The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1924-08-09
Community TAX
LAW RULING
AWAITED
California Taxpayers to Save
100000 Annually If
Statute is Upheld

/ NoiAOA Aio taxpayers Will bdV6
from Sc. 900, 900 to $1,000, 900 annually
If the Federal Government recog.
nizes the community property law
of that State. the United States
Treasury estimated today.
Refunds on taxes paid from 1918
to 1928 aggregating from $45, ZOO, 900
to $5o.OO0,O00 must also be paid by
the Government should the law be
sanctioned either through a ruling
Of Attorney General Stone or
future United States court decision
Attorney General Stone an
nounced that a decision would be
made by him prior to September
l. In the ruling Stone will advise
the Treasury whether or not the
California community tax law
should be recognized.
In seven States the Federal Gov.
eminent recognizes as legal the
community property laws which In
substance give husband and wife
the authority to divide their gross
income and render separate tax re.
turns, thus obtaining a lower rate
of taxation.
Legal, Said Daugherty.
Former Attorney General Daugh.
erty ruled that the California
law was legal, like those of other
States, and held that the Govern:
ment should refund the excess
taxes paid. However, Stone, find
ing a confusion Of decisions IN the
California courts, neld up Daugh.
erty's decision for a further IN.
vestigation cl the legal aspects Of
the matter.
Prior to announcement of his
ruling a number Of legal authori-
ties and large taxpayers of Cali.
fornia will be heard by the Attorney
General or will file briefs setting
out their opinions as to the law.
Advocates of the California posl-
ton pointed out that it would be
discriminatory against that State
for the Government to recognize
community tax laws Of the seven
other States and reject the Cali
fornia law.
Treasury officials announced that
taxpayers in California must pro.
tect their interests by filing applica.
tons for refunds within five years
of the year in which the tax on
which a refund is sought, was paid.
Persons who have not already acted
to protect alleged excess payments
on 1918 taxes will not receive a
refund.
An exception to the five.year
limitation was provided on 1918 In.
comes: Treasury regulations per.
mitted the filing of a waiver to
the tax before June Is, 1924, which
had the effect of extending the
limitation to April /, 1925.
Even should the Attorney Cen.
eral decide the lay constitutional or
should court decisions fix its legal.
ity, no refunds will be made unless
taxpayers have filed application for
refunds within the specified five
years, according. to the Treasury.
Would Refund at Once.
1t was stated that should tho
Daughetry decision be upheld, funds
would be available for a prompt re.
funding of the excess tax.
Should the decision be unfavorable
to the. taxpayers. Treasury officials
anticipated that the case would be
taken to the Federal courts for a
final determination. If the Federal
courts decide against the California
law 1t was stated that the State
statutes undoubtedly would e BIZ
amended to meet the requirement.
Of the Federal Government.
At the time Attorney Genera
Stone withdrew the DaughertS
opinion for further consideration
taxpayers were advised as follow.
by d. H. Blair, commissioner of in
ternal revenue:
I'm the meantime taxpayers may
take such steps to protect their in
terest by the filing Of waivers OF
claims for refund as they may deem
advisable"
Should the Government make re
funds taxpayers will be given de
tailed Instructions as to the proce
dure to be followed, according to in
ternal revenue officials.