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words "bank" and "banker."

Definition of SEC. 3407. Every incorporated or other bank, and every person, firm, or company having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid or remitted upon draft, check, or order, or where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale, shall be regarded as a bank or as a banker.

Tax on circulation.

Who are bankers under this section? (Selden v. Equitable Trust Co., 94 U. S., 419; 23 Int. Rev. Rec., 171; Warren v. Shook, 91 U. S., 704; 22 Int. Rev. Rec., 77.)

Liability of foreign banks doing business in United States. Suits to recover taxes on capital employed. (United States v. Bank of Montreal; 30 Int. Rev. Rec., 310; 21 Fed. Rep., 236.)

A loan and trust company regarded as a bank (U. S. v. Farmer's L. & T. Co., 25 Fed. Cas. No. 15070; 3 Int. Rev. Rec., 62.) SEC. 3408. There shall be levied, collected, and paid, as hereafter provided:

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Third. A tax of one-twelfth of one per centum each month upon the average amount of circulation issued by any bank, association, corporation, company, or person, including as circulation all certified checks and all notes and other obligations calculated or intended to circulate or to be used as money, but not including that in the vault of the bank, or redeemed and on deposit for said bank; and an additional tax of one-sixth of one per

centum each month upon the average amount of such circulation, issued as aforesaid, beyond the amount of ninety per centum of the capital of any such bank, association, corporation, company, or person.

In the case of banks with branches, the tax herein pro- On circulation vided shall be assessed upon the circulation of each branch of branch banks. severally, and the amount of capital of each branch shall

be considered to be the amount allotted to it.

Taxes on deposits and capital repealed. Act of March 3, 1883. (22 Stat., 488.) The taxation ceased December 1, 1882. (29 Int. Rev. Rec., 171; 17 Op. Atty. Gen., 539.)

When the plaintiff admits that his business was that of buying and selling stocks for his customers, and that in such business he employed capital, he proves that he was a banker within the statutory definition, and that, within the meaning of section 3408, his capital was employed in the business of banking. (Richmond v. Blake (1889), 132 U. S., 592; 36 Int. Rev. Rec., 24.)

The tax on circulation of national banks is paid to the Treasurer of the United States. (Sec. 5214 as amended.

3417, p. 352.)

See sec.

Certificates of indebtedness issued by a person or a corporation are not taxable as "circulation" under section 3408, unless intended to circulate as money. (United States v. Wilson, 106 U. S., 620.)

What is capital? (Mechanics and Farmers' Bank v. Townsend, collector, 5 Blatch., 315.)

Merchant's Nat'l Bank v. U. S., 42 Ct. Cls., 6.

SEC. 3409. The taxes provided in the preceding section Taxes, when shall be paid semi-annually, on the first day of January Payable. and the first day of July; but the same shall be calculated How calcu at the rate per month as prescribed by said section, so that the tax for six months shall not be less than the aggregate would be if such taxes were collected monthly.

In regard to abating tax against insolvent national, State, and savings banks, see section 22, act of March 1, 1879 (20 Stat., 327), and Supplement, Revised Statutes No. 1, page 243. (Johnson v. U. S., 17 Ct. Cls., 157; Jackson v. U. S., 20 Čt. Cls., 304.)

lated.

SEC. 3411. Whenever the outstanding circulation of Circulation, when exempted any bank, association, corporation, company, or person, from tax. is reduced to an amount not exceeding five per centum of the chartered or declared capital existing at the time the same was issued, said circulation shall be free from taxation; and whenever any bank which has ceased to issue notes for circulation deposits in the Treasury of the United States, in lawful money, the amount of its outstanding circulation, to be redeemed at par, under such regulations as the Secretary of the Treasury shall prescribe, it shall be exempt from any tax upon such circulation.

Legislation affecting taxes upon the circulation of State banks. (Merchants National Bank v. U. S., 42 Ct. Cls., 6.) SEC. 3412. Every national banking association, State Tax on notes of bank, or State banking association, shall pay a tax of ten banks used as cirper centum on the amount of notes of any person, or of culation, etc.

persons or State

Tax on notes

of town, city, or

any State bank or State banking association, used for circulation and paid out by them.

