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The purpose of the law is to require stamps on checks which are, commercially, negotiable instruments. A check, however, is not required to be in any particular form. If it is in a form sufficient to constitute an order for the payment of money, and assumes the character of negotiability, then it is subject to tax. When a bank takes a receipt from a depositor in exchange for payment of money, the paper being retained by it as its authority for making the payment and as its evidence of payment, relying upon it as constituting an order to pay out the amount named therein, it is held by this office that such an instrument is subject to the tax of 2 cents upon an order for the payment of money, and the bank which believes otherwise and takes the risk of transacting business in this manner without payment of stamp tax must do so upon its own responsibility, and hold itself subject to proceedings to compel payment of tax claimed to be due and the recovery of penalties provided under section 10 of the war revenue law.

If a depositor issues his receipt so that it would be good in the hands of another person to draw upon his deposit for the amount of it, then, as a negotiable instrument, it loses the character of a receipt and becomes a check or draft, and is subject to the tax without any question.

The president of the Commercial Bank may be assured that his relations to the law are entirely changed when, as a hardware merchant, he leaves one vocation, over which the Government exercises no control, and as a banker enters upon another, privileged by the Government to him upon payment of a special tax, as "a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid or remitted upon draft, check, or order." His reciprocal -obligation will prevent him from payment of money on deposit, as a banker, only upon the "draft, check, or order,” which the law specifies are to be used in the business he is then carrying on, and which are subject to tax, and when, as a banker, he accepts a receipt for payment of money on deposit, it must be construed as an order, and is subject to tax as above set forth. 1

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Please furnish to Mr. Hillyer, secretary of the State Bankers' Association, a copy of this letter, and advise him that it is believed the banks of his State will have no difficulty in deciding for themselves whether or not the methods they are adopting in the transaction of their business are subject to taxation. They must be aware that under the provisions of section 7 of the act of June 13, 1898, the responsibility to stamp instruments subject to taxation is placed alike upon the persons who make, sign, or issue, and those who cause the same to be made, signed, or issued, and that by the provisions of section 10 above referred to a penalty is imposed upon any person who shall accept or pay any order for the payment of money without the same being duly stamped. Respectfully, yours, N. B. SCOTT, Commissioner. MR. HENRY A. RUCKER, Collector Internal Revenue, Atlanta, Ga.

This has been modified by subsequent decisions.

(20231.)

Stamp tax-Receipts.

Liability to stamp tax of receipts used in lieu of bank checks.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., October 21, 1898.

SIR: I have to acknowledge the receipt of your letter of the 20th instant, in which you request the ruling of this office as to whether a receipt in the following form

-$

LANCASTER, S. C.,

dollars on account.

Received of the Bank of Lancaster, of Lancaster, S. C.,

filled out in the handwriting of an official of the bank and signed by the depositor on calling for and receiving the money, is liable to stamp duty.

In reply, you are advised that, in accordance with the advice of the Attorney-General, this office holds that a receipt given to a bank by a person to whom the bank is indebted as a depositor or otherwise, or for whom it holds funds, is no more subject to a stamp than a receipt given for any other debt or demand.

The purpose of the law is to require stamps upon checks, which are commercial negotiable instruments. A check, however, is not required to be in any particular form. If it is in a form sufficient to constitute an order for the payment of money and assumes the character of a commercial negotiable instrument, then it is subject to the tax.

There is much banking done, especially in savings banks, without the use of checks at all, the depositor having a book in which the bank denotes the amounts deposited on one side and the amounts drawn out on the other. Of course, the depositor in such case draws the money out of the bank, but he does it in such a way as not to be subject to stamp duty, because he does not give a check. So, if a person does not give a check he does not have to pay tax, and if he goes to the bank and the bank pays him upon its dues to him and he gives a receipt, such receipt does not require a stamp; but if he issues his receipt so that it will be good in the hands of another person to draw upon his deposit for the amount of it, then it loses the character of a receipt and becomes a check or draft, and is subject to tax.

Respectfully, yours, G. W. WILSON, Acting Commissioner. CASHIER, BANK OF LANCASTER, Lancaster, S. C.

(20239.)

Stamp tax-Grain tickets.

Grain tickets paid by private persons under contractual relations to pay same, taxable as orders for the payment of money.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., October 24, 1898.

