ANNUAL REPORT

OF THE COMMISSIONER OF INTERNAL REVENUE

FOR THE FISCAL YEAR ENDED JUNE 30

1941

UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1941

For We by the Superintendent of Documents, Washington D C Price 25 cents (paper cover CONTENTS

Page Introduction 1 Collections 1 Cost of administration 4 Personnel 4 Important legislative and other changes affecting the Bureau 5 Accounts and Collections Unit: Assessments of employment taxes 10 Taxes under Federal Insurance Contributions Act 11 Special refunds 12 Offers in compromise 12 Coordination with Social Security Board 12 Tax under the Federal Unemployment Tax Act 13 Offers in compromise 15 Carriers taxes (Chapter 9, Subchapter B, I. R. C.) 15 Coordination with Railroad Retirement Board 16 Income Tax Unit: General functions 16 Income and excess profits taxes 17 Collections 17 Returns filed 17 Examination of income and excess profits tax returns upon re- ceipt 18 Investigation of income tax returns by field offices 19 TREASURY DEPARTMENT Revenue results of investigation of income and declared value excess profits tax returns 20 Document No. 3110 Stage at which additional tax was assessed 20 Refunds, abatements, and credits 21 Internal Revenue Inventory of' returns on hand in field offices as of June 30, 1941_ 22 Miscellaneous Tax Unit: Estate Tax Division: Returns 24 Claims 24 Court decisions 25 • Tobacco Division 26 Sales Tax Division: Admission taxes 29 Documentary stamp taxes 29 Playing cards 29 Oleomargarine; adulterated, process, or renovated butter 29 Mixed flour 29 Firearms 29 Narcotics and marihuana 30 Bituminous coal 30 Silver tax 30 Hydraulic mining 30 Assessments 30 Field reports and returns 30 Claims 30 Credit cases 31 Offers in compromise 32 Miscellaneous tax special squads 32 Court decisions 32 Capital Stock Tax Division 32 Processing Tax Division 33 Sugar tax 33 Claims 34 Alcohol Tax Unit: Procedure Division 35 Statistics 35 Ethyl and denatured alcohol 36 Distilled spirits 36 Hi IV CONTENTS CONTENTS V Alcohol Tax Unit—Continued. Table Page Procedure Division—Continued. Page 14. Cigars weighing more than 3 pounds per thousand: Number removed Rectified spirits 36 tax-paid, by classes, calendar year 1940, by collection districts and Fermented malt liquors 36 by States 118 Wines 36 15. Cigars weighing more than 3 pounds per thousand: Manufactured Enforcement Division 37 and removed tax-paid for domestic consumption from customs Field Inspection Division 37 bonded manufacturing warehouses, class 6, by classes, calendar Laboratory Division 38 year 1940 120 Audit Division 40 16. Cigars weighing not more than 3 pounds per thousand: Quantity of Assessments 40 tobacco used, number of cigars manufactured, on hand at com- Offers in compromise— mencement and close of year, removed for export and tax-paid, Liquor taxing laws 40 121 Federal Alcohol Administration Act calendar year 1940, by collection districts and by States 40 17. Cigarettes weighing not more than 3 pounds per thousand: Number Basic Permit and Trade Practice Division 40 of factories operated, quantity of tobacco used, number of ciga- Technical Staff 42 rettes manufactured, on hand at commencement and close of year, Facilities offered by Technical Staff for settlement of tax disputes _ _ _ 42 Field operations removed for export and tax-paid, calendar year 1940, by collection 45 districts and by States 122 Coordination of field activities 46 Compromises, extensions of time, and closing agreements 18. Cigarettes weighing more than 3 pounds per thousand: Quantity of 47 tobacco used, number of cigarettes manufactured, on hand at com- Office of the Chief Counsel: mencement and close of year, removed for export and tax-paid, Appeals Division 49 calendar year 1940, by collection districts and by States 124 Civil Division 49 Leaf tobacco used in manufacturing cigars, cigarettes, and tobacco Compromise Section 50 19. Interpretative Division and snuff, calendar years 1931 to 1940 125 50 20. Production of manufactured tobacco, snuff, cigars, and cigarettes, Penal Division 50 125 Review Division 51 calendar years 1931 to 1940 21. Summary of operations of manufacturers of tobacco and cigars, calen- Legislation and Regulations Division 51 126 Alcohol Tax Division dar year 1940 51 22. Exportation in bond of manufactured tobacco, snuff, cigars, and ciga- Intelligence Unit 52 rettes, etc., year ended June 30, 1941, by collection district8 128 Conclusion 53 23. Withdrawal of manufactured tobacco, snuff, cigars, and cigarettes STATISTICAL TABLES from factory in bond, for shipment or delivery as sea stores, fiscal 129 RECEIPTS FROM INTERNAL-REVENUE TAXES year ended June 30, 1941 Table 24. Withdrawal of manufactured tobacco, snuff, cigars, and cigarettes from bonded internal revenue tobacco sea stores warehouses, for 1. Receipts from specified sources of internal revenue, fiscal year ended June 30, 1941, by collection districts, States, and Territories shipment or delivery as sea stores, fiscal year ended June 30, 1941_ _ 130 56 25. Drawback of internal-revenue taxes allowed on tobacco, snuff, cigars, 2. Comparative internal-revenue collections, fiscal years 1940 and 1941, by collection districts, States, and Territories and cigarettes exported, year ended June 30, 1941, by ports, and 92 comparative totals for years ended June 30, 1936 to 1940 130 3. Summary of internal-revenue collections, year ended June 30, 1941, by States and Territories 96 26. Domestic and imported cigarette papers and tubes withdrawn and Summary of monthly internal-revenue tax receipts for the fiscal year internal-revenue receipts from taxes during fiscal years ended June 4. 130 ended June 30, 1941, by sources 98 30, 1932 to 1941, inclusive Summary of internal-revenue collections, years ended June 30, 1940 27. Tobacco products withdrawn for consumption, computed from collec- 5. 131 and 1941, by sources 104 tions from the sales of stamps, fiscal year 1941 6. Total internal-revenue collections, years ended June 30, 1863 to 1941_ 28. Dealers in leaf tobacco in business, leaf tobacco exported and received 106 from farmers, calendar year 1940, by collection districts and by 7. Internal-revenue tax on manufactured products from the Philippine 132 Islands, fiscal years 1940 and 1941, by objects of taxation 107 States 29. Leaf tobacco imported by cigar manufacturers, tobacco manufac- 8. Internal-revenue tax on manufactured products from Puerto Rico, fiscal years 1940 and 1941, by objects of taxation 107 turers, and dealers in leaf tobacco, calendar year 1940, by collection districts and by States 134 INCOME-TAX AUDIT 30. Quasi tobacco manufacturers classified: Number of factories operated 136 9. Additional income tax assessments on the Commissioner's and and tobacco material handled, calendar year 1940 Tobacco material held or owned by dealers in leaf tobacco, cigar and collectors' lists made during the fiscal year 1941, by tax years 108 31. 10. Tax items appealed to the United States Board of Tax Appeals, fiscal tobacco manufacturers on January 1, 1941, by collection districts 137 year 1941 111 and by States TOBACCO, CIGARS, CIGARETTES, ETC. OCCUPATIONS SUBJECT TO SPECIAL TAXES 11. Manufactured tobacco: Number of factories operated, leaf tobacco 32. Number of each class of special-tax payers purchasing special-tax and other materials used, calendar year 1940, by collection districts stamps covering the fiscal year 1941, or portion thereof, under the and by States 112 various annual rates, by collection districts and States 139 12. Manufactured tobacco: Quantity manufactured, on hand at com- mencement and close of year, removed for export and tax-paid, OLEOMARGARINE, RENOVATED BUTTER, MIXED FLOUR, ETC. calendar year 1940, by collection districts and by States 114 13. Cigars weighing more than 3 pounds per thousand: Number of fac- 33. Production and withdrawals of colored oleomargarine, year ended tories operated, quantity of tobacco used, number of cigars manu- June 30, 1941, by collection districts 145 factured, on hand at commencement and close of year, removed for 34. Production and withdrawals of uncolored oleomargarine, year ended export and tax-paid, calendar year 1940, by collection districts and June 30, 1941, by collection districts 145 by States 116 CONTENTS CONTENTS VII

Table Page Table Page 35. Production and withdrawals of oleomargarine (colored and uncolored), 67. Distilled spirits: Materials used in the production of brandy, by kinds year ended June 30, 1941, by months 146 - and by States, fiscal year 1941 161 36. Summary of production and withdrawals of oleomargarine (colored 68. Rectified spirits and wines: Production, by kinds and by months, and uncolored), years ended June 30, 1932 to 1941 147 fiscal year 1941 161 37. Materials used in the manufacture of oleomargarine (colored and un- 69. Rectified spirits and wines: Number of plants operated and produc- colored), year ended June 3b, 1941 147 tion, by kinds, by States, fiscal year 1941 162 38. Production and withdrawals of renovated butter, year ended June 30, 70. Rectified spirits and wines: Alcoholic liquors used in rectification, by 1941, by collection districts 147 kinds and by months, fiscal year 1941 162 39. Summary of production and tatapaid wi hdrawals of renovated butter, 71. Rectified spirits and wines: Alcoholic liquors used in rectification, by years ended June 30i 1932 to 1941- 147 kinds and by States, fiscal year 1941 163 40. Production and withdrawals of mixed our, year ended June 30, 1941, 72. Distilled spirits: Wine gallons of spirits bottled by rectifiers and tax- by collection districts- 148 paid bottling houses and bottled-in-bond spirits withdrawn on pay- 41. Pmduction, importation, and wit drawals of playing cards, by ment of tax from internal revenue bonded warehouses, fiscal year months, year ended June 30,_194 148 1941 163 73. Distilled spirits: Production, tax-paid withdrawals, and stocks on hand ALCOHOL, DISTILLED SPIRITS, BEER, ETC. June 30 of whisky and of total distilled spirits, fiscal years 1934- 42. Ethyl alcohol:• Production and withdrawals, by months, fiscal year 1941, inclusive 164 1941 149 74. Fermented malt liquors: Production and tax-paid withdrawals, by 43. Ethyl alcohol: Plants and bonded warehouses operated, production, months, fiscal year 1941 164 withdrawals, warehouse losses, and stocks remaining in bonded 75. Fermented malt liquors: Breweries operated, production, with- warehouses June 30, by States, fiscal year 1941 149 drawals, losses, and stocks on hand June 30, by States, fiscal year 44. Ethyl alcohol: Withdrawals, tax-paid and tax-free, by States, fiscal 1941 165 year 1941 150 76. Fermented malt liquors: Withdrawals, tax-paid and tax-free, by 45. Ethyl alcohol: Materials used in production, by kinds and by States, States, fiscal year 1941 166 fiscal year 1941 150 77. Fermented malt liquors: Materials used in production, by kinds and 46. Ethyl alcohol: Production, by kinds of materials used, fiscal year by States, fiscal year 1941 167 1941 151 78. Fermented malt liquors: Production, tax-paid withdrawals, and 47. Ethyl alcohol: Production, tax-paid withdrawals, withdrawals for de- stocks on hand June 30, 1934-1941, inclusive 167 naturation, and stocks on hand June 30, 1934-1941, inclusive_ _ _ _ 151 79. Cereal beverages: Plants operated, production, and withdrawals, by 48. Denatured alcohol: Plants operated, production, withdrawals, and States, fiscal year 1941 168 stocks on hand June 30, by States, fiscal year 1941 151 80. Still wine: Production and withdrawals, by months, fiscal year 1941_ _ 168 49. Denatured alcohol: Production, by months, fiscal year 1941 152 81. Still wine: Bonded wineries and bonded storerooms operated, pro- 50. Completely denatured alcohol: Withdrawals, by formulas and by duction, withdrawals, losses, and stocks on hand June 30, by States, months, fiscal year 1941 152 fiscal year 1941 169 51. Specially denatured alcohol: Withdrawals, by formulas, fiscal year 82. Still wine: Tax-paid withdrawals and stocks on hand June 30, by 1941 152 alcoholic grades and by States, fiscal year 1941 170 52. Specially denatured alcohol: Withdrawals, by leading formulas and 83. Still wine: Amelioration and fortification occurring after fermenta- by months, fiscal year 1941 153 tion, by States, fiscal year 1941 170 53. Specially denatured alcohol: Operations of bonded dealers, by States, 84. Still wine: Materials used in production, by kinds and by States, fiscal year 1941 153 fiscal year 1941 171 54. Specially denatured alcohol: Operations of manufacturers, by States, 85. Sparkling wine: Production and tax-paid withdrawals, by months, fiscal year 1941 154 fiscal year 1941 172 55. Distilled spirits: Number of distilleries and internal-revenue bonded 86. Sparkling wine• Number of producers, production, withdrawals, warehouses operated, by States, fiscal year 1941 155 losses, and stocks on hand June 30, by States, fiscal year 1941__ _ _ 172 56. Distilled spirits: Production, by kinds and by months, fiscal year 87. Sparkling wine: Tax-paid withdrawals and stocks on hand June 30, 1941 155 by size of container and by States, fiscal year 1941 173 57. Distilled spirits: Production, by kinds and by States, fiscal year 1941_ 156 88. Vermouth: Production and tax-paid withdrawals, by months, fiscal 58. Distilled spirits: Brandy produced, by kinds and by States, fiscal year 1941 173 year 1941 156 89. Vermouth: Number of premises operated, production, withdrawals, 59. Distilled spirits: Total withdrawals, tax-paid, by kinds and by losses, and stocks on hand June 30, by States, fiscal year 1941__ 174 months, fiscal year 1941 157 90. Still and sparkling wines: Production, tax-paid withdrawals, and 60. Distilled spirits: Total withdrawals, tax-paid, by kinds and by stocks on hand June 30, 1934-1941, inclusive 174 States, fiscal year 1941 157 91. Enforcement, Alcohol Tax Unit: Seizures and persons arrested, by 61. Distilled spirits: Bottled-in-bond withdrawals, tax-paid, by kinds and months, fiscal year 1941 174 by months, fiscal year 1941 158 92. Enforcement, Alcohol Tax Unit: Seizures and persons arrested, by 62. Distilled spirits: Bottled-in-bond withdrawals, tax-paid, by kinds and States, fiscal year 1941 175 by States, fiscal year 1941 158 63. Distilled spirits: Stocks remaining in internal-revenue bonded ware- TECHNICAL STAFF houses, by kinds and by States, June 30, 1941 159 93. Analysis of the work of the Technical Staff during fiscal year 1941- 64. Distilled spirits: Stocks remaining in internal-revenue bonded ware- Income, profits, estate, and gift tax cases 176 houses, by kinds and by years and seasons of production, June 94. Analysis of work on compromise, extension of time, and final closing 30, 1941 159 agreement cases, fiscal year 1941 177 65. Distilled spirits: Losses in internal-revenue bonded warehouses from leakage and evaporation, by kinds of spirits and by States, and OFFICE OF THE CHIEF COUNSEL other losses, by kinds of spirits, fiscal year 1941 160 66. Distilled spirits: Grains and molasses used in production, by States, 95. Appeals Division: Cases appealed to Board of Tax Appeals, including fiscal year 1941 160 those appealed from Board decisions to appellate courts, fiscal year 1941 178 VIII CONTENTS Table Page ANNUAL REPORT 96. Appeals Division: Number, and amounts of cases shown in table 95 for the fiscal year 1941 only, by class of tax and amounts involved.. 178 OF THE 97. Appeals Division: Circuit and Supreme Court cases pending June 30, 1941 178 98. Appeals Division: Status of cases pending before Board of Tax COMMISSIONER OF INTERNAL REVENUE Appeals June 30, 1941 179 99. Appeals Division: Progress of cases in appellate courts on appeals from decisions of the Board of Tax Appeals 179 TREASURY DEPARTMENT, 100. Appeals Division: Results obtained in cases closed before the Board of Tax Appeals during the fiscal year 1941 179 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 101. Appeals Division: Disposition of cases by Board of Tax Appeals Washington, D. C., October 31, 1941. during fiscal year 1941 179 102. Appeals Division: Number, and amounts, of cases pending in field The honorable the SECRETARY OF THE TREASURY. divisions, by class of tax and amounts involved 180 SIR: I have the honor to submit the following report upon the 103. Appeals Division: Disposition of cases by United States Board of work of the Bureau of Internal Revenue for the fiscal year ended Tax Appeals during fiscal year 1941 180 104. Appeals Division: Cases appealed to United States Processing Tax June 30, 1941: Board of Review, including those appealed to appellate courts, 180 COLLECTIONS fiscal years 1938-1941 105. Appeals Division: Number, and amounts, of cases shown in table 104 Total collections of internal revenue taxes during the year I for fiscal year 1941 only, by class of tax and amounts involved 180 amounted to $7,370,108,378, as compared with $5,340,452,347 during 106. Appeals Division: Status of cases pending before United States Proc- essing Tax Board of Review June 30, 1941 181 the fiscal year 1940, an increase of $2,029,656,031, or 38 •per cent. 107. Appeals Division: Results obtained in eases closed before the United This collection is the largest fiscal year collection in the history of States Processing Tax Board of Review during fiscal year 1941 _ _ _ 181 the Bureau. 108. Appeals Division: Civil cases received and disposed of by the Proc- Income tax collections received during the March and June quarters, essing Tax Section, Appeals Division, and number decided by courts during fiscal year 1941 181 1940, which included the first two quarterly payments on 1939 earn- 109. Appeals Division: Interpretative, corporate reorganization, and ings, amounted to $1,313,014,582, while the corresponding figures for bankruptcy and receivership cases disposed of by Processing Tax 181 the year of this report are $2,248,777,289-an increase of $935,762,707. Section, Appeals Division, during fiscal year 1941 The taxes imposed on 1940 incomes were levied under the Revenue 110. Appeals Division: Review cases received and disposed of by the Processing Tax Section, Appeals Division, for the fiscal year 1941_ 182 Act of 1940 and the Second Revenue Act of 1940. These acts provide 111. Civil Division: Cases received and disposed of during the fiscal year for increased rates and for an additional defense tax of 10 per cent on 1941 182 incomes. The defense tax levy and increased rates, together with 112. Civil Division: Results obtained in cases closed during the fiscal better business conditions throughout the country, contributed to year 1941 182 113. Civil Division: Results obtained in lien cases closed during the fiscal the increased collections. year 1941 183 The following table shows the increases or decreases in general 114. Civil Division: Civil cases pending at the beginning and end of the sources of internal revenue for 1941 compared with 1940: fiscal year 1941 183 115. Civil Division: Number of Civil Division cases tried by the Depart- Summary of collections, fiscal years 1940 and 1941 ment of Justice and the number decided by the courts during the 183 fiscal year 1941 116. Civil Division: Number of cases received and disposed of during the Fiscal year Increase, or decrease (-) fiscal year 1941 183 General source 117. Civil Division: Classification and tax liability involved in cases 1940 1941 Amount Per cent pending June 30, 1941 184 118. Interpretative Division: Number of cases received and disposed of Income taxes: 184 Corporation income tax $1,120, 581, 550.75 1, 851,987,990. 58 $731,406,439. 83 65. 3 during the fiscal year 1941 44.4 119. Review Division: Number of cases received and disposed of during Individual income tax 982, 017, 376.17 1,417,655,126. 59 435,637,150.42 184 Exeem-profits tax, declared value_ 17,047,134.68 25,919, 566.85 8,872,432.17 52.0 the fiscal year 1941 Excess-profits tax, Second Revenue 120. Review Division: Public decisions, promulgated under Treasury Act of 1940 164, 308,987.23 164,308.967.23 Decisions 4264 and 4583, during the fiscal year 1941 184 Excess-profits tae, Vinson Act_ 1,427,087.15 2, 156,717.81 729,650.66 51.1 Unjust enrichment tax 8, 538,178.32 9,095, 561. 51 559,383.19 6.6 -20.36 MISCELLANEOUS STATISTICS Dividend tax I (repealed) 20.36 121. Moneys paid to collectors as proceeds of In rem actions, judgments Total 2,129, 609,327.43 3,471,123.930. 57 1,341,514,603.14 63.0 recovered in civil suits, fines and penalties imposed in criminal Alcohol taxes: actions, and costs, as reported by clerks of United States courts Distilled spirits, imported, excise (Form 158), year ended June 30, 1941 185 tax. 27,874,052.19 34,889.895.90 7,015, 843.71 25.2 Expenses of the Internal Revenue Service, fiscal year ended June 30, Distilled spirits, domestic, excise 122. tax 289. 857,903. 07 393, 751, 625. 27 103,893,722. 20 85.8 1941 186 Distilled spirits, rectification tax.. 11,854, 090.97 13,460, 554.79 1,606,463.82 13.6 123. Summary of internal-revenue stamps issued to collectors of internal revenue and the Postmaster General during the fiscal years 1940 I Tax due on dividends declared between June 16 and Dee. 31, 1933. and 1941 195 I The year, unless otherwise noted, means the fiscal year ended June 30. 1941. 124. Cost of printing and binding for the Internal Revenue Bureau and 1 Service, fiscal years 1940 and 1941 195 2 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 3 Summary of collections, fiscal years 1940 and 1941—Continued Fiscal year Fiscal year Increase, or decrease (—) Class of tax General source 1940 1941 1940 1941 Amount Per cent Income $291,198,664. 00 $269, 725, 157. 011 Alcohol taxes—Continued. Miscellaneous internal revenue: Floor taxes (on stocks of Jan. 12, Estate 52 350,045.30 55,539, 688.33 1934, June 30, 1938, and Juno 30, Gift 6, 364, 319. 72 9, 263, 764. 22 1990) $12, 201 32 $25, 304,050. 09 $25,291,849.77 Capital stock 1, 732, 327.10 994,812. 55 Bottle or container stamps 11, 22A, 905. 49 11,162,805.62 —62,099.87 —0.6 Sales 4, 561, 082.62 3,003.389. 26 Wines, including fortifying brandy 9, 366,706. 29 12,819,857.91 3,453,151 82 36.9 Liquors 3,854,593.05 5,476,957. 12 Fermented malt liquors, excise tax- 264, 579,036. 03 816,741,027.11 52,161,991 08 19.7 Miscellaneous 7,943, 709. 74 6, 591, 263.80 Special, or occupational, taxes 9,484, 261.75 11,926,361.64 2,442, 099.89 25.7 Tobacco 122, 703.57 82,428. 18 424, 504. 29 659, 393. 18 Total Coal 624, 253,156.11 820, 056,178.33 195,803,022.22 31.4 Silver 26, 925. 9D 197, 251.35 239,077. 24 Miscellaneous taxes: Sugar Capital stock tax 132, 738, 537.17 166,652,639. /18 33,914,102.71 25.5 Total miscellaneous 77, 567,562 64 ; 81,850, 773. 88 Estate and gift taxes__ 360,071,186.94 407,057, 747. 52 46,986,580.58 13.0 Tobacco taxes 608, 518,443. 59 698,076,890.87 89,558,497.28 19.7 ; 31,744,653.82 Sales taxes (manufacturer's excise Employment and Carriers' taxes 26,143, 458.88 . . taxes, admissions, communica- 383,320, 584.70 tions, oleomargarine, documen- Grand total 393,909,685. 50 tary stamps, coal, etc.) 583,595, 382.97 806, 449, 089900. 51 222,854, 318.04 38.2 Sugar tax M1145,357.56 74,834939.60 6, 689,482.04 9.8 'Includes, for income taxes, $262,730,729 from the Income Tax Unit and $6,994, 428 from the Accounts Total and CollectIons ;Init. The assessments of theIncome Tax Unitinclude $23,049,262made under the jeopardy 1, 753,068,887.73 2,153, 071,809.38 400,002,920. 65 22.8 provisions of section 279 of the Revenue Act of 1926 and section 273 of subsequent Revenue Acts. Employment taxes: ; Includes, for miscellaneous internal revenue, $70,261,573 from the Miscellaneous Tax Unit, $8,112,244, Federal Insurance Contributions from the Accounts and Collections Unit, and $5,476,957 from the Alcohol Tax Unit. Act Includes, for employment and carriers taxes, $8,919,073 from the employment tax activities of the 605,350,175.64 697, 327,651.09 81,977, 375.45 13.5 Accounts and Collections Unit and $22,826,581 from the collectors' offices. Federal Unemployment Tax Act_ . 106,123, 156.21 100,657,721.58 —5,465,434. 63 —5.2 Carriers taxes_ 122, 047,643.86 137,871,187.71 15,823, 544.05 13.0 Total 833, 520,975.51 925,856,460.38 92, 385,484.87 11.1 Refunds, etc.—Payments for the refund of taxes illegally or erro- neously collected and for redemption of stamps and drawbacks are Total, all collections 5,340,452,346.78 7, 370,109,377.66 2,029, 656, 030.88 38.0 made from sums appropriated for such purposes.

Comparative statement of tax collections by quarters, fiscal years 1940 and 1941 Number of claims paid and the amount of refunds, payments, and repayments, including interest, during the fiscal years 1940 and 1941

Miscellaneous Employment Quarter ended— Income taxes internal-revenue taxes, including Total collections Number of Interest allowed (included taxes carriers taxes ela ms Amount refunded or repaid in amount refunded) Class of tax Sept. 30, 1939 S404, 101,228.59 $735,155,042.82 $182, 509, 494. 71 $1, 321, 765, 786.12 1940 1941 1940 1941 1940 1941 Dec. 31, 1939 385,983, 116. 56 552, 5011, 230.89 192, 865,039. 17 1, 130,898,386. 62 Mar. 31, 1940 766,069,685. 99 534,411, 289.61 252,032, 566.66 1,552,483, 541.65 June 30, 1940 548,944,895.78 582, 265, 881.64 206,143, 874.97 1, 335, 354, 652.39 Refund of internal-revenue ' collections: Fiscal year 1940 2, 102,598,925 92 2,409, 332 444.35 833,520, 975.51 5, 340, 452, 346.78 Income taxes 132,532 117,861 $46,022,031. 85 $35 328,418. 77 $9,155, 587.93 $7,055.283.80 Miscellaneous internal- Sept. 30, 1940 505, 931,630. 06 808, 885,033. 53 206,025,497. 28 1, 520, 842, 160. 87 revenue taxes: Dec. 31, 1940 514,934, 197. 64 730, 853, 160. 81 208,466, 752.52 1,463,754, 110. 97 Bituminous coal 103 68 6, 567.92 7, 643.00 399.50 564.10 Mar. 31, 1941 1, 275.183,095.86 780.528,923.02 272, 587, 516. 36 2, 328, 209, 535. 24 Capital stock 2,131 2,854 381, 857.55 601, 165. 49 45, 437.40 81, 702.93 June 30, 1941 973,594,193.61 854,841,682. 75 238, 776,694.22 2,067, 212, 570.58 Distilled spirits 5,902 7,681 641. 275. 23 296, 715. 93 1, 182. 43 2 332. 33 Estate 1, 582 I, 513 5, 491, 476.11 4, 544. 329.56 880, 308.78 660. 199. 71 Fiscal year 1941 3,269,843, 117. 17 3,174,608,800.11 925, 856,460. 38 7, 370, 108,377.66 Gift 421 411 3,498, 569.60 662 027.37 541, 207.97 101,896.09 Miscellaneous tax 962 198 585,298.30 127, 554.68 60, 532 53 20,365.08 Narcotics 127 317 205.31 757.62 6.21 Nora.—The Revenue Act of 1940 became effective July 1, 1940, increasing the majority of tax rates by Sales 1,105 2120 2,165,637.45 2 210, 748.33 196, 916.26 206, 755.87 approximately 10 per cent. Sugar 1, 637 996 1,683, 636.96 1, 749, 925.85 521 99 297.15 The capital stock tax is due to be paid in the September quarter and the gift tax in the March quarter. Tobacco 9 365 573.94 5,753.69 27.03 10457 Other miscellaneous taxes are payable monthly. The March quarter includes full-paid calendar year Employment taxes: Income tax returns. Carriers 131 127 10, 21& 61 76, 689.43 469.73 6,77&71 Federal Insurance Contributions In the appendix will be found tables showing the amount of internal Act 5,665 10,868 546, 219.77 665, 703.50 52 572.13 67,197.42 Federal Unem- revenue tax receipts in detail for the year, with statements of com- ployment Tax parative collections by districts, States, and Territories, during the Act 14, 972 15, 448 1, 909, 393.72 1, 954, 427.75 58, 243.52 63, 783. 17 Agricultural ad- fiscal years 1940 and 1941. Tables are presented also showing the JusUnent 49,027 12 864 11, 503, 970.56 8, 125,017. 63 1, 418, 310.02 1, 254, 008.94 quantities of liquor, tobacco, oleomargarine, etc., tax-paid for con- Total 215, 706 173, 681 74, 496, 930.88 59, 386 878.60 12, 409, 716. 22 9, 511,226.08 sumption. Repayments (not refund of Additional assessments.—The additional assessments, including in- taxes erroneously col- lected): terest and penalties, resulting from office audits and field investiga- Redemption of stamps: tions made during the fiscal years 1940 and 1941, were as follows: Distilled spirits.... 2112 1,865 54,232.68 112.949. 77 597.80 707.03 Miscellaneous 1, 984 2,176 215, 588.17 295, 292.03 18,892. 44 21,643.09 Narcotics 57 68 218.43 587.76 4 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 5 Number of claims paid and the amount of refunds, payments, and repayments, There were 112 employees retired on annuity during the fiscal year including interest, during the fiscal years 1940 and 1941-Continued 1941, 51 of whom were retired on account of disability.

Number of Interest allowed (included IMPORTANT LEGISLATIVE AND OTHER CHANGES AFFECTING . THE claims Amount refunded or repaid in amount refunded) Class of tax BUREAU DURING THE FISCAL YEAR 1941 1940 1941 1940 1941 1949 1941 Public, No. 699, approved July 1, 1940, amends sections 270, 396, of the Bankruptcy Act, relating to the determination of the Repayments-Continued. and 522 Redemption of stamps basis of property for Federal or State income-tax purposes, to provide -Continued. Silver 2 MOO that the basis of the debtor's property (or such property, other than Tobacco 1.985 2.010 1,832,670.38 a 112, 618.81 money, as is transferred to any person required to use the debtor's Total 6,140 6,119 2, 102. 764. 66 2 521,448. 37 819,403. 24 $22, 350.12 basis) shall not be decreased to an amount less than the fair market Drawbacks: value of such property as of the date of the entry of the order con- Alcohol 640 450 177, 189. 48 222,437.10 17 7 3,823. 77 1,18& 74 firming such arrangement, and that any determination of value in a. Tobacco proceeding under the Bankruptcy Act shall not be deemed a deter- Total 657 457 181,013. 25 223,573.84 mination of fair market value within the meaning of such sections. Grand total 22Z 503 180, 257 70,730, 708.79 62131, 900.81 12,429.206. 46 9, 533, 573 20 The amendments are effective as of June 22, 1938. Norf.-There were also refunded from Philippine coconu oil tax collections (trust fund the amounts Public, No. 705, approved July 2, 1940, excludes from the require- of $175.293, including $1,064 merest, covering 451 claims, during the fiscal year 1940, and OM 008, including $5,259 interest, covering 564 claims, during the fiscal year 194 . ments of section 2810(a) of the Internal Revenue Code the registra- The figures in this table will not agree with those in later sections of this report, for the reason that the amounts shown in the later sections relate to claims disposed of by the units, whereas this table shows the tion of stills or distilling apparatus set up at refineries for the refining actual payments made. of crude petroleum or the production of petroleum products and not COST OF ADMINISTRATION used in the manufacture of distilled spirits. The amount of $66,414,910 was appropriated for the fiscal year 1941 Public, No. 764, approved August 13, 1940, amends the Railroad for salaries and expenses in connection with the assessment and col- Retirement Acts of 1935 and 1937, the Railway Labor Act, the lection of internal revenue taxes and the administration of the internal Carriers Taxing Act of 1937, the Railroad Unemployment Insurance revenue laws. The expenditures and obligations against this appro- Act, and Subchapter B of Chapter 9 of the Internal Revenue Code, priation were $65,289,527, leaving an unexpended balance of $1,125,- and has the general effect of excluding (retroactively to the effective 383. The expenditures do not include amounts expended for refund- dates of such Acts) certain coal-mining services from the railroad ing taxes illegally or erroneously collected and for redeeming stamps. security system and including retroactively such services under the The cost of collecting a total of $7,370,108,378 during the year was social security system. It also provides for adjustments in connection $0.89 per $100, compared with $1.12 per $100 for 1940. with such change in coverage. The amendments affect companies The amount of $2,800,000 was appropriated for the fiscal year 1941 and individuals engaged in the mining of coal or its preparation, for salaries and administrative expenses in connection with making supplying (where delivery is not beyond the mine tipple), handling refunds authorized by Titles IV and VII of the Revenue Act of 1936. (not beyond the mine tipple), and loading (at the tipple). The amount expended and obligated from this fund amounted to Public, No. 781, approved September 9, 1940, amends the profit- $2,110,466, leaving an unexpended balance of $689,534. limiting provisions of section 2(b) of the Act of June 28, 1940, by Personnel.-A comparative statement of the number of employees removing from the operation of such section contracts and sub- in the various branches of the Internal Revenue Service on June 30, contracts entered into after September 9, 1941, for the manufacture 1940, and on June 30, 1941, is given in the following table: of Army and Navy aircraft. The effect of this amendment is to increase the allowable profit under the Vinson-Trammell Act (section June 30, nine 30, Increase or 3 of the Act of March 27, 1934, 48 Stat. 505, as amended) on contracts Branch of service 1940 1941 decrease (-) for Army and Navy aircraft from 8 percent to 12 percent, and to retain the allowable profit of 8 percent on naval vessels. However, Employees in the departmental service 3,993 +4,161 168 Offices of collectors of internal revenue • 8,376 I 12, 322 3, 946 the profit-limiting provisions of the Vinson-Trammell Act were later Internal revenue agents' forces: suspended with respect to contracts and subcontracts entered into Income and estate taxes 4,834 + 3,490 656 Miscellaneous and sales taxes 61 63 2 during taxable years to which the excess-profits tax is applicable Offices of district supervisors 4,033 1 4,013 -70 Miscellaneous field force (Alcohol Tax Unit) 16 13 -3 (see section 401 of the Second Revenue Act of 1940). Supervisors of accounts and collections- 46 44 -2 Public, No. 801, Second Revenue Act of 1940, approved October Fief] force (Intelligence Unit) 296 369 73 Field force (Assistant General Counsel's Office) 177 1228 51 8, 1940, amends the Internal Revenue Code by increasing the normal Field force (Technical Staff) 541 537 -4 corporate tax rate of corporations having a normal tax net income in 27.2311 4. WI excess of $25,000; imposing a graduated excess-profits tax on corpora- Exclusive of 229 temporary employees on the internal revenue roll, 295 permanent employees on the re- funding processing tax roll, and 51 permanent employees on the basi permit and trade practice roll. tions; giving corporations the right to take a deduction for income- Exclusive of 597 temporary employees on the internal revenue roll. tax purposes with respect to the amortization of properly certified Exclusive of 11 temporary employees and 119 general deputy coil etors on the refunding processing tax roll. emergency facilities, based generally on a period of 60 months; pro- Exclusive of 5 temporary employees oo the internal revenue roll and 43 permanent employees oo the bask permit and trade practice roll. Exclusive of 5 permanent employees on the basic permit and trade practice roll. 6 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 7 viding rules for determining the earnings and profits of corporations, depreciation, for the purpose of Federal income or excess-profits such amendment being retroactive to taxable years beginning after taxes, of vessels acquired from funds deposited in the construction December 31, 1938 (Revenue Acts prior to the Code were similarly reserve fund shall be reduced by the amount of unrecognized gains amended retroactively to their respective enactment dates); and represented in such funds. provides for the taxation of the income of a personal service corpora- Public, No. 860, approved October 15, 1940, amends section 3508 tion to its shareholders in cases where the corporation has elected of the Internal Revenue Code by extending the termination date of not to be subject to the excess-profits tax for the taxable year. The the tax on the manufacture, use, or importation of sugar from June Act also suspends the profit-limiting provisions of the Vinson- 30, 1941, to June 30, 1942. Trammell Act with respect to contracts or subcontracts for naval Public, No. 861, Soldiers' and Sailors' Civil Relief Act of 1940, vessels or Army or Navy aircraft which are entered into in any taxable approved October 17, 1940, provides that no sale of the property of year to which the excess-profits tax is applicable, and suspends the a person in military service shall be made, or any proceeding or action profit-limiting provisions of the Merchant Marine Act of 1936 as to commenced, to enforce the collection of taxes, if such person shows subcontracts entered into between corporations while the excess- that by reason of such military service his ability to pay the tax is profits tax is in effect, provided the contractor and subcontractor materially affected, except upon leave of court granted upon an ap- are not affiliated corporations. It also extends the time within which plication by the collecting officer. The court may stay such sale or contributions must have been paid into an unemployment fund under proceeding until six months after the termination of the military a State law in order that a credit may be obtained against Federal service. unemployment taxes, and provides for refunds in certain cases. Public Law 3, approved January 31, 1941, extends the time for Public, No. 807, approved October 8, 1940, amends section 3493(a) certification of national-defense facilities and contracts for amortiza- of the Internal Revenue Code so as to permit the same person (con- tion purposes. signor, shipper, or manufacturer) who files a claim for drawback of Public Law 7, approved February 19, 1941, provides in general customs duty with respect to sugar exported or sugar used in the that interest upon, and gain from the sale or other disposition of, production of articles exported, to file claim with the Bureau for future obligations issued by the United States or any agency or refund of the tax paid on the sugar under the provisions of section instrumentality thereof; shall not be exempt from Federal taxation. 3490 of the Code; and amends section 3493(b) by extending to two Public Law 10, approved March 7, 1941, comprehensively amends years the 1-year period of limitation for the filing of claims for refund the Excess Profits Tax Act of 1940 (Subchapter E of Chapter 2 of the under section 3493(a). Internal Revenue Code). The amendment affords relief for certain Public, No. 819, approved October 9, 1940, permits States to classes of abnormalities which were not specifically covered by the extend their sales, use, and income taxes to persons residing or carry- Excess Profits Tax Act of 1940. Relief is also provided by extending ing on business, or to transactions occurring, in Federal areas. In the scope of the unused excess-profits credit carry-over; by permitting such Act the word "person" has the same meaning assigned to it in a taxpayer to utilize the base period experience of a predecessor part- section 3797 of the Internal Revenue Code, thus including corpora- nership or sole proprietorship; by allowing the capitalization of tions, partnerships, etc. certain advertising and goodwill expenditures; by providing a new Public, No. 833, approved October 10, 1940, amends section 1532(e) method of computing the excess-profits credit based on income, of the Internal Revenue Code by providing generally that, for the designed to assist growing corporations; by providing that securities purpose of determining the amount of employment taxes under sec- held as stock in trade by dealers therein shall be treated as admissible tions 1500 and 1520 of the Code, compensation earned in the service assets in the computation of invested capital; by providing that insur- of a local lodge or division of a railway labor organization employer ance companies other than life or mutual may join in a consolidated shall be disregarded with respect to any calendar month if the amount return with noninsurance companies with which they are affiliated; thereof is less than $3; and contains a similar provision affecting the by providing that it shall be optional for an acquiring corporation taxes under sections 2(a) and 3(a) of the Carriers Taxing Act of 1937. which was actually in existence before January 1, 1940, to have its Public, No. 840, approved October 10, 1940, amends the Merchant excess-profits credit based upon income computed either with reference Marine Act of 1936 by the addition of a new section 511, applicable to to the base period experience of all its qualified component corpora- unsubsidized operators of vessels engaged in the domestic or foreign tions or solely with reference to its own base period experience; and commerce of the United States or in the fisheries. Such section pro- by removing the provisions in existing law that a taxpayer must vides for the nonrecognition, for income and excess-profits tax pur- irrevocably elect to use either the excess-profits credit based on in- poses, of the gain realized from the sale or indemnification for the vested capital or the excess-profits credit based on income and pro- total loss of such vessels if the net proceeds of the sale or indemnifica- viding instead that it shall have the benefit of whichever credit results tion are placed in a construction reserve fund and used for the in the lesser tax. The Act contains safeguards to prevent abuse of acquisition of new vessels of a specified type, speed, and size. Further- the relief provisions contained therein and provides that the Board more, amounts accumulated in a construction reserve fund shall not of Tax Appeals shall have exclusive jurisdiction to review the Com- be considered as an accumulation of earnings and profits within the missioner's determination upon issues of abnormalities. Provision is meaning of section 102 of the Internal Revenue Code. The section made for an adjustment of the excess-profits tax in certain cases in provides, however, that the basis for determining gain or loss and for which the treatment accorded an item for excess-profits tax purposes 8 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 9 is inconsistent with the treatment accorded such item for income tax moving from one collection district to another; (b) it provides for a purposes in a taxable year beginning prior to January 1, 1940. The unification of checking procedures involving a large volume of similar provisions of the Act are made retroactive to taxable years beginning clerical tasks, resulting in substantial economies; and (c) it•coordinates after December 31, 1939, in order that the relief afforded may be the timing of efforts to secure delinquent income tax returns so as to available for the entire period covered by the excess-profits tax. insure a better distribution of return blanks for the following taxable Public Law 18, approved March 17, 1941, amends the Internal year and a consequent decrease in the number of individuals who fail Revenue Code to correct a number of errors of a clerical nature to file required income tax returns. resulting from the codification of the basic law. It is proposed to carry this program forward during the coming Public Law 34, approved April 11, 1941, amends section 3527 of fiscal year, since it provides the most effective measure for insuring the Internal Revenue Code by extetufing the termination date of the filing of returns by the rapidly increasing number of persons who, the taxes on the sale or disposal of bituminous coal so as to make such though unacquainted with the provisions of the income tax law, are taxes apply to transactions made not later than April 25, 1943. liable for the first time for filing returns due to a spreading of increased Public Law 58, approved May 9, 1941, exempts from internal- earnings and the lowering of the amount of income requiring the revenue tax articles imported by consular officers (or consulate filing of returns. employees) of a foreign state for their personal or official use, such exemption being conditioned on reciprocal exemptions by the foreign ACCOUNTS AND COLLECTIONS UNIT state to corresponding officers or employees of the United States The Accounts and Collections Unit is the central administrative stationed in such foreign state. organization for the 64 internal revenue collection districts and makes Changes in procedure.—Near the close of the previous fiscal year, Public, No. 656, Revenue Act of 1940, approved June 25, 1940, the administrative audit of all expenditures for the Internal Revenue Service. The Unit also administers the employment taxes imposed amended the Internal Revenue Code to provide among other things a change in the requirement for filing income tax returns by individ- under Chapter 9 of the Internal Revenue Code, the taxes under Sub- chapter A (Federal Insurance Contributions Act) being with respect uals and fiduciaries. Under this amendment, the amount of gross income rather than net income determines the liability for filing returns. to employment by others than carrier, Subchapter B with respect to Returns filed during the fiscal year 1941 were the first to be employment by carriers, and Subchapter C (Federal Unemployment Tax Act) with respect to the tax on employers of eight or more. affected by the change. This amendment of the Code was a part of a program to strengthen the enforcement methods with respect to Prior to enactment of the Internal Revenue Code the provisions of Subchapters A, C, and B of Chapter 9, were contained in Titles VIII income tax. The first step in the program was to simplify the technical require- and IX of the Social Security Act and in the Carriers Taxing Act of ments of law with respect to the filing of returns. The change from 1937, respectively. a "net income concept as defined by statute" to "gross income" has There were 28,077,237 tax returns filed in collectors' offices during accomplished that purpose because it has removed all doubt in the the fiscal year 1941, an increase of 8,877,305 over the previous year. mind of the taxpayer in reaching a decision as to whether his income Of the total returns filed, 16,150,496 were income tax returns, an is above or below the amount requiring him to file a return. increase of 7,162,084 during the year. The increase in the number of The next step in the program sought to insure the filing of returns returns filed may be attributed largely to the reduced exemptions by all persons receiving gross income equal to or in excess of the provided by the Revenue Act of 1940. amount requiring the filing of a return. This involved a more effec- A total of 13,878,586,593 revenue stamps, valued at $1,455,156,314, tive use of the Information at the source provisions of the Code. was issued to collectors of internal revenue and the Postmaster General With this in mind, there was undertaken during the fiscal year 1941, during the year, compared with 13,351,512,052 stamps, valued at for the first time, an assembly in the Washington office of the informa- $1,188,107,282, issued during 1940. tion returns with the records of all taxpayers throughout the country Revenue stamps returned by collectors of internal revenue and by for the purpose of identifying those individuals receiving gross income the Postmaster General, and credited to their accounts, amounted equal to or in excess of the amount requiring the filing of a return and to $50,905,319. There were 318 applications allowed for restamping for whom no returns were of record. packages from which the original stamps had been lost, mutilated, In previous years, this assembly was made in Washington only or destroyed, compared with 390 applications in the preceding year. with respect to those returns reporting net incomes of $5,000 or over, During the year, 40,604 income tax, 13,807 miscellaneous tax, and or returns on Form 1040 reporting income from business or profession, 218,177 employment tax returns were investigated by field deputy leaving the assembling of the information returns with the returns of collectors, and 10,869,458 information returns were verified. At the the smaller taxpayers who filed on Form 1040A to be made in the close of business June 30, 1941, there were outstanding in the 64 collection districts, for field investigation, 4,868 income tax returns, collectors' offices. The undertaking of the entire task in Washington materially compared with 3,212 as of June 30, 1940. The number of information strengthens the effectiveness of the enforcement system for a number returns on hand June 30, 1941, was 1,729,903, compared with 5,315,926 of reasons, among which are: (a) It facilitates frequent cross- as of June 30, 1940. On June 30, 1941, there were 183,594 warrants checking between collection districts in the case of income recipients 423348-41-2 REPORT OF COMMISSIONER OF INTERNAL REVENUE 10 REPORT OF COMMISSIONER OF INTERNAL REVENUE 11 for distraint in the custody of the collectors' field forces for collection, under Chapter 9 of the Internal Revenue Code, formerly Titles VIII compared with 212,701 as of June 30, 1940. and IX of the Social Security Act and Carriers Taxing Act of 1937. Collectors of internal revenue, after having taken the necessary Included in this total were 1,605 lists prepared by the collectors' administrative action, transmitted to the Bureau or otherwise disposed offices and adjusted by the Bureau, consisting of 8,607,625 items of 261,955 claims, as compared with 249,007 claims in 1940, an increase totaling $837,473,473, and 3,940 lists prepared in the Bureau, con- of 12,948. The number of claims on hand in collectors' offices at the sisting of 58,784 items totaling $8,919,073, as further analyzed in end of the fiscal year was 8,223, compared with 14,126 at the close of the fallowing tabulations: the previous ascii]. year. Field deputy collectors of internal revenue served 407,667 warrants Analysis of employment tax assessments appearing on collectors' lists for distraint, which resulted in the collection of $54,353,624. An average of 3,732 producing field deputy collectors made 2,220,467 Sources Items Tax and penalty Interest Total revenue-producing investigations, including the serving of warrants Federal Insurance Contributions Act 8,152, 507 $615, 200, 427.24 $759, 754.78 $615, 960, 182. 02 for distraint, compared with 1,622,104 revenue-producing investiga- Federal Unemployment Tax Act 423, 948 94, 712, 257.28 356, 076.26 95, 068, 333. 54 tions made by an average of 2,718 producing field deputy collectors Carriers taxes 31, 170 126, 375, 807.98 69, 149. 67 126, 444, 957. 65 in the preceding year. The total amount collected and reported for Total 8, 607, 625 836, 288, 492.60 1,184, 980.71 837, 473, 473. 21 assessment by field deputy collectors was $90,285,877, compared with $84,566,072 in the previous year. The average number of investiga- Analysis of employme tax assessments appearing on Commissioner's lists tions made per field deputy and the average amount of tax collected and reported for assessment were 595 and $24,192, respectively, as Sources Items Tax Penalty Interest Total compared with 597 and $31,113 in 1940. The supervisors of accounts and collections submitted 107 reports Federal Insurance Contributions Act_ _ 20, 524 $1, 256, 779.97 $131, 438. 36 $122, 563.34 $1, 510, 781.67 Federal Unemployment Tax Act 38, 212 6, 381, 479.68 425, 542.78 . 593, 844.91 7, 400, 867.27 covering their examination of the accounts of collectors of internal Carriers taxes 98 6,657.47 33. 32 733.09 7, 423. 88 revenue during the year, compared with 113 reports submitted during Total 58, 784 7, 644,917.02 557, 014. 46 717, 141. 34 8, 919, 072.82 the period ended June 30, 1940. Every collector's office was examined at least once and all but 26 of the collectors' offices were examined twice during the year. The internal-revenue stamps in the office Taxes under the Federal Insurance Contributions Act.—Collections of the United States internal-revenue stamp agent for the Philippine of taxes imposed under the Federal Insurance Contributions Act Islands were verified twice by the auditor general for the Philippines amounted to $687,327,551 for the year, as compared with $605,350,176 during the year. Seven new collectors and three acting collectors for 1940, an increase of $81,977,375. These amounts include both were installed during the fiscal year. Seven collectors' offices were the employees' tax and the employers' tax, each of which was imposed transferred under renewal bonds and one under confirmation bond. at the rate of 1 percent of taxable wages paid. Returns under the In administering the personnel of the several collection districts, act are required on a quarterly basis, 8,684,639 being filed during the the provisions of the Classification Act of 1923 and amendatory acts, fiscal year, as compared with 7,868,402 filed in the preceding year. and decisions of the Comptroller General relating thereto, were closely The complete and final audit of returns under the act is conducted followed. The policy has been continued of making such appointments in the offices of collectors of internal revenue. as have been authorized in the field collection service at the minimum The following table sets forth information relative to claims dis- salary rate of the appropriate grade, and all applications for positions posed of under the Federal Insurance Contributions Act and/or Title have been carefully scrutinized and investigated with a view to main- VIII of the Social Security Act: taining the usual high standard of requirement for employment. The Disbursement Accounting Division administratively examined Claims under the Federal Insurance Contributions Act and/or Title VIII of the Social Security Act, except special refunds under section 1401(d) of the former act, and recorded 1,540 monthly accounts of collectors of internal revenue, received and disposed of during the fiscal year 1941 internal revenue agents in charge, heads of Staff divisions, district supervisors, including the Philippine branch of the district of Mary- Claims: Number Pending at beginning of year 2, 644 land, and the internal revenue salary payments made by the special Filed during year (new claims) 18, 134 disbursing agent, San Juan, P. R., comprising a total of 132,020 Received from other sources 286 vouchers, in addition to which 6,990 expense vouchers of employees and 17,954 vouchers covering passenger and freight transportation Total to be disposed of 21, 064 and miscellaneous expenses were audited and passed to the chief Allowed in full or in part 12, 759 disbursing officer, Treasury Department, or General Accounting Rejected 3, 190 Office for payment Canceled 70 Assessments of employment taxes.—During the year, 5,545 assess- ment lists, an increase of 66 over the previous year, consisting of 8,666,- Total disposed of 16, 019 409 items totaling $846,392,546, were approved by the Commissioner. Pending at end of year 5, 045 These lists included original and additional assessments of taxes Certificates of allowance issued when no claims were filed 4, 787 12 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 13

