Newspapers / The Reidsville Review (Reidsville, … / Nov. 18, 1913, edition 1 / Page 1
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First Section 12 Panes REIDSVILLE, N. (NOVEMBER 181913. VOL. XXVI, NO 71. $1. PER YEAR. ISSUED TUESDAYS AND FRIDAYS SEMI-WEEKLY Wk COMPLEXITIES IN THE COLLECTION OF THE INCOME TAXES HAVE BEEN MADE CLEAR By CHARLES A. BRODEK, lit'ii-ber of the New York 'Bar. Association. Now York city, !T has Won estimated that the in--nni) tax law will dirt-rily affect nun-" than half a million citizens and aliens, rrolmbly millions will to indirectly affected in one way or nuethcr by the irovisjons of the law for payment of the tax "at the source.':' In additibn to those directly aiid Indi rectly affected, there are many who: wili be concerned to : know whether or not they corne within the provisions of he now law. In the Ikht of more than twenty years' experience in nan jiini; tax iiestiins from the legal sfi. iidpoinl. I have sousht to set down the questions which would naturally rutin? to the mind of the iniiuirin citi zen and to .set down briefly and in siin I'lo lantruatre the answers to such ques tions. : Preliminary Questions. Ci-Vi'hen was this law passed ? A Oct. S, ii;13, and went Into effect nt once. It forms section 2 of the tariff bill. l).-Does It affect 'arty income I received before the la v wax passed? A. Yes; it t.Xcs income from March 1, 1913. (J - Why did the law fix March 1, 1913, aa tho date from which Income was to be taxed? A. I'.eeauso the United States su- . preine court had held some years aso that the government had no constitutional power to pass such a law. and it was 'therefore necessary to adopt a constitu tional amendment rIvIiik the government ffiTwer to tax incomes. This constitutional amendment went into effect the last part of February. 1913, and congress therefore taxed incomes from the very 'earliest date. Q Has the government the power to piss a law in October. -191J, taxing income .V hich I received before that date? A.---tt has been, claimed that this provision of the income tax law is uneoniiUtutional, be cause Income received from Starch to Oc tober, 1013, had become part of capital at the time five income tax law was passed. It Is unquestioned that the federal Rovern oient has no power to taAa. man's capital directly. Whether this provision of the law is unconstitutional is extremely doubt ful. . Q Have I the riht to refrain from paying the tax on Income received before the law passed until the courts have de termined whether this tax was valid? A. No; you must pay the tax next June, and you cannot await any court's decision. Q. Does that mean if this provision U Invalid I will Jose what I paid to th government? A No. You should pay that portion of the tax which relates to your Income before October. 1913, under protest. If this feature of the law Is held to be Invalid the government will then re pay to you this part of the tax. The gov ernment has always been very fair in re funding taxes paid under any law found to be invalid, Individuals Subject to the Tax. Q. What persons are subject to the tax? A. Every citizen of the United States, whether rcsidins at home or abroad, and every alien residing In the United States are taxable upon their entire net Income minus specific exemptions. . Every non resident alien is taxable upon his net in come derived from property in the United - States or from carrying on any business or profession in the United States, Q. Who pays the tax? A. The tax will bo collected either directly from the tax payer or through the employer, agent, trustee or other person having control of . liis" income. The latter method is termed "collection at the source." Corporations Subject to the Tax. Q. What corporations are subject to the tax? A. Every corporation, Joint stock : company or. association and every insur ance company organized in the United States is subject to a tax of 1 per cent upon Its net Income," and every foreign corporation is subject to a tax upon its net Income from business transacted or capital .invested within the United States. Q. Are any concerns exempt? A. Yes. Agricultural