency, 29

Disciplinary actions, 74

Personnel, 74

Prosecutions recommended, 32

Statistics on, 29, 32, 74

Tax fraud, 32

Wagering and coin~perated garning

devices, 32

i

joint Committee on Internal Revenue

Taxation, 28

joint integrity program, 72

L

Laboratories:

Training, international, 50

Testing, 37

Legal activities, 42

Legislative activities, 42

Legislation:

Pending, 45

Public Law., 44

Litigation, appeals and civil, results of,

43

Long-range planning (See Planning.

Prograrning-Budgethig System)

M

Magnetic tape, 63

Management activities, 62

Map of Internal Rcv~nue regions and

districts, 77 .

Mathematical verification:

Additional tax from, 34

Statistics on, 22

Model,, tax, 59

N

National Computer Center, 63

National Identity File, 34

0

Obligations incurred, Internal Revenue

Service, 71, 133, 134

Occupational taxes:

Collections, I 11

Number of stamps issued by class of

tax, 125

Returns filed, 16

Offers in compromise, 31

Officers, principal, Internal Revenue

Service, 79

Old-age insurance taxes:

Collections, 12, 117, 119

Refunds of, 15

Operation Dry-Up, 36

Optical scanning, 55

Organization-principal officers, 79

Organizational planning, 54

Organized crime drive, 33

Other collections, 12, 115, 118, 119

Overassessments, 24

Over=essments reported to joint

Committee, 28

P

Pension trust plans, 10

Personnel:

Equal employment program, 67

Handicapped, use of, 67

Investigations, 74

Manpower utilization, 66, 67

Opportunity programs, 65, 66. 67

Recruitment, 64, 65

Staffing and redeployment, 66

Statistics on, 65

Piggy-back mailing label, 63

Planning-Prograrning-Budgeting System, 59

Planning activities, 54

President's Commission on Employment

of Physically Handicapped, 4

Principal officers of Internal Revenue

Service, 79

Programs:

Career, 64

Equal employment opportunity, 67

Foreign tax assistance, 49

Identify U.S. taxpayers, 52

Incentive awards, 62

joint integrity, 73

Legislative advisory, 44

Nondiscrimination, 67

Redeployment, 21

Reduction, cost, 62

Research, 54

Tax return forms, 7

Taxpayer assistance, 5

Taxpayer compliance measurement,

60

Taxpayer publications, 86

Teaching taxes, 8

Wage and information document

rnatching, 21, 63

Protested cases, statistics on, 26-28

Public information program:

Films

'

radio, and television, 5

News rel-es, 5

Other, 3, 15

Publications, taxpayer:

A Guide to Laws, 87

Alcohol and Tobacco, Summary

Statistics, 86

Answers to Questions Most Frequently Asked by U.S. Taxpayers

Abroad, 50

Crime Prevention and You, 87

Cumulative List of Organizations, 87

Distribution and Use of Denatured

Alcohol and Rum, 87

Dual-Status Tax Years of Alien Taxpayers, 87

Employer and Employee Tips, 8

Farmer's Tax Guide, 86

Federal Income Tax Information

for Service Personnel, 8

Free taxpayer information documcnts, 88

Looseleaf Regulations System, 87

Liquor Laws and Regulations for Retail Dealers, 86

Machine Guns and Certain Other

Firearms, 87

Methods of Analysis for Alkaloids,

Opiates, Marihuana Barbitur

and Miscellaneous I~rug,, 87 ate

Miscellaneous publications and

documents, 88

Tax Guide for Peace Corps Trainees,

Volunteers, and Former Volunteens, 8

Tax Guide for Small Business, 87

Teaching Taxes, 8, 86

Tobacco Tax Guide, 87

Visiting Teacher, Instructions forInternational Teacher Development

Program Grantees, 8

Your Federal Income Tax, 86

Puerto Rico, 123

R

Railroad retirement taxes:

Collections, 12, 109, 117

Refunds of, 15

Returns filed, 16

Reading rooms, public, 78

Receipt and processing of returns,

11-16

Receipt. (See Collections)

Recruitment, 65, 66

Redeployment, 21

Refunds:

Claims for, 26

Duplicate, 21

Excessive prepayments, 15

Statistics on, 15, 26

Regulations:

Alcohol and tobacco taxes, 89

Employment, 89

Excise tax, 89

Hearings on, 45

ANNUAL REPORT * INDEX

Regulations-Con.