Claims under the Federal Insurance Contributions Act and/or Title VIII of the Act and the Federal Insurance Contributions Act. At the beginning Social Security Act, etc.—Continued of the fiscal year, 101 inquiries from the Board relating to such pro- visions were pending before the Bureau. During the fiscal year, 1,877 Overassessments settled by— Ammar Abatement $850, 480. 45 similar inquiries were received from the Board, and 1,814 were dis- Credit 14, 801. 42 posed of, leaving 164 pending at the close of the fiscal year. Copies of Refund 481, 658. 17 663 opinions of the General Counsel of the Federal Security Agency were furnished to the Bureau, and copies of 127 opinions of, or rulings Total 1, 346, 940. 04 Interest 58, 450. 28 approved by, the Chief Counsel for the Bureau were transmitted to the Federal Security Agency. Grand total • 1, 405, 390. 32 Tax under the Federal Unemployment Tax Act.—The tax under the NOM—The amount involved in claims filed during the year 1941 was $3,000,404. Included in the allowed Federal Unemployment Tax Act is imposed on employers of eight or claims shown in the above tabulation were 7,001 collectors' claims for abatement, of which 347 were multiple- Item claims involving 9,204 Items. There were also allowed 524 collectors' claims recommending refunds of more. The rate is 3 percent on taxable wages paid during 1940 with $3,839, plus interest of $440. The amount Involved in the claims rejected during the year totaled $855,742. respect to employment. Collections amounted to $100,657,721, as Special refunds.—Effective with the calendar year 1940, the Social compared with $106,123,156 for the fiscal year 1940, a decrease of Security Act Amendments of 1939 added a new provision to the $5,465,435. There were. 368,639 returns filed during the fiscal year, Federal Insurance Contributions Act, section 1401(d), whereby an as compared with 367,670 filed during the preceding fiscal year. employee, performing services for more than one employer during a The return for each calendar year is due on January 31 following calendar year, may obtain a refund of the amount of employee's tax the close of the year unless an extension of time for filing is granted. deducted from his wages which is in excess of the tax on the first Against the tax imposed by the act, a taxpayer is entitled to a $3,000 of such wages. To obtain such a refund the employee must credit (not exceeding 90 percent of the tax) for contributions paid to file a claim after the calendar year in which the services were per- unemployment funds under a State law approved and certified by the formed; therefore, the first year during which such claims could be Social Security Board to the Secretary of the Treasury. With cer- properly filed was the calendar year 1941. tain exceptions, the contributions to be allowable as credit must be paid into the State funds on or before the date the Federal return is Claims for special refund, for the calendar year 1940, under section 1401(d) of the required to be filed. The Second Revenue Act of 1940, enacted Federal Insurance Contributions Act received and disposed of during the fiscal October 8, 1940, extended the time within which contributions could year 1941 be paid into a State fund in order to be allowable as credit against Number Claims: the Federal tax. With respect to the calendar years 1936 to 1938, Filed during year (new claims) 16, 960 inclusive, section 701 of the Second Revenue Act of 1940 provides Received from other sources 3 that contributions paid before the sixtieth day after enactment could Total to be disposed of 16, 963 be allowed as credit. For the year 1939 it is provided that contribu- tions may be credited against the Federal tax, m addition to contribu- Allowed in full or in part 8, 389 tions paid on or before the last day the Federal return is required to Rejected 30 be filed, if paid after such last day but before the sixtieth day after Canceled 2 enactment. However, with respect to contributions for the year 1939 Total disposed of 8, 421 paid after the last day the Federal return is required to be filed but before such sixtieth day, the taxpayei may only credit an amount Pending at end of year 8, 542 which does not exceed 90 percent of the amount which would have Nora.—The amount involved In claims filed during the year 1941 was $392,283. In connection with the been allowable as credit on account of such contributions had they claims allowed, $191,834 was recommended for refund, and the amount involved In the claims rejected was $705. been paid on or before such last day. For the calendar year 1940 unemployment compensation laws of the Offers in compromise.—On July 1, 1940, there were on hand 129 48 States, the District of Columbia, and the Territories of Alaska and offers in compromise, aggregating $26,827, which had been submitted Hawaii were approved and certified to the Secretary of the Treasury in settlement of an aggregate liability of $71,464, incurred under Title by the Board. VIII of the Social Security Act and/or the Federal Insurance Contri- For the purpose of enabling the Bureau to determine whether the butions Act. There were 564 offers received, in the total amount of credit claimed by a taxpayer for contributions to a State fund is cor- $78,090, involving an aggregate liability of $281,040; 320 offers in the rect, each State furnishes the Bureau with a statement for each em- amount of $35,463 were accepted in settlement of liability of $87,253; ployer, showing the amount of contributions paid by the employer on 120 offers, amounting to $18,091 and involving liability of $92,929, or before the date the Federal return is required to be filed and the were rejected, leaving on hand at the close of the year 253 offers amounts and dates of payments made thereafter. During the fiscal totaling $51,363 and involving liability of $172,322. year 1941 there were received from the States 4,954 such statements Coordination with the Social Security Board.—The Bureau and the for the year 1936, 15,972 for 1937, 28,675 for 1938, 165,200 for 1939, Social Security Board continued to coordinate their decisions on ques- and 573,737 for 1940. tions involving provisions common to Title II of the Social Security

14 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 15

In addition to the credit against the Federal tax for contributions Of the total of 9,538 revenue agents' reports disposed of during the actually paid into State funds, the taxpayer may be entitled to an year, 1,493 were closed ,showing no change in tax liability, 7,119 additional credit under section 1601(b) of the act. This additional showing deficiencies in tax amounting to $1,428,413, and 926 showing credit is allowable to an employer if, by reason of having stabilized overassessments of $344,222. the employment of his employees in a State or for some other reason, The following table sets forth information relative to claims adjusted he is granted an "experience rate" under the laws of the State and is and certificates of overassessment or of allowance issued under the thereby permitted to pay contributions at a lower rate than that paid Federal Unemployment Tax Act and/or Title IX of the Social Security generally by other employers. Certain conditions with respect to a Act: State law are imposed by the act that must be met before an employer Claims under the Federal Unemployment Tax Act and/or Title IX of the Social is entitled to the additional credit. For the calendar year 1938 and Security Act received and disposed of and certificates of overassessment issued 1939 the State of Wisconsin was the only State having a law that during the fiscal year 1941 complied with the conditions imposed by the act. For the year 1938 there were 110 employers with employment in that State who were Claims: Number granted an "experience rate," and for the year 1939, 2,804. For the Pending at beginning of year 8, 618 Filed during year (new claims) 25, 367 year 1940, four States granted "experience rates," namely, Indiana, Received from other sources 57 Nebraska, South Dakota, and Wisconsin. There were approximately 5,500 employers granted "experience rates" by the four States for Total to be disposed of 34, 042 the year 1940. Allowed in full or in part 19, 724 Field investigations conducted by the States in connection with the Rejected 4, 630 administration of State unemployment laws result in numerous cor- Canceled 119 rection statements being submitted to the Bureau, showing changes in the amounts standing to the employers' credit in the State funds. Total disposed of 24, 473 This causes a considerable number of cases to be reopened for audit Pending at end of year 9, 569 by the Bureau. Certificates of overassessment and certificates of allowance issued when no claims were filed 8, 791 Number of Federal unemployment tax returns (annual) received, reopened, and closed Overassessmente settled by: Amount by the Bureau during he fiscal year 1941 and the number pending at the beginning Abatement $3, 451, 776. 43 and close of the year, by tax years Credit 93, 234. 27 Refund 1, 982, 796. 42 • On hand Received Reopened Disposed On hand Total 5, 527, 807. 12 Tax year July 1, during during Total of during June 30, 1940 year year year 1941 Interest 67, 351. 09 Grand total 1936 1, 581 3,086 6,058 10, 705 10,132 573 5, 595, 158. 21 1937 12,269 6,551 12,419 31,239 28,381 2,858 Nora.-The amount involved in Maims Hied during the year 1941 was $5,641,383. Included in the allowed 1938 24, 643 9, 554 17,626 51, 823 44,171 7,652 claims shown in the above tabulation were 4,015 collectors' claims for abatement, of which 55 were multiple- 1939 326,757 17,191 12,864 358,612 330,914 25,698 item claims involving 976 items. There were also allowed 5,077 collectors' claims recommending refunds 1940 None 332,257 None 332,257 None 332,267 of $112,651, plus interest of $3,881. The amount involved in the claims rejected during the year totaled $841,407. Total 365,230 368,039 48,767 782,636 413,698 369,038 Offers in compromise.-On July 1, 1940, there were on hand 102 The Bureau submitted 468 returns to the field for investigation offers in compromise, aggregating $16,508, which had been submitted during the fiscal year. Independent of these cases, the field force in settlement of an aggregate liability of $105,483, incurred under submitted reports, prepared in connection with income tax investiga- Title IX of the Social Security Act and/or the Federal Unemployment tions, for the years 1936, 1937, 1938, and 1939, which are included in Tax Act. There were 466 offers received, in the total amount of the following table: $54,644 involving an aggregate liability of $434,067; 160 offers in the amount of $19,714 were accepted in settlement of liability of Revenue agents' reports received and closed by the Bureau during the fiscal year $108,304; 201 offers, amounting to $22,144 and involving liability 1941 and the number pending at the beginning and close of the year, by tax years of $190,336, were rejected, leaving on hand at the close of the year 207 offers totaling $29,294 and involving liability of $240,910. On hand Received Disposed On hand Carriers taxes (Chapter 9, Subchapter B, Internal Revenue Code).- Tax year July 1, riming Total of during June 30, 1940 year year 1941 Collections of employers' tax and employees' tax under Chapter 9, Subchapter B, of the Internal Revenue Code (employment by carriers) anE 1936 70 680 750 721 aggregated $137,850,549, as compared with $122,037,661 for the 1937 397 1, 226 1, 623 1, 468 1938 840 2, 957 3, 797 3, 389 previous year, an increase of $15,812,888. Each tax was imposed at 1939 None 4, 606 4, 606 3,960 the rate of 3 percent of the taxable compensation. Collections of Total 1, 307 9, 469 10, 776 9, 538 1, 238 employee representatives' tax, which was imposed at the rate of 6 REPORT OF COMMISSIONER OF INTERNAL REVENUE 16 REPORT OF COMMISSIONER OF INTERNAL REVENUE 17 percent of the taxable compensation, amounted to $20,637, as com- essing taxes, and the laws limiting profits on certain Army and Navy pared with $9,982 for the previous year, an increase of $10,655. contracts. The administration includes the preparation of regula- Returns are required on a quarterly basis, 30,994 being filed by em- tions and interpretative and procedural rulings and instructions ployers and 1,540 by employee representatives, a decrease of 921 regarding such laws, and the examination and adjustment of returns and 158, respectively, from the previous year. The complete and filed thereunder, through office audits and field investigations, for the final audit of these returns is conducted in the offices of collectors purpose of determining the correct tax liability as required by law. of internal revenue. The following table sets forth information relative to claims dis- INCOME AND EXCESS-PROFITS TAXES posed of under Chapter 9, Subchapter B, Internal Revenue Code, and/or the Carriers Taxing Act of 1937: Collections. -During the fiscal year 1941, collections of income and excess-profits taxes amounted to $3,462,028,369. This compares Claims under Chapter 9, Subchapter B, Internal Revenue Code, and/or the Carriers with $2,121,073,129 collected in the fiscal year 1940, an increase of Taxing Act of 1937 received and disposed of during the fiscal year 1941 $1,340,955,240, or 63.2 percent. The comparison in detail is as Claims: Number follows: Pending at beginning of year 44 Collections during the fiscal years 1940 and 1941 Filed during year (new claims) 297 Received from other sources 1 Erna year Increase or Total to be disposed of 342 Source decrease (-) 1940 1941 Allowed in full or in part 203 74 Corporation income tax: I Rejected 6958, 260,442 61,649,027,052 $690, 766, 610 Canceled 5 Current collections 2 40, 639, 831 Back collections 2 162,321,108 202, 960,939 Total disposed of 282 Total I 1,120, 581, 550 1, 851, 987, 991 731,406,441

60 Declared value excess-profits tax: ; 891, 543 Pending at end of year Current collections 2 15,388, 825 20, 280,368 4, Certificates of allowance issued when no claims were filed 4 Back collections 3,085, 378 7, 795, 916 4, 710, 538 Amount Overassessments settled by: 18,474, 203 28,076, 284 9,602, 081 Abatement $4, 486. 90 Total Credit 100, 440. 14 Excess-profits tax: 164,308,967 164,308,967 Refund 70, 542. 68 Current collections ' Back collections ' Total 175, 469. 72 Total 164, 308,967 164, 308, 967 6, 779. 71 Interest Individual income tax: Current collections 1 891, 764,121 1, 314,265, 807 422, 511, 686 103, 389, 320 13,126,065 Grand total 182, 249. 43 Back collections ' 90,263,255 Nom-The amount involved in claims filed during the year 1941 was $661,191. Included in the allowed Total 982, 017, 376 1, 417,655, 127 435,637, 751 claims shown in the above tabulation were 43 collectors' claims for abatement. There were also allowed two collectors' claims recommending refunds of $9.44, plus interest of $0.10. The amount Involved in the Total income and excess-profits tax 2, L31,073,129 3,462,028, 369 1, 340,955, 240 claims rejected during the year totaled $137,044. Unjust enrichment taxes 8,536, 178 9,095, 562 559, 384 Grand total 2, 129, 609,307 3,471, 123, 931 1,341, 514, 624 Coordination with Railroad Retirement Board.- The Bureau and the Railroad Retirement Board continued to coordinate their decisions on I The corporation income tax collections for the fiscal year 1940 include $2,931, and for the fiscal year 1941 questions involving provisions common to the Railroad Retirement include $2,448, paid by the Alaska Railways under sections 1303 and 1301 of the Internal Revenue Code. In addition, these collections also include tax withheld at source under sections 143 and 144 of the Internal Act of 1937, the Railroad Unemployment Insurance Act, and Sub- Revenue Code and reported by withholding agents, although much of this tax was withheld from taxpayers other than corporations. The exact amount of these collections cannot be stated as it has not been tabulated chapters B and C of Chapter 9 of the Internal Revenue Code, as separately. fiscal year, three inquiries from 2 The term "current" collections means in general taxes paid within 12 months after the close of the taxa- amended. At the beginning of the ble year for which the return was filed. The term "back" collections means in general taxes paid more than the Board relating to such provisions were pending before the Bureau. 12 months after the close of the taxable year for which the return was filed. Includes collections of excess-profits taxes (Vinson Act) of $1,427,067 for the fiscal year 1940 and $2,156,718 During the fiscal year, 21 similar inquiries were received, and 23 were for the fiscal year 1941. disposed of, leaving 1 pending at the close of the year. Copies of 185

opinions of the General Counsel of the Railroad Retirement Board Returns filed. -The number of all types of income and excess-profits were furnished to the Bureau and copies of 9 opinions of, or rulings tax returns filed during the past fiscal year on which tax was reported approved by, the Chief Counsel for the Bureau were transmitted to and assessed was 7,867,319, compared with 4,324,275 returns filed in the Board. the fiscal year 1940, 1 an increase of 3,543,044, or 81.9 percent. In INCOME TAX UNIT addition, 8,283,177 taxpayers filed returns during the fiscal year 1941 showing no income subject to tax, compared with 4,664,137 such General functions. -The Income Tax Unit is charged with the administration of the internal revenue laws with reference to taxes on returns for the preceding fiscal year. The total number of income income, excess profits of corporations, and refunds of certain proc- tax returns filed by individuals was 14,877,544, which is nearly double I Including in each fiscat year the delinquent returns filed during that year relating to prior years.

18 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 19 the number received in the preceding year and is by far the largest larger number of transactions, and, second, because of the levying of number of income tax returns filed for any one year in the history of an excess-profits tax. Federal income taxation. Prior to shipment of the returns to the field offices, various informa- Three factors accounted, in a large measure, for the increased tion at the source forms and other documents bearing upon the audit number of individual income tax returns: (1) the reduction of the are associated with them for use in the investigative work. The personal exemption; (2) the use of gross income rather than net income number of information at the source forms filed during the fiscal year to determine liability for filing; and (3) increased income payments to showing income payments was approximately 25,347,000. individuals and more widespread employment. Contributory factors, Investigation of tax returns by the field offices.-The number of not measurable but of undoubted significance, are: (1) the public income tax returns, including partnerships and fiduciaries, investi- response to the national emergency and willingness to support the gated during the fiscal year 1941 was 470,876, as compared with defense program by paying taxes; and (2) more widespread publicity 424,072 for the previous fiscal year, an increase of 11.0 percent. as to the income tax changes affecting smaller taxpayers. Details as These figures include all returns for which the examiner's report has to the number of returns filed are as follows: been submitted, whether or not the case has been finally disposed of by the reviewing officer. Estate and gift tax returns investigated by field offices during the Fiscal year fiscal year numbered 17,355, as compared with 17,881 for the previous fiscal year, a decrease of 2.9 percent. Type of return 1940 1941 The total number of individual, taxable fiduciary, and corporation Taxable Nontaxabi Nontaxable income tax returns disposed of by the field offices during the fiscal year 1941, with and without investigation, was 924,358. In addition, Individuals: the field offices dispos&l of 395,591 partnership and nontaxable Citizens and resident aliens I 3,970, 543 7,312,056 14,832,403 fiduciary income tax returns and 20,579 estate and gift tax returns. Nonresident aliens 73, 783 95, 141 The following table shows how the disposals for the fiscal year 1941 Fiduciaries 63,909 258,206 Partnerships 368,690 compare with disposals during the preceding year: Withholding agents 14,928 14,042 14,042 Corporations: Income tax 200,715 590, 935 207,183 535, 525 Number of tax returns disposed of by field offices during the fiscal years 1940 and 1941 Personal holding company surtax 397 531 5,420 Excess-profits tax 11,845 91,054 Fiscal year All other 2,015 Type of return Total 4, 329, 275 4, 669,117 8,988,412 7, 867, 319 8, 283,177 16,150, 496 1940 1991

I Includes 2,465,118 taxable and 2,798,048 nontaxable Forms 1040-A filed during the fiscal year 1940 and INCOME TAX 5,298,932 taxable and 5,226,164 nontaxable Forms 1040-A filed during the fiscal year 1991. Reported with the taxable returns. Corporations, individuals, and taxable fiduciaries: Na change 588,631 6313,114 Deficiency adjustments 211, 629 210,806 Examination of income and excess-profits tax returns upon receipt by Overassesement adjustments 58,061 57,438 the Income Tax Unit.-The returns described in the foregoing table, Total 858, 321 924, 358 with certain exceptions, are forwarded by the collectors to the Income Partnership and nontaxable fiduciaries 550, 892 395, 591 Tax Unit at Washington.' Total income tax returns 1,409,163 1,319,949 As of June 30, 1941, the work to be done by the Income Tax Unit had been completed on substantially all the returns filed by taxpayers ESTATE AND GIFT TAX No change 9,893 8,873 within the fiscal year which had been transmitted to the Washington Deficiency adjustments 11, 228 10, 708 office by the collectors, except with respect to those not accepted as Overassessment adjustments 848 998 filed and certain of the nontaxable individual returns. Of 2,912,344 Total estate and gift tax returns 21,969 20, 579 returns of individuals, taxable fiduciaries, and corporations examined to June 30, 789,057 were not accepted as filed. The returns not Efforts made by agents to expedite the closing of examined cases accepted as filed are transmitted to the field offices of the Income Tax met with greater success in the fiscal year 1941 than in 1940, as Unit for further consideration. In the main, this represents the work evidenced by the fact that during 1941 the examiners' proposals were load of the field offices for the fiscal year 1942. concurred in by the taxpayers without formal protest in a higher The work load is appreciably heavier for 1942 than for the fiscal year percentage of the cases than in the previous year. (See discussion of 1941; first, because there is a larger number of higher bracket returns stage at which additional tax was assessed appearing on page 20.) which generally require more time for investigation on account of the Petitions to the Board of Tax Appeals filed during 1941 involved I Returns on Form 1040-A, individual income tax returns for net incomes of not more than $5,000 derived 5,891 returns and proposed tax deficiencies of $117,927,968. This chiefly from salaries, wages, dividends, Interest, and annuities, and Form 1040-C, individual income tax returns of departing aliens, are audited by the collectors of Internal revenue and not by the Income Tax compares with 5,386 returns and tax deficiencies of $69,970,847 for Unit. Nontaxable fiduciary returns, Form 1041, and partnership returns, Form 1065, are retained in the offices of the collectors for examination by representatives of the field offices of the Income Tax Unit. the fiscal year 1940. For a statement showing the number of returns, REPORT OF COMMISSIONER OF INTERNAL REVENUE 21 20 REPORT OF COMMISSIONER OF INTERNAL REVENUE Number and amount of additional income tax assessments made by the Income Tax proposed tax, interest, and penalties in petitioned cases, classified by Unit during the fiscal years 1941 and 1940, by stage at which assessment was tax years, see page 111. made Revenue results of investigation of income and declared value excess- profits tax returns.-The total amount of additional assessments made Returns Additional tax during the fiscal year 1941 was $262,730,729. Excluding jeopardy Stage at which additional Interest Penalty Total assessment was made Per Per- and duplicate items, the amount was $236,815,872, or a decrease of 2.5 Num- cent of Amount cent of percent from the preceding year. In relation to the total technical ber total total personnel assigned to the field offices, the amount of additional tax, interest, and penalty assessed in 1941 represented an average of FISCAL YEAR 1941 $69,325 for each agent, as against $72,214 for 1940. An analysis of On agreements executed prior to mailing of 90-day letter__ 221, 800 94.3 $156,215,263 78.0 taa, 479, 384 $1,710,899 $181,405,546 the assessments for the fiscal year 1941 as compared with the fiscal Default or agreement after year 1940 follows: issuance of 90-day letter, ._, 9,305 3.9 15,439, 313 7.7 2, 838, 208 835, 678 19, 113, 199 In appealed cases, after trial on the merits and decision Additional income tax assessments made during the fiscal years 1941 and 1940, by by the Board of Tax Ap- peals, or upon stipulation nature of assessment before the Board of cases settled by Technical Staff and/or Chief Counsel 4,150 1.8 28, 579, 838 14.3 10, 104,026 482, 242 39, 166,106 Number of Additional Penalty Total Nature of assessment returns tax Interest Total 235,255 100.0 200,234,414 100.0 36,421, 618 3,028,819 239,684,851 Jeopardy provisions of the Code 1,355 17,011, 127 3, 595,071 2,439, 680 23,045, 878 FISCAL YEAR 1941 Regular 234, 786 $198, 056,808 $35, 754, 408 $3,004, 656 $236,815,872 Grand total 236,610 217,245,541 40, 016, 689 5;468, 499 262,730,729 Jeopardy 1,355 17,011, 127 3,595,071 2,439,680 23,045,878 . . Duplicate 1 469 2,177,606 667,210 24, 163 2, 868, 979 FISCAL YEAR 1940 Total 236,610 217,245, 541 40,016,689 5, 468, 499 262, 730,729 On agreements executed prior to mailing of 90-day letter__ 199, 044 93.3 165, 810, 823 78.4 25, 386, 376 1,259,158 192,456, 357 FISCAL YEAR 1940 1 Default or agreement after 16, 037,400 Regular 212,797 200,342,371 39,631,242 2,882,897 242, 856, 510 issuance of 90-day letter. __ 10,522 4.9 12,714, 788 6.0 2, 500, 731 821,881 Jeopardy I 1, 568 19, 676, 342 4,307,076 4,800, 345 28,783,763 In appealed cases, after trial Duplicates 542 11,132,989 1, 570, 829 98,632 12,802,460 on the merits and decision by the Board of Tax Ap- Total 214,907 231, 151, 712 45, 509,147 7,781,874 284,442,733 peals, or upon stipulation before the Board of cases settled by Technical Staff Duplicate assessments made under the Jeopardy provisions are included with the Jeopardy assessments. and/or Chief Counsel 3, 773 1.8 32, 949, 759 15. 6 13, 314, 964 900,490 47,165, 213 Total 213,339 100.0 211,475,370 100.0 41, 202, 071 2,981, 529 265, 658, 970 progress was Jeopardy provisions of the Stage at which additional tax was assessed.-Further 19, 676, 342 4, 307, 076 4, 800, 345 28, 783, 763 made in settling cases of proposed additional tax liability by agree- Code 1, 568 ments with taxpayers without issuing formal notices of deficiency, Grand total 214,907 231, 151, 712 4b, 509, 147 7, 781,874 284, 442, 733 which are otherwise required by law as a basis for assessment and from which taxpayers may appeal to the Board of Tax Appeals. For a distribution of the additional assessments made during the Of the total number of 235,255 returns on which regular additional fiscal year 1941 by tax years for each stage at which assessment was assessments (including duplicate-regular) were made, 221,800 addi- made, see pages 108-111. tional assessments, or 94.3 percent, were made by agreement with the Refunds, abatements, and credits.-The number of income tax cases taxpayers without the necessity of a statutory notice. Of the total which involved refunds or credits of tax or interest to taxpayers or regular additional tax assessed (including duplicate-regular), aggregat- abatement of tax audited and closed by the Income Tax Unit during ing $200,234,414, the amount assessed by agreement was $156,215,263, the fiscal year 1941 was 73,627, by comparison with 82,078 1 such or 78.0 percent. cases closed during the fiscal year 1940, a decrease of 8,451, or 10.3 There follows a table showing, by stage at which additional assess- percent. Of the total of 73,627 overassessments for 1941, 39,730 were ment was made, the number and amount of additional assessments made to taxpayers without the necessity for filing claims. This com- made during the fiscal years 1940 and 1941: pares with 38,771 in the previous year. Of the overassessments settled by the Income Tax Unit in 1941, 57,511 represented refunds or credits of tax or interest involving $50,438,931, by comparison with 71,648 involving $55,810,102 in 1940. The amount involved in overassessments of all types for 1941 repre- sented by refunds, credits, interest, and abatements for income tax cases audited in the collectors' offices as well as by the Income Tax Unit was $113,600,916, as compared with $185,936,641 the previous year.

1 Revised.

REPORT OF COMMISSIONER OF INTERNAL REVENUE 23 22 REPORT OF COMMISSIONER OF INTERNAL REVENUE number of open income tax returns on hand in the field offices as of There follows a table showing a comparison of claims and certificates June 30, 1941, was 373,889, compared with 406,616 for June 30, 1940. of overassessment issued for the fiscal years 1940 and 1941 by the The net reduction as between the ends of the two fiscal years was 32,727, Income Tax Unit: or 8.0 percent. The net reduction in prior-year work was 850 in Number of certificates of overassessment issued and claims disposed of during the number of returns, or 1.5 percent. The percent of open prior-year fiscal years 1940 and 1941 work to open current-year work at the end of 1941 was 17.1, as com- pared with 15.8 percent for 1940.

number of income tax returns on hand in the field offices for investigation and in process of settlement, by tax years, as of June 30, 1940 and 1941

Allowances: Number of income Number of income Certificates of overassessment issued when no claims had been filed tax returns on hand fax returns on hand Claim allowed in full or in part Tax years as of June 30- Tax years as of June 30- Total allowances 1940 1941 1940 1941 Status of claims' Pending at beginning of year Filed during year (new claims) 1934 2, 885 1,459 1935___ 5.620 2,686 Total to be disposed of 1936 16,041 5,998 1937 26,432 12,938 Allowed in full or in part 33, 897 1938 110,789 28,731 Rejected 14,020 1939 240.010 115, 192 1940 1 §1 388 203,770 Total disposed of 1941 348 Pending at end of year Total 406,616 373,889 Total prior year returns 55, 429 54, 779 Revised. Total current year returns._ _ _ 351,187 319, 310 There were also allowed 21,342 collectors' claims, of which 9,270 recommended abatements or credits and 12,072 recommended refunds. These claims were largely multiple-item claims, i. e., claims for refund The returns on hand in the field offices as of June 30, 1940 and 1941, to numbers of taxpayers, and involved 20,440 items for abatement or are classified according to pending status in the table which follows: credit and 65,282 items for refund. Number of income tax returns on hand in field offices for investigation and in process There follows a table showing the amount involved in tax over- of settlement, by pending status as of June 30, 1940 and 1941 assessments scheduled during the years 1940 and 1941 resulting from audit of income tax returns, including cases settled by the collector's Number of income tax re- officers as well as the,Income Tax Unit: turns on hand as of June Pending status 30- Amounts of overassessment, by method of settlement, and interest allowed on all income tax cases closed during the fiscal years 1940 and 1941 1940 1941 Returns on which agents' reports have not been completed: Fiscal year Awaiting classification 103, 506 71,016 In process of verification 220, 991 221,187 In review or typing 43,585 49, 946 1940 1941 Totel 368,082 341, 189

Overasseasments settled by- Returns on which agents' reports have been completed: Abatement: In 30-day file 9,109 8, 400 Regular $98, 784, 513 $27, 074, 085 Awaiting action after protest or preliminary notice default 25,316 99, 905 Duplicate 29, 527, 956 33, 826, 883 In 90-day file 4, 109 3,395 Credit 11, 711, 124 14, 241, 700 Refund 36, 824,426 31, 425, 457 Total 38, 534 32, 700 Total 176,828,018 108, 568, 126 Grand total 406, 616 373,889 Interest 9, 108. sza 7, 032, 791 Grand total 183, 936,641 113, 6W, 916 Included above under "returns on which agents reports have been Nora.-The amount involved in claims filed during the year 1941 was $120,817,115, compared with completed" as of June 30, 1941, are 27,031 returns, involving adjust- $166,272,676 the preceding year. Of the claims disposed of during the year, the amount rejected totaled $138,842,462, compared with $143,847,884 the preceding year. ments not agreed to by the taxpayers, as compared with 31,507 returns in such status at the close of the previous year. Inventory of returns on hand in the field otfiees as of June 30, 1941.- There was a net improvement in the position of the field offices as of the close of the fiscal year 1941 as compared with 1940. The REPORT OF COMMISSIONER OF INTERNAL REVENUE 25 24 REPORT OF COMMISSIONER OF INTERNAL REVENUE MISCELLANEOUS TAX UNIT were allowed in the total amount of $5,216,105 in 1,924 cases. In- cluded in this amount were refunds of $530,277 authorized as a result The Miscellaneous Tax Unit is concerned with the administration of court decisions in 21 cases. of all internal revenue taxes except the income and excess-profits taxes, the taxes applicable to alcoholic beverages, and those relating to em- Estate tax and gift tax claims received and disposed of during the fiscal year 1941 ployment. Detailed statements concerning the particular taxes ad- ministered in each of the five divisions of the Miscellaneous Tax Unit Estate tax claims Chit tax claims are set forth in the pages that follow. Collections of miscellaneous taxes for the fiscal year 1941 amounted Refund Abatement Refund Abatement to $2,153,071,808, an increase of $400,002,900 compared with collec- Num- Num- int. • Amount NII:elnr • Amount Amount tions for the preceding year. ber Amount Nle ber ESTATE TAX DIVISION.-The Estate Tax Division administers the laws applicable to the estate tax and the gift tax. Claims filed: c A On hand July 1, A Collections of estate tax for the year amounted to $355,194,033, an 1940 437 $12, 068, 552. 71 $42, 152. 71 177 $3, 843, 954.41 $38,899,06 Received 2, 176 13, 857, 014 75 5, 744, 022.20 391 1, 519, 489, 63 822, 960.25 increase of $24,307,984 over the collections for the preceding year. 50 999, 613. 78 40 148, 878. 81 Collections of gift tax amounted to $51,863,714, exceeding the col- Reopened Total to be dis- lections of this tax for the fiscal year 1940 by $22,678,596. posed of 2, 663 26, 420, 181. 24 391 5, 786, 174. 91 558 5, 512,322. 85 89 861, 859.31 Assessment and collection of proposed deficiencies in estate and gift Allowed 0 561 2, 608, 210.14 371 4,771, 852. 37 198 303, 165. 95 81 721,015. 15 taxes aggregating $39,701,646 asserted in 356 cases were withheld Rejected 366 5, 301, 106.69 12 193, 332. 35 178 3, 652,386. 65 1 139, 162. 00 pending the adjudication of appeals filed with the United States Total disposed of 927 7,909, 116.83 383 4,965, 184. 72 376 3,955, 552. 60 82 860, 177. 15 Board of Tax Appeals. On hand June 30, were 19,044 estate tax returns and 17,369 gift tax 1941 1, 736 18, 510,864.41 8 820, 990.19 182 1, 556, 770.25 7 1, 682.16 Returns.-There No claims filed. over- , returns filed during the year. The estate tax returns are referred to assessments allowed _ • 952 1, 282, 296.55 202 3, 383, 548.63 213 260,387.05 12 1, 823,948. 72 the internal revenue agents in charge for investigation and determina- Interest allowed 660, 199. 71 101, 896.09 tion of the tax, and later receive a post-audit review in the Bureau at Total amount al- lowed, includ- • Washington. 'Field investigations in connection with gift tax returns ing interest_ _ . _ 513 4, 550, 656. 40 573 8, 155, 401. 00 411 665, 449. 09 93 2, 544, 963. 81 are conducted only in designated cases, which are likewise subjected to a post-audit review. All other gift tax returns are audited in the Bureau in Washington without reference to the field. Court decisions.-Among the more important decisions affecting the estate and gift taxes are the following: Number of estate tax and gift tax returns on hand, received, and audited during the The decisions of the Supreme Court of the United States, dated fiscal years 1940 and 1941 February 3, 1941, in the cases of Guggenheim v. Rasquin (312 U. S., 254), Lnited States v. Ryerson (312 U. S., 260), and Powers v. Com- Estate tax Gift tax missioner (312 U. S., 259), involving the question of the value for 1940 1941 gift tax purposes of a life insurance policy. The Court held that the 1940 1941 cost of replacement rather than the cash surrender value at the date 14,173 12,907 4, 814 5,592 of the gift is the value which must be used for gift tax purposes. On hand st beginning of year 18,908 19,044 14,435 17,369 The decisions of the Supreme Court of the United States in the Received 33,081 31,951 19,249 22, 961 cases of Helvering v. Le Gierse (312 U. S., 531) and Keller v. Com- Total to be disposed of 20,174 18,090 13, 657 16, 168 Disposed of missioner (312 U. S., 543), under date of March 3, 1941. These 12,907 961 5, 592 1 6, 793 On band at end of year cases involved the question of whether the proceeds of a single pre- mium life insurance policy purchased in conjunction with a single requiring post-audit review were disposed of, leaving on During the year, 1,057 out of 1,100 gift tax cases premium annuity contract were to be treated as insurance subject band only 43 cases requiring similar disposition. to the insurance exemption of $40,000. The Court held that such As a result of the Bureau and field investigations and audits, total policies were not insurance within the scope of section 302(g) of the assessments of $50,333,057 were made in estate tax cases and Revenue Act of 1926 but constitute transfers to take effect in posses- sion or enjoyment at or after death and are taxable as such. $8,014,664 in gift tax cases. The decisions of the Supreme Court of the United States in the Claims.-Claims for refund of estate tax and gift tax aggregating 2,517 were received, compared with 1,186 claims received during the cases of Maass v. Higgins, Abendroth, v. Commissioner, and Blacgue preceding year. The marked increase may be attributed to a decision v. Commissioner (312 U. S., 443), under date of March 3, 1941, in- of the United States Supreme Court holding that certain rents, divi- volved a question of whether where an executor avails himself of the dends, and interest are not part of the gross estate in those cases where option extended by the estate tax law to value a decedent's gross es- the executors elect to value the estates as of a date subsequent to the tate as of one year after decedent's death, the rents, dividends, and date of death. Refunds of estate and gift taxes, with interest thereon, 423348-41-3

26 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 27 interest received during the year are to be added to the value of the of 1940, which became effective on July 1, 1940, as well as to an increase property to which they are attributable and included in the value of in the consumption of cigarettes. the gross estate. The Court held that since Congress had not speci- The withdrawals of tobacco products tax-free for the use of the fically stated in the Act that such rents, dividends, and interest were United States, under authority of section 3331 of the Internal Revenue to be included in the gross estate, it was the evident intention that Code, amounted to 84,384,800 cigarettes and 286,290 pounds of they were not to be so included. manufactured tobacco, such withdrawals being effected under 2,785 The decisions of the Supreme Court of the United States in the permits. He/vying v. Hutchings (312 U. S., 393), United States v. cases of (312 U. S., 405), Number of claims for the refund and abatement of tobacco taxes, for the redemption Pelzer (312 U. S., 399), and Ryerson v. United States of tobacco stamps, and for drawback, received and disposed of during the fiscal decided on March 3, 1941, involved primarily the question of whether year 1941 the donor of property in trust for designated beneficiaries was entitled to a single gift tax exemption or exclusion only to the extent of the Refund Redemption Abatement Uncollectible Drawback first $5,000, or if entitled to separate exclusions of $5,000 for each Num- Num- Num- beneficiary under the trust. The Court held that in the case of a Amount be, Amount Nbamer . Amount Num- gift to a trust created for the benefit of several beneficiaries, a sep- ber bar ber Amount arate exclusion was to be allowed for each beneficiary named under On hand July 1, •1 1 1940 I $2, 692.54 233 $178, 512. 45 7

the trust unless the conveyances to the trust amounted to gifts of a , $826.39 Received 270.51 2, 035 2, 145, 776.31 100 35,132. 61 $149, 013. 71 8 Reopened $1, 175. 79 le 1 73.36 1 2.73

future interest. 01) Allowed ) c0 11, 880. 27 2, 009 2, 112, 618.81 89 30, 188. 99 ■ 148,995. 97 7 DIVISION.—The Tobacco Division is concerned with the -• 1, 136. 74 TOBACCO Rejected 1,082. 78 15 30, 548.18 11 1, 727. 56 17.74 administration of all laws and regulations relating to the taxes on On hand June 30, .05 the manufacture, sale, or removal of tobacco, snuff, cigars, cigarettes, 1941 250 181, 195. 13 8 4, 045.18 1 39.00

cigarette papers and tubes, the purchase and sale of leaf tobacco, and I In addition, interest in the amount of $62.43 was allowed. The sum of $2 112,619, representing claims the removal of tobacco products without the payment of tax. allowed for redemption of stamps, includes the following: Stamps which were rendered useless, $1,213,309; stamps for which the owner alleged he had no further use, $6,987; and the value of stamps affixed to packages The collections of tobacco taxes for the year amounted to $698,- of tobacco products withdrawn from the market by the manufacturer or impo ter, 6892,323. 076,891, an increase of 14.7 percent over collections from similar sources for the preceding year. Under the provisions of section 2197 of the Internal Revenue Code, manufacturers are authorized to withdraw from their factories A comparison of the collections of tobacco taxes for the fiscal years 1940 and 1941 tobacco products, without the payment of tax, for use as sea stores. These products may be delivered directly to vessels or to bonded Increase or dec ease (—) tobacco sea stores warehouses for subsequent delivery to vessels. Source 1940 1941 There are 26 such warehouses now in operation. Percent Amount Section 212 of the Revenue Act of 1940 imposed a floor stocks tax of 25 cents per thousand on all small cigarettes and 60 cents per cvi

Cigars (large) $10, 218,926. 14 $324, 256. 56 ho- Class A $9, 894, 669. 58 thousand on all large cigarettes, held by any person for sale at the 127, 370. 58 129, 310. 45 1, 839. 37 cd Class B 2, 435, 020. 80 2, 581, 173. 79 146, 152. 99 first moment of July 1, 1940, and each person subject to the tax Class C 378, 882. 52 409, 441. 49 30, 558. 97 Class 17 61, 820.09 61, 675. 73 —144.36 required to make a return and pay the tax on or before August Class E total of 438,355 floor stocks tax returns, aggregating $4,534,384, , 400, 527. 60 502, 764. 03 3. 9 Total 12, 897, 763. 57 and 876 claims for refund of floor stocks tax aggregating $13,566, were 97, 685.79 113. 969. 87 16, 284.08 16. 7 filed during the year. Cigars (small) 16, 854.96 12, 059.83 —4, 795. 13 —28. 4 Cigarettes (large) 616, 745, 234. 31 83, 702, 689.97 15. 7 Cigarettes (small) 533, 042, 544. 34 Detailed statistics covering the manufacture and removal of manu- 54, 333, 802. 79 54, 927, 764. 18 543, 961. 39 1. 0 factured tobacco, snuff, cigars, and cigarettes, the receipt and ship- Tobaoco, manufactured 101, 264.09 1.5 Snuff 6, 798, 556.53 6, 899, 820.62 ment of leaf tobacco, and the removal of cigarette papers and tubes, 61, 827, 584. 80 645, 225. 48 I.1 Total 61, 182,359 32 will be found in tables which appear in the appendix. I, 727. 71 11, 814. 90 10, 087.19 583. 8 SALES TAX DIVISION.—The work of the Sales Tax Division includes Leaf tobacco sold 155, 935.93 12. 5 1, 252, 252.40 1, 408, 188. 33 Cigarette papers 27, 255.50 23, 127.02 4, 1 48 —15.1 the administration of the manufacturers' excise taxes, the taxes Cigarette tubes 4, 534, 384. 21 4, —4,128. 84. 21 Cigarette floor stocks tax - - - applicable to the transportation of oil by pipe line, electrical energy, 89, 658, 447. 28 14.7 608, 518, 443.59 698, 076, 890.87 telegraph, telephone, cable and radio communications and facilities, Grand total safe deposit boxes, admissions and dues, pistols and revolvers, the processing of coconut and other vegetable oils, bituminous coal, The tax on small cigarettes, not including floor stocks tax, amount- silver, hydraulic mining, narcotics and marihuana, the documentary ed to $616,745,234, an increase of $83,702,690, or 15.7 percent, over the stamp taxes, special occupational taxes, and the enforcement of the collections for the preceding year. The increase in the collections of National Firearms Act and the Federal Firearms Act. tax on small cigarettes may be attributed to the change in rate from Collections with respect to the taxes administered in the Sales Tax $3 to $3.25 per thousand effected by section 212 of the Revenue Act Division are shown in the following table:

REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL . REVENUE 29 Collections during the fiscal years 1940 and 1941 Admission taxes.—The special investigations which have been con- Increase or ducted in certain metropolitan areas in connection with the taxes on Source 1940 1941 decreed° (—) admissions to theaters, operas, cabarets, and similar places of amuse- ment, and on excess charges for theater tickets, have produced excellent results, both with respect to the increased collections and Documentary stamps: $18,145, 227.94 $22, 072, 503.40 $3, 927, 275.46 Bonds of indebtedness, capital stock issues, etc.. 12, 176, 496. 92 —3,351,453.27 in securing greater compliance with the laws and regulations relative Capital stock sales or transfers 15, 527, 950. 19 0) 92.99 92.99 Sales of produce (future delivery) 4, 814,430. 40 4, 756, 586. 50 —57, 843.90 to the collection and return of the tax and the proper marking of Playing cards 51, 286. 28 —142, 450. 51 Silver bullion, sales or transfers 193, 736. 79 tickets. A number of convictions were obtained for failure to collect 38, 881, 345.32 39, 056, 966.09 375, 620.77 or report the proper amount of tax or otherwise comply with the laws Total and regulations. Oleomargarine. 31, 116. 52 19, 762.38 18,645.86 Documentary stamp taxes.—The collections of documentary stamp Colored 759, 463. 51 860, 755.2Z 91, 291. 74 Uncolored 1, 223, 020. 00 1,221,195.09 —1, 824.91 taxes applicable to the issue and transfer of corporate bonds, the Special taxes 013, 600.03 2, 121, 712. 72 108, 112. 69 issue and transfer of shares of stock, deeds of conveyance, passage Total 2, tickets, and foreign insurance policies amounted to $34,249,000, 13, 275.31 8, 954.72 —4, 320.59 Adulterated butter 7,002.89 7, 093. 27 90.38 compared with $33,673,178 for the preceding year. Renovated butter 6 241.83 7, 208.10 966.27 Mixed flour 155.24 6, 366.97 6, 211.73 Playing cards.—There were 67 manufacturers, repackers, or im- Filled cheese porters of playing cards registered during the year, and the production 26, 675. 27 29, 623.06 2, 947. 79 Total amounted to 48,853,893 packs of playing cards, compared with Manufacturers' excise taxes (title IV, Revenue Act 51,667,930 packs for the preceding year. of 1932, a.s amended, and subtitle 0, chapter 29, 404, 298, 499. 35 570, 035, 996. 98 165, 737, 497. 63 Internal Revenue Code, as amended) 989,939. 11 Oleomargarine; adulterated, process, or renovated butter.—At the 11, 510, 646. 54 12, 480, 585.65 Transportation of oil by pipe line 42, 338, 501.94 47, 021,015. 62 4, 682, 513.68 beginning of the year there were 41 manufacturers of uncolored Electrical energy 25,000, 050.81 25, 922, 369.61 922, 318. 80 Telegraph, telephone, cable and radio messages, etc 40, 849. 79 oleomargarine engaged in the business. The number of manufac- 1, 367, 894.21 1, 408, 744.00 Leased wires, etc. (telegraph and telephone) 1, 988, 933.9 2, 215, 898.10 226,964.31 turers of colored oleomargarine was 24 at the beginning of the year Safe deposit boxes 486, 504, 526.64 659,084, 609. 96 172, 680,083. 32 and 28 at the close of the year. The production of oleomargarine - Total during the year amounted to 4,489,410 pounds of colored oleo- • margarine and 339,445,528 pounds of uncolored oleomargarine, 21, 887, 916. 00 70, 963, 094. 06 49, 075, 178. 06 Admissions 6, 334, 908.82 6, 582,649. 28 247, 740.46 compared with 1,859,931 pounds of colored oleomargarine and Dues anddnitiation fees 301,857,570 pounds of uncolored oleomargarine produced during the 222, 824.82 77, 315, 743.34 49,322,918.52 Total previous year. There were 17,227 returns filed during the year by 89, 508. 54 85, 301. 13 —4, 207.41 Pistols and revolvers 605, 395.66 684,197.90 78, 802. 24 manufacturers and wholesale dealers in oleomargarine. Narcotics 4, 702.60 6,090. 38 1. 387. 78 Marihuana 8 233, 651.85 —268, 670.26 The withdrawals, tax-free, for export of colored oleomargarine Delinquent under repealed laws 2 502, 322.11 amounted to 1,864,674 pounds, compared with similar withdrawals 1, 201,928.91 1, 009, 241.26 —192, 697.65 Total of 649,489 pounds during the preceding year. There were withdrawn. 441, 581.56 22, 744, 354.47 23, 185, 936.03 tax-free, for the use of the United States, 2,075,586 pounds of colored Coconut oils, etc., processed 12, 388.68 15, 897.50 3,608.82 National Firearms Act oleomargarine, compared with 896,387 pounds for the preceding year. 23,201, 833. 53 445, 090. 38 Total 22, 756, 743. 15 There were no manufacturers of adulterated butter registered dur- —2,473.03 4 2, 480.70 7.67 ing the fiscal year, and 4 manufacturers of process or renovated butter Hydraulic mining 4,161,663. 92 4, 386, 798. 77 224, 134.85 Bituminous coal produced a total of 2,783,509 pounds, compared with a production 14,154. 11 —9, 959.96 Other miscellaneous receipts 4 26 614. 07 of 2,706,852 pounds for the preceding year. 906, 449,690..51 222, 851, 287. 68 Grand total 583, 595, 402.83 Mixed flour.—There were 22 makers, packers, or repackers of mixed flour engaged in business during the year, and the production amounted Repealed as of Tune 30, 1938. Includes taxes of $159,810.57 on fur, $143,095.47 on sporting goods, $71,655.70 on candy, $64,332.64 on to 28,855,995 pounds, compared with 25,468,470 pounds produced Jewelry,2 $45,242.33 on toothpastes and toilet soaps, $6,622.13 on cameras and lenses, $2,488.17 on malt, during the preceding year. $2,303.58 on checks, $2,075.86 on chewing gum, $2,061.60 on soft drinks, $1,588.13 on brewer's wort, $555.39 on crude petroleum processed, refined, etc., $270.09 on grape concentrates, and $20.36 on dividends. Firearms, under the National Firearms Act and the Federal Firearms s Includes taxes of $124,205.12 on sporting goods, $63,698.56 on fur, $21,611.17 on toothpastes and toilet Act.—There were registered with the Bureau during the year, in soaps, $18,709.29 on Jewelry, $1,884.37 on cameras and lenses, $1,732.53 on checks, $770.98 on soft drinks, $501.02 on candy, $359.12 on crude petroleum, $100 on brewer's wort, $49.83 on chewing gum, $28.86 on malt, accordance with the requirements of the National Firearms Acts and $1 on yachts and boats. Correction of amount shown in 1940 report. 158,532 machine guns and other firearms subject to the provision, of that Act, and 212,884 transfers of firearms were made under appli- cations for such transfers The total number of firearms registered in accordance with the provisions of the Act during the period from July 26, 1934, the effective date of the Act, to June 30, 1941, inclusive, is 217,931. The collections of taxes under the National Firearms Act, including special taxes, amounted to $15,898. REPORT OF COMMISSIONER OF INTERNAL REVENUE 31 30 REPORT OF COMMISSIONER OF INTERNAL REVENUE Number of claims received and disposed of by the Sales Tax Division during the fiscal The total number of licenses issued during the current year to manu- year 1941 facturers and dealers in firearms, in accordance with the provisions of the Federal Firearms Act, was 22,464. Refund Abatement Redemption Uncolleetible collections of taxes on narcotics, Narcotics and marihuana.— The Claims Num- Num Num including special taxes, amounted to $684,198, compared with $605,396 Amount Amount Amount Num- Amount for the preceding year. The collections of taxes on marihuana, in- ber bar bar ber cluding special taxes, amounted to $6,090, compared with $4,703 Sales taxes: for the preceding year. On hand July 1, 1940. 906 $8, 045, 503.26 358 $3, 374, 120. 30 1 $5. 00 33 of the Internal Revenue Code im- Received 3,110 9,143, 374.44 1,045 3, 069, 239.25 1, 257 1, 024, 122.21 Bituminous coal. — Chapter Reopened 61 1, 089, 702. 12 52 174, 090.08 2 50. 99 poses two taxes with respect to the sale or other disposal of bituminous Allowed 2, 598 2, 846, 476.43 837 1, 927, 049.78 1, 250 997, 927.87 on all coal sold or Rejected 639 7,586,413.48 176 2, 378, 109. 51 9 384.95 coal by the produCer, (1) a tax of 1 cent per ton On hand June 30, 1941 840 7, 825, 690.91 442 2, 312, 290.34 6 25, 865.38 otherwise disposed of by the producer, and (2) a tax equal to 19% Miscellaneous stamps: percent of the selling price or fair market value of the coal, if the pro- On hand July 1,1940_ 61 144, 950. 28 52 186, 225.16 516 $193, 499.96 Received 225 203, 983. 16 225 145, 121.62 3,011 693,887. 43 128 85, 936.01 ducer is not a member of the Bituminous Coal Code and the trans- Reopened 11 31, 196. 73 11 18, 105.26 30 2, 004. 93 Allowed 191 102, 520.81 139 131,385.93 2,198 321, 938. 87 125 85, 434.31 action is one subject to the provisions and conditions of that code. Rejected_ 57 154, 714.45 72 140, 932. 99 1,010 161, 210.28 During the year, 78,426 returns were filed by producers of bitumi- On hand June 30, 1941 49 122,894. 91 77 77, 133. 12 349 406, 243. 17 3 501.70 nous coal, and the collections of taxes from that source amounted to Narcotics: On hand July 1, 1940. 9 13.25 1 202.50 3 151. 28 $4,385,799, compared with 63,624 returns and collections of $4,161,664 Received 313 408.48 13 25.10 69 543.02 12 8,643.25 Reopened for the preceding year. Allowed 311 398.88 10 21.35 62 595.20 12 8,643.25 tax.—The collections of tax on the transfers of interest in Rejected 1 10.00 4 206.25 9 59.95 Silver On hand June 30, silver bullion amounted to $51,286, compared with $193,737 for the 1941 10 12.85 6 39.15 preceding year. Marihuana: collections of tax on hydraulic mining On hand July 1, 1940. 1 109. 78 1 100.00 1 4.00 Hydraulic mining. — The Received 2 135.81 5 334, 465. 37 2 2. 00 25 108, 943. 55 Reopened 1 16.02 under the California Debris Control Act amounted to $8, compared Allowed 1 98.91 6 269,462.49 4 22.00 25 108, 943. 55 Rejected 1 109.78 1 65, 102. 88 .02 with $2,481 for the preceding year. On hand June 30, total of $1,406,815,951, representing 1,698,279 1991 1 — A 36.90 Assessments. Silver: items, was assessed on 2,378 miscellaneous tax assessment lists, which On hand July 1, 1940_ 1 190.95 included original and additional assessments of all miscellaneous Received 69 28, 019.00 1 918.46 Reopened taxes.' Included in the lists were 52,161 additional assessments, Allowed 69 28, 187. 16 1 918.46 Rejected reultings from office audits and field investigations, representing taxes On hand June 30, $70,261,573. The interest assessed and collected amounted to 1941 1 22.79 of Coal: $7,930,818. On hand July 1, 1940. 8 309.69 100 31, 696.00 4 568.78 the beginning of the year there were Received 101 15, 029.48 1,278 573, 604.96 445 43, 336. 21 Field reports and returns.— At Reopened 1 30.35 on hand 119 field reports, representing additional miscellaneous and Allowed 79 9, 518. 33 914 464, 903. 38 440 42, 563.93 Rejected 16 4, 091.90 119 43, 913. 17 9 1,336.06 sales taxes in the amount of $1,223,220. During the year, 7,133 On hand June 30, 1941 15 1,759.29 345 96, 484. 41 field reports were received, representing $4,103,546, and 7,079 reports Total claims: were examined and closed, covering taxes amounting to $4,683,418. On hand July 1,1940_ 985 8,190, 886. 26 513 3, 592, 534.91 520 193, 655.24 5 573.78 Received 3, 751 9, 362, 931. 37 2, 635 9, 150, 475.30 3, 082 694,432.45 1, 868 1, 271, 899.69 At the close of the year there were 158 reports, representing $624,690, Reopened 73 1,100, 929.20 63 192, 195.34 31 2, 020. 95 2 50. 99 Allowed 3,180 2.959, 012.38 1, 974 2, 821, 010.09 2, 264 322, 556. 07 1, 853 1, 244, 436.37 awaiting additional evidence, and 15 reports, aggregating $18,658, Rejected 714 7, 745, 339. 61 372 2, 628, 284.80 1,014 161, 270. 25 13 1,721.01 were on hand which had not been reached for consideration. In On hand June addition to the foregoing, 616,784 sales tax returns, aggregating $744,- 1941 915 7, 950, 394.86 865 2, 485, 930.66 355 406,282.32 9 26, 367.08 495,640, were received and examined during the year. number of claims received and disposed of by the Claims.— The Interest in the amount of $254,686 was allowed in connection with Sales Tax Division during the fiscal year ended June 30, 1941, is shown the adjusted claims shown in the foregoing table. in the following table: Credit cases.— At the beginning of the year there were on hand 977 es assessm , schedules I As a matter of administrative convenience, the Sales Tax Division complet EstateentsTax Div dives sales tax credit cases, involving $1,215,428, and 10,735 cases, involving claims and certificates of overassessment, and passes on offers in compromise for t he thelaims Tobacco Division, the Capital Stock Tax Division, and the Processing Tax Division with respectc to $14,377,748, were received. A total of 10,422 cases, involving $13,- sugar-tax claims. 453,566, was disposed of during the year by the allowance of 10,132 cases in the amount of $3,236,943 and the rejection of 290 cases in the amount of $21,237. At the close of the year there were on hand 1,290 sales tax credit cases, involving $2,139,610. At the close of the year there were 101 cases, involving credits in connection with bitumi- nous coal tax, totaling $2,846, and during the year 3,455 cases were REPORT OF COMMISSIONER OF INTERNAL REVENUE 33 32 REPORT OF COMMISSIONER OF INTERNAL REVENUE Claims for refund of capital stock tax, with interest thereon, were disposed of by allowances in the amount of $100,741 and rejections in allowed in 2,780 cases involving $596,776. This amount includes the amount of $6,027. $52,320 the refund of which was authorized as the result of court Offers in compromise.—At the beginning of the year there were on decisions. hand 518 offers in compromise, aggregating $610,863, which had been PROCESSING TAX DIVISION.—The Processing Tax Division is con- submitted in settlement of civil and criminal liabilities incurred in cerned with the administration of the tax imposed on the manu- connection with various excise and other miscellaneous taxes. There facture of nianufactured sugar under Chapter 32 of the Internal were received during the year 12,294 offers, aggregating $1,439,487; Revenue Code, and the adjustment of several types of claims arising 11,361 offers, aggregating $1,233,127, were accepted; 287 offers in the as a result of the invalidation of the taxing provisions of the Agri- amount of $57,879. were rejected; and 39 offers, totaling $241,747, were cultural Adjustment Act and the repeal of related legislation. withdrawn. At the end of the year there were on hand 1,125 offers, Sugar tax.—Manufacturers of manufactured sugar filed 1,727 aggregating $517,597, under consideration or awaiting additional returns and the taxes collected amounted to $74,834, 840, compared evidence. with 1,927 returns and collections of $68,145,358 for the previous Miscellaneous tax special squads.—The small group of internal year. Claims for refund filed in connection with the exportation revenue agents and general deputy collectors operating in connection of sugar totaled 796 and represented the total amount of $1,364,454, with the miscellaneous taxes, chiefly as a mobile force investigating compared with 1,614 claims filed during the previous year represent- delinquent taxes, continued to obtain excellent results. These field ing $2,048,263. officers reported 2,350 cases, involving additional taxes, penalties, and interest amounting to $2,237,003. Sugar tax claims received and disposed of during the fiscal year 1941 Court decisions.—There were a number of decisions by the various Federal courts during the year with respect to questions arising Export Overpayment Livestock feed under the laws imposing the excise and miscellaneous taxes, the majority of which were favorable to the Government. Number Amount Number Amount Number Amount CAPITAL STOCK TAX DIVISION. —The capital stock tax is imposed On hand July 1, 1940 42 $10, 666. 84 5 $6, 481.91 upon corporations carrying on or doing business during any part Received 796 1, 364, 454.31 11 13, 803.52 54 $4, 369.19 of the taxable year and is measured by the adjusted declared value Reopened 70 3, M. 57 1 10.57 2 339.67 of the capital stock of domestic corporations, or in the case of foreign Total 908 1, 378, 461.52 17 20, 296.00 58 4, 708.86 corporations by the adjusted declared value of the capital employed Allowed 848 1, 335, 781. 78 15 6, 989. 44 27 2, 207. 74 in the United States. Rejected 43 7, 522.35 1 12, 482. 41 19 1, 128. 11 The collections of capital stock tax during the year amounted to On hand July 1, 1941 17 35, 157. 39 1 821.15 10 1, 373.01 $166,652,640, compared with $132,738,537 for the preceding year, Total 908 1, 378, 461.52 17 20, 296.00 56 4, 708.86 an increase of $33,914,103, or 25.5 percent, and the greatest yield from this source since the capital stock tax was first imposed. Abatement Grand total Domestic and foreign corporations filed a total of 535,159 returns, of which 33,438 were submitted by corporations organized since Number Amount Number Amount

June 30, 1939. There were 38,028 delinquent returns filed for the On hand July 1, 1940 47 $17, 148. 55 years 1933 to 1939, inclusive. Received 6 3153, 017. 52 867 1, 535, 644.54 As a result of the review and audit of returns, 19,921 assessments Reopened 73 3, 600.81 were made, involving tax, penalty, and interest in the amount of Total 6 153, 017. 52 987 1, 556,483.90 $994,813, compared with 16,457 assessments totaling $1,732,327 Allowed 4 29.99 894 , 345, 008.95 Rejected 2 152, 987.53 65 174, 120.90 made during the previous fiscal year. On hand July 1, 1941 28 37, 354. 55 Number of capital stock tax claims received and disposed of during the fiscal year 1941 Total 6 153,017. 52 987 . 556, 483.90

Refund Abatement Uncollectible Total

Num- Num- Num Amount Amount b, Amount Num-bar Amount her Der

1, 241 $1, 493, 150. 82 On band July 1, 1940.... 722 $1, 328, 348.73 218 6150, 075.88 303 $14, 728.21 927 143, 183. 85 2, 370 185, 073. 29 10, 489 22, 413, 828.60 Received 7, 172 22,085, 571.66 79, 558. 72 157 79,231. 08 7 327.66 164 Reopened 173, 332. 14 5, 770 815, 729. 07 Allowed 2, 780 51849.886, 754 123, 752. 05 2, 23 8 22,012, 524.28 181 66, 047.50 1 4 737.38 4,635 22,082, 309. 14 Rejected 4,440 1, 469 1,088, 499.93 On hand June 30, 1941... 831 963,980. 29 215 103, 787.84 423 20, 732.00 REPORT OF COMMISSIONER OF INTERNAL REVENUE 35 34 REPORT OF COMMISSIONER OF INTERNAL REVENUE various types of claims tion, or use of alcohol and alcoholic liquors were under the supervision Claims; processing and related taxes.—The of the Alcohol Tax Unit: relating to the processing taxes and related taxes, received and dis- posed of, are shown in the following table: Under permit requirements of the Federal Alcohol Administration Act: 1 Number Importers ' 1, 014 Claims for refund or payment received and disposed of during the fiscal year 1941 Distilleries: Alcohol 3 39 Brandy 134 Revenue Act of 1938 Registered 121 Warehousing and bottling: Section 602 Title VII Bonded warehouses: 4 Section 601 Alcohol 60 274 Amount Internal-revenue Number Amount Number Amount Number Tax-paid bottling houses 126 Wine producers and blenders: 342 $1, 603, 283.24 2, 319 $9, 516, 111. 83 Wineries 1, 017 Dn hand July 1, 1940 119 10, 357, 375.68 Received 2 $194. 64 10 10,910. 82 Bonded wine storerooms 89 40, 203.73 232 638,469. 86 321 531, 803.00 Reopened 25 Rectifying plants 237 2, 252, 663.92 2, 759 20, 405, 290.49 Total 27 40, 398.37 584 Wholesalers: 5

gi'" 5, 550 35, 961.44 870 851, 724.05 1, 350 1,174, 962.95 Wholesale liquor dealers Allowed 1,088,988.45 1, 236 6, 329, 218. 75 Wholesale malt liquor dealers 10, 306 4, 436.93 197 Rejected Not under permit requirements of the Federal Alcohol Administration Transferred to Income Tax 37 9, 947, 243. 47 Unit 17 311, 951.42 136 2, 953, 865. 32 Act: On hand July 1, 1941 Breweries 537 2,759 20, 406, 290.49 Total 27 40, 398. 37 584 2, 252, 663. 92 Denaturing plants. 41 Bonded dealers in specially denatured alcohol 50 Grand total Bonded manufacturers using specially denatured alcohol 4, 199 Cotton ginning Act Tobacco Act Hospitals, laboratories, and educational institutions using tax-free alcohol 6, 576 Number Amount Number Amount Number Amount Vinegar plants using vaporizing process 13 Bottle manufacturers 66 3, 672 $11, 146, 872.09 On hand July 1, 1940 563 $8, 721. 11 448 $18, 755.91 Retail liquor dealers 256, 653 202, 395. 66 1, 254 21, 127. 74 10, 592, 004. 52 147, Received 8, 958 2, 835. 54 10.7726 1, 214, 393.92 Retail malt liquor dealers 063 Reopened 58 1,081. 79 90 1 Separate permits are required for lessee operations. In addition to the number of premises shown, the 14, 741 22, 953, 270.53 Tail 9,579 212, 198. 56 1, 792 42, 719. 19 lessees are as follows: Registered distilleries, 62; tax-paid bottling houses, 13; rectifying plants, 19. A lessee 2, 175. 462.13 authorized to operate two or more premises is counted once for each premise. 7,873 83, 591.56 1, 383 29, 223.13 11, 002 2 An importer is required to hold only one permit regardless of the number of his premises. Allowed 3, 505 7, 562, 887.71 Rejected 1, 669 126, 912. 58 402 13, 331.00 I Permits are required only where alcohol is produced for nonindustrial use. Transferred to Income Tax I Permits are required only if the proprietor conducts bottling operations. 37 9, 947, 243. 47 z Total number of premises. Permits are required for those making sales to trade buyers. A wholesaler Unit 197 3, 267, 677.22 On hand July 1, 1941 37 I, 695.42 7 165.06 is required to hold only one permit regardless of the number of his premises. Includes three distillery denaturing bonded warehouses. 9, 579 212, 198. 56 1, 792 42, 719. 19 14, 741 22,953, 270.53 Total Several new regulations were issued during the year. The regula- tions relating to distilled spirits, wines, and fermented malt liquors ALCOHOL TAX UNIT are now complete with the exception of regulations concerning alcohol, Collections of the liquor taxes amounted to $820,056,178 in the which will be issued in the near future. fiscal year 1941, compared with $624,253,156 in 1940, an increase of PROCEDURE DIVISION. —This division is responsible for planning $195,803,022, or 31.4 percent. The increase in collections over the and developing procedure for the headquarters and field offices of previous year is principally the result of the higher rates imposed by the Alcohol Tax Unit.; assists in drafting regulations, Treasury De- the Revenue Act of 1940. In comparing the yield from the excise cisions, mimeographs, and circulars; reviews for revision all forms taxes on liquors (see table 1, pp. 56 to 91 for taxes grouped under prescribed by the Alcohol Tax Unit; and is charged with the adminis- this heading), it is found that the largest increase was in distilled tration of regulations relating to traffic in containers of distilled spirits spirits, for which collections increased 39.6 percent over the previous and the supervision of the Statistical Section. year. The collections from the excise tax on wines increased 36.7 Statistics.—Regular monthly and annual statistical reports and percent, while the collections from the excise tax on fermented malt releases concerning the activities of the Alcohol Tax Unit were pre- liquors increased 20.5 percent. pared. Special statistical research work was performed relating to Of the total liquor taxes collected, $484,163,478 came from distilled proposed legislation and inquiries from officials and the public. A spirits, $13,186,464 from wines, and $322,706,236 from fermented statistical analysis was made of the uses of specially denatured alcohol malt liquors. Taxes collected from distilled spirits constituted 59.0 during the fiscal year 1940. Statistical tables covering the operations percent of the total in 1941, compared with 55.6 percent in the previous relating to distilled spirits, fermented malt liquors, and wines, and enforcement activities are contained in the appendix. year. On June 30, 1941, the following premises and proprietors qualified The following data summarize operations of the legitimate liquor under internal revenue laws, and engaged in the production, distribu- industry under the supervision of the Alcohol Tax Unit: 36 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 37 Ethyl and denatured alcohol.—More ethyl alcohol was produced fiscal year. The withdrawals of domestic sparkling wines increased during the fiscal year 1941 than in any prior year. Production by 72.7 percent, and tax-paid withdrawals of domestic vermouth pro- amounted to 298,845,417 proof gallons, which is 55,117,661 proof duced at wineries increased from 394,245 gallons to 1,077,382 gallons, gallons more than the previous year's figure. Tax-paid withdrawals or by 173.3 percent. increased from 24,344,306 proof gallons in 1940 to 27,866,523 proof ENFORCEMENT DIVISION.—The activities of the Enforcement gallons in 1941. Of the denatured alcohol produced, 17,676,172 Division include the investigation, detection, and prevention of willful wine gallons were completely denatured and 135,834,261 wine gallons and fraudulent violations of the internal-revenue taws relating to were specially denatured. This compares with 15,352,033 wine gallons distilled spirits, wines, and fermented malt liquors. of completely denatured and 111,409,797 wine gallons of specially During the fiscal year, 11,826 stills were seized, having an aggre- denatured alcohol produced during the fiscal year 1940. gate mash capacity of 2,056,230 gallons,' and in connection therewith, Distilled spirits.—The total production of whisky, rum, gin, brandy, 6,868,078 gallons of mash were seized and destroyed. Investigators and other distilled spirits in 1941 was 175,208,746 tax gallons, an also seized 275,396 gallons of spirits and 4,752 automobiles and increase of 31,753,554 tax gallons, or 22.1 percent, over the production trucks. The total appraised value of the property seized amounted in 1940. Compared with the previous year, whisky production in- to $2,424,565. A total of 26,010 persons were arrested for Federal creased by 22,858,680 tax gallons, or 23.1 percent, while brandy pro- liquor law violations. duction increased by 6,937,052 tax gallons, or 37.6 percent. The enforcement of Regulations 17 and Regulations 92 has been Tax-paid withdrawals of domestic distilled spirits, other than increasingly effective. Because of the voluntary cooperation of alcohol, decreased from a total of 103,981,635 tax gallons in 1940 to dealers in this program, illicit distillers have found it necessary to go 102,685,625 tax gallons in 1941, or 1.2 percent. Each kind of spirits far afield for supplies and purchase them in small quantities, thus except brandy and rum shared in this decrease. Tax-paid withdrawals materially increasing their cost of operations. The reports received of whisky amounted to 80,541,974 tax gallons, a decrease of 0.9 from dealers have in the meantime led to the seizure of 497 illicit percent. The withdrawals of bottled-in-bond whisky amounted to distilleries and 148 vehicles, with 692 arrests. The preventive and 13,543,847 tax gallons, or 16.8 percent of total tax-paid withdrawals of enforcement program under these regulations has substantially aided whisky. in reducing the number and size of illicit distilleries. Withdrawals of distilled spirits, other than alcohol, for tax-payment In connection with the enforcement of the Liquor Enforcement are permitted in packages and tank cars direct from distillery cistern Act of 1936 for illegally introducing tax-paid spirits into dry States, rooms. During the fiscal year, tax-paid withdrawals direct from 215 cars and 12,150 gallons of tax-paid liquor were seized and 332 distilleries were as follows: In packages, 433,447 tax gallons; in tank persons were arrested. Indictments aggregating 273 were returned cars, 8,553,390 tax gallons. A total of 102,685,625 tax gallons were and 196 persons were convicted in such cases. withdrawn on payment of tax during the fiscal year (see table 59), of During the past year, 268 applications for pardon and 3,886 appli: which 93,698,434 tax gallons were withdrawn from internal-revenue cations for parole were examined and reports submitted. A total of bonded warehouses and 354 tax gallons from export storage ware- 266 applications for pardon and 3,970 applications for parole were houses. Withdrawals from internal-revenue bonded warehouses con- received. sisted of 180,609 tax gallons from tanks, 12,088,075 tax gallons in FIELD INSPECTION Divisioir.—This division plans, coordinates, and cases, and 81,429,750 tax gallons (including 1,607,360 tax gallons for supervises the permissive functions in the field offices of the 15 field bottling in bond after tax-payment) in packages. districts. A group of technically trained field inspectors, who serve as Total stocks of spirits in internal-revenue bonded warehouses at representatives of the Alcohol Tax Unit in maintaining an efficient the close of the fiscal year aggregated 551,424,175 tax gallons, of which permissive organization in the field offices, are assigned and directed 504,080,691 tax gallons were whisky. by this division. They make frequent examinations, by actual in- Rectified spirits.—The production of rectified distilled spirits and spection of records, documents, and otherwise, to determine whether wines increased from 47,656,570 proof gallons to 54,157,628 proof law, regulations, established policy, and procedure are being followed; gallons, or an increase of 13.6 percent. The quantity of rectified devise and recommend plans and methods for greater efficiency and whisky produced increased from 37,977,224 proof gallons to 44,317,166 economy in the conduct of the work; supervise the installation of new proof gallons, or an increase of 16.7 percent. The production of procedures which have been approved by the headquarters office; cordials and liqueurs increased 4.3 percent, while the production of coordinate and standardize the functions and work in the various units gin decreased 1.5 percent. of the permissive divisions; determine the adequacy and efficiency of Fermented malt liquors.—Tax-paid withdrawals of fermented malt the personnel and suitability of space and equipment and the prac- liquors decreased from 53,014,230 barrels to 52,799,181 barrels in ticability of its reallocation for the proper handling of the work; make the fiscal year 1941, or a decrease of 0.4 percent. The percentage of recommendations relative to the judicious expenditure of public funds; beer withdrawn by pipe line for bottling increased from 50.9 percent and confer with district supervisors on problems of organization, of the total in 1940 to 52.7 percent during the current fiscal year. management, and service. of still wine increased from 212,367,737 gallons Wines.—Production Represents the cubic capacity of still pots and cookers. Column stills which operate without a still to 286,371,423 gallons. Tax-paid withdrawals of still wine aggre- pot or cooker are not reflected in this total. The size of illicit stills is reflected more properly by the mash facilities. The cubic measurement of the mash fermenters of all the illicit stills seized during the fiscal year gated 88,592,333 gallons, or an increase of 7.8 percent over the previous was 9,971,340 gallons. REPORT OF COMMISSIONER OF INTERNAL REVENUE 39 38 REPORT OF COMMISSIONER OF INTERNAL REVENUE The division maintains general supervision over the activities of beverage control boards, and police departments. The greater part of the work, however, has to do with the internal revenue and narcotic inspectors and storekeeper-gaugers in the field districts and provides laws. for the general instruction of these groups. A total of 72,189 inspec- tions of plants and permittees was made during this period by general The Washington laboratory is primarily concerned with basic prob- inspectors in the supervisory districts. Inspections of retail dealers lems, such as the development and modification of methods of analyses were conducted by junior Inspectors, and the following statement for the great variety of products submitted and the formulation of denatured alcohol. This necessitates intensive research as to the shows the results accomplished by this group: actual components for all alcoholic products; a knowledge of the Number of inspections made 239, 139 24, 012 effect of diverse manufacturing processes on related products; ab- Number of dealers found violating stracting currect technical publications; and the testing of proposed Number of violations found 27, 459 Percent of dealers found violating 10. 0 denaturants. Amount collected $518, 710. 46 Routine activities of the Washington laboratory include the exami- This division is also responsible for the final determination for the nation of the formulae for all preparations and processes in which approval or disapproval of applications for the establishment of denatured alcohol is used before permits are issued by the district industrial alcohol plants, alcohol bonded warehouses and denaturing supervisors for the withdrawal of alcohol. In most cases samples are plants, distilleries, fruit distilleries, distillery denaturing bonded ware- analyzed to determine whether they are according to formulae and houses, internal-revenue bonded warehouses, and rectifying plants. sufficiently protected against removal of their denaturants and other Final review of qualifying documents submitted in connection with the added compounds to produce potable alcohol. This policy appears establishment of bonded field warehouses, bonded storerooms, bonded to be very effective in that few cases of diversion by cleaning specially wineries, and breweries is made by the division. denatured alcohol preparations have been reported. Many changes were made in the premises, construction, and equip- Preparations manufactured with tax-paid alcohol and wine are ment of established plants during the fiscal year, requiring examina- examined for the purpose of determining whether they are fit for use tion of applications, notices, bonds, consents of surety, plats, plans, as a beverage and thus subject to the tax levied on rectified spirits. and other documents submitted in connection with such changes. Processes used in distilleries and in industrial alcohol and rectifying The total number of such examinations, including those covering 122 plants are reviewed by the laboratory. new plants and 205 plants discontinued, was 21,885. For the Miscellaneous Tax Unit the laboratory examines such com- The work of the central file sections of the field offices was reorgan- modities as oleomargarine, mixed flour, filled cheese, adulterated ized under the supervision of the field inspectors. Standard methods butter, lubricating oils, and soaps. The Washington laboratory also were installed in each office governing the arrangement and sub- examines many samples relative to the enforcement of the Federal division of basic permit files, both active and inactive, miscellaneous Alcohol Administration Act. Members of the staff frequently appear files, and audit report files. individual files were subdivided by major in court as expert witnesses in cases involving the refund of taxes; subjects to facilitate ready reference and to permit the several divisions they assist in revisions of regulations and drafting of Treasury Deci- of the office to utilize individual folders of the same file simultaneously. sions, and serve as consultants to administrative officers of the Field inspectors made administrative examinations of the field Bureau. offices during this period. These inspections covered every phase of Except for the research features, the work of the field laboratories permissive activity in the respective districts, resulting in the correc- parallels that of the Washington laboratory. The chemists act as tion of numerous discrepancies and deviations from prescribed policy advisors to the district supervisors on technical matters; they inspect and procedure, and made available to the Bureau complete data for breweries, distilleries, rectifying plants, and places seized by enforce- consideration of further standardization and simplification of field ment officers. activities. Methods were developed with which storekeeper-gaugers are able All records of the inspection divisions of the field districts were to determine the amount of alcohol in butanol, acetone, and ether. reorganized and standardized under the supervision of field inspectors, Improved methods for detecting fingerprints and erased writing have which resulted in the elimination of duplication in work by field been developed. Satisfactory progress has been made in the applica- employees. tion of spectrographic and chromatographic absorption methods to LABORATORY DIVISION.—The Laboratory Division comprises a the analyses of wines and distilled spirits. central laboratory in Washington, D. C., with 13 branch laboratories Branch laboratories received 78,640 samples, a decrease of 1,366 located in continental United States, and 1 in San Juan, P. R. Pre- over the preceding year; 1,327 days were spent by the field chemists vious to May, 1941, there were 15 branch laboratories, but those in in court proceedings and 314 days in inspections, making a total of Los Angeles, Calif., and Pittsburgh, Pa., were discontinued and 1 was 1,641 days outside work, a decrease of 32 days; 17 percent of the established ini Louisville, Ky. samples examined in the field were narcotics. The laboratory in The Laboratory Division performs all the chemical work for the Washington, D. C., examined 6,715 samples, which is 2,178 less than Bureau of Internal Revenue and Bureau of Narcotics; it frequently during the preceding year; 68 days were spent in court proceedings assists the Bureau of Customs, Secret Service, Federal Bureau of and inspections by chemists from the Washington laboratory, an Investigation, Coast Guard, Post Office Department, State alcoholic increase of 24 days. 40 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 41 The broad purpose of the statute is the regulation of the conduct of the AUDIT DIVISION.-This division is responsible for the tax account- ing, assessment, claim, and compromise work of the Alcohol Tax Unit. legitimate liquor industry. It administers the provisions of internal-revenue laws and regulations The Federal Alcohol Administration Act requires that all producers pertaining to the manufacture, storage, tax-payment, exportation, (other than brewers), importers, and wholesale distributors of alcoholic sale, and use of alcohol, denatured alcohol, distilled spirits, wines, and beverages secure basic permits. The issuance, denial, revocation, suspension, and annulment of basic permits , have been delegated to malt liquors. Assessments.-During the fiscal year, 28,026 reports of violations district supervisors, a small staff being retained in the Washington of the internal-revenue laws pertaining to alcoholic liquors were office for the purpose of directing and coordinating such activities. received from the field offices, reviewed and audited, and tax liabilities The experience of one year under the decentralized system has shown disclosed thereby were assessed, including ad valorem penalties. it to be a definite improvement over the centralized system, since there There were certified to the Commissioner for assessment 21,529 have been more complete facilities for investigations of applicants items, totaling $5,476,957, listed in the Bureau, and 292,177 items, and of violations, and it has been possible to hold hearings where the aggregating $140,469,958, listed by collectors. parties in interest were located. The following table reflects the permit activity under the Federal Alcohol Administration Act during the Number of claims received and disposed of by Audit DivMon during fiscal year 1941 year and the number of permits of each class outstanding on June 30, 1941: Redemp- Abate- Uncol- Total Amount lion of Refund ment leetible stamps New Amended i. Permits in Permits ter- permits permits minted r - " effect June issued I issued 30, 1941 5 671 $4, 334, 292.89 On hand July 1, 1940 62 249 231 129 2,096 9, 085 2, 052 9, 646 22,879 8, 235, 824. 12 Received during year 9, 307 20, 494 5, 400, 899. 59 Allowed 1, 795 7, 608 1, 784 Distillers 58 314 54 354 213 307 297 43 860 4, 480. 230.12 39 33 41 314 Rejected 2, 196 2, 688,987. 27 Rectifiers On hand June 30, 1941 150 1, 419 202 425 Importers 86 89 103 1,014 Wine producers and blenders 66 66 149 1,130 Warehousing and bottling 841 56 212 627 Wholesalers 1,334 1,245 1,785 12,042 the beginning of the Offers in compromise-Liquor taxing laws.-At 2, 424 1, 803 2, 344 15, 481 fiscal year there were on hand 583 offers, aggregating $15,448. During Total the year, 7,788 offers, amounting to $347,514, were received, of which Includes permits Issued to lessee operators, alternating proprietorships, changes in ownership, manage- ment, control, etc., which do not involve the establishing of additional premises. 231 were forwarded to the Department of Justice and 194 were Includes permits surrendered for cancellation, automatically terminated, or revoked. returned to the field offices. During the year, 6,640 offers, aggregating $ Represents active permits and includes lessee operators, also permits in Puerto Rico. Data on Outstand- $201,225, were accepted, and 564 offers, totaling $47,952, were rejected, ing permits heretofore published included inactive permits. leaving 742 offers on hand at the end of the fiscal year. The Federal Alcohol Administration Act provides that no bottler Offers in compromise-Federal Alcohol Administration Act.-During or importer shall bottle or remove from customs custody for consump- the year, 43 offers, aggregating $5,330, were received, of which 33, tion distilled spirits, wine, or malt beverages, unless the bottler or totaling $4,740, were accepted, and 7 offers, totaling $430, were importer upon application has obtained and has in his possession a rejected, leaving 3 offers on hand at the close of the year. certificate of label approval or a certificate of exemption from label Number Amount approval covering such distilled spirits, wine, or malt beverages. The Drawback claims received allowed number of applications for label approval filed was approximately the same as the number filed the preceding year, and a total of 78,989 Alcohol used in flavoring extracts, and toilet and medicinal spirits exported 611 $221, 400. 96 applications were acted upon. 183 17, 728. 56 Distilled spirits and wines bottled for export 9 214. 00 Stills exported In connection with the enforcement of the advertising regulations, 803 239, 843.52 the division reviewed 76,859 advertisements appearing in 24,787 Total publications, representing a slight increase over similar activities for the preceding year, and took appropriate regulatory action in 887 cases BASIC PERMIT AND TRADE PRACTICE DIVISION. -This division is which involved various types of irregularities. There were also re- charged with administering the provisions of the Federal Alcohol viewed 4,803 radio programs and 4,250 pieces of point of sale advertis- Administration Act and regulations which have been issued pursuant to ing. Particular attention was given to advertisements containing its authority. Its activities involve the enforcement of the trade prac- patriotic themes, references to the Army or Navy, or appeals to the tice provisions of the Act aimed at the prevention of certain unfair defense forces, the regulations being amended during the year to give trade practices on the part of alcoholic beverage producers, importers, the Bureau more authority to deal with objectionable advertisements and wholesalers, including exclusive retail outlets, so-called "tied- of this nature. Particular activity was also necessary in connection house" relationships, commercial bribery, consignment sales, false and with advertisements of domestic products designed to replace former misleading labeling and advertising, bulk disposition of distilled spirits, imported items and advertised in some instances in a misleading and interlocking directorates in the distilling and rectifying fields. manner. 423348-41 4 42 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 43 Violations of the trade practice provisions of the Federal Alcohol of an agreement, the controversy is subject to review only by the Administration Act have involved the furnishing to retailers of United States Board of Tax Appeals and the Federal courts. equipment such as electric mixers, heating devices, dispensing equip- In order to encourage the proper settlement of tax disputes in the ment, signs, etc. ; exclusive sales agreements; paying retailers for window offices of the examining agents, and to insure the fullest possible displays; and making sales on consignment or with the privilege of development of the issues in unsettled cases, the privilege of submit- return. These practices result in pressure selling, which constitutes ting disputed liabilities to the Technical Staff without first petitioning unfair competition and results in advantages to the larger companies the Board of Tax Appeals is restricted to taxpayers who have tried which have sufficient capital to subsidize their customers in this in good faith to reach agreements with the internal revenue agents in manner. There were 199 such cases handled during the year, the charge through discussion with employees in the agents' offices. penalties imposed including permit suspensions for as long as 60 days However, if a taxpayer asks for an immediate Staff review of an and the acceptance of substantial offers in compromise. agent's preliminary findings, without prior conference in the agent's office, the internal revenue agent in charge may, in the exercise of TECHNICAL. STAFF reasonable discretion, grant the request. If no agreement as to liability is reached with the taxpayer through The Technical Staff is the appellate agency within the Bureau of conference in the Staff division, the head of the division directs the Internal Revenue for the determination of Federal income, profits, internal revenue agent in charge to issue a statutory notice of defi- estate, and gift tax liability. It is an independent organization in the ciency in the Commissioner's name. Similar statutory notices are Commissioner's office and acts under the supervision of the Commis- also issued by the internal revenue agents in charge on their own initia- sioner. Its work relates principally to those classes of taxation over tive (a) if taxpayers, after conference in the agents' offices without which the United States Board of Tax Appeals has jurisdiction. The agreement, and upon being apprised of their rights, fail to ask for Staff organization consists of an administrative office in Washington consideration of their cases by the Technical Staff; (b) if, after receiv- and 10 field divisions containing 37 local offices. The principal ing preliminary notices of deficiency, they fail either to accept the functions of the Bureau personnel assigned to these field divisions are agents' findings or to file protests and ask for conferences; and (c) if (1) to determine the liability of taxpayers who have protested the the agent in charge, on the completion of a revenue agent's investiga- findings of the internal revenue agents in charge, and (2) to consider tion, finds that the collection of the tax might be jeopardized by the proposals submitted by taxpayers for the settlement of cases docketed delays incident to the issuance of a preliminary notice and the holding by the Board. In the performance of these duties the heads of the of a conference. field divisions have exclusive authority to represent the Commissioner If for any reason a taxpayer receives a statutory notice without in cases coming within their territorial jurisdiction, provided, how- having previously had an opportunity to present his contentions fully ever, that proposed settlements in docketed cases must be concurred to the Technical Staff, the local Staff division may, in exceptional cases, in by representatives of the Chief Counsel for the Bureau, acting as grant him a conference during the 90 days allowed by the law for the division counsel. filing of a petition. In rare instances, also, a case that has been Facilities offered by the Technical Staff for the settlement of tax dis- considered by a Staff division without agreement before the issuance putes.—Under the present system of decentralized determination of of a statutory notice may be reconsidered during the 90-day period. income, profits, estate, and gift tax liabilities, the Technical Staff Of the cases considered by the Staff before petition to the Board in offers taxpayers opportunities for the settlement of tax disputes at the fiscal year ended June 30, 1941, only about 1 in 14 was originally three separate stages of the procedure: First, before the issuance of considered during the 90-day period; of the cases in which statutory a formal notice of deficiency, which, in the absence of a waiver of the notices were directed by the heads of the Staff divisions, only about 1 statutory restrictions, is required by law as a basis for assessment and in 27 was settled on reconsideration during the 90-day period. Of the collection; second, in exceptional cases, after the issuance of such a total number of cases dealt with in nondocketed status, over two- notice but before the filing of a petition to the United States Board thirds were settled by agreement or default. of Tax Appeals for redetermination of the liability stated in the If an asserted deficiency is not agreed to before the issuance of a statutory notice; and, third, after such a petition has been filed and statutory notice or during the 90-day period, the tax will be assessed the case has been placed on the Board's docket. and collected unless a timely petition is filed with the Board. During A taxpayer who disagrees with the determination of liability by the the fiscal year ended June 30, 1941, petitions were filed with respect local internal revenue agent in charge has the privilege under regular to approximately one-third of the total number of statutory notices procedure of submitting his case promptly to the local division of the mailed, most of the remainder being cases in which the taxpayers Technical Staff for a final administrative determination of his liability. had failed to respond to the agents' preliminary notices of deficiency. The head of the Staff division has exclusive authority to represent the Of the petitions filed, about one-half, involving somewhat more than Commissioner in making such determinations, and in the absence of one-half of the total amount of the petitioned liabilities, arose from fraud, malfeasance, misrepresentation of a material fact, or an im- statutory notices issued by direction of the heads of Staff divisions, portant mistake in mathematical calculations, his decision, based on an after conferences with the taxpayers. The remainder of the petitions agreement with the taxpayer, will not be disturbed. In the absence were filed almost entirely in response to statutory notices issued on the initiative of the internal revenue agents in charge. In more than REPORT OF COMMISSIONER OF INTERNAL REVENUE 44 REPORT OF COMMISSIONER OF INTERNAL REVENUE 45 one-eighth of such cases were ultimately submitted to the Board for two-fifths of these cases the taxpayers had conferred with representa- decision. tives of the internal revenue agents in charge but had made no request for consideration by the Staff; in another two-fifths they had not asked In pursuance of the Bureau's broad policy of settling tax disputes for conference in either the agents' offices or the Staff divisions, at the earliest possible stage, Staff consideration is generally available although afforded opportunities for such conferences; and in a little less before the issuance of a statutory notice, but the taxpayer is under no compulsion to confer with the Staff at that stage. If he prefers, he than one-fifth, jeopardy notices were issued without any opportunity may permit a statutory notice to be issued and may file a petition to for conference. With rare exceptions, conferences are not offered to taxpayers in the Board without conference either in the agent's office or in the docketed cases that have been fully considered by the Technical Staff division, or he may confer with the agents but not with the Staff. However, statistics for the fiscal year ended June 30, 1941, show that a Staff in nondocketed status. Instead, such cases are promptly referred to the division counsel, for defense of the Commissioner's large majority of the taxpayers who did not accept the findings of the determinations before the Board. However, in cases originally re- internal revenue agents in charge preferred to discuss their cases with the Staff as promptly as possible, without first filing petitions with ceived by the Staff in docketed status the head of the Staff division the Board. customarily invites the taxpayer to a conference as soon as practicable after the petition has been answered by the division counsel. In the The facilities offered by the Technical Staff for the settlement of fiscal year ended June 30, 1941, such cases constituted a little less than disputed tax liabilities may be summarized as follows: Every taxpayer one-fourth of the total number received by the Staff in docketed status who does not accept the findings of an internal revenue agent in and nondocketed status combined (those coming back in docketed charge as to his tax liability is given full opportunity to discuss his status after Staff consideration at a prior stage being counted only case exhaustively before an experienced conferee who has not previously once). Over two-thirds of such cases were settled on original con- considered the issues and who has authority to make a final decision, sideration by the Staff. The remainder, in which conferences could subject only to the approval of superior officers in the same field di- not be arranged or agreements could not be reached after conference, vision, who will themselves grant the taxpayer a hearing if they disap- were referred to counsel for the Staff divisions, for defense before the prove a proposal of settlement accepted by the conferee. Whether the case is considered before or after petition to the Board, the•settle- Board. Cases referred to counsel for defense are not ordinarily reconsidered ment procedure is the same, except that the concurrence of counsel is for settlement except at the suggestion of counsel or at the request of required in cases settled after petition. If any case cannot be satisfac- torily settled by these steps, the Commissioner's determination of the the taxpayer. Nevertheless, in the fiscal year ended June 30, 1941, taxpayer's liability is defended before the Board by the counsel for the settlements on reconsideration numbered nearly 45 percent of the Staff division. docketed cases not settled on original consideration (including cases in which the Staff directed statutory notices after consideration with- In the case of deficiencies found by collectors of internal revenue, out agreement in nondocketed status). Nearly five-sixths of these where, after protest, the taxpayer and collector are unable to agree, settlements were effected after the Board had placed the cases on trial the protest will be referred to the internal revenue agent in charge for calendars for hearing at an early date, so that prompt and decisive consideration. Thereafter the same procedure applies as in protested cases originating in the offices of the agents in charge. action had become necessary. A considerable number of dockets were Field operations.—The also settled at the same stage on original consideration, owing to the work of the Staff field divisions falls into two principal classifications: (1) income, profits, estate, and gift tax taxpayers' failure to respond, up to that time, to the Staff's invitation to discuss settlement. However, settlement of such belated cases cases not before the United States Board of Tax Appeals, including is often seriously impeded by shortage of time. In all, about 55 cases in the pre-90-day status, cases in the 90-day status, and cases percent of the cases disposed of after being set for hearing were settled involving overassessments and claims; and (2) cases docketed by the United States Board of Tax Appeals. This work, under the decen- by agreement, and another 2 percent were closed by the taxpayers' tralized plan in operation throughout the country for the fiscal years failure to prosecute. So far as practicable, all cases taken up for reconsideration are ended June 30, 1940 and 1941, covers substantially all of the settle- ment activities formerly conducted by the various agencies of the assigned to the same conferees by whom they were originally handled, in order to avoid encouraging a practice of withholding agreements in Bureau in Washington in income, profits, estate, and gift tax cases. The statistical data reflecting the work of the Technical Staff (see the hope of reopening cases with different conferees. The counsel for table 93 on page 176) are divided in general into two parts: (1) the the Staff divisions are not vested with authority to settle cases referred to them for defense, although their concurrence is required in all record of work accomplished and results obtained on contested cases in a nondocketed status; and (2) the record of work done and results settlements of docketed cases. If an agreement reached with a Staff conferee is disapproved by a obtained on cases docketed by the Board. These figures are based superior officer, the taxpayer is accorded the privilege of conferring upon records maintained in the Staff field offices and are taken from the regular monthly reports prepared by those offices and compiled with that officer and endeavoring to reach a settlement with him. In from the records so kept. the fiscal year ended June 30, 1941, the various settlement procedures were successful in disposing of nearly seven-eighths of all the cases At the beginning of the fiscal year 1941 there were on hand 3,487 coming within the jurisdiction of the Technical Staff, so that about contested nondocketed cases awaiting Staff action and 1,556 such 46 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 47 cases awaiting action by taxpayers on statutory deficiency notices During the fiscal year coordinators of the Washington office, includ- directed or sustained by the Staff, or a total of 5,043 nondocketed ing the Head of the Staff, made a total of 52 visits of inspection to the cases on hand July 1, 1940. During the year, the Staff had net 37 field offices. Personal contacts were made with the technical men receipts (less transfers and returns without action to agents in charge) in order to insure a mutual understanding of the problems faced. of 6,551 such cases. Of these nondocketed cases, 4,614 were disposed Offices of internal revenue agents in charge were also visited in the of by agreed settlement; 934 cases were closed and the deficiencies course of these trips for discussion of mutual problems. assessed in full after issuance of the statutory notice, no petition General operating policies of the Technical Staff are determined in having been filed; 517 overassessment and claims cases were closed the Washington office both as to technical questions of general interest without agreement; and in 2,205 cases petitions were filed with the and as to matters of administrative practice. A conference of all Board. The number of nondocketed cases remaining on hand June Staff division heads and division counsel was held in Washington 30, 1941, was 3,324, including 2,646 awaiting Staff action and 678 during the month of March of this year for consideration and dis- awaiting action of taxpayers on directed statutory notices. The cussion of these matters. Records are maintained for reference and inventory of nondocketed cases was reduced during the fiscal year control purposes and reports are assembled and summarized in 1941 by 1,719 cases. The amount of taxes and penalties involved Washington. Necessary details and transfers of personnel are and results obtained in the nondocketed cases handled by the Staff arranged by the Washington headquarters office. are shown in table 93 on page 176. Compromises, extensions of time, and closing agreements.—The 10 With respect to docketed cases, 4,355 dockets were on hand July 1, field divisions of the Technical Staff also consider offers in compromise 1940, and net receipts during the fiscal year were 4,731. There were of liability in income and profits tax and certain other classes of cases, 3,072 dockets disposed of by stipulation, 239 were dismissed by the except where criminal prosecution, receivership or other court proceed- Board, and 1,522 were submitted to the Board by trial on the merits. ing, or delinquency penalties only may be involved. The head of each On June 30, 1941, 4,253 dockets were on hand, representing a decrease division is authorized to reject finally an offer in compromise or to in inventory during the year of 102 dockets. Details of the taxes recommend its acceptance by the Commissioner. All rejections are and penalties involved and results of Staff action in the docketed post reviewed by a central compromise group in the Washington head- cases handled during the year are set out in table 93 on page 177. quarters office of the Staff. This central group assists in the deter- Staff records show that during the fiscal year ended June 30, 1941, mination of operating policies in compromise matters, and in the co- the Staff field divisions directed the issuance of 2,278 statutory ordination of field procedure in compromise cases. notices of deficiency. There were on hand July 1, 1940, 609 compromise cases; 1,233 cases Petitions were filed with the Board during the fiscal year in 2,205 were received during the year, and 1,197 disposed of, as follows: Accepted, 504; rejected, 520; withdrawn, 133; and transferred, 40. cases which had been considered by the Staff prior to such filing. Also, Staff records show that of the cases on which the Staff directed The number of compromise cases on hand June 30, 1941, was 645. or sustained the statutory notice, 32.3 percent were not petitioned to The Washington office of the Staff also considers applications for the Board. extensions of time within which to pay income taxes and reviews for Coordination of field activities.—Under the decentralized plan, the the Commissioner final closing agreements executed pursuant to sec- Washington headquarters office of the Staff under the direction of the tion 3760 of the Internal Revenue Code. There was 1 extension of Commissioner performs those supervisory functions necessary to the time case on hand July 1, 1940; 187 were received and 186 disposed maintenance of uniformity in procedure and consistency in treatment of, leaving 2 cases on hand June 30, 1941. With respect to closing of taxpayers by all of the 10 field divisions. This central group in agreement cases, there were 60 on hand for review at the beginning of Washington is responsible to the Commissioner, through the Head of the year; 507 were received and 488 disposed of, leaving a balance on the Staff, and consists of three coordinators, each with one technical hand June 30, 1941, of 79 cases. advisor as chief assistant and a number of technical employees as general assistants. This group is charged with the work of (a) OFFICE OF THE CHIEF COUNSEL originating and improving procedure in the handling and control of The activities of the office of the Chief Counsel for the Bureau of cases in the field divisions, (b) coordinating Staff procedure with the clarifying Bureau policies Internal Revenue include the defense of all Federal tax cases appealed other units and offices of the Bureau, (c) to the United States Board of Tax Appeals; the review of refunds, on questions not fully covered by Bureau regulations and rulings or visiting the field divisions and credits, and abatements in excess of $20,000; consideration of various Board and court decisions, and (d) administrative and internal-revenue tax matters referred to that office offices for the purpose of personally inspecting the work in progress by the Secretary, the Under Secretary, an Assistant Secretary of the and discussing problems which apply to the field divisions generally. Treasury, the General Counsel for the Department of the Treasury, The Washington headquarters office post reviews all decisions ren- the Commissioner, the Assistant to the Commissioner, the heads of dered by Staff field divisions, including not only cases settled but also units of the Bureau, collectors of internal revenue, and other branches those cases in which no agreement was reached. This post review of the Department. They include also the preparation, at the request work enables the coordinators to analyze carefully the field operations of the Department of Justice or of the United States attorneys, of data and to suggest changes and corrections for guidance in the handling of for use in the prosecution or defense of tax cases (civil and criminal) in future cases with a view to uniformity in tax administration. CO~lMlSSroNER RI'JY-E~U~; 48 REPOR1' OF OF ]);TEHN.\L PloJPOHT OF COlVL\lISSlOXEU OF 1l';'l'ERKAL HEYEl\UE 49

