The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1910-04-30
.SHARPSIGNS

and ordinarily one is, in the eyes of the
law, regarded as paying his taxes vol
unfairly unless he does so under coer-
cion; and ordinarily, in the absense OF
a statute the mere filing of a written
protest, and a payment Hereunder
or thereafter is not Z payment under
coercion.
Federal Decisions Defining lnvolun-
tary Payment.
1t therefore becomes necessary 20
examine the federal statutes and learn
from them what is the proper pro-
cedure to follow as a basis for the
, recovery of taxes. The law imposing
the federal tax on corporations specl-
ficially provides that all laws relating
to the collection, remission and re-
fund of internal revenue taxes so far
as applicable to the federal taxes on
4 corporations. There is nothing in the
! California law.
After a careful examination of the
cases of ChesebrUugh VS.. United
States, 1872 u. S. 253, and Herold VS..
Kahn, 1853 Fed COS, with prIvious de-
cisions the writer has reached the
conclusion that it is quite doubtful
whether the mere payment of taxes,
accompanied with written protest.
is sufficient to make the payment in
voluntary and to form the basis of
right Of recovery under the federal
statutes. It is therefore advisable not
to pay these taxes until after June
Both of this year and Zen only after
formal demand by the local Collector
of Internal Revenue, so that there
may be no question but that the
taxes are paid under coercion.
Pay Taxes Under Protest Only.
Second Notice.
The law imposing federal taxes on
corporations provides that all com
panies shall be notified of the amount
of the assessments for which they are
respectively liable on or J efore the
first day of June = This is the first
notice which the company will re-
ceive The tax Is then payable on or
before the thirtieth day of June If
not paid by that time, it is the duty
of the collector to give the company
a second notice and make a demand
for the payment of the tax. If the tax
is not paid within ten days after this
second notice and demand penalty
is incurred which amounts to five per
cent of the taxes and interest thereon
at the rate of one per cent per month
from TIL thirtieth DAY of June. If
the company, before paying the tax,
awaits the receipt of this second no
tice and demand and then, within the
ten days after its receipt, to avoid the
penalty and interest, pays the tax un-
der protest, it will be just such an
involuntary payment of the tax as was
held in the Herold case was sufficient
to constitute involuntary payment If
the tax and basis of a right of re-
covery.
What Form the Protest Should Take.
No particular form of protest is re-
quired so long as the protest advises
the collector that the party paying
the taxes claims that they are being
illegally exacted and gives the collec-
tor notice that he intends to insti-
tute proceedings or suit to compel
their repayment. The notice of pro-
test should conclude with a demand
on the collector for the repayment OF
the taxes so paid under protest. In
the protest, where part of the taxes
are to be protested (ike taxes on the
income and realty, should be state
ment of the amount of income derived
from real property, and the amount
of the tax on that income when the
tax on it is to be protested. A like
statement should be made with refer
ence to income derived from personal
property or income derived as interest
from state or municipal bonds, if the
taxes on the income from those sour
ces are to be protested. Although the
law apparently does not require that
the protest be in writing, it is clearly
advisable that it should be.
Appeal to Commissioners and Suit.
After taxes have been paid under
protest if the Collector of Internal
Revenue does not refund the taxes an
appeal must be made to the Commits
sioner of Internal Revenue at Wash
ington for the refund of these taxes
This appeal is made upon forms and
! subject to, the regulations prescribed
by the Secretary of the Treasury ana
) may be made by a delivery to the
local collector for transmission to the
commissioner. If the decision OF the