The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1922-01-13
MORE INCOME
TAX PROVISIONS.
MORE MATTERS EXPLAINED BY
INCOME TAX COLLECTORS.

The following statement is issued
by Collector of Internal Revenue,
L. NJ. Willcuts, for the district of
Minnesota:
The Revenue Act of 1921 con-
tains two new and important pro-
visions, which are the subject of
frequent inquiry. The first relates
to the personal exemptions allowed
married persons, and the second to
the provision requiring that re-
turn be made of gross income of
$4,000 or more.
The act provides that married
person, living with husband or
wife, whose net income for 1921
was $1,000 or less shall be allowed
personal exemption of $4,000.
If the net income of such person
was over $4,000 the exemption is
$4,000. Under the Revenue Act
of 1918 the personal exemption al
regardless of the amount of net in
come. The normal tax rate re-
mains unchanged, 4 per cent on
the first $4,000 of net income
above the exemptions and per
cent on the remaining net income.
In order that an income slightly
in excess of $4,000 shall not be
subjected to an Unfortunately dis
proportionate tax because of the
reduction of the exemption to
$4,000 thereon, the law provides
that such reduction shall not oper-
ate to increase the tax, which would
be payable if the exemption were
$4,000, by more than the amount
of the net income in excess of
$4,000.
For example, on a net income
of 5000, the tax, without this
saving clause, would be s120.4O,
which is per cent on 5000, the
amount of net income less an ex-
emption of $4,000. The actual tax
is $1,000, computed as follows:
from the net income of 5000 is
deducted $4,000 leaving S2,510,
the 4 per cent tax on which
amounts to $100.40. To this is
added $40, .ethe amount of net in
come in excess of $1,000"
The personal exemptions allowed
married persons, apply also to the
head of family, person who
supports in one household one or
more relatives by blood, marriage
or adoption.
Heretofore, person whose net
income was less than his exemption
Isl, 900 if single, or $4,000 if
married) was not required to file
return. Under the Revenue Act
of 1921, if the gross income of
an Individual, equalled or exceeded
$1,000, or If the combined gross
income of married couple and
that of dependent minor children
equalled or exceeded $4,000, re-
turn must be filed, regardless Of
the amount of net income.
NET income" is gross income,
less certain deductions. The fact
t n a t allowable deductions from
gross income, for business expens-
es, losses, bad debts, etc. may re-
duce the net income to an amount
below the personal exemptions of
$1,000 or $4,000, does not alter
the requirement to file a return
Of gross income, if such gross in
come equalled or exceeded $1,000.
zee
Following is statement from
Commissioner of Internal Revenue,
David H. Blair, relating to the pro-
cedure with respect to inquiries
received by the Bureau of Internal
Revenue regading tax liabilities.
Requests are being received
daily for rulings and advice upon
abstract cases or prospective trans
actions involving questions of in
come tax and profits liability
These requests are so numerous
and the insistance on prompt action
so great that it seems advisable at
this time definitely to outline the
Bureaus policy which will govern
the consideration of these results.
The Revenue Acts Of 1913 and
1921 depart widely at many points
from prior law or practices and
have given rise to new questions
of such Importance, complexity,
and number that the resources of
the Bureau are no more than ade-
quate to advise taxpayers promptly
of their present liabilities arising
out of past transactions. It is i'm
possible to answer every question
which the invention or ingenuity
OF the inquirer may devise without
negieeting the fundamental duty of
determining tax liability upon the
basis of actual happenings. Under
these circumstances, the admins
trative necessity is obvious Of Civ
ing precedence over abstract or
prospective cases to actual cases in
which the taxpayer desires to know
what are his immediate liabilities
under the law.
1T will be the policy Of the
Bureau not to answer any inquiry
except the following circumstances:
The transaction must be COM
pleted and not merely proposed
or planned.
1.-THE complete facts relating to
the transaction, together with
abstracts from contracts, or
other documents, necessary to
present the complete facts, must
be given.
''The names Of all the real
parties interested (not "dum-
mics" used In the transaction)
must be stated regardless Of who
presents the question, whether
attorney, accountant, tax service,
or other representative"