thereof or source of income, profits, losses or expenditures appearing in any income return; and any offense against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding $1,000 or by imprisonment not exceeding one year, or both, at the discretion of the court; and if the offender be an officer or employee of the United States he shall be dismissed from office or discharged from employment. List of taxpayers to be posted. LAW. Section 257. (b) The Commissioner shall as soon as practicable in each year cause to be prepared and made available to public inspection in such manner as he may determine, in the office of the collector in each internal-revenue district and in such other places as he may determine, lists containing the names and the post-office address of each person making an income-tax return in such district, together with the amount of the income tax paid by such person. The corresponding provision of the 1921 law was changed by adding the phrase "together with the amount of the income tax paid by such person." Congress, for the first time, has made the amount of the tax paid available to the public. The word "person" means an individual, a trust or estate, a partnership, or a corporation.14 This means that a taxpayer's net income is no longer a secret. Concerns may, by examining this list, ascertain whether or not their competitors had a prosperous year. The publication of this information may prove hurtful to many taxpayers. The regulations are silent as to the foregoing section of the law. Since the words "shall" and "in each year" are used in the law, the posting of the lists is obligatory. Publication of statistics.— LAW. Section 258. The Commissioner, with the approval of the Secretary, shall prepare and publish annually statistics reasonably available with respect to the operation of the income, war-profits and excess-profits tax laws, including classifications of taxpayers and of income, the amounts allowed as deductions, exemptions, and credits, and any other facts deemed pertinent and valuable. REGULATION. The Commissioner will publish annually a volume of statistics of income, showing, among other things, the distribution of incomes between corporations and individuals and by States, by classes and by occupations. (Art. 1101.) Compilations of income for the calendar years 1916 to 1924 have been issued by the Treasury under the title of "Statistics of Income." 15 14 See section 1. 25 See page 4. The penalties imposed in cases of delinquency of various types are discussed in this chapter. Summary of penalties in cases of delinquency.-The following is a synopsis of penalties and interest payments on delinquencies and extensions of time for payment of tax under the Revenue Act of 1924: UNDERSTATEMENT OF AMOUNT OF TAX Delinquency or Offense If not due to negligence or intentional disregard of rules and regulations, or fraud. Section 274 (f). If due to negligence or intentional disregard of rules and regulations, but without intent to defraud. Section 275 (a). If any part of the deficiency is due to fraud with intent to evade tax. Section 275 (b). False or fraudulent return Penalty 6% per annum from the date prescribed for the payment of the tax or any installment thereof to the date the deficiency is assessed. 5% of the total amount of the deficiency in the tax. 50% of the total amount of the deficiency in the tax in lieu of penalty provided by section 1003 (R. S. 3176) but in addition to specific penalties. (See section 1017.) 50% of amount of tax in addition to specific penalties (but not in addition to the 50% penalty under section 275 (b). (See section 1017.) DELINQUENCIES IN FILING RETURNS, SUPPLYING INFORMATION, COLLECTING TAXES, ETC. Delinquency or Offense Willful failure to pay any tax, make any return, keep any records or supply any information as prescribed by law (or regulations under authority thereof) at the time, or times required by law or regulations. Willful failure to collect or truthfully account for and pay over any tax required, under the law to be collected, accounted for and paid over, and willful attempt on the part of any person to evade or defeat any tax imposed by the 1924 Act or the payment thereof. (1) Willful aiding or assisting in the preparation or presentation of a false or fraudulent return, affidavit, claim, or document authorized or required by the internal revenue laws, or (2) willful procuring, counselling or advising the preparation or presentation of such (whether or not such falsity or fraud is with the knowledge or consent of the person obligated). Failure to make and file a return or list within the time prescribed by law or prescribed by the Commissioner of Internal Revenue or the Collector in pursuance of law, unless a return is filed after such time and it is shown that the failure was due to a reasonable cause and not to willful neglect. FAILURE TO PAY When installment is not paid when due, Section 270 (b-2). Where claim for abatement which has been filed under authority of the 1924 Act is denied in whole or in part. Penalty Maximum fine $10,000, or maximum imprisonment one year, or both, together with costs of prosecution. (This penalty is in addition to other penalties provided by law that may be applicable.) See Section 1017 (a). Maximum fine $10,000, or maximum imprisonment five years, or both, together with the costs of prosecution. (This penalty in in addition to other penalties provided by law that may be applicable.) See section 1017 (b). Maximum fine $10,000, or maximum imprisonment five years, or both, together with the costs of prosecution. See section 1017 (c). 