Evening star., 1949-05-30
Tax Officials
FaceProbIens
On SaIesLeW
Maryland Aide Sees
Formulation of Rules
As Biggest Headache
By Jerry o'Leory, Jr.
Sicr SfoH Correspondent


BALTIMORE, May 30.-Tas
officials in the District Of Colum-
bia are due for a thousand head
aches between now and August
IL the experience Of Maryland In
getting its own 2 per cent sales
tax operating two years ago holds
true.
This was predicted last night by
Walter e. Kennedy. administra-
tor Of the Maryland Retail Sales
Tax Division in Baltimore. who
inaugurated the levy in his State
in May. 1947. -
The biggest problem, Mr.. Ken
nedy said. is formulating the rules
and regulations for guidance of
businessmen and their customers.
It is with that problem that Dis
trict Tax Assessor Edward A.
Dent and Corporation Counsel
Vernon e. West are wrestling now
The Maryland experts were
handed their sales tax act by the
State legislature on March 26,
1947. They put it in operation
May Z. but did not issue the rules
and regulations until June 16. Mr..
Kennedy said the time spent In
drawing up the regulations paid
tncalculable dividends.
Views of Groups Sought.
Utilities. organized business
groups, representatives of every
type Of industry, were called in to
confer with Mr.. Kennedy and his
legal staff before a single rule was
written. Hundreds of hours were
spent discussing the terms OF the
act and their meaning.
MIR. Kennedy said each group
was given an opportunity to speak
its piece about the sales tax and
their suggestions were taken into
consideration by the tax experts.
The result was that Maryland
has found it necessary to make
only six changes in the rules in
the last two years and have had
only a handful of court tests of
their rulings.
OF course. some loopholes were
found in the act as time went by.
Mr.. Kennedy said.
He cited the Ocean City board
walk case. The legislators ap-
parently did not realize that the
boardwalk at the oceanside resort
is legally a thoroughfare of the
city and trouble cropped up over,
Of all things. the hot dog and the
hamburger. ~
The Maryland law originally
exempted all foods sold for con-
sumption off the premises. ! Con-
sequently,9 patrons of boardwalk
stands and shops had merely to
climb off their stools to be con-
sumirg of the premises.
Experience Benefits d. C.
Mr.. Kennedy said that mixup
couldn't be corrected until the next
session Of the legislature, when the
law was amended to exempt only
food bought for consumption in
the home.
The District, although 1t has no
boardwalks. benefited by Mary
lands experience in that one, Mr..
Kennedy said.
The Maryland rules were re-
versed only once in court and that
happned in Prince Georges County
when a horticulturist claimed ex-
enption for his crop of orna-
mental shrubs, contending they
were products Of the farm" That
law also was amended to make
shrugs tax eligible.
The Marylanders also amended
their law last year to add eye
glasses and wheel-chairs to the
liSt of exemptions that included
Artificial eyes. crutches. hearing
devices and artificial limbs.
The District law, incidentally,
efempts sales of wheel chairs for
the use of cripples and invalids
when designed to be worn
Oh the person of the purchaser or
user" It does not explain how to
wear wheelchair.
The minimum taxable sale also
was changed in Maryland after a
while. Originally, the State
charged / cent on each sales from
8 to SO cents. This was changed
to read from IA to SO cents.
Penalty Changed.
Maryland did away with the
clause that required merchants to
file an annual return as well as q
monthly return and changed the
penalty for failure to comply. At
first, Maryland gave merchant
10 days to answer charges and
then slapped a 100 per cent
penalty for failure to reply salts
factorily.
This penalty was regarded as
too severe and was soon changed
Now a tardy or delinquent mer-
chant Is assessed q 10 per cent
penalty Immediately and after
10 days, If his answer Is not
satisfactory, an additional rs per
cent. There is still q 100 per cent
penalty for fraud in Maryland
The Maryland headquarters
still gets about a dozen calls a
day from confused persons who
want the law explained to them
but most contingencies are made
very clear in the booklet pre-
pared by the State from the
rules and regulations.
The comparative simplicity OF
the Maryland law as compared
to the District document has
made it possible for the State
to recover about $500, 900 in
"breakage" in one year.
This is "breakage"-A mer-
chant sells five articles for Il
cents, thus collecting rs cents
and q total of 5 cents in tax. He
also sells another article for 7s
cents and collects 2 cents tax fol