Evening star., 1942-03-29
HeadsFigh
Lifting Tax for
Outside Firms
D'AIesundro Bill
Held Unfair to
Merchants Here

Opposition of the Commissioners
to proposal to weaken the applca-
ton of the District income tax law
to out-of-t town firms doing business
here was expressed in letter from
Corporation Counsel Richmond 3.
Keech to the House District Com
mittee yesterday.
Chairman Randolph of the COM
mittee also made public a letter
from 10 v. Morgan, sole member Of
the District Board of Tax Appeals,
submitted at Mr.. Randolph's re-
quest, which also suggested changes
in proposal offered Friday by Rep
resentative D'Alesandro, Democrat,
Of Maryland.
Mr. Keech and Mr.. Morgan pre-
ented separate suggestions for
modification of amendment dis
cusSed at recent hearings before the
House Fiscal Affairs Subcommittee
The effect of the amendment would
be to limit application of the tax to
outside concerns having an Office
and carrying on business within the
District
Act Passed February 2.
An act passed February to close
gaps in the 1899 District income tax
law, applied the per cent tax to
income Of outside firms derived from
District sources. 1t also required
those concerns not having Offices
here, but which received income
from District sources, to take out
the $40 annual license. A penalty
of $500 day was provided for fail
ure to obtain the license.
Chairman Randolph turned the
suggestions of Mr.. Keech and Mr..
Morgan over to the legislative draft
ing counsel, along with the Dale
sandro bill, for study in prepara-
tlon for meeting of the commit
tee some time this week to deter
mine what action should be taken.
MI Randolph said he wanted to
work out solution that would have
people outside pay a proper tax.
put at the same time not set I'D
any barriers"
Keech States Objections.
Mr.. Keechs letter said:
The Commissioners are opposed
TO the proposed amendment for two
reasons. First, under the existing
District act the tax is imposed on
only that part of the income of
corporations which is earned in the
District. This method of taxing
income is eminently fair and if
every State or taxing Jurisdiction
imposed income taxes on the same
oasls double taxation would be
avoided.
Enactment of the proposed
amendment would permit corpora
tlons having their Offices or places
OF business across the District line
10 engage In business in competi-
tlon with local merchants without
paying the tax. which is imposed
upon such local merchants. Sec
ondly, it would reduce substantially
Olstrlct revenues at a time when
demands are extraordinarily heavy
Que 10 the many additional ex-
| penseS placed on the District of
! Columbia by virtue of the activities
OF the Federal Government grow.
ing out OF the national emergency
1t is my understanding that it
IS the purpose of the proposed
amendment 10 exempt from the re-
qulrement of obtaining a license
ana payment OF the 5 per cent in
come tax on the income of CORPORA
tons selling personal property for
delivery in the District of Columbia
unless such corporations have an
Office or place of business and en-
| gage in business within the District
Of Columbia"
Submits Revised Draft.
Mr.. Keech submitted a revised
draft, expressing the belief it would
accomplish the desired results with
out suhJecting many other features
OF the existing law to Interpretation
unnecessarily.
| Mr.. Morgan said that income de-
rived from sales requiring accept
ance outside the District and where
title changes outside the District,
Is not income from sources within
the District.
| Mr.. Morgan wrote also that
| there are corporate dealers or
/ Jobbers Of merchandise (particu-
| larly dealers in food, fruits, etc.
/ with home offices in Baltimore. They
load their trucks with merchandise
and come into Washington and
sell their merchandise to local
\ market stores onJ tho l;l>o ,-l 49,.
return to Baltimore"
Mr.. Morgan added that "such
corporations have consistently evsd-
ed the District tax, and will continue
to do so If the licensing provisions
OF the act are emasculated.
Others Avoiding Tax.
Another class of outside corpora
tlons which will avoid taxation" Mr..
Morgan wrote, ARE those who re-
celve interest, rents and other in
come from sources in the District,
because 1t cannot be said that they
nave an office or place of business
and engaging in or carrying on any
business within the District"
1t also developed yesterday that
Spokesmen for District banks are
planning to confer with District Of
f1clas as to the effect the law would
have in making District bank re-
sponsible if it received or remitted
any income for an out-of- town
corporation that had not met Dis
trict income tax requirements. This
subject was referred to in Mr.. Nor
| gan'S letter as follows.
1T is unfair to require bank to
see that it's customers have COM
piled with the law. and I believe that
the section should be amended so
as to contain a proviso at the end
thereof, as follows: Provided, how
ever, that the provisions of this sub
section shall not apply to the collec-
ton of income by a bank for a Gus
toner corporation not having the
license required hereby"