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The accrued interest should invariably be collected, at the rate of one per cent per month, for the full number of calendar months which intervene between the date of the expiration of the ten days' notice and the date of the payment of the tax. No interest for a fraction of a month shall be demanded. Interest is not regarded as a penalty, or as any part of a penalty, but simply as an amount paid for the use of money detained from the government. Int. Rev. Reg., Series 7, No. 1, revised June 9, 1893. See Form 17, appendix.

turns and spe

cial returns,

when to be

made, and

when tax

SEC. 3185. All returns required to be made monthly by any person liable to tax shall be made on Monthly reor before the tenth day of each month, and the tax assessed or due thereon shall be returned by the Commissioner of Internal payable. Revenue to the collector on or before the last day of each month. All returns for which no provision is otherwise made shall be made on or before the tenth day of the month succeeding the time when the tax is due and liable to be assessed, and the tax thereon shall be returned as herein provided for monthly returns, and shall be due and payable on or before the last day of the month in which the assessment is so made. When the said tax is not paid on or before the last day of the month, as aforesaid, the collector shall add a penalty of five per centum, together with interest at the rate of one per centum per month, upon such tax from the time the same became due; but no interest for a fraction of a month shall be demanded: Provided, That notice of the time when such tax becomes due and payable is given in such manner as may be prescribed by the Commissioner of Internal Revenue. It shall then be the duty of the collector, in case of the non-payment of said tax on or before the

last day of the month, as aforesaid, to demand payment thereof, with five per centum added thereto, and interest at the rate of one per centum per month, as aforesaid, in the manner prescribed by law; and if said tax, penalty, and interest, are not paid within ten days after such demand, it shall be lawful for the collector or his deputy to make distraint therefor, as provided by law.

A tax was assessed on certain distilled spirits after the expiration of the bonded period, and after demand had been made for the tax by the collector, and a penalty of five per cent and one per cent interest per month had accrued, the spirits were allowed under the statute to be exported without payment of tax. Held that the penalty was not discharged by the exportation. Clay v. Swope, Circuit Court S. D. Ky., April 9, 1889, Barr, J., 38 Fed. Rep. 396.

See demand notice, Form 21, in Appendix.

No power to remit this penalty and interest. 9 Int. Rev. Record, 109.

Sec. 3, act

SEC. 3186, as amended by Sec. 3, act March 1, 1879 (20 Lien for taxes. Stat. 327). If any person liable to pay any tax March 1, 1879. neglects or refuses to pay the same after demand, the amount shall be a lien in favor of the United States from the time when the assessment-list was received by the collector, except when otherwise provided, until paid, with the interest, penalties, and costs that may accrue in addition thereto, upon all property and rights to property belonging to such


The tax on deficiency in the quantity of distilled spirits exported may be collected by distraint upon the property of the withdrawer of the spirits as well as by suit on the transportation bond. Such tax is secured by a lien under the general provision contained in Sec. 3186 R. S., upon all the

property of the person liable therefor. The special provisions found in Sec. 3251 R. S. do not forbid the application of the general provision of Sec. 3186 to all cases where there is nothing in such special provisions to contradict. The receipt of the ascertainment of deficiency by the Collector of Internal Revenue from the Collector of Customs is, in effect, his receipt of an assessment list of the tax, within the meaning of Sec. 3186, as amended by the act of March 1, 1879. 16 Opinions Atty.-Gen. 634.

The provisions of Secs. 3184 and 3185 R. S. must be closely followed in order to secure the government lien for taxes, and where taxes accrued in 1867 and lien not enforced until 1876, and no legal notice or demand could be proved, the United States acquired no title to the land by a sale under a distress warrant, and the conveyance to an innocent purchaser before such sale will not be set aside. United States v. Allen et al., Circuit Court M. D. Tenn., October, 1882, Key, D. J., 14 Fed. Rep. 263.

What is necessary to create a lien for taxes under Sec. 3186. United States v. Pacific R. R., 4 Dillon, 71; same case, 1 McCrary, 1.

ble by dis

SEC. 3187. If any person liable to pay any taxes neglects or refuses to pay the same within Taxes collectiten days after notice and demand, it shall be traint. lawful for the collector or his deputy to collect the said taxes, with five per centum additional thereto, and interest as aforesaid, by distraint and sale, in the manner hereafter provided, of the goods, chattels, or effects, including stocks, securities, and evidences of debt, of the person delinquent as aforesaid: Provided, That there shall be exempt from distraint and sale, Property exif belonging to the head of a family, the distraint. school-books and wearing apparel necessary for such family; also arms for personal use, one cow, two hogs, five sheep and the wool thereof, provided the aggre

empt from

gate market value of said sheep shall not exceed fifty dollars; the necessary food for such cow, hogs, and sheep, for a period not exceeding thirty days; fuel to an amount not greater in value than twenty-five dollars; provisions to an amount not greater than fifty dollars; household furniture kept for use to an amount not greater than three hundred dollars; and the books, tools, or implements of a trade or profession, to an amount not greater than one hundred dollars, shall also be exempt; and the officer making the distraint shall summon three disinterested householders of the vicinity, who shall appraise and set apart to the owner the amount of property herein declared to be exempt.

The collector distrained and sold the property of a distiller for non-payment of $4,339.37 taxes on distilled spirits assessed against him by the Commissioner of Internal Revenue, and realized only $108.72. Afterwards action was brought on the distiller's bond for the remainder of the assessed tax, and a verdict was rendered in favor of the distiller and his sureties, thus impeaching the validity of the assessment. Subsequently this action was brought for an alleged wrongful seizure and sale of the property of the plaintiff by the collector under distraint. The verdict in the suit on the bond was relied upon to support this action. The court instructed the jury that the taxes for which the defendant as collector seized and sold the plaintiff's property, having been assessed and the assessment certified to him, was a complete protection to him against the suit of the plaintiff, and directed the jury to return a verdict in his favor, which was accordingly done, and judgment entered thereon. The Supreme Court affirms the judgment of the court below, and, referring to the case of Erskine v. Hohnbach, 14 Wall. 613, says, in conclusion, "All that we decide is that a liability cannot be fastened upon the collector, a ministerial officer, for the enforcement of an assessment for taxes, regular on its face, made by the Commissioner of Internal Revenue.

Of such an officer the law exacts unhesitating obedience to Harding v. Woodcock, collector, 137 U. S. 43.


its process.


SEC. 3188. In such case of neglect or refusal, the collector may levy, or by warrant may au- Mode of levythorize a deputy collector to levy, upon ing distraint. property and rights to property, except such as are exempt by the preceding section, belonging to such person, or on which the said lien exists, for the payment of the sum due as aforesaid, with interest and penalty for non-payment, and also of such further sum as shall be sufficient for the fees, costs, and expenses of such levy.


must be exhibited.

SEC. 3189. All persons, and officers of companies or corporations, are required, on demand of a Books relating collector or deputy collector about to distrain distrained, or having distrained on any property, or rights of property, to exhibit all books containing evidence or statements relating to the subject of distraint, or the property or rights of property liable to distraint for the tax due as aforesaid.

on distraint.

SEC. 3190. When distraint is made, as aforesaid, the officer charged with the collection shall Proceedings make or cause to be made an account of the goods or effects distrained, a copy of which, signed by the officer making such distraint, shall be left with the owner or possessor of such goods or effects, or at his dwelling or usual place of business, with some person of suitable age and discretion, if any such can be found, with a note of the sum demanded, and the time and place of sale; and the said officer shall forthwith cause a notification to be published in some newspaper within the county wherein said distraint is made, if a newspaper is published in said county, or to be pub

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