The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1875-03-12
THE TAX ON CHECKS.
COMMISSIONER DOUGLASS DEFINES THE INTEN-
TON OF THE NEW LAW

COMMISSIONER DOUGLASS DEFINES THE INTEN-
TON OF THE NEW LAW.
Considerable discussion has been caused In
banking circles on account OF q rumored IN vestL
cation by the United States authorities relative to
the supposed evGsions OF the law regarding the
stamping OF checks and drafts. IL was reported
that bank inspectors were to be appon,ed to In
Quire into the matter, and much annoyance was
anticipated.
In order to arrive at proper Interpretation Of
the law OF February s. 1875. Mr.. F. d. Tappen.
President OF the Gallatin National Bank, called
upon the Commissioner of Internal Revenue who
refused to give verbal decision. though he dis
claimed all intention OF inspecting the banks
Mr.. Happen subsequently, on the 4th inst. sd-
dressed to the Commissioner the following
queries:
made payable at bank, subject TO stamp tax Of
two cents; and. II so, does the tax apply to notes
drafts and acceptanees drawn or accepted prior
to February $. 1875. and which have matured and
since been paid 7
bank upon ITSELF Tor the purpose OF paying ~
own dividends and the dividends, coupons or In
terest OF other corporations
Thtrd-Are checks drawn by State. county OF
city government on bank subject 10 this taxi
AS the questions raised are OF great interest Ia
bankers and their customers we give the reply
and decision or Commissioner Douglass In full:-
TREASURY DEPARTMENT., !
OFFICE OF INTERNAL REVENUE,
WASHINGTON March 10, 1875. }
r. D. TApPEN. ESQ.,, President Gallatin National
SR-in your letter OF the Attn inst. you inquire
as . to me proper interpretation OF the WORD
voucher IN section l5 oil the Act to amend exe
listing customs and internal revenue laws" &c,
| approved February ), 1875.
You also ask the following questions Given
Section Is, OF said act OF February 8. 1875, pro-
vides that bank check, draft, order or voucher
for the payment oil any sum OF money whatsoever.
drawn upon any bank, banker or trust company,
shall be subject to q. stamp tax Of two cents
1t is understood that this enactment was made
mainly to meet evaslons Of the stamp tax ON
checks oy the substitution OF receipts, orders
tax upon checks or orders, &C., drawn on time, a.
well as those payable at sight or on demand: 70
also on receipts and all other vouchers substituted
the custom OF banks.
section Of the act OF March 8 1876 exempta
| from the tax 'the receipts In the receipt book Of
savings bank or institution for savings having
no capital stock. and doing no other business than
receiving deposits to be loaned or invested lOK
the sole benefit OF the parties making such deposits,
without profit compensation to the ASSOCIATION
or company when money Is paid TO deposltor On
his pass0Ook."
This provision leaves the tax upon all receipts
with the above excepton) given to the banks a.
vouchers Tor the pay nlent OF money on deposit a.
imposed by section 10 OF the said act OF February
3, whether Such receipts are loose or contained II
book.
reply to your SPECIFIC questions: =
f1rS-rhat II there Is any understanding bo-
tween the bank and the maker OF the notes. OF
acceptor OF the checks. drafts orders payable as
paid by the bank and charged In the account O4
the makers drawer or acceptor, In the same man.
per as ordinary checks would be such notes and
acceptances are considered haole to the two cenS
stamp tax as vouchers" for the payment ol
money by the bank. 1nls applies to notes. draft1
&C., made. drawn or accepted prior to February &
1875. when paid by the bank on or alter That date
SecOnd-Tnis tax applies to checks drawn BY .
bank upon itself for the purpose Of paving It's own
dividends. coupons interest OF otner corpora
tons, or for otner payments.
Third-Cnecks drawn by state, county or city
officers in their official capacity upon puDic bonds
deposited In bank are exempt, II said bonds are
kept separate from any private account It not
being within the intent OF the law TO tax public
treasury.
will add. with reference to some other ques-
tons frequently proposed to this ONCE. that or
ders for dividends are subject to the tax II drawn
Tor definite and certain sum, but not Otherwise.
An ordinary certificate OF deposit used 10 the
ordinary manner Is not liable.
Interest coupons are considered exempt. Bills
OF exchange, foreign well as inland, when
drawn upon bank, banker or trust company, are
held to oe subject to the tax whether payable ~
sight or Otherwise.
Duplicates OF bills, ORDERS &C., are liable the
same as originals. Receipts not relating to BANK
ing business-for instance, Tor rents-are exempt
| Very respectfully,
j.w. DOUGLASS, Commissioner.