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(156.)

Special tax-Broker.

A person who makes it his business to buy securities, even for himself only, without selling them, is a broker in contemplation of the statute and required to pay special tax accordingly.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., June 13, 1900.

SIR: Mr. E. E. Wilson, a lawyer of Corvallis, Oreg., has submitted to this office the question whether the special tax of a broker is required to be paid in the following case:

A retired merchant, who lives off the interest of his money, but has no office other than his residence, buys county warrants whenever he can and makes no concealment of the fact that he desires to purchase warrants, and it is generally known in the immediate community that he will buy warrants, and when he knows of a warrant being issued may solicit its purchase, but who never sells a warrant that he has bought.

If the merchant thus referred to is, as appears, regularly and constantly engaged throughout the year in making purchases of these securities, he must be regarded as making that his business or a material part of his business from which he derives his living; and as the statute defining brokers requires every person whose business it is to negotiate purchases or sales of securities to be regarded as a broker, this merchant must be required to pay special tax as a broker, notwithstanding the fact stated, that he never sells the securities bought by him.

Until there shall have been a judical decision warranting a contrary construction of the statute defining brokers (paragraph 2, section 2, act of June 13, 1898), this office must hold that the words "whose business it is to negotiate purchases or sales" of securities "for themselves or others" mean that a person who makes it his business to buy securities, even for himself only, without selling them, is a broker, and that the language quoted does not mean that a person must both buy and sell securities in order to become liable as a broker within the meaning and intent of the statute.

Respectfully,

G. W. WILSON, Commissioner.

Mr. D. M. DUNNE, Collector Internal Revenue, Portland, Oreg.

(174.)

Special tax-Commercial brokers—Brokers.

A person whose business it is, upon orders from his customers, on commission, to negotiate purchases or sales of wheat or other merchandise and purchases or sales of stocks, bonds, etc., even though he makes such purchases of sales in his own name only, not disclosing the names of his customers, is required to pay special taxes as a broker and commercial broker.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., July 6, 1900.

SIR: In reply to your letter of inquiry of the 29th ultimo, you are hereby informed that the old ruling to which you refer has been modified, and it is now held that persons whose business it is, upon orders from customers, to negotiate purchases or sales of wheat, or other merchandise, on commission, even though they conduct such negotiations in their own names only, not disclosing the names of their customers, are nevertheless commercial brokers and required to pay special tax accordingly. The same ruling, of course, applies to the business of buying or selling stocks, etc.

Respectfully, ROBT. WILLIAMS, Jr., Acting Commissioner. Mr. J. S. RIZOR, Wabash, Ind.

(180.)

Special tax-Commercial brokers.

Persons whose business it is to buy or sell grain (or other merchandise) on commission on orders received from customers are commercial brokers and required to pay special tax as such, even when they negotiate such purchases or sales in their own names only (the grain or merchandise not being received into their actual possession).

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., July 18, 1900.

SIR: Your letter of the 13th instant has been received, inclosing a letter from Churchill & Co., of Toledo, submitting the following statement of their transactions, on which they urge that they are not required to pay special tax as commercial brokers, namely:

If we have a customer in the country who sends us an order to sell 10,000 bushels of wheat for September delivery, we sell it to some member of our exchange and stamp the contract at the rate of 1 cent for every $100 that it would be worth at the price sold. Our customer is not known in the transaction at all. He would send us, say, 5 cents a bushel as margin to protect us against any loss on the market. In case he should desire to buy this grain back any time before September 30, he pays us a commission for making the trade, the same as he would had he shipped the grain into Toledo. We pay stamp tax on the contract the same as if the grain was delivered. The difference between ourselves and a broker in handling the busi

ness is that a broker sells for one party to another, and after the trade is made he is out of the deal and has no responsibility in the matter, while we are held responsible by the firm we sell to for any loss there may be incurred by a failure to fill the contract, as the contract is made in our name and we are held as principals.

The same condition applies when we buy grain in the country for deferred shipment.

The business thus described by Churchill & Co. is that of buying or selling grain upon orders received from their customers, for which they pay Churchill & Co. a commission. Although they carry out these transactions in their own name, it is held that they are commercial brokers, and must pay special tax accordingly.

You will, therefore, without further discussion of this question, call upon this firm and other firms engaged in like business for the requisite special-tax return before the expiration of this month, informing them that if they fail to make such return within this month it will become your duty to report the cases in your next list for assessment of the special tax and 50 per cent penalty.

If it is the desire of Churchill & Co., or any other firm, to test the correctness of the ruling of this office on this point, they are at liberty to do so by suit in court, after payment of the special tax and rejection of their claim for the redemption of the special-tax stamp issued.

Respectfully, G. W. WILSON, Commissioner. Mr. GEORGE P. WALDORF, Collector Tenth District, Toledo, Ohio.