organizations, mutual sav ings banks, fraternal beneficiary socle ties, building loan associations, cemetery companies and religious, charitable, scien tific and educational corporations, busi ness leagues, boards of trade and civic or ganizations are not subject to the tax. They are clearly defined in the law, so that other corporations may not use these exceptions aa a loophole. Tax Returns. Q. What Individuals n re required to make - tax- returns ? A-Every- person of lawful age"subject to the tax having a net income of $3,000 or over for the taxable year. In addition, all guardians, trustees, executors, administrators, agents, recelr rs and conservators must make a tan re turn for the person for whom they act. Q. Suppose there . are two or more guardians, trustees, executors, etc.; must each make a return? A. --No; a return made by any one Is sufficient. Q. Are there any Individuals who need not make a tax return? A. Persons hav ing net Incomes not exceeding J3.O10, per- sons for whom the return Is made by an employer or by a guardian, trustee, ex ecutor, etc., and who have no other In come, and persons whose Income is de rived solely; from dividends on stock la corporations which pay tax and whose net Income does not exceed $;0,C0O. Q. Does a copartnership have to file a return? A. No; only if required by the commissioner or collector; each partner Jnust make an .individual return, Q. What corporations must make re turns?. A. All eorr-orations subject to the tax. '-:."'.' Q. When must ihe return be filed? A. Individuals and '.orpora'ions must file the return on or befre Starch 1, Q. For what period is the tax levied? A. Fcr the eatend-vr. year, except in 1913, when it is lev'ed fnm .March 1, .1913, only. Q.. -Si;pii e a C'i.1 poi'r.'tlon lias ft fiscal paid Within 1-0 days after the close of the fiscal- year. q. Where must the return be filed? A, An Individual must file the return where he resides or has his principal place of business; a corporation or a nonresident must file where the principal place of business is located, aiid the trustee, guard Ian, executor, etc.. must file tho: return where he resides or where the Instrument under which he acts is recorded. Q. What must the return contain?, A. The gross income and certain deductions and allowances which will be explained shortly. Q.-Must the return be sworn to? A. Yes. In case of a corporation the oath or affirmation is made by an officer. Gross Income. Q. What does gross income mean under the income tax law? A. Gross Income Is defined in the statute as gains, profits and income derived from salaries,: wages or compensation for personal service or from professions, vocations, businesses, traae, commerce or sales or dealings in real or personal property knowing out of the own ership or use- of or interest In real or per ianal property, also Interest, rent, divi dends, securities, or the transaction of any lawful business, or gains, profits and Income from any source .whatever-..' .:' ' Q.-Does gross income include property acquired by gift or by will? A. No, but It Includes the income from such prop erty. : Q. Will proceeds of life Insurance poli cies paid upon death or paid upon the ma turity of a term or upon surrender of a policy be included as Income? A. No. Rates of Taxation. Q. What is the rate of taxation? A. The normal rate is 1 per -cent of the net Income, and. this applies to corporations as well as to individuals. In the case of Individuals having a net Income exceed ing $J0,0W the law. provides, for an addi tional tax. v.. . : Q. What is the rate of the additional tax against incomes of individuals? A. One per cent on amount by 'which. Income exceeds $20,fl00 but does not exceed JjO.000; t per cent on amount by Which income ex-1 'coeds. i;;,(M but does not exceed $75,000; 3 per cent on amount .by which Income ex ceeds ?;ri,0(Hi but dues not exceed $100,000; 4 per tent on amount by which income ex ceeds $lt.Ht .but does not exceed- SKO.OOfl: 5 per oc.t on amount by' h'icli i.icoiiio ex ceeds tJJti.O'ii) btit due.-not exceed J&in.OOO; I? per cent oi! anion nt by- which income ex eeeds J"'"'),''".'