The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-15
ROPER ASKSLAW
TO POSTPONE TAX
Would Relieve Those Who
Have Suffered Losses i'm
Industrial Depression.
SUGGESTS CONCESSIONS
Former Commissioner CT In
ternal Revenue Fears Finan-
cial Disaster to Many.

Special Despatch TO THE New YORK HsRALp.
BiNGfiAMToN, ~ Y. Nov. linn
mediate legislation TO permit business
firms which have suffered heavy finan-
cial losses in the current commercial
and Industrial depression to postpone
payment of the December is instainent
Of income and profits taxes under GER
tain conditions was advocated by Daniel
c. Roper, former Commissioner of In
ternal Revenue. In an address here to-
day before chamber of commerce
meeting. Mr.. Roper also recommended
that Congress soon after its converting
next month consider remedial legsla-
lion to extend the net loss' provision
of the revenue. act ~ the year 1920, so
that business Institutions which have
suffered loss this year through shrink
age OF values OF their stocks of conf
modities may deduct those losses frofo
last years income in calculating taxu@
due.
Referring to the necessity Of enabling
some business firms to postpone the
December Is Instruments Mr. Roper
said:
Because of financial and industrial
c. nd tions with which all are acquainte I
many concerns are going to experiences
great difficulty III meeting this install
n ont. The tremendous decline since
the first OF this year in.the market value
0. many stapie commodities has re-
ST tied IN an almost unprecedented
strinkage OF inventory values. In MANI
instances these losses exceed the entire
net income for 1919 and the unfor-
tuIate companies possessing such goods
5nd themselves unable to convert thefr
wares into cash or to obtain credit *
their banks by which to meet the tax
OF sed upon their paper profits-profits
that have never been realized.
Suggests Deferred Payment.
I'm some of these cases under ths
present law, unless it S amended befor
December Is, it viii be mandatory upon
the Treasury to CO ect the tax by cour
action through distraint proceeding
i his would mean. financial disaster In
rlFny cases and should be obviated.
"A plan should be devised lor iegisla-
tive relief for such cases, whether ar s.
ing from inventory losses or from other
Industrial ard financial conditions, by
deferring the tax payment for a period
OF, say. six months under such safe
guards as will extend the benefit o ~
to those concerns which cannot pay the
tax. Where sch layment Is ae4effeu,
would suggest that the normal rate Of
interest be as high as per cent. TO dis
courage those who might Improperly
take advantage OF the Government I'm
der a lower rate of interest"
In urging early amendment of the
net loss section. to make ii apply TO
business of the current year and thus
TO taxes due rext year, the former Com
missioner OF Internal Revenue said:
Must Care for shrinkagc.
Section 204 of the revenue act pro-
vdes that In case a taxpayer sustains
net loss in a taxable year beginning
after October /, 1918, and ending prior
10 January 1, 1920, such net loss may be
deducted from the income of the pre-
ceding year. or IL necessary from the
income of the succeeding year, and the
taxes for that year recomputed accord
ingly This provision was enacted in
contemplation of the period of Industrial
and financial contraction which is now
upon us, but the contraction did not take
place within the period specified in the
law. The result is that there Is now no
provision to care for the tremendous
shrinkages in the inventories which have
taken place since January 1, 1920
"A striking of balance sheet Of gain
or less every twelve months and the
treatment of credit balances thus OBJ
tanned as net income for the purposes
Of taxation. is 4 necessary but arbitrary
accounting practice that frequently re-
suits in serious In. guilty For example
IL n business concern made $4,000 in
1918. lost $4,000 In 1919 and made
$4,000 In 1920 it has not earned profits
OF $4,000 in the three year period, but
only $4,000.
Certainly both the Treasury Depart
ment and the Congrc IS win see the JUS
tice of permitting net losses In one year
to be offset against profits Of prior or
subsequent years and will unite in the
effort to give the taxpayers this just