Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-07-29
BANKERS NOW FACE
A PENALTY THREAT
Warned Not to Use Other
Than District Assessors
Tax Form.
BY L. A. FLEMING.

Local bankers were informed this
morning that failure on their part
TO make return of interest paid on
government bonds and Treasury GER
tificates on forms prepared and fur
nished by the assessor of the Dis
trict would result IN the impost of a
penalty of 20 per cent.
Recently Frank Hogan. attorney for
the District Bankers Association, pre-
pared a form which he furnished to
the organization on which returns
were to be furnished of gross earn
ingS for taxable purposes. which IN
cluded the items of interest on tax
exempt securities. TO be paid under
protest. with intent TO bring suit for
the recovery of the items later on.
The conclusion was that the bankers
had fighting chance against making
the returns on these items which are
specifically exempt, according 70 ne
terms of their issue.
Moreover the assessor of the Dis
trict in his rulings on Intangible
taxes. issued March ,. 1917. specific
ally noted the exemption from such
taxation of United States bonds.
state and municipal bonds. District of
Columbia bonds and such other bonds
as are specifically exempted by Con-
Gress from taxation are not subject
to taxation under the intangible per-
sOnal property act of the District of
Column bia"
In lieu of all personal property tax
the banks OF the District are assessed
per cent on gross earnings. For
two years some of the largest and
many of the smaller institutions mad
their returns without including their
interest on taX-free bonds, but this
year the assessor of the District is
forcing this payment, and the sugges-
ton has been made that this action
developed from some of the banks in
Guiding the income from government
in their returns.
Will Discuss Matter.
The Washington Clearing House AS
ISOLATION will hold a very important
meeting this afternoon. when this
question will be considered pro and
con.
1t is understood that some of the
larger banks will contend for unani-
nous action on the part of the Clear
ing House Associa ii on-all national
banks being members-in support of
the formula offered the bankers by
Counsel Hogan, with a possible una
nimity of action. in seeking an in
junction against the proposed 90 per
cent penalty.
If the banks are not a unit in this
matter then the chances are against
the use OF the association formula.
Yet Another Angle.
II Is UNDERSTOOD that Treasury Off
Gals and Federal Reserve Board Of
fcials are watching the case with
considerable interest. The banks of
the District of Columbia responded to
the appeals of the government in flo
tation of liberty bonds and victory
notes to the full extent of their abil-
1ty in subscriptions, in efforts to pro-
mote sales. in carrying millions of
bonds on the installment plan. until
paid for, at a low rate of interest
furnishing help at a time when help
was decidedly scarce to push the gov
taken their quotas of Treasury Ger
tificates. to assist the biggest Dor
rover in the country. the government
itself.
If the banks find that they have to
pay per cent of their gross interest
from Treasury certificates, it would
not be surprising if they were less
liberal in their purchases Of certif-
Gates when future issues are an
nounced. Indeed, they did not support
the latest issue with their usual en-
thuSiasm.
Treasury officials have needed. and
still need, the banks. That they are
awake to the impost of the tax under
consideration is equivalent to a pos
sibility that influence will be brought
to bear in behalf of the bankers.
A Franchise Tax.
William +. RlcndrOS, the DlStrlCl
assessor explained today that the tax
complained of by the banks is a fran
cl1ise tax of per cent on gross earn
ings. and is not an assessment on the
liberty bond transactions, but that the
gross earnings mus include the inter-
est on government bonds.
In regard to the form to be used. he
said that the District assessor has.
since 1902. under the act of that year,
been prescribing the form on which
the tax returns shall be made and
that the banks have been using that
form. The act provides. he points out.
that "af persons required to make re-
turns shall do SO on form approved
or provided by the assessor of the Dis
trict of Columbia
He now understands that the at
torney for the D. B. x. says they do
not have to use the form provided by
the assessor. while the assessor says
they must use that form, otherwise
they have not made return as re-
quired by law, in which event the as
SCISSOR makes out the return for them
as he can best compute it and adds
90 per cent thereto.
The form provided by the asses
sor's office is first to get all informa
tioBSdesired for the purpose of levy
ing-the tax, and to have uniformity
for Hing.
after the banks have complied with
thes law. he says. and filled out the
Is mo objection to their adding
thereto any other information they
desire. and they can, IL they wish.
Ms Richards says, says, paste the form .sa
form rrovided by the assessor.
NJ Richards said he understands
tfsAt the banks are going to comply
With. the requirements by the asses
sQrss office
Clearing House Association.
House Association has been called this
afternoon for the express purpose of
hearing a report from the special COM
mittee on uniform hours of closing.
service charges and other matters as
signed to il for report.
1t is understood that the commit tt ee
will report favorably on am. to 2
pm. as the regular opening and clos
ing hours, with the regular closing
herr at noon on Saturdays. and late
hours on government pay days and
the first day after pay days.
Members of TIE committee. while
disfnclined to talk before making re-
ports to the association. seemed TO
rink that the to 2 opening and
closing hours had small chance of
meeting with approval Some trust
companies and some of the smaller in
stitutions are said to be opposed Ito
the measure.
Service charges on accounts that
cannot be operated at a pro6t-that
is where balances are so small as to
make the account actually cost the
banks to handle them-will be given
the approval of the committee.
II IL within the possibilities that
some effort will be made to bring nom
member banks into harmonious action
with the Clearing House Association
through associate membership.
Hallway Preferred Dividend.
AT $40 yesterday afternoon the di-