. Q,-Are corporations ever liable for the additional ta:? A. -Never. Q. In' calculating net income for the ad ditional tax, are the same deductions made as in calculating net Income for the normal tax of 1 per cent? A. Yea. with the "'exception 'Viit in calculating net In come for the additional tax neither, divi dends nor .amount of income on which tax Is Withheld at the source will be deducted Exemptions and Deductions. Q. Is there any exemption allowed to a taxable person? A: Yes, 3,'KiO; and if th person is married and his wife lives with him the exemption is $l,0:)0 more, makms JU.WKUn all; -..Tim -same .provlslo.il is niadi if the person making .the return is a mar ried woman whose husband jives with her . Q: (-V'.n : : husViatid --mid wifo cneli deduct the additional $l,0uo? A. No. Only one deduction of $4,000 shall bo made from the aggregate "'.income". f husband nud wife when living .together; Q Can jruardians, ttusf'ees, . executors. etc.. deduct th exemption of $:!.000 for the -benefit of. the person for whom they act? A. Yes. Q. What deductions can be made by an Individual for expenses, etc. ? -A 1. Neces sary expenses actually paid In carrying on business. 2.. All interest paid on in debtedness. 3. All national, state,, county. school and municipal taxes. 4. All losses actually sustained In trade or arising from lire, storms or shipwreck and not compensated by insurance or otherwise, 6. Debts due and found worthless and charged off.,. 6. Reasonable, allowance for wear and tear. 7, Dividends received from corporations which pay income; tax. 8, Amount of Income on which tax Is paid or withheld at the source, provided such income does not exceed $3,000 or Is Irregu lar as to time and amount. 9. Interest on obligations of the United States, a' state or a political subdivision of a state. 10 Salaries of the present president of the United States, present Judges of the fed eral courts and the compensation of all officers, employees of a state or a political subdivision of a state, provided the same Is not paid by the United States govern ment. 11. The exemption of $3,000 or $4,000 for couples living together. As above ex plained, these deductions are allowed In calculating net Income for the normal tax For the additional tax items 7 and 8 are not allowed. Q. Can personal, - living Or family ex penses. be deducted!, A. No yt -,r whic'v -.oes r:;'t. correspond with the c.lif I. .r " ! I , ini.M n i : o- i iriuiii ihi t I .1 ... .. II H . .1 L II I Q. Is an assessment for local benefits deemed a tax and" deductible as such? A. No. Tho statute expressly provides that such 'assessments. 'shall'. -not' be de ducted. . Q Can any deduction bo allowed for est cf new buildings, improvements or bi'termenls made to Increase the value of ariy property?.. A. No. . ! . . Q - What Is hioant by the .necessary ex-tioe-es p'ild in carryins on business? . A. ClelU i.li'e, rent, lixhting, heating,, 'sta tionery, delivery ehiri?es, etc. '. Q."SuppO.-e. l.-.havo- allowed state or local ta::es tu accumulate for several years; can F deduct the payment of ac I'Umulited taxes, or can I only deduct the faxes 'which fell du" within the year for tvhieh I made .an InConie tax return? A.--Vou ran deduct nil the tax payments, whether thev w re accumulated or not. Q. Wf't deductions aro allowed to corp oration i? A. 1. The ordinary an il neces- rary expenses Incurred In maintaining and operating the business and properties of the company, Including rentals, t All lusii s actually sustained nnd not compen sated by insurance or otherwise, 'Includ ing' reasonable .allowance' for ; deprecia tion; ,. Inteiest paid on bonded iitut otlier ir: .';.l'ti'dri': ss to tin amount, cif. ' such ln c.l i.t. im .-s not exceed;)? otie-lialf the ln-rcrj-sf '; '" Imlei-,!"diies3 and its out- Tr., c :. .: of for Us bnea; yc-ai .' A. The tax K levied and the' return- must be filed-. for 'he calendar year, but the corpo ration -r fiy designate and u?e,thie' last day of i ny month as the day for closing Its flsr-fil 'year, nroy!d..