Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1909-06-23
Designated Internal Revenue Officials
Will Act as Collectors.
'ENALTY FOR FALSE REPORTS
to Business Rivals is
Guarded Against.
INSURANCE CONCERNS TO PA
House and senate Leaders Present at
Important white House Confer
ence Its Passage Pre-
dicted 20 President.

WASHINGTON. June 22-Detans Of the
proposed measure for the taxation Of net
earnings of corporations. were arranged
tonight at the most important conference
that has been held at the White House
since Mr.. Taft assumed the presidency.
There were present as the presidents
guests Attorney General Wickersham and
Senator Root, who are charged with the
task Of drafting the measure; Secretary Of
state Knox, Senators Aldrich, Burrows,
Penrose, Hale, Cullom, Flint, Smoot, Nc
Cumber and Lodge. constituting the repub
lican membership of the senate finance
committee; Speaker Cannon, Representa-.
tive Payne chairman of the house com
mittee on ways and means, and Represen-
tative John Dwight of New York the re-
publican whip of the house.
The guests sat down to dinner in the
state dining room at o'clock No bust
ness was discussed at the dinner, but for
two hours afterward the corporation tax
measure, which had been prepared in the
form OF an amendment TO the tariff bill,
was viewed from every angle.
Many changes from the form in which
It was placed were suggested, and not
few Of these were declared to be wise The
result was that the carefully prepared
copies given to each member Of the party
by Attorney General Wickersham were
returned to him at the end OF the confer
ence
President Taft himself suggested that the
copies should not be taken by the mem
bers of the party until the amendment
had been perfected. All agreed not to
make the form of the amendment public
until 1t is ready to be introduced i'm the
senate as a finance committee amendment
to the tariff bill.
Measure Agreed Upon.
The terms of the measure finally
agreed upon although not fully formu-
| lated provide that all corporations having
| capital stock and organized for profit
shall pay a tax of per cent on their
net earnings. Corporations coming within
that designation will be compelled to make
returns to specially named agents of the
bureau of internal revenue Of the treas
ury department, giving the amount of
their gross receipts, capital stock, bonded
! Indebtedness and all other gross receipts,
capital stock, bonded Indebtedness and all
other visible debts
Separated from these returns, the cor
porations will be compelled to report the
amount of their net receipts after de-
Quoting their general and ordinary run
ming expenses, interest on bonds up to
the amount of the capital stock OF the
corporations, interest notes and other
forms of tangible Indebtedness, and any
actual loss that may have been incurred
/ in business, which loss was not made up
! by insurance, salvage or other form of
return.
The amendment will define in the broad
est possible way the character OF losses
which may be deducted from the net earn
/ ings upon which the tax is to be collected.
/ These losses will Include bad accounts OF
a mercantile corporation, losses upon Sc
| curities held by banks, uncolectable notes
and all other forms of bad debts which
are usually charged to profit and loss
/ accounts.
Exemptions Up to $4,000.
AS has been stated before the per cent
tax will apply to all corporations organized
| for profit, but each corporation will be al
( lowed a 5000 exemption, which means that
J the tax viii not be collected except upon
earnings in excess OF 5000
Any corporation which makes a false re-
port to an agent OF the Bureau Of Internal
Revenue, who has been designated TO col
lect information regarding earnings or has
made a fraudulent return upon any OF
the subjects covered by the law, will be
subjected TO a penalty. The amount OF
this penalty is the only feature Of the bill
which was not decided tonight. Most of the
participants In the conference expressed
the opinion that this pealty should range
from $1,000 to 10000 the amount TO be
fixed by United States court upon presen-
tation of all of the facts connected with
such fraudulent terms
The tax will be collected upon the entire
/ Iar mount Of ha nrefarrad connpnop
stock OF every corporation and upon the
bonds OF a corporation where they exceed
the total amount Of capital
COIIectnbIe July 1, 1910.
It Is intended that the bill shall become
| operative Immediately on the passage OF
the bill The life of the measure was made
indeterminate, instead Of two years or
osme other fixed Limitation such as had
been suggested originally. The present
| years tax will be collectabie July !, 1910
the beginning OF the next fiscal year
Leaders In the senate and house have
/ been flooded with kilograms from corpor-
ations expressing fear that the law would
be drawn in such form that unscrupulous
agents Of the internal revenue buerau
might use information obtained in some
way so as to injure the business OF a
corporation. his danger was discussed to-
night, and it was decided that only espec-
tally designated agents Of the bureau
should be permitted TO interrogate corpor-
ations concerning their business. The cor
/ porations are to make their returns d-
rectly to the bureau Of the internal reve-
| nue. in Washington.
It was decided at the conference tonight
that all incorporated insurance companies,
organized for profit shall be brought
within the terms Of the proposed corpor-
alton tax law. This will not exempt so
called mutual insurance companies which
admittedly or which can be proved to
have been organized as profit taking insti-
tutions. Neither WIN " exempt fratsrnal