Evening star., 1914-02-05
INCOME TAX LAWS
TERMS EXPLAINED
Directions for Holders of Bond
Coupons.
IMPRISONMENT AND FINE
FOR FRAUDULENT RETURN
List of Organizations Not Subject to
Levy Include Religious and
Educational.

No. 31-Question. AS income from
coupons cut from bonds of corporations
that are paying the tax is $500, OF this
amount there was received in April and
July $500 The corporations were not
responsible for the Withholding of the tax
in April and July. and therefore paid the
face value of the coupons, but made no
provision for paying tax on them.
Should the individual enter the entire in
come received from these coupons in col
umn A. opposite subdivision 4. on page 2,
of the return form 1910?
No; he should enter only that amount
OF the coupons which was paid after No
Vember l and on which no exemption
was claimed. The clause in the bond
Whlch allows the tax to be assessed
against it or guarantees the income free
from the tax is a contract between the
corporation and the bondholder, aud in
so Tar as the income tax applies the gov
ernment will not treat differently the
coupons with a guarantee in them and
those that have no such guarantee The
corporation or its duly authorized with
holding agents are responsible for the
normal tax due on coupons on which no
tax has been withheld, except where ex-
emption has been claimed
They are only responsible this year for
an coupons paid after November /.
therefore any income paid in the form
OF coupons from March l to November
l. 1913. shall be included in the indi-
vldual return under column B opposite
subdivision . on page of form 1910
All income paid in the form of coupons
on which the normal tax of one per
cent has, been deducted or paid at the
source should be entered in column A
opposite subdivision ) on page of form
1o4O. The income in this case would be
entered thus: $3.50 in column B, and
S2OOo in column A. it being supposed
the 5000 lot was cashed after November
l. Where person has received the full
amount on coupons after November I
and has not claimed any exemption in the
ownership certificate the corporation is
then responsible for the tax and the in
dividual can assume the tax has been
paid. far~as he is concerned.
Penalty for Evading Return.
No. 3S-Question. What is the penalty
for not making d return and what pen
atty is imposed where false or fraudu-
lent return or statement is made with
intent to defeat or evade the assessment
of the tax?
The penalty imposed for not making
or neglectinG to make a return before
March each year is to be not less
than $50 nor more than 81 00o y per-
son Intentionally making any false or
fraudulent return or statement to
escape paying the tax shall be adjudged
guilty of miSdemeanor and shall be
fined not more than $4,000 or be inn
prisoned for more than one year or
both, at the discretion of the court. The
cost of the prosecution also is 70 be
paid by the defendant.
Exempt From the Tax.
No 39-Question. What organizations
are not subject to the income tax?
/. Labor. agricultural or horticultural
organizations.
.. Mutual savings banks whose cap
ital stock is not represented by shares.
g. Fraternal beneficiary societies. or
ders or associations operating under a
lodge system. for benefit of its mem
bers, providing for life, sick, accident
and other benefits to its members, and
their dependents.
tions.
5. Cemetery companies organized and
operated for their members.
Religious Associations Excluded.
6. Corporations or associations or
ganized and operated exclusively for
charitable, religious, scientific or edu-
cational purposes, no part of whose net
income inures to the benefit of any
private stockholder or individual.
:. Business leagues, chambers of COM
merce, boards of trade not organized
for profit and no part of whose income
inures to the benefit of a private stock
holder or individual.
s. Civic leagues or organizations not
organized for profit, but operated eX-
clusively for the promotion of social
welfare.