Hot Springs weekly star. (Hot Springs, S.D.) 1892-1917, 1913-10-03
HOW Income
TAX WORKS
OFFICIALS PREPARING FOR A
FLOOD Of QUESTIONS.
ACT To- Be IN FORCE SOON
CITIZENS SUBJECT TO NEW PRovI.
SION'S REQUIREMENTS ARE NOT
EXEMPT FROM PENALTY.

OlVN y NlVUlNkmkNlO ANL NVI
EXEMPT FROM PENALTY.
Washington, D. O., Oct. 3.-The treas.
ury department is preparing for flood
Of questions about the new income tax,
realizing that this feature of the tariff
bill about to become law strikes more
intimately at the tax paying citizen
than does the indirect taxes collected
thru the customs duties.
One of the first steps to be taken to
get general information before the pub.
lie will be to distribute income tax
blanks thru postoff1ces, internal rev.
enue Offices and other federal agencies.
However, the fact that he does not re.
ceive blank or request to pay the
tax will not exempt q taxable person
from the penalties of the law.
Representative Cordell Hull, of Ten
nessee, who drew the income tax provi.
sion of the tariff bill, which soon will
become law, made public today de.
tailed explanation of the tax plan as it
will touch the individual citizen.
HOW THE LAW WORKS.
"The. treasury regulations soon to be
prepared will make clear to every tax.
payer the requirements Of the law and
its application to income derived from
the various kinds Of business" Mr..
Hull said. ANY person who keeps
familiar with his business affairs dur.
ing the year should have no difficulty
in executing his tax return.
"The income tax is divided into two
phases, the normal tax of per cent
on the whole income above $1,000, and
the additional tax that begins with an
extra per cent above $4,000 and is
graduated to 6 per cent above $50 900.
Wherever the income tax is paid at the
source by corporation for its en-
ployes or in similar cases onlv the l
per cent normal tax is to be paid. The
individual has to pay any additional
tax himself.
"The provisions of the law requiring
the tax to be withheld at the source
does not take effect until November ],
1913. For the flrst year the citizen will
make return to the local internal
revenue collector before March l, 1914,
ae to his earnings from March l, 1913
to the end of this year. The collector
will notify him June l how much he
owes, and the tax must be paid by June
80. After next year the tax will apply
on the full calendar year.
HITS FOREIGN RESIDENTS.
"If the income of person is under
$1,000, or IL the tax on the same is with
held for payment at the source, or II
the same is to be paid elsewhere in the
United States, affidavit may be made
to such fact, and thereupon no return
will be required.
1.-THE tax covers all incomes of citi
zens Of the United States. whether liv
ing here or abroad; those Of foreigners
living in the United States, and b {
net incomes from property owned OF
business carried on In the Unite
States by persons living abroad.
1.-THE net income includes all income
from salaries or any compensation fol
personal services; incomes from trades
professions, business or commerce
from sales or dealings in personal pro
perty or real estate; from interest, rent
dividends from securities for all bust
ness carried on for gain.
"Bequests will not be considered in
come; nor will life insurance paid to ,
beneficiary or retured to the insured
person as Q paid up or 'surrenderet
policy be- taxable. Interest on sucl
property will be included as income
however.
BUSINESS COST DEDUCTED.
"The amount that may be deducted
from q total income includes the COS
Of carrying on business, actual losses
depreciation allowances and tax exemp
or tax paid money. Living expense
cannot be deducted, nor can none,
spent for permanent improvements {,
property.
"The form that 10 to be filed out b,
the taxpayer will be drawn up soon b.
the commissioners of internal revenue
The taxpayer will have to give his gros
revenue, and then specify and clain
the deductions to which he feels On
titled. Unless Q mans income tax
paid at the source hs must hunt up