Evening star., 1925-03-08
TREASURY LAXNESS
COST j. s. MILLIONS,
SENATE INFORMED
Committee Reports Ship Firm
Settled S9,913,841 Tax
for 81, 100000.
PARTY LEADER FAILED
TO MAKE RETURN, CLAIM
Members Assert William Boyce
Thompson Concealed 100000
Profit on Sale.

Evidence in two additional cases
designed to show laXness in the
Treasury Department in protecting
the interests of the Government in
collections from big taxpayers has
been presented to the Senate by it's
Special investigating committee
One case is that of the Atlantic,
Gulf and West Indies Steamship Co.
and its subsidiaries. which were per-
mitted to satisfy an assessment of
S9,91S,S4l for S2.60O.000 despite at
tempts which, it was charged before
the committee, had been made to con-
ceal assets in an effort to evade tax
payments over a period of four years,
from 1917 through 1920.
Case of Thompson
The other is that of William Boyce
Thompson of New York, former
chairman of the finance committee of
the Republican national committee
and his associate. o. ]. Mcconnell. who
are alleged TO have failed to make
returns on profit of 5000. 900 in the
sale of mineral lands in Kansas, Mis-
souri, and Oklahoma in 1917 and 1918.
The committee was told that Sec
rotary Mellon had approved the set
tlement with the Atlantic. Gulf and
West Indies Steamship CO.. but, ac-
cording to the evidence. not even the
solicitor of the Internal Revenue
Bureau passed on the Thompson case,
in which is involved also his claim
for losses on the sales of stocks and
bonds aggregating s597.479.
Chairman CouZens directed Internal
Revenue Bureau officials to bring this
case to the immediate attention of
Secretary Mellon. adding that it had
developed "a most astounding condi-
ton"
Heads Knew Nothing.
Il think" he said. that the MEM
bers of the bureau here must be i'm
pressed with the power of an indi-
Vidual so to route case through the
bureau as 10 obtain anything he de-
Sires, and yet the head of the bureau
or the solicitor would know nothing
about it,"
Whatever supplemental reply Of
ticials of the bureau NAV have made in
these cases in the secret sessions of
the committee is not known publicly
since none of chose connected with the
committee will discuss what trans
pires even after the evidence has been
submitted to the Senate.
Chairman Couzens has expressed
his doubt as to whether publication of
details of the testimony is authorized
under the law since ii has to do with
income tax matters and there is a
general statute which would seem to
prohibit their publication.
Internal Revenue Bureau officials
told the committee that in the settle
ment with the Atlantic, Gulf and West
Indies Co the controlling factor was
hnn ha
without being forced into bankruptcy.
The stock was widely held said
Nelson X. Harrison, solicitor of the
Internal Revenue Bureau. 1T was a
big company: it was the largest
American shipping company.
and that was brought home to US
very strongly
Chairman Couzens said he thought
this was the most astounding case he
could possibly conceive Of
Advantage of F'raud
After all these attempts at fraud
that were made by the taxpayer as
disclosed by the records of the final
settlement" he added they got ad-
vantage of their attempts at fraud
which were made and no criminal
prosecution. at least of record be-
fore this committee. has been had"
l.. c. Manson, counsel for the COM
mittee, stated for the record that an
examination disclosed that the tax
payers income had been understated
and the payment of taxes evaded by
the failure to report profits on sale
of ships; reserves set up out of in
come, the failure to capitalize per-
manent improvements, instead of
which they were charged as ex-
N s; excessive depreciation
charges and the failure to report on
income profit resulting from liquida-
ton dividends paid by the Mexican
Navigation Company"
According to memoranda and state
ments placed in the committee rec
ord the liquidators for the Mexican
Navigation Company-A. r. NicoI,
then president, and Albert G. Smith
then director of the Atlantic, Gulf
and West Indies Company, and Con-
zalo Abauno-declared liquidating
dividend aggregating $3,s41,223 on
3,409 shares of the Mexican company
held by the Atlantic, Gulf and West
Indies Company and the Ward Line.
Taxes Compounded.
The records show" Mr. Manson
told the committee, that the Allan
tic, Gulf and West Indies Company
received S3,s41,223, the amount of the
liquidation dividend, during March,
1920. However, in order to secrete
the profit and avoid the payment of
tax thereon, it issued to the Mexican
Navigation Company three non-inter-
est bearing demand notes for S3,941,-
223. This was all uncovered and this
formed part of the taxes compro
missed
Manson went on to charge that
Continued on Page 4, Column 3D.