25% of the amount of the tax in addition to specific penalty. See section 1003, quoting section 3176 R. S. as amended. TAX WHEN DUE Entire tax becomes due and payable on notice and demand. 6% per annum from date of notice and demand by Collector under section 274 (d) to date of notice and demand under section 279 (b). See section 279 (c). Delinquency or Offense Failure to pay amount determined by taxpayer as the tax or any installment thereof or any part of such amount or installment at the time prescribed therefor. When extension has been granted for payment either under section 270 (c-1) or under section 274 (g) and there is a failure to pay by the expiration of the extension date. Failure to pay any deficiency or interest or additional amounts assessed in connection therewith under section 274 (f) or under section 275, or any addition to the tax under section 3176 Revised Statutes, or any portion of a claim for abatement denied as demanded under section 279 (b) including the 6% prescribed under section 279 (c), within ten days from the date of notice and demand. (Exception noted below.) Exception Estates of incompetent, deceased or insolvent persons. Violation or attempt to violate the provisions of Section 282, relating to departure of taxpayer from United States, designing to conceal himself or property or doing any other act tending to prejudice or render ineffectual proceedings to collect tax for taxable year last past or year then current. Cause Penalty 1% per month from date prescribed for its payment until paid, See section 276 (a-1). · 1% per month on such unpaid amount from the date of the expiration of the period of extension until paid. See section 274 (g) and section 276. (a-2) 1% per month from the date of such notice and demand until paid. See section 276 (b) and section 279 (c). 6% per annum in lieu of interest provided in section 276 (a) and (b). See section 276 (d) and section 279 (c). 25% of the total amount of the tax or the deficiency in tax, together with interest at 1% per month from the time the tax became due. (This penalty is in addition to all other penalties that otherwise apply.) See section 282 (f). POSTPONEMENT OF TAX PAYMENTS When extension is granted by Commissioner for payment of tax or any installment thereof. Section 270 (c-2). When extension is granted by Commissioner for payment of any deficiency. Interest 6% per annum from original due date to expiration of period of extension. 6% per annum covering period of extension. See section 274 (g). Penalty and interest for assessments made prior to 1924 law. Generaly speaking, the interest and penalty provisions of the 1924 law apply only to returns filed under that law. LAW. Section 280. If after the enactment of this Act the Com. missioner determines that any assessment should be made in respect of any income, war-profits, or excess-profits tax imposed by the Revenue Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, or the Revenue Act of 1921, or by any such Act as amended, the amount which should be assessed (whether as deficiency or as interest, penalty, or other addition to the tax) shall be computed as if this Act had not been enacted, but the amount so computed shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including the provisions in case of delinquency in payment after notice and demand) as in the case of the taxes imposed by this title, except as otherwise provided in section 277. Section 277 mentioned above relates to the limitation period upon assessment and collection. RULING. The penalty and interest provisions of section 250 (e) of the Revenue Act of 1921 are still applicable in the case of assessments made prior to the enactment of the Revenue Act of 1924. Accordingly, taxpayers who are delinquent in paying installments of tax for 1923 (notice and demand having been sent within the prescribed time) are liable to the 5 per cent penalty and I per cent interest for nonpayment of tax. If assessments of taxes imposed by the Revenue Acts of 1916, 1917, 1918, and 1921 are made after the enactment of the Revenue Act of 1924 and the taxpayer is delinquent in making payment, he is liable to the I per cent per month interest imposed by section 276 of the Revenue Act of 1924 but not to the 5 per cent penalty imposed by section 250 (e) of the Revenue Act of 1921. . The 5 per cent penalty has been eliminated by section 276 of the Revenue Act of 1924. Under section 276 interest is collectible at the rate of 1 per cent per month for nonpayment of tax. While under section 250 (e) of the Revenue Act of 1921 no penalty or interest for nonpayment of tax is collectible in the case of estates of incompetent, deceased, or insolvent persons, under the provisions of section 276 interest at the rate of 6 per cent per annum is collectible in such cases. If the tax determined by the taxpayer or any installment thereof is not paid within the prescribed time, under the provisions of section 276 the I per cent per month interest immediately attaches, notice and demand not being required. Under section 276 notice and demand are necessary only for the purpose of imposing the I per cent per month interest in the case of additional assessments of tax. (III-34-1749; Mim. 3329.) Are interest penalties constitutional?-There is a question in the mind of the author as to the constitutionality of some of the interest penalties. This question arises in spite of the knowledge that there can be scarcely any limitation on the power to levy and assess taxes.1 It is also recognized that this power includes the power to adopt such measures as will make the collection of the 1Veasie Bank v. Fenno, 75 U. S. 533, 548, 19 L. Ed. 482; McCulloch v. Maryland, 17 U. S. 316, 428, 4 L. Ed. 579. |