cas~s; suit, unci eompiinne(' with reqlJ€'sts fot ussistunce in such ond the In IJw 5,7:32 el,lSC'S dosrd J'clllLing to hnnkTuptcy find l'N'civ(>rship, prepnrntion, revision, imd review of r<.'gulntions, Tronsury deeisions JlliJn<.'ogrnph~, prn~ clil ims wpTe filed in UlC nmollnt of S5,lOo,261, find tho sum of anel rrJIings for the guidmwe of the ofIiccrs and ~ R('n~nue S1.71 i ,filS was <:ollccted. . . pIo}'cc!'. of the BUrt'nu of Intpl'lIul nml ot11l.'I'5 cOJlccrn('d. . During: t.he ~ISl'lll yell,!" 4,29, nc:\' b'lJ.,krUptcy nn~ rc(~Clverslllp Th(· o{flC'e is di\~jd<.'d into scv('n dhTisiolls, viz, Appl"uls, Civil, Interprc_ 'l-'('S wen" rec:mve<1, and 362 ellS('S III wlud, t.ux was ul\'olvpd were t,ati\1u, PCLHl1, Rpview, Legislntion llUd Rl"gnlu\,iolls, and Alcohol Tnx. cOJllpnnie~ c,'1:'(:d in which dw debtor we're originully in\"olved in Thf' Chief Counsel's cOlillniu,('e. eOllsist,ing of thn'e UWIIl bel"S I.itlH'r ( reoJ'O'fllllzI1tlOll,. . llITongl'IllCnt, 01' rea 1 property arruTlgemen t serves in l1Jl lldvisory ('npHeity to tlie Chid Co"lll1sd, Assisttlnt Chief \rocccdin<'s'" hut. IntC'r went into liqtlidllt,iotl, Tlw 7 bnnkruptcy COIl11sel, gOlw1"ui llssisinnts, lind spreial nssist-unts, who refer to the ~ll';I'S fineI"" 13 rece.ivership el~ses .which were eliminnted were f~und commit,t,cr~ e!1s<'s from liB divisions of the office. The committee tn be jnvoln~d 1.1] l'CorgaOlzlltlon und llrrangement procecdlTlgs, consid('r:=; th('8c Cllses lind mnk('$ wTiUen rpcommelJdntions as to their f(':;p(,ct,iveIy. .. ~ ~. .. proper disposition. The commitleo is nlso charged with the liunl There were pcndmg dUl'lng the ypnr 15,/3, reorgillllznt,loll, nrrn.ngc-­ n>\'i~'w of enscs involving comprorniscf.; Hnd closing- llg-!'('l'llIeuts pr(~violls h~ing ~rllt. hi~ mt'nt., bllukrnpt.cy, nnd receivership cases.. Of thes;., cases, 6,718 to t.heir to the SccrN,nry of t.110 Trenslll'Y fol' were elosf'd \Vlt,h 11 totnl tSlX collected of $4,531,129, Ihere nrc now llpprovnl. AI, lobe beginning of the fiscnl YC'tlr 1041 the ('ommith~e PI~lHliI1g 8.62G Cllses...... Cfl!,;('~; hnd on hand 63 ,it, rcceiv('(.l 2,072 nud closed 2,115, leilying ApPEALS DIVISION.-Tlus dl\'JSlon hns chnl'go of uU CllS(>·'S mvolvtng 20 <:ases p<'lldillg nt, \;lw"dose of the fiscal yeur. inc-ome, exe(~ss profits, lmjllst, cnrichml'nt, estn,te, nnd gift tax('s TI~o t,h~ H(·organiz!\tion. SeeLic!ll is cl':1I'.ged with dlll,y of prol('(it,ing pc~ding Stilt~s of 'I'll-X Counsd ~ll}d beforc the .United Board. APlwuls, t,he mtCl'C'sts C'll! IIns of the tJ nilI'd St,n tes 1Il bunkrllpLcy uud sS!'1lgned to t.he vunous fi0ld offICI'S, w1l1011 won~ Cfen ted undor the l'eccivership proecedings, indllding- pnrLieulurly proceed ings insti t uted dccclltrnlization program of tho BureMI of Internal HE'vcl1Iw, propare under seeLioJls 77, nB, Chapters X llud XV of the NnlionnI BllIlk­ answers to pctit,ions fikd with tbe Boarcl of Tnx Appenls and IHlvise ruplcy Act, ilnd HITtlng-ernent proceedings under Chapters Xl, XII, and tht' various StnfT divisions upon legllI qlwstions tU'ising in the delorm­ XIII of t,he Act. iDittion of income, profits, estate, and gift tax liabilitv. All proposed S('ttlem('nts are concl\lTed in bv counsel. Counsel !llso IUlVe exclusive Nu /libel' of cm·7ifo·tlfe reor(Jal),i zalinn (} ",I tlrrtl1llicmetd (;a.~es h()7/dled d'~ri,.g tM rppresenL .fi~c"l Ill''!r 19/d lluthority to the Corllmissiollcr of Intel1lnl Revenue in Lbe defense of uLl cases set. for hC'llring before the Board of Tax Appeals, Cascsprnrlillg-on .11Jly I. [!)4Q •• ' ._ .• ' _ 2.369 New ca,;w; reccived during thea1 yeaL • . J. :m5 The division has immediate chargo of nIl-cases involving refunds of amounL', collectcd under the AgriculLlU'flI .&djustment Act pending a. 764 bl'forr the United Stale's Processing Tnx 13o11,1'd of Hcview. It Cnf<('s rlj:;p().~l'd of: prf'par('s lI.Il pkndings in snch cnsC's and i1pp0l),l'S fol' and represents C'ls['r; d().~()r1 ______-­ 066 Cw,,,oIJdnted_. ._ _ ._ • __ • . __ ._. _. the Commissioner of Inh'rnnl Hev('IJue nt t,he trial t,]um!Of. In bl\[lknlpk~- rt.'e()i\'(~rshjJl. ~ ~ddition, the cliYisioIl hili:; t,he sllrne jurisdiction, duties, nnd act,iviLics Clinng-i,d to or • __ - __ ._ e'_ -- 364 " Tran~fl,rred to ot,l1('r l:wctioIlS . ••__ ------. -- 5 In matters im-olyjng Titks III, IV finu VII of the H(~\'enue Act of I. :~:i9 1936 IlS hnve tlw Civil, lntcrpret,ntivc, Legislation und RegulnLions, ~= and .Revil':v Divisions l1lH1 the Reorganization, Bllnkruptcy, nnd Clt,;e"pelldjllg.J\lnC~O,l!)4L 0 ._ 2.,J25 RecOlverslnp Sect,ion wit.h r('spl'ct to quest.ions involving incomc. cX;~s~ pr~)f~t~, tltXr~s, In 287 0 r 1,110 corpol'l1 tc l'f'orgllnizll t.ion easC's closed during tile yC'llf, en,pitai stock, estate, gift., flncl miscelll1llC01.lS ] IllS dlnslon !llso lws n. gcnel'fll !,lIpPl'visioll of tht~ prepitrfit,ion of clHims were filed in tho amollnt of $0.62:3,.509, ami were settll·d fOf ~ontt'llts $2,u;J[j,042. t,be. of 1,11e records on r(>view in nll cnses wherein are filed r(~view In 3M) of t,hC' arrllllgC'menC ('nsf'S elosl'd during the )"1'111', claims p('htlous f<:l'. by the Unjtcd Stn,tf's Oircuit Court.s of Appcnb of finnl dpcIslons of eit,ber th(~ Unit,ecl Stntcs BOilnl of Tas APPOllls or were filed ill \.hc nmOllllL of $249.479, und Wf'I'f' 5ettI('1l fol' $15S,4119, g~' Pl'f;l:~~'.ssing I~, ~uch pro.ceediTl~s, III addit,ion to t1l('>'e, tllf'J'(' \Vcre' 32~~ <;uses c!osC'd in which no tftX Tnx llonrd of Revi('\:. where t.lw c1l1ims W(le() filod, il~ llI~IJ:S~l_?~er of In.ternl1l R('venue IS pCI.lilOllel', tIllS dut,y IS pOJ'f~)rm<;d t11( rh\ilslon suhJcct to ll.pprovlll by the DCpilrtlllcnt of Just,ICC; m ctr~,·., ,I\'umb(!1' of bOllkr"7'/C'/ owl ,.cce;v6·r.'j,;p elos/:d ,J"r;lI!! tlil: !tnl/' cUS\''''-th'" wll"'"... e ~ t ,HXpil;\'f'l' ...'IS pC'tltloner, t 1HJ (IVISIOnI'" IIllS soIe ('IHuge 0 f Ca"cs pnnrlinJ.( .Jnl.\' J. l\),llL __ ------­ 7.3101 \ pr('lHll'i\ t.JOn of tlJe record. :\l'\\, CI.\.'' pl'W!iUP; .JIIIIC 30. JtI·IJ n, 201 50 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 51 prepares recommendations for or against the institution of suits in mendations for prosecution have been made to the Bureau or by the connection with claims of the Government against taxpayers, trans- Bureau to the Department of Justice, and prepares opinions construing ferees, bonding companies, and others; and, when suits are recom- the criminal and percentage penalty statutes. It also prepares mended, prepares statements for the Department of Justice similar opinions as to whether cases closed by agreement under section 606 to those in actions brought by taxpayers. Stipulations of facts for of the Revenue Act of 1928, and similar provisions of other Revenue the use of the Department of Justice and for submission to the courts Acts and the Internal Revenue Code, should be reopened because of in actions in the district courts and in the Court of Claims are ex- "fraud or malfeasance, or misrepresentation of a material fact"; and amined and approved, modified, disapproved, or new stipulations considers claims for reward under section 3463 of the Revised Statutes prepared; and the division makes recommendations for or against an or section 3792 of the Internal Revenue Code. Whenever requested appeal from adverse judgments of district courts and for or against by the Department of Justice, an attorney from this division assists applications to the Supreme Court for writs of certiorari in cases of in the prosecution of criminal cases. adverse decisions rendered by the circuit courts of appeals and the At the beginning of the fiscal year, 1,441 cases were pending in the Court of Claims. The division makes recommendations for or against Penal Division. New cases in the number of 958 were received and acceptance of offers submitted for settlement or compromise of cases 879 cases disposed of during the year, leaving 1,520 cases pending on pending in court. June 30, 1941, a net increase of 79. It handles all cases in which liens for taxes are involved in mort- Formal claims for reward for information relative to violations of gage foreclosure actions pending in Federal and State courts. The internal revenue laws were filed and disposed of during the year division considers all applications for the release of Federal tax liens ended June 30, 1941, as follows• Pending July 1, 1940, 533; presented and the discharge of property for such liens which are permissible or reopened during year, 265 (including 37 informal claims converted under section 3186 of the Revised Statutes as amended by section to formal claims); disposed of during year, 271; pending June 30, 613 of the Revenue Act of 1928 and section 509 of the Revenue Act 1941, 527. Of the 271 claims disposed of, 184 were rejected, and 87 of 1934. were allowed in a total sum of $57,936, all of which were paid during Compromise Section,.—The prosecution of claims filed by collectors the fiscal year. The 527 claims pending are awaiting the closing of (a) against the estates of deceased taxpayers, (b) against insolvent the tax cases to which they relate, the receipt of reports from the banks, and (c) in liquidation proceedings, including assignments for field officers of the Bureau who are investigating the claims, or ad- the benefit of creditors, is handled by the Compromise Section. At ministrative action in Washington There were also 119 informal the request of the Department of Justice, this section assists in trials claims disposed of during the fiscal year (including 37 informal claims involving the above types of claims. converted to formal claims), which left 116 informal claims pending. INTERPRETATIVE DIVISION.—The functions of this division consist REVIEW DIVISION.—This division reviews overassessments of of: the preparation of letters and memoranda for the signature of income, excess profits, war profits, estate, gift, and miscellaneous taxes the head of the division, the Chief Counsel, or the Commissioner, proposed for allowance (also deficiencies when coupled with over- interpreting internal revenue statutes, where so requested by the assessments) where the amount of the overassessments in any case administrative branches and units of the Bureau of Internal Revenue exceeds $20,000, and proposed refunds or credits of any tax in excess or by other divisions of the General Counsel's Office; the review of all of $20,000. It prepares the reports to the Joint Committee on correspondence for the signature of the Commissioner or of the Secre- Internal Revenue Taxation required by section 3777 of the Internal tary or of an official of his office, containing a ruling or opinion regard- Revenue Code, where the overpayments of income, excess profits, war ing internal revenue laws prepared in the administrative units of the profits, estate, or gift taxes exceed $75,000, and prepares public Bureau and routed through the Chief Counsel's office for approval; decisions where the overassessments exceed $20,000. It also examines assisting in the preparation and review of briefs to be filed with the and reviews special cases referred to it by the Chief Counsel for the United States Board of Tax Appeals in key cases; reviewing actions Bureau. on decisions; reviewing closing agreements covering proposed trans- LEGISLATION AND REGULATIONS DIVISION.—The regulations issued actions; editing material published in the Internal Revenue Bulletin•, under the internal revenue laws, including tax conventions with and the preparation of opinions and rulings in special cases assigned foreign countries, and including the profit-limiting provisions of the by the Chief Counsel. Act of March 27, 1934, as amended, relating to certain Army and Included in this division is the Digest Section, the functions of Navy construction contracts, and the reports on legislation introduced which are to preserve, digest, and make readily available to the in Congress affecting the internal revenue, except as they relate to members of the Chief Counsel's staff all opinions, rulings, and other taxes on alcoholic beverages, are prepared or reviewed in the division. documents which have been prepared or reviewed by the Chief In addition, this division considers suggestions for amendments of Counsel's office. and additions to the various internal revenue laws and prepares re- PENAL DIVISION.—The Penal Division deals with practically all ports thereon for the consideration of the Commissioner and the classes of internal revenue tax cases when criminal liability is alleged, General Counsel. It participates in the preparation of income tax including among others income and profits tax cases, miscellaneous forms and assists in the drafting of tax conventions. tax cases, and social security tax cases; considers offers in compromise ALCOHOL TAX DIVISION.—This division handles the legal work of liability where criminal proceedings have been instituted or recom- arising in connection with the administration and enforcement of the REPORT OF COMMISSIONER OF INTERNAL REVENUE 53 52 REPORT OF COMMISSIONER OF INTERNAL REVENUE sideration for appointment to various positions in the Treasury internal revenue liquor laws and the Federal Alcohol Administration Department and national defense agencies. Included in this number Act. The work includes the preparation of opinions and briefs were applications for appointment to the positions of revenue agents, relating to assessment, collection, abatement, and refund of liquor deputy collectors, and various other positions in the Internal Revenue taxes and penalties; compromise of civil and criminal liabilities; and Service. the remission or mitigation of forfeitures. This division prepares CONCLUSION citations to revoke industrial and denatured alcohol permits, conducts permit hearings, and reviews revocations records, also similar work Internal revenue collections exceeded by nearly two billion dollars in connection with the issuance, suspension, and revocation of permits the largest amount heretofore received in any fiscal year. In per- under the Federal Alcohol Administration Act. It assists' the De- forming this task, coupled with the administration of all of the pro- partment of Justice in connection with civil and criminal cases arising visions of the various internal revenue laws, it affords me pleasure to under the internal revenue liquor laws and the Federal. Alcohol state that I have continued to receive the wholehearted cooperation Administration Act; gives legal advice to the Deputy Commissioner of every branch of the Internal Revenue Service. of the Alcohol Tax Unit, district supervisors, and other officials on GUY T. HELVERING, questions involving interpretation or construction of said laws; and Commissioner of Internal Revenue. reviews all correspondence prepared in the Alcohol Tax Unit involving Hon. HENRY MORGENTHAU, Jr., legal questions. Work performed by this division, in Washington and in the field, Secretary of the Treasury. during the fiscal year included preparation of 7,312 memoranda, 342 briefs, 5,550 opinions, 3 parole cases, 269 libels, and 17 indictments. Review work included 6,788 case reports, 72 claims of over $5,000 each, and 7,586 compromise cases. In addition, 9 revocation cases were handled, and 909 petitions for remission or mitigation of forfeiture were examined and finally passed upon.

INTELLIGENCE UNIT The Intelligence Unit is principally concerned with the investiga- tion, in cooperation with revenue agents and deputy collectors, of cases involvmg alleged evasion of taxes; investigation of charges of a serious nature against employees in the Internal Revenue Service; investigation of applications of attorneys and agents to practice before the Treasury Department; and investigation of prospective appointees to the Service. During the fiscal year, 871 investigations were made of alleged evasion of income and miscellaneous taxes, resulting in the recom- mendation for prosecution in 239 cases involving 446 individuals. There were 192 individuals tried, of whom 156 were convicted and 36 acquitted. Investigations of these cases resulted in recommenda- tion for assessment of additional taxes and penalties totaling $33,810,- 418. There were 2,411 investigations of applications of attorneys and agents to practice before the Treasury Department, and 57 investiga- tions of charges against enrolled agents and attorneys. These investigations resulted in the disbarment of 14, reprimand of 2, suspension of 2, and the rejection of applications of 11. Five names were stricken from the rolls during the course of disbarment proceed- ings and two resignations were accepted "with prejudice." Investigations were made in 87 cases of charges against employees of the Bureau of Internal Revenue, resulting in the separation from the Service of 44 employees and the prosecution of 13, of whom 12 were convicted. There were 7,535 cases of miscellaneous character investigated, including investigations of a number of cases for the Bureau of Nar- cotics, the Customs Service, and investigations of persons under con- APPENDIX

STATISTICAL TABLES

55 REPORT OF COMMISSIONER OF INTERNAL REVENUE 57 56 REPORT OF COMMISSIONER OF INTERNAL REVENUE

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58 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 59

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68 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 69

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REPORT OF COMMISSIONER OF INTERNAL REVENUE' 93 92 REPORT OF COMMISSIONER OF INTERNAL REVENUE .,..,..m,..mccgem...... ,,moem.c» 9' 99

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98 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF. COMMISSIONER OF INTERNAL REVENUE. 99 L LE ' az 45 n136 LE E 07 ' 77 75 82 45

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IS ' 1 6 39 81 33 90 21 - 42 ..4 .1247122 25 25 90 94

59 3 0 542t)] 86 SR

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REPORT OF COMMISSIONER OF INTERNAL REVENUE 104 REPORT OF COMMISSIONER OF INTERNAL REVENUE 105

years ended June 30, 1940 and TABLE 5.--Summary of internal-revenue collections, years ended June 30, 1940 and TABLE 5. —Summary of internal-revenue collections, 1941, by sources—Continued 1941, by sources

Source Increase or Increase or 1940 1941 decrease (—) Source 1940 1941 decrease (—)

Stamp taxes (title VIII, Revenue Act of 1926, as Income, excess-profits, and unjust enrichment amended): taxes' Bonds of indebtedness, issues of capital stock, Corporation income taxes $1, 120, 581, 550, 75 1 $1,851,987,990.58 $731, 406,939. 83 deeds of conveyance, etc $18, 145,227. 99 2 $22,072,503.40 $3,927,275.46 Individual income taxes 982, 017,376. 17 , 1,417,655,126.59 435,637, 750.12 Capital stock and similar interest sales or transfers 15, 527, 950. 19 2 12,176,496.92 —3,351,953.27 Total income taxes 2,102, 598,926. 92 1 3,269,643,117.17 1, 167. 044, 190. 25 Sales of produce (future delivery) (repealed Excess-profits taxes—declared value 18,474, 201. 83 1 28,076,284.66 9, 602, 082.83 July I, 1938) 92.99 92. 99 Excess-profits taxes—second Revenue Act of Playing cards 9, 814, 430. 40 2 4,756,586.50 —57,843.90 1940 161,308,967.23 164,308,967. 91 Silver bullion sales or transfers 193, 736.79 51,286.28 192,450. 51 Unjust enrichment taxes (title HI, Revenue Act of 1936) 8, 536, 178. 32 9,095,561.51 559,383. 19 Total 38, 681, 345. 32 39,056,966.09 375, 620 77 Total 2, 129, 609, 307. 07 3,471,123,930.57 1,341, 514,623. 50 Manufacturers' excise taxes: Lubricating oils 31, 232, 589. 30 8 38,220,844.40 33, 914, 102. 71 6, 988, 255. 10 Capital stock tax 132,738, 537.17 2 166,652,639.88 Gasoline 226, 186,669. 47 5 343,021,269.39 116,834, 599. 92 Estate tax 330,886,048. 91 2 355,194,033.49 24, 307, 989. 58 Tires and inner tubes 41, 555,488.81 Is 51,054,262.05 9,498, 773.24 Gift tax 29, 185, 118. 03 s 51,853,719.03 22, 678, 596.00 Automobile trucks 7, 866, 070. 51 "10,746,619.35 2,880, M8. 84 Other automobiles and motorcycles 59, 351, 198. 09 n 81,402,519.06 22,051,320. 97 Liquor taxes: Parts or accessories for automobiles 10, 629, 993.36 I 13,083,554.99 2, 453,561. 54 Distilled spirits (imported), excise tax 27, 879, 052.19 s 34,889,895.90 7, 015, 843.71 Electrical energy 42, 338, 501. 94 52 47,021,015.62 5 682, 513, 68 2 103, 893, 722. 20 Distilled spirits (domestic), excise tax 289, 857, 903.07 393,751,625.27 Radio sets, phonograph records, etc 6, 079, 914. 50 2 6,935,182.03 855, 267.53 Distilled spirits, rectification tax 11,854, 090.97 13,460,559.79 1, 606, 463.82 Mechanical refrigerators 9, 954, 398. 86 2 13,278,909.68 3, 324, 510. 82 Still or sparkling wines, cordials, etc. (import- Firearms, shells and cartridges 3, 707, 843.68 2 5,535,773.25 1,827,929. 57 ed), excise tax_ 649,925. 38 4 378,380.60 —271, 544.78 Pistols and revolvers 89, 508. 54 2 85,301.13 —4, 207.41 Still or sparkling wines, cordials, etc. (domes- Toilet preparations (perfumes, cosmetics, etc.) 7, 712,483. 96 2 6,661,922.05 —1,050, 561.91 tic), excise tax 7,410,006 71 4 11,045,066.02 3,635,059. 31 Toilet preparations (dentifrices, toilet soap, Brandy used for fortifying sweet wines (repeal- etc.) (repealed July 1, 1938) 95, 242.33 21,611.17 —23, 631.16 ed June 24, 1410) 1,306,774. 20 1,396,411.29 89;637.09 Matches, colored wooden stems 21, 848.81 95,140.82 73, 292.01 Rectifiers, retail and wholesale liquor dealers, Repealed taxes not listed above 315, 880.33 189,966.74 —125, 913.59 manufacturers of stills (special taxes) 6, 287, 110. 46 2 7,971,666.43 1,684,555.97 Stamps for distilled spirits intended for export 542. 50 537.30 Total 447, 087, 632.49 617,353,89151 170, 266, 259.16 Stamps for distilled spirits bottled in bond. i _ ' 1,089, 230. 00 1,039,267.64 —49, 962. 36 Container stamps (Liquor Taxing Act of 1934) 10, 135, 132. 99 10,123,000.68 —12, 132. 51 Miscellaneous taxes: Floor taxes (levies on tax-paid stocks, invento- Bituminous Coal Act of 1937 (effective June 21, ries of Jan. 12, 1934, July 1, 1938, and July 1, 1937) 4, 161, 663. 92 4,385.798.77 224, 134. 85 1940) 12, 200. 32 25,304,050.09 25, 291, 849. 77 Sugar Act of 1937 (effective Sept. 1, 1937)_ 68,145, 357.56 74,834,839.60 6, 689,482. 09 Fermented malt liquors 264, 579,036. 03 2 316,741,027.11 52,161, 991. M Telegraph, telephone, radio, and cable facilities 26, 367,945. 02 27,331,113 61 963, 168. 59 Brewers, retail and wholesale dealers in fer- Transportation of oil by pipe line II, 510, 646. 54 22 12,480,585.65 969, 939.11 3, 197, 151. 29 2 3,954,695.21 757, 543. 92 Leases of safe-deposit boxes 1, 988, 933. 79 2 2,215,898.10 226, 964.31 mented malt liquors (special taxes) Admissions to theaters, concerts, cabarets, Total 624, 253, 156. 11 820,056,178.33 195, 803, 022. 22' games etc 21,887,916. 00 42 70,963,094.06 49, 075, 178. 06 Club dues and Initiation fees 6,334,908.82 2 6,582,649.28 247, 740. 46 Tobacco taxes: Adulterated butter, including special taxes 13, 275. 31 8,959.72 —4,320.59 Cigars (large) 12, 897,763. 57 13,400.527.60 502, 764. 02 Renovated butter, including special taxes 7, 002.89 7,093.27 90.38 Cigars (small) 97, 685.79 113,969.87 16, 284. OS Filled cheese 155.24 6,366.97 6, 211. 73 Cigarettes (large) 16, 854. 96 2 12,059.83 —4,795.13. Mixed flour 6, 241.83 7,208.10 966.27 533, 042, 544. 34 s 616,745,234.31 83, 702, 689.97 Oleomargarine— Cigarettes (small) Snuff 6,798, 556. 53 6,899,820.62 101. 264. 09 Colored 30, 758. 77 49,762.38 19,003. 61 Tobacco, chewing and smoking 54,383,802. 79 54,927,764.18 543, 961. 39 Uncolored 759, 463. 51 850,755.25 91, 291. 74 Cigarette papers and tubes 1,279, 507. 90 1,431,315.35 151,807. 45 Special taxes 1,223,377.75 1,221,195.09 —2, 182. 66 Leaf dealer penalties, etc 1, 727. 71 11,814.90 10,087. 19 Narcotics (opium, coca leaves, and special Cigarette floor tax 4.534,384.21 4, 534, 384.21 taxes) 605, 395. 66 684,197.90 78,802. 24 Marihuana Tax Act of 1937 4, 702. 60 6,090.38 1,387. 78 608, 518, 443. 59 698,076,890.87 89, 558, 417. 28 Coconut, etc., oils processed (sec. 6021/2, Rev - Total enue Act of 1934, as amended) 22,744,354.47 23,185,936.03 441, 581.56 Crude petroleum processed, etc. (repealed I Rates of taxes were increased by Revenue Act of 1940 and Second Revenue Act of 1940. July 1, 1938) 555. 39 359.12 —196.27 2 Rates of taxes were increased 10 percent by the Revenue Act of 1940, effective July 1 1940. National Firearms Act 12,388. 68 15,897.50 3; 508. 82 Effective July 1, 1940, rates were increased from $2.25 to $3 per gallon and on brandy from $2 to $2.75 , Receipts from other miscellaneous sources, In- per gallon. eluding repealed taxes on checks, candy, Effective July 1, 1940. rates of taxes on wines were increased 20 percent. jewelry, soft drinks, and dividends 166, 738. 83 35,876.60 —130,862.23 & Effective July 1, 1940, the rate of tax on fermented malt liquors was increased from $5 to $6 per barrel. 4 Effective July 1, 1940. rates of taxes on cigarettes were increased from $3 to $3.25 per thousand on small. Total 165, 971, 782. 58 224,873,672.38 58,901,889.80 cigarettes and from $7.20 to $7.80 per thousand on large cigarettes. Employment taxes: Federal Insurance Contributions Act (2 per- cent of taxable wages) 605, 350, 175. 64 687, 327, 551. 09 81, 977, 375. 45 Federal Unemployment Tax Act (employ- ment of 8 or more) 106, 123, 156. 21 100,657,721. 18 —5,465, 434. 63 2 Rates of taxes were increased 10 percent by the Revenue Act of 1940, effective July , 1940. 2. Effective July 1, 1940, rates of taxes on capital stock transfers were increased approximately 20 percent. Effective July 1, 1940, tax on lubricating oil was increased from 4 cents psi/4201m to 41/2 cents. Effective July 1, 1940, tax on gasoline was increased from 1 cent per gallon to 11/2 cep s. '5 Effective July 1, 1940, tax on tires was increased from 214 cents per pound to 219 cents and the tax on inner tubes increased from 4 to 91/2 cents per pound. II Effective July 1, 1940, the tax on automobile trucks was increased from 2 to 21/2 percent. is Effective July 1, 1940, the tax on automobiles and motorcycles was increased from 3 to 31/2 percent. 22 Effective July 1, 1940, tax on electrical energy was increased from 3 to 31/2 percent. Effective July 1, 1940, tax on admissions was increased approximately 10 percent and amount of exemp- tion lowered. taxing all admissions of 21 cents or more. 22 Effective July 1, 1940, tax on transportation of oil by pipe line was increased from 4 to 41/2 percent. 423348-44--8

106 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 107

TABLE 5.—Nutnntary of internal-revenue collections, years ended June 30, 1940 and TABLE 7.—Internal-revenue tax on manufactured products from Philippine Islands, 1.941, by sources—Continued fiscal years 1940 and 1941, by objects of taxation

Increase or 1940 1941 Increase or 1940 . 1941 Source decrease (—) Articles taxed decrease (—)

Employment taxes—Continued. Distilled spirits, excise tax $176, 878.05 $177, 096.32 $218. 27 8.98 2.18 Carriers taxes (old-age benefits, 51i or 6 per- Brandy 4.80 cent of taxable compensation) $122, 047, 843.86 $137, 871, 187. 71 $15, 823, 544.05 Distilled spirits, rectification tax 4, 319.68 3, 097.94 —1, 221.74 Wines 1.13 .05 —1.08 Total 833, 520, 975.51 925, 856, 460.38 92.335, 484.87 Fermented malt liquors 4, 761.24 4, 171. 24 —590.00 Cigars. large: Grand total, all collections 5, 340, 452, 346.78 7, 370, 108, 377.86 2, 029, 656, 030.88 Class A 436,833. 66 356, 429.45 —80, 404.21 Class B 345.79 634.88 289.09 Class C 1, 607.33 1, 971. 64 902.79 Noce.—Collections for credit to trust accounts, included in the table above, were as follows: Class D 2, 831.89 825.99 —1, 994.11 Class E 1, 831. 88 3,825.99 1, 994. 11 Cigars, small 29.08 1940 1941 increase or Cigarettes, large 22.86 51.94 decrease (—) Cigarettes. small 2, 356.47 891.91 —1, 484.56 Manufactured tobacco 9. 77 2. 16 —7.61 Playing cards 102.80 14.40 —88.40 Corporation Income tax (Alaska Railways)_ $2, 931. 19 $2,448.48 —$482.71 Distilled spirits (domestic) 179, 316.37 179, 627.00 311. 69 Total 631, 739. 25 548,955.90 —82,783.35 Distilled spirits rectification tax 4, 666.85 3, 374.09 —1, 292.76 Wines (domestic) 52.78 9. 45 —43. 33 Fermented malt liquors 4, 761. 24 4. 174. 48 —586.76 Nom.—Under section 3343 of the Internal Revenue Code, the above receipts are covered into the Treasury Cigars (large) 443, 284.26 363, 622 96 —79, 661.30 of the United States to the credit of the treasurer of the Philippine Islands. The above amounts for the Cigarettes (large) 22.86 51.94 29. 08 fiscal year 1941 are exclusive of defense tax collections which were covered into the Treasury of the United Cigarettes (small) 2, 356.47 891.91 —1, 464. 56 Manufactured tobacco 9. 77 2.18 —7.61 States. Coconut oil 17,046, 520.47 18, 022, 751.63 976, 231. 16 102. 80 14.40 Playing cards —88. 40 TABLE 8.—Internal-revenue tax on manufactured products from Puerto Rico, fiscal Brandy 25.30 16.81 —8.49 Sugar 117. 70 117. 70 years 1940 and 1941, by objects of taxation Total trust fund collections (included above) 17, 684, OW. 36 18, 577, 103.07 893,053. 71 Increase or Articles taxed 1940 1941 decrease (—)

TABLE 8.—Total internal-revenue collections, years ended June 30, 1868 to 1941 Distilled spirits, excise tax $2, 512, 145. 56 $5, 522, 546.67 $3, 010, 401.11 Distilled spirits, rectification tax 251, 110. 01 412, 906.83 161, 706.82 Wines 51.65 11.24 —40.41 Year Amount Year Amount Year Amount Fermented malt liquors 5.00 9.60 4.60 Cigars, large: Class A 1, 972.81 1, 484.66 —488.14 illfillI - $41, 003, 192. 93 1890 $142, 594, 696.67 1917 $809, 393, 640.44 Class B 413.75 700. 50 -70.05 116, 965, 578. 26 1891 146,035, 415.97 1918 3, 698, 955, 820.93 Class C 2, 413. 75 2, 225.20 —164. 76 210, 855,864. 53 1892 153, 857, 544. 35 1919 3, 850, 150, 078. 56 Class D 23. 10 28.90 4.0 310, 120,448. 13 1893 161, 004, 989.67 1920 5, 407, 580,251.81 Cigarettes, large 1,452.96 1, 038.96 —414. 00 265, 064,938. 43 1894 147, 168, 449.70 1921 4, 695, 357, 061.95 Cigarettes, small 12, 418.34 11, 184. 94 —1, 117.70 190, 374, 925.59 1895 143, 246. 077. 75 1922 3, 197, 451,083.00 Sugar 117.70 117.70 159, 124, 126. 86 1898 146, 830, 615. 66 tom 2, 621, 745, 227. 57 184, 302, 828.34 1897 146, 619, 593.47 1924 2, 796, 179, 257.08 Total 2, 782, 361.72 5, 952, 275.30 3,169, 913.58 gggigg"M 143, 198, 322.10 1898 170, 866, 819.36 1025 2, 584, 140, 288.24 130, 890, 096.90 1899 273, 484, 573.44 1926 2, 835, 999, 892.19 113, 504,012. KO 1900 295, 316, 107. 57 1927 2,865, 683, 129. 91 Noxt—The above collections for the fiscal year 1941 include defense-tax collections levied under the 102, 191, 016.98 1901 306, 871, 669.42 1928 2, 790, 535, 537. 68 Revenue Act of 1940 which were credited to the Treasurer of the United States. Stamp sales for Puerto 110, 071, 515.00 1902 271, 867, 990. 25 1929 2, 939, 054, 375. 43 Rican tobacco and liquor manufacturers, exclusive of defense-tax collections, are deposited at San Juan to 116, 768. 096. 22 1903 230, 740, 925. 22 1930 3, 040, 145, 733. 17 the credit of the treasurer of Puerto Rico and consequently are not shown in other collection statements 118, 549, 230. 25 1904 232, 903, 781. 06 1931 2, 428, 228, 754. 22 herein, except that liquor taxes amounting to $2,858.45 in 1940 and $2,947.06 in 1941 were collected at the Treasury of the United States to the credit of the treasurer of ; i : 110,654, 163. 37 1905 234, 187, 978.37 1932 1, 557, 729,042. 64 ports of entry and were covered Into the 113,449, 621. 38 1906 249, 102, 738. 00 1933 1, 619, 839,224.30 Puerto Rico, under the act of Mar. 2, 1917 (sec_ 3360, Internal Revenue Code). 123, 981, 916. 10 1907 269, 664, 022. 85 1934 2, 672,230, 194. 52 illiiral 135, n9,912. 30 1908 251, 665, 950.04 1935 3, 299, 435, 572. 18 146, 523, 273. 72 1909 246, 212, 719. 22 1936 3, 620, W8, 381.09 144, 563, 344. 88 1910 289, 957, 221.16 1937 4, 653, 195, 315.28 121, 590,039. 83 1911 322, 526, 299. 73 1938 5, 658, 765, 314. 33 112, 421, 121. 07 1912 321, 615,894. 69 1939 5, 181, 573, 952. 58 116, 902, 889. 44 1913 344, 424, 453. 85 1940 5, 340, 452, 346.78 118, 837, 301. 06 1914 380, 008, 893. 96 1941 7, 370, 108, 377. 66 124, 326, 475. 32 1911 415, 681, 023.86

130, 894, 434. 20 1910 512, 723, 287.77 Total__- 97,953, 675, 229.45

I Period of 10 months, from Sept 1, 1862, the day on which the internal-revenue laws went into practical operation, to June 30, 1803. 108 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 109

INCOME TAX AUDIT TABLE 9.-Additional income tax assessments on the Commissioner's and collectors' lists made during the fiscal year 1941, by tax years-Continued TABLE R.-Additional income tax assessments on the Commissioner's and collectors' (c) ASSESSMENTS ON AGREEMENT lists made during the fiscal year 1941, by tax years WITHOUT 90-DAY LETTER

(a) TOTAL REGULAR AND JEOPARDY ASSESSMENTS Items Tax Interest Penalty Total

Items Tax Interest Penalty Total 1920 and prior 154 $147,237 $35, 329 $15, 200 $197, 766 1921 31 9, 180 6,524 3,095 18,799 1922 40 20,121 17,482 5,244 42,847 1923 1920 and prior 230 3288,867 546,411 $19, 773 3395,051 50 12,275 5,148 3,789 21,212 61 131, 525 9,174 5, 373 146,072 1924 53 17, 494 15,360 6,596 39,450 1921 1925 1922 55 102,325 95, 518 59,355 257, 198 77 77,085 67,658 9,889 154,632 73 324,088 304,450 19,152 647, 690 1926 81 90,546 31, 559 18,086 90, 191 1923 1927 1924 79 311,556 289,253 27,860 628,669 110 103,875 72, 552 20, 899 197, 326 104 542,970 478,444 40,854 1,062, 268 1923 122 510,835 331,013 34, 257 876,105 1925 1929 1926 116 701, 888 574,587 84, 799 1, 361, 274 155 1,056,605 675, 979 48, 678 1, 781, 262 162 934, 772 700,652 111,633 1, 747, 057 1930 185 2,363,128 1, 368, 811 62,850 3, 794, 789 1927 1931 1928 177 1,078, 199 728, 661 182,021 1, 982 881 217 1, 133, 959 577, 977 41, 983 1, 753.919 248 3, 091,964 1, 969, 316 161, 350 5, 222130 1932 242 1, 774,911 794,096 53,399 2,622,406 1929 1933 1930 281 3, 733,633 2, 132 835 185, 132 6, 051, 800 346 2 483, 354 1, 367,187 82, 564 4,933,105 302 1, 789, 367 898.272 102,840 2,790, 479 1934 811 4, 482 518 1, 511, 205 141, 407 6, 138,130 1931 1935 1932 380 3, 514. 127 1, 568, 233 116,703 5,199, 113 1, 595 7,096,416 1, 949, 773 175, 131 9,221,320 578 6,007, 92A 2, 386, 561 293, 253 8,687, 742 1936 5,346 12 225, 454 3, 986, 954 334,646 22, 547,054 1933 1937 1934 1,468 8,785,072 2,979, 316, 412. 676 12, 177.061 16,847 27, 289, 254 9,355, 121 369,634 32,014,009 2, 795 14, 379, 716 3,617,988 665,057 18,662, 781 1938 61,442 38,434, 809 3, 831, 984 198,087 42,464, 780 1935 1939 1936 7, 798 34, 768, 966 7,603, 529 799, 554 43, 172,049 130,373 42240,024 2,464, 321 82,952 50, 787, 297 20,239 40, 663, 181 6,605, 164 1,360,257 9 1940 3, 522 L 692 171 13,451 2,513 1, 709, 135 1937 8, 628, 592 1941 1938 65, 696 43, 706, 878 4,401,338 518,414 48, 626, 630 1 12 12 132,204 50, 261, 05 2,571,561 292,387 53,125, 353 1939 Total 1940 3, 564 2,126,035 15,386 10,056 2,151,477 221,800 156, 215,263 23,479,384 1,710,899 181,405, 646 1941 2 1,579 1, 579 236, 610 217, 245, 541 40,016,689 5,468,499 262, 730, 729 Total (d) ASSESSMENTS ON AGREEMENT AND DEFAULT AFTER ISSUANCE OF 90-DAY LETTER (0) TOTAL REGULAR ASSESSMENTS r" 1920 and prior 335,643 $6, 849 3419 $42,911 2,139 2,371 1,578 6,088 1920 and prior 201 $262,277 $79,968 $17, 594 $358,839 1921 """"' 34 11, 319 8,895 4, 673 24,887 1922 4.132 801 373 5,306 1921 2,409 1, 910 1, 102 5,421 1922 45 33, 324 25,956 9, 561 68,341 1923 84 318,645 304,450 17,843 640,938 1924 646 621 241 1,508 1923 12,049 10, 513 6,259 28.821 1924 68 306,748 284, 731 25,008 616,487 1925

496,006 22,183 976,466 1926 5 2,884 2, 380 1, 873 7.137

94 507,397 . 1925 )11 101 621, 161 507,536 27,744 1, 156,441 1927 21, 649 16,534 15, 509 53,692 1926 28,843 20,292 13,982 63,117 139 719,266 539, 569 85,367 1, 324, 202 1928 2° 1927 13,365 8,599 5,082 636, 771 120,830 1, 703,149 1929 . 27,046

157 945, 548 ° 1928 .` 35,440 18,866 64,188 2, 956,926 1, 983, 578 87,896 4,928, 390 1930 : 9,882

218 .' 1929 5,419 2,837 2,134 10,390 5, 799,994 1931 c' 254 3, 621, 167 2, 068, 371 110,456 ,'

1930 ,4 280 1, 771, 108 888,562 91, 144 2,750,814 1932 58,931 27,372 7,590 93,893 1931 7 117, 853 34, 915 - 200,547

7 )E 47,779 1932 352 3,402, 651 1, 515, 930 90, 262 5,008,843 1933 544 5, 648, 914 2, 239, 396 160,664 9,048,974 1934 1,091,043 366,369 90,184 1, 547, 596 1933 2, 387, 101 437,218 268,935 3,093, 254 1934 1, 389 8,233,440 2, 783, 2I9 268,737 11, 235,416 1935 §lin° 2, 675 13, 556, 218 3, 372, 249 488, 873 17,417,140 1936 3, 690, 348 796,575 115, 442 4, 602, 365 1935 4, 393, 233 728, 761 130, 061 5, 257,055 1936 7,640 27, 627, 233 8, 074, 736 474,442 34, 176,411 1937 20,029 37, 193,497 6,045.870 524,579 43, 763,946 1938 2, 596, 586 286,447 107, 857 2, 990, 890 1937 930,851 55,001 22,260 1,008,112 1938 65,459 41, 532, 756 4, 176, 399 313,344 46, 022, 499 1939 131,983 49, 267,887 2, 526,492 105, 336 51,899,665 1940 3, 749 113 3, 862 1939 1941 1940 3,528 1, 696,920 13,564 2,513 1, 712, 997 1 12 12 1941 Total 9, 305 15, 438,313 2,838, 208 835,678 19, 113,199 Total 235,255 200, 239,414 86,421,618 3, 028, 819 239,684,851 110 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 111

TABLE 9.-Additional income tax assessments on the Commissioner's and collectors' TABLE 9.-Additional income tax assessments on the Commissioner's and collectors' lists made during the fiscal year 1941, by tax years-Continued lists made during the fiscal year 1941, by tax years-Continued (e) ASSESSMENTS BASED UPON STIPULATION BEFORE THE BOARD OF TAX APPEALS (8) JEOPARDY ASSESSMENTS UNDER BANKRUPTCY AND DISSOLUTION PROCEDURE

Items Tax Interest Penalty Total Items Tax Interest Penalty Total

1920 and prior $12, 277 $5, 939 $1, 669 $19, 885 1920 and prior 1921 1921 1922 2. 366 591 2,957 1922 1923 268,765 262.168 898 531.831 1923 1924 254,301 236,355 1,927 492,583 1924 1925 397.897 350,809 3, 264 751,970 1925 1926 552, 218 452,541 3,778 1,008, 537 1926 $1,901 $1, 570 83,971 1927 451,887 343,541 3,692 799,120 1927 345 264 609 1928 261,408 184,067 21,009 466.484 1928 1,474 1, 040 2, 514 1929 993,759 607,093 25, 132 1, 625, 984 1929 2,633 1,700 4,333 1930 902,642 491,691 30, 344 1, 424, 677 1930 2,243 1,314 3,557 1931 425,103 203,820 25,632 654,555 1931 661 347 1,008 1932 579,122 227,871 5,899 812,892 1932 5,884 2,762 ,$1, 471 10, 117 1933 665.709 267, 710 40, 130 973,549 1933 467 192 346 1,005 1034 1, 488, 850 511,498 15, 418 2,015, 766 1934 6,531 2,212 1,603 10,346 1936 2, 757, 461 615,371 27,867 3, 400, 699 1935 210,957 67,500 844 279,301 1936 4, 413, 015 987,976 18,366 5, 419, 357 1936 6, 290, 812 1,336,301 9,832 7, 636, 995 1937 5, 010, 797 875. 392 16, 821 5, 903, 010 1937 990,146 154, 429 8, 438 1, 163, 013 1938 478, 108 55,064 7,234 540,406 1938 • 863, 510 99, 944 25, 790 989,194 1939 96,638 7,094 124 103,856 1939 565, 269 27, 247 76,046 668, 562 1940 1940 398,429 1,067 1, 873 401,369 1941 1941 Total 2,764 20,012, 323 6.686, 000 249,795 26, 948, 118 Total 359 9, 341, 262 1,897, 889 126,193 11,165, 344 Or) ASSESSMENTS MADE AFTER DECISION BY THE BOARD OF TAX APPEALS (i) FRAUD JEOPARDY ASSESSMENTS

1920 and prior $67, 120 $30,851 $306 $98.277 Items Tax Interest Penalty Total 1921 1922 6,705 7.173 3,353 17. 231 1923 35, 196 35,224 12, 054 82.479 1920 and prior $26,590 $7,443 $2,179 $36, 212 1921 120, 206 279 700 121, 185 1924 34, 307 32, 395 16,244 82,946 ( 4 69,001 70,062 49, 794 188, 857 1925 20, 366 17.926 2, 751 41,043 1922 ° 50,576 1923 ' 7 5, 493 1, 309 6, 752 1926 25,513 25,056 4,007 -12 1927 141,855 106,942 25,267 274,064 1924 9, 808 4, 522 2, 852 12, 182

' 35, 573 31, 538 18, 691 85, 802 1928 144,462 101,399 51,582 297,443 1925 4

78,826 65, 481 57.055 201,362 1929 893,197 591.907 8, 994 1, 494,098 1926 E4 1927 215, 161 160, 819 46,266 422,246 1930 319,957 189, 003 7, 380 516,340 2 1931 206,627 103,928 21,395 331,950 1928 :a 131,177 90,850 61, 191 283, 218

1929 131, 905 89, 038 73, 464 289, 407 1932 989,687 466.591 23, 374 1, 479, 652 AEA 1933 1, 381, 998 556, 720, 3,055 1, 941,773 1930 110, 223 63,150 74,676 ' 248,049 1934 1,168,029 394,167 ' 21,728 1,583,924 1931 17, 598 9, 363 11, 696 38,657

1932 105, 592 99, 591 24, 970 180, 153 1, 315, 240 369,887 16,740 1, 701, 867 cc

1935 : 1936 1, 298, 416 303, 231 5,988 1, 607, 635 1933 . 3g 358,547 146, 973 132, 243 637, 763 1937 495, 213 86,596 8,063 589, 872 1934 545, 101 193, 865 142, 336 881,302 1938 23, 253 3.004 166 26, 423 1935 612, 541 178, 239 175, 540 966, 320 1939 374 26 400 1936 850, 921 192, 492 315, 280 1,358, 693 1940 1937 2,479, 538 404,855 827, 290 3, 711, 633 1991 1938 1, 310, 612 124,995 179,330 1,614,937 1939 428, 249 17,872 111,005 557,126 Total 1, 386 8, 567, 515 3. 418. 026 232,447 12, 217, 988 1940 30, 686 765 5, 670 37,111 1941 1, 567 1, 567 (0) TOTAL JEOPARDY ASSESSMENTS Total 996 7. 669. 865 1, 897,182 2, 313, 487 11, 880, 534 Items Tax Interest Penalty Total TABLE 10.-Tax items appealed to the bnited &a es Board of Tax Appeals, fiscal year ended June 30, 194i 1920 and prior $26,590 $7,493 $2,179 $36, 212 1921 120,206 279 700 121, 185 1922 69, 001 70, 082 49, 794 188, 857 Items Tax Penalty Total 1923 5,443 1, 309 6, 752 1924 4, 808 4, 522 2, 852 12, 182 1925 35, 573 31, 538 18, 691 85, 802 1925 and prior 134 $751, 880 $105, 049 $856,929 1926 80, 727 67, 051 57, 055 254, 833 1926 22 146,486 69,537 216,023 1927 215, 506 161,083 46,266 422,855 1927 26 164, 664 62, 028 226, 692 1928 132, 651 91,890 61,191 285,732 1928 27 155, 741 58, 435 214, 176 1929 134, 538 85, 738 73,464 293,740 1929 39 403, 173 116, 843 520,016 1930 112,466 64,464 74, 676 251,606 1930 44 369,423 116, 557 485,981 1931 r 18,259 9,710 11, 696 39,665 1931 41 168,051 67.650 235,701 1932 111, 476 52, 353 26, 441 190, 270 1932 48 240,874 36, 944 277, 818 1933 359, 014 147, 165 132,589 638,768 1933 82 2, 504, 685 347, 448 2, 852,113 1934 551, 632 196, 077 143, 939 891,648 1934 214 13, 018, 409 264, 987 13, 2533, 396 1935 823,498 245, 739 176, 384 1, 215, 621 1935 600 23, 179, 178 766, 228 23, 945, 406 1936 7, 141, 733 1, 528, 793 325,112 8,995, 638 1936 1, 121 25, 909,380 863.311 26, 772, 691 1937 3, 469, 684 559,284 835, 678 4,864, 646 1937 1, 861 35,088, 523 1, 243, 939 36, 331, 962 1938 2, 174, 122 224,939 205,070 2, 604, 131 1938 1, 169 13, 279, 882 624,008 13, 903,890 1939 993, 518 45, 119 187, 051 1, 225, 688 1939 446 2, 388, 280 156,343 2,544,623 1940 429, 115 1, 822 7, 543 438,480 1940 17 159,359 87,999 227,358 1941 1, 567 1,567 1941

Total 1,355 17,011,127 3,595,071 2,439 680 23,045,878 Total 5.891 117. 927.968 4. 966. 806 122.894. 774 112 TABLE 11.Manufactured tob REPORT OFCOMMISSIONERINTERNALREVENUE

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118 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 119

,(TioTag..%23%;:*..WggYN'4.x=MOSI=b3.117 W 8E42522RIZE2ERt8888 25 'eini t ' pZ.gv;cie S -icicierZeimici oS -I.. RgagERgEE-mgagg.tEgag4 atEg-ggsaad LIW5.410SOItenn EHERHE ? 22 c8gi °E.82g 221 a Ocri 4.4 gg_ 5 5°, 2 4smi° °F.,°2ER 4m „05,,g m Em gg7WE:P >°4m°E pi

12HETAH21§-2151Mgiliige§Einern RREHER HEHRERHE effi HERERRE eeige lregee.;eeeee‘r 47.04 18554-4.r-'4184^5888'6°tc-44 ccom 817148°=4Stmcog R044 E688868g mmo 44 2E8'24882=5R22°E24E RE 10W-4.gg ;:4 g al^ t6E-- .it.i--gc's '.2.f ggSt•cr: aeg §peg bre Eg OE'ALEEE'

044'.i2° R E E E RR R HMV IE 8° EHREEE t Low---a. c-a, P2v,-2.2

az-gt,- RICT py-d48i445t 4 44 a 1 4, 2Ecm 8° cp.2 E t° % c 44mm°E2E E° tEE4m54c°'°°' mO REHEREE E40w0 .1°071 t ,op5.- pi c.i ci e t- a tOcve, :5P. ,e e .. A . a 2 "gtqW ciiu rE 22 E pE-.2g,s8-.”= .m946 .g. .. itrziglflgge -I 6,6,-gaa- 00comggomomecon °Lgt2IET.1 HEEHERE EEEHEEHERR REREEEERT911 tattEScerct28884 COLLECTION DIST MEM ggccipitipo-cp ee A: grsae° 11°02 `c.i O4rborici -e es.,--: e 't,ioff 'ce-t oti.er Rot".4 ci 6 'of ' co tS8"mt0 '°'-'"'° §'t 8°1°3° °8'°S'^ 44° add§ 04 c ccE"5 R IMEE4ER 4E4.00E4°, t:211 etige.re a-gtag..- zi t--::-- : g- n=q:= 04 11 3ac..a.trats. THAN ONE

ga.C10,1 , HERE E HE EERHER H EEREEH EIE HEEEEEE IEEE E !HEUER§ rolIgne ega e-reeeeee cipicepi gg seeweeprwr., g2gat.g1. g .:-ig g 4 g47,4 gr-lfgEgc6 4g 28°4 4E° OR 02264g2° goi,N 16o g4 ci -7a- a a eenn o.B,gjg.P105 p. HEEEEEEREEEHREEHERHEEREHEEHE EHREEEEEEREERFEEE ISING M IHEEEER asa..,.. 4mk.m

r„ SERIVJEWEgagagE EK MPR .HREfi -vain.4.-. p=gEfiRcgs ;a40.2glEgin;ii EgGon EgRaiEt

.aligpvj. . g4 g I-r 4.eg-r .6g 41-4 44 4gtg4a; CO -°. cmcnt, C at...se -e uag- .., ES T 0

0 C LS FOR STA OPA

go go C t C 14 0 6>'1 et. tz .0 cc>4. 4 - F g - al Co nq 4 z amgP"B: zegz-aiSt 44 t4 ;9.1,_ 00,0v gg-„g cl."9 4081eg :55,b4 Erg 's ---agE.gcozzzl p4 4° %tE44ggA=0,10° 41-1U121N.C.0egn e0 >9 Ft' gal C iggS204-Eitta;Pi§RuLIP'4°41 ER:Mte...,>W110 MtI CI OCU.411 4flaFTh o 8 g ...i.a6M oagama EiZAz,747.x.E., FEZZ4.gF.TP=i8ri:PE-gc22E.47a 33W3 120 -.• 0 0 O Z1 0 0 g .0 g 1 to. Et' O of ig-cs • dc Rf P• ti

ca) A o G 1 t3 a U .3 ' P O

P.

z 8 REPORT OFCOMMISSIONERINTERNALREVENUE '040 a m o o 0 0 0 "c3 3 P 5 0 o kr tER x° ii; igg 1%g 2ER trap 04.000 2E tg§ Adg gEss, 01 el c.Sg `88 mg re0 1 0 00 727 ; , 0 ,

8 C- CO e6 CO 0

ag teg.

fPg - RE s4 48 go GN as Ui and .v 8 Oi t2 c?, E am '42 it R! 12 tg crlo =4 1pg jf., mq 'i%' ag m 11E 1 Et 005 t u UT eg9 0, ;11 4 c714 Z' 2,154 gliG Pt g t1 coo ■ • AgE 'T 44: 0 t ,•-•1 . 0 a qy c„. 1g 7 1

R § g tt, I.

