The Washington herald., 1914-02-07
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Income TAXLAW
| INCLUDES CLUBS
Social Organizations, 1t Is
Announced. Will Have
to Pay.
MUCH SURPRISE CAUSED
Under Former Act. Returns from
Corporations mot Organized for \
Profit" We're Not Required.
MUCH SURPRISE CAUSED

That the income tax law IL an alnos
inexhaustible mine Of surprises was dem
onstrated sfresh yesterday when II wa
discovered that clubs such as the Com
mercial. Metropolitan, University. Cos
mos. Press. and Army and Navy were
subject to the tax. provided they are In
corporated. 1t Is supposed that Congress
did not intend that such organization
should come within the law. but failed Il
exempt them through an oversight. ant
the result Is that they are taxable, &C
cording to an oficial determination By
Internal Revenue Commissioner w. IL
| Osborn.
lawyer who Is a member OF severa
clubs noticed that the income tax law
In re-enacting. with some notifications
the older corporation excise tax law, had
been differently phrased and that there
seemed to be no specific provision as to
clubs Of this sort.
Formerly Were Exempt.
In the former law returns were re-
quired Of all corporations except those
mot organized for profit" which ex-
empted social clubs. In the income tax
law the phrase mot organized for proft''
was dropped out, and In its stead was a
clause stating specifically the kind OF
organizations that were exempt from the
! tax.
These included labor. agricultural, or
horticultural organizations; mutual saw
ings banks. fraternal beneficiary socie-
ties. orders or associations operating un-
der the lodge system. domestic building
and loan associations. cemetery COM
panies operated for the mutual beneht OF
their members. religious. charitable.
scientific. or educational societies: busi-
ness leagues, chambers Of commerce.
boards of trade. and 'civic leagues for
the promotion Of social welfare
The only language even remotely sug-
gestinE a social club was that concern
ing social welfare" and the view taken
by the lawyer was that this must mean
''uplift' societies for the social welfare
OF others. He knew that under the older
law clubs had been exempt and none OF
those he belonged TO had contemplated
for a moment the necessity of making
returns OF its income and operating ex-
pense this year.
Many Have Ne ProAts.
Many clubs have no profits or net
income al the end of the year and IL Is
not uncommon for them to be run at a
loss. but the income tax law. as affecting
corporations, is different from that
affecting individuals, in that II re-
quires a return from every corporation.
without any S3.oc0 exemption and even IL
II has a net loss for the year. Under the
old law corporations were exempt from
taxation on $500 of their profits. but
nevertheless all had to file returns. Cn-
der the income tax law there is no ex-
emption for corporations and, of course,
no exemption from making returns
The lawyer in order TO clear up all
doubts, wrote TO the Internal Revenue
and yesterday he received
4 reply, saving that, as clubs were not
among those specifically exempted. they
were apparently subject to the tax and
would be required to file returns of their
net income and pay any tax shown 10
Do due.
All returns under the law must be filed |
IN or before March !, so that the officers
Ind bookkeepers OF social clubs. thus sud |
ienly awakened TO a requirement they |
never dreamed of, will have occasion to |
yet to work at once on the compilations |
" their receipts and expenditures.