The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1871-04-28
LIABILITY OF BUILDING ASSOCIATIONS TO GER
TAlNTAX

81
TAIN TAX
The Commissioner OF Internal Revenue
has written the following letter to Super
visor PreShrey. of Virginia. concerning the
liability of building associations to special
tax A. banking Institutions:
Sir,-This Office is in receipt of a letter
! addressed TO Assessor h. FL. Smith, under
date OF 18Th instant, by Mr.. John &. Bos-
| sioux, president of the Mutual Building
! Fund and Dollar Savings Bank. enclosed
! in your letter of the 18th instant to this Of
| ice ] quote the following from his letter:
cur institution was organized in May,
| 1867, with IN authorized capital Of $500 200,
and 4 paid-up capital to this time Of &c.,
ono. = We have the buiidi g fund,
the savings fund, and. rs far az necessary,
! the banking deposit and discount which fol-
| low al savings institutions, In the work.
lng of The institution about two-thirdS oil
! oar capital is absorbed in the building fund,
and the whole OF said capital may at any
| time be 50 absorbed, us all stockholders
have the privilege nt borrowing ut any OF
the monthly sales the whole OF their
stock should we have the money.
The residue of the capital is used in the
general business OF the savings fund, We
have never paid the Department any other
| tax than the dividend tax, and generally in
| paving this tax We have made the inquiry
| il there was any further tax TO pay, and we
! have ALWAYS received an answer in the neg
aliyc. prr>uming the Assistant Assessor
10 hr possessed of the necessary inlorma-
! ton, We never made further inquiry. We
nuSt respectfully submit that we have al
way been ready 10 pay any demands that
wee made upon us: That we never refused
or intended To refuse that we never neg
lectrd or intended TO neglect or evaded III
any manner amy tax whatever.
You are instructed in this case that this
| institution is, and has been since it was or
| guniZrd, liable to return each month 50
much OF lis capital IL las been used or en-
| ploycd in the business Of banking. This is
| Understood TO be about onc-thlrd of its
entire capital. Being created with Il cap
| ital stock, it cannot, OF course, claim the
exemption accorded to provident savings
| banks in the proviSo to section no. but is
| liable to tax upon lis average monthly de-
posts under The body Of the section, and is
| Understood To have been So liable from the
first 1t is also liable To special tax, rs pro-
yidrd in paragraph J, section 10.
TIa material tacts III the case should he
given to the United states District Atlor-
ncy for the same reason rs that stated in the
letter to you respecting the Richmond
Banking and Insurance Company The
Office does not, however, feel disposed to
determine upon the question of liability OF
this institution to general penalties without
further evidence rs TO the INTENT You will
| please cal,se such evidence to be procured
and forwarded to this Office.
Very respectfully, -
| A. PLEASoNTON, COm'r."
4 BETTER STATEMENT OF THE BANK CASES
Commissioner plcasanton writes TO su.
|
of the Union Bank at Richmond to tax on
capital and deposits, and to general and
apecific penalties for failure to render the
proper returns, the bank claiming exemp-
! ton from deposits for the reason that While
nominally bank it is in origin and design
q savings institution, and has not engaged
in banking business within the meaning OF
the law: that it pays interest on its dep0s.
| its, unlike ordinary banks, and that It's de:
posts being made i'll the First National
| Bank, which pays Il tax thereon, they VIII
he twice taxed il this taS is required Of IT,
Il is further stated that this hilia was char.
tered by the General Assembly OF Virginia,
| in March, 1866, ut which time the diStinc-
lion made in the act OF Congress between
savings banks with capital stock and those
without had not been brought to the atten-
ton OF the business men OF the State, ana
that it was done to encourage deposltors OF
small sums.
In view Of these statements, the Com
missioner inStructs the supervisor that the
bank is liable to render returns OF both It's
capital and deposits, separate returns OF
each being required, and unless it waves
its right Of limitation us to capital ana re-
turns for the entire period of liability,
which is understood to be from 1866, i
penalty OF nifty cents should be added TO
the tax assessed Oil capital, and the facts
should be reported to the proper United
States attorney. With regard to the returns
OF deposits, in view of the statement made,
the officer is of the opinion that no general
penalties need be assessed additional to the
tax found to be due, under the limitation
of fifteen months. The reasons presented
why the deposits should not be taxed do
not furnish any ground in law for relieving
them from tax yet. if found to be assigned
in good faith, should have due weight III
determining liability to penalties. -
The question has also been presented in
relation to the liability of the Richmond
Banking and Insurance Company to tax on
Capital, deposits, and to special tax, the
assessment Of one-tWenty-fourth of zone per
cent. of the capital and the deposits of the
company having been objected to, and the
question Of liability having been submitted,
as well as the question Of assessment OF o
special tax In May, 1868, against the com,
pany, upon the basis Of S35, NO capita! paid