EXHIBITIONS AND SHOWS.

(21.)

Special tax-Local exhibition.

A “home talent" exhibition given for the benefit of a school, or by a ladies' sewing circle, for a public benefit, is not among the "public exhibitions or shows for money" for which special tax is required to be paid.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., January 24, 1900. SIR: In reply to your letter of the 17th instant, you are hereby informed that special tax is not required to be paid under the warrevenue act of June 13, 1898, in the cases to which you refer, wherein, as you state, a school "makes up an exhibition of home talent and charges entrance fees, the proceeds to benefit the school," or "a ladies' sewing circle * * makes up an exhibition of home talent, and charges spectators for entering, the proceeds being for a public benefit." These are, in the opinion of this office, not to be regarded as among those "public exhibitions or shows for money" contemplated by the eighth paragraph of section 3 of the act of June 13, 1898; and there is,

*

therefore, no violation of the internal revenue laws of the United States in giving such exhibitions without a special-tax stamp.

Respectfully,

G. W. WILSON, Commissioner.

Mr. BEN. E. SYLVESTER, South Bluehill, Me.

(22.)

Special tax-Exhibition or show.

A company giving exhibitions of pictures to which an admission fee is charged for the pecuniary profit of the company is required to pay special tax under the eighth paragraph of section 2, act of June 13, 1898.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., January 24, 1900.

SIR: In reply to your letter of the 19th instant, concerning the United States Picture Company, who has made application, under protest, for a special-tax stamp on account of a show given by them, in regard to which you say: "Their exhibition is a series of metascope pictures of the Spanish war and the war in the Philippine Islands, for which they charge admission fee," you are hereby informed that if this exhibition is given by this company for its pecuniary profit, it is held by this office to be a public exhibition or show for money within the meaning of the eighth paragraph of section 2 of the act of June 13, 1898; and, upon such a state of facts, you have correctly informed the agent of this company, Mr. Hoover, that he is involved in liability under that paragraph of the statute.

In accordance with your suggestion, a copy of this letter has to day been sent to Mr. J. Hoover, New Matamoras, Ohio.

Respectfully,

G. W. WILSON, Commissioner.

Mr. B. E. GUYTON, U. S. Commissioner, Marietta, Ohio.

(26.)

Special tax-Poultry show.

Special tax is not required to be paid for a poultry show to which an admission price is charged simply to pay the expenses, and not for the pecuniary profit of the association giving the show or of any of its members.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., January 27, 1900.

SIR: Mr. George Taysum, secretary of the Utah Poultry Association, of Salt Lake City, Utah, in a letter to this office, dated the 18th instant, states that they have been called upon by the deputy collector of internal revenue there to pay special tax under the eighth paragraph of

section 2 of the act of June 13, 1898, and he inquires whether his association is required to pay this special tax. He says:

* *

We hold an annual poultry show in this city every year in January. * * * The admission fee is charged at the door in order to make enough money to pay the expense of running the show. * Should we in any way run behind in our expenses on holding one of these shows, each individual member is held liable for his share of the shortage.

As the poultry show, as it appears, is not given for the pecuniary profit of the association or of any of its members, and the association, as Mr. Taysum states, is "organized for the purpose of creating interest in poultry for the State of Utah," it is held by this office that its exhibition of poultry, though an admission price thereto is charged for the purpose of covering its expenses), is not among the public exhibitions or shows for money contemplated by the statute, and that consequently special tax is not required to be paid therefor.

Respectfully,

Mr. CHAS. M. WEBSTER,

G. W. WILSON, Commissioner.

Collector Internal Revenue, Helena, Mont.

(47.)

Special tax-Exhibition.

A national soldiers' home is not required to pay special tax for employing theatrical companies to give performances, for admission to which a price is charged, the proceeds being devoted to the amusement fund of the home; but the proprietor or agent of every such company giving exhibitions for money must hold the requisite special-tax stamp under the eighth paragraph of section 2, act of June 13, 1898. TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., February 19, 1900. SIR: Your letter of the 15th instant has been received, asking whether the National Soldiers' Home at Hampton, Va., is required to pay special tax under paragraph 8 of section 2 of the act of June 13, 1898, upon the facts which you state that it "frequently employs outright traveling shows, or theatrical companies, chiefly for the amusement of the inmates of said institution, but a few outsiders are usually admitted, who pay for their seats as they would at any other place of amusement, the proceeds being devoted to the amusement fund.”

The National Soldiers' Home is not required to pay special tax on this account. But the proprietors or agents of the traveling shows or theatrical companies who, as it is understood, are giving these shows for money and for their own pecuniary profit, must hold the requisite special-tax stamp under paragraph 8 to cover these exhibitions in each State in which they are given.

Respectfully,

G. W. WILSON, Commissioner.

Mr. JAMES D. BRADY, Collector Second District, Richmond, Va.

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