This relates to the principal, and if the principal renews his obligation an additional tax of 50 cents is, as to him, applicable under the renewal of his contract, it being the stamp duty at the same rate as would be imposed on the original instrument. In this particular the fact to be established is, Does the principal renew an obligation that has ceased? If he does, a tax accrues; if he does not, there can, of course, be no renewal, and consequently no tax as to him. In so far as renewals are concerned, the surety company can in no case be liable for a tax accruing under the paragraph in Schedule A, first hereinbefore quoted and numbered 1. In other words, there can not accrue as to the guaranty or surety company a tax of 50 cents in any event. I am of the opinion that the paragraph in Schedule A relating to insurance, "casualty, fidelity, and guarantee," was enacted by Congress to provide for a proper tax on instruments executed by persons, associations, companies, or corporations who transacted the business of fidelity, guaranty, and surety insuranceship for compensation, and that whenever this situation arises the instrument evidencing the transaction comes within the purview of the insurance paragraph referred to, and no other paragraph of the act, in so far as the act of the person, association, company, or corporation guarantying the fidelity of a principal is concerned. Under this ruling there should be no difficulty in construing the law in reference to the document when issued. In regard to the tax accruing upon a renewal there may be more difficulties presented, but if the fact is borne in mind that there can be no tax of 50 cents as to the principal unless he renews his bond, and there can be no tax of one-half of 1 cent as to the guaranty company unless they charge another premium for a renewal of their obligation, it would seem that what might be an apparent difficulty would in fact be a matter of simple solution. It is presumed that the surety companies, or the majority of them at least, have able counsel, perfectly competent to pass upon the instruments to which their respective companies are parties, and that the ruling I have made will be applied to such instruments according to their form and covenants and the proper taxation accruing be represented by the affixing and canceling of stamps in the amount found to be due under said construction. Respectfully, Mr. H. D. LYMAN, G. W. WILSON, Commissioner. President American Surety Company, New York, N. Y. (40.) Dramshop bonds. Under the laws of the State of Illinois and the ordinances of the city of Chicago, it is necessary for a party making application for license as saloon keeper to file a bond with the city collector. The case of United States v. Ambrosini involves the question as to whether the Government can require such bonds to be stamped under the war-revenue act of 1898. - Decision in favor of the Government. TREASURY DEPARTMENT, The following opinion of the United States district court for the northern district of Illinois is published for the information of officers of internal revenue and others concerned. G. W. WILSON, Commissioner. 1 UNITED STATES V. AMBROSINI. Opinion by SEAMAN, district judge: The indictment charges the defendant on two counts for executing and issuing two bonds, respectively, without the revenue stamp required by the act of