New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-07-13
U. S. Traps S
Firms Here in,
Big i L AK Fraud
Government Robbed i'm This
State of $l5O,OOO, 900 by
Concerns Who Keep Lux
ury and Other Levies
Many Soda Violations
Numerous Film Theaters
Accused; Deli,1quents To
be imprisoned, Is Order

ihulctment OF at least FIVE local con-
Germs for alleged willful intent to de-
fraud the United States government of
luxury and other taxes due under the
revenue act of 1918 was promised by
federai officials of this city Yesterday
as the result Of the special drive now
belng made against delinquents bv the
force of lao inspectors under Internal
Revenue Collector William H. Edwards
Evidence In the cases has been sub
mitted to United States Attorney Hav-
ward and action by the Federal grand
jury is expected at an earlv date The
Tribune was informed there would be
no compromises such as have been
granted to offenders heretofore.
Concerns in New York State. it was
said yesterday, are defrauding the gov
ernment of close to $150,0OO, 900 yearly
in luxury taxes.
The cases were said to be similar to
that pending against Martin & Martin.
of 615 Fifth Avenue. dealers in leather
goods and specialties, indicted on June
2S for alleged evasion of luxury tax
payments. Only one of the five cases
mentioned, however, involves the lux
ury tax.
Employees Give Evidence
Three of the remaining four charge
failure to pay admission taxes, involv-
ing theater and two dance halls. and
another charges a fur manufacturer
with defrauding the government Of ex
else taxes. In all these cases the gov
ernment is said to have obtained it's
evidence through persons employed bv
the concerns.
In three of the cases in which in
dictments are expected the United
States Attorney has evidence tendino
to show that various government taxes
rad been collected by the concerns in
question from their customers and the
proceeds applied to their own use. Not
only are such concerns, if convicted
guilty of violating the revenue act of
1913, known as the war tax law. but
they were said to be equally guilty un-
der Section AZ of the United States
Criminal Code, which charges embez-
Element or misrepresentation of govern
ment funds. The evidence. therefore
makes them liable to conviction under
both laws, and the penalties are severe.
No Mercy for Delinquents
Internal Revenue Collector Edwards 9
declared the government is determined
from now on to prosecute its tax de-
llnquents with the utmost vigor.
Hitherto they have been permitted to
submit compromise offers, which in
cluded the full amount of taxes due.
plus a punitive settlement satisfac-
tory to the government. The penalty
for violation of the different sections
of the internal revenue act alone is
fine of from $1,000 to $4,000, impris-
onment for not exceeding one year,
or both.
Mr.. Edwards confirmed statement
made yesterday by Representative
Isaac Siegel that in New York County
the luxury taxes are bringing in close
to $40, 0,500,000 a month, whereas they
should amount to at least s15, 100000.
Mr. Siegel estimated that those who
fail to pay these taxes are defrauding
the government of s60,000,000 year
in this county, while the total for the
CONTINUED on page FOUR