Evening star., 1938-07-08
BY DON S. WARREN.

Nonresident concerns engaging In
business here will be required here.
a1ter to pay the revised business
privilege tax on but a varying portion
OF their receipts from District trade.
1t developed today, under the effect of
new set of regulations promulgated
today by the District Commissioners.
A complicated formula has been
adopted by the Commissioners for the
calculation of the sum of the receipts
OF nonresident firms against which
tbe new sliding scale tax will be ap-
piled. but it appears that in no case
will nonresident firm have to pay
on the total Of all his receipts from
business done in the District.
Washington concerns and profess
sional operators will continue to pay
the applicable tax rate on their entire
gross receipts from business transacted
in the District. The weight of the
tax on Washington firms, however. is
lightened by formula-similar to that
for nonresident houses-for that por-
ton of their business transacted with
buyers or customers beyond the boun.
daries Of the District.
District ALLEGATIONS Guide.
Generally, the new rules will mean
that the nonresident merchant will
have to pay the District privilege tax
only on the sum of such costs as ad-
vertising, sales and deliveries that may
be allocated to the District added to
one half of the gross receipts from
trade allocated to the District. In
the case Of a manufacturer, it appears
that the tax blow will be further
softened by the granting of deductions
for manufacturing or processing costs.
Rough calculations indicated that
some nonresident firms would have
to pay the tax on considerably less
than half the gross receipts from Dis
trlct business. whereas others would
have to pay on considerably more.
District officials said they had acted
under the authority of a new section
written into the law by Congress, near
the end of the past session, which
reads: THE proper apportionment and
ALLEGATION of gross receipts with respect
to sources within and without the
District may be determined by proc
esses and formulas of general appor-
tionment under rules and regulations
prescribed by the Commissioners"
Misunderstanding Feared.
District ofacials rather reluctantly
agreed that the full meaning of the
clause, permitting the apportionment
formula for gross receipts from busi-
ness done in the District, probably
had not been generally understood.
In fact. in some quarters the formula
clause was regarded as something of
Joker" In the last-minute revision
of the law.
However that may be, District off,
cials defended the 80 per cent" ap-
portionment plan, just adopted, on the
grounds: First. that a District law
should not operate to stifle interstate
commerce; and, second. that some
indication has been given by the
United States Supreme Court in re-
cent decisions that it believes there
should be some reasonable apportion-
ment under such tax laws, although
no definite formula has been laid
down.
1t appeared that District tax and
legal officials arbitrarily selected the
so per cent apportionment plan as
the best way out Of an admittedly
difficult situation.
The new rules were submitted for
approval of the Commissioners by Cor.
poration Counsel Elwood H. Seal.
The ALLEGATIONS of gross receipts
within and without the District are to
be reported by the taxpayer and must
be approved by the District assessor.
The returns must be made this month,
under the revised tax plan.
Business houses located out of the
District are required to report only on
their business done in the District, but
Washington concerns must report their
entire gross receipts derived from sales
wherever made, the new rules state.
The section dealing with business
done by Washington firms at places
beyond the District boundaries con-
tinues: If any portion OF such sales
resulted from solicitation and orders
obtained without the District. the ap-
plication for apportionment shall state
the manner in which such business Is
(See TAXES. Page A-3)