2, 1, 423348-41-9 • Tobacco used Cigars weighing not more than 3 pounds p 2, 1, er thousand REPORT OFCOMMISSIONERINTERNALREVENUE 7.,..5 ... ag msg

Er41 aas Removed w w e pin s At -a

M

E s

l l me

pom . On hand

na,na

- j j Jan. 1, 1940 Jan. 1, 1941 10 80 Tax-paid dur- ing 1940 W r o 2 ; 1' 4 4 % rgREEIgE , t

DISTRICT t '-' EEEEIEEEEERE IEREgEgEEEEE gqingtM First California 2.9R27".R2WMTR

Sixt 2 h California 454R10^gil

Di' ''w" SR25R ';' .4-7 4 8 c° R Fo

44 , Florida , ei4 t: First New Jersey RiPE re RREE Fifth New Jersey "Q. ERE r oz 4g Second New York s °' nn ° e ,-re Third New York 4ar 4 North Carolina "Q.' Ream Reamn :4

Eighteenth Ohio ,

n 8 ERE ° , Twenty-third Pennsylvania 2 s' ...ti4 A= A0 R ER 44 South Carolina ,. 0 W 4 a g

,, t.,

Virginia ° 8 ,si

-

1 1 68 9' 89 89 19 01'

Total, 1940 0 3 3 9 2 9' 68 I 8 £' 195, 413 99 134, 738, 339 14, 346, 928 6, 638, 151 332, 870 142, 101, 682 106, 576. 26

Total, 1939 1

230, 685 156, 939, 932 9, 084, 636 14, 346, 928 4, 770 152, 535, 050 114, 401. 29

'62 ne ne t t ' 592

3' 36 ZE S '

.001 .001

Increase 2

9 ' 3 31

21 ' 936

Z Z T 3 10 ' £69

1 1 01' 8 ' ILL

89£ , '2 38 9

Decrease 20'

L L YR

TOTALSFOR STATESC DMPRISING MOR N ONECOLL ' ECTIONDISTRICT 2 c .-,. e. g -8A

■

4

STA TE ,'

:-t22 14 E

Num ber Number Num ber Num ber Nu mber 92'

California .

' -7 '1 5 21

New Jersey 17, 914 17, 800 66'

R 1 ' 6 20 4

New York 617, 600 61, 210 30, 820 647, 990 52

417, 680 381, 606 258, 856 MO, 430

- -

, 3.9 pounds. 121 II 122 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 123 MC1[ 0811 8888.882888188 ! 2q 4 °2 -1!

8 4' 8'

MigggElggig :1 44 t q 01E3 DI F1 g 4 - 99

. . .. .

er Igt HMSO g rig g FT 40 r7g--gg i g gig :::- g

19 Iggts F,,t,: 25 p „ 8,7a.. ,. . 0 7 3. 0 M 94 333 6 ing n 71 -7 °lag g g 5, 15, 70,

At $ 4 ea e 2 34 dur 6 d i 039, 425, M a 0U, 4ME ?. §gPq 84

P.6- 464, 8, -p er I di88''17:g 488'8 5: ig .i. 72, .00 0 0.0 1

- ‘ • 180, eo 3 P Tax At $ T

- gaag 45 ou 362 d t g ta § `'' §§§§ U § 9

lc .

2 ....

3, ga2,3 3 y ve or

77, Om n 4 34 n 0 i AiE R mo tio ha exp 50, t 6 878,

F-' 3 0 Re g RD § e for 7, 7, 1 1 L82 08'

-EP ER§RPRr=§ R F 8 1 § ' 101 S t mor 1 E26' 4cri Sin n t■ niRA '-' ra § .., EC I no 3TE ° iVIt e n to .11. 4.4 hing ' ig ° 8 2 72 t gg-§tg 8 a 9 839 g.-7 tng § .. EU 'we 2 id-id' s

AA 7.= 1 g .1:91g1 .';iv, Fi 614, .. . 6' " 8..!1§;- ttes 1 01 CP- s ONE COLLECTION DISTRIC 313, 50 ' 1 'A 1 are N pan 71 80. 1 4

691 11:4 Cig IMPEREHE4 R PE PR uov teee4sesee-pae s 4x74 d - 24, 33,

88.4838 -rag.'848 ° 888 2 m 258, 8 4 bOL0 pme e e.-7 ...„ . g t 127,0 704, 4 c° - 371, 666, ',4- -I w s s g 9, 0, 8, me

2.1- 18 18

IL8 ' 976 747 876,

.e",b ilfl .fli Q a ra aaaax F, 4aa a Ecao§ IV a °•°'08 °cc -r .6 A•rw> 'ci cO g 8, e 04, ' : ''fla 8 o 32 962, 8 8' P.'S': s a

P 8 5, g e 9, e

4 8 23, 1

Egg g2N 7 3

t 74 ' 90 .1r0 2 86 :la Ea 2 061 8 2

F1 11 -i,-; 16, m 34, o Go COMPRISING MORE THA 50` - ' 5 5 m 0a, 2 o g'g 326, 9 2, 1, 0?,e e s- e-t a 9 g 82, . 0 i3n g

- .-- 29 2 a oLe ' TES -ze.gE

42 L,e) t 4 472 415 -1

EAR P. EMI m 696 ' ,Fi gg t i g, qg 4, :

414, r 56 599, Pi cc° :; , 9 . g 56, 99, 106, Z Z 0 P PI 0 6 99 95

FOR STA

I

. 44Q ,.°3 >E g - 541 e.5, › 4k TOTALS

.....„...... — . ”,ZgZc "4!

wo •100 000 OVI g 'IN Eli ■ IrC40.0,. ,C4MC4r-. *-t ,inc0 ..W 2 i- 0 1, cg gg

n. 94 28612a

In - 800-8 1 ness bus Ia — 7,i'se .83 ° 81711 t 0 Z 00i 4 im— °° 83 ;SI re. 0 0881W 4 P.:07 0p, 11 1 ama in f CI 6E - F du,g„ to,, zzg,,s 4..thca' gg A:4 5.0.8.- 11 ,Wn16111.stg,tr, E 71t5.4 CAT:Ctaf ,.7.E, 85 6z4 srsztg

124 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE' 125 L8 16E1 55 601301

S ASSAISq8A . 939' TABLE 19.-Leaf tobacco used in manufacturing cigars, cigarettes, and tobacco and I ?hitlari gl snuff, calendar years 1931 to 1940 1 I

; I I '''=4 -

Cigars Cigarettes Year Tobacco and Total 0

I snuff 8 940 7. 1

M Large 1 Small Large - Small

ogt '

er 40 ing 90 p At $ 0 r 8 ns Pounds Pounds Pounds Pounds Pounds Pounds d 4, du

n 1931 126, 611. 200 1, 016, 997 43, 171 329, 919,309 209, 812, 985 752, 403. 657 0 0 0 0 0

a 039, 36 20 1032 103, 233. 757 1, 059, 270 18, 347 299, 010, 925 285, 815, 510 690, 133, 809 id 29 15 60 44 2, 350 20 8 350 a 96 500 2, ber 1933 279, 875, 778 710, 668, 377 M

2 103, 953, 997 745,245 17,325 326, 076,032 9, 7. 2, 1, 2,

-p 16, 2 30, r 1934 110, 203. 292 910, 672 882,144 374, 500, 769 289, 024, 051 775, 529, 878 226, e 55 thous 775, 932, 051 p 1935 113.066, 319 675,804 14,050 399, 444, 333 262, 731, 465 Num At $ er Tax 1936 125, 875, 214 702,567 12,474 453, 314, 812 267, 461, 957 847, 367. 024 p

009 000 009 1937 127, 879, 843 773,417 18,699 979, 942, 665 269, 309, 344 872, 923, 968

ds

00 1938 118, 161, 858 589, 451 14,151 483, 826, 314 262. 710, 323 865, 302.097 n 5 T '929 ber § § 4 1 1939 253, 485, 999 885, 299, 201 ,i. ' § 268

7.)i 349 122, 071, 819 609, 278 24,9533 509, 107. 672 1, ou

v-0.0 ca m cm- g cr Ef IC 1940 126, 309, 121 525, 764 13, 864 535, 203, 981 260, 662, 967 922, 715, 697

scr, a 0 1 3 p Nu TR

in

t ! 1 The quantities given are unstemmed quivalent of all kinds o tobacco used. Stemmed lea and Wraps, 099 T 09 0021

0901 005 eRg .5 00 09 O

than etc., used in manufacturing have been converted to un temmed equivalent at the ratio of 3 pounds stemmed, ze lt 1 9 1 - ,:, tzcs 1 ,, 11

ot etc., to 4 pounds unstemm d. 0,

0, N DIS an .8 39 6 IP . 2 Does not include tobacco used in bonded manufacturing warehouses.

more ..zi4 N

go3- TIO 0- SS C TABLE

hing 20.-Production of manufactured tobacco, snuff, cigars, and cigarettes, 05 ig 0 LE

0 calendar years 1931 to 1940

L' L 300 80 900 El 000 65 t. ggeg 550 300 650 we t.i. ber 89 s 9, 7, 0, TOBACCO AND SNUFF 2, m 1 28, 5 CO te Lig 5 216, e, 30 1 ga t 0,!,,i- E 0 Nu are N 8 Year Plug Twist Fine cut Semi) Smoking Snuff Total O chewing 0 Cig tSESSSA SEER 790 05 a ,c-r-...., 740 AN 20, .S 48, Pounds Pounds Pounds Pounds Pounds Pounds Pounds gl 368,

1 1 etea'-rrit:ay 2 1931 76, 652, 810 6, 377, 436 4, 170, 275 61, 235, 195 182, 947, 238

TH 39, F54, 345 371, 237, 299 2, 0- , a 2, 4, 0 1932 61, 945. 173 4, 918, 034 3, 354. 471 50, 080, 201 190, 986, 528 35, 994, 337 347, 278, 744

61 HE 1933 OM 1 61, 361, 495 5,041, 990 3, 120, 427 44, 729, 472 EOL gll 191, 766, 382 36.098, 394 392, 113, 160 RE . ,„ s pun 1934 62, 759, 057 5,079, 904 2, 970, 421 49, 786, 387 193, 075, 426 36, 893, 903 395, 565, 998 O AwA gon° 1935 50, 588, 960 5, 609. 226 9, 683, 060 94. 005, 896 191. 750, 069 36, 095,140 342, 727, 851 aa I k/ 1936 59, 164, 521 6, 372, 164 5,068, 192 45, 342, 446 194,006, 958 38. 022. 225 347, 976, 506

G M 1937 58, 330, 801 6, 774, 192 4, 999, 260 95, 559, 419 187, 774, 329 37, 141. 208 340, 579, 204 e, 1938 54, 494, 646 5, 658,859 4, 572, 346 42, 775, 966 200, 693. 591 37. 173, 135 345,368 538 IN 1939 51, 262, 796 5, 732, 777 4, 701, 102 41,350, 992 202. 289, 113 37, 969, 933 S 866' 343, 306, 713 169 9 909' d tyzetio

10 ' 1940 48, 758, 919 5, 605, 287 4, 176, 369 42, 909, 979 205, 101, 032 37, 871.628 344, 423, 209

se 0 1 3 PRI u 3

o a e

7 CIGARS AND CIGARETTES g) 04 bacc tO COM g To 8E ‘.. o cq cv o 0 in OYL 8/9' 9, 4 Cigars C garettes 11 ' Z .4 Si cin-:i.a. '01 81 4,5 0 a e - lo El g Weighing Weighing Weighing not 2 121 Weighing more not more more than more than 3

than 3 pounds than 3 3 pounds

pounds per ' a per thousand pounds per per thousand thousand thousand s'S 3

• g 2 Number Number Number Number 1931 5,347 , 921,293 338, 996, 780 5,159, 6110 17, 064, 214, 494 1932 4, 382, 722, 918 278, 748, 580 3, 373, 577 06, 632, 433, 839 1933 4, 300, 094, 810 209, 514.620 2, 845, 705 14, 874, 217, 470 o e, 1934 4, 525, 780,081 221,976,561 88, 202, 405 29, 976, 333. 581 1935 4.685, 369, 674 177. 822, 178 2. 504, 490 39, 966, 179, 916 1936 5, 172, 278, 512 180, 005, 714 2, 457, 940 58, 893, 958, 304 mm s 1937 5, 303, 368, 834 198. 589, 972 3,066, 460 69, 969, 319, 880 T .5 a 1938 5, 014, 757.804 152, 989, 705 2,637, 530 71,686, 382, 671 IC TE yq 1939 5,197, 627, 088 159, 939, 932 4, 368, 790 80,666, 824,480 TR 1990 5, 235, 271, 076 134, 738, 339 2, 248, 740 89, 371, 258, 171 STA ‘! DIS U ia

NOTE-Compiled from statements of accounts prepared from manufacturers' inventories and monthly an ia

returns filed under the United States interns -revenue laws. For cigars produced in and removed for domes- k FS o lv k

r tic consumption from bonded manufacturing warehouses, see table 15. k sy ia 940 939 Yor lvan se 1 1 n ia

Yo a tts lina n Jersey l, l,

. Yor a k ta

ta ay w liforn w crease lv ky huse Caro h Pen In Decre To To Yor Ca d New Pennsy Ne

h d New lft nsy n sac t tuc t t h Ne h w r t hir Pen Ne Firs Twe Firs Seco T No Ken Mas Fift Six

REPORT OF COMMISSIONER OF INTERNAL REVENUE 126 REPORT OF COMMISSIONER OF. INTERNAL REVENUE 127 2228FF a 8R. FgAggg.!=.5Ii. 00001 0161 l 0 l g "asa 0 444 " 04.4 o F.,i g

ta ta

P A n 'Pe t to io

f 0 f to y t o t 0 t o F w O duc en 222,152 8 z 6E61

c ro MN:RW=22PS:: W 0 "4,0 51 o '4444 *0.04.zIri; 00 0 Percen n0 Per

A p O aa 22g • b R OW

On a 986' aa a o d e 0 ) GO ) or NAHEREMAR

0 a 269 + (— (

6 se

g P WAAAgAgAai 'Le+

181 se

F rea o Z Io ea ■114171TVVPM ion a dec t Incr

g o d 5 0 F

g tt 0 duc duce ro

,ARRAMITAIR 076

g ro

0 06 p

p F ar 81

filtiEt4AtA6,4:4 271, ig P. ing ,HREE-g 6 c Fingfg4-T;tgen-g 6 235,

bacco te hew

lggF:ggF: 5, w a g S a to

c ....., o p d reg

4 Z re

6 Scrap E- tu Agg . A ARAgeggil 088 6E61

066 fac Eg A iz ii6aggnAM 627, C) gagoega t z O i g og aa0NNO Ws,t10-4WilA 197, Manu 2 Z 0 aa 71+11 c.i. 5, 6 ^ N 141 -o (—) 62C-

U m OSB AU p 4+e-

m n°777-777;7 OSOIT

Z man :MARA Fgg022 IM„1 ers 1 Wo ON (+) I MA, "van P601 EFIE=.FFP, ap, tur g d 0 fac mg 595 ' wF 4 1 .4 0461 awg5!.,z4-gig3g

6 2

CV f manu w o X g rsrle., .4g 0Z

o° tl o Sara X Ua YIN N a -4 ber

;iE 10 o 0 626 E. gg 4 1 az Num Z N O 66 CP"

P E. RFE-.12:."01 C Z 8FAFFg X 8 4 g o FU z 6a w0 0w g 6 P-1 0z 04 0z N 6 CC E. 6 F 0 0 Eirg 0 g ds)

4 0 oun

)

0 0 (p s

F0 ds 5 OE 0 ar ig 6 un o F bacco

a Gra f c

0 .4 (p f to 6 t o u

Z A o t tp

a m u

F bacco

E tp Ou f to

0. Ou o t

d u

d g tp 6

m 0 0 Ou 0 000 000 00

0 000 000 000 000 000 F 0, 000 000, 000, 000,

a 000 0, 00 000, 500, 0 0 000, 000, 20, 4 000 000, 2, 4, 3, 5, 7, 10, °mo 000 l 500, 1, ta to s 000, 250, 000 to 000 to 00 to To 40, 000 to 000 to 0 000 000 to 000 to Fy 000 to 000 to der

2 er da F 000, 000, z 000, 000, 000, 000, 000, 500, z z Un 250, 500, 1, 2, 3, 4, 5, 7, 10, 20, Ov

128 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 129

TABLE 22.-Exportation in bond of manufactured tobacco, snuff, cigars, and TABLE 22.-Exportation in bond of manufactured tobacco, snuff, cigars, and cigarettes, etc. year ended June 30, 1941, by collection distric s cigarettes, etc., year ended June 30, 19-41, by collection districts-Continued TOBACCO AND SNUFF CIGARETTES WEIGHING NOT MORE THAN 3 POUNDS PER 1,000

Unaccounted Removed for Tax-paid or Unaccounted Unaccounted Removed for Tax-paid or Unaccounted District for July 1, exportation Exported returned to for July 1, District for Ju]y 1, exportation Exported returned to for July 1, ,1940 during year factory 1941 1940 during year factory 1941

Pounds Pounds Pounds Pound a Pounds Number Number Number Number Number First California 3, 567 2, 472 1, 095 First California 5, 590, 000 212,504,800 187, 354, 800 30, 740, 000 First Illinois 1, 787 11, 382 12, 010 56 1,103 Florida 100,000 68.985 168,985 Kentucky 175, 388 1, 337, 760 1, 329, 778 381 182,989 Kentucky 40,619, 600 202, 984, 100 252, 553, 300 188,000 80, 862, 400 Massachusetts 30 226 256 First Missouri 1, 270, 500 1, 270, 500 First Missouri 182, 646 867, 953 935, 371 58 115, 170 Fifth New Jersey 4, 677, 400 46, 444, 400 46, 403, 800 4, 628,000 Fifth New Jersey 108 108 First New York 230, 000 2,006, 800 1, 892, 000 344.800 First New York 2, 202 , 59 2,143 Second New York 790, 000 363, 000 1,143, 000 10.000 Second New York 454 124 330 North Carolina 19, 232, 520 1, 793, 338, 480 1, 745, 183, 380 1, 544,120 65, 843, 500 Third New York 577 9, 387 9, 964 First Pennsylvania 4,180, 000 30,409, 000 30, 109. 000 20, 000 9, 460.000 North Carolina - 524 305,101 290, 877 14, 748 Twelfth Pennsylvania 90, 000 2, 802, 500 2, 742, 500 150, 000 First Ohio 586 16,827 '15,305 2,108 Virginia 391, 962,800 6, 091, 308, 830 6, 092, 304, 330 7, 517, 000 383, 450, 300 Tenth Ohio 232 232 Twelfth Pennsylvania 4,384 3,479 905 Total 467, 472, 320 8, 473, 501, 395 8, 361, 215, 595 9, 269,120 570, 489, 000 Tennessee 597 43 640 Virginia 82,838 1, 378, 965 1, 343, 235 3,935 114, 633 West Virginia 93 1,985 1, 316 262 CIGARETTE PAPER BOOKS Total 445, 066 3, 940, 076 3, 945, 226 4, 430 435, 486 Number Number NuMber Number Number Connecticut 4, 408, 684 4,408, 684 PERIQUE TOBACCO, SCRAPS CUTTINGS, CLIPPINGS, SIFTINGS, ETC. Second New York 223, 800 123, 800 100, 000 North Carolina 381, 600 381, 600 Pounds Pounds Pounds Pounds Pounds Total 5, 014, 084 4,914, 084 10D, 000 Florida 220 220 Louisiana 316 22, 966 22, 653 629 91,490 93,939 2,909 Second New York 5,358 CIGARETTE TUBES Third New York 116, 271 118, 271 Tenth Ohio 23, 535 21, 480 2,055 9, 304 3, 766 5,531 First Pennsylvania Number Number Number Number Numb* Second New York 4, 000, 000 4, 000, OW Total 5, 674 263, 786 258, 329 11, 131

CIGARS WEIGHING MORE THAN 3 POUNDS PER 1,000 TABLE 23.-Withdrawal of manufactured tobacco, snuff, cigars, and cigarettes from factory in bond, for shipment or delivery as sea stores, fiscal year ended June 30, Number Number Number Number Number 149 1 First California 2, 500 2, 500 frith California 8, 500 6,000 2, 500 Florida 26,250 1, 872, 662 1, 664, 152 20,000 314,760 37,450 Unac- Louisiana 37,950 Withdrawn Delivered to Maryland 16, 000 16, 000 Class of product counted 6,100 4, 100 2,000 forl, 1J94 u loy from factory sea-stores Massachusetts during year warehouses First New Jersey 6, 700 139, 300 128, 000 18, 000 Fifth New Jersey 42, 500 1, 439, 900 1, 330, 100 15, 000 137, 300 First New York 82, 000 32, 000 50, 000 Third New York 2, 500 81,100 60,900 22,700 Tobacco and snuff pounds.. 519 50, 716 47, 701 Fourteenth New York 58, 500 46,000 12, 500 Large cigars number 8, 500 5,000 Tenth Ohio 11,750 264,000 232,000 250 43,500 Small cigarettes do.... 6, 216, 000 1, 3M, 161, 400 , 145, HS, 130 First Pennsylvania 85,000 1, 892, 731 1, 610, 845 1, 136 365,750 • Twelfth Pennsylvania 98, 900 92,400 6,500 5,000 Twenty-third Pennsylvania 5,000 Delivered tc vessels South Carolina 28, 000 1, 027, 750 982, 750 73,000 486,350 31,600 Virginia 517,950 Tax-paid Unac- Class of product United or returned counted Total 207, 700 7, 545, 343 6, 636, 547 36, 386 1, 080,110 In foreign In inter- for July trade coastal States to factory 1, 1941 trade Govern- CIGARS WEIGHING NOT MORE THAN 3 POUNDS PER 1,000 went

Number Number Tobacco and snuff pounds 2,251 60 257 12 954 Number Number Number Large cigars 43,925 22,925 21,000 number.. 1, 500 2,000 Florida 4.000 Small cigarettes do.... 39, 092, 000 5, 873, 000 125, 505,000 346, 050 44, 553, 220 Virginia 327,050 323,050 Total 370, 975 345, 975 25,000

CIGARETTES WEIGHING MORE THAN 3 POUNDS PER 1,000

Number Number Number Number Number Second New York 500 1,000 1, 500 North Carolina 31,000 31,000 Total 500 32,000 32,500

REPORT OF COMMISSIONER OF INTERNAL REVENUE 130 REPORT OF COMMISSIONER OF INTERNAL REVENUE 131 of manufactured tobacco, snuff, cigars, and cigarettes from TABLE 26.-Domestie and imported cigarette papers and tubes withdrawn and TABLE 24.-Withdrawal internal revenue receipts from taxes during the fiscal years ended June 30, 1932, bonded internal revenue tobacco sea stores warehouses,' for shipment or delivery to June 30, 1941, inclusive-Continued. as sea stores, fiscal year ended June 30, 1941 Cigarette papers-Continued Cigarette tubes Withdrawn Unaccounted for July 1, from ware- Class of product houses during Fiscal year Receipts Tax-free 1940 year

Domestic Imported Total Domestic Imported Total 46, 318 Tobacco and snuff pounds_ 363 number 4, 750 Large cigars ,139, 449, 575 Small cigarettes 16, 583, 125 Number Number Number 1932 $85, 332. 63 $1, 559, 909. 32 $1, 645, 241. 95 13, 865, 050 _ 13, 865,050 1933 134, 050. 20 784, 502.64 918, 552. 84 20, 893, 300 20, 893, 300 Delivered to vessels 1934 134, 864.73 822, 829.85 957, 694.58 23, 251, 430 23, 251, 430 1935 162, 116. 24 801, 641.92 963, 758.16 28, 170, 100 26, 170, 100 Unac- Tax-paid 1936 982, 625.68 286, 325.30 1, 268, 950.98 19, 172, 450 19,172, 450 counted 1937 877, 204.09 225, 910. 50 1, 103, 114. 59 20, 429, 660 20, 429, 860 Classlass of product United or returned for July In inter- States to factory 1938 1, 070, 406. 53 100, 196. 45 1, 17ff 602. 98 18, 495, 700 70,000 18, 565, 700 In foreign coastal 1, 1941 1939 trade Govern-Govern- 1, 403,092. 03 74, 839. 73 1, 477, 931. 76 19, 449, 400 20,000 19, 469, 400 trade ment 1940 1, 112, 121. 90 40, 130. 50 1, 252, 252.40 8, 324, 350 8, 324, 350 1941 I, 405, 724.88 2, 463.65 I, 408, 188. 33 18, 040,180 18,090, 180 126 1, 537 Tobacco and snuff pounds__ 39.043 2, 448 3, 525 4, 750 Cigarette tubes-Continued Large cigars number__ 26,278,375 Small cigarettes do____ 527, 467, 780 79, 089, 300 503, 242, 715 19, 934, 530 Fiscal year Tax-paid Receipts

I There are now 26 such warehouses in operation. Domestic Imported Total Domestic Imported Total TABLE 25.-Drawback of internal-revenue taxes allowed on tobacco, snuff, cigars, Number Number Number and cigarettes exported, year ended June 30, 1941, by ports, and comparative totals 1932 135, 980, 500 140, 596,150 276, 576, 650 $27, 141. 67 $28, 119. 23 $55, 260.90 1933 25, 896, 200 171, 702, 500 197, 598, 700 5, 252.00 34, 340.50 39, 592.50 for the years ended June 30, 1936, to June 30, 1940 1934 21, 214, 900 56, 048, 000 77, 262, 900 4, 150. 00 11, 209. 60 15, 359.60 1935 24, 827, 000 36, 613, 000 61, 440, 000 4, 987.40 7, 322. 60 12, 310. 00 1936___ . ______ 64, 047, 900 614, 300 64, 662, 200 12, 950.00 1L2. 86 13, 072.86 Cigars Cigarettes Draw- 1937 65, 360,100 150, 000 65, 510, 100 13, 232.40 30.00 13, 262.90 andTobacco mud back al- 1938 58, 179, 100 180, 000 58, 359,100 11, 900.00 36.00 11, 936.00 Exported from port of- Claims lowed 1939 75, 882, 700 526, 800 76, 409, 500 15, 748.68 105.36 15, 854.04 Large Small Large Small 1990 137, 144, 300 342, 500 137, 486, 800 27. 187.00 68.50 27, 255. 50 1941 119, 236, 900 5,100 119, 242, 000 23, 126.00 1.02 23, 127.02 Number Number Number Number Number Pounds $216. 03 Newport News .. I 298, 250 1,144 5,000 920.71 TABLE 27.-Tobacco products withdrawn for consumption, computed from collections San Francisco 6 from the sales of stamps, fiscal year 1941 1, 144 5, 000 __ 298, 250 I, 136. 74 Total, 1941 .... 3, 823.77 Total, 1940 7, 420 13, 825 17, 900 8, 450 791, 793 5, 926 10, 500 10, 100 4, 600 550, 948 2, 781. 27 Large cigars Total, 1939 .~M~ 1, 528, 511 8, 694.2E Total, 1938 10, 684 35, 000 21, 330 9, 880 8,086 106, 425 14, 400 7, 700 7, 227, 518 23, 521. 3( Classification Total, 1937 24, 648. 7, Total. 1936 8, 451 74, 000 16, 600 16, 900 7, 587.984 Class A Class B Class C Class D Class E Total

Number Number Number Number Number Number TABLE 26.-Dontestic and imported c'garette papers and tubes withdrawn and Domestic manufacture 4, 904,084, 389 41, 823, 557 451, 799, 264 21, 922,096 466,158 5, 920,045, 964 years ended June 30, 1932, Bonded manufacturing ware- internal-revenue receipts from taxes during the fiscal houses ' 29, 412, 833 878,086 60,935, 191 15, 965, 624 1,382, 839 103, 574, 568 to June 30 1941, inclusive Imported-Cuba 6,605 2,300 657,141 1,030,783 2,427,222 9,129,051 Imported-Other countries_ _ _ 2,418 55,407 8,377 2,007 8,910 77,209 Cigarette papers Total 4,928, 506, 245 42, 759,940 513, 399, 973 38, 920, 610 9, 285,124 5, 527,821, 292 Philippine manufacture 178, 214, 590 211,706 394,322 72,475 283,405 179,176, 498 Puerto Rican manufacture.... 742,335 233,500 449,800 2,900 1, 428, 035 Tax-free packages, books, or sets Tax-paid packages, books, or sets Fiscal year Total 5,107, 463,170 43, 201, 646 519, 199, 095 38, 995, 385 4,568, 529 5, 708, 425, 825

Domestic Imported Total Domestic Imported Total Large Chewing Total Classification Small cigars ciga- Small and smok- Snuff tobacco Number Number Number Number Number cigarettes Number 119, 845, 072 127, 652, 898 rettes big tobacco and snuff 1932 1,018, 676, 818 242, 599, 233 1, 261, 276, 051 8, 007,826 457, 074, 483 1,915, 570, 912 9,819, 889 57, 894, 783 67, 714, 672 1933 1,458, 496, 429 59, 141, 230 68, 871,189 1934 1,930, 133, 447 539, 625, 666 2, 469, 759, 11.3 9, 729, 959 Number Number Number Pounds Pounds Pounds 2, 482, 499 2, 687, 409, 416 11, 693, 440 59, 448, 000 71,141, 440 1935 2, 684, 926, 917 21, 622, 890 91, 420, 277 Domestic manufacture 151, 804, 285 1, 977, 728 189, 765, 312, 437 304, 986, 398 38, 326,173 343, 312, 571 2, 860, 219, 316 1, 333, 333 2, 861. 552, 659 69, 797, 387 Imported-Cuba 1,600 2,600 330,015 4,060 42 1936 ll 712, 354, 987 61, 571, 548 17, 797, 240 79, 368, 788 4,102 1937 2, 711, 554, 987 800, 000 83, 697, 432 Imported-Other countries 64,938 1, 964,031 93, 780 4, 936 98, 716 I, 952, 699, 101 500, 000 1, 953, 199, 101 76, 475, 882 7, 221, 550 1938 248, 660 5, 798, 065 106,046, 725 1939 2,160, 364, 855 1,040,000 2, 161, 404, 855 100, Total . 151, 805, 785 1, MA 266 189, 767, 106, 983 305,084,238 38, 331, 151 343, 915, 889 400,000 2, 277, 227, 218 84, 746, 566 3, 180, 970 87, 927,138 1940 2, 276, 827, 218 158,333 101, 349, 419 Philippine manufacture 7,180 297,292 12 12 1941 1, 632, 313, 944 , 600, 000 1, 832, 913, 944 101,191, 086 Puerto Rican manufacture 132, 785 3, 491, 415 Total 151, 805, 785 1,885,231 189, 770, 845,190 305, 089,250 38, 331,151 343, 916, 901 I Manufactured under customs su ion from tobacco imported from any on country. 132 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE' 133 flaw, 44RAAR ggi EggggFr4g aA fIggagAggg e00001=VM a le „Fgg a

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bus 94 0 n. 1 ness aa -4 Ja In 0 0 a ti m.. a t, 4TIBr E w 4 c,.,.„M t Lt Z .2 (5..4 a .2 'E.° Z,„a 2 0 ,04 0' 0 it E 0 210 = g.gEs,' gE ... v baanq0-5!.,aaSe ,,a,c, 8034L 4r„ ciriaThz&zgtbuiSW 41to .IOu,linabl:g.-A.0-ctvg:2--,-.2g-a.Tg5 a. P6 c g Pi A.E.02& 2 avgg.“,-aNr, 5Agacee.EgaaaAkt... 2 OE g.unaogg4garag.E.gE.E.zgpggoak.g& diaiz0g A REPORT OF COMMISSIONER OF INTERNAL REVENUE. 135 134 REPORT OF COMMISSIONER OF INTERNAL REVENUE EE 09 ME g 4 WPRXEN ICi ggg3xF4gN ASE gg g LI ago ga a... ae-- ,g a_ gg OS 'istsger EA t g tfr ,7; g a - ..T.. t - ocan or 01 00 Fag smal Egg RE g a a-nef 011 2 isg m 2 imp go 311

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REPORT OF COMMISSIONER OF INTERNAL REVENUE' 137 136 REPORT OF COMMISSIONER OF INTERNAL REVENUE , t- d 0 s EAU A EAE4RA :=.REAA c=f4 AAgARREEEE g

tobacco manufacturers classified: Number of factories operated cu

- ing TABLE Quasi an 30. s, I Af t: g 1,4g71 g gm -, -,K.,:ggectie , 1 and tobacco material handled, calendar year 1940 s,

rap .4. lipp 0, c ting Sc

a turers

On hand Jan. 1, 1940 d

Number fac gA4 E A R2 ii ARE IR 'REE62E R g in busi- 0;---:- e: Class _,Lt-:. -r R -.-f A t• c.,0 a; 0 ness Jan. Un- mme .. c., 0 1, 1940 Stemmed Scraps In process Stems Siftings 0) e. manu stemmed Ste co c ti pouirtio Pounds Pounds Pounds Pounds Pounds Pounds. ba E§ E A g 1. 8"' HE I c7,00,0°rat: 're g. 333, 717 1, 980 11 To a 5, 184 591,814 107,742 2 63 64,223 tst 15 164,396 a a a 28,843 59,537 ta 4 40 1,074, 126 18,246 2, 452, 838 3 245 647,833 5, 572 19, 944 13, 427 5 79,609 2, 141.827 4, 101, 601 610, 947 17 596,431 t- d 6 s 14 2,419, 402 1, 363,057 7,269,898 462,179 F.mzediges=*qggRE8mg.ps2a8;,22 7 cu -- ---.--.--- 695,627 ing -100. -0- -0-- - - .-0.- an 8 65 s, 1 s, 9, 417, 297 4,614,547 791.653 5,633, 264 lipp 228 4,154,427 719, 057 ing

Total s c . , t Scrap rer pom Opened Received 1 tu 0,4EEEgAgg REARRMEMEREEn2EARE2RAR2 fac ina E ER*: A-1-r 645-r-sgrg %iispigreg d

133 5, 490, 240 l

1 S 2 106, 531 1.668, 836 2, 335, 093 27, 178 153, 762 g - • ,

2 30, 339 manu 2 7, 618 8 1, 166, 100 r po

3 a 1 15, 130, 357 1,101, 977 8,115, 856 267,840 138, 533 87.146

4 mme 9, 851 2, 095, 859 809, 302 3, 295 JERRER2EimEEEEMEME222EAAAAARE2EE2LEE 5 Cig 6,166, 109 11, 284 2, 287, 743 11, 075 106, 224, 232 16,185, 656 6 3, 822, 903 4, 331, 242 3, 402, 151 2,000 1 7:-Rel va -,gat-,:,=.:wrg5.rt, a ggtigsggggrq g 10, 032, 218 325 lsr 7 f 380,945 1 N 3 ta 8 211,657 J t 1„. 8 31,452,817 3, 375, 032 25,313, 794 4, 637, 335 110, 574, 218 16,462, 198 • Total ci

tuas q g M M E A i E EA - --PI - - Closed Removed 1 g e tycs ^e c/ 4 =, Di 1 133 5, 758, 852 0 e >- . _a) 1 145 118,023 2 4 99,261 1, 660,142 2, 221, 783 o

27, 555 po 3 2 1,220, 711 RAIEAARE E 681, 624 .0... .3 EA. 2 i2 E E 2 Bri E 3 559,852 139, 608 18, 410.353 1,016, 407 1, 894, 043 mme c,r44-,-; 2s 4 397 2, 575, 633 295, 693 79, 289 52,670 . -E“),

5 lers f 416, 780 119,084 212. 831 3, 830, 493 336, 618 .c4-...5' 9,811 ls r.„.„5, 6 II 5,677, 123 1, 293, 712 10, 223 128,315, 647 683. 094 4; oaAri Dea ,, .4 173, 639 3, 578, 283 14, 694, 705 163, 714 2,000 7 32, 459 .-cgba2° 9 8 3 610,111 po

inure RE NEEE RFA 4 ria.' E2 ,, 4AARAAEA A 35,178, 441 16, 230, 004 134, 283, 186 1,901, 684 cu.ece.4t-7n44.1 r: Total 20 6,927, 185 2, 452, 131 Eg EAAA g6 2 Eg2 A2 „ er'itEgrgR R gsa „ 0 d 04 . g g P14"TMt.04:‘',,ESLI,B,- w-zc,, Number ft in busi- ness Jan. On hand Jan. 1, 1941 ro 1, 1941 4 1.e2:9g1.1,te..,ttt 10 67, 212 1, 980 1 70 189, 736 ... 2 61 26,061 11,857 707, 420 0 3 15 106,138 911,553 93,873 8,039, 609 8,508 4,047 31,223 t 4 107,351 4,229 19,326 7, 687 5 2 mriaZaaWat. 17 90, 167 92, 243 1, 292, 514 4,225, 720 316, 654 =, 6 7,961,030 514, 735 P. 7 14 1,837, 155 1,578,243 8 69 646,187 :., 216 2, 864, 936 761,917 5,698,216 9,266,351 4,765,808 545,300 E Total . 5 25, 815, 123 890,041 14,806,967 Loss 11,441, 723 23, 860, 229 Gain 9, 929, 599 042 1 Description of c ossification: Class 1, dealers In imported scrap tobacco; cia s 2, dealers n domestic . scrap tobacco; class 3, dealers n imported and domestic scrap tobacco; class 4, producers of scrap filler to- bacco; class 6, reclaMin2 scraps( rom stem ; class 6, manufacturers of fertilizer, insecticide, nicotine, etc.; class 7, storage, scraps, etc.; class 8, growers of, and dealers in, perique tobacco. Ct2 2 Grown. S Transferred to o her registries. 4 Used in product on of nicotine, extract, and fertilizer. A I Exported. ..14(.000....444.9.2 Aniltoq)484KIO41§uCiO4 0•,C1i5 art L4.04' 423348-41-10

. '1'.\ FIl.I~ :31.-'l'obflGcn material held M' (/umed hy ilealn" in leaf In/,arco a /l.tI cigar and tobacco 71111" lifo cI TI r~;rs on ./fI1ll1ary 1, 1 J, 1. by c"lleclion r/islricls a",1 oy . lales -Contiou d ­

Dealer~ ('ig-:1r lllf1nllfru~I~lrl'TS Tllhl\~:w"I nmD.u(r.c.ll.lr.'rs 1------,----..,.------·-.,------1- . Crtll"'. cut· w,tcmmcd lll£lemmecl SI~mlDerl (1n~~.IlJld {"flsl(lltltnrd cJippim:~' ------.------1-----1------1----11----1----1----1 J>ISTJnnsyl\'anl." __ ••••••.•.••. _ ••._ . -j. ~1~.ljl:l 2.'>< '2;' z. 7~, H.H T\\clrth Pcnn,d"onl •• • __ ...... 107.~12 ~:S i $\1,7(.1, TII'ell( .. hlrd l'ennS~'hll I.u ••• __ . _ . 1.240 R.62-1 RI1(~I·I·lond ... . __ ..... _ .. .. 2. Tlro 2.~~ , nth Cnrnllnn . "ll1lth J):,ko!o . ••• ._ .. 'l'(lnu~ ~ • _•. ..__. 1: :\('.1. ~1 .iO. O:ll iI.RiO FJr~! "c lU ...... __ "". __ ,~,~ll(l ~_ 2 ""COnd" (I.'.. , ("jill _ \',.rJltoll[ Vir~tnln . W:

'1'0\01, WI!. __ •••_ ••, 42. SO;. 715 11, mn. (107 10.124. iR5 9. 7.rif., 7'.)7 ·re,lt,l. 1~1O ••• _•.•••••. 37.702.952 11.021.3-10 11.411.003 9. ·141. ().I.j 1-----·1-----1------lnro 1$)"'" _ .__ _ 4. M12. 763 693.G67 314.752 De<·reflse . 1171.9-11

TOT.\ L ------.,----~---~-----.----~---~----~------

OCCUPATIONS SUBJECT TO SPECIAL TAXES . . ~ I'TchQsinq SI)U;n/'/(JX stOlt/liS COllerillp ti,e fiSC'" y,·(tr ,VIi",b"r of "aeh class of sp,.c/f!l·/ax payer. p, l' ,.' b" collrCti!ll1 di'lrict~ <1m/ 8/'lt s • l!aT")lt~ (t1P~11/1 nt,c,. "

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oi o 44 g In e.,.4 4,, .., ' sassily A $ 3 P- LynoRt-o-n OLEOMARGARINE, RENOVATED BUTTER, MIXED FLOUR, ETC. IZ 96

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a',1`67-1 8 TABLE 33. -Production and withdrawals of colored oleomargarine, year ended

- 1$ June 30, 1941, by collection districts

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pin saationpatid Pounds Pounds Pounds Pounds Pounds Pounds Pounds Georgia 243 47, 665 8, 096 39, 544 4, 116 1,152 nan 99L First Illinois 11,819 1.142, 619 170, 356 191,011 766, 221 252 26, 503 Indiana 12 12 nt IS tion1611c1 5 0' Kansas 4, 359 320, 311 78, 442 ips 1, 280 237, 719 836 8, 393 Maryland 8, 757 I, 034, 501 115, 294 740,325 124,100 2,430 61,009 NITTNoi C7, Ca lc MoD ..--NON w g First Missouri 1, 130 125, 716 5,842 117, 414 3,000 ES 49.10NaCI Sixth Missowl 14, 996 14,280 216 Fifth New Jersey 10, 672 568,488 25, 872 282, 579 260, 988 360 9,861 91 First Ohio 623, 843 1, 332 234, 111 382 424 2,976

55$ Pala ismanioainuayg Tenth Ohio 1,190 489, 648 415, 368 46,020 29,450 Eleventh Ohio 11, 313 150 8,6733 2, 490

811 South Carolina 2,874 41 . . NN N 73, 691 I, 832 66, 495 8, 288 1$ "370 Second Texas g saiaoluaoquil 37,102 5, 358 28, 438 3,306

332 Total IZ81 41, 044 4,989, 410 926, 866 1, 864, 674 2, 075, 586 7, 994 155, 334 2 'snob 5$ -8113g01 paxel gig 2 RN "..I.' A 8 2 A 8' -un UT SIOT130(1 ' M 993' 689' Lt

°'L TABLE P TATeriKgri 34.-Produc ion and withdrawals of uncolored oleomargarine, year ended E ' - g R §E ' 'TO oT 0 Tel.