The act of March 3, 1875 (18 Stat., 507), provided that the Secretary of the Treasury be authorized and directed to settle and release any claims for tax on circulation of evidences of indebtedness made against any mining, manufacturing, or other corporations other than against any national banking association, State bank, or banking association, by such corporations paying the tax, without penalty, that shall have accrued thereon since November first, eighteen hundred and seventy-three.

Internal-revenue tax on State banks. (14 Op. Atty. Gen., 98; 16 Int. Rev. Rec., 57.)

The tax of 10 per cent on State bank circulation was designed to drive all such circulation out of existence. (Remark of the court in Head Money Cases. 112 U. S., 580, 596.)

SEC. 3413. Every national banking association, State municipal corpo- bank, or banker, or association, shall pay a tax of ten per by banks, etc. centum on the amount of notes of any town, city, or municipal corporation, paid out by them.

rations, paid out

Ten per cent tax on parties,

their own notes

This tax not a direct tax and not repugnant to the Constitution. (Veazie Bank v. Fenno, 8 Wall., 533; 10 Int. Rev. Rec., 195.)

Above decision cited and approved (National Bank v. United States, 101 U. S., 1) where the United States sued a national bank for 10 per cent of the notes of the city of Little Rock paid out. Tax on circulation of State banks (Deposit Savings Association v. Marks, 3 Woods, 553; 23 Int. Rev. Rec., 241, Fed. Cas. No. 3813.)

Section 3583 provided a penalty for issuing notes for a less sum than $1 intended to circulate as money. (United States v. Van Auken (96 U. S., 6 Otto) 366; 24 Int. Rev. Rec., 204; U. S. v. Roussopulous, 95 Fed. Rep., 977.)

Section 3583 has been reproduced in section 178 of the Criminal Code. Act of March 4, 1909. (35 Stat., 1088.)

[SEC. 3413a.] [Sec. 19 of the act of Feb. 8, 1875 (18 Stat., other than na-311).] That every person, firm, association other than tional banks, on national bank associations, and every corporation, State used for circula- bank, or State banking association, shall pay a tax of ten per centum on the amount of their own notes used for circulation and paid out by them.

tion, and paid

out.

tax on circula

used and

out.

paid

Ten per cent [SEC. 34136.] [Sec. 20 of the act of Feb. 8, 1875.] That tion of other than every such person, firm, association, corporation, State national banks bank, or State banking association, and also every national banking association, shall pay a like tax of ten per centum on the amount of notes of any person, firm, association other than a national banking association, or of any corporation, State bank, or State banking association, or of any town, city, or municipal corporation, used for circulation and paid out by them.

The main object of the Federal legislation on this subject was to secure for the national currency the exclusive use in the United States as a circulating medium; and this object was sought to be effected by imposing upon all competitive money such a tax as would make its issue unprofitable. (21 Op. Atty. Gen., 560.)

The effect of the act of February 8, 1875, was to extend sections 3412 and 3413, which included only banks and banking associations, to all persons, firms, associations, and corporations. The subject matter of the tax, to wit, "notes used for circulation paid out by them" was the same.

Construction of sections 19 and 20, act of February 8, 1875. (21 Int. Rev. Rec., 346.)

"Wages certificates" of Philadelphia & Reading Railroad
taxable. (16 Op. Atty. Gen., 341; 25 Int. Rev. Rec., 167; see
Philadelphia & R. R. Co. v. Pollock, 19 Fed. Rep., 401.)

Tax limited to obligations payable in money. (Hollister v.
Zion's Co-operative Mercantile Institution, 111 U. S., 62; 30 Int.
Rev. Rec., 111. In re Aldrich, 16 Fed. Rep., 369.)

Glass manufacturers' cases. Warrick and Stanger were glass
manufacturers and issued their notes in various amounts, from
5 cents to $5 each, in payment of wages. These notes circulated
as money, and when redeemed were constantly reissued. Every
issue of the notes taxable. (United States v. Warrick, 31 Int.
Rev. Rec., 327; 25 Fed. Rep., 138.)

A national bank paying out on checks and otherwise notes of a bank chartered in a foreign country is subject to tax of 10 per cent upon the total amount of all notes it has received and used as a circulating medium. (20 Op. Atty. Gen., 534.)

