New-York tribune., 1871-05-30
THE CENTRAL RAILROAD TAX.

THE CENTRAL RAILROAD TAX.
THE ASSESSMENT AFFIRMED BY THE COMMITS
sIONER OF INTERNAL REVENUE.
WASHINGTON, May 29-The following decision
is announced this afternoon by the Commissioner OF In
ternal Reyenue: -
INTERNAL REVENUE DEPARTMESr,
WASHINGTON, May 90, 1871. }
JoUS NJ BAILEY esq.,. collector Of Internal Rerenue,
Fourteenth District, Nep- York.
sIR: The following decision is announced as to the
validity Of the Internal Revenue tax assessed against
the New-YoTk Central Railroad Company on certain
amounts Of money represented by certain interest Gi
On the leth day of December 1863 the New YORK Cen,
tral Railroad Company by it's duly authorized Board oi
Company has hitherto expended Of ts earnings or he
purpose s oG9S,9g @ oS p e e a view to the increase Of rsc
moneys equal TO 80 cent Of the capital stock o the Oo
ras The several stockholders Company entitled
rTe eTierf me- ~ fnirIe % NJ raaIiod; now Therefore
az St % b i1ed to lie Si5cshoders seersu declaring such
stcckhoer entitled to 80 per cent Of the saOun, Of the
c S4sea.s % issued undcl this resolution the option Of the
COMPANY out & Of it m 55S 'I sah S he Sa p oa s % Of o @
stock Of the Company and that such certificates may be- the option
Company be authorized increase its capital stock to an amount
soed That such delivered to the stockholders Of the
Company the Union Iiaa So@pspy % IN ae me- @ ~ & G fy
in these resolutions shall be indorsed The stock certificates
Under the authority conferred by these resolutions Ger
tain certificates were issued IN the usual prescribed
forms In Nav 1869 the Legislature OF the state Of New
York egalized the issuing OF these cercates ana a
tbOzed their conversion into stock OF the Company Dut
no such conversion has ever been made. Inc capltaI
stool Of the Company time these resolutions
adopted was and for so cent OF the same
being s2O36OOO interest certificates in the form above
on the sd Of March 1870 Assessor Of the Fourteenth
made an assessment against this railroad Company,
founded the interest eerthc3tes rms was an ssess
Sll5l 500. He added as penalty for failing 10 uahe
return under section 122, $1,000 The entire assessment
Z 1 rD IL
ment that is now under consideration. DID the law
aqFserT Tbee was "a an error in assessing the penalty of
That not assessable penalty bnt one iat car De
recovered by some appropriate snt OF pI0ceedss IN
question is the tax OF sl,oOO Was II III accord
The anfbory for this tax is found section Of the
act Of June So 1864 amended July 49, 1906 That sec
SIC in Isd be frTer enacted any railroad canal
PIKE canal CATION kwater COMPANY indebted for money
Tor Which bonds other evidences o. ndehei have eeee in
10 be paid coupons REPRESENTING Tie interest OF any sleh
i stofhode including uonreden whether citizens aliens,
P par o. s & % e6ny carried to the account Of any fad Of used for
construction shall be subject to snl pay tax OF per eenu oD tht
wherever shall payable and whatsoever party or person
Aliens and d c6psne. are hereby authorized sud withhold
from aymer on seq1n Of 9'eres, OF coupons iI9 M lI one % m @
dvi5end and by !5e President conf
haI discharge company that amount Of the dividend inter
coupons on The bonds or edenee, o. nolen 50 hea W any
person party whatever except where SAD companies may nave con
ced oihase and list or return aI De made and rendered 10
la a a. osr ss sverv 1 months; and d list or rcirrn
ba contain true Of there
ha be annexed declaration Of he President Of
the company under oath affirmation form and manner may be
prescribed y Commissioner Of Internal Revenue that the
contains snd faithful account o>a tax AND for any default
making rendering such list or rttu WIN me declaration sne1e OF
Of payment the Aforesaid the making such de-
deui in making or rendering the payment
the aI OF tay part Thereof as Aforesaid ine G h .et & %
IN other 0 neglect . refusal
on examining the assessment to see it Is in accord,
anee with this law, il il pertinent TO inquire what
basis these interest certificates issued and whether
that basis subject not 10 the tax OF per cenn
under requirements OF section 22 above quoted To
answer this inquiry find that the Board OF Directors
of the NewYOrk Central Railroad Company, on the 10th
day of December 1865 stated in the following resolution,
IN clear and precise terms what these interest cercates
ras This Company expended Of earnings the
puose Of constructing and eqgPng its Tosd and N the OF
eq amount 90 cent Of the capital stock Of the Com
Sas The shareholders Of the COMPANY entitled to
evidence Of expenditures and Reimbursement Of the at some
Iesolped That certificate signed by the President sni Treasurer Of
this Company be issued the stockholders seyera declaring that sa
stockholders entitled to 30 per cent OF the amount OF the capital
These interest certificates therefore, represent the
moneys and earnings OF the New York Central Railroad
been expended by the Company but acknowledgment
earnings had ever been declared until tins
1865, which was adopted.
appears also, that 50 per cent of the capital stock of
this Company, amounting TO S2303G,OOO moneys which
the earnings OF the road, had been expended.
There no doubt that amount Of money had been IN the
would liable the tax under section l22 above quo
ted Further the tax should have been upon these
ings from time TO time as they accrued. They have,
however, been expended and they represented
by these interest certificates.
Do the facts Of the expenditure of this amount OF
S23O3C and The issue these interest certificates
represent it, relieve the NewYOrk Central Railroad Com
pany from the obligation TO pay the tax this amount
which is claimed under section l22 These moneys hay
ing been IN the possession OF the Company
mgs, created an obligation TO pay the tax them,
which, under the requirements of the second clause OF
that section required satisfactory account to be
Assessor
Obligation could be cancelled. No such account
rendered and 10 IT, therefore, declared that the oblga-
ton the NeWNJrk Central Railroad Company to pay
the tax the original carvings OF s23O3G 900, and
represented by these interest certificates not impaired
bv their issue j. OF fun force the present time
You will accordingly inform the President OF the New
York Central Railroad Company that this decision has
been made and proceed TO collect the tax Of
81 l5l sOO which properly assessed Very respect
fully, a TLhAsoNION' NOHIiiSsIoHcI'
The decision OF Commissioner Pleasonton to-day, in
the New-York Central Railroad scrip dividend case,
caused considerable surprise here the long delay and
other circumstances had led many 10 suppose that the
decision, when made would be adverse To the Govern
ment Gen PeasOntOn does not expect that the Com
pany will begin Judicial proceedings TO avoid payment
but 10 prevent this bc has eliminated from the question
an side issues One Of the most important Of the quos
tOns yet 10 De settled will De the claim Of the Govern
for interest on the tax FROM bo time 1t was duo