Evening star. [volume] (Washington, D.C.) 1854-1972, 1925-12-13
GREGG FLAyS TAX
INQUIRY AS UNFA AIR
Says Probers Sought Only
Black Spots, Admitting =,
Some Fraud Cases.
By the Associated Press.

BY the Associated Press.
Sharp criticism of what is described
as the action of representatives of the
Senate Internal Revenue Bureau in
veStigating committee in picking out
a few isolated cases of tax settlement
and advertising them as typical of
the action of the bureau. is made by
A. w. Gregg, recently appointed So
licitor of the bureau.
Mr.. Gregg's statement was made to
the committee at secret hearings and
is contained in another installment
of testimony made public yesterday
after its presentation to the Serare.
The solicitor conceded frankly that
there have been eases of irregular
Ity, some isolated cases of fraud. in
settling tax cases. but said officials
of the bureau are doing everything
they can to correct the situation
Praises Bureau Work.
The bureau has done a big job and
it has done a wonderful piece of
work" Mr.. Gregg declared. He
committee were hunting only for the
''black spots" in the bureau and pro
tested that this was not fair.
l.. G. Manson. counsel for the COM
mittee. interiected that he. had been
very free to say, with respect to
every branch of work gone into, that
where it appeared the work was on
sound foundation he had commend
ed il.
Solicitor Gregg's statement was
made to the committee during con
sideration of the case of the Ana
conda Copper Co, in which agents
for the committee contended that
through errors of audit the Govern
ment had lost $2.500,O00 in taxes.
Other cases dealt with in the testi-
mony now made public included the
Roessler and Hasslacher Chemical
Corporation. the Phelps Dodge Cor
poration and the Slim Jim Oil and
Gas Co.
In the case of Roessled & Hass-
lacher Co.. which still is open for set
tlement, George G. Box. chief auditor
for the committee, commended hat the
Niagara Electric Chemical Co. and
the Perth Amboy Chemical Works.
subsidiaries, would have been assessed
an additional S671,409 for 1917, 1918
and 1919 If the concerns had not been
permitted to file a consolidated return.
With respect to the Phelps-Dodge
Corporation. a New York mine hold
ing concern. representatives for the
committee assailed particularly the
1917 tax. contending that the tax in
and that the bureau had allowed an
overcapitalization of the company.
Testimony of committee agents in
the case of the Slim Jim Co of
Wichita. kans., was to the effect that
the Government had lost a large sum
in taxes from this company through
failure to assess and through a COM
promise.
Records Fail to Explain.
Describing this case as unusual,
Mr. Box said the records of the hu-
reau failed to explain it satisfaction lily.
He asserted that the COMPANY made
an original return in 1918 showing
that it owed taxes aggregating ST.
3l9,5S2. but that it appeared that this
tax was never paid nor even assesse d.
An amended return showing a tax
liza bility of S451 .245 was filed in the
year following. Mr.. Box testified. The
case was finally closed in 1880 and
the tax was reduced to s11S.n0o.
In this case the record raises a
strong suspicion of fraud" Mr.. Box
added. and there is no inhibition to
the opening of cases closed by a for
mer commissioner when fraud is an
element in the case"
Solicitor Gregg in reply. said he
had a recollection that the corpora
ton had been dissolved when the final
settlement was made and that the
Government would have had TO go
into the courts to sue the stockhold
ers of the corporation.
I'VE could no longer assess the
tax" he said. There was just one
stakeholder. as l remember. who was
solvent, just one of the stockholders
who had received liquidating divi-
dends. and he was the one, / think,
who paid all of the offer in compro
mise. It is very doubtful how much
we could have gotten if we had gone
into-court and sued the stockholders"