Evening star., 1920-03-07
j. S. WILL EXTRACT
FULLY TWO BILLION
FROM TAXD0DGERS
One Corporation Which Held
Back rs Million Is Forced
/ to Pay Up.
BY DAVID LAWRENCE.

BY DAVID LAWRENCE.
This is the third and last of a series Of
srtcles telling what vast sums of money the
government had recovered f,om persons wh" IN
Fully two billions of dollars that
the Congress of the United states did
not estimate could be obtained from
the taxpaying public may be recov-
cred in the next eighteen months
from individuals and corporations
who since 1917 have failed to pay the
correct amounts of their taxes. When
IT is considered that Congress ex-
pected to raise six billion of dollars
from all kinds of taxes annually. two
billions is "A tidy sum saved.
Its collection is no easy matter and
may take three years to gather to-
gether. But if it is recovered the
present generation can expect its tax
burdens to he made lighter by Just
that much Nobody can be absolutely
certain that the government has dis
posed of his income tax return OF
1917 unless he is confident II has
oesn honestly made out -Four mil
ions of persons. il is estimated. file
income tax returns annually. That
means about 100000 returns for
1917. 1918 and 1919. But the govern
ment has way of sitting them so
that the big fellows are examined
first Persons with small incomes and
relatively small taxes can't he sure
for another year or SO that their 1917
tax returns were audited and filed.
But IL they made a return that is on
its face honestly intentioned they
need not worry. 1t is the big cor
porations and concerns and persons
who have tried to cvade their taxes
who need worry. And the expert
iD
last fortnight tells story or how
far-reaching and retroactive is the
effect of the income tax on modern
business.
One Case in Point.
The government investigators dis
covered that the 1917 return of big
corporation was improperly returned;
in fact. something like s25.0o0,o00
taxes due the government were not
included. The government had the
goods on the corporation and the
latter paid the sum without protest.
But corporations do not usually nave
large sums in bank available for
emergencies like this. The govern
ment demanded within ten days a part
payment of s1O,000,0o0. The firm in
question went to it's bank. The bank
was not in a position to make the
loan. but stretched point. Yet the
the tax return of the same concern
for 1918 was correct and that said
firm would not be in hot water over
it's other income tax return later on.
So the Treasury Department CO.
operated to the extent of examining
amount of taxes for 1917 and 1918 was
estimated and check for $10.0O0.000'
was handed over in part payment.
But there have been some tragic
cases in which the firms have in the
meantime changed hands. the money
has been spent or the dividends dis
tributed. People who buy out husi-
nesses need to be careful nowadays
that the income tax returns Of the
present owners are absolutely sound
and it would not be surprising If mod
ern business made the question of past
income taxes a vital factor in contracts
OF sale as an insurance against flu
ture liability. Banks will some day
maintain bureaus in their credit de-
partments to investigate the tax status
Of their clients.
shows Much Discretion.
The Treasury Department has a
good deal of discretion about accept
ing voluntary payments on taxes not
originally returned. But that is true
Is a rule Of cases in which there
have been technical errors. cases in
which subordinates have plainly erred
and where collusion with principals
could not be proved. Even in these
cases the government collects not
merely the taxes, but the interest.
that the government might have had
II the money were in Its vaults during
the period Of the delinquency.
OF course. there is plenty of room
for fraud even among employees OF the
government. But special division OF
government agents is busy checking
up on personnel. And in one conspicu-
Gus instance recently. n firm which
offered a bribe to a government agent
discovered thirty minutes later that
the latter had turned in evidence OF
the attempted bribery to the United
States attorney and prosecutions en-
sued.
The staff Of the government is on
the whole efficient. 1t is composed OF
men who are ambitious to make
record for themselves and make the
most of the experience they get in
the government service SO that they
can pursue successfully their own
vocationS of law, accounting. investi-
CATION, etc, in later life. Statisticians
galore are on the income tax rolls.
They are constantly comparing and
auditing returns and classifying them
according to districts. trades. busi-
nesses. professions and incomes. They
cations. Fully 100000 special cases
are handled by the government dur
ing a year. Some are closed up more
rapidly than others. The table of just
how much was recovered from each
trade or business would make inter-
esting reading. but it might convey
wrong Impressions about the rela-
tive honesty Of different occupations
and cause no end Of trouble.
May Reduce Taxes.
Generally speaking, there is a sur
plus of $4,000. 100000 in prospect ac-
cruing from the years 1917 and 1918
and 1919, the estimate being based
upon experience with returns already
examined. II the government finally
collects that amount taxes can be
reduced some time within the next
FIVE years The more the taxpayers
give the government now, however.
the less everybody will have to pay
later on. Individual honesty never
has meant SO much collectively as it
does today.
Copyright. 192O)
The smokers in the United States