The Washington herald., 1913-09-30


understated. but he is obliged to serve
due notice and TO produce evidence.
In the event of a disagreement between
the collector and the taxpayer, the latter
may carry the case, with papers and
proof, to the Commissioner of Internal
Revenue, but his decision will be final
Under the terms of the bill in its final
form the net income of each individual
taxpayer is to include the following
items:
All gains, profits, and incomes derived
from salaries, wages, or compensation
for personal services of any kind, pro-
fessions or vocations. business trade or
commerce. sales or dealings in property,
real or personal; interest, rent, dividends,
and securities; also t. gains and profit
from any transactions of lawful business,
and the income of property acquired by
gift or bequest. Neither the return of
insurance 10 the assured. nor the pro-
ceeds Of policies paid upon death, are
included as income.
From these items of income the follow
ing deductions are allowed:
l. Necessary expenses actually incurred
in carrying on any business.
>. All interest accrued and payable
within the year on Indebtedness.
). All national. State. county. school.
and municipal taxes.
4. Losses actually sustained during the
year in business, not compensated by in
surance or otherwise, arising from fire,
storm or shipwreck.
.. Debts actually ascertained to be
worthless, and charged on during the
year.
s. A reasonable allowance for the eX-
haustion or wear and tear on property.
not to exceed. IN the case of mines,
per cent of the gross value at the mine
of the output for the year.
Z. All income, the tax upon which has
been paid at the source.
s. Amounts received as dividends upon
the stock of any corporation, which is
taxed upon its net income, but such divi-
dends shall not be deductible unless in
cluded in the return as a part of the
gross income.
Items Not DeductibIe.
The following items will not be allowed
as deductions:
l. All personal living or family ex-
penses.
. Taxes assessed against local bene-
fits.
g. All expense of restoring property or
which an allowance has been made.
4. Amounts paid for new buildings, per-
improvements, or betterments
made 10 increase the value of any prop
srty or estate.
In computing the net income. the fol- |
owing exemptions are allowed:
l. Interest upon the obligations of a I
State or any political subdivision thereof. !
:. Interest upon the obligations of the !
United "tates. or its possessions.
President of the United States is |
Exempted from the tax, as are also the |
Judges of the Supreme and inferior courts |
If the United States, and all officers and |
employees of State or any political sub |
iivision of a State. ->nators and MEM |
1ers of Congress are obliged to pay the |
AK.
Besides all taxable persons of lawful |
Lge, guardians, trustees. and executors |
ire obliged to make return to the Inter |
Ia, Revenue Bureau.
Two methods are provided for the col !!
ection Of the tax. The foregoing deals |
together with the direct collection from 1
he taxpayer himself There also is the |
method of collecting at the source. AL |
ersons, corporations and business con-
erns which control the payment of |
Xed or periodical gains or income OF
mother person subject 20 the tax is
bliged to make return for such per-
ons and to withhold the normal tax Of |
ne per cent and pay il to the govern
lent.
This feature of the legislation will not
ecOme effective, however, until Novem-
er l next, so that there will be no with
Olding of the tax at the source prior
, that date. Taxpayers whose taxes
will be collected in this way
ill be obliged this year to make per-
Onal return on income from March l
, November l, which ordinarily will be
Ollected at the source.
The foregoing collections at the source
efer only to incomes of more than 5000
year. They refer to incomes of a fixed
r periodical character. such as salaries,
ent, royalties, partnership profits, and
le like.
Source Exceptions Noted.
The rule for Withholding of income at
le source contains one exception. This
slates to the interest on corporate bonds
nd other like Indebtedness. The 1 per
mt normal tax on such interest, accru-
e to all individual bOndholders, will be
ithheld by the debtor corporation, or
S paying agent, and transmitted to the
even if the individuals :n- I
,me from such bonds is under 5000.
In order to avoid the payment of this ,
x if the bondholder is entitled to an {
OF 5000, he must file, not :ess
ian thirty days prior to March l next,
ith the person or concern required to
ly the tax, a notice in writing, claiming
lie benefit of the exemption.
Also, the individual whose tax is with
I'D at the source, If he is entitled to de- q
lotions for losses or other expenses, will q
obliged to file a claim either with the }
0llector of Internal Revenue or with the 6
erson or corporation Withholding a tax, {
tting forth his income and the deduc- !
1ns to be made.