Notes of Canadian Banks (33 Int. Rev. Rec., 405; 34 ibid., 53,
61, and 77; also Treas. Dec. (1899), No. 20507).

Notes of the Dominion of Canada not taxable. (34 Int. Rev.
Rec., 61.)

Notes of State banks taxable. (T. D., 784.)

Certified checks of State banks not notes. (T. D., 885.)
Ice tickets not taxable. (19 Op. Atty. Gen., 98.)

Opinion of the Attorney General as to whether pay-roll checks
issued by manufacturers and others, and certificates issued by
clearing-house associations when used for circulation, are notes
within the meaning of section 19, act of February 8, 1875. The
tax applies only to promissory notes. (39 Int. Rev. Rec., 398;
20 Op. Atty. Gen., 681.)

Persons, corporations, banks, etc., purchasing from foreigners
and returning tourists notes of foreign banks and corporations
for resale to persons going abroad, not liable for 10 per cent tax
if such notes are not used for circulation in United States. (T.
D., 1041, Sept. 24, 1906.)

Clearing-house certificates not notes within the meaning of
34136. (T. D., 1271, Nov. 14, 1907.)

sec.

amounts and

payment of tax.

[SEC. 3413c.] [Sec. 21 of the act of Feb. 8, 1875 (18 Return Stat., 311).] That the amount of such circulating notes, and of the tax due thereon, shall be returned, and the tax paid at the same time, and in the same manner, and with like penalties for failure to return and pay the same, as provided by law for the return and payment of taxes * circulation, imposed by the existing provisions of internal revenue law.

on

* *

bankers' month

SEC. 3414. A true and complete return of the monthly Banks' and amount of circulation, *** as aforesaid, and of the ly returns. monthly amount of notes of persons, town, city, or municipal corporation, State banks, or State banking associations paid out as aforesaid for the previous six months, shall be made and rendered in duplicate on the first day of December and the first day of June, by each of such banks, associations, corporations, companies, or persons, with a declaration annexed thereto, under the oath of such person, or of the president or cashier of such bank, association, corporation, or company, in such form and manner as may be prescribed by the Commissioner of Internal Revenue, that the same contains a true and faithful statement of the amounts subject to tax, as aforesaid; and one copy shall be transmitted to the col

In default of return, commis

mate, etc.

lector of the district in which any such bank, association, corporation, or company is situated, or in which such person has his place of business, and one copy to the Commissioner of Internal Revenue.

The words "of deposits and of capital" are omitted in line 2 as obsolete.

SEC. 3415. In default of the returns provided in the sioner to esti- preceding section, the amount of circulation, * * * and notes of persons, town, city, and municipal corporations, State banks, and State banking associations paid out, as aforesaid, shall be estimated by the Commissioner of Internal Revenue, upon the best information he can obtain. And for any refusal or neglect to make return and payment, any such bank, association, corporation, company, or person so in default shall pay a penalty of two hundred dollars, besides the additional penalty and forfeitures provided in other cases.

State banks

converted into

returns,

made.

how

The words "deposits, capital” omitted in line 2.

See section 3176, page 89, as to additional penalties.

(U. S. v. N. Y. Guaranty Co., 8 Ben., 269, 27 Fed. Cas., No. 15, 872; 21 Op. Atty. Gen., 564.)

SEC. 3416. Whenever any State bank or banking assonational banks; ciation has been converted into a national banking association, and such national banking association has assumed the liabilities of such State bank or banking association, including the redemption of its bills, by any agreement or understanding whatever with the representatives of such State bank or banking association, such national banking association shall be held to make the required return and payment on the circulation outstanding, so long as such circulation shall exceed five per centum of the capital before such conversion of such State bank or banking association.

Certain provisions of this chap

national banks.

1875 (18

319).

Stat.,

This section (3416) is practically obsolete.

* *

SEC. 3417. The provisions of this chapter, relating to ter not to apply to the tax on the circulation of banks, and to their * returns, except as contained in sections thirty-four Act Feb. 18, hundred and eleven, thirty-four hundred and twelve, thirty-four hundred and thirteen, and thirty-four hundred and sixteen, and such parts of sections thirty-four hundred and fourteen, and thirty-four hundred and fifteen as relate to the tax of ten per centum on certain notes, shall not apply to associations which are taxed under and by virtue of Title "National Banks."

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