T$ '&M011130' 2 £ 9 01.1 99

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51$ 1519 -. 44 N ro oN-i N 1040 export use of stroyed 1041 'POP OTHOOTOUNT '1 United

TA States PT ■-i.--1 N N N 555 "OTO I d saaaniaionmijk Pounds Pounds Pounds Pounds Pounds Pounds Pounds 51$ 'soaped ao SIO I-. N . ti Alabama 5, 032 293,140 295,192 2, 988 -.M1OBJWISUI 'anoupeam First California 375, 553 28, 927, 925 29, 041, 733 7, 808 I, 494 252, 443 Sixth California 326, 864 15. 257, 903 15, 326, 013 60 257,895 05$ Georgia 20.451 4, 740, 571 4, 729, 188 55 31, 779 1 sompornuom hosing First Illinois 1,102, 341 103, 205, 945 103, 145, 221 1, 320 10, 552 I, 151, 193 papitiouaa JO moo oa a Indiana 48, 878 37, 593, 572 37, 635, 554 716 6, 180 1 1 Kansas 233,538 23, 381, 173 23, 359, 959 066

SIP ' 80 254, 752 8£0 Maryland 148, 200 9, 667, 790 9, 669, 924

6 ' 78 145, 988

9$ taa15001:10 12 gi'''' g 53$4"42 P'g A Z Michigan 615,478 16, 344, 888 16, 806, 608 3

6 154, 756

HT woN9P [Mali a oi c/i 4 9 Minnesota 12, 718 897,322 860,040 1

I 93 First Missouri 36, 052 8, 150, 756 6,147, 748 39, 060 39 gro LOT Sixth Missouri 27,018 2, 071, 207 , 2, 060, 479

on 5,526 33,019 00s$ 'PO" N' R A "°'.7..."2 ' 1- Fifth New Jersey__ ... 300, 692 25, 397, 896 ' 25, 568, 548 13, 245 118, 747 in2 -Noun 11-1 SIO First Ohio 382, 057 24, 514, 899 -jeep 24, 729, 846 167, 105 NUMMI& Tenth Ohio 53, 930 7,834,642 7,804, 258 84,114 nmoo

GC Eleventh Ohio 187,662 17, 231, 614 17, 238, 316 180,950 gt TPOT°100 .. Oregon 18,583 401, 259 419,892 UT STOTOOP [MOH South Carolina__ 17,772 1, 814, 958 1, 816, 210 16,020 s3 Second Texas 229, 764 13, 768, 587 13, 897, 636 OUST 1, 050 99, 695 I N 'pampa ni 8)0 -pop aresamm Total 4,138, 531 339, 945, 528 340, 550, 313 1, 320 7, 808 32, 776 2, 991, 852 I 35 009$ 44 44 44 1 6aaanplif anew d n a ts ic

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TABLE 35.-Production and withdrawals of oleomargarine (colored and uncolored), TABLE 38.-Summary of production and withdrawals of oleomargarine (colored and year ended June 30, 1941, by months uncolored), years ended June 30, 1932 to 1941

Colored Colored Uncolored

Month Withdrawn With- With- free of tax drawn With- drawn Produced Withdrawn Withdrawn for u of Lost or de- Year With- With- tax-paid for export stroyed tax-free Withdrawn drawn free of tax United Produced drawn drawn for use of Produced tax-paid for ex- for use of States tax-paid for export United port United States States 1940 Pounds Pounds Pounds Pounds Pounds July 213,571 21,254 104,115 84,032 204 Pounds Pounds Pounds Pounds Pounds Pounds Pounds Pounds August 186. 270 21, 202 97,159 74, 428 940 1932 4. 636, 218 2, 090, 578 1, 666,182 910, 749 210, 706.942 210, 450. 678 15 September 216, 868 25, 432 94, 815 88, 392 256 1933 2, 813, 198 500,021 1, 570, 811 768,714 218, 229, 634 215, 990, ON 180 October 217,069 30,978 109,156 71, 665 256 1934 2. 889, 095 462,590 1. 594. 168 631, 665 240, 497, 599 240, 410, 117 240 November 281,038 35,060 151, 810 84,976 1935 2,904, 971 808, 439 1, 408, 827 680.921 350, 915, 555 350,113, 863 222 December 239,990 38,080 125, 719 68,788 1936 2, 773, 194 527, 419 1,471.424 781, 292 368, 964, 422 368, 986, 799 330 1937 1, 967, 206 673, 307 583. 610 740,960 387, 297.043 386, 775, 872 1941 1938 1, 649, 356 624.362 200, 401 837, 588 413, 754, 759 413, 560, 893 January 404, 451 41, 838 254, 931 66, 053 48 1939 1, 380, 891 354, 991 155, 748 887, 925 331, 591, 928 331, 701, 894 300 3,000 February 338, 048 39,484 220,988 107, 888 1940 1, 859, 731 302, 149 649.489 896, 387 301, 857, 670 301, 599, 496 1,830 March 291,887 40,397 199,733 73, 501 1,196 1941 4, 489, 410 426, 866 1.864, 674 2,075, 586 339.445, 528 340, 650, 313 1,320 7,808 April 412,907 44,313 227,420 91,330 2,684 May 1, 388,173 47, 782 135, 706 286, 382 Total_ 27,163, 270 6, 770, 722 11,165, 334 9,191,787 3, 161, 260, 080 3, 160, 140,011 4,437 10,808 June 300,140 41,048 143,122 980,151 2,430 Total 4, 489, 410 426, 866 1, 864, 674 2, 070, 586 7, 994 TABLE 37.-Materials used in the manufacture of o eomarga e (colored and Uncolored uncolored), year ended June 30, 1941 Pounds Pounds Withdrawn Babassu oil 1, 918, 662 Lard stearine 240 Month Butter flavor 29 Oleo oil 15,982,604 Produced Withdrawn Withdrawn free of tax for use of Lost or de- Coconut oil 16, 525,100 Oleo stearine 3, 369, 548 tax-paid for export United stroyed Color 4, 026 Oleo stock 1, 336, 514 States Corn oil 298, 642 Palm oil 286, 451 Cottonseed oil 136, 035,181 Peanut oil 1, 893, 384 Cottonseed stearine 12,680 Salt 12, 547, 879 1940 Pounds Pounds Pounds Pounds Pounds Derivative of glycerine 843, 959 Soda (benzoate of) 137, 250 July 21, 812, 715 22, 050, 260 2,890 Diacetyl 3 Soya bean oil 92,152, 569 August 21, 486, 149 22, 480, 483 2,006 Emulsol 10 Soya bean stearine 3,059 September 26, 367, 800 25, 693, 776 Lecithin 144, 625 Soya flake 15 October 29,948, 696 29, 469, 071 6,100 Margo 593 Vegetable gum 8 November 29, 725,440 30, 824, 038 1,096 Milk 64, 417, 645 Vitamin concentrate 15,478 December 32,221, 051 31. 083, 974 597 Monostearine 154, 559 Neutral lard 6, 863, 981 Total 354, 925, 694 1941 January 33, 625, 940 33, 789, 497 February 27, 770, 007 27, 831, 809 7,808 2, 679 TABLE 38.-Production and withdrawals of renovated butter, year ended June 30, March 33, 605, 688 34, 291, 371 1, 320 2, 031 1941, by collection districts April 31, 786. 746 30, 538, 783 880 May 26, 306, 522 26, 809, 052 709 June 24, 788, 776 25, 678,199 13, 789 On hand With- On hand District July 1, Produced drawn June 30, Total 339, 445, 528 340, 550, 313 1, 320 7, 808 32, 776 1940 tax-paid 1941

Pounds Pounds Pounds Pounds Alabama 185 1, 628,062 1, 627, 433 814 Georgia 15.085 812,829 815,832 12,082 Maryland 4, 102 342,618 338, 080 8,640 Total 19,372 2, 783, 509 2, 781, 345 21,536

TABLE 39.-Summary of production and tax-paid withdrawals of renova ed butter, years ended June 30, 1982 to 1941

With- With- Year Produced drawn Year Produced drawn tax-paid tax-paid

1032 1, 129, 299 1, 117, 784 1937 2, 737, 181 2, 769, 853 1933 1,002,131 1,008,327 1938 2, 435, 499 2, 381, 270 1939 1,213 166 1, 205, 475 1939 2, 906, 117 2,925,272 1935 1, 844, 561 1, 851, 245 1940 2, 706,852 2, 735, 433 1936 2, 252, 920 2, 218, 951 1941 2, 783, 509 2, 781, 345 REPORT OF COMMISSIONER OF INTERNAL REVENUE 149 148 REPORT OF COMMISSIONER OF INTERNAL REVENUE ALCOHOL, DISTILLED SPIRITS, BEER, ETC. TABLE 40.-Production and withdrawals of mixed flour, year ended June 30, 1941, by collection districts TABLE 42.-Ethyl alcohol: Production and withdrawals, by months, fiscal year 1941 PRODUCED [Proof gallons

Half Quarter Eighth Total District Barrels barrels barrels barrels pounds Withdrawals

Tax-free Stock on hand July 1, 1940 2, 590 8, 760 2, 568 639, 667 Month Production Total Tax-paid First California 16, 425 98, 788 54, 015 5, 683, 029 For denatur- For other Illinois 986 1,233 ation Iowa 31, 864 1,317, 284 Purposes Minnesota 27, 824 2, 726, 752 Sixth Missouri 22, 957,045 22,012, 269 2,019, 762 19,621, 431 371,076 Twenty-eighth New York 27, 774 2, 721, 852 July 43,189 160,027 23, 747 10, 534, 355 August 24, 094, 281 22, 738, 660 1, 423, 507 20, 917, 775 397, 378 Oregon September 21, 559, 290 26, 687, 288 2, 045, 917 24, 212, 614 428, 757 Utah 3, 328 5, 949 611, 706 2, 359, 606 25, 556, 712 320,356 Washington 376 34,745 41,507 5,081 5, 159, 732 October 23, 595, 180 28, 236,674 1, 021 100, 058 November 23, 346, 835 26, 528, 647 2, 958, 601 23, 139, 967 430,079 Wisconsin December 23, 762, 244 29, 670, 226 2,127,850 22, 055, 847 486, 529 19, 934, 059 565, 510 Total 376 154, 306 338,135 83, 829 28, 855, 995 January 24, 223, 923 21, 743, 795 1, 744, 226 February 22, 029,106 21, 375, 002 1, 766, 786 19,069, 887 538, 329 Grand total 376 156, 896 346, 895 86, 397 29, 490, 662 March 25, 654, 684 26, 896, 844 2, 735, 662 23, 705,158 456, 024 April 26, 248, 455 25, 933, 286 2, 448, 613 22, 788, 781 695,892 May 29, 650, 922 30, 776, 464 3,012, 275 26, 555, 028 1, 209,161 June 32, 223, 502 31, 905, 940 3, 223, 718 27, 830, 002 852, 220 WITHDRAWN TAX-PAID Total 298,845, 917 309, 505, 095 27, 866, 523 274, 887, 261 6,751,311 First California 16, 029 97,179 49, 775 5, 515, 791 First Illinois 986 1,233 I The unit of measurement is the proof gallon, a legal standardpreseribed for tax purposes. (See secs. 2800 Iowa 31, 906 1, 318, 898 and 2809, Internal Revenue Code, 1939.) The proof of spirits is twice the percent of the conten , by volume, Minnesota 27, 836 2, 727, 928 of ethyl alcohol. Spirits containing 50 percent ethyl alcohol by volume are, accordingly, 100 proof. A Sixth Missouri 0 0 standard proof gallon is a wine gallon (231 cubic inches) of 100 proof spirits. The number of proof gallons Twenty-eighth New York 27, 657 2, 700, 406 contained in a wine gallon of spirits of proof other than 100 Is proportional to the alcoholic content. For Oregon 43, 841 162, 568 24,969 10, 711, 951 example, 1 wine gallon of 190-proof alcohol is equivalent to 1.9 proof gallons. (The units described are based Utah 3,918 5,945 620,334 upon spirits at 60 degrees Fahrenheit, at which temperature ethyl alcohol has a specific gravity of .7939.) Washington 371 35, 643 42, 146 5, 035 5, 273, 792 2 Includes 1,484,412 proof gallons transferred to denaturing plants by alcohol plants not having bonded Wisconsin 1,021 100, 058 warehouses. Total 371 155, 445 339, 739 80, 265 28, 979, 391 Lost or destroyed 57 5 5, 874 TABLE 43.-Ethyl alcohol: Plants and bonded warehouses operated, production, Stock on hand June 30, 1941 5 1, 394 7,151 6,132 505, 397 withdrawals, warehouse losses, and stocks remaining in bonded warehouses June 30, by States, fiscal year 1941 Grand total 376 156, 896 346, 895 86, 397 29, 490, 662 [Quantities in proof gallons]

Remaining Number Number TABLE 41.-Production, importa ion, and withdrawals of p aying yards, by months, of ware- Withdrawals Warehouse in bonded year ended June 30, 1941 State of plants ho s Production losses warehouses operated I operated I June 30

With- ODN.. 1- drawn California 6, 207, 289 6, 818, 761 21, 270 511, 391 Colorado 45,247 306 15,088 On hand Withdrawn free of Lost or On hand 3, 450 Month July 1, Produced Im- Withdrawn tax for des- June 30, District of Columbia 564, 921 557, 965 1940 . ported tax-paid for export use of troyed 1941 Hawaii 227, 326 228, 324 662 42, 340 United Idaho 11, 758 15, 757 States Illinois * el. 9,874,273 20, 287, 721 49,561 1, 083, 374 Indiana 26, 030, 795 39, 752, 643 168, 500 1, 131, 733 9,234 9 5,400 Kentucky IC MCONA 1940 Packs Packs Packs Packs Packs Packs Packs Packs Louisiana 52, 235,857 32,995, 657 43, 374 157, 927 10 Maryland 28, 313, 632 30,093, 872 41, 466 1, 205, 031 July 12, 809. 188 2, 340, 770 1, 165, 990 321.458 3,600 11, 409 60, 433 August 3, 451, 878 1, 581, 948 385, 984 38 Massachusetts 7,050, 599 7, 764, 704 3, 038, 959 121, 311 443 Michigan 330,240 1 14,823 September 3, 237, 244 ti 12 19,812 October 3, 903, 216 3, 690, 066 140, 593 3, 888 802 Missouri 448,178 November 3, 439, 986 4, 999, 060 253, 008 4,032 210 New Jersey 99, 779, 046 48, 994,156 89, 010 1, 854, 036 December 3, 651, 047 3, 929, 796 255, 276 14,100 202 New York 635,129 2, 449 Ohio 948, 749 1, 356, 110 3, 454 385,196 1941 Oregon 26, 241 Pennsylvania 65, 197, 894 64, 989, 934 127, 554 Z 756, 556 490, 853 January 4, 359, 880 4, 809, 976 128,693 63,360 180 Puerto Rico 2, 571, 864 3, 067, 636 13, 365 February 4, 718, 608 3, 817, 673 209,088 3,888 228 Texas 911, 833 890, 720 March 4, 997, 799 4, 156, 259 229, 469 61, 632 144 Virginia 257,114 257,114 April 4, 829,818 3, 426, 955 292,634 8, 712 144 West Virginia 48, 495, 005 49, 670, 560 124, 254 611, 373 May 5, 247, 290 5, 242, 462 615, 742 17, 424 62 Wisconsin 167, 512 333, 192 484 43,536 June 4, 676, 357 4, 102, 510 167,200 10, 368 520 Total 39 62 298, 845, 417 5 30B, 505, 095 I 697, 140 8 10, 392, 352 Total__ .__ 12,809,188 48, 853, 893 43, 061, 104 3, 110, 456 191,004 2,983 15,297, K4 I Number operated during any part of the year. One experimental plant. 'Includes 1,484,912 gallons transferred to denaturing plants by alcohol plants not having bonded ware- houses. In addition, 47,451 proof gallons lost in transit. e. Stocks in transit between bonded warehouses and quantities In receiving tanks of alcohol plants awaiting transfer to bonded warehouses not computed.

150 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 151

TABLE 44.-Ethyl alcohol: Withdrawals, tax-paid and tax-free, by States, fiscal TABLE 46.-Ethyl alcohol: Production, by kinds of materials used, fiscal year 1941 year 1941 [Proof gallons] Quantity used Alcohol produced Kind of material Tax-free withdrawals Percent Amount Unit Proof gallons of total For use of State Total with- Tax-paid with- For hos- drawals pital and Unite d For Molasses ) 220, 898, 526 Gallons 210, 426, 805 70.41 drawals Total For dens- Stat e s ' Ethyl sulphate 53, 399, 664 Gallons 69, 902, 860 23.39 turatlon scientific export 17, 532, 441 5.87 use and sub- Grain 199, 119, 727 Pounds divisions Pineapple Juice 1, 831, 381 Gallons 227,326 .0S Cellulose pulp, chemical and crude alcohols mix - ture: California 6, 818, 761 737,119 6, 081, 642 5, 519, 699 201,363 359,964 616 2, 365, 256 Gallons Colorado 45,247 21,866 23,381 21, 874 1,507 Crude alcohols mixture 575, 730 . 19 512,052 Cellulose pulp and chemical mixture_ 15, 365, 950 Pounds District of Columbia__ _ _ 557, 985 7, 856 550,109 34, 285 3, 772 Other mixtures: Hawaii 224, 324 19 228, 305 228, 185 111 9 921,866 Gallons Idaho 15,757 15,757 15,757 Molasses 302, 044 20,120 28, 215 Corn sugar by-product 2, 245, 793 Pounds Illinois 20, 287, 721 8, 236, 627 11, 351, 094 11,000, 715 Malt 1, 265, 953 Pounds _ Indiana 39, 752, 643 6, 063, 395 33, 689, 298 33,096, 299 62, 992 527, 080 2, 877 1,110, 284 Pounds 180, 315 .06 Kentucky 9, 234 2,125 7,109 7,109 Corn 31,940. 796 110.454 314, 805 Potatoes 686, 585 Pounds Louisiana 32, 935, 657 568, 975 32, 366, 682 627 Barley 8, 758 Pounds Maryland 30, 093, 872 587, 644 29, 506, 228 28, 381, 691 256, 620 867, 837 80 5, 891 Pounds Massachusetts 7, 764, 704 887,614 6, 877, 090 6, 646, 248 155, 290 75,552 Bran Michigan 330,240 229,673 100, 567 100, 440 127 298,845, 417 100.00 Missouri 448,178 328, 983 119,195 76,676 42,519 Total New Jersey 48, 994,156 1, 915, 933 47, 078, 223 46, 467, 487 478,829 83, 347 48, 560 I Additional amounts used in combination with other materia s included under "other mixtures." New York 636, 129 636,129 636,129 2 Includes 1,045 proof gallons produced at an experimental plant from materials not shown. Ohio 1, 356,110 1,162, 670 193, 440 11, 248 181,901 291 Oregon 26,291 26, 241 TABLE 47.-Ethyl alcohol: Production, tax-paid nil. thdrawals, withdrawals for de- Pennsylvania 64, 984, 934 6, 369,155 58, 615, 779 57, 221, 860 105,867 1, 250,187 37, 865 Puerto Rico 3, 067, 636 I 3, 067, 636 2, 266, 248 1, 134 274, 697 naturation, and stocks on hand June 30, fiscal years 1934-1941, inclusive Texas 890, 720 890, 720 890, 720 [Proof gallons] Virginia 257,114 257,114 257, 114 West Virginia 49, 670, 560 6, 332 99, 664, 228 49, 511, 258 3, 538 149, 891 591 Wisconsin 333,192 14, 296 318, 896 283,755 35,141 Withdrawn Withdrawn Stocks Total 309, 505,095 29, 866, 523 1 281, 638, 572 9 274,887, 261 2,135, 668 3, 696, 008 394,078 Fiscal year ended June 30- Produced tax-paid tax-free for June 30 Percentage of total with- denaturation drawals 100.0 9.0 91.0 88.8 0.7 1.2 0.1 1 Including 476,182 proof gallons for beverage purposes, 45,669 proof gallons for medicinal use, and 3,706 1934 165, 103, 582 16, 154, 614 137, 416, 765 27,970, 640 proof gallons for industrial use. 1935 180, 645, 929 16, 990, 972 163,009, 786 25,252, 756 s See footnote 3, table 43. 1936 196, 126, 236 24,052, 532 172, 478, 748 21, 300, 340 1937 223, 181, 2H 32, 289, 650 179, 324, 373 28, 464, 541 TABLE 45.-Ethyl alcohol: Materials used l in production, by kinds and by States, 1938 ROL 033, 858 29,976, 609 164, 263, 210 32, 046, 632 1939. 201, 017, 596 22, 150, 969 175, 644, 641 30, 810, 351 fiscal year 1941 • 1940 243, 727, 756 24, 344, 306 223, 321, 704 21, 798, 554 1941 298, 895, 417 27, 866, 523 274, 887, 261 10, 392, 352 Grain 1 withdrawals, and State Molasses Other materials TABLE 48.-Denatured alcohol: Plants operated, product Corn Malt Other stocks on hand June 30, by States, fiscal year 1941 Gallons Pounds Pounds Pounds Gallons Pounds [Quantities In wine gallons 9 California 8, 530,083 635, OM 95,714 1,210 District of Columbia 798,858 Hawaii 1,831, 381 Num- Completely denatured Specially denatured Idaho 2,775 14, 652 3 686, 585 ber of Illinois 788, 208 89, 652, 530 8,324,126 3, 149, 195 15, 066 State plants Produc- With- On hand Produc- With- On hand Indiana 55, 590, 775 4, 560, 187 2, 572, 734 • 5 15, 364, 600 oper- Louisiana 59, 352, 004 ated 5 tion drawals June 30 tion drawals June 30 Maryland 27,461,841

Massachusetts 6,944, 475 c0 . New Jersey 58, 632, 014 California 179,012 172, 781 1,382 3, 126, 555 3, 125, 488 23,765 4, 775 7, 456 5, 408 499,942 498, 993 9, 100 Ohio 7, 355,040 856,800 188,160 District of Columbia._ 1-1 2,258 2,082 1,818 38,960 36,037 2,867 Pennsylvania 59, 641, 618 17, 474, 490 2, 520, 282 6, 128, 418 Hawaii 1-1 4, 197 4, 191 5, 231 5,304

Idaho 0,01 Puerto Rico 3, 749, 425 5, 087, 276 5, 101, 422 12,486 Texas 5 652, 964 Illinois 1,603, 201 1, 610, 134 447 6 15, 365, 060 Indiana 2, 989, 884 2, 989, 876 15, 222, 024 15, 237, 600 32.409 Virginia 726,307 727,108 15, 781 West Virginia 1 39,747,356 Kentucky 1,777,108 1, 778, 080 3,868 15, 004, 021 15, 024, 089 5, 013 Wisconsin 919,091 1,110, 284 1, 265, 953 2, 245, 793 Louisiana 01 N Maryland 4, 091, 136 4, 066, 753 36,327 13. 153, 280 13, 181, 049 33,392 2 18, 313, 394 Total 221, 820, 392 171, 818,129 17, 623.062 12, 054, 359 I 57, 596, 301 Massachusetts 348, 013 366,444 7,416 3, 885, 287 3, 896, 883 24, 163 24, 775, 857 68.919 1 For those plants in which ethyl alcohol is a by-product of the bu yl process, only the estima ed amounts New Jersey 756, 808 768,129 42, 751 24, 781, 223 148, 343 158, 906 207, 848 ' 208, 855 oi materials allocable to ethyl alcohol have been included. In 3 plants, where other products were produced New York wk. in addition to ethyl alcohol it was not possible to allocate the materials to each product, and accordingly all Pennsylvania 5, 475, 972 5, 497, 388 335, 364 25, 773, 222 25,759, 658 53.593 materials used at such plants are included. Figures do not include materials used at experimental plants. Puerto Rico 249, 805 251, 586 540 1, 046,173 1, 031, 614 22, 847 Texas 486, 975 342, 862 143, 948 2 Pineapple juice. 288 Potatoes. Vermont 3,565 3,259 Diamalt. Virginia 136,000 136,000 s Ethyl sulphate. West Virginia-__-_____ 46,070 45,996 4 26,368, 955 26, 948, 552 176,972 Cellulose pulp and chemical mixtures. Wisconsin 4,592 1,080 3, 510 281,917 282, 156 1, 965 37,382,100 gallons of ethyl sulphate and 2,365,256 gallons of crude alcohols mixture. A corn sugar by-product. Total 43 17, 676, 172 17, 720, 882 438,835 135, 834, 261 136, 319,810 630,974 Includes 12,037,907 pounds of rye, 8,758 pounds of barley, 5,894 pounds of bran, and 1,800 pounds of rice. 1 Included in denatured alcohol are 1,796,185 tax gallons of rum and 82,917 tax gallons of other spirits Nom-In addition to the materials reported above, 59,602,277 gallons of molasses, 883,382 pounds of corn, transferred from distilleries for denaturation. The number of wine gallons is not reported. 467,620 pounds of rye, and 257,858 pounds of rice were used at industrial alcohol plants in the production Standard United States gallons of 231 cub ic inches. of products other than ethyl alcohol. Number operated during any part of the year. 152 REPOR'r O!" COMM1SSIOl'\ER OF INTERNAL REVENUE HEPOR1' OF COMl\:lISSIONl'jR OF INTERNAl, REVENUE 153 T""DI,E Qy ml)nth~, J[)4J 49.-Dena/urcd alcohol: Prodnel1'on, liseal year 1'.\JlLB 52.-Speeially denat'ared aloohol: Withdrawals, by leadillg lff)rmulas and by 1Wiu(' gallons) . months, fiscal year 19.1J IWJoe gallons) }lIontll OornpletcJ J' Sp

Jllly_ •.•••_•••••••---­••••.•.. --.--....••. ---...... I ~~:~g g:~~:m :~'= "-Il ...... _...... :!, 2(l7, tl.'iO 2, ~~3.c,()2 2, ,2'3. (01) Z. 601. 6'17 2, 778.392 3.00-1, 459 j - .. .• ._____ 2, :103, 010 2.287.7:;'1 :l, :l:J8, 171', 2, $74. 958 2', O:l:i, 136 :l, :JID, ()I;lj ArJ~USt_ •••• •.••. ------•••••••••. -­ -.... :i:W:l,:j02 10,GOO.:j!ll, 13:603 Sepwmbcr.••• ••__ • •••••••••• .•••_. .1811 ll7ll 10.2SG,lr'j l3.oua ',Q--­ -: __ 2,21O,OM 2.Zlr.,OI2 2,36~,'i:lG 2,505,7107 2.S5U2O 2,360.382 Orlnbrr_. ••••• • ._•• ._...... 2' 269:SII; to,Il.~I. r,i1 I~ 1M, js----~.. ------­ ------­ 42S,52l ~':j.O\ll ·1:i1.221 --I80.8f>S fm.G92 4~2,917 No'·cmher•• ..-••••• ------.. . 948. O! I II. 2"0(;, SO'J Ii 21. :l~::\~---...-_·------·· ·· ~8,".~.'\ 4:j~,~ tJ6.10' 4!6.~~\ ~,~? ~~.!!67 Deccmher. . .. __ _. 610.127 9,{l-IO.Ztl7 10610: 40 _.. __ • __ .;H, 4,7 r.,,32S 280.5,3 21;\7.•~S 271,0,2 ••­.•,6-17 IL·:.. ..--.-•• ­-.. -­ _­ 2'lO.l:l1 270.0-10 Z56.5~14 207.753 211.31:1 1~1'!l:!? 23-D • .. Ifo9,01l5 2:,l-I,SIl 218, I.)(J 20~.86-1 209,5f>8 1/·1,8,;9 ir~(1F~~:::::=~::::::::~::=::::::::~::::~::::::::::: ~H~? :H~n&~ !~~ 4 .. __ _._ ------.. --­ H9.2!15 t72.2-I8 185,3S1 173.555 17,',045 10".~93 1~, a-A " ...... __ S7,IOil 111.971 J5-IJ>S6 118.181 1l8.·1R$ J63,63O AprIl.. •..... ------... ------­••• ---­.. ,-.". • \151. 780 iG2,n.jr, 14,714.422 ~f' . • __ _. ._..__ 70,2'.!lI %,077 9,,3-81 ,~7.3:l5 ~1.370 139.76" ~~:~L:::::·:::~:::::.:::·::::::::::::::~:=:~·::::::::: 91).1,703 H, m. 728 I~ :,~-i.- ..---_ _..-...... 113,1(10 101.287 126.,\01 117. H6 120.978 12'.la7 i.1-A • 2(j. ·125 -la, 438 101,321 71,136 :;G.276 88,IIJ1 ·l'ot;;j •.. •••• ._ .._.... 17,GIl), 172, IJ5,S3·I, 261 15;1,~IO,431 :l'.1-C .... __ :HI.Z57 5-'l.ll58 75. 90ft 7.;.(i.~9 88.!l07 IH,40S :l8 ._ 2l.1r.0 411,300 -I~,7f,1l 51.000 73,6.'1() St.!O)(1 31-:­ • 18,S13 38.289 107,-112 30.803 26.006 78.658 12-.\ ...... •••_ __ -­ __ 36,318 32.07'; :;0.91J 36.307 '15.215 60.92\ TABt,!·] flO.-Completely rlc1U1111I'£.d ale"J"'l: Withrtl'nwals, Ii!/ furliO/laN (J1!fi by mo-naa., 31'-8•• __ .. __ •• SO, IIII 31i,M.1 5ll,36\ 51.131 J2.816 37.0tl 1'.H.I __ 10.3'11 2-1,[>J6 2'2,07-1 ao.7!)9 27,283 10.gU ji.• e(J1 lIear 19/, l :lO • ___ •. .._ 9.;;82 15,,~ 12.!VJO 10.507 15.225 JO.910 .\11 other> __ __ 56. ,94 M.295 62, 87.S n. 026 20.036 oIfUl3 IWlnc~allonsl \ , 'I'om\. __ __ • 8. nG. 618 9. -In:l ~~If! 1i. (!r,il fl[,r, , 10. r'89 705 11. 2111, ~ l~ I J1.127. '106 FrJrrnuln: Formu!:l JllDllllry I Fl'lJrUllr~' I '~larC!l I A"PriJ1 !vi",. Junu I Total 1\[(",lh '1'otlll 2-11 ...._. 2.301.91l 2.1lO0.·IZtl I 3.:108.5-17 3"102.430 ·1.f'48.670 1 5•091)..153 37.651.823 13 1l 12 11 HI 1.. 2,309.61-1 2.123.2103,700.375 2,llSS.f,s2 3.J-I0,881 J.749,6!lO 35.216.087 211.. 2,927,539 2.9H,653 2,ll3(),ol08 a,OI9.9Z! 3.213.073 3.\21.271 32,082,7:12 18_ .. ._ 52ll, 950 4'17. ~l8 5[,1,146 WS.2\)3 429. 311l 400.393 5.098. .142 July ",...... • I !la.67lS ooa.;~--J.10-1 ---;;~I---;-;; 35--A .. _ 42/l,03'1 317,&27 300.56:; 4IG,2ll6 '191,7(;\)1 11H.337 r.,151.;174 r .0 • 167,302 2lIG.I-I'11 2lH,2:H 2(;,.675 310,;,;]lS 2!15,700 3.1-15,278 863. 77. , Sit O~1 \7,llf>3 -10il I, 7~", ~ ~e':f~~b(,;':: :~:: ::::~~~:: ~. i>fJ.~. I... . __ .. 187,778 180. ·1:JI1 I' :lSii, 1.36 282.852 298.620 342, HI) 2,926.0,52 _ :.:::::­ b:!3 .j Ill, ('"r .. '.!:HI _ •••••••• 1:1:1,620 19t.ll.1t 235, ,H2 2:i2.085 223, 1)~7 277, 910 2. [,21,012 .J, 208.408 71 ~ 277 ~~, -10-1 ,j,410 2. ~:H ~. \'111. UJ NUI'ember•. . __ 4...... ~ __ • 140.400 IH,5aJ 1G8,90J 108.681 10:;.806 193.902 1.93'1,308 2. LOIi, 0..' :11(1,121 11.600 :3.'176 1,~lG :l,:~.!\I,olO6 Dl'ucmbc,_.. , _.. er.s,OG\I J~I. f>3~' l.~;, 3·A ....._.. HlI.82'.! 127.21J l:lO.58.' 142, -507 16r..8tl\l 119, 102 J, 571, ~94 lanull!')' .. 299 30. 710 I,UILm ~12.... :~ '151.11V9 :.-n~. 22; :. ·1Il1 _. __ ~ .. _ 11;00 115.,271 ..;.. .. __ In070 144,035 HI.610 178,470 J62.2J2 t62, 227 1.502.300 Frbruory .• _~ ••• ;_. • _ 321, SS3 2:~.\ .. S.~.366 117.·178 l:l2.:J.1~ 116,~OO 1-I1.03t 138.3t2 1.·131;,598 ,,[arc'l! ...... _._ ••••__. _ 120,633 :!.51ti __ . _ __ .. 4r.o.\d 314. lUI J71\.m 2\1.181 •• ~ _ _. &I,lli' 13-.\ ...... [',.008 al].Pl0 77,(174 60,987 77,542 \l(),2t6 795,8-13 :Iii-c'oo __ .. __ •• o-I~ 7'J.314 70.tm 781,271 11~.OS7 It'S. (tal 7. 97~ ~. •• :1":1, UlI "q. r,0,2!J8 58_ 000 M.I'79 i{;~,L::. -:::::::::~:::.:~::::::_ 3[~1. 2S~ ..... 32.73-3 41,027 S(I,O:;O 73.147 .''',63., n.6W mil. 712 JUIlC ...... _. 715.37Il 20,\ 700 1I'l!l.&2I l»J.~ 3011. lSSJ u. ~n ______!ISs, 1115 3. _. __ _ 23,-14-1 61.995 70.052 33.47l! 6-1.710 M,S35 uOS.o86 I~-A .. _ 2Il.1O~ .Jr•• 027 fol,316 ,13,389 60.:!3S r',,3~6 5-1\).009 Tow!. .• __ .. • 'J.II}(),~J :;:;-.u 35.612 30,6-17 30,982 ·js,tlo ·12,:183 15.719 ,SOS.lfJO 2H\ 77r~ ;7;~1 ~. M6 I., 7:lU, ll82 1'. I :i'll-B. -­ 1J •.'.10 10. HI W,:l7:i I 18,000 l:l.571 21i.852 n~.887 JO . _ .... II. :157 I l:j.2118 IJ.3Hl 13.314 n.428 J5. GSt J5-1.031 1 Illr,;rmntlon ,,. to the cOIllPOsllioli or H.e:sc j'IrII1UJrlS "ill he I,yowd in '1'1'1);1>"';- IkclsintlS '1Q~. ItIll11d All otl"'r~_ ___ 47. 1.00 37. 14.6 6-1. ;;'1 ;\1, 8il2 M. SFAl "5. oro tl4S.895 ~6-1S nnd (I,,· Aplelld" 1.0 !l<-v,ulat[olls No.3, );'(I'llluhl(' rur Compl,tely :llld Sl'ccl:llly DCII"tun'd .'\.1('01101. TotaL.~ I 9,840.0-;:; 10. 100.821 12, 8Ir•. I~l I 12. J2i> OSI 13.000_ 35[, 14,9-11_ 871 13(). 310. 810 RC\'ised )fI3:}r Tn.'-:.L:::.ury 1)e.pt\J·lmcut, BI.lrl.':l,u of Inl('l'unl Re\'~'nlJl" • Withdrllwals for the ycar excc,X11n~ 100,000 ~allOl\s ranked in ordl'r or total wi.bdrawals.

T A (H.E 5L-Sl'ecially dClca/ul'nl (J/eoh(ll: lVithd"a'WI1I~, bll jrJY1fllllfls, fi,~elll ilear 191.1 T M:lLJo: 53.-Specially denatured alcohol: Operations of bonded denlers, by States, jiseal year 191,1 (Wino ~:\l1o"sJ [Quantities ill winl' gallons! l"ormula I I AmOlWt }'ormulo 1 Amount }'orruuln I Amount Formula I I .\lIlcun& I II 1­__11 1 11 1 - NnrnberrJf State dc.nlcrs Hoc.,i\-,·S O-B...... 8f,. 20t 2.~A ....._ 54.1ll13 :l7 •• ••• Oflll, Sl;O 11,IGI 1 4.6.231 ·W.5.~ 1,146 )'1·,\.--.-.­ M'I,(I09 27 ••• -12,010 J,-.I... __ .. 2.o.~7 :lO 2 lH,02S U:~.!H.; 14.4-13 1:J-A .. 'l'5.~3 27-.\. _ 8.2'-1 3~ ... '.ll>.,;jO 1\,\l7P 7 32i.016 32,. -Ial n~42 17._ .• 2,ttblOS2 27-B _._ 7J.~:!,'j ~~A ~.~ . 1.')0 I. 110,417 11·1, G03 7, 0117 1.8 __ ...... ~.fi9s.3-l2 cn; _. . _ GIlD. 712 :jS-!l 5OS,lr,OII"' __ p. 3• ,2.303 71,743 0, :;23 19_...... (ill.09O 2:;-.\.... :US2 :l~-C ... I:j,732 1 I':l. So." 172.93G In. 957 ~ ~ ~,'h."JV ~;;._ 5~~ (,~ "'1.' 13.&23 70s !.272 AJ£".ohOI, 'J'f\':\.Sur;-' Ih·p·lrtrn~'lJt,.!if !lUu'JHll.L1 by 'rn.'llSlJry l)cd~ion ~o, l::Ki1. I 0,25-1 7.137 ),607 1.4M Z,254 ___~)l __ .. , .. __ ~~_~ __ . _ . .._ •• _, _... ~~. A~ .....hft Q' , .... vv.> '0\1 I •• If... Y31 2711. ~H3 I :-uOlh.'r o!'<'mllull dnrlul( nny IllUt "I the YClal'. U:::118--H--ll 154 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 155

TABLE 54.-Specially denatured alcohol: Operations of manufacturers, by States, TABLE 55.-Distilled spirits: Number of distilleries and internal-revenue bonded fiscal year 1941 warehouses operated,' by States, fiscal year 1941 (Quantities in wine gallons] Distilleries Internal. revenue Number Used In State bonded State of menu- Recovered On hand Received manatee- Whisky Rum Gin Brandy Other 2 Totals ware- faetwers after use s turing June 30 houses operating I

rel Arizona Alabama 78,709 40,168 117, 445 7,760

Arkansas N M... 30 30 11 Arizona California 77,620 78,992 10,501

Arkansas ES8

Colorado ,. California 3,216, 415 993,394 4,192,565 180,814

Connecticut .I Colorado 46, 810 49, 396 1,889 M

Georgai N 360, 663 1, 146,812 90.928

Connecticut :1 798, 298

Hawau MM. MO 7

367, 714 447,904 18, 688 .1 Delaware ;; 84, 011

Illinois 2 518,008 519,124 5,097 District of Columbia ;;P

Indiana n. gM Florida 15, 277 5,130 20,134 2, 380 - r Kentucky Georgia 69,296 69,109 1,593

Louisiana , 04• r Hawaii 18.179 18, 223 97 iRr Maryland CO 0

1,896 2, 571 4 4

Idaho

Massachusetts NMt Illinois 7,442, 699 724,530 7, 996, 168 397,747 Michigan Indiana 7, 174,020 4, 721,364 12, 551, 949 566,128 ag N

Minnesota eo Iowa 393, 899 244, 246 6, 371 ■

Missouri Ne i 82.098 79,411 6,010 Kansas 61

New Jersey CVO Kentucky 411,455 406,437 27,050 e

-' New York Louisiana 7,182, 278 7, 177,094 71, 371

Ohio NC r. Maine 11 916 35 Oregon 9,848, 1113 302, 930 10,042, 528 176, 241 ON M3CCI Maryland §5 Pennsylvania Massachusetts 4, 935,334 4,840,855 9, 756,968 212, 515 Tennessee Michigan .2A 2, 658, 139 2, 169, 770 4, 768, 350 197,766

Vermont am Minnesota 233,197 _________ 229,035 12,200 Virginia 138,669 8, 633, 905 8, 777; 989 698 Mississippi r Washington Missouri 1,926, 581 2, 478,411 4, 443, 613 174,339 Wisconsin 21 19 4

Montana Z 18,067 86,907 104,058 2,324 Nebraska t 88 11 127 16 232 288

r Total 8 New Hampshire 16, 872 16,949 192 New Jersey 23,697, MI 21, 748,180 45,135, 265 939, 649 116 39 New Mexico £ 108

0 I Number operated during any part of the year. 34 New York 3 7, 324, 274 5,911,881 13, 260, 948 274,437 2 Except as otherwise noted represents distilleries p educing h gb-proof spirits. 2,950,705 209,358 3, 141, 293 121,861 North Carolina ,S 3 Exclusive of duplications which resulted from plants produc ng more than one kind of spirit . North Dakota 43 52 17 Arak. Ohio 1, 269, 704 279, 843 1, 498, 603 109, 644 49,279 9, 846 Oklahoma n 55, 783 Oregon 17,449 17,473 2,755 TABLE 56.-Distilled spirits: Production by kinds and by months, fiscal year 1941 9,109, 899 10,073, 552 19, 166, 741 197, 220 Pennsylvania Er Puerto Rico 996,922 998,124 834 (Tax gallons I] Rhode Island a: 97, 961 8, 524 105, 461 6,648 South Carolina ." 1, 440 169 1, 459 144 South Dakota 92 51 100 24 Other 13, 309, 040 2,071, 606 15, 357,856 1,850,905 Month Whisky Rum Gins Brandy 3 Total Tennessee E7 spirits Texas 798, 007 57,700 790,006 88, 739 Utah -7° 7,346 7, 587 250 ° 6,889 6.969 88 Vermont SW July 5, 199, 555 167, 280 614, 463 316, 459 1,305,661 7, 603, 318 Virginia 1, 387, 975 1, 282, 872 2, 374, 850 347,273 August 3, 251, 931 177, 263 404, 548 1, 987, 767 1, 041, 258 6, 862, 767 Washington 6,043 6.085 1, 550 September 6, 775, 849 194, 242 262,893 8,130, 317 1, 394, 988 16, 758, 289 West Virginia 9S 26, 138, 560 22, 014, 322 48, 170, 813 70,998 October 10, 435, 216 238, 574 286, 590 9, 009, 449 2, 101, 285 22, 071, 064 409,629 397,876 24,286 Wisconsin N November 11, 908,032 219, 172 302, 217 3, 619, 210 1, 778,113 17, 824, 744 Wyoming 10 10 3 December 12, 315, 791 228, 236 202, 697 986, 341 2 027,040 15, 760,105 January 13, 219, 788 154, 182 218,163 298, 234 1, 811, 277 15, 701, 644 Total 4, 200 134, 847, 908 89, 383, 748 223, 745,001 6, 217,459 February 12 658, 046 199, 564 210, 806 284, WO 1, 781, 703 15, 134,619 March 12, 642, 833 304, 968 728, 337 147, 854 1, 689, 681 15, 513, 573 April 11, 859, 719 251, 718 625,162 265, 753 1, 723,317 14, 725, 669 I Number operating during anypa t of the year May 12, 025, 273 240, 639 605, 724 184, 591 1, 675,473 14, 731, 700 In some industries, where the denatured alcohol does not become a part of the product, a portion is re- June 9, 559, 950 239,108 715, 807 133, 402 1, 872, 987 12, 521, 264 oovered and reused. 3 Includes 210,763 wine gallons recovered from solutions received containing specially denatured alcohol. Total 121,121,851,983 3 2,614, 946 5,177, 357 25, 383, 877 3 23, 200, 583 175, 208, 746

1 Figures are in tax gallons. The tax on cdstilled spirits is collected on the basis of proof gallons for spirits of 100 proof or over and on the basis of wine gallons for sp rits of less than 100 proof. (See secs. 2300 and 2809, Internal Revenue Code, 1939.) The proof of spirits is twice the percent of the content, by volume, of ethyl alcohol. Spirits containing 50 percent ethyl alcohol by volume are, accordingly, 100 proof. A standard proof gallon is a wine gallon (231 cubic inches) of 100 proo spirits. The number of proof gallons contained in a wine gallon of spirits of proof other than 100 is proportional to the alcoholic content. (The units described are based upon spirits at 60 degrees Fahrenheit, at which temperature ethyl alcohol has a specific gravity of .7939.) For additional production of gin at rectifying plants, see table 68. See table 58 for kinds of brandy oduced. • Includes 1,796,185 gallons produced at distilleries for denaturation. Except for 82,917 gallons of spirits produced for denaturation and 1,225 gallons of arak, reprceents high- proof spirits produced at distilleries.

156 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE, 157 TABLE 57.-Distilled spirits: Production, by kinds and by States, fiscal year 1941 TABLE 59.-Distilled spirits: Total withdrawals, tax-paid,' by kinds and by months, [Tax gallons] fiscal year 1941 [Tax gallons] State Whisky Rum Gin 1 Brandy' Other spirits Total

73, 632 Arizona 73,632 Month Whisky Rum Gin Brandy Other Total Arkansas 4,828 4,828 spirits California 524, 043 281,139 24, 754, 295 10, 700 25, 570,177 Connecticut 21, 000 5, 493 26, 493 15, 514 15, 614 July 5,467, 645 46,819 604,824 85,185 1, 421, 866 7,626,889 Georgia August 3,614, 837 Hawaii 614 6, 250 1, 225 8, 089 35, 426 424, 659 104, 585 668, 460 4,847,967 1, 8413, 328 1, 778, 889 26, 901,302 September 6, 335,649 97.382 272, 976 183, 995 1, 323, 854 Illinois 23, 229,085 October 8,183, 256 Indiana 19, 474, 448 I, 918, 922 11, 370, 712 32, 264, 082 8,904, 744 73,056 228,943 231,153 1,981, 909 11,479,805 130, 249, 515 2,103 2,938, 509 61, 653, 727 November 10, 490,262 96,303 324, 881 310, 718 1,913, 204 13,134, 368 Kentucky 57, 332, 890 1, 710 December Louisiana 312, 462 120, 518 1, 204 434, 184 7,322, 796 82,183 221, 645 258, 430 1,065, 270 a 950, 324 706, 535 8,149 3, 534, 573 13, 318, 523 January 5,016,503 86,256 197,330 173, 076 566,984 Maryland 9,069, 266 February 6, 040,179 Massachusetts 78, 606 1, 257, 391 1, 335, 997 5, 822,668 64,464 215,564 156,630 703.965 6,963,291 243, 602 March 6, 619, 399 65, 426 746, 578 175, 663 842, 728 Missouri 243, 602 April 8, 449, 799 New Jersey 234, 614 234, 614 6,147, 206 67,134 661, 875 152, 223 998, 517 8, 024,955 627, 918 7, 940 153, 369 789, 227 May 7, 531, 002 87, 330 570.564 148, 583 1, 384 429 9, 721.908 New York June 7, 209, 863 Ohio 5, 289,146 35, 956 411, 402 5, 736, 504 67, 945 697, 649 173, 083 1,132, 899 9, 281,439 23,967 23,967 Oregon Total Pennsylvania 5, 735,197 100, 057 5, 835, 254 80, 541,979 818, 754 5,167, 488 2,153, 324 14,034,085 102, 685,625 Tennessee 242, 507 3, 379 245, 886 Vermont 5, 656 5, 656 Virginia 216, 314 128,398 344, 712 1 These figures refer to spirits withdrawn subject to tax at the rate of $3 per tax gallon. with he exception Washington 132, 991 132, 991 of brandy, for which the rate was $2.75 per tax gallon. In addition, 19,818,471 tax gallons of brandy were Wisconsin 9, 785 9, 785 transferred from brandy distilleries and 5,180,908 tax gallons of brandy were withdrawn from internal- revenue bonded warehouses for the fortification of wine. (The Act °Lions 24, 1940 (Public, No. 655, Seventy- Total 121,851, 983 4 2, 614, 946 5,177, 357 25, 363, 877 4 20, 200, 583 175, 208, 748 sixth Congress), effective July 1, 1940, amended section 3031 of the Internal Revenue Code by eliminating the tax on brandy used in the fortification of wine and increasing the tax on wine to compensate for the loss of revenue occasioned by such elimination.] ' 1 For additional produccon of gin at r ctifying plants, see table 69. I See table 58 for kinds of brandy produced. Includes 1,796.185 gallons produced at distilleries for denaturation. TABLE 60.-Distilled spirits: Total withdrawals, tax-paid,' by kinds and by States, 4 Except for 82,917 gallon of spirits produced for denaturation and 1,225 gallons of arak, represents high- fiscal year 1941 proof spirits produced at datilleries. [Tax gallons] TABLE 58.-Distilled spirits: Brandy produced, by kinds and by States, fiscal year - 1941 Other State Whisky Rum Gin Brandy Total [Tax gallons] spirits

Arizona 21,680 21,680 Virginia ashing. Total California 4, 667, 511 Kind California Ohio Oregon t o 18,245 257, 621 528, 945 63, 938 5,536,960 Colorado 54,203 54, 208 Connecticut 114, 152 5, 314 267 12,933 132, 0611 1 Georgia 4, 048 Grape 22, 754, 475 21, 649 984 120. 84, 147 22, 864, 837 Hawaii 9,098 1, 777, 231 1, 109 44 557 1, 710 Raisin 1, 777, 231 Illinois 16, 377, 898 63, 243 1, 869, 622 237,979 168, 935 12, 311 16, 418 122,002 32, 087 , 606,427 1, 770, 556 20, 319, 293 Apple Indiana 11.303, 608 48, 044 1,424, 213 71, 199 5, 758, 472 Peach 17,081 3, 508 2, 043 $ 41, 525 Kentucky 18, 605, 538 4, 494 27, 131 26, 255, 969 20, 651 250, 347 17, 264 1, 358,965 27,903, 196 Prune 22, 637 Louisiana 297,765 14,312 40 Cherry 4, 129 5134 1,124 189 7, 522 13, 52E1 Maryland 312, 117 1, 269 783 2, 519 2, 531 i 12, 153 7, 438, 289 3,823 706,448 28,157 3,260,461 11, 437,178 Blackberry Massachusetts 1, 019, 321 345, 428 10, 375 86, 069 Apricot 9,378 167 9, 545 Michigan 1,461.193 4, 658 4, 668 10,270 10.270 Pear Minnesota 307,129 73 2,660 Guava 6 3,941 56,018 365, 870 6 2,309 Missouri 596, 013 1,104 175 11,993 609, 285 Pineapple New Jersey 732, 473 22, 643 601 545, 889 37, 247 Plum 429 429 Slew York 1, 338, 783 163 163 115,636 3,199 631,072 323, 590 125, 739 1,199, 284 Elderberry Dhlo a 153, 455 2, 592 56,421 488,631 Dragon 3, 701,099 24,754,295 35,956 23, 967 128, 398 132,991 25, 363, 877 4, 787 4, 787 Total Pennsylvania 7, 798, 540 268,909 10,010 133,758 1,139,328 9,350 561 lannessee 44,545 1,636 46, 181 Vermont 905 1,880 191 Includes 3,462 gallons in Arkansas. Virginia 2,978 Includes 1,368 gallons in Arkansas, 5,493 gallons in Connecticut, 2,103 gallons in Kentucky, 8,149 gallons 201,201,279 32, 478 233,755 I Washington 31,042 85 2,267 118 33, 492 in Maryland, 229,563 gallons in New Jersey, and 7,940 gallons in New York. Wisconsin 266 3 Includes 15,514 gallons In Georgia and 3,379 gallons in Tennessee. 2611 4 Includes 5,051 gallons in New Jersey. Total 80, 541, 974 818,754 5,167, 488 2,153, 324 4 Produced in Hawaii. 14,004,085 102,685, 626

I These figures refer to spirits withdrawn subject to tax at the rate of $3 per tax gallon, with he exception of brandy, for which the rate was $2.75 per tax gallon. In addition, 19,818,471 tax gallons of brandy wero transferredfrom brandy distilleries and 5,180,908 tax gallons of brandy were withdrawn from internal- revenue bonded warehouses for the fortification of wine. [The Act of June 24, 1940 (Public, No.655, Seventy sixth Congress), effective July 1, 1940, amended section 3031 of the Internal Revenue Code by eliminating the tax on brandy used in the fortification of wine and increasing the tax on wine to compensate for the loss of revenue occasioned by such elimination.] 158 REPORT OF COMMISSIONER OF- INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENVE 159

TABLE 61.-Distilled spirits: Bottled-in-bond I withdrawals, tax-paid, by kinds TABLE 63.-Distilled spirits: Stocks remaining in internal-revenue bonded ware- and by months, fiscal year 1941 houses, by kinds and by States, June 30, 1941 I [Tax gallons] [Tax gallons]

Other Total State Whisky Rum Gin Brandy Total Month Whisky Rum Gin Brandy spirits Arizona gfis 909,624 909,629 838,056 3,858 843,679 California 5,081, 277 23,975 81,775 13,590, 12A 19,698 18, 796,899 July 2, 578 537, 542 532, 869 Colorado 83,398 83, 398 August 8, 574 972,218 Connecticut 961, 201 R. 124,299 6,662 630 41,715 684 173,985 September 10,010 1, 347,492 1, 332, 973 g Georgia 14, 713 14, 713 October 21,782 1,949, 154 Hawaii November 1, 923, 286 as 7, 569 12. 881 17, 830 38, 2730 1, 649,037 16, 658 1, 669, 729 Illinois 81,265.283 111, 176 19,687 440.490 944,706 82, 781,342 December 12,186 761,468 744,492 Indiana 77, 440, 046 18,343 33,898 396,502 13, 889, 938 91,778,727 January 388 885,394 Kentucky February 876,395 5 213,739,792 319,050 6,729 50, 602 2,460,145 216, 576,318 1,173, 675 9, 297 1, 185,822 Louisiana 357,290 334,825 12,342 709,457 March 5,775 944, 433 April 936,167 Maryland 99, M0,455 2,144 17,336 61.695 5,662, 726 54,994, 356 1, 228,792 6,080 I, 237, 769 Massachusetts 2, 031,198 1, 428, 881 14,576 93, 369 3, 568,021 May 10,498 1, 360, 795 Michigan June 1,346,904 71.498 71,498 Minnesota 141,106 335 166 29,504 171,111 112,684 13,695,435 Total 13, 543,847 37,846 1, 058 Missouri 1, 138,755 508 316 25, 511 1,185,090 New Jersey 1, 506,986 3.116 857.611 19, 366 2,381,579 New York 52, 269 6, 756 5,146 572.426 7, 992 644, 589 I These spirits were bottled in bond prior to the payment of tax, with the excep ion of 1,602, 78 gallons of Ohio 18, 472,273 1, 211 64,571 3, 274, 692 21, 812, 747 Oregon , whisky and 5,182 gallons of brandy bottled In bond of er payment of tax. The figures in this table are 40,385 40,335 Pennsylvania 50, 622, 671 1, 217, 753 14,216 380.531 included in total withdrawals as shown in table 59. 468, 788 52,703,959 Tennessee 490,190 18, 266 508,456 Vermont 354 362 80 22, 258 23,059 spirits: Bottled-in-bond 1 withdrawals, tax-paid, by kinds and Virginia 1, 567, 391 168,540 1,735,931 TABLE 62.-Distilled Washington 195,123 3,887 6,483 205,993 by States, fiscal year 1941 Wisconsin 89,918 292 90,210 [Tax gallons] Total 501.080. 691 3,482.958 210,784 16,865.919 24783,823 3 551, 424,175 I Number of tax gallons according to original entry gauge. Losses are not determined until withdrawal. 'In addition, there were 8,774 gallons of unclassified spirits in export storage warehouses. Total State Whisky Rum Gin Brandy TABLE 64.-Distilled spirits: Stocks remaining in internal-revenue bonded ware- 51 47,863 596.646 houses, by kinds and by years and seasons of production, June 30, 1941 I California 548, 475 267 7,124 7, 124 Colorado 8,809 [Tax gallons] Connecticut 8,809 1,334,491 321 5,788 1, 340, 600 Illinois__ 18,683 1,120,788 Other Indiana 1,101.805 300 Year Season Whisky Rum Gin Brandy Total 6, 710, 751 153 832 4,858 6,716, 594 Kentucky 1,374 Louisiana 1,374 635,170 799 635,969 1911 Spring 77 77 Maryland 175,715 Fall 135 146,882 28,529 304 135 Massachusetts 21,438 1912 Spring 850 650 Minnesota 21,938 219, 877 175 6 220,059 Fall 30 159 189 Missouri 11, 464 133, 690 1913 Spring 2, 640 137 New Jersey 122.226 2, 777 50.075 1,154 51,229 Fall______1,400 1,400 New York 519,572 1914 Spring 2,244 • 2, 244 Ohio 519,572 2, 105, 825 8,285 21, 765 2,135,875 Fall 288 279 567 Pennsylvania 4, 287 1915 Spring 2,127 58 Virginia 4,287 2,185 5,666 5,666 Fall-______1,278 93 1,371 Washington 1916 Spring 11, 699 11, 699 112, 684 13,695, 435 Fall 9, 462 135 286 9, 883 Total 13, 543,847 37,846 1,058 1917 Spring 5,484 169 1, 456 1 99 7, 082 14, 290 Fall 7,194 223 29, 622 6 18, 757 50, 802 1919 Fall 87 179 266 I These spirits were bottled in bond prior to the payment of tax with the excep ion of 1,602,178 gallons of 1920 Spring 286 98 whisky and 5,182 gallons of brandy bottled in bond after payment of tax. The figures in this table are In- 389 Fall 2,502 2,502 cluded in total withdrawals, as shown in table 60. 1921 Spring 1, 121 1, 121 Fall 36, 681 897 37, 578 1922 Spring 351 351 1928 Spring 462 462 1933 Fall 187, 727 72,365 3, 320 '263,412 1934 Spring 671, 349 8, 662 30,509 710, 515 Frail 1,788,892 245,477 917 42,695 2,057,431 1935 Spring 4, 331, 788 786, 012 821 32,969 5, 151,590 Fall 9,602,818 70, 421 12, 544 109,129 9, 789,912 1936 Spring 25, 983,394 91,410 2,697 86,844 . 26, 169, 345 Fall 45, 481,098 147, 171 3,016 268, 245 193, 862 46,043,392 1937 Spring 53, 569,161 172, 966 11, 279 205, 394 469, 071 54, 927,361 Fall 29, 091, 663 209, 897 12, 620 1, 276,679 780, 584 31, 371, 443 1938 Spring 37, 783,387 66, 183 2,744 312, 616 686,058 38,850, 988 Fall 35, 593, 922 222, 532 171 8, 968, 074 522, 200 45, 304, 899 1939 Spring 43, 583, 851 160,944 5 1, 054 743,383 2,865,485 47, 354, 717 Fall 35, 899,884 269,189 172 1, 365, 371 1,994, 763 39, 529, 379 1940 Spring 60, 306, 725 274, 727 1, 655 477, 396 4, 726, 931 65, 787,384 Fall 48, 868, 812 185, 099 3, 162 2, 396, 975 5, 605, 635 57,060, 628 1941 Spring 71, 270.830 498, 973 132.354 550.492 8. 963. 297 81.415.946 Total 509. 080. 691 3. 482. 958 210.784 16. 865, 919 26. 783. 823 +551.424.175 Number of tax gallons according to original entry gauge. Losses are not determined until withdrawal. Due to correc ion, this amoun exceeds the figure reported for June 30, 1940. 3 Due to error, no figure was reported as of June 30, 1940. In addition, there were 8,774 gallons of unclassified spirits in export storage warehouses.

