Evening star., 1925-03-12
Treasury Would Bar Closing
of Ford Deal Case by
Legal Limitations.
UNDERPAYMENT CHARGE
MADE ONLY 6 DAYS AGO
Memorandum Alleges Michigan
Senator Owes Government More
on 1919 Income Return.

To prevent the statute of 1imita-
tions from closing today the tax case
of Senator James A. Couzens, Re
publican. of Michigan, the Treasury
has prepared an arbitrary assess
matter of his sale in 1919 of Ford
Motor Co. stock The amount in
volved was not revealed.
The arbitrary assessment, il was
learned. had not been personally
presented to the Michigan Senator,
who is head of the Senate committee
investigating the Bureau of Internal
Revenue, by noon, but it was indi-
Gated at the Treasury that papers
were ready TO prevent the statute Of
limitations from barring an addi-
tional tax after today, should Senator
Couzens still decline TO sign a waiver
on the statute.
While Senator Couzens has criti-
cized the action of the Treasury as
an effort to discipline" him, and re-
fused to sign a waiver, Secretary
Mellon stands on his statement of
Monday that the only question be-
tween the Treasury and Senator
CouZens with respect to his 1919
taxes is whether the proper amount
of tax had been collected"
Issue Arose Last Friday.
At the same time it was revealed
today at the Treasury that no action
had been taken in the Couzens case
prior to last Friday, when the first
intimation that there might be more
taxes due the Government from his
sale of stock to Henry Ford was
given the Treasury in a 'memoran-
dunn" from a man whose name. at his
request, has not yet been disclosed.
Prior to Friday, it was said, the
case had been considered closed. But
having been put on notice formally
by the memorandum from person
considered responsible" by the Treas
ury, it was said officials OF the de-
partment were placed in d position
where it was their duty" to examine
further into the case.
Prejudice Is Denied.
The move of the Treasury agains
Senator Couzens was not made, 1t
was explained by officials, with any
idea that it should influence disa gree
hents between the department ana the
senior Senator from Michigan. SEN
stor Couzens was only one of sew
eral minority stockholders who sold
their interests TO the majority stock
holder, Henry Ford, according TO the
memorandum" All the other per-
sons involved in the transaction have
already signed waivers, which are on
file. it was said.
The arbitrary assessment VIII not
necessarily be the amount finally
levied against the senator by the gov
ernment, II was explained, but serves
TO continue the case so that investl-
gators may go into the matter
thoroughly and determine how much
is due According to the "memoran-
dunn" the total amount of underpay-
ment by minority stockholeds in the
Ford Company was around S35.00o,OOo.
senator Couzens underpayment 1t
was charged was about $1o,0O0,0OO
to s11, 100000"
Has Right of Appeal.
The senator. it was repeated at the
Treasury today will still have re-
course, as any other taxpayer, to
the board of tax appeals. and hnally
TO the courts. if he is dissatisfied.
The identity of the man who wrote
the memorandum to the Treasury we s
guarded today at the department., not
because of any pledge to secrecy on
the part of the Government, but as an
accession to his request that his name
ther an employe of the Treasury De-
partment. nor connected with the
Ford Motor Company, it was said, but
is connected With IAN institution
familiar with the transaction in
question.
Allow Total of $562, ,OOO, 900.
A total of 1862. 100000 has been al
lowed by the Internal Revenue Bu-
reau in amortization claims under
conditions questioned by the Senate
committee headed by Senator Couz-
ems in the collection or war ana post
war corporation taxes. Thls was ais
closed in the record of the lnNestl-
cation by the committee filed with
the senate Yesterday. The record of
testimony also discloses that similar
claims are still pending amounting
to about s300,000,0O0.
Detailed Investigations OF several
of the allowed claims were made oy
the committee through its counsel, L.
H Manson, and its own engineers,
with the aid of the Bureau Oh inter
nal Revenue. Among these claims
was that of the Berwind- White CoaI
Mining Co. in Pennsylvania
Illustrates Allowance.
"I wish to call the committees at
tention very briefly to the ultimate
facts which your counsel expect 10
establish" Mr.. Manson said, in in
troducing his evidence. THE claim
js for amortization of an electric
mower plant, construction of which
was started in June, 1918, and which
was nut into operation in 1920. The
cost of this plant was sS25,722. The
amount of amortization allowed was
sara 4O1. This allowance was based
upon the theory that but 52.6 per cent
of this plant was required by the
Rerwind- White Co. to meet its post
war needs. We expect to show that
10. and more likely so. per cent of the
plant was in use at the time the
amortization was determined"
]. w. Swaren, an engineer for the
bureau, who made study of the
Berwind- White claim when it was
originally advanced, agreed that he
had reported the plant to be in use
in 1922 to the extent of 20 per cent
of it's capacity. His superiors in a
final adjustment allowed the corpo-
ration to claim the deduction on the
theory that it was only 52.6 per cent
useful, he declared, and expressed
the opinion this allowance to be fair.
II feel that the Berwind- White
Co. was entitled, If they wanted to
go to the expense OF setting up ad-
ditional claims to q great deal more