The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1923-01-29
PROPOSE TO
/ CLARITY LAW
| ON INCOME TAX
State Tax Department Would
Meet Objections by Stand.
ard Oil
SUTr BASIS OUTLINED

Although the state Of North Da-
kota contends the Standard Oil Com.
pany should pay the state $74,8Sl
additional income taxes for the years
9l9, 1920 and 1921, an effort will be
lade to remove the objections raised
y the company in suit now pend
lng in federal court in the enactment
pf new income tax law by the pres
emit session of the legislature.
The tax commissioners has as
essed additional taxes against the
Standard Oil company ''on III e
grounds that the company failed to
apportion to North Dakota the
mount of net income which should
pcoperly be allocated or apportioned
10 the state under the provisions of
the present law" according to Ly-
man A. Baker, secretary to the tax
commissioner
The following statement of the
case was made by the state tax de-
partment:
The Standard Oil company has
brought an action in federal court
rtquesting permanent injunction
'eainst the collection Of certain ad-
ditional in ome taxes assessed
against this company by the stat:
tag commissioner on the 1919, 1920,
and 1921 income of this company
The total amount involved is STA, S8i
The Standard Oil company paid a
tax to North Dakota on it's net in
r6me in North Dakota for the years
1919 and 1920. The tax commission
cr has assessed additional taxes
against this company on the grounds
hat the company failed to apportion
20 North Dakota the amount Of net
income which should properly be al
located or apportioned to the state
under the provisions of the present
INV. The provisions of the present
law are ambiguous in some respects
n regard to the apportionment Of
set income in the case of a corpor-
alton doing an interstate business
and operating in this state.
The Standard Oil company is pri-
llarily engaged in the oil business
but has other lines of business n.
directly connected with their oil bus
mess from which they derive net
income. The state is not contendng
that North Dakota is entitled to any
part Of the net income derived from
sources not connected with the oil
business of this company there
should be deducted only that proper
ton of the federal income tax which
was paid in connection with the net
income Of the oil business and should
not deduct federal income tax paid
on net income from outside sources.
The company claims that under ther
system of keeping accounts they can
arrive at their actual net income in
North Dakota on definite basis;
that the provisions of the present
income tax law which provide that
the total net income in the state of
North Dakota of a corporation en-
gagged in interstate business, and do
ing business in this state shall be
found by all0cating to North Dakota
that proportion of the total net in
come of corporation which it's bus
mess in the state bears to its total
business is unconstitutional, in that
it is taxing income not derived in the
state Of North Dakota.
The Stanard Oil company in som.
states has no selling organization
but has very large investments in
oil wells and refneries, and it claims
that the basis of apportionment pre-
scribed in the state income tax law
does not mean that business shall be
measured by gross sales, and that if
it does SO mean that such provision
is unconstitutiona in that it is tax
ing property and income beyond the
jurisdiction of the state; it contends
that the basis of apportionment of
che present law is unjust and in
equitable and deprives foreign cor
poration engaged in business N
North Dakota of equal protection of
the law as guaranteed by the federal
constitution.
The basis of apportionment of net
income of foreign corporations pre-
scribed in the proposed new incom.
tax luaws is definite and follows the
recommendations of a committee
composed of the best legal and taxa
ton experts in the country.