REPORT OF COMMISSIONER OF INTERNAL REVENUE 161 160 REPORT OF COMMISSIONER OF INTERNAL REVENUE TABLE 67.-Distilled spirits: Materials used in the production of brandy, by kinds TABLE 65.-Distilled spirits: Losses in internal•revenue bonded warehouies from and by States, fiscal year 1941 leakage and evaporation, by kinds of spirits and by States, and other losses, by kinds of spirits, fiscal year 1941 FRUIT I [Tax gallons) Kind California Kentucky Tennessee Virginia Total Other State Whisky Rum Gin Brandy spfrits Total Pounds Pounds Pounds Pounds Pounds Grapes 31,058,4131 31, 058,231 Raisins Losses from leakage and evaporation: 1 3,483 7, 057, 815 7,057,816 Arizona 3, 483 Apples 1, 640, 000 179, 802 1, 604,156 3, 423, 958 995, 066 3, 635 128 87, 848 2,080 1,068,757 Peaches California 8, 598 1, 980,000 502, 790 1, 982, 790 Colorado 8, 598 Apricots 580,000 560,000 19, 750 I, 061 1 1, 799 22, 806 Prunes Connecticut 385. 456,636 456,636 Georgia 395 93 20 41 154 Total 42, 252, 682 Hawaii 2,914,343 179, 802 502, 790 1, 604,166 44, 539, 430 Illinois 2, 839, 838 10, 019 459 23,936 40, 101 2, 382, 604 3, 596 698 10, 300 244,157 2, 641, 305 Indiana 57, 812 5, 935, Kentucky 5, 873, 610 3, 375 1,874 FRUIT WINE, CIDER, AND JUICE 2 30, 266 1,979 11 32 256 Louisiana 2, 050, 538 Maryland 1, 826, 248 711 11 9, 372 219,196 189,907 45,684 5,477 241,068- Massachusetts 2, 322 Washin - Michiang 2, 322 Kind California Ohio Oregon Virginia tee 6 Total 70,425 22 6 6, 523 76, 976 Minnesota 121, 344 Missouri 120, 489 348 507 135, 623 2, 971 64, 076 1,245 203, 915 New Jersey 17 59, 287 Gallons Gallons Gallons Gallons Gallons Gallons New York 22,485 714 36, 071 Grape 153, 942, 495 91, 434 6, 913 500 477, 514 s 154, 564, 570 625,841 548 1,249 26,971 851,279 Raisin Ohio I, 249 1, 299 11, 416, 760 11, 416, 760 Oregon Apple 1, 214, 389 59, 415 146, 819 774, 627 200, 073 4 4, 454,119 2,133, 133,440 57, 378 16, 799 76, 145 283, 762 Peach Pennsylvania 3, 902 19, 050 15, 205 ' 94, 808 Tennessee 3,831 71 Che 19, 573 2, 315 7, 830 730 43, 733 79,181 236 51 287 Black Vermont 37, 502 10,450 6,674 7,850 12,472 062,931 Virginia 33, 3 84 4,118 Prune 38,250 23,376 61,626 7,068 13 3 1, 606 3,690 Washington 34 Pear 45,738 45,738 Wisconsin 34 Plum 9, 860 9, 860 Apricot 1,814 1, 814 17, 324, 538 132, 147 1,267 268,495 667,816 18, 394, 213 Total 237, 384 Elderberry 963 963 Losses from other causes 2 9, 964 6 921 229, 785 1, 708 18, 631, 597 Total 166, 641, 327 164, 577 212,974 802, 757 774,187 7 170, 846, 756 Total losses 17, 334, 502 132, 153 2, 188 493, 230 669, 524 1 In addition, the following amounts of fruit residuums were used: 1,577998 gallons of lee In California I Difference between entry and withdrawal gauge of all spirits withdrawn from bonded warehouses. and 3,275 gallons in Ohio; 4,357,410 gallons o grape pomace in California and 111,623 gallons o apple pomace I Losses from fire, theft, casualty, etc.- in Virginia. Not included are 12,516,264 gallons of grape wash in California. I Includes 46,714 gallons in Arkansas. TABLE 66.-Distilled spirits: Grains and molasses used in production; by States, O Includes 11,463 gallons in Arkansas, 40,500 gallons in Connecticut, 71,985 gallons In Maryland, 1,866,298 fiscal year 1941 gallons in New Jersey, and 68,600 gallons in New York. Includes 60,553 gallons in Gernert 6 Includes 25,985 gallons in New Jersey. Grains 7 Includes 33,250 gallons of guava juice and 26,136 gallons of pineapple juice in Hawaii. Molasses s State TABLE Rye Malt Total 68 -Rectified spirits and wines: Production, 1 by kinds and by months, Corn fiscal year 1941 Pounds Pounds Pounds Pounds [Proof gallons 21 8811,095 Arizona 513, 000 246,335 129, 760 California 5, 636, 886 675,007 738.617 7, 050, 510 Connecticut 134,470 65,966 72, 566 273,002 Cordials Month Whisky Gin and Miscalla- Total Hawaii 312, 737, 829 liqueurs mous Illinois 202, 214, 716 72,004,388 38, 518, 725 283, 789, 167 44, 170, 744 38,636,445 366, 596, 358 Indiana s 701, 300, 775 Kentucky 495; 701, 374 113, 446, 152 89, 642, 209 Louisiana 3, 390,090 36, 470 341, 396 3, 767, 956 July 3, 452. 564 782,026 132,211 32,389 4, 399, 190 Maryland 66, 709,173 72, 505, 749 24, 651, 924 162, 766, 846 August 1, 629, 556 602, 391 140, 500 16, 736 2, 389,183 Massachusetts 731, 379 157, 228 106,016 994,623 September 3, 502,110 956, 737 201, 526 29.529 4, 189,902 Missouri 2, 238, 568 510, 544 409, 546 3, 158, 658 October 5, 367, 852 424,547 298,564 36,831 6, 117. 799 New York 8,410, 550 66, 990 1,168, 640 9, 646,180 November 5, 863, 207 617.349 344,111 40,189 6, 764,856 Ohio 46, 968, 336 11, 722,143 8, 113, 359 66, 803, 838 December 3, 769, 317 446,318 321, 250 56,239 4, 593,124 Pennsylvania 16,933, 177 45, 570, 678 10, 341, 408 71,845, 163 January 2, 635,422 354,287 186, 533 42, 411 3, 118, 653 Tennessee 2, 525, 376 313, 768 356,216 3, 196, 360 February 2, 837, 671 333.109 182,724 33,785 3.387.289 Vermont March 3, 379, 829 593,342 186,450 51,281 4,210, 902 Virginia 1, 740, 256 359, 240 288,363 2, 387, 849 April 3, 417, 559 736.347 185, 245 69.489 4, 398, 640 Wisconsin 107, 680 26, 890 134, 570 May 4, 224,127 726,213 183, 713 61, 062 5,195, 115 June 4, 347, 952 792,041 179,361 73,636 5,392,980 Total 1,135, 636, 518 361, 958, 982 213, 442,070 1, 713, 548, 610 3, 528, 327 Total 44.317,166 6, 769, 707 2, 592,178 3 533, 577 54,167, 628 I For materials used in the production of brandy see table 67. In addition to the grain and molasses. shown, 4,000 pounds of sake lees, 2,750 pounds of guava Juice, 950 pounds of coconut juice, 750 pounds of rice I For production of distilled spirits at dis Merles, see table 57. lees, and 300 poundsorgans'. sirup used In Hawaii, 236,100 pounds of diamalt used in Illinois, and4,1169 pounds- • 2 The figures are in proof gallons. Except for some products containing fortified wine, the rectification of malt sirup used in Louisiana. tax Is collected on the basis of proof gallons. (See sec. 2801, Internal Revenue Code, 1939.) For a definition 2 All used In the production of rum with the exception of 211,697 gallons in California used for gin, and of a proof gallon see footnote 1, table 42. 1,600 gallons in Hawaii used for arak. I Includes 184.835 proof gallons of brandy, 179,185 proof gallons of rum, 46,184 proof gallons of alcohol, s Includes 2,511,040 pounds of wheat. 36,539 proof gallons of wine, 8,059 proof gallons of vermouth, 376 proof gallons of high-proof spirits, and 78,399 proof gallons of other unclassified spirits. 162 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT? OF COMMISSIONER OF INTERNAL REVENITAI 163

TABLE 71.-Reetified spirits and wines: Alcoholic liquors I used in rectification, by TABLE 69. - Rectified spirits and wines: Number of plants operated and produc- tion I by kinds, by States, fiscal year 1941 kinds and by States, fiscal year 1941 [Quantities in proof gallons [Proof gallons]

Cordials Number State Alcohol Whisky nigh-PITIof Wine MiseeIla- Total State of plants Whisky Gin and MI44431141 Total spirits MOUS operated 1 liqueurs 114004 California 784,388 R 147,803 46,760 25, 550 108,813 I, 113, 114 480,431 114,798 86,008 , 1,112, 624 Colorado California — 462,387 2,287 295 127 2,709 1,764 119 324 2,445 Connecticut Colorado °'' 238 513,676 173, 074 12, 289 1, 843 18, 099 718, 981 Connecticut 326, 272 266, 774 80,287 42, 533 715.916 Hawaii 19 ______208 1,235 1,748 3,210 180 116 1,004 1,755 3,055 Illinois AL' 1, 025,099 989, 416 1,638,136 Hawaii 3,847,487 76,873 154,371 3,881,895 Illinois 2,772,026 293,973 719,474 62,014 Indiana 2,153, 008 2, 660, 250 4, 395,804 14, 399 42, 454 9,265,915 225, 752 15,865. 14,975 9, 213, 369 Kentucky 689, 703 Indiana E" 8.956, 787 2, 505, 707 1, 648, 232 1, 442 11,148 4,858, 232 4, 769, 977 27,831 7, 575 308 4,805. 691 Louisiana 124,417 2, 277 Kentucky 123,510 166 1, 756 128, 816 Louisiana 624 108,107 20,031 1.848 Maine 27,292 3,394 19 30,705 14, 818 13, 931 1,775 30,524 Maryland 2,989,428 4,546,468 Maine RA"' 4,156, 331 16,752 31, 578 11,720, 557 Maryland 11,512,958 117, 554 40, 378 5,418 11.878,303 Massachusetts 1,534,712 450,639 89,609 85,830 2,160, 790 Massachusetts 1,199,911 390,005 487,667 65,148 2,132, 731 Michigan 129,664 17,429 8,989 59,056 213,118 Michigan 15,188 176,140 15,332 206, 710 Minnesota 79, 308 19, 217 3, 732 I, 775 58,102 160. 134 fl 70, 851 4,435 36,780 46,302 153, 368 Missouri 175,452 11,010 Minnesota 202,139 4,293 11,908 202,681 Missouri 4. 573 80,801 116,806 159 New Jersey 3, 777,855 • 679, 259 12, 679 80,014 4, 549,607 2,330,025 1,987,034 183,832 7,627 4,508,518 New Mexico 925 183 New Jersey 9,065 7, 566 336 9, OW New Mexico 218 56 1,006 7,786 New York 1, 038, 767 483,037 129, 517 12,381 64, 204 I, 707,901 1,263,862 322, 532 73,068 45,058 1,694, 570 Ohio 1,282,820 c 567,292 14,077 19,174 1,883, 163

New York 4S 1,219,136 441,638 187,589 30,932 1,879, 295 Pennsylvania 6,459,083 3, 765, 739 1, 362, 824 25,498 178,011 Ohio 122,750 11, 719,706 11, 789,155 Pennsylvania 9,359, 766 1,996,423 240,768 Rhode Island 23,906 7,699 78 31,883 29,950 1,676 31,628 Tennessee 1,129 1, 082 2, 211 Rhode Island 2,117 Tennessee 2, 117 Vermont 1, 233 741 19 70 2, 083 Vermont 1,972 71 2,043 Washington 19,484 6,292 53 25,829 1,721 25,521 Wisconsin 31, 290 Washington 23 ,800 49,291 4,746 9,072 4,805 49, 913 Wisconsin 1, 747 7,501 31,843 8,200 Total 22,844, 540 17,021, 767 13,391,833 322, 456 3 928, 576 54,509,172 Total 245 44,317,166 6,764,707 2, 542,178 ] 533, 577 54,157, 628 1 Includes imported as well as domestic liquors. I For production of distilled spirits at distilleries, see table 57. 2 Represents high-proof spirits produced at distilleries The number operated during any part of the yeaf. ] Includes 563,257 proof gallons of brandy, 179,864 proof gallons of mm, 123,094 proof gallons of gin, 29,818 Includes 184,835 proof gallons of brandy, 179,185 proof gallons o rum, 48,184 proof gallons of alcohol, proof gallons of cordials and liqueurs, 12,228 proof gallons of vermouth, and 20,315 proof gallons of unclassified 36,539 proof gallons of wine, 8,059 proof gallons of vermouth, 378 proof gallons of high-proof spirits, and 78,399 spirits. proof gallons of other unclassified spirits.

TABLE 72. -Distilled spirits: Wine gallons of spirits bottled by rectifiers and tax- spirits and wines: Alcoholic liquors I used in rectification, by TABLE 70. - Rectified paid bottling houses and bottled-in-bond spirits withdrawn on payment of tax from kinds and by months, fiscal year 1941 internal revenue bonded warehouses, fiscal year 1941 [Proof gallons] [Wine gallons]

High-proof Mised" Total Month Alcohol Whisky 1 spirits Wine laneota Products bottled by .Bottled-in- Kind rectifiers and bond with- Total 4.? Ri 1,700, 248 1,160, 184 1,371,865 31.040 4281,439 tax-paid bot- drawals July l 39, 614 2,486.724 Ging houses 618, 254 El 1

657.254 sgnailEM August 1,137,002 58, 311 4,392, 816 September 1, 612,344 1,458,332 1.242,433 gl 2,015,929 2,189,715 1,848, 068 102.199 6,185,732 October 120,851 9 898,943 Whisky 106, 004, 279 13, 543, 847 119, 548,126 2,251,208 1.900, 693 .r November 2, 684,062 ig4gggg. 1, 461,638 1,001, 704 122, 278 4,459, 519 Rum 1, 340,346 37, 846 1,378,192 December 1,836, 266 3.047, 615 Gin January 1, 386.544 995,721 590, 715 70,748 13, 315,798 1, 058 13. 316, 856 1,128.990 659, 582 59,149 3, 399, 430 Brandy 1,897,937 112, 684 2,010, 621 February 1.529,345 4,310,377 Cordials and liqueurs March 2,115, 636 1,275,203 820,251 72,565 3, 754, 858 3,754,858 1,281,818 986,627 72,280 4,438, 368 Alcohol 341,125 341, 125 April 2,089, 917 5,271, 916 Other spirits May 2,334, 591 1,562,277 1, 259, 965 83,783 151,872 151,872

5, 358,493 2.522, 656 1, 621, 377 1,091, 676 96, 758 June Total 128,806, 215 13, 695,435 140, 501,650 Total 22,844, 540 17,021,787 13, 391, 833 322,456 + 928, 576 54,509,172 1 Includes imported spirits bottled after withdrawal from customs custody or used by rectifiers. 1 Includes imported as well as domestic liquors. Represents high-proof spirt s produced at distilleries Includes 583,267 proof gallons of brandy, 179,884 proof gallons of min, 123,094 proof gallons of gin, 29,818 proof gallons of cordials and liqueurs, 12,228 proof gallons of vermouth, and 20,315 proof gallons of Imola*. sffied spirits.

REPORT OF COMMISSIONER OF INTERNAL 'aviator 164 REPORT OF COMMISSIONER OF INTERNAL REVENUE 165 73.-Distilled spirits: Production, tax-paid withdrawals, and stocks on hand TABLE TABLE 75.-Fermented malt liquors: Breweries operated, production, withdrawals, June 30, of whisky and of total distilled spirits; fiscal years 1934-1941, inclusive losses, and stocks on hand June 30, by States, fiscal year 1941 [Tax gallons] [Quantities In barrels of 31 gallops]

Stocks, June 30 Produced Withdrawn tax-paid Number - Withdrawals Fiscal year ended State criesof brew- op, Production On hand Losses June 30 June 30- Total dis- Total dis- Whisky Total dis- Whisky tilted spirits Whisky tilled spirits tilled spirits crated' Tax-paid Tax-free 2

',

Alaska 22,946,622 57, 717,662 63, 065,017 $076 904 60 45 L 172 62,352,666 76, 506, 388 18,875, 964 Arizona_ 20,258 17,348 169, 126,472 50,780, 940 58, 083, 021 152,807,235 160,756, 394 198 730 6,741 149, 112,923 California ~~w 76,330, 524 300, 658, 508 310,803,839 2,622,844 2,487,864 12,696 88,829 305,198 223, 659, 539 253, 862,925 67, 299,166 Colorado 262,004 256,027 1,294 5,815 258,956,886 72, 616,195 87, 721,644 445,285, 663 462, 607, 980 64,481 223, 457,850 Connecticut mr 85,949, 786 471, 159, 539 497, 527.756 374,761 347,873 10,815 23,.727 60,135 102,895,872 150, 155,924 68, 611, 650 Delaware 49,888 .47,025 030 145,326,176 72, 059,023 92, 427,100 478, 819, 618 522,058, 134 1,718 0,611 93, 003.917 525,394,924 District of Columbia 135,600 125,040 766 5,438 25,100 98,993, 303 143,455,102 81, 267,368 103,981,635 480,937, 609 Florida

I 243,709 236,108 80,541,974 102, 685, 625 504, 080,691 551, 424,176 1,386 7,813 39,551 121,851, 983 175, 208, 746 Georgia ~a~w 58,482 60,176 440 2,188 11,710 Hawaii 81,684 78,824 431 1,849 15,967 Idaho 35,258 34,563 446 1,336 6,887

'Exclusive of ethyl alcohol, for which see table 47. Illinois 6ra 3,792,385 3, 683, 748 62,296 121,857 613,079

Indiana a 1, 754.151 1, 707, 093 6, 569 46,615 288,004 74.-Fermented malt liquors: Production and tax-paid withdrawals, by months, Iowa 122,071 120, 298 1,101 6,254 21,173 TABLE Kentucky 896, 768 859, 251 5,967 21,158 132,494 fiscal year 1941 Louisiana 1,007,474 954,043 4,082 38,422 91,292 Maryland 1,282,856 1,231,390 9,389 36,943 169,139 [Barrels of 31 gallon ] Massachusetts 1, 248,056 1, 143,975 12,659 77,232 185, 205 Michigan 2, 819, 674 2, 744, 902 11,915 81,103 438,228

Minnesota ~~wma~r 2,171, 299 2,067, 165 36,130 69, 545 344,589

Tax-paid withdrawals Missouri a 4,652,077 4,419, 256 41,507 159,853 782548 Montana 196, 752 187,095 1, 705 4, 594 34,810 Nebraska Month Production 382,427 355,974 1,916 13,056 70,983 In barrels By pipe line Nevada 15,800 15,184 Total 57 877 3,511 and kegs for bottling New Hampshire ~wmm 30 670 35, 461 258 2,136 , 4,864 New Jersey 3, 570, 445 3,370,807 28,674 163, 411 495,818

New York wn 8, 571,897 8,264, 756 78,681 292,419 1,468,100 2, 754, 495 North Carolina 91,764 90,611 July 5,908,435 5,371,846 2,617, 351 52 3,954 15,348 2, 687, 310 2,722,525 Ohio ffi~ 3,802,332 3,668, 273 26,114 August 5,088, 834 5, 409, 835 122.827 632,188 4,025,107 4.321,274 2,143,492 2,177,782 Oklahoma 55,940 66,802 437 1,969 10,018 September 2,196, 705 Oregon 147,350 193,643 October 8,975, 647 4,259, 546 2,062,841 602 5, 184 33,150 1,888,920 Pennsylvania ~aw 6, 259, 887 6,009,253 November 3.397,067 3, 765,445 1,876,525 39,181 225,330 906,569 3,812,164 3,778,863 1,833,473 1,945,390 Rhode Island 637,401 691,392 3,641 35,829 101,488 December 1,495,607 1, 744, 521 South Dakota $144 2,204 52 January 3,903,741 3,243, 127 105 271 3,696,850 3,218.061 1, 533, 522 1,644,539 Tennessee 172, 907 165, 192 1,584 7,170 27, 721 February 1,753,218 2,060, 589 Texas 875, 252 849,852 3, 677 March 4,466.063 3,813,807 31, 600 152, 578 5,170,004 4, 557,135 2,047,977 2, 609, 158 Utah 126,282 117,827 661 5,669 23, 422' April 2, 453, 866 2,931,183 Virginia 131,811 127,295 836 May 5,844, 209 6,385,049 3,764 25, 669' 6, 125,729 5,678, 193 2,453,832 3, 224, 361 Washington +rwmw~w 870531 828,076 3,322 23,102 187,071 June West Virginia 23,9488 22,411 547 914 4,737 27, 840,167 Wisconsin 5, 553, 817 Total 55,213,850 52, 799,181 24,959,014 5, 325, 100 67,022 178,245 1, 137, 761 Wyoming wmw 54,338 60,560 930 2,425 12,439 Total 574 55, 213, 850 52, 799, 181 479,034 1, 922, 057 9,037, 708

Number operated during any part of the year. Including amounts consumed brewery PrembeS.

REPORT OF COMMISSIONER OF INTERNAL REVENUE 166 REPORT OF COMMISSIONER OF INTERNAL REVENUE 167 -paid and tax-free, by States, TABLE 77. - Fermented malt liquors: Materials used in production, by kinds and by TABLE 76. -Fermented malt liquors: Withdrawals, tax States, fiscal year 1941 fiscal year 1941

r [Barrels of 31 gallons] Grain and grain products i State Sugar and Hops and sumps hop extract Tax-paid withdrawals. Tax free withdrawals Malt Corn Rice Total with- State By pipe Consumed For cereal Pounds Pounds Pounds Pounds In barrels on For export drawals Pounds and kegs line for promisor beverages Alaska 93,650 20,200 1,428 bottling Arizona 699,090 207,100 30,000 3,200 9,865 California 92,180, 908 9,832, 860 19,175, 457 4, 967, 125 1,512, 713 Colorado 9,039, 231 1,020, 050 50 954 1,960, 100 33,183 133,387 Alaska 904 17, 494 Connecticut 13, 704,165 3, 691, 785 59,970 2,048, 515 274,203 Arizona 2,900 14, 448 146 Delaware 1,892, 150 707,900 1,680 2, 228, 334 8, 385 1, 237 3,074 2,500,550 30,215 California 261, 620 257, 321 District of Columbia 4, 596,631 110,000 2, 098,000 96, 000 67,820 Colorado 109, 783 146, 244 1,294 Florida 8,397,104 721,600 2,008,285 718,530 140,475 145.292 3, 248 7,192 377 358, 388 Connecticut 202, 281 47, 625 Georgia 1, 907, 630 688,300 307,350 36,170 Delaware 25,118 21,907 600 Hawaii 1, 975, 095 99, 700 4, 305, 980 105.431 706 125.806 227,823 24, 366 District of Columbia 19,609 236,494 Idaho 1,328,948 235,832 153, 242 9 965 20,097 Florida 25,671 209, 437 1,386 Illinois 122, 621,075 42,188, 375 10,494, 239 5, 309, 290 1,919,151 11.900 48, 276 940 60, 616 Georgia 431 79, 265 Indiana 64, 783, 884 16, 427, 200 386,800 3, 584,888 903,446 Hawaii 10,909 67,915 Iowa 4, 186,495 3,543,180 26,940 70,175 13, 102 21,461 446 35,009 Idaho 19,616 835 41,845 3,646,044 Kentucky 30, 302, 493 4, 608, 000 7, 260,000 828, 789 498,812 Illinois 1, 526, 273 2, 057, 475 Louisiana 32, 724, 921 787, 500 7, 770,360 6,989,498 493, 782 904,490 1, 302, 603 6, 669 1, 713, 662 Indiana 1, 001 100 121, 349 Maryland 47, 109, 634 8,401, 320 2,861, 653 6,421, 777 766,128 Iowa 50, 034 70, 214 Massachusetts 50,069, 127 6,538,085 2,036,800 11,312, 613 251, 824 607,627 4, 239 I, 728 865, 218 1,157,030 Kentucky 142 958,125 Michigan 100,288, 203 24,893, 901 13,071,200 1,960,480 1,476,968 Louisiana 74,747 879,296 3,940 Minnesota. 74,396,601 11,939, 798 751, 570 7, 333 2, 056 1, 240, 779 1,184, 756 10,333,472 1, 134, 772 Maryland 479. 820 1,156,634 Missouri 157,126,361 9, 613, 752 59, 725, WO 1, 570, 089 2,609 424 769,609 374,366 11.509 1,150 Massachusetts 2, 756, 817 Montana 7,674,301 289,420 1, 579, 200 474, 626 104, 935 Michigan 1, 085,036 1, 659,886 11, 915 Nebraska 12,468, 318 3,111, 780 1,403, 600 310,192 1,108, 798 958.367 9, 208 25,822 Z 102, 195 173,692 Minnesota 3, 629 18.590 4, 480, 763 Nevada 531,441 183,900 31,000 8,055 Missouri 1, 772, 860 2, 646, 396 19, 288 New Hampshire 73, 090 1,705 188.800 1,085, 280 199,040 625,998 28,720 Montana 114,005 357,890 New Jersey 136,065, 921 32, 735, 790 1, 715,191 13,225, 851 2,138, 701 105, 905 250,069 1,916 Nebraska 4,846 57 15, 241 New York 314, 926, 393 83, 344, 382 15, 522,913 17,584,151 5,060, 212 Nevada 10,338 35, 719 North Carolina_ 3,049,850 1,034, 000 687, 500 52, 690 22,184 13, 277 258 New Hampshire 15,597 13,077 3, 399,481 Ohio 129,452,874 38,445, 390 9,138,506 7,496, 457 2, 113, 619 New Jersey 1,926,847 1, 443, 980 Oklahoma 1, 652, 575 5, 575, 494 2,689, 262 44, 548 17, 657 16,476 8, 343, 437 273,280 443,944 43,500 30,798 New York 52 90, 563 Oregon 5,409, 109 23,400 1, 583, 150 2,450 88,459 North Carolina 4, 396 89 115 Pennsylvania 227,040, 639 1,642, 260 2,026.013 18,120 7, 994 3,694, 387 57, 523,323 7, 772, 865 23,957, 367 3, 786, 349 Ohio 57,239 Rhode Island 22,432, 706 9 138, 718 933, 668 5, 790,996 559,199 Oklahoma 9,204 47, 598 437 South Dakota 61.837 81, 806 602 144, 245 96,885 58 904 Onlgon 99 6,018,434 Tennessee 6, 755, 380 454, 600 1, 762, 776 633, 050 74, 400 Pennsylvania 3,234,396 2, 774,883 39,082 402,269 189,133 3,641 595,033 Texas 30,018,130 524,200 11, 588, 650 706, 514 446, 512 Rhode Island 2, 256 Utah 4,411, 935 490,090 843,500 67,529 South Dakota 1,197 . 1, 057 52 18, 831 146, 361 1, 584 165. 776 Virginia 4, 649, 720 1, 485,400 219 075 74,348 Tennessee 3, 677 853, 529 Washington 31, 644, 262 1, 552, 697 8,029,244 539, 796 434, 360 Texas 73, 915 775.937 West Virginia 48,922 68,905 861 118, 488 381,748 303,000 1,840 12,960 Utah 128, 131 Wisconsin 193, 640, 296 63, 747, 899 7, 409, 788 7, 531, 232 2, 645,112 Virginia 6, 653 120, 742 836 442,426 3,11772 150 831,398 Wyoming 1, 900, 459 346,995 107, 900 174, 275 33,189 Washington 385,650 2Z 958 West Virginia 1,993 20, 418 547 9, 22, 905 8, 784 35, 333 5 , 39Z 122 Total 1,954, 267, 618 432, 341, 647 204, 297, 333 135, 531,375 31, 154, 678 Wisconsin 3,085,484 2,23 616 50,990 Wyoming 20, 412 30 148 430 131, 219 53, 278, 215 In addition, 3,508,975 pounds of wheat and wh at flakes. ' Total 24,959,014 27,840, 167 271, 687 76,128

'TABLE 78. -Fermented malt liquors: Production, tax-paid withdrawals, and stocks on hand June 30, fisca years 1934-1941, inclusive [Barrels of 31 gallons]

Withdrawn tax-paid Fiscal year ended June 30- Produced Stocks In barrels By pipe line June en Total and kegs for bottling

1934 37, 678, 313 32, 266, 039 24, 254, 451 8, 011, 588 6, 908, 581 1935 45,228, 605 42, 228, 831 31, 274, 069 10, 954, 762 7,766, 433 1936 61,812,062 48, 759,890 32, 431, 298 16, 328, 692 8, 659,482 1937 ,,_ 58, 748,087 55,391, 960 32, 462,136 22, 929, 824 9, 591,466 1938 56, 340, 163 53,926, 018 29, 659,955 24, 266,063 9, 660, 903 1939 53,870, 553 51,816,874 27, 086,889 24, 729, 985 9,447, 166 1940 64, 891, 737 53,014,230 26, 010, 165 27, 004,065 9, 019. 354 1941 55, 213, 850 52, 799, 181 29, 959,014 27, 840,167 9,037, 708

168 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL. REVENUE 169

TABLE 79.-Cereal beverages: 1 Plants operated, production, and withdrawals, by TABLE 81.-Still wine: Bonded wineries and bonded storerooms operated, produc- States, fiscal year 1941 tion, withdrawals, losses, and stocks on hand June 30, by States, fiscal year 1941 [Quantities in gallons fl [Quantities in wine gallons]

Number of Number Produce- With- On hand, State of plants premises Withdrawals operated' tion drawals June 30 1 operated State Product On hand, lion 1 Losses California 43, 834 33,316 6,115 Bonded Bonded June 30 ,., store- Connecticut 225,897 102703 83.080 Tax-free Tax-paid Illinois 12400 12,028 will- roonas Iowa 2170 1,860 eri&s only Kentucky 35, 743 35,875 1, 550 Massachusetts 37,355 26,040 8,526 Alabama

Oa 4,457 Minnesota 608,592 613,095 83,356 Arkansas 227 445 182 1,00( Missouri 76,260 87,621 3,948 0 CO 645,301 63,427 528,176 42,588 487, 287 California , 272,073,331 New York 379,812 328,468 91,641 Colorado 179,683, 262 45, 954, 012 5,145,856 99, 538.40(1 Ohio 202, 740 192,495 11.160 36,024 474,986 7,600 88,182 Connecticut 17,035 1, 600 Wisconsin 216,535 197,997 12,555 Florida 741, 346 13, 236 97.161 55,612 302 50.408 6,719 82,887 Georgia 829,886 60,486 Total 23 1,841, 338 1,622, 610 219,818 Hawaii 814,414 28, 313 237,136 54, 349 38, 513 12, 442 1, 253 169211 Idaho 1,175 Illinois 398 123 1,865 1 Containing less than one-half of 1 percent of alcohol by volume. 30,720 2,851 4, 267, 480 54,385 811,348 Iowa 15,129 1 Standard United States gallons of 231 cubic inches. Kentucky 313 93, 603 1,070 31.369 3 Number operated during any part of the year. 500 6,971 37 18,105 Louisiana 192, 233 Maryland 589, 591 7,105 91,862 78, 517 2,400 281,714 2, 874 92.220 Massachusetts 1,961 TABLE 80.-Still wine: Production and withdrawals, by months, fiscal year 1941 Michigan 1,928,286 20,036 186647 1,324 892 14,129 1,479,622 66,469 1,901, 580 Minnesota 12, 425 (W ine gallons 11 Missouri 10, 887 1,077 42, 561 28, 139 106,233 158,959 6,819 149.859 Nevada 895 New Jersey 52 45, 512 1, 205 14,851 Tax-paid withdrawals 735,852 410,730 9,719,422 76068 1, 281, 708 New Mexico 12,259 New York 430 15, 571 727 12, 049 ,I 5, 501, 953 1,186, 365 Tax-free North Carolina 18,037,060 685,893 7,922,446 Over 14 Over 21 -1 NI. 284,972 795 70,833 51, 767 146823

Month Production 2 with- Ohio Not over and not and not 1,424 325 218,072 2,454, 903 136,671 2,460, 534 drawals 1 14 percent over 21 over 24 Oregon 344.245 186,129 Total Pennsylvania 231, 900 46,419 265,372 alcohol percent percent 70,838 16,344 2, 384, 731 14,310 463,025 alcohol Muth Carolina 7,448 35 alcohol Tennessee 5, 750 806 3, 342 . 1— 2.175

Texas i 14,079 103 19,452 2, 021 17,290 1,384,073 1,994,252 Virginia. 3.34, 258 July 3,303,110 2,532, 462 3,385,007 6,882 Washington 82,068 1, 555,102 33, 489 282,184 August 22, 118, 855 14,890,687 4,731,605 1,718,326 3,005, 619 7,660 2,235,600 723,915 1, 295, 327 105,290 1,184, 109 4, 100, 257 8.497 West Virginia 6,123 September 100, 161, 965 59, 758,057 6435,598 2,126 844 Wisconsin 169,361 1,420 16,520 October 105, 671,150 64,897,940 8,783,110 2,667,328 6,102,541 13,241 2,975 7,399 194,671 1,988 46,906 7,071,487 30, 487 November 35,644, 533 24, 782,460 10, 240, 647 3,138,693 . Total December 10, 150, 584 6,959,863 10, 252,910 3,074, 751 7, 163,909 14,250 1,064 106 286, 371, 423 3 182812,064 88,592,333 6 563,991 117,886.723 January 2, 087, 458 2,419,698 6,682,751 1,999,786 4, 867,692 15, 273 February 1,666,698 1,479,059 8,983,892 1,964.371 4,994,535 24,988 March 856,628 728,051 7, 933, 475 2, 202, 692 5,680,912 49,871 1 Number operated during any part of the year. April 1,709, 391 1,714,726 8, 050, 718 2, 288, 498 5,723,00S 39,212 Production represents the amount removed from ermenters, ins tiding wine to be used as distilling May 1, 364, 809 1,302, 949 7,269, 588 2, 026,352 5, 219, 532 23.704 material in the production of brandy. Increases by amelioration and fortification occurring after removal 1, 636, 242 1,348,212 7,543,032 2,030,246 5,782 387 30, 399 from fermenters are shown In table 83. June 3 See footnote 3 of table 80. Total 286,371, 423 182, 812,064 88, 592, 333 26,621,960 61,706,131 234, 242

1 Standard United States gallons of 231 cubic inches. I Production represents the amount removed from fermenters, including wine to be used as distilling material in the production o brandy. Increases by amelioration and fortification occurring after removal from fermenten are shown in table 83. Includes 179.360.694 gallons removed for use as distilling material, of which 163,601,277 gallons were "substandard" wine (i. 4, produced with excessive water or residue materials); 1,561,675 gallons removed for the manufacture of vermouth; 956.027 gallons removed for the manufacture of champagne or artificially carbonated wine; 722,547 gallons removed for export; 166,196 gallons removed for the manufacture of vinegar; 41,931 gallons removed for family use; and 44 gallons removed for the use of the United States.

423348-91--I2

170 REPORT OF COMMISSIONER OF INTERNAL REVENUE IMPORT OF COMMISSIONER OF INTERNAL REVENUE 171

TABLE 82.-Still wine: Tax-paid withdrawals and stocks on hand June SO, by alcoholic TABLE 84. -SUU wine: Materials used in production; by kinds and by States, grades and by States, fiscal year 1941 fiscal year 1941 [Wine gallons] Kind Arkansas California New Jersey New York Tax paid withdrawals On hand June 30

Over 14 and Over 21 and A. Fruits, berries, etc. (pounds): State Not over Over 14 and Over 21 and Not over Grapes 4,020, 763 1, 991, 1,11, no 1,630,604 13, 023, 276 not over 21 not over 24 not over 21 not over 24 Raisins 10,672,638 7,000 6,075 19 percent percent 14 percent percent percent alcohol percent alcohol Blackberries 325,484 119,530 833,963 2, 120, 594 alcohol alcohol alcohol alcohol Aples 720120, Lopganberne 129, 240 38,320 42, 250 Cherries 1,609 611,174 1, 650 47, 325 Alabama 445 1,009 Peaches 29,750 49,932 167,860 Arkansas 51,586 380, 531 96,059 323,663 125,064 38,560 Apricots 316,330 2,000 59,975 California 11, 145, 348 34, 709, 888 98, 776 32,138, 570 64, 180, 599 3, 219, 240 Pears 1,000 Colorado 71, 231 403,755 46,233 41,899 Plums 994 190,875 Connecticut 183, 560 556, 049 1, 737 22,509 70,428 4, 224 Elderberries 2,200 Florida 49,722 686 77,821 5,066 Youngberries 39, 768 Georgia 640,793 173,621 193,687 43,443 Honey 77,851 Hawaii 12,142 4,616 11,307 Boysenberries 18,369 Idaho 69 327 400 1,465 Other 10, 533 3, 145 Illinois 1, 228, 385 3,037, 574 1, 521 255,442 555.906 B. Juices, including concentrates (gallons): Iowa 4,986 88, 617 8, 721 22,648 Grape 39,172 188,696 12, 655 1, 216, 698 Kentucky 1,494 4, 977 5,339 12,786 Apple 8,647 177,850 270,510 55,333 Louisiana 338,815 250,776 37,435 54,427 Blackberry 6,750 681, 070 Maryland 84,859 196,855 59,937 32,283 Cherry 3,565 20,230 308,666 1,619, 720 37,466 143, 181 25,450 Mageochusetts 9,099 Loganberry Michigan 139,861 1, 339, 761 1,042,049 850,482 Other 200 Minnesota 1,899 8,988 8,956 33,606 Missouri 43,627 114,832 120, 141 29,718 19,069 11,824 3,027 Nevada 26,443 Washing- All other New Jersey 1, 755,621 2, 961, 628 2,173 691,000 561, 301 9,407 Kind Ohio Oregon Total New Mexico 8,915 6, 656 10, 731 1, 318 ton States 2 New York 7,717,280 10, 310,491 9,289 3,450, 856 4, 336,994 134, 596 North Carolina 68,583 2,250 145,805 1,028 1,836, 526 617, 183 6,825 A. Fruits, berries, etc. (pounds): Ohio 1, 151,347 1,303, 556 3 Oregon 140,029 91,871 101,245 161,127 Grapes 5, 922, 266 755, 593 11,868, 165 15, 772, 728 2,095,004, 675 Pennsylvania 572,380 1,812,351 163,001 297,114 2,910 Raisins 4 322, 209 14,007, 922 South Carolina 1, 251 1,499 2,245 1, 297 Blackberries 313,940 74, 555 921,173 & 9,127, 710 8, 336, 949 Texas 15,276 4,176 14,345 2,945 Apples 808,884 598,800 1, 227, 194 63,360 3,008,358 Virginia 306,683 1,193, 732 64, 687 57,621 141, 137 3,426 Loganberries 261, 218 1, 242,992 763,905 Washington 483,027 812,300 274,474 900,173 9,462 Cherries 14, 966 61,825 964,688 124, 538 1, 727,675 West Virginia 14,010 155,351 877 15,643 Peaches 308,370 0 1 163, 124 1, 719,036 Wisconsin 62,869 131,802 25,923 20,983 Grapefruit 4 601, 580 604,580 Currants 83,116 476,075 559,191 Total 26,621,960 61, 706,131 264,242 41, 172,458 73,276, 566 3,437,699 Apricots 34, 131 912,430 Pears 398,000 2,640 901.640 Plums 149,599 878 342,340 268,845 wine: Amelioration and for ification occurring after fernientation, by Prunes 268,846 TABLE 83. - Still Guava Z38, 850 228, 850 States, fiscal year 1941 Elderberries 300 132,588 135,086 Oranges 134, 964 139, 984 [Wine gallons] Gooseberries 123, 189 123,189 Youngberrles 20, 766 27,175 548 83, 257 Honey 720 78,571 Wine amel- Resulting Wine forti- Resulting State Huckleberries 925 25,725 26,650 iorated product lied product Boysenberries 18, 369 Olympic berries 13, 493 13,198 Other 305 1, 100 3,379 640 19,102 Alabama 2,299 2,408 Juices, including concentrates (gal- 724,775 832, 427 479,823 5435,414 B. Arkansas 85, 261,691 lons): California 6, 978,012 8,030,849 72,475,696 G 37,266 10,3133 2,193 2,564 344,221 0 229, 379 1, 262444 Colorado 8,653 Apple 67, 028 108, 576 Connecticut 7,739 8, 589 7,416 Blackberry 1,634 2,749 1,978 161,597 756,678 Florida 27,414 29,067 Peach 101,928 101, 426 1, 173,805 1, 257,819 5,185 6,218 12,097 Georgia 18, 558 Cherry 2,825 5,145 43, 862 Hawaii 2,120 2, 236 15, 317 Loganberry 4, 126 34 29, 610 Illinois 13,477 14,479 Other 2, 629 565 1,482 8,541 13,407 Maryland 76,510 82,221 1,477, 196 1,638,155 754,731 816,663 Michigan 10, 131 Missouri 28,876 35,609 9,579 1 Exclusive of sugar and other sweetening material. Represents fermenting material crushed or pressed New Jersey 545,626 570,624 260,994 358,289 and deposited in tormenters for the production of wine, including wine used In the production of brandy. New Mexico 917 947 2 States in which more than 250,000 pounds or 100,000 gallons of a given material were used are footnoted. New York 3, 571, 596 3, 895, 211 1,227,431 1, 373, 373 Includes 707,994 pounds used in Maryland, 785,138 pounds in Iowa, 11,148,435 pounds in Michigan, North Carolina 52,062 56,120 .312,580 pounds in Missouri, and 1,827,328 pounds in North Carolina. Ohio 808,122 878,608 562,069 645,982 Includes 288,925 pounds used in Louisiana. Oregon 107,087 114, 709 41,045 55, 541 Includes 2,956,001 pounds used in Georgia and 273,743 pounds in Michigan. Pennsylvania 38,975 43,201 Includes 952,120 pounds used in Georgia. South Carolina 4,250 4,506 Includes 595,540 pounds used in Florida. Texas 18,688 20,356 Includes 141,880 gallons used In Virginia. Virginia 174, 635 186,452 183, 117 241, 671 Washington 2, 298, 274 2, 397, 054 636, 921 725,271 Total 18,169, 721 20, 142, 630 76,661, 517 1 90, 090, 019

In producing fortified wine, a total of 25,364,793 proof gallons of brandy and 673 proof gallons of tax-paid alcohol were used. TABLE 172 July January November August June Apra December October September The taxispayable"oneachone-halfpintorfractionthereof"of"eachbottleothercontainer. May March February TABLE half-pint unitsinmiscellaneouscontainers. Bureau Illinois California Arkansas New York New jersey Missouri Michigan Massachusetts Louisiana Washington Virginia Pennsylvania_ Oregon Ohio other withdrawals,19.962;losses,11,734; andonhandJune30,275,589half-pintunits. Wisconsin York, 1inOhio,Pennsylvania,and 1bondedfieldwarehouseinWisconsin. New Jersey,andYorkforexport. I Represents12,465half-pintunitsinthree-fourthsquarts,73,600Inmagnums,and40 1 Reportedfigureshavebeenconvertedtoone-halfpinunits.Dataonsparklingwinearereportedthe 1 Includeschampagne,othersparklingwine,andartificiallycarbonatedwine. 1 4 3 1 1 Includesartificiallycarbonatedwinesas follows:Production,1,391,098;tax-paidwithdrawals,1,367,005; ISaddition,5bondedstoreroomsinCalifornia, 3inIllinois,1Louisiana,Massachusetts,21nNew Numberoperatedduringanypartofthe year. Seefootnote2oftable85. Allconvertedintostillwinewiththeexception of180,647half-pintunitsremovedinCalifornia,Missouri, Total Total in 86.-Sparkling wine: 85.-Sparkling Month bottles andothercontainersofvaryingsizesaccordingtothenumberotaxableunitscontained. REPORT OFCOMMISSIONERINTERNALREVENUE State and stocks onhandJune30,byStates,fiscalyear1941 ____

wine:' Productionandtax-paidwithdrawals,bymonths, 18, 210,635

Produc-

2, 3,018,094 2,826,069 1,234,023 1, 1,462,857 1,071,916 1,002. 712 1,258,604 Number tion 993,886 889, 795 588, 936 681,407 384, 337 ducers of pro- opera- ling 1 Numberofproducers,production,withdrawals,losses, [Number ofhalf-pintunits'] [Quantities inhalf-pintunits 4 107

'

M. M.

.NN N .NN

I V. N N t ■ ■ fiscal year1941 14,464,136 3,272,378 2, 510,330 1,038.060 18, 210,635 1,678,015 1,174,024 1,043, 258 4,741, 540 Prodnc 2,84, 195 2,055,045 7, 744,016 Total 410,189 382,972 672,783 776,782 797,039 708,346 tion 453,027 257,146 116, 666 14,464,136 Tax-paid 1, In half 3,480,661 2,833 8,851, 249 1,305,163 pints 306, 700 260, 759 195, 745 150.028 100, 177 769, 005 127, 371 139.624 145,781 161,772 87.292 90,351 89,103 76,069 329,093 106,608 82,116 Withdrawals 2,888 2,040 2,376 Tax-paid withdrawals 240 264 792 1 ,474 ] In pints 1,883,750 1 Other 429.102 364,764 137,982 102.252 198,830 375,517 142.662 140.932 179, 082 66,270 83.358 54,648 92, 852 70,998 45,357 66, 797 83, 211 1,070

In quarts 10,725,276 2, 520,052 1,873,308 1,275,532 Losses 285,888 239,136 896, 376 505,720 581.944 742,036 755,432 551,080 618,772 289, 245 144,052 132, 330 672,687 46, 112 55,487 4,728 428 118 24 93 62 8

In other On httnd June 30 15, 872,251 sizes 8,804, 705 2, 190,566 7,257,280 1, 303.836 1,088,586 3 86,105 145,074 16, 524 11,499 48,830 8,914 10,290 3,483 7,908 2,316 16, 578 7, 270 7, 326 6,039 5,714 1,497 7, 615 1, 964 2,006 1,336 1,250 29,803; inpints,83,584:quarts,159466;andothersizes,2,626half-pintunits. TABLE July half-pint unitsinmiscellaneouscontainers. New York New Jersey. California Arkansas June January November September TABLE pint unitsinmiscellaneouscontainers. 182,060; inquarts,844,400;andother Wisconsin Washington Virginia Pennsylvania. Ohio Missouri Michigan Meemzebusetts_ Louisiana Illinois May April December October August March February 3 1 2 1 Forproductionofvermouthatrectifying plants,seetable68. includesartnoisilycarbonatedwineasfollows:Tax-paidwithdrawss-inhalfpints,312,813in Represents12.465half Seefootnote2oftable85. Represents 12,630half-pintunitsinthree-fourthsquarts,105,192half-pintunitsmagnums,and69,851 State Total_ Total 87.-Sparkling wine: 88.- REPORT OFCOMMISSIONERINTERNALREVENUE

1,769,005 Vermouth:' Production ------In half Month 868.386 547,788 pints 120,113 149, 656 58, 572 14,002 5,784 9, 349 by sizeofcontainerandStates,fiscalyear1941 144 168 48 - pint units Tax-paid withdrawals 1,883,760 In pints 884, 356 172, 336 193, 386 549,084 52,652 22, 368 16,284 10,856 744 540 120 928 96 in I Tax-paidwithdrawalsandstocksonhandJune30, , tiaresiousgehe [Number ofhalf-pintunits BIM, 10, 725,276 In ' 5,211,200 1, 256,392 2,780,452 986,432 255,932 quarts 84,440 80,832 68,916 Production 1,816 27,732 half-pintunits; 1,610, 701 [Wine gallons] year 1941 624 240 201,005 153, 528 185, 815 162,756 137, 442 149, 770 136,137 165, 2,30 128, 218 80,865 59,470 50,415 and quarts: 73;600 In '86,105 sizes 4L 360 28,405 tax-paid withdrawals, other 6, 607 5,232 1,469 1,296 1,836 1,077,382 Total 110,486 104, 400 146,179 126, 208 43,440 94, 289 95, 634 86, 379 96, 725 59, 307 37,792 77, 543 In 315,298 128,221 pints' 69, 385 85,808 18, 346 1 haifyintnnitvirinagnums, ant040half. 2,096 7,382 3,314 ] half stocks 868 119 96 96 72 14 Tax-paid withdrawals Not over a percent 9, 046, 1,477,086 In on handJune30-Inhalfpints, On handJune30 278,840 385, 584 683,958 174, 444 20, 340 393 15, 514 pints 5, 690 93 2, 310

1., g Xt8& 782 680 810 600 926 Over 14and21 not over2124 1,076,405 alcohol by 12, 332,500 110.406 104,235 146.007 126,985' In quarts 94,230 43, 337 5,672,596 95,403 86,279 95, 603 58, 792 37,735 1, 789,740 2,934. 528 77,394 789,088 988,920 106,388 months, fiscal 33,220 8, 7, 684 792 884 680 percent alcohol 4 In 177,673 116,834 sizes 21,790 13,226 12,248 11,928 173 other 1,077 1, 584 '138 495 570 165 118 169 59 81 72 93 82 55 67

174 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE. 175

TABLE 89. - Vermouth: I Number of premises operated, production, withdrawals, TABLE 92. - Enforcement, Alcohol Tax Unit: 1 Seizures and persons arrested, by losses, and stocks on hand June 30, by States, fiscal year 1941 States, fiscal year 1941 [Quantities in wine gallons] Seizures Number Withdrawals Persons On hand State State °f Production Losses Property arrested premises June 30 Stills Distilledspirits Mash Wine Automo-piles Trucks (appraised operated+ Tax-paid For export [ value) 4txtr. California 596,146 187,631 10,006 13,115 309,192 252 7,129 Gallons Gallons Gallons PRP" Connecticut 1, 600 9.939 Alabama 1, 347 23, 262 484, 403 4 447 $159, 947 Illinois 2,105 19,794 462 11,277 477 Arizona 3 55 290 130 2 . 272

Kentucky c,c 2,143 Arkansas 210 2,471 77,950 41 31,076 Maryland 877 2, 947 27, 753 37, MO 14 4, 194 1,921 9,046 411 4,122 California 90 Massachusetts grom. 51,035 Colorado 511 New Jersey 212,368 191,523 6,331 2,770 4,006 382 16 3, 493 761,940 647,909 9,209 17,878 235,931 Connecticut 13 1,006 New York Delaware 8 310 1,480 10 258 Ohio 13,567 8,197 262 7,859 District of Colum- n1 Pennsylvania 14,267 299 23 8, 107 10 451 800 1, 580 4 642 47 405 bia 2 Virginia 0 225 155,813 Florida 581 14, 077 392,079 527 c; Wisconsin 6,787 1,525 24 5,239 Georgia 1, 939 48, 691 1, 211, 435 2, 807 338 223, 536 51

314 '0 1, 077,382 25.546 35, 244 643,016 Hawaii 8 34 266 Total 195 1, 610. 701 Idaho 2 10 Illinois 103 7,058 351,809 28 54 102 304 9, 588 . I For production of vermouth at rectifying plants, see table 69. Indiana 62 1,849 19,040 32 8 21 5,835 Number operated during any part of the year. Iowa 10 595 493 iUW:t 97 34,280 Includes 2 galleys withdrawn for family use and 3 gallons withdrawn for use of United States. Kansas 28 356 4,240 15 4

Kentucky 683 11, 749 182, 975 22 189 87,866 Louisiana 68 227 5,551 140 9 6,508 TABLE 90. -8E41 and sparkling wines: Production, tax-paid withdrawals, and stocks Maine 7 646 1,380 24 1 738 on hand June 30, fiscal years 1934-1941, inclusive Maryland 168 3,349 80,640 88 52 23, 959 Massachusetts 37 2 030 28,465 25 17 11,785 28 146 1, 145 909 4 1,988 Still wine (wine gallons) Sparkling wine I (half-pint units/ Michigan

606 9 2, 940 3 Minnesota 17 416 1, 247 A

Fiscal year ended Mississippi 502 7,446 171,941 168 81,873 i" June 30- Withdrawn Stocks Missouri 26 1, 521 2,630 146 115,417 Withdrawn Stocks Produced 61 270 1 742 Produced [ tax-paid June 30 tax-paid June 30 Montana 9 Nebraska 2 34 183 250 158 " Nevada 1 ' 1,209

150 13 402 Ig 14, 525,688 50,168, 336 10,657,488 5,688,456 9,016,440 New Hampshire__ I 7 1934 77, 778, VS New Jersey 45 4, 317 278,472 267 31 22, 994 1935 91, 930, 362 35,416.512 56,476,590 6, 214,445 5,276,263 9,273,563

1, 485 gE 5,799,429 10, 781.785 New Mexico 4 111 160 3 4 1936 170,903, 1013 47, 933, 5.52 . 78,471,573 8,277,011 230 New York 397 30, 716 890,889 5, 216 502, 573 Dt 1937 122,045,241 62, 117, 999 68, 176,305 9, 622,525 7,906,213 11,648,069 North Carolina 1, 245 28, 365 883, 324 582 195, 933 2 1938 228,726,368 61, 328,799 102, 119, 796 9,780,274 7, 223,416 13, 248, 748 12,943,627 North Dakota 14 19 104 WMg 1939 231,959,287 67,563,672 94, 947,598 6,683, 762 6, 337, 846 2, 562 129 27, 576 93,421,179 9, 634, 791 8,376, 590 13,207, 501 Ohio 264 6, 935 60, 531 1940 212,367, 737 82, 570,831 Oklahoma 378 4, 967 91, 830 162 60, 084 1941 286,371,423 89,669, 715 118,529,739 18, 210, 635 14,464, 136 15,872,251 Oregon 12 33 356 4 1,481 4 Pennsylvania 282 7, 419 118, 752 9,135 132 117,964

9 1, 09692,177 I Includes champagne, o her sp arkling wine, and artificially carbonated wine. Rhode Island 9 306 3, 651 4 44 Represents amount removed from tormenters, including wine to be used for distilling material in the South Carolina._ 609 15,301 333,581 252 production of brandy. South Dakota 2 21 I 15 Includes vermouth produced at wineries. Tennessee 930 17, 676 459, 281 304 132, 420 Texas 512 2, 818 85, 506 703 172 : 58, 053 '

Seizures and persons arrested, by Utah - TABLE 91.-Enforcement, Alcohol Tax Unit: 1 "V Vermont 288 1 254 months, fiscal year 1941 Virginia 878 24,890 777,545 343 137,380 =

2,542 RW" Washington 16 28 946 963 3 13,981 West Virginia__ 293 1, 644 37,806 19 35 Seizures Wisconsin 4 752 100 31 3 4,019 Persons Wyoming 1 5 35 120 5 Month Property arrested Automo- Total 5 11,826 5 275, 396 6, 868, 078 82,502 4, 299 453 2,424, 585 26,033 Stills Distilled Wine Mash Trucks (appraised spirits biles value) Includes seizure and arras s in cases adopted as well as in cases originated by the Alcohol 'Pax Unit. [ Not including s ills seized at cleaning and cracking plants. Nine such plants were seized during the Gallons Gallons Gallons Z 099 year. July 867 9.54 946 482,632 373 97 $398,510 Not including 413 gallons of denatured alcohol and 39,048 gallons of tax-paid liquors seized. August 939 22,844 584 515,523 388 42 194, 826 Z 304 September 817 24, 551 116 420,614 405 33 158, 547 : 2. 250 October ' 1, 045 22.755 4, 527 575,127 395 36 182, 568 2, 354 November 812 19,077 12, 785 510, 309 301 34 137,975 1,904 December 1,120 25, 273 11, 352 694,307 366 55 224,544 2, 362 January 1,169 27, 070 15, 248 677,811 386 35 226, 767 2, 299 February 1,036 18, 775 3,726 837, 324 320 24 167, 618 2, 127 March 1,107 22, 5, 208 869, 354 418 36 221, 248 2,391 April I, 083 22, 638471 Z 633 619, 091 325 38 103,136 2, 039 May 931 23,713 1, 758 541,457 304 33 163,192 1, 958 June 900 22, 275 3, 659 524, 529 320 36 165,833 1, 927

Total +11,826 5 275, 396 6Z 502 6,868, 078 4, 299 453 2, 424, 565 28,010 I Includes seizure and arrests in cases adopted as well as in cases origin ated by the Alcohol Tax Unit. Not including s ills seized at cleaning and cracking plants. Nine such plants were seized during the year I Not including 413 gallons of denatured alcohol and 39,048 gallons of tax-paid liquors seized. 176 REPORT OF COMMISSWNER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INrl'ERNAL RE\'ENUE 177 TECHNICAL STAFF l' .~l'Ir.E 93.-Analy~is of the work of the T(lcJ~llic(ll Staff during ':he fiscal year J!)41­ Income. ]Irojits, estate, and gIft tax cases-Cun(.muecl TABLE !l3.-,171alysia of the work of the 1'cchnical Staff dUr/:ng the fiscal year 1941_ income, profits, estate, and (Jift tax casCIl Io'(ELD 0I'EIl.\,·!lONS-ALL Drvlsw~s, CO:lfSOLLVATf:o-Contiuued

FIEI.n OPERATIONS-ALL DIVISIONS, CONSOLIDATED P ....lIT U-'CASES DOCf:t:TED BY BOARn o~' '.f ....x AI'PEALS

PART I-CASES NOT DEFORE THE BOARD OF TAX APP£AL~ (A) l'ROORI::SS OF WOUK .---_.--.._----­ (A) PROORESS OJ. WORK Amannt stlltcd In stalutary notice I Number 1---'----;---­ Hewl1ue agenl'S lI.ntllog or .tah~ of (:aseJl Ovnra.s~s.'5' Defieiene,' Penalty I I notl(.'C l in tux nIl'nt : ~;)~~~~r ndiclency Penulty O"~r~-:: I I I be~innillg pcnc.lira.g at or year .• 1,355 $125,441.696 ss. 173.212 $200.53S­ lu~ta~ mCDt U(\('(llvrd dllriw year (not-·tr(lTI~I(·r" NC.. deductcd) : P~n1.730 'I'otnl recciplL••_ _ _'J, • 211 4. MlI.86J 12,601,1>l~ 'rotaL •. 11.511-1 1'ot"lla be accounted ror. .. 9.0861 26ti,O:lJ.933 3.713.749' 2::, 4J.9. 001 J 4, 1:3. :~p I ~. \l7~6UI Disposc<} 01: J)lspOStc'J 01 duriuQ y("ar~ CJ!OSCl1.._ •...... _.••.•.•_ •••••••••._••_••••..•_ Closed by slipnJatio!l-nl:r~c"settlement ' ...... •. 71. 9~3. 849 '1,266.726 831.000 !l.OM "'. ~/j-l. 939 !!'!lO. ,,3 3. 1\9.6ft4l d~tnnlt Potitioned to BOllr.'s ori~lnlllly «'cdycd 10 pre·90·dll)' slllh". ",,,aunt of rewnue a~cnt'61inding:tor ~•• arIglnal17 JliNILs fmmd h!lo' f1}\'€InlW ll/Z:ents in c<'rtain ))~~()CilltC'd case::; not ~ltt)\\'JI iu stotutory noli(!C. For estate ta~ recel\'ed III 9l).do)' status••mOllut of stlltutor)' notice. ca~cs oP.t amouDts aro \ls.,(} nftN deduct!n!! nddit!onul StnH, tux ('redils nllow"I-,lo H susblantluted. • Includes IS docketed cascs scUled pursufmt ta al1el's in c()ruprol.lllsc, OB'rAI~ED (TI) RESULTS IN CASES CLOSED (E) Rl<:SUL'J'S O}j'l'AINED IN S·1'1PUT,,\TF.D CASES

';;t oil decision Stipu]atians 11'.'r. (,,"r_a~e --- filed sustained Numhcr I I IOyc,­ ------1----1--­ of ('"-SOS J)cJieiencs' Penalty 'I mcn' in t-RX _ ---1---­ AKr~lIIcnts ao arigil.llli consldcrulloo ngreed ifriiiEE~~:'::;~:;;;;~:~:::;~:;~;~;:;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;~: ~ii ~i I-~' :~.~~ (including $2$. ovorns.ses.~rn(\IlU H~T('l'd lLnd _ elalm r"jrctlons) ___ ... 4.494 $20. GOO. 760 ~:!'l4.473 $2, 135," A/:(1JOlllcnl·s on reconsideration "ner statutory notioo dirccted hy Stll!! •• _. __ ... _._...... __ J20 0Ii7,Sl·J G9!\ 36,767 Nct del!cicnc)' atlll IlOnlllty• . .. _ . 27. 8.19. 179 36.5 DefalJlts "ftf'r cOIlSltleratian hy St"llI in prc·9O-doy or \lO·dl\~· (110 filed) __ . __ S~,6Si status /lolll.ion Ilo'l -1.230.715 NOTF:.-Tb,· abo,-e l1/:urc, ~re complied an the basis 01 collsid('rln~ that n C8l'C r~lcrred to tl!nl:Hatr is still Unal!n,od O\'('fllSSCSStllOnts and claim reJecl!ans .• IllI2.lIUO82." &17 ...... ---_. ­ - - --­ --­ ""ndi"•• unless nnd unlil it is clos<'d by na IlNitlon lx'iliK tiled with ~he lloard, b,' agreewl'JIt or s~ipl1!('tian, j I I ---­ by dlsml"""l or dofunlt, ar by ~r!nl u"forr' the Daard all tb,' !ll('rits. TotaL _ __ ••••••.••••• t',lJh;) I ~'J ..'''". ~Ill I 314.81\l1 I 2.1141.226 TAI1LtJ !)4.-Anal!l.~i" of 1L'ork on comp"omisl<, extension of time, ond final closing Pcrcent 01 dellcionc\' in tax slIstllirl\"l, ·1 U. (JgrCCTllf'1l1 C(/~("', ji8col year It)41 Pl'r~nt al Il~t d,·.flek'n(:)· and penult}· ~ll'tr,incd, ·11.4.

E,L~_nstOIl Flnnl Cases Compra· of timo cloo.ing mlS('. C>l003 agreement OilS"., ca.sc.s - -- I I I 1 1;0· ~~)~j~~~ll~~~~)I:l!~'~.::.~~::=-:::~:::::::::~~:::::::::::::::::::::: 1.~ 187 [(17 Total to be dis\Coasc-

OFFICE OF CHIEF COUNSEL TABLE 98.-Statue of cases pending before United States Board of Tax Appeals June 80, 1941

TABLE 95. - Cases appealed to the United States Board of Tax Appeals, including those appealed from Board decisions to appellate courts, for fiscal year 1941 Unanswered 26 On reserve calendar 59 APPEALS DIVISION-WASHINGTON OFFICE Inactive 35 I 808 In process of preparation: Pending beginning of fiscal year On Washington calendar 1 Filed-new cases 29 1 553 On field calendar Received from field for appeal to Circuit Courts of Appeals Set for trial: On Washington calendar 1 1, 390 Tried by Board of Tax Appeals: Awaiting decision 14 Awaiting expiration of appeal period 44 Closed: 1 By decision on merits 464 In process of closing 11 By agreed settlement Total 182 Total closed 475 Transferred to field-remanded for further hearing 12 TABLE 99.-Progress of cases in appellate courts on appeals from decisions of the United States Board of Tax Appeals for the fiscal year ended June 30, 1941 Total 487 4t In In In Cases circuit Supreme Cases i Supreme

Pending end of fiscal year 903 e courts Court Court I See footnote to table 96. Pending beginning of fiscal year: Closed during fiscal year: TABLE 96.-Number, and amounts, of cases shown in table 95 for the fiscal year 1941 Appealed by Commissioner 181 11 Favorable to Commissioner_ 230 only, by class of tax and amounts involved Appealed by taxpayers 398 9 Favorable to taxpayers . 110 Appealed by both 20 Modified 55 Total 599 20 Total 395 41 Filed, reopened, and Closed and trans- Pending June 30, Pending Iuly 1, 1940 received from field, ferrod to field, fix- 1941 Appealed during fiscal year: Pending end of fiscal year: Cat. fiscal year 1991 cal year 1941 By Commissioner 168 16 Appealed by Commissioner. Class of tax By taxpayers 355 21 Appealed by taxpayers 15 Appealed by both Amount in Num- Amount in Nun- Amount in By both Num- Amount in S ber dispute dispute ber dispute ber dispute Total 538 37 Total 705 16 F*8 Income 695 $62, 194,909 $23, 205, 376 $22, 039, 681 $57, 360,624 Estate 164 1 18, 637, 256 1, 214, 248 4, 363, 452 15, 288,052 1, 067,014 1, 136, 887 836,977 TABLE 100.-Results obtained in cases closed before the United States Board of Tax Gift 49 926,860 Appeals during the fiscal year 1941 Total 808 81, 759,015 582 25,486,638 487 33, 760, 000 903 73, 485, 653

Amount Percentage One case, Involving $5,344,080, includ d in 1940 final inventory. Case included again in August 1940 Character of closing Number Amount in monthly report. Duplication, therefore, eliminated from opening inventory for fiscal year1941. of cases dispute won of recovery

TABLE 97.-Circuit and Supreme Court cases' pending June 30, 1941 Decision on merits 469 $17, 731, 987 $9, 289, 234 52.38 Agreed settlement 11 15, 536, 501 8, 854,688 56.99 Total 475 33, 268, 488 18,143, 922 64.63 New appeals to Cif- Closed during fiscal Pending June 30, Pending July 1, 1940 cuit Courts of Ap- peals and reopened year 1941 1941 Class of tax TABLE 101. - Disposition of cases closed by United States Board of Tax Appeals Num- Amount in Num- Amount in Num- Amount in Num- Amount in during the fiscal year 1941 bar dispute ber dispute bar dispute ber dispute

iS% Amount in dispute Amount approved Income $18, 889, 620 470 $23, 085, 285 390 $12, 037, 211 621 $29, 917, 694 Percent- Estate 8, 975, 601 34 9, 821, 715 33 4, 451,158- 41 14, 346,160 Character of closing Number Net result age of Gift 727,223 35 1,063, 621 14 1,090, 733 69 710,111 Ovraergistiy- recovery Deficiency Deficiency Ovmentr Total 619 28, 572, 444 539 33, 970,621 437 17, 569, 100 721 44, 973,965

Decision on merits 464 $17, 361,090 WO, 897 $9,003 350 $86, 013 $9, 289, 234 52.38 Agreed settlement 11 7, 767, 004 7, 769, 497 1, 158, 157 72, 966 8, 859, 688 56.99 Total 475 25,128, 094 8, 140, 394 10, 162,507 156,979 18, 143, 922 54.53

180 REPORT OF COMMISSIONER. OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 181

FIELD OFFICES TABLE 106.-Status of cases pending before United States Processing Tax Board of Review June 30, 1941 TABLE 102.-Number, and amounts, of cases pending in field divisions, by class of Number tax and amounts involved "Unanswered Set for trial: Pending June 30, Filed and reopened, Closed, fiscal year Pending June 30, On Washington calendar 6 1940 fiscal year 1941 1941 1941 On field calendar 21 Class of tax Submitted to Board of Review: Num- Amount in Num- Amount In Num- Amount in Num- Amount in Awaiting decision 26 ber dispute ber dispute ber dispute ber dispute Awaiting expiration of appeal period 23 'Circuit Court of Appeals: 4 §g§ Income $147, 315,998 4,198 $112, 776,228 4, 117 $92, 717, 823 4,961 $167,374, 403 Awaiting decision 8 Estate 21, 724,428 285 38. 100,4843 289 15, 998.. 090 298 43, 828,82A Awaiting expiration of appeal period 7 Gift 13, 791, 207 190 694,959 218 10,152, 220 178 4,333,946 in process of closing 3 Total 5, 388 182,831, 633 4,873 151, 571,673 4,624 118,866, 133 5,437 215, 537,173 Total 103 TABLE 103.-Disposition of cases by United States Board of Tax Appeals during 'TABLE 107.-Results obtained in cases closed before the United States Processing Tax fiscal year 1941 Board of Review during fiscal year 1941

Amount in dispute Amount approved Amount of Percentage Num- Percent- Number Amount of claims re- of claims Character of closing ber of meat Net result age of Character of closing of eases claims in covered recovered cases Deficiency Overpaty- recovery dispute by tax- by tax- men Deficiency °TuerP payers payers

Default 239 $874,616 $61,153 $871,520 $931,673 99.6 Dismissals 61 $363,723 .00 Decision on merits 1,313 27. 550, 829 4, 052, 315 12,693,969 $507,738 16, 238, 548 51.4 Agreed settlement 8 11,826,801 $8,400 0..00 Agreed settlement 3,072 79, 220, 575 7,106,646 28,794,681 268,491 35,632.836 41.3 Decision on merits 24 2, 563, 813 363, 516 .14 Total 4.624 107,646, 019 11, 220,114 42, 359,170 778, 227 52,883, 057 44.4 Total 93 144754,337 371,916 .03

PROCESSING TAX SECTION 'TABLE 10&-Civil cases received and disposed of by the Processing Tax Section, Appeals Division, and number decided by courts during the fiscal year 1941 TABLE 104.-Cases appealed to United States Processing Tax Board of Review, in- cluding those appealed to appellate courts, fiscal years 1938-1941 Not in District CiLcui„t, Court of Supreme suit Total courts 'muappeals' ''' -1 Claims Court 1938 1939 1940 1941 Cases pending July 1, 1940 447 2 13 4 116 Pending beginning of fiscal year 4 52 83 93 Cassa received during fiscal year 34 159 5 Filed during year 59 107 120 103 35 233 Total 34 256 7 48 4 349 Total 58 159 203 196 Cases closed during fiscal year 5 78 1 15 I 4 103 Closed: Cases pending June 30, 1941 em 29 178 6 By dismissal 6 76 89 33 246 By agreed settlement 9 . Cases decided- By decision on merits 12 X For Government 4 2 2 4 12 Against Government 3 1 Total 6 78 110 93 4 Total 7 2 3 4 16

TABLE 105.-Number, and amounts, of cases shown in table 104 for the fiscal year 1941 only, by class of tax and amounts involved 'TABLE 109.-Interpretative, corporate reorganizat'on, and bankruptcy and receiver- ship cases disposed of by Processing Tax Section, Appeals Division, dur fig fiscal year 1941 Pending June 30, Filed during fiscal Closed, fiscal year Pending lime 30, 1940 year 1941 1991 1941 Class of tax Corporate Bankruptcy

zz Interpre- Amount in Num- Amount in Num- Amount In tative reoraanua- and reach,- NUM- Amount In Lion ership dispute ber dispute ber dispute ber dispute

Cases pending July 1, 1940 11 Processing 93 $7, 897, 221 103 $22, 762, 816 93 $14, 754, 337 103 $15, 905, 700 Cases received during fiscal year 11 33 37 1 29 Total 48 Cases disposed of during fiscal year 12 62 40 7 27 Cases pending June 30, 1941 8 5 35

182 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 183

TABLE I10.-Review cases received and disposed of by the Processing Tax Section, TABLE 113.-Results obtained in lien eases closed during the fiscal year 1941 Appeals Division, for the fiscal year 1941 Number Amount Amount in- of eases collected Cases Claims volved Lien cases pending in court $105, 496.17 On hand beginning of fiscal year 47 137 $27, 810, 213.04 Lien cases not pending in court 112, 350.00 220 469 180, 194, 633.27 Received during the year Total 217,846.17 Total 267 606 208, 004, 846.31 Disposed of during the year 199 429 108, 483, 062 12 On lumid end of fiscal year 68 177 99, 521,783.19 TABLE 114.-Civil cases pending at the beginning and end of the fiscal year 1941

Pending CIVIL DIVISION June 30, 1941 TABLE 111.-Cases received and disposed of during the fiscal year 1941 I Pending July 1, 1940: Number For suit by the United States 187 Pending in district courts 1,536 In court (exclusive of lien cases) 2, 724 Involving liens 817 Not pending in court 234 Pending in circuit courts of appeal 74 Cases in court involving liens 657 Pending in Court of Claims 413 Pending in Supreme Court 4 Cases not in court involving liens 45 Pending payment of judgment claims 65 State courts and mitscellaneous 7 3, 660 Total Total 3, 660 3, 903 Received during the year: Suits by taxpayers 674 Excludes bankruptcy, receivership, insolvency, compromise, and liquor eases Suits involving liens 971 Cases for suit by the United States 244 TABLE 115.-The number of Civil Division cases tried by the Department of Justice Liens cases not in court 337 and the number decided by the courts during the fiscal year 1941

Total 2, 226 Cases decided 5, 886 Total to be disposed of Courts Cases tried Partly for For the Against and partly Closed during the year: Govern- Govern- against Total 1, 290 ment ment Govern- Cases (exclusive of lien cases) ment Cases involving liens 1,193 2, 483 District courts 179 217 107 11 514 Total Circuit courts of appeal 63 141 38 2 244 Court of Claims 18 33 16 0 67 Pending June 30, 1941 Supreme Court 10 9 3 0 22 Total 270 400 169 13 847 Pending July 1, 1940 $204, 664, 199. 21 Received during fiscal year 27, 303, 091. 65 COMPROMISE SECTION Total 231, 967, 290. 86 Closed during fiscal year 47, 506, 236. 06 TABLE 116.-Number of cases received and disposed of during the fiscal year ending June 30, 1941 Pending June 30, 1941 184, 461, 054. 80 Pending July 1, 1940 2, 933 I Excludes bankruptcy, receivership, insolvency, compromise, and liquor cases. Received during year 2, 127 112.-Results obtained in cases closed during the fiscal year 1941 I Total 5, 060 TABLE Closed or in process of closing 2, 023 Number Amount Recovered from Amount re- Pending, June 30, 1941 of cases claimed taxpayers funded 3, 037

Suits instituted by taxpayers 1, 012 $36, 843, 219.39 $7, 330, 733.12 Suits and claims by the United States 276 10,301, 791.57 $1,089,309.13 Injunctions-Social security taxes 2 10, 691.53 Total 1, 290 97, 155,702.99 1,089, 309. 13 7, 330, 733. 12

! Excludes bankruptcy, receivership, insolvency, compromise, lien, and liquor cases.

184 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE. 185

TABLE 117.—Classification and tax liability involved in cases pending June 30, 1 MISCELLANEOUS STATISTICS TABLE 121.—Moneys paid to collectors as proceeds of In rem actions, judgments Pending In process of dosing recovered in civil suits, fines and penalties imposed in criminal actions, and costs, Class • as reported by clerks of United States courts (Form 158), year ended June 30, Number Liability Number Liability , 1941

1,652 $20,092,078 Judgments Decedent estates 27 108, 321 Insolvent banks In rem Miscellaneous cases 1,369 3, 055, 616 Internal-revenue collection 57 302,051 76 $851,889 districts eases Civil suits Interest Costs Total Cash offers in compromise 25 1,171,473 ' . Fines and Installment offers in compromise 32 1,458, 350 amtsts on ' 101 2,023,362 bonds, etc. Peaaleles Total 3,037 25, 014,410 Alabama $250.00 $13, 720.00 $154.81 $14,124. 81 INTERPRETATIVE DIVISION Arizona 2,100.00 2,100.00 Arkansas of cases received and disposed of during the fiscal year 1941 First California 2, 580.00 354.81 2,934.81 TABLE 118.—Number Sixth California 21, 441. 50 76.64 21, 518.14 298 Colorado 300.00 300.00 Cases on hand July 1, 1940 Connecticut 5, 315.00 147.80 5, 482.80 Cases received during the year 2, 367 Delaware 1,000.00 25.00 1,025.00 Florida 1, 950.01 228.24 2, 178. 24 Total 2, 665 Georgia 3, 677. 00 377.90 4,054.90 2, 406 Hawaii 4, 971.00 4, 971.00 Cases disposed of during the year Idaho Cases on hand June 30, 1941 259 First Illinois 171.55 5, 503.17 368.32 8,041.04 Eighth Illinois 16,377.00 212.50 16, 589. 50 REVIEW DIVISION Indiana 7,837.12 373.46 3, 210. 68 Iowa 770.00 770.43 1,540.43 of cases received and disposed of during the fiscal year 1941 Kansas 200.00 394.57 594.57 BLE 119.—Number Kentucky 13,152.00 348.09 13, 408. 09 Louisiana 8, 800.00 3, 308.37 12, 188.37 Estate and Maine 500.00 500.00 other miscel- Income ha Total Maryland 10.585.00 507.90 11,072. 90 laneous taxes Massachusetts 1,482.09 182.12 1,814.21' Michigan 4,897.00 4,897.00 Minnesota 3,672.00 60.00 3,782.00 134 Mississippi 1,035.00 178.08 1,211.08 21 113 On hand July I, 1940 87 460 547 First Missoun 25, 895.00 64.75 25, 959.75 Received to July 1, 1941 Sixth Missouri 4,800.00 133.00 5,023.00 108 573 581 Montana 7,646.00 7,846.00 Total 84 504 588 Nebraska 3,501.00 45.51 3, M5. 51 Disposed of during year Nevada 101.01 100.00 24 69 93 New Hampshire 2, 915.00 2, 915.00 On hand July 1, 1941 First New Jersey 3, 360.00 183.50 4,043. 50 Fifth New Jersey 1,595.00 110.20 I, 701.20 Amounts involved: $3,02892 67.70 3,096. 82 $5, 140,908. 40 $57,970,081.76 $83, 110,990. 113 New Mexico Claimed by taxpayer 3, 310, 311.44 38, 560, 737.62 39,871,049. 06 First New York Approved by Review Division Second New York 3, 253.06 $1. 28 108.37 3,382. 70 Third New York 30.00 8,452. 50 405.29 8, 887.79 Fourteenth New York 60.55 6, 566.00 146. 92 8, 773.47 TABLE 120.—Public decisions, promulgated under Treasury Decisions 4264 and Twenty-first New York 2, 879.90 1, 550.35 6,430. 25 during the fiscal year 1941 Twenty-eighth New York 9, 277.00 211.513 9,488 80 588, North Carolina 1, 656.00 19, 467.70 376.26 21,499. 98 North Dakota Income tax cases Estate tax cases Gift tax cases First Ohio 1, 800.00 145.00 1, 945.00 Tenth Ohio 600.00 21.10 621.10 Decisions Eleventh Ohio 131.01 131.00 Month 'numbered Num- Amount ap- Num- Amount ap- Num- Amount ap Eighteenth Ohio 4, 527. 20 714.69 5,241.89 bar proved ber proved ber proved Oklahoma 16, 718.00 1,011. 77 17, 729.77 Oregon 75.00 75.00 First Pennsylvania 11, 561.00 60.14 11, 621.14 NnW° 144.29 869.29 6545-6575 $2, 758,257.87 $147, 447.55 866,329. 47 Twelfth Pennsylvania 525.00 July 1940 1,515, 229.34 82, 181. 59 1, 790, 771. 49 Twenty-third PennOlvania 2,144. 50 3,800.40 11,944.90 August 1940 6576-6600 Rhode Island 1,025.00 1,026.00 6601-6624 2, 142, 489. 25 64,472.49 September 1940 582,588. 42 23, 223.38 83, 386.83 South Carolina 1,100.00 286.75 1, 386. 75 October 1940 6625-6634 A8AMINS 8635-61360 2,956, 137. 47 232, 024.99 30, 691.00 South Dakota November 1940 Tennessee 190.00 510. 74 4, 793. 68 51.07 630.81 6, 176. 30 6681-6656 1,018,951. 24 185, 144.82 December 1940 1,223,050.00 72,857. 88 First Texas 77. 73 17, 174.00 262.83 17,514.56 January 1941 6687-6711 245.01 6712-6742 1,848,807. 23 . 151, 642. 37 Second Texas 3,245.00 3, February 1941 586, 227.07 53, 040. 00 Utah 2.00 2.00 March 1041 6743-6784 2,676,830. 74 8785-8813 10,088,395.43 385, 138. 56 Vermont 75.00 75.00 Apra 1941 101,948. 37 Virginia 3, 889.02 674.48 4, 563. 50 6814-6845 5.796,09.8 22 May 1941 2, 213, 108. 40 109, 087.07 27, 340. 12 Washington 1,274.00 95.92 1,389.92 June 1941 6846-8878 West Virginia 3,350.40 24.00 3,374.40 295 34, 818,724.61 30 2,101, 400. 94 7 2,050,953. 91 Wisconsin 3, 588. 00 9.23 8,597.23 Total for fiscal year 250, 654.08 1, 818, 111. 61 Wyoming Abatements 16,576,011. 72 6, 042, 863.83 Credits 1,850, 746.88 232,847. 30 Total 2,435.83 6,419. 56 309,225. 28 52.35 17,928. 75 338,059.77 Refunds 12, 066,975. 33 Unadjusted 131,873. 73 Non.—The difference between the total o $39,871,049.06 approved in all eases revkewed andthe shove total of 838,971.089.46, as shown in the public decisions, is attributable in part to delayed application of credits, cases in which no public decisions are required, ease pending before the Jo'nt Committee during 423348-41-18 the 30-day period not yet expired on June 30, and to uncompleted final scheduling of allowances. T.\ 1I1.F. 122.-F,lzpellses of/he Intcrtwl Revenue Scn'iw, fiscal year fljded /tUi 30, WJ,I ..... C/J A. 1lISnUR..Io:MB 'TS Fon COLU'; Tons 01' 'KTER:S-.u. REVE 0)

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901' 8888 R 4888 RR 'EL R2:88882$6- 8 a uO rra e L Li B ggaRgrit gcl ro P gag :t gei gg ti 811 gg i RUg gg. grAgOggIgg wa -ratz -ra .: me .., ■ • a ... a .4 .a -1 CAL fl-rag4 -- i S agalas6.41. NI 16 al 166 ' -se

- $288ERRZRR.R.R288g84 469R8 3R;99R4824RARR Iso CH s

sane 8.92288:289R.W 0V 28RM22R889 l RICT pro e2 nse ggglaglIggUggatIlggi g1640BlEgggE0 ag011igggagg e

TE igggVARRIR 1 u

(' W2 114.4°6 g^g::‘5 tt: e.ti 7:0'lidr.i.67:s.e.:fot: St Trave d FRAPV19818R2R:g

exp 4a , OR DIST 69 na '

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94ARRRgRRR88AR2RRR84542 14R2642$R9£48829 f

ks, f 8R2RA82888R8R98 v 28RRS92289 tc. o o s o s ler ggageggUgggrt4 gg: Mg“gggtiggatgga 4 e isors,

2 gRIEVAMM101 ie ie $96 '

c gggicagagg tc. L9 ' MENTS FOR rv e ks, ts, e lar likigiOtRigalagnggig4ggg gggaggVg lar

11 IniggIERPORgg n SE

6 Mgggig455 " ler Sa e Sa c 1. sup ag UR 94

1 SB URSEMENTS F nue, DI ISB ve E. D l re D. na ter in

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ting

t n ic llec io O tr is "Co

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063 v;t30 4 E§ l isc hia the ans ... 6 8 ■ k .1 4.0 r ta 141 71-g m7c4 re

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na V 0,19 k 161 "bori am i U 04 E ta it To de Or S as gr - 141' Yo '5 1: P.011'' ' a2 .21t244g ag isv ton timo Franc ttle w 1 Fro tro l ns ilg •'4 3-VP Pau Ur1' 124 104 5Z i glta A 5 A1 i t t twPO a s4Attig Bos Ne Phila Newar Ba

:444m4o668M0q010044.4,24ZZZZ coaigallato7.1i Atlan Lou De Chic New Ka St. Denver San Se < 00 zzgioalit 192 mt. REPORT OFCOMMISSIONERINTERNALREVENUE 2888 & ... gggt gggg X 88c 888gAn 4 8'' E 4;

'Collecting the internal revenu

ENTSF OR DIS T RICTSUPE RVISORS ' OFFICES ' E t t - %GROW-8282885RA A teeae4eee4 g:= 1 88E282%248 m7.s trIgti 1288888828888& aa ggggAggggigggg eeest,raeisaeasza 4 O : ggWgg g -itgflgels gE2 i64644 , ,f4stirregssag 888 'C" tag.' 28 7 44eea 7ag4 8a$ -

taa g 488 - 83 1 X 1 5 g 8 8

H. DISBURSEMENTSFOR C HI D FORCE ' S 0 REPORT OFC0143,11881011ERINTERNALREVENUE g A 8 a gggE 83%2 aa id 3 r.1 zz ewe tt V E p. O 8 8 a 1 t m "

I. DISBURSEMENTS BY TH ECH IEF DISBUR SINGOFFICER, DIVISIONOF DISBURSEMENT, TREASURY DEPARTMENT 43E2.2 ex. N ig 3i F Ni G 1 a 8 -4 i a a

the Internal revenue, 8 $10, 789, 288. 94 $12, 239, 861. 90 8 A 8 8 8 A a ti 1 4 8 C- 193

194 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 195 9! 01 ' 91 ' 30 ' tO ' 09 196 1 2 3 0 77 t.: 8888 8 96 TABLE 123.—Summary ME ' M Mg 7

211 68 of internal revenue stamps issued to collectors of internal 30. t T 6 ' 47. MO revenue and the Postmaster General during the fiscal years 1940 and 1941 343. '

gggg g 3 4 524. 5 095 9E1 L90 T 158 ' 7 .6 ' 16, 94, W 140,

OgA0 5 608, 99 I Quantity Value

il iIi. ti a 63, Kind rot tt ' L9 '

EL ' 1990 . 1941 1990 1941 - elleos

snoeu 85422 g El g 8 2 569 8 19 30 ' 8 '1

' Distilled spirits and wines:

g 0 g g g 3

iN gggg 81 119 4 19 Brandy 38,400 58, BOO $3,889, 320.00 $8, 997, 037.50 g‘gt: Other domestic distilled spirits 2,140,830 2,909,900 231,085, 102. 50 341, 172,030.00 Certificate of tax-payment, dis- 3;' 8! 0018 98 M 69 ' Sc E

5 1 L ' d

t tilled spirits, for shipment in . 3 '

g ig:lit 2 ' 30e ' 938 919 ' 19 ezz tank can 2, 250 &POO (1) (I) an 2. E 6 1 T Export (secs. 2878 and 2885, men 47 698 8 to 3 II lies I. R. C.) 12, 800 2,400 1, 280.00 220.00 ip

12,

u Bottled-in-bond, export (blue

pi; t 889, 'I strips) eq 1, 113, 820 318,128 9, 011.40 2,806.28 1, Supp Bottled-in-bond,domestic (green SE 12L E 99 MO 08 ' L9 ' 58 ' IL ' strips) t ' 128, 610, 000 106, 295,000 , 1,268,100.00 1,004,412.50 81 8g2g 09 31 Container or bottle stamps (red L98 ' t Mt O

3. M T

74. strips) 1, 070, 689,700 1,067, 747, 400 10,479,909. 50 10,285,974.00 hone , 79 TI 040g i 0 2 2 6 Rectified, class B 5 16, 000 13,800 215,820.00 196.686.00 M 5, 4, M lep g Rectified, Puerto Rico 2 2 1, 600, 000 2, 757, 950 + 368, 500.00 763, 338.00 ggig Rectified, class A 20,000 11,500 Te Industrial alcohol transfer 60,800 54,000 i 09 8t ' 93 EL' 96 qd Alcohol warehousing 164,300 97,200 (3) TIT L3 Wholesale liquor dealer's pack- g g 8 .

ea g we

g 2 g 8 n E81. c6 g ai ei LI ages 800 9,900 Cs) (2)

a Win 17,961,584 41,322,936 7, 686,050.97 17,206, 298.25

g '6

:IA 6 to Fermented malt liquor 53,875, 500 53,045,100 263,948, 125.00 324,333,750.00 y Tobacco:

99 ' Manufactured tobacco 2,469, 379, 540 2, 458,985,330 55,336,074.60 55, 049, 719.29 LI3 ' 89 ' ASA'S.' 2 A Snuff 392, 4u, 989 421,002,811 8,984,833.04 7,402,237. 88 sna 9L9 618 OI Tinfoil wrappers 1,393,048 1,376,400 15,657. 17 15, 427.12

L Cigars, large 183, 738,400 174,928,860 19, 248, 752. 35 13,748,891.30 ' g i d nt 0405 0 g 98 tIL Cigars, small 14, 144,000 15,908,300 108, 756.45 117,249.45 Cigarettes, class A 8,918,083, 400 9,916,680, 700 536, 677, 877. 50 613,692, 179.92 gag 6 Cigarettes, class B 422,600 122,500 80, 310. 80 13,852. 80

90 ' 08' LT T8 Et Mt I IL ' £6 9 £6

1 ' Cigarette tubes 2, 102, 100 1,595,200 30,541.00 13, 902. 00 38 69 '813 ' 109

8s„8 8 89 x- 009 ' BIZ 11t Oleomargarine: s 6. 8 ' 8 Domestic, colored 17,975 19, 925 28,690.00 90, 315.00 l e ' 116. 05 13 98 08

E-406 g t Domestic, uncolored 16,416,850 17,956,450 793, 855. 50 879, 368.12 0,

1 1 Process or renovated butter 163, 000 261,000 4, 930.00 8, 455.00 pense 83 IWI 627, Mixed flour 581, 000 629, 500 6, 470.00 7, 810.00 Trave 2, 2, Playing card 92,308, 370 54, 508,658 9,230, 837.00 5,985,920. 78 £8 ' L9 ' 18 T99 Documentary 11,344, 828 23,340, 792 17, 306, 267.00 27,606, 537.00 18 60 05

teo 73 05 Stock transfer 17,146, 280 10,313,618 18,098, 391.00 73 10,099, 391 00 gggiag 1 989 ' 188' se 1. 8. 4. 0. Silver transfer 2, 888 50,600 65, 650.00 93, 054.00 l 16 im '065 '

83 88 Narcotic 3,525,900 5, 295, 075 279. 81 l 195, 458.00 260,973. 25 008. I Agggg A 185 ise ie Order forms for opium 1,090,000 1,072,500 10, 900.00 10,725. 00 14, 82, 64, 137, S 124,

8 Marihuana 100 200 100.00 g101 5 765, 89 200.00

1, Order forms for marihuana 190 a80 vs-- ,ss 57, a National Firearms Act (sec. 2720,

I. R. C.): •

- f i- Machine guns, silencers, etc 20 9, 000.00

m fi o ing

ts fi Certain short 2-barrel guns 450 50 • 950.00 50.00 from fro Div or occupational, stamps 959,040 049,060 15,054,860.00 16, 098,199.00

Emer Special from Ac

ice rocess ing t ing

for Total ing 13, 351, 512, 052 13,878,588, 593 1,188, 107, 281.48 1,455, 156, 314.24 t t t

p a ra era e er Prac

ding

Revenue Value inserted when purchased. Office

n de 3 op op These items were consolidated in Annual Report for 1940. op a ( fu 3 Rave no money value. III,

Tr rces rces re le nue

d fo forces fo it ve n for 41: — T TABLE 124. Cost of printing and b nding for the Internal Revenue Bureau and

42 19 ld ld ld Re

ion es

it a Service, fiscal years 1940 and 1941 t 19 1: ing ie l fie f fie 4 r ns ia e rm r te nue, rna 19 d d d is xp op n te 1940 1941 r Pe 1940- in ue, e ce ), ic In n an Reve an a Class of work ive l dm for App ve t ice ice Bas Quantity Cost Quantity Cost a v War ld d a rna rv rvice ld force ld force tr l re t, n es, te fie is n fie fie na a

in ns In

l, l se Publications, regulations, decisions, etc 1,814,000 $119,870.28 2,150,200 $106, 813.58 ff, l, l ser l se e me f Treasury, ter xes l e l l ta Blank forms 251,604,000 871, 137. 78 272,176,000 520. 132.87 ta ta ton dm ton o in ton n Sta n ta n ta ta Letterheads 13,763,000 18,484. 41 17,844,000 25,506. 15 u d, l s unse ors d ta Miscellaneous: Binding, memorandum sheets, he is d a d exp l isors bto bto tme hing bto tme hing Counse ica tme hing te tors fun Co v t tor analysis paper, tabulating cards, etc 15, 489.29 21,226,325 31,807.40 41: r r ta ts f c f ar la ar a Su Su Manag Su e erv an n hn an Burea 19 lec ie ing l

lle e s

Was To t Was Was hie Total 267, 181,000 522,962. 66 313, 398,525 684,360.00 ies ie king ncy d re Sup C Dep Co Ch Dep 38, Dep Co Sup Ag Tec lec ion, l lar lar ge s 19 an Wor Sa Sa Co 0