The sun., 1917-06-19
FALSE RETURNS
MADE TO EVADE
MUNITIONS TAX
Government Charges Wide
Attempt to Escape Levy
on Profits.
$12,OOO.OOO rs INVOLVED
$26, 6,50O,00O Already Paid,
but Checking Reveals
Frauds.
PLANTS CHARGED OFF
Included in Expenses on Plea
They Will Be Useless
After War.
$12,0O0.00O IS INVOLVED
PLANTS CHARGED OFF

WARRINGTON, June 1S.-Widespread
attempts on the part of munition makers
to evade the payment Of profits taxes
imposed by Congress last September
have been reported by internal revenue
agents. who have been working quietly
for the last two months checking up
the manufacturers returns.
The extent Of the attempted evasion
thus far brought to the attention Of the
Treasury totals more than $4,000, 900,
or approximately 40 per cent Of the re-
turns voluntarily made. Indications are
that the figure will go as high as 313.-
100000 or s13,o0O.0O0
Scores of the manufacturers Of mum.
tons are said to have attempted to de-
feat the full operation of the law by
making only partial returns OF their
profits. Some of the largest concerns in
the industry failed to make complete re-
turns OF profits. 1t is charged.
s28,5OO,OOO in Taxes Received.
Under the law munitions makers are
required to report to the Commissioner
Of Internal Revenue their profits each
of ~. per cent. Virtually all Of the 600
to 700 manufacturers made their RS
turns. apparently in conformance with
the law. showing profits which netted
the Government approximately $26,500,.
900 in taxes.
1t was assumed, apparently, that the
bureau would check the returns leisurely
as 1t had been checking the returns upon
the income tax reports. Commissioner
1 npha hav 4 ti,,~
year or more. set field force of Inc
vestigators to work almost Immediately
after the munitions returns lad been
received. They were thus enabled to
check the figures given TIL, Government
before there had been any radical change
in conditions at the plants.
Investigators reported profits largely
in excess of those reported to the Gov
ernment in many instances. Not all the
manufacturers made incorrect returns,
but the percentage OF those who did 10
said to have been remarkably high. Ono
of the methods frequently adopted to
bring down the total profits was TO
charge of as expenses proportions OF
the cost of special munitions plants.
Plants Charged on.
Several plants charged off the entire
cost Of such plants, deducting the
| amount from the net profits. Justif1ca-
| tion OF this was attempted by the plea
that the plants would be worthless when
the war ended. and that II was apparent
| that the war would not last much longer.
| Investigators reported that while the
, special establishments would be worth
! less at the end OF the war, so far as tho
manufa cture OF munitions was concerned.
they could be utilized in other ways and
| by no means would be a total loss,
AS result Of the investigation re-
! turns to the Government have been re-
| vised in many instances and will be in
others, so that the total which the Gov
eminent will obtain in taxes will be at
least $8e. 100000.
Activity of the Governments agents
became known at plants which were
about to be Investigated and several re-
quests were received by the bureau ask
ing that the returns he sent back for
revision. One firm, which reported orig
inaly that It had made no profits al
tered its report upon reconsideration
while the investigators were at work in
other plants and before its own had heen
reached, and sent the Government a
check for approximately sl50,O00 in pay
ment of taxes.
The penalty for making false returns
Is fine or Imprisonment or both. Oficials
have not yet decided what course they
will take. The Investigation is proceed
ing. though nearing close