The Wheeling daily register. [volume] (Wheeling, W. Va.) 1864-1878, 1870-05-06
THE SAVINGS BANKS.
Their Liability TO Tax on Their Tn
distributed Surplus Profifs-Deci-
sion of Acting Commissioners
Douglass.
OFFICE OF INTERNAL REVENUE,
WASHINGTON. Anril Is, 1870.

SIR:--l ours OF the l-th instant,
relative 10 liability Of the savings banks
and savings institutions in your district
to tax on their undistributed surplus
profits, is received | reply that all
savings banks and savings institutions
which fall within the proviso OF section
( 10. act June 80, 1864, as amended
that's, have no capital stock and do no
other business than receive deposits, to
be loaned or invested for the soul bene-
fit of the depositors, without profit or
compensation to the bank or institution
are exempt from liability to dividend
tax provided in section 100 (See the
ruling expressed on page 60, volume =,
Internal Rermue Record You will
Please conform your official action TO its
provisions in determining the liability
of any savings bank Of the description
above given which may he found with
in yonr district. All savings banks
other than those above described are
subject to tax the same a. an ordinary
bank, both under the provisions OF sec
tons 10 and 100.
Whether or not savings bank which
has no capital stock does business solely
as described in the prOviso to section
10. and, further, whether its accumu-
lations of surplus are to be eventually
distributed To the depositOrs alone, are
questions which, from the nature Of the
case, the assessor must often determine
upon his own judgment and RESPONSE
hilitv.
You ask in your letter if all invest
mentS in United States securities are
deductible from the taxable deposits Of
500 and upward in the name of any
one person. or only such as are made
from such taxable deposits, stating that
the practice has been to deduct the
amount invested in United States secur-
lite, from such taxable deposits without
reference to the character OF the deposits
from which these investments are made.
! have carefully considered thi> quc~.
ton, now presented to my attention for
the first time. and am Of the opinion
that this alleged practice on the part OF
the savings banks i'll your district is
correct and in accordance with law
The proviso 10 section llU cXrInptS
from tax Of one twenty fourth 81 one
PEE cent, first, all deposits Of 5000 or
less III the name OF any one person or
dcpositor, and. second, all deposits
which are invested in securities of the
United States. Suppose savings
bank has, for instance, 100000 in de-
posts of the character above described
which we will call low deposits; $500
900 in deposits Of more than $500 in the
name of any one person, which we will
designate. as high deposits; and $780,
600 of deposits invested in United
States securities. 1t has then 100000
in deposits, 100000 Of which
i. invested as above. What
shall he the exemption to
the banks, 100000, 100000, or some
sum between the amountsY In my
opinion, 5000, 900 should be held exempt
and the bank required to pay tax on
$lOO,U0O. 1t il believed that fair con-
struction and the evident intention Of
the provso TO section 10 warrants this
conclusion. Any other decision than
the above would, it seems TO me, be i'm
practicable even if the proviso seemed
to warrant it; for hank would most
likely claim, and with entire honesty
it is presumed, that it was impossible to
say whether its investments in United
States securities represented high or
low deposits, all deposits received by
an institution Of this character being
merged. a. is understood, in one COM
mon fund.
But even if it were practicable to dis
tinguish between deposits, so as to de-
terminc what portion OF an investment
represents high and what low deposits,
it is evidently the intention Of the pro-
viso that two amounts shall be exempt
from tax under section 10, when the
provident savings banks come to est
mate their liabilities to tax on de-
posits-hrst, the amount Of deposits
and second, on amount equal to the de-
posts of the bank which are invested
bv it in United States securities. As
was stated in the first part of this let
ter. the question whether a bank falls
within the decision expressed on page
GO. volume ), of the Record is one upon
which the assessor should exercise
careful judgment, and report the facts
to the office, in any case wherein he
feels q doubt in his own mind.
Very respectfully,
j. W. DOUGLASS.
Acting Commissioner.
PIERRE c. VAN WICK, Esq, Assessor
Fourth District, New York City.