-d it oto to the dislrirt collector. Ti e tax is then levied f-;r tVu- t'scoi yenr. and the re- ,.,turu must.be. jikd AYltsla. sixti'-du.y 3-a ter rT,fyp-f m,r ,., ,Mr- (rpnvHtirmy tne cios oi me nscai year aim me in wlli:tj this ai.pears to result in n.tiiioU i-., ;ai;il Bleu.. -1. All taxes, na ti.o;;al ;e.y ....tte or Imposed by a foreign Urn in hi I i i in. taxation, a xax or l per cent- having been paid upon the dividends by the corpora tion from which they were received, con gress Intended to tax dividends received by one corporation from another. Q. Does the present Income tax law take the place of the corporation Income tax law of llWl: A. -Yes. but for the months of January and February, 1913. the old corporation income tax law re mains in force. The present Income tax law goes into effect from Starch 1, 1313. Collection at Source. Q. What Is meant by the collection of this tax "at the source?" A.-The law provides that all persons, firms and corpo rations paying Interest, rent, salaries, an nuities or other fixed or determinable an nual or periodical gains, profits and In come of any other person exceeding $3,000 per year; shall withhold 1 per cent and pay It to the government as the nornial tax upon that portion of the income of the person who was entitled to receive the rent, salary, income, annuity, etc. Q. If the annual rent on my home or place of business Is $l!.C"0 and I know that the landlord has other Income which would make him taxable, shall I deduct 1 per cent from my reiit? A. No; you can oniy make the deduction provided the rent you---paj exceeds $3.0o0 per year, and tills same principle applies to all payments of rent, salary, interest, annuities, etc., with the sole exception of interest on corporate bonds. Q. If the Interest on corporate bonds I amounts to less than $3,000, "must " tho 1 per cent be deducted at .the source? A. r Yes; the law provides that where the In come is Interest on Corporate bonds the tax must be deducted at the source, Irre spective of the amount of the interest payment. Q. If rent or salary payable by me amounts to $3,000 or less I understand I withhold no tax, but If It amounts to more than $3,000, do I withhold the tax on the excess or on the whole amount? A. You ; withhold the tax on the whole amount. For example, if rent or salary due from you amounts to $3,000 or less you deduct nothing, but if It amounts to $3,500 you I. list deduct $30 namely, 1 per cent of tho entire $3,E00. Q. Cin the person entitled to rent, sal ary, interest, annuity, etc., claim an ex emption? A. Yes; by filing a notice with you he can claim and obtain an exemp tion of $3,lK) ("or $4,0i)0 if married and with a wife living with him)';' In that case you should only deduct the I per cent from the excess over the exemption. For ex ample, If a landlord or employee Is en titled to $5,000 a year and files with you an exemption as a married man amounting to $4,000 you would only deduct $10 namely, 1 per cent on the excess of $1,000. Q. I low about the collection of coupons on corporate bonds? A. The Interest Is to be deducted by the corporation. The owner of the coupon must then fllo a cer tificate of ownership with the bank or other concern which receives the coupon for collection, otherwise that bank would have to deduct the tax and attach its own certificate, giving the name of the owner. The owner has a right to claim exemp tion up to $3,000 if single or $4,000 if mar ried. The forms of certificates of owner ship and of exemptions have been pre scribed and may be obtained from the col lector. .-,-''. Q. In deducting the tax from rent, sal ary and Interest, shall I deduct from each payment or wait until $3,000 has been paid? A. Under the regulations you need not withhold the tax untib such time as the rent, salary or Interest shall have reached an aggregate In excess of $3,000. The tax subsequently is to bo deducted from the full amount or from $3,000 of $4,000 less If notice of exemption has been filed. Q. What tax shall be deducted in 1013? A.