upon request give to the person making such payment a full written or printed receipt, stating the amount paid and the particular account for which such payment was made; and whenever any debtor pays taxes on account of payments made or to be made by him to separate creditors the collector shall, if requested by such debtor, give a separate receipt for the tax paid on account of each creditor in such form that the debtor can conveniently produce such receipts. separately to his several creditors in satisfaction of their respective demands up to the amounts stated in the receipts; and such receipt shall be sufficient evidence in favor of such debtor to justify him in withholding from his next payment to his creditor the amount therein stated; but the creditor may, upon giving to his debtor a full written receipt acknowledging the payment to him of any sum actually paid and accepting the amount of tax paid as aforesaid (specifying the same) as a further satisfaction of the debt to that amount, require the surrender to him of such collector's receipt.

Penalties for failure or delay.

PENALTY OF PERCENTAGE AND INTEREST.—

LAW. Section 250. ... (e) If any tax remains unpaid after the date when it is due, and for ten days after notice and demand by the collector, then, except in the case of estates of insane, deceased, or insolvent persons, there shall be added as part of the tax the sum of 5 per centum on the amount due but unpaid, plus interest at the rate of I per centum per month upon such amount from the time it became due: Provided, That as to any such amount which is the subject of a bona fide claim for abatement such sum of 5 per centum shall not be added and the interest from the time the amount was due until the claim is decided shall be at the rate of 1⁄2 of 1 per centum per month. . . . .1

SPECIFIC PENALTY.—

LAW. Section 253. That any individual, corporation, or partnership required under this title to pay . . . . any tax, . . . . who fails to pay . . . . such tax, ... shall be liable to a penalty of not more than $1,000. Any individual, corporation, or partnership, or any officer or employee of any corporation or member or employee of a partnership, who willfully refuses to pay . . . such tax,

at the time or times required under this title, . . . . shall be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution.

'This proviso is new.

WARRANT FEE.

LAW.

Section 250. ... (f) In any case in which in order to enforce payment of a tax it is necessary for a collector to cause a warrant of distraint to be served, there shall also be added as part of the tax the sum of $5.

PENALTIES DO NOT APPLY UNTIL NOTICE HAS BEEN GIVEN. -Penalties for failure or delay in the payment of tax are not applied until after assessment has been made and notice has been given to the taxpayer. The assessment and notice in the case of the first instalment are combined with the act of filing the return.1

'See page 129.

CHAPTER V

PROTESTS, APPEALS, OVERPAYMENTS,
REFUNDS

Many of the additional assessments following examinations of taxpayers' returns are based upon erroneous conclusions drawn by examiners, which the courts would promptly reverse if the taxpayers brought suit. But suits at law are so expensive, or thought to be, and delays and postponements are so frequent and annoying, that most of those reassessed pay even when they are sure of the injustice of the tax.

Because of the many erroneous assessments which have been made, taxpayers should be informed as to the details of steps to be taken to question an assessment, and, if a claim is refused, the necessary procedure to secure from the courts an impartial opinion as to the sufficiency of the taxpayer's side of the contention. Until the case reaches the courts it cannot always be said that the facts are passed upon impartially.

Many of the inequalities which existed under past practice were due to the thought on the part of those administering the law that there was no middle ground. Any doubtful point, no matter how great an injustice it might work, was decided against the taxpayer.

The provision in the 1918 law for the appointment of an "Advisory Tax Board" sets up a tribunal to which a taxpayer may go for a hearing.

LAW. 1301. . . . . (d) .... (2) The Commissioner may, and on the request of any taxpayer directly interested shall, submit to the Board any question relating to the interpretation or administration of the income, war-profits or excess-profits tax laws, and the Board shall report its findings and recommendations to the Commissioner.

(3) The Board shall have its office in the Bureau of Internal Revenue in the District of Columbia. . .

(4) The Board shall have the power to summon witnesses, take testimony, administer oaths, and to require any person to produce books, papers, documents, or other data relating to any matter under investigation by the Board. Any member of the Board may sign subpoenas and members and employees of the Bureau of Internal Revenue designated to assist the Board, when authorized by the Board, may administer oaths, examine witnesses, take testimony and receive evidence.

At the present time every appeal must be carried to Washington. Some method should be devised whereby local hearings could be arranged.1 Of course no effort should be made to encourage unfounded claims, but on the other hand nothing should be left undone to give an impartial and patient hearing to all just claims, and the way of the claimant should be made easy rather than hard.

Taxpayers are entitled to be informed as to the attitude of the courts on doubtful points which arise in the course of the administration of the law.

DECISION. At the outset it may be remarked that a statute providing for the imposition of taxes is to be strictly construed, and all reasonable doubts in respect thereto resolved against the government and in favor of the citizen."

Erroneous or illegally assessed taxes must be paid. In all cases it must be remembered that the tax levied by the collectors must be paid if (after a hearing before the collector and an appeal to the Commissioner) the assessment is confirmed, even if it is clearly in error. The United States Supreme Court has held that Congress has afforded a complete and adequate remedy at law open to all persons aggrieved by the collection of an erroneous or illegal revenue tax, and that the taxpayer must pay the tax, and may then bring an action to recover it after appeal.

The Supreme Court has affirmed this old rule under the

'Such opportunity was given by the act of 1894, which in this matter took particular pains to make the remedy as inexpensive to the taxpayer as possible (Vol. 25, Congressional Record, 6828-6830).

Mutual Benefit Life Ins. Co. v. Herold, 198 Fed. Rep., 199.

income tax laws. In a recent case1 the court reiterated the provision in Section 3224, R. S., that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court."

REGULATION. The filing of a claim for the abatement of a tax alleged to have been erroneously assessed does not necessarily operate as a suspension of the collection of the tax, or make it any less the duty of the collector to exercise due diligence to prevent the collection of the tax being jeopardized. He should, if necessary, collect the tax and leave the taxpayer to his remedy by claim on form 46. (Reg. No. 33, 1918, ¶ 743.)

Taxpayer's right to question assessment.-Vast numbers of persons pay too much tax for a variety of reasons: ignorance; the desire to overpay rather than to underpay; the tendency to follow Treasury Department rulings even though obviously illegal; fear of penalties; fear that failure to pay will be called unpatriotic; and many others. In view of the fact that in a democracy the people are supposed to be sovereign and public officers their servants, this tendency is hard to understand. It probably results from the disinclination of the average well-to-do American to go to any trouble about overcharges of any kind. kind. He will pay a cab driver an extortionate fare rather than question the rate. He will tip an insolent and inefficient waiter rather than be looked at unkindly or spoken to offensively.

It is so with taxes. But there should be a change. Public officers, at least those in Washington, are not to blame. An effort has been made to render the remedy of an aggrieved taxpayer as inexpensive and as little troublesome as possible. Taxpayers who refuse to acquaint themselves with the remedies and means for correcting erroneous assessments have only themselves to blame.

Notice required in all cases.-It appears that some collectors are too arbitrary in their demands for additional returns,

'Dodge v. Osborn, Commissioner, 240 U. S. 118, February 21, 1916.