Evening star., 1934-05-26
MELLON DEMANDS
REFUND OF TAXES
Former Treasury Head An
SWerS Suit by Claiming
0ut.
-- Excess Payment.
By the Associated Press.

BY the Associated Press.
Andrew w. Mellon has answered the
Governments $l,978.621 income tax
case against him with a demand for
S139,045 refund.
The former Secretary Of the Treas
ury, whom Pittsburgh grand jury
refused to indict for tax evasion,
stated his case yesterday in a petit
ton to the Board of Tax Appeals. re-
plying to a Treasury deficiency assess
ment on MELONS 1881 income.
Mellon. who served in the cabinets
of Presidents Harding, Coolidge and
Hoover, disclosed he paid the Internal
Revenue Bureau S647,559 on his 1881
income He listed charitable contrt-
buttons that year of $3,821,178. e..
Lamont Pays in Full.
Melons appeal to the tax board was
filed shortly after the Justice Depart
ment announced full payment by
Thomas S. Lamont, youthful j. P.
Morgan & Co. partner, of Government
income tax claims and penalties. La
mont was named by Attorney Cen
eral Cummings along with Mellon,
Thomas Sidlo Cleveland attorney,
and James j. Walker as among several
hundred against whom the Govern
rf1ent is seeking to collect additional
taxes.
Sidlo, law partner Of Newton D.
Baker, previously had paid in full the
claims against him. The department
has not disclosed what progress is be-
Ing made against Walker, New Yorks
former mayor, who now lives abroad.
Discrimination Charges.
Melons petition reviewed the May
action when a grand jury returned
the Governments presentment as not
a true bill" He further said he was
not given the same treatment accorded
other taxpayers by the commissioner
of internal revenue, Guy T. Helving,
adding:
I'm spite of the fact that a waiver
Of the statute of limitations had been
filed by petitioner (Mr. Mellon) ex-
tending the time within which to
assess any additional tax which might
pc found to be due and notwithstand-
ing the fact that respondent (commis-
sioner) was informed and well knew
that petitioner desired an opportunity
10 be heard and protested any ad-
suStments which respondent might
make in respect to petitioners tax
liability, respondent departed from
the usual practice and issued his no
tice Of deficiency without the issuance
Of the usual 30-day letter, without any
explanation to petitioner by letter or
otherwise, without affording the peti-
toner any opportunity to file a pro-
test and without granting any hearing
to petitioner, and without regard to
the facts"
Stock Sold.
MELONS petition sets forth 18 diff
ferent assignments of error on the
part Of the Treasury, including items
Of losses sustained on the sale Of
stock Of the Pittsburgh Coal Co..
Western Public Service Corporation
and others which the former Secre-
tary contended were sold in the ordi-
nary course Of business and in good
On the sale Of, Pittsburgh Coal
stock. Mellon claimed an ordinary loss
held more than two years of $5,672,-
1854. He claimed an ordinary loss of
$24,l0o and $S5a, 500 capital loss
on Western Public Service stock sales
Mellon alleged also that in deter
mining his 1881 tax liability the
Treasury treated as taxable income
stock and securities of Bethlehem
Steel Corporation. distributed in con-
nection with the corporations reor-
ganization with the McClintic-Mar-
shall Corporation. Instead, he said
that under the law and internal reve-
nue. regulations such stock and Sc
curities were not taxable until dis
posed of by him.
Mellon said revenue agents investi- |
gated his books and records in 1888 |
and instead Of reporting tax evasion
said he had overpaid $7,507.
Allowed Losses.
In this report, Mellon said agents
allowed losses not questioned by the
commissioner and also treated the
stock distribution in the Bethlehem
and McClintic-Marshall reorgani-
cations as a tax-free distribution.
Mellon said the internal revenue
commissioner lacked authority to de-
termine tax deficiency unless there
had been a full opportunity for a |
hearing and asserted also there was
no basis for a penalty such as had
been dlaimed by the commissioner.
In connection with the grand jury
investigation, Mellon said:
The public announcement also
stated that this action was taken in
pursuance Of a new Governmental
policy of submitting to Federal grand
Juries, instead of the appropriate Gov
ernment officials, the determination in
the first instance Of the innocence or
guilt OF taxpayer in cases of alleged
income tax evasion.
Prior to this time, it had been the
consistent policy for the commissioner
OF internal revenue to make such de-
terTn1nations; and only after the most
careful consideration of all the facts
and circumstances and after affording
the taxpayer hearing would he GER
tifyss the case for presentment to a
grand Jury"
Amounts involved in the Lamont
case were not disclosed by the Gov
ernlnent nor was there any indication
what years were involved. But last
Spring young Lamont told the Senate
Banking Committee that by exchang-
ing Stocks directly and indirectly with
his wife he was able to make a $114,-
600 deduction on his 1880 income.