The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-05-03
EXPLAINS U. s. TAX
ON CAPITAL STOCK
Treasury Issues Regulations
Under Provision of New
Revenue Law.
EXEMPTIONS ARE FEW
Returns for Taxable Period,
July I, 1918, to June 80,
1919 Is Tax Basis.
EXEMPTIONS ARE FEW
Special DespafcA TO Tnn sns

special Despdfch to THH Sun.
WASHINGTON. May 2.--Regulntions
under the capital stock tax provisions
OF the new revenue law were issued by
the Treasury to-day.
The tax applies to all corporations.
joint stock companies and associations,
Foreign and domestic, engaged in BUSH
ness in the United States unless spe-
foially exempted under the act.
For domestic corporations tho tax is
at the rate of 81 for every $1,000 of
average fair value In excess Of an ex-
emption OF $1,000 ana is based on the
tair average value for the year proceed
ing the taxable year.
roreign corporations engaged in bust
ness In the United States are taxed SIM
I!ariy to domestic corporations except
, a .he basis for the tax is the average
amount OFT capital Employed in the
transaction of business in the United
states during the year preceding the
taxable year
me tax applies to domestic and for
eign mutual insurance companies. in
which case the basis for the tax dif-
1ers from domestic and foreign corpo-
rations.
The law is retroactive and effective
as OF July 1, 1918. and Is in lieu Of
section 4O7. Title ". Of the act of
september 8. 1915. which taxed corpo-
rstions cat the rate OF SO cents a
sI,ooea year OF the average fair
value OF the capital stock in excess of
$4,000. ",
As practically all corporations fled
returns for the taxable period Of July 1,
1918. to June 30. 1919. under the pro-
visions Of the act OF 1915, such returns
VIII be used as far as practicable in
assessing the tax under the revenue act
OF 1918. Corporations will be notified
or the additional tax due~and should be
in position to make prompt payment
upon receipt Of bills from the collectors
OF Internal Revenue.
Special taxes, Of which this is one, be-
come due on July 1 annually, or on COM
mencing any trade or business on which
such tax Is imposed. The tax Is payable
In advance. but corporations may ava IL
bills from the collectors before making
payment.
Returns for the taxable period of July
l, 1919. to June 80. 1920, are due during
July. 1919.
The tax does not apply to any corpo-
ration which was not engaged In bust
HESS curing any part OF the fiscal year
preceding the year for which the tax ia
due. but IL II was In business one day II
Is subject to the tax. There il no reIa-
ton between the amount Of the tax paw
able and the length Of time the corpora
ton was in business.
n corporation owning n railroad con-
trol'ed and operated by the Government
Is exempted for a given taxable year
only IN case II does no business during
such year.
AS corporations are organized for do
ing business, all corporations will be
held to be engaged In business and
liable for capital stock tax unless posi-
tive proof is submitted 10 the Commits
sioner of Internal Revenue showing ex-
emption or non-liability to such tax.
4 corporation which does business
without having paid the tax Is liable
to a fine of $1,000. A penalty of not
more than $1,000 for failure and not
more than $4,000 for wilful refusal TO
make return and pay the tax are pro-
vided for in the bill.
ANY officer or employee of a corporo
tion who in the course OF his duty fails
TO make return on time Is liable for
fine of $1,000. For wilful refusal +he
penalty is fine OF not more than $40
200 or Imprisonment for not more thai
year, or both. Corporations showing
wilful Intent to evade the tax are liable
10 penalty in an amount equal to SO Der
cent. of the. tax in addition to the penal
ties mentioned
Corporations delinquent IN filing re-
Turns are liable to penalties in amounts
equal TO rs per cent. of the amount,
OF their taxes.