New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-11-27
RULES FOR NEW TAX
Mr.. TAFT APPROVES
REGULATIONS.
Secretary MacYeagh Com
picteS Plan for Collection
from Corporations.
IFrom The Tribune Bureau ]

N'i-N Nl'tClai excise TAX or the PdynS
law. commonly known as the corpora
ton tax" We're approved to-day by
President TAFT. They We're sent to- the
printer this afternoon and viii be made
public in a week or ten days Two
copies of the blank forms Will he sent
To each Of the 122.Upo corporations which
are required To make returns.
Secretary MacVeagh' devoted pains
taking study 10 the formulation of these
regulations. Assistant Secretary Hi!les
and Commissioner Cabell. of the Inter
nal Revenue Bureau. were his principal
assistants in this work. but before the
regulations were finally approved they
We're submitted for criticism To lead
Ing expert accountants. Mr.. MACY eagh
believes that when the regulations are
made public much of the criticism
which has been directed against the
tax. and especially the alleged imros-
sibility Of enforcing the law. will be
dissipated. II is the expectation ~
Treasury officials that the tax will yield
about So. .JOoOO0 a year.
one Of the interesting questions which
confronted the Treasury officials was
whether the law applied To the Philip
pines and Porto Rico. The law says
that il shall apply To corporations or
ganized under the laws of the United
States or Of any state or territory or
under the acts Of Congress applicable
To Alaska OF the District II Columbia.
There is a'furthe- provision that f.r-
eigu corporations doing business I'm the
United States shall be taxed on their
stood that the Treasury Department
will hold that corporations organized
in the Philippines or Porto Rico which
are not engaged in business I'm this cnun-
try are not :hjaCt u the tax. on the
theory that Porto Rican or Philippines
corporations which do business I'm the
United States must lee regarded aS
either domestic or foreign corporations.
they viii become subject 20 the tax
whenever they extend the scope OF their
operations t. cover business trans
actions in this country
NO REGULATION OF SALARIES
An official Of the Treasury Department
said to-day that the government would
be powerless To- regulate salaries paid 10y
corporations. and would not attempt To-
enter this field of private business. II Is
not believed. however. that many cor
porations will evade the payment ~ tie
tax by increasing the salaries Of their
officers So that their net income viii fall
below $5.Uso n year. In IN" case ~ 500
called family corporations. where ia"
earnings are large and the number of
stockholders does not exceed half dozen
persons. u IS expected Their" VIII he in
stances of an evasion of the tax hy
change Of business methods which will
v.ovide for high salaries 90 the officers,
such salaries - bc Iroratcd ON the basis
Of stockholdines.
This class of corporations may ais"
evade IN. tax 10y dissoIvins as corpora
tions and organizing as partnerships.
Large corporations viii not nud IL con
v.nient 10 employ such methods. and il
is the expectation of tho Treasury "iii-
cials that the so-callrd trusts viii have
TO pay their FUN assessment
Another question which has aroused
the interest of Treasury officials ~ tho
extent 20 which corporations viii seek 10
cyade the tax 10y excessive charges for
Maintenance and improvements. II has
occurred 10 them that railroad corpora
ticns. for instance. might max" large
purchases Of steel rails and rolling stock
with a view To diminishing their showing
OF net profits. II was felt. however that
this rractice would not extend over
Ing pcriod Of years. and that II large
purchases of equipment were mace TINS
year the income of the railroads would
be correspondingly increased next year,
while interest charges would more than
OBJECT the tax were such methods prac-
tis.d extremely. The fact that the new
law win enable every stochholder in
ccrporation 20 obtain accurate data as
90 The h.,eincssetransactions Of his cor
marathon IS regarded by officers Of the
comment as orc Of the best features of
tie law.
THE PUBLICITY FEATURE.
,r5e returns made 10y corporations will
not become public records until they are
e-ed IN the Office vf the Commissioner of
1p,crn.l Revenue Then they win be
o,..r - general Inspection. bot those DC
string to cxamine them must co"e IN
uerecn TO WaahirEton or appear 10y a
Commemorative. Incarnation regarding
~ records Of corporations VIII not be
Furnished by the Treasury Department
through corrcsl londencc.
Secretary MacNeaRh and ...s assistants
have evolved what they believe VIII be
accented "a a feir definition of the term
net income" as used ln the tax !aV.
,rt.t n will BE q satisfactory definition
90 All corporations is not expected 1t
,,..s nee. ssary for Ir. Na,NcagE 10 de
,.r,nine first what Congress meant when
!. -..ole OF gross amount of income"
and rroyidcd that net income should De
,,s,srmiued by making certain dCduc-
tlens therefrom.
An rorporatiOns VIII be required to re-
,,o,.t on eight general features Of their
t,,.ipess before March /, 1910. This re-
80, is 10 doa! with business transac-
.io,s al the present calendar year The
..,,.,ssrneuts are 20 be made and the Ger
,ora,i,us informed before June l. 1910,
"a III assessments are 10 be paid an
-, before June 50. 1910. The returns
.,,der the eight separate heads viii in
clude:
First-Total paid-up capital stock
Second-TOtal bonded ana other IN
Gcbtedness.
Third--Total gross income received in
the preceding year: also the amount re-
ceived as dividends on stock CT other