The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1871-07-23
TAXES ON INTEREST COUPONS.

Decision Of Solicitor Banfield on the LRbilit v
Of Corporations to Pay Taxes WithheId Under
Decision Of COMMISSIONER Pleasonion.
WASHINGTON, July %, 1871.
The following important decision OF the Treasury
Department Is made public to-day
DEPARTMENT OF JUSTICE
OFFICE OF THE SOLICITOR OF THE TREASURY
WASHINGTON, ID. c., July Il, 1871 }
SIR have the honor to acknowledge the receipt
OF your letter OF the 81 ult. transmitting one from
Jersey, and one from the commissioner OF Internal
Revenue, IN relation to claims for taxes under the
act OF July IA, 1870, made on SAID companie
by the Internal Revenue ONCE. It APP
pears that on the eth Of February. 1871
respect to the liability OF corporations to tax OH
interest coupons under sections 100 and l22 CT the
H. 1870, that no tax should be withheld from inter.
est coupons representing interest falling due and
PAYABLE within the period OF five months from
August l. 1870 to December 81, 1870, and that III
tcresi falling due on or subsequent to January l.,
1871, Is taxable at The rate Of two and nan per
cont. II such interest accrued either prior to
August l, Or subsequent to December 81 1870, from
30 much OF It as accrued within the last five months
IN accordance with this decision. the n0 ,oint
companies OF New Jersey, oil the lst OF
Nay ISL. having WING coupon Interest falling
one and two-thirds per cent tax only, beng
the proportion Of the two AMI a nalf
1871, the Attorney General. to whom Tins question
had been referred BY The Secretary OF the Treasury
having declued tllaC tue TAX on interest
imposed BY the fifteenth section OF the act OF July
L. 1870, Is applicable to interest paid sDsequen
to August l, 1870, aud pr10r to January j. 1871 the
commissioner OF Internal Revenue, on the l4th OF
May 1871, IN accordance with instructions from the
Secretary OF the Treasury, revoked HIS former de-
cison and made one In conformity with the opinion
Of the Attorney General When the companies who
by the fifteenth section, above referred TO. are au-
thOrzed to deduct the tax In question made return
Oi tho amounts retained FOR the government
to the Collector OF the district they were
informed OF the revocation OF the decision
nf EAl.r
for a return Of the Two aud half per cent Upon
application to- the Commissioner on the 10th OF May,
ultnO, requesting that, a5 they compiled with the
instructions OF tue Department IN making return
OF one and half per cent, they he permitted TO
make such return TO the assessor they were
unless authorized to do 80 by the secretary Of the
Treasury. Upon this state OF facts my opinion IL
asked whether the companies can be legally or
equtaDly held 10 account for the deficiency that has
occurred IN consequence OF the action OF the proper
Officer vi the government
Such being a brief history OF the question In
VOWED In this case, nave to say that the Com
missioner OF lpterna Revenue Is the recognized
authority under tile law anu IN practice, through
whom decisions npon questions arising under the
Internal Revenue laws are promulgated to tie pub
NC His decision OF the 27tn OF February was one,
therefore, upon which the applicants IN tins case
had right 10 act. The Joint railway companies OF
New Jersey did act upon u, so lar to- ADJUST the
interest due upon their coupons and pay the same
10 the holders thereof. The companies can only be
eminent In reseryfpg the fax from their bond.
holders aud paying the same into the Treasury.
Ihey acied In this case under the direction Of
suo principal IN the frat instance. ana by reason OF
ulat proper action have become involved In the
V'oSsht controversy. 1t Isl perhaps fair 70 assume