| E.D.N.Y | Jun 22, 1912
In the cases before the court actions have been brought against five corporations to recover in suits at law the- penalty provided by Act Cong. Aug. 5, 1909, c. 6, § 38, 36 Stat. 112, for failure to file returns. By direction of the court the jury in each case has found a verdict, and has fixed the amount of penalty at the minimum, viz., $1,000.
The statute provides that each corporation “now or hereafter organized” shall be subject to pay, etc. This' clearly makes every corporation not actually dissolved or legally out of existence subject to the provisions of law.
The next question presented is whether every organization admittedly within the classes defined, viz.-, a corporation, joint-stock company, or association organized for profit, and having capital stock represented by shares, and every insurance company, except the particular ones exempted, is liable to the duty of making the annual return specified by the statute, or whether only those who enjoyed a sufficient net income to make them liable to the payment of the annual tax are under obligations to make the return.
.This question was first passed upon for the guidance of the Treasury Department in administering the law by an opinion of the Solicitor General, issued upon the 7th day of August, 1911, and approved by the Attorney General. In this opinion the Solicitor General refers to the income tax law of 1894, by which all persons having an income in excess of $3,500 were required to make returns, while all business corporations were expressly required to make returns whether having a net income or not. The Solicitor General also refers to the war tax law of .1898 (Act June. 13, 1898, c. 448, § 27, 30
But it will be seen that the war tax law did not require a return from those only who were subject to tax, but, on the contrary, required a return from every such corporation, while in the present statute the tax is to be collected from every “such corporation” as is taxable; that is, such as have a certain amount of income, while the return is to be made by every “such corporation,” subject to the tax.
In the case of U. S. v. Military Construction Co., 204 F. 153" court="W.D. Mo." date_filed="1913-04-03" href="https://app.midpage.ai/document/united-states-v-military-const-co-8787741?utm_source=webapp" opinion_id="8787741">204 Fed. 153, decided by the United States District Court for the Western District of Missouri, and published-as Treasury Decision No. 1,774, the same question as is presented in the present: case was considered by the court, and the conclusions of the honorable Solicitor General were followed, for the reason that the application of the war tax law was considered to have been in the mind of the Congress when passing the present statute. But it would seem that the changes in the language of the statute might as well be held to show that Congress intended to change the application, if they were justified by the plain reading of the law. Nor does it seem that any greater confusion would result to the government if certain corporations in certain years did not make returns, and hence should be assumed to consider themselves not subject to tax, than if they did make returns, and upon the face of the figures as presented by them they did not appear to be taxable. The difference in trouble and necessary investigation to the government would be slight.
But it does appear by the reading of the law itself that the present, statute makes every corporation of a certain kind subject to pay a tax upon income over and above a certain amount, and every such corporation — i. e., of the sort required to pay if their income be great enough — must make a return and must pay if taxable. There would be no difficulty about this interpretation if it were not that the Con-
The present motions, .therefore, which have been considered to set aside the verdict of $1,000 in each case, must be denied and the various corporations can have no remedy (other than appeal) except to apply, as is indicated in the opinion of the Solicitor General above quoted, to the commissioner of internal revenue, or to the Secretary of the Treasury, for a compromise of the government’s claim under sections 3229 and 3469 of the Revised Statutes (U. S. Comp. St. 1901, pp/2089, 2317).