Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-03-12
EXPERT UNRAVELS
TAXLAW TANGLE
Head of Auto Trade Cham
ber Gives Interpretation
of Revenue Act
COMPLICATED CLAUSES
Three Per Cent Tax on Trucks
and Wagons, Five Per Cent
on Passenger Cars

what erect the new war revenue
act is going to have on the automouvt
industry, including both dealers ant
private owners of passenger cars anc
motorized commercial vehicles, is tolt
by Alfred Reeves, general manager o
the National Automobile Chamber o
Commerce in n special bulletin jus
issued.
Automobile men generally. 1t is said
have been puzzled over those Prov
sions of the law relating directly t,
their business. which prompted Mr.
Reeves to confer with Daniel c. Roper
internal revenue commissioner. on thei
operation. The Interpretation whicl
Mr.. Reeves gives OF those clauses II
dispute therefore, is virtually official
The chambers bulletin says
The new law continues the per
cent tax on the manufacturers sell
ing price for automobile trucks
and automobile wagons and adds "a
provision that all tires. parts ana ac-
cessories sold on or in connection with
such trucks and wagons are consider
ed part of il in estimating the tax,
The law increases the tax on the
manufacturers selling price of pas
senger automobiles to 5 per cent. with
the same provision that tires, parts
and accessories sold on or IN connec-
tion herewith are TO be included in
estimating the tax.
There is a similar : per cent tax on
motorcycles, but no tax on tractors
nor on tires, parts or accessories
therefor.
New Tax On Tires
There is new tax OF per on
the manufacturers selling price ot
tires. parts and accessories when sold
separately. except that such tires,
md aprpSgnripa sold hy their
makers to automobile manufacturers
or motorcycle manufacturers are not
taxable. This exception is apparently
to prevent double taxation.
In addition to the above taxes on
sales there are taxes at the same rates
on the leasing of cars, tires, parts ana
accessories therefor by their makers.
There is no floor tax or tax on
motor fuels, nor is there any direct
tax on car users except that persons
carrying on the business of operating
for hire or renting passenger auto
mobiles are taxed $40 annually for
each automobile seating more than
one or less than eight passengers and
$40 a year for automobiles seating
more than seven.
The tax situation regarding the eX-
porting of automobiles, tires, parts
and accessories therefor is charged
so that under the new law. all such
articles sold or leased for export
and in due course exported are not
subject to the tax, This is in Compli-
ance with the federal constitutional
provision against taxes on exports.
Must Reimburse Seller
Tlere are some complicated provi-
- rs in Section 1872 of the new law
he effect that on contracts for the
s..lss or lease of cars and parts, etc,
made prior to the date when this new
law was first discussed in Congress,
la RAIN n-
burse the seller or lessor for the tax
that the latter has to pay.
Those liable for the tax on automo-
bi,es, tires, parts and accessories
must make monthly returns under
oath il duplicate. to the local collec'
tor of internal revenue and pay the
taxes due to this collector without
further notice. If the tax is not paid
when due, there is added a penalty OF
per cent together with interest at
l per cent per month. In case of over
payment of taxes. the Revenue Bureau
may return the overpayment.
The tax on automobiles. tires, parts.
and accessories becomes due when the
article is sold or leased, This means
In the case of sales, when the legal
title passes from the buyer to the
seller or when the article ceases to be
the property of the buyer, and in case
of lease, the lease is effective gener.
ally when the lessee receives posses,
sion of tn article. Therefore. all sales
and leases by automobile manufac
turers made on and after February
20 are subject to the tax rates of tht
new law. All sales and leases made
prior to February 25 are either ia,
free or subject to the old tax rate al
the case may be.
Await Future Rulings
A myriad of special cases will aris
under this new tax law, the corret
answers to which will have TO wait II
rulings of the Revenue Bureau. How
ever, the wording of the new law 70
lows quite closely that of the prior lay
'so that all the general ruling of II
Revenue Bureau based ON the prior Law
such as those relating to when a sa
takes place and who is the manufa
turer and the like, will apply equal
to the present law.
Another section of the law of intere
not only to automobile manufacturer
but to every other manufacturer, is II
child, labor tax. While this is a rev
INCREASING provision, il is undoubted
intended to discourage the use of Chi
labor in the industries, The law
detail says that any mine, quarry, cal
merry, manufacturing establishment, etc
that employs or permits any childre
to work who are under the age of fou
Teen, or WHlCH Dtliib btNNttl Nht db'
of fourteen and sixten, are permittt
10 work more than eight hours in al
day, more than six days in any wee
or after I p IN. or before 6 a. m, al
subject to a special tax of 10 per Gel
OF the entire net profits Of the esta'
lishment. This tax is over and abo'
every other tax in the new law.
one provision that in most instanc
escaped the eye running over the b
for the first time affects all bus. mot
freight and express lines that can
construed as operating in competitit
with railroads. Under the provision
question passenger tariffs carry an
per cent tax, while freight lines mu
sustain a tax of 3 per cent on the
schedules. The tax on express matt
handled in competition with the ra
roads is one cent for each twenty cen
charged. These provisions hold ov
from the old law. Rural express lin
In many Instances probably will not !
affected, since they serve territory tri
utary to co1amon carriers.