El Paso herald. (El Paso, Tex.) 1901-1931, 1920-03-10
If You Try To SwindIe Your Uncle Sam
On Income Taxes, He Will Catch You

arisen. And some big concerns have
been on the carpet here about "eX-
cessive" salaries And the govern
ment has in many cases decided that
the allowance for salary was beyond
the average and the employer did not
prove that his employe possessed the
extraordinary qualifications or per
formed extraordinary duties which
entitled the latter TO be considered
an exception 20 the rule The returns
OF the general average OF ones trade
or business competitors IS the best
check the government has on efforts
to charge of 10 salaries sums that
logically should be subject to the
cess profits taxes Many man
would prefer TO pay an individual tax
on 100000 rather than an excess
profits tax on the same sum as a
business profit, for in the second
case he might have TO give nearly
half OF i 70 the government.
Big Salaries Costly
Indeed. some people are lucky.
Years ago, long before the income
tax laws were ever thought Of. Ger
tain men entered into contracts, re-
corded in their books each year. and
paying themselves big salaries or
even specified sums OF the net profits
OF the business. Those sums are not
taxable as excess profits. The con-
tracts cannot be invslidated BY the
government But these cases are not
numerous
Speaking OF data on corporations.
however the government experts can
tell at a glance what constitutes ex-
cessive cost Of production. The bur
den OF proof rests on the taxpayer.
He may be able TO explain why the
salaries he pays or the expenses he
incurs are out Of all proportion to
the other men IN the same business.
But his return is the kind likely to
excite curiosity and start the ma
chinery Of investigation
They Get You Every Way
And when the government agents
begin examining books and minutes Of
corporations they may find evidence
useful TO the department OF justice
in prosecuting DrofiteerinE or COM
oinauons in restraint OF trade Pros
ecutions for improper returns on in
come taxes are not always left to the
Z. s attorneys, because the latter
haven't the time 20 familiarize them
selves with the intricacies Of such
cases Thousands OF men are espe-
cially trained for Investigation and
prosecution For failure to make a
return on time. there is a penalty OF
$1,000 plus Is percent OF the tax due.
For failing to pay tax when due or
there's a penalty OF five percent and
interest For making a fraudulent
return. the penalty is $4,000 and a
years imprisonment. plus 50 per
cent added TO the taxes evaded. And
besides. individuals are at the same
time liable 10 prosecution under other
statutes for perjury. conspiracy and
other things that could keep a man
in jail for years.
Honesty II the Best
Tentative returns can always be
made and amended returns flied later.
Honest mistakes are often made II
is case OF good faith and good IN
tent It's also a case fn which honest
people have nothing 10 fear. while
dishonest people may find themselves
In plenty OF embarrassment IL the gov
eminent catches them. And the
chances Of being caught are excel
lent. No one need make any mis-
take about it.-Copyright. 1890, by FL
Paso Herald
Tomorrow article will deal with
the amounts Of money already re-
covered or expected to be obtained
from back tnxes.)