The times. [volume] (Washington [D.C.]) 1897-1901, 1901-04-04
STATUS OF BUCKET SHOPS.
instructions Sent Out by the Com
sioncr of Internal Revenue.

long letter has been addressed by the
Commissioner of Internal Revenue to all
revenue collectors emphasizing the neces-
sity of great care in. administering the
amended War Revenue law. Special ref
erence is made to the paragraphs in the
law relating to the status of brokers and
stock traders.
Confusion may and will result" says
the Commissioner. unless great care is
exercised in collecting the taxes pro-
vided for under paragraphs and g.,
schedule A section 81, act of March 2,
1901.
Paragraph applies to sales of pro-
ducts and merchandise, at any exchange,
board of trade. or similar place The
stamp tax of l cent on each SIGa in value,
and for each additional 500 or fractional
part thereof in excess of 800, which is
provided for in this paragraph has usually
been and probably will continue to be. col
lected in the district where the exchange
or board of trade is located.
Paragraph three provides for tax on
transactions which are not made on
board of trade. exchange or similar place
1t is intended by this paragraph to reach
and tax what are commonly called bucket
shop transactions and other similar deal
ngs. In discriminating between the sales
made under paragraph 2 and para
graph frequently a pure question
of fact will arise. Those who claim to be
covered and governed by paragraph 2
should be permitted to show that their
sales are made on one of the regular
known and recognized exchanges or
boards of trade. and in accordance with
all the provisions of paragraph 2.
In absence of reliable knowledge on
your part, careful examination into the
books, accounts, and business of such
parties may be necessary, and in such
cases this examination should be made
patiently and accurately"
Continuing, the Commissioner said:
you will note that the annual special
tax of $50 imposed on commercial brokers
by the War Revenue act is repealed on
and after July /, 1901, but, by the act of
March 2, 1901, under paragraph of sec
ton 2 the tax of $50 On brokers is con-
tinued. This special tax, however, refers
exclusively to persons, firms, or COM
panies whose business 1t is to negotiate
purchases of stocks. bonds, exchange.
bullion. coined money, bank notes. prom
issory notes. or other securities for
themselves or others. and does not refer
to or include persons whose sole bust
ness it Is to make sales or agreements of
sales of products of merchandise at any
exchange, board of trade, or similar
place. That is. If broker on a board
of trade or exchange deals in products
or merchandise exclusively he is not re-
quired to pay the special tax of $50 If.
however. although operating on a board
of trade. exchange. or similar place he
deals in stocks. bonds, etc, and also in
products of merchandise, he must pay the
brokers' tax of $50.
IF, under paragraph ., Schedule A, a
person makes sales or agreements on a
board of trade or exchange or similar
place, either for present or future deliv-
cry of merchandise alone, he pays no
special tax as a broker. but there must
be made a delivery by the seller to the
buyer bill, memorandum. or agreement.
to which shall be affixed stamps for each
800 in value of said sale or agreement
of sale. l cent, and for each additional
800 or fractional part of 800 in excess
thereof, l cent