The daily star-mirror., 1922-10-21

| 0SIu0PB lAC AOSl CACSllNC hAy - dS
ter others. A recent New York cas-
was cited by officials. A combination
OF fur dealers, In conspiracy with Ger
tain government agents, sought to de
ceive the government by false certif
cations that their taxes had been paid
Through the connivance Of government
agents the accused got away with th'
game for long time.
When the scheme was uncovered
and given wide publicity, there was al
immediate rush among fur dealers al
over the country to file amended re
turns, with additional payments Of
money to the government.
In Pittsburgh another sample Of how
exposure for the tax evader operates
was cited by officials. Junk dealers
doing an enormous business were ap-
pretended. AS soon as the accused
were taken Into court and some OF
them jailed there was a stampede Of
junk dealers to pay additional taxes
on the plea that their previous returns
contained "honest errors" In the
Pittsburgh cases, 1t was shown, some
dealers who made upward Of 100 per
cent net profit during a year certified
| to the government that their profits
were less than 2 per cent. Most OF
them, In deductions claimed, repre-
sented that they had conducted their
business at loss. This and similar
frauds are being regularly unearthed.
Each fraud reveals others, officials
said, and thereby is opened up hidden
revenue sources.
The internal revenue bureau applies
the rule OF common sense and reason
ableness in deciding the thousands Of
knotty problems constantly confront
ing the government, many Of which do
not involve criminal intent by those
failing to make returns or who under
estimate their liability. In a few typ
ical cases the bureau made these off,
cial explanations In response to Ques-
tions submitted by the New York Her
aid:
Must BE Bankrupt to Escape.
Q. Suppose a large income Is re-
ceived and all is spent In other ways
than by business or speculative losses
so that nothing Is left with which to
pay income tax? A. The taxpayer
would have to submit q statement Of
his assets and liabilities. Proof ac-
ceptable to the bureau would have to
be shown that the taxpayer Is bank
rupt. Proper investigation Of the facts
cited by the taxpayer Is made by the
bureau to determine IL there Is an
effort to dodge taxes. The govern
ment views 1t as q case Of not being |
advisable to try to extract "blood from |
q turnip' II the bankruptcy OF the in
dividual Is conclusively shown.
Q. How many persons have been
punished for failure to make any re-
turns to the government showing their
Income? A. More than $4,000 persons
each year are assessed a penalty Of
from IS to $40 for failing to make q
return, although their income is not
taxable.
Q. Does the government have the
right to examine bank records in cases
of those suspected Of avoiding pay
ment OF income tax? A. Congress
gives the bureau the right to insist
hat all records, banking record or
be revealed, II that course
s necessary to establish the taxpay-
RS status
Q. What happens to an individual
Who fails to declare in his return the
Profits made upon sales of stocks?
/. Along the line somewhere In stock
transactions there Is record of the
uyer and seller. Brokers' records
ffer reliable information on this point.
Jnder a Supreme court decision, stock
ividends are not taxable. Profits on
took Sales however, are taxable, and
re required to be shown. There is
check on an individual stock sale
through the preceding or subsequent
ales. Very careful watch Is kept up
q brokers' records to detect willful
allure Of taxpayers to hide their prof
. from such sources. I
Difficult to Trace.
@. If a citizens money is in many !,
lvings banks does the government ,
AXE Z total Of these deposits and find
1t whether the total annual interest .
Ills for q taxi A. 1t Is difficult for !
e government In all cases to trace q
the liability Of taxpayers )
ho so distribute their accumulated =
nds on deposit. Generally 1t is only 9
cases Of fragrant efforts to hood =
nix the government by that method
es the government call for private :,
nix records to disclose the taxpayers .
atus. The bureau regards this as a =.
ry exceptional method and one that y,
obably does not mean very large loss h.
the government. b.
A very important part of the rev. q,
ue bureaus machine Is the auditing y,
'ce Of 1000 men. Auditors subject
, returns to closest scrutiny, and If ar
1uctiOn or other claim appears on w
'lr face to be doubtful, investigation fr
tally Is ordered. At different pc n,
de- Of the year hundreds of these ex- ar
It's are In the field checking up on th
books of concerns whose returns or