-For the year 1013 everything Is on a five-sixths . basis, because tint Uiw will have been in effect for ten months". All calculations of exemptions, deductions, in come, etc, for 1013 shall be taken at five-sixths-of the whole annual amount In each case. : Q. Suppose the landlord or employee entitled to receive more than $3,000 a year has business expenses, losses, etc., which bring his net Income belcw $3,000 In all; can he, by filing a statement of such busi ness expenses, losses, etc., obtain a full payment from me without deduction? A. No. You must still deduct 1 per cent. lie' will be entitled to obtain tho benefit of such deduction by application to the col lector. . . Q. What do I do with the amounts I deduct from payments of salary, interest, rent, annbity, etc.? A. You hold them and make separate returns for such de duction at the same time you make your own return. You pay the amount of the deductions to the collector between .june 1 and June 30. Individuals and corpora tions will "be notified of the amount upon which they are liable on or before June 1. Publicity of Returns. Q. Are the returns made by an individ ual or corporation open to the Inspection of the public? A. All returns, whether by Individuals or corporations, are public records, but they may be Inspected only upon the order of . the president undur rules and regulations to be prescribed by the secretary of tho . treasury and ap proved by the president. ; Q. Can Income-tax returns be Inspected by the tax officers of ' any state, city or county? A. No, except as they may be Inspected by any citizen, as explained in my answer to the previous question. The only exception Is that officers of any state which Imposes a general income tax may have access to the returns, , . ' Penalties. Q. What is the penalty-for nesrlect or refusal; to- make a return ion time? .Ai Five per cent of the iiniount of the tax is added and 1 per cent per mouth from the time it became due, and a tine "may he imposed of riot less than .$.) or more; llinu tl.OijO in tlie ease of an in'd'i'vkliial o"r not more than Jl'V'Vf in. the case of a. corpo ration. ; Q. What is .the penalty for making . a false or fraudulent . return '.' A. A Tile, not exceeding Si.'.i. Imju isoifnie.nt for on year, or both, in' the e;i.so of an ; iridivi 1 unl or 'officer 'of 'a i-'orrm'riil.o.n and "a flnc not exceeding i !) in tlte caste of a cor poration. " Q. !s there, any penalty if ;i landlord ornnpioyee. or other person from whom a tax' nitist be deducted :it the source !!lef a false statc-me.n't .re!-perting. t he tS,V'i :-' emptiorv . or "iW for- .a ' 'married 'coiiplf-? y Is a corporation entitled to an ex-i-.mptton of .;S.t-) or-. $4. (00 like an Indlviil i.Lii? A.-No.' Tie-re are mi exemptions In ' lite rise of corporations; they are allowed to d i" 'iet (he exoenses. losses: interest llOT. th'r'.V tlars 1 mid nKHtit-aJrein-lY fli'HneJ. t-1 " Q. Individuals- rnny deduct, dividends; i-,i-ira?!on !v rict (iivau mis ro- a double - T HANKS GIVING AND CHRIST MAS! Holiday Ml Just Around The Comer ! If you buy , u 1 fur now vou wiu nave new f . - niture for both festive occasion and if . ''-' ' '" you advantage of your favorite. m mmm m m ..' m m - buy this week you will have the added getting the pony votes for T1nn if There is no more complete stock of fur niture to be found in this section than you will see our mammoth store room and storage houses. We have every thing you iran-possi bly want in Mahog any, Birdseye Maple, Oak, and all the pop ular woods and fin ishes at right prices ... ! ;;''; :' I . ." II . r..: I 1 I 1 rt Mr If you want Living Room, Dining Room, Bath Room, Bed Room, Hall or Kitchen Furniture you cannot afford to buy before getting our prices. A. Vcj-; h line of . Q Cin a nivii'. or .rompiinyV hoolm and ! ifniwi imi niiniui d Kiiiii no lector? A. TV I'nitcd St:i compel aitendae.ee, pro I n and testimony in caHCH whe lummoned hy tli collector. Tes eriM-t C'M tlon of finriii re persotiB ar FOR SALE. Yo-ang mules pnl Poland China njgs. If. II. William sou, Route 6r Reiilsvilie, N. C. 5 K V ' ' V ff A V m mm. HOME FURNISHERS AND UNDERTAKERS tre: B -'..:'...... i
The Reidsville Review (Reidsville, N.C.)
Standardized title groups preceding, succeeding, and alternate titles together.
Nov. 18, 1913, edition 1
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