Evening star., 1920-03-10
LOSS
NEAR HALF BILLION
FROM TAX REBATE
Decision on Stock Dividends
Discussed by Commits
sioner Roper.

Loss to the government as a result
of the decision by the Supreme Court
of the United States declaring stock
dividends not taxable as income will
approach nearly half a billion dollars
according to an estimate today by
Commissioner of Internal Revenue
Roper.
With some 100000 dividends re-
turned on the bureaus files, it would
take months to make an accurate eS-
innate of the effect of the decision.
Mr.. Roper said. but from n hasty
search of financial manuals an unofii
cial guess" reveals the following fig
ureS:
For 1917. S35.OO0,OO0 would have to
be returned. and for 1918. a like sum:
for 1919 the loss in unpaid stock divi-
GendS is placed at S100. 900, 900. and the
estimate for 1920 indicates $500. 200, 900
unreturnable.
However, Commissioner Roper said.
the loss to the government cannot be
computed with any degree of GER
tainty because what the government
may lose as dividends will be offset
to some extent by the tax on stock
sales. Such transactions, OF course,
are going on continuously. Commits
sioner Roper emphasized the fact that
estimates of the governments loss
at present are not official and the re-
suit may be found to be larger than
is now supposed.
Instructions to Collectors.
The following letter of instruction
outlining the procedure to be follow
ed by taxpayers in claiming credit
for taxes paid on stock dividends was
issued to collectors of internal rev.
enue by Commissioner Daniel c. Rop-
er today:
on Monday decision in the case of
Eisner VS.. Macomber, which in sub
stance is as follows:
"A true stock dividend made law
fully and in good faith by corpora
tion. either against profits invested
working assets of corporation, or
against accumulated and undivided
profits, is not taxable as income to
the shareholder recipient. it being
held that to tax such stock dividends
would be to tax property without
apportionment in violation of the
provisions of article I, section z.
clause 3. and article l. section 3.
clause 4 of the Constitution. notwIth-
standing the sixteenth amendment.
there being no realization OF pront
shares is made.
TeleEraphsl Collectors.
'The bureau has telegraphed to the
collectors of internal revenue as fol-
..Claims for credit against first in
stallments March Is on account or TAX
paid in prior years on stock d1vloends
may be accepted, but must not be per-
mitted to reduce payment on March
Is fnstallment, unless claim on form
47A is filed setting forth fun de-
tails of dividends received and taxes
paid thereon. and statement OF al!
n
shares received as stock dividend
and unless claim is accompanied by
statements from the corporations
which distributed dividends as to
amounts distributed TO taxpayer and
years in which profits distributed were
earned
I'm filing returns for prior years
taxpayers reported dividends received,
including both cash and stock d1vi-
dends, without segregation. 1t Will.
therefore. be necessary for the depart
ment tofhave specific information, veri-
fed by the corporations declaring the
dividends, as to the amount of divi-
dends distributed to each taxpayer. the
year in which the profits distributed
were earned and a statement disclosing
all details of subsequent sales OF the
shares in order that the amount of
credit allowable and the validity of
the claim may be correctly and justly
determined.
In accordance with this the tax
payer should present to the collector
formally a claim for credit for any
overpayment of taxes in prior years
on the regular form for that purpose
(form 47A), and on this form must be
set forth the full details of dividends
received and taxes paid thereon. This
claim must be accompanied by a state
ment or certificate from the corpora
tion distributing the dividends show
ing the amount distributed to the tax
payer and the years in which profits
distributed were earned.
Taxpayers on complying with these
requirements will be permitted by the
collectors to credit the amounts due
them against any installment of taxes
remaining unpaid. In case the credit
to which the taxpayer is entitled ex-
ceeds the amount of taxes remaining
unpaid. claim for refund of the diff
ference may be fled.