The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1895-03-20

Has Virtually Suspended the Operation
of the Law.
washington, March 19.-It is consid-
cred unfortunate by officials OF the IN
ternal revenue bureau that there IS no
provision in the law to reach the IN
comes of non-residents derived from
interest upon railroad and other Amer
lean securities. In the tarlf Dill, as II
passed the house, it was provided that
interest upon the bonds OF corpora
lions should be regarded as net earn
ings. and that per cent should be de-
Quoted from the amount to be paid by
the corporations TO the holders of their
bonds. whether residents or not. The
senate. however, changed this so as to
exempt from the tax all interest upon
bonds or other Indebtedness.
The effect of this is to exclude the
foreign bondholder from the operation
of the law, while the resident bond
holder is compelled 10 pay taxes upon
eli income in excess of $4.OOp, without
regard to whether that income is de-
rived from interest upon bonds or
comes from other sources. In the case
of the leading railroads of the country,
the annual interest paid upon bonded
Indebtedness exceeds upon an average
several times the amount or the net
earnings. and as a great pofIlon OF
these securities are hel abroad, III can
be seen that the government VIII lose
millions that ought to be paid TO the
treasury, il the tax is to be collected at
all. The collection of tax imposed
upon the interest paid bondholders by
railroads would have CAUSED the treas
uTy no trouble and no expense. Inc
amount Of the indebtedness ana the an
nuaI interest charges are puDilSneu IN
the reports of the roads, and the col
Iectors would have nothing 10 co IN
the matter but demand the amount OF
tax upon the whole amount of interest
paid II is considered not improbable
IL the tax is declared constitutional by
the supreme court, ana It's operation Is
observed by the people of the country,
that congress VIII be called upon TO
restore the house provision regarding
foreign bondhOldeT-S, so as to put them
upon the same footing as resident
Americans.
AWAITING y DECISION.
The reports of collectors Of internal
revenue from various sections of the
country indicate that the test in the Su-
preme court of the conStitutionahty OF
the income tax has caused practical
suspension of the work of collecting IN
come tax returns by the revenue agents
was extended to April ID at the last
session of congress the officials of the
internal revenue bureau anticipated
collecting q great many of them prior
to that date and had instructed all
collectors to hurry the work along as
much as possible and to send the re-
turns to the treasury in order that they
might be properly scheduled and the
assessments made. This was done to
enable the small force employed in the
revenue bureau to begin work upon
them at once. 1t was foreseen that II
the matter was delayed until April ID
Ii would be a physical impossibility 10
handle all the returns before July l.,
when the tax is to be collected. The
work Of collecting the tax was there
fore begun early in February, and the
returns for that month showed that
good progress was being made.
Since the beginning of the income tax
hearing in the supreme court, however,
the persons subject to the tax have be-
come somewhat chary about filling in
the blanks left with them by the revenu
agents, and have evidently determined
to await the courts decision before
making known the amount Of their in
comes.
MUCH EMBARRASSMEN
On this account treasury officials are
exceedingly hopeful that decision viii
be rendered by the court at an early
date as the court is fully cogniZant of
the embarrassment to which the treas
ury will he subjected in the event of "a
delayed decision. 1t is anticipated
that it may be rendered about the 81 st
or the present month
The following instructions have been
sent to collectors OF internal revenue:
Corporations are required to make
income tax returns 10 the collector or q
deputy collector of the district in which
their principal office. To which their
business is directed and in which their
books and records pertaining to such
business are kept, is located. Branch
houses and Sub-agencies are, therefore.
not required TO make returns to the col
lectors of that part Of the business UNI
der their control.
In view of the foregoing, collectors
are instructed 10 ascertain from all
agents, managers or other persons in
control of the branch or local business
OF corporations situated in their respec-
tive districts the exact location of the
principal office Of the corporation which
they represent. and TO forward the infor
nation received from such agent or
persons to the collector of the district
in which said principal office is loeat-
ed"
DECIDED \ TRUST CASE.