SIR: This office is in receipt of your letter of October 6, 1898, inclosing a letter from Deputy Collector Wells, of Sparta, Wis., under date of October 4, 1898. This letter is written in reference to the taxability of grain tickets as orders for the payment of money. He refers to decision No. 20087, page 100, in which a ruling is made in regard to the taxation of the Spencer Grain Company's tickets. The difference between this case and the Spencer Grain Company's case is that these grain tickets were cashed by the bank in the latter case, while in the case submitted by Deputy Collector Wells they are cashed by private persons in each village where the W. W. Cargill Company has an elevator. This company sends out men to buy grain to be sent to the elevator, and they make a contract with a merchant to cash these grain tickets when properly computed and presented, and with this person the Cargill Company have monthly settlements, when they reimburse the person for paying the tickets, and, in addition, pay him a compensation for his service, and the question is, Are these tickets subject to taxation when the party with whom the contract is made cashes them?

This office has ruled that where the employee of a company pays a ticket similar to this it is not subject to taxation, although the paying office may be located in another place from the factory or elevator. The employee's act is considered to be the act of the employer, and therefore it would not be an order for the payment of money payable by a third party. There is a difference in law between the payment by the employee and the payment by the person under contract, the specific object of the contract being the payment of these tickets. It is true that this contractual relationship is not entered into with a banking institution, but this does not alter the situation.

Here is the situation as understood by this office: A, who is in the grain business, has his central office in the town of He bas scattered throughout the country a number of grain elevators, and in connection with these elevators he has buyers who go out and buy the grain. It is sent to the elevator and the grain ticket is made out. The seller of the grain then takes this grain ticket to B, who is a merchant, a broker, or any other person who has entered into contractual relations with A to pay these tickets. There is a decided difference between B under the contract and an employee of A, who might cash the ticket. This office therefore holds that whenever these tickets are presented

for payment to one under contractual relations with the person, firm, or corporation engaged in the grain business they are subject to taxation as orders for the payment of money, no matter what the form of the ticket is.

Respectfully, yours, G. W. WILSON, Acting Commissioner.. Mr. M. F. BLUMENFELD, Collector Second District, Madison, Wis.

(20312.)

Stamp tax-Time checks.

When time checks become taxable.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., November 9, 1898.

SIR: The statement of account inclosed by you in your letter of the 31st ultimo, and styled by you as a "time check," is a statement of account made by a contractor showing the balance due to a workman or employee. It is marked "Not transferable," and if that is strictly adhered to it does not require a stamp. If in any case it passes from the workman or employee to a third party, it is taxable as an order for the payment of money.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. F. VON BAUMBACH, Collector Internal Revenue, St. Paul, Minn.

(20375.)

Stamp tax-Cotton tickets.

Cotton tickets O.K.'d by a buyer, and paid with buyer's money in hands of third party, exempt from taxation.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., November 26, 1898.

SIR: This office is in receipt of your reply, indorsed on the back of a letter from this office to you dated November 19, 1898, the subject of the correspondence being the exemption from taxation of cotton tickets presented for cashing under certain circumstances.

After a careful review of this subject this office is of the opinion, and so holds, that where a buyer of cotton deposits with a third person a sum of money, out of which this third person is directed to pay all cotton tickets O.K.'d by the buyer, the tickets cashed under these circumstances are exempt from taxation as orders for the payment of money. In order to come within this ruling the buyer must actually place the money with the person who cashes the ticket, and the ticket must be then actually cashed out of the buyer's own money, and no

other. This would not include the payment of tickets by a bank out of the funds of its depositors, nor payment of tickets in the hands of persons to whom they have been transferred by the cotton seller. N. B. SCOTT, Commissioner.

Respectfully, yours,

Hon. JAMES K. JONES, Washington, D. C.

(20463.)

Stamp tax-Checks.

Checks used in lieu of promissory notes must be stamped at the rate of 2 cents per $100. TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., December 27, 1898.

SIR: This office has been informed that some of the banks in New York City are loaning money to parties, taking as an evidence of the debt an uncertified check for the amount advanced, the loan, of course, being secured by collateral. This is certainly an evasion of the law, and you are hereby instructed to send a letter to the Clearing House Association of New York City, asking them to advise the members thereof that the method above described must be discontinued.

A check used as a promissory note is an acknowledgment of a debt, and must be stamped accordingly-that is, at the rate of 2 cents per $100 or fraction thereof-and if the collateral pledged as security for such a debt is pledged specifically for this one loan, then the pledge of collateral is subject to taxation on the amount of the loan in excess of $1,000 at the rate provided in the paragraph of Schedule A relating to pledge or mortgage.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. CHAS. H. TREAT, Collector Second District, New York, N. Y.

CIGARS.

(See TOBACCO, CIGARS, AND SNUFF.)

CHEWING GUM.

(19879.)

Retail dealers in chewing gum.

Retail dealers not permitted to remove chewing gum from original stamped packages and place same in show case.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., August 10, 1898.

SIR: This office has received a letter, dated 4th instant, from the Colgan Gum Company, Louisville, in which they ask whether chewing

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