Evening star., 1935-07-31


the tax is computed and collected at
the maximum rate. If the bond is
filed the tax with respect to the
contingent interest is held in abey-
ance until the contingency has oc-
CURED. In such a case, a special
return is required which must be
| filed within one year after the oc-
currence Of the contingency Upon
the happening of the contingency the
entire tax is recomputed and the bal
ance of the tax due to the contingent
interest is collected.
Inheritance-tax returns are re-
quired TO be filed by the executor and
the tax paid within Is months after
the death of the decedent. However,
the commissioner Is given authority to
extend the time for payment of the
tax. not to exceed 10 years from the
Que date. Interest Is collected at the
rate Of per cent per annum for the
first three years from the expiration
of six months after the due date of
the tax, and then at the rate Of
per cent per annum to the date OF
expiration of the period of the extern
sion. Thereafter, interest Is collected
at the rate Of IL per cent per annum.
The period for assessment Of the tax
is 10 years after the return was filed,
and the period for collection Is six
years after the date of assessment
Special rules apply In the case OF false
or no returns and contingent inter-
ests.
The tax is collected by the executor
from each beneficiary or deducted and
withheld from any property in the
executors possession or control which
Is transferred to such beneficiary. To
avoid the hardship of forced sale,
each beneficiary may at his option
pay the tax outright instead Of having
it deducted from the property trans
ferred to him. II the will or other in
strument of transfer provides for the
payment of the tax out of specific
property, the executor may so pay 1t
without affecting the rights Of the
United States.
The bill provides for a lien upon
the property for a period of IA years
from the date OF the death of the
decedent. An exception is made in
the case Of property which is used for
the payment Of charges against the
estate and expenses of its administra-
ton allowed by any court having ju'
risdiction thereof. If the commissioner
is satisfied that the tax liability has
been fully discharged or provided for
he is authorized under regulations ap-
proved by the Secretary to issue q
certificate releasing the lien.
The administrative provisions oi
the bill in general follow those which
are now applied to the estate and gift
taxes imposed under existing law.
To prevent avoidance of the inheri-
tance tax through the use of corpora
tons, a special rate is provided for ir
case the corporation is formed ol
availed of for the purpose of avoiding
the tax or any part thereof. The bur-
cen of proving that the corporation
was formed or availed Of for that pur-
pose is upon the commissioner, except
that. if so per cent or more Of the in
terest or control of the corporation
exists in any one or more persons
bearing the relationship to the dece-
dent of spouse. child, father. mother
brother or sister, grandchlld, grand
father or grandmother, then the bur-
den of proof is upon the corporation
to show that it was not formed or
availed of for the purpose Of avoiding
the inheritance tax.
Gift Tax on Donees.
Title III of the bill imposes gift
tax upon the right to receive property
by gift. This Is companion tax to
the inheritance tax and Is designed
to prevent avoidance of that tax BY
taxing gifts made during lifetime.
Unlike the present gift tax, which
is imposed upon all gifts made by the
donor to all donees, the gift tax or
donees Is imposed separately with re-
spect to gifts made by each donor te
each donee. Like the present gift tax
the gift tax on donees is levied with
respect to all gifts made after the
enactment of the act, but for more
effective administration and to secure
prompt collection of the revenues the
tax is computed and collected annu-
ally. beginning with the calendar veal
1885. Gifts made prior to the effec-
tive date of the act are not subpect
to tax.
The computation of the tax payable
each year involves three operations
namely: O a computation of the ta1
at graduated rates on all gifts with
certain express exceptions) made after
the enactment of the act, including
gifts made in the current calendar
year; ca a computation of the tax al
graduated rates on the gifts made ir
the prior year or years, and (3) the
subtraction Of the result Of the Sec
ond computation from that of the
first. This computation results in q
tax imposed on a cumulative basis
In short, the design is to impose tax
which measurably approaches the in
heritance tax which would have beer
payable if the donee had received the
property by inheritance. However, the
rates OF the gift tax are one-fourtt
less than those of the inheritance tax
This follows the same principle as i;
applied to the gift tax on donors. the
rates of tax upon the gift tax or
donors being one-fourth less than the
estate tax rates. This gives some In.
centive to the making Of gifts and al
the same time gives the Government
an opportunity to secure revenue at ar
earlier date.
The following is table showing gift
tax rates and amounts of tax:
Gift Tax Rates and Amounts.
| Total net gifts from Rate of Amount
donor to l donee.' tax. Of tax I
(Per cent?
so to 0,O00--- 8 500
$4,000 to $2O,O00-- 6 80,
$4,000 to 30,000--- 9 1,80I
$4,000 to $50,000---- IL 4,20,
| $50 000 tn S1()0 0(r 15 II mi