The Brattleboro daily reformer. (Brattleboro, Vt.) 1913-1955, 1920-03-05
INCOME TAX DODGERS
WILL BE SURPRISED
Government Will Uncover Their Graft Some Day =
Aliens Unable to Run Away from Taxes = Special
Prosecuting Agents Busy Examining Suspicious
Cases

duction and deducting the expenses
which he thinks he should be allowed to
subtract from the total of his income.
Now, of course, it is improbable that
all the bakers, for example, acted in a
conspiracy to put down exactly how
much their costs of production were
in any year. Competitors do not en-
gage in conspiracies. So on the face of
it, the government has general collec
tion of statistics on each trade, pro-
fession or business. And then when
somebody comes along and wants to
claim that he paid an employe or man
ager $4,000 year when nobody in
| the whole business, wholesale or retail,
included any such return, the govern
| fnent investigator takes the matter in
| hand. To be sure, some odd cases have
| arisen. And some big concerns have
been on the carpet here about Eek
| cessive' salaries. And the govern
ment has in many cases decided that
the allowance for salary was beyond
the average and the employee did not
lprove that his employee possessed the
extraordinary qualifications or per
formed extraordinary duties which en-
titled the latter to be considered an
Exception to the rule. The returns of
the general average of one s trade or
business competitors is the best check
the government has on efforts to charge
| off the salaries sums that logically
should be subject to the higher per.
centages of taxation or excess profits
taxes. Many a man would prefer tC
ipay an individual tax on 100000 rath
er than an excess profits tax on the
same sum as a business profit for il
the second case he might have to give
nearly half of it to the government.
| Indeed, some people are lucky. Year,
ago, long before the income tax law
were ever thought of certain men en-
tered into contracts, recorded in thei
books each year and on the minutes o
their corporations, paying themselve
big salaries or even specified sums o
the net profits of the business. Thes
: sums are not taxable as excess profits
The contracts cannot be invalidated b,
the government But these eases ar
not numerous.
Il Speaking of data on corporation:
however, the government experts ca
tell at glance what constitutes eS
cessive cost of production. The burde
of proof rests on the taxpayer. He ma
be able to explain why the salaries
pays or the expenses he incurs are OF
i of all proportion to the other men
the same business. But his return
the kind likely. to excite curiosity an
start the machinery of investigation
And when the government agent
begin examining books and minutes {
corporations, they may find evlden'
> useful to the department of justice
prosecuting profteerng = or seambini
tions in restraint of trade. Prosec1
u tions for improper returns on incon
taxes are not always left to the Unite
u States attorneys because the latt
haven t the time to familiarize ther
Z selves with the intricacies of su,
:, eases Thousands of men are especial
= trained for investigation and pros
cution. For failure to make r
. turn on time, there is penalty of s
= 900 plus % per cent of the tax du
70 For failing to pay tax when due
"a understatement through negligenC
=. there s a penalty of five per cent al
!. interest For making a fraudulent T
r turn, the penalty is $4,000 and
!. years imprisonment plus 80 per ce
added to the taxes evaded. And b
10 sides, individuals are at the same tlT
q liable to prosecution under other sta
% utes for perjury, conspiracy and 9th
is things that could keep a man in j
! for years.
ri Tentative returns can always
# made and amended returns filed late
!. Honest mistakes are often made.
d is a case of good faith and good i
e. tent 1t s also case in which hone
It people have nothing to fear while di
If honest persons may find themselves
n plenty of embarrassment if the Cover
T. ment catches them. And the chanc
v of being caught are excellent. No OF
Y, need make any mistake about it.
ell Tomorrow article will deal wi
p the amounts of money already reco
h cred or expected to be obtained fro
back taxes.)