Income tax, 89

New, 88

Temporary, 89

Releases, News and Technical, 5, 97

Requests:

Technical advice, 9

Revenue rulings, analysis of, 9

Research program, 54

Resources utilization, 71

Returns filed;

Classification and selection of, 23

Direct filing, 20

Examination of, 23

Increase in, 16

Number examined, 23

Processed in service centers, 20

Projections, 57

Statistics on, 16, 122

Verification, 22

Revenue rulings and procedures:

Analysis of, 9

Published, 9, 89

S

Self-employed persons benefit plans,

determination letters on, 10

Seminar, Inter-American, 47

Service centers, 20, 63

Service to taxpayers, 3-10

Space, 4, 69

Statnp taxes, statistics of, 11 2, 125

Statistical reporting, 57

Statistics, highlights, I

Statistics of income releases, 57, 104

Supervision of the alcohol and tobacco

mdustries, 39

Supreme Court decisions:

Civil Cases, 97

Criminal cases, 98

Other court actions, 98-103

Systems development, 55

T

Tax'conventions, 49

Tax Court, The (See also Appeals)

,i Disposals of cases, 35, 131

Tax laws, evaluated, 44

Tax models, 59

Tax (es)

Additional:

From delinquent returns secured,

34

From enforcement, 34

From examination, 34

From mathematical verification,

34

From National Identity File, 34

Alcohol, 12, 110, 116, 117, 119, 123,

124

Corporation income, 12, 109, 116,

117, 119

139
ANNUAL REPORT - INDEX

Tax(es)-Con.

Disability insurance, 12, 109, 116,

117

Employment, 12, 109, 117, 119

Estate, 12, 110, 117, 119

Excise, 12, 110, 117, 119

Gasoline and motor fuels, 113, 116,

118

Gift, 12, 110, 117, 119

Individual income, 12, 109. 117, 119

Old-age insurance, 12, 117, 119

Other, 12, 115, 110, 119

Railroad retirement, 12, 109, 117

Stamp, 112, 125

Tobacco, 12, 112, 117, 119

Unemployment, 12, 109, 117

Withholding, 12, 109, 117

Medicare, 13

Taitpayer assistance program, 5

Centiphone service, 7

Taxpayer- compliance neasm-ement

program, 60

Tasrpayer publications (See Publications)

Tax -Ii.g,:

Request for, 9

Statistics on, 9

Teaching taxes prograrn, 8

Technical information releases, 97

To acco, tax(cs)

Arrests, 36

Collections, 12, 112, 117, 119

Refunds of, 15

Results of criminal action, 37

Returns filed, 16

Seizures, 36

Statistics on, 12, 15, Ili, 36, 37, 112,

117, 119

Toi-t CW.s, 43

Training:

Ferrig., 49

International, alcohol and tobacco

tax laboratory, 50

Ta,tpaycr assistance, 3

Technical, 68

Treasury Decisions, 8849

Trust fund transfers, statistics on,

14

U

Unemployment insurance taites:

Collections, 12, 109, 117

Refunds of, 12

Returns filed, 16, 122

V

Verification, mathematical, results Of, 22, 34

W

Wagering tasc cases, results of criminal

action, 33

Wines, taxes collected, 111, 116, 117

Withholding taxes, by employer, 12,

109, 116, 117, 119

Workflow in the Service and Courts, 34

I

140

u~G0MK?fTM"NGOFFJM:l967 c-276-51PS