The Devils Lake world., 1922-11-22

NernQpS the most eneCtlVe way tO Oe-
ter others. A recent New York case
was cited by officials. A combination
Of fur dealers, In conspiracy with GER
tain government agents. sought to de-
celve the government by false certifi-
cations that their taxes had been paid.
Through the connivance Of government
agents the accused got away with the
game for long time.
When the scheme was uncovered,
and given wide publicity, there was an
immediate rush among fur dealers all
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
We're 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, it was shown, some
dealers who made upward Of 100 per
cent net profit during 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 few typ
ical cases the bureau made these off,
clal explanations in response to Ques-
tions submitted by the New York Her
aid:
Must Be Bankrupt to Escape.
y. 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 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 a case of not being
advisable to try to extract blood from
a turnip" If the bankruptcy Of the In
diyidual 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 moi
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 insis,
that all records, banking record o.
otherwise, be revealed, II that cours,
Is necessary to establish the taxpay
ers' status.
Q. What happens to an individua
who fails to declare In his return tn,
profits made upon sales Of stocks
A. Along the line somewhere in stool
transactions there is record Of tn
buyer and seller. Brokers' record
offer reliable information on this point
Under Supreme court decision, stocl
dividends are not taxable. Profits o.
stock sales, however, are taxable, an
are required to be shown. There l
q check on an individual stock sal
through the preceding or subseQuen
sales. Very careful watch is kept W
on brokers' records to detect willfu
failure Of taxpayers tQ hide their prof
its from such sources.
OtUtCUIk 70 lT0COs
Q. II citizens money Is In man
savings banks does the government
make total Of these deposits and I'm
out whether the total annual interet
calls for tax? A. It is difficult fo
the government in all cases to trac
accurately the liability Of taxpayer
who so distribute their accumulate
funds on deposit. Generally it is onl
in cases Of fragrant efforts to hoot
wink the government by that metho
does the government call for privat
bank records to disclose the taxpayer
status. The bureau regards this as
very exceptional method and one ths
probably does not mean very large 10,
to the government.
A very important part Of the re
enue bureaus machine Is the auditir
force Of 1000 men. Auditors subje
the returns to closest scrutiny, and
deduction or other claim appears {
their face to be doubtful, investigate
usually Is ordered. At different p
riods Of the year hundreds Of these e