Evening star., 1942-12-30
Victory Tax Applies
To Any AZ Salary
Paid in January
Reported Treasury Rule
Held Contrary to
Congress Intent
By the Associated press

By the Associated Press.
The Treasury, it was learned au-
thoritatively today, has ruled that
the new victory tax must be with
held from all wages and salaries
paid in January, even though part
or all OF the money was earned this
month, or at any time in 1912.
In other words, man paid
monthly on the first Of the month
will find . victory tax nick taken
out of his pay envelope this Fri
day, despite the fact that he worked
for the money in December.
The Treasury ruling was based
on the language Of the. law which
says There shall be levied, collected
and paid for each taxable year be-
ginning after December 81, 1912, a
Victory tax of per centum upon
the Victory tax net income of every
individual"
Wages and salaries received In
1943 are to be considered Income"
for l943 under the ruling. regard
less of the period in which they
were earned.
Senators Urge Clarification.
Two members of the Senate
Finance Committee, active in the
drafting of the new tax bill, de-
clared the ruling ran counter to
congressional intent.
1T was the intention of Congress,
I know, to base the tax on l943
earnings" said Senator Byrd, Dem
ocrat of Virginia. I'D be in favor
of clarifying it and applying the
tax to income earned in the next
year. Suppose man was paid his
income on quarterly basis and
received quarters income next
month"
Senator Danaher, Republican, of
Connecticut said there was mot the
slightest doubt" that the act pro-
vides that the Victory tax with
holding deduction from salaries
should apply to income commencing
January /, 1943.
The apparent incongruity be-
tween the act and the Treasury's
ruling which calls for a deduction
on income received, even though
not earned. in January may be
justified only on grounds of ex-
pediency," he said.
First, the computation for tens
Of millions of wage earners would
create enormous bookkeeping diff
culties.
Second. the withholding tax, in
part at least. represents an approx
nation which will be averaged out
over a years time.
Solution Offered.
"One solution lies in getting paid
December 81 for moneys earned in
December"
Some Government departments,
it was learned, plan to make such
a pay split for the benefit of their
employees.
The Treasury itself, however. will
not do so. Secretary Morgenthau
issued directive December 81 to
administrative officers of the de-
partment saying:
The deduction will be made on
the gross amount of salaries and
wages paid on and after January l,
1943, without regard to the fact that
part of the salaries or wages may
have been earned in December"
The Bureau of Internal Revenue
is sending out to businessmen over
the Nation a letter stating that
beginning January l, 1943. every
employer is required to withhold.
collect and pay upon all wages of
every employe Except agricultural
labor, domestic service, casual la
Dor and certain other types of la
bor) a tax of per cent of the ex-
cess of such wages over the with
holding deduction allowable"
The withholding deduction al
lowable' is 1924 year. The 5 per
cent Victory tax is figured on the
remainder Of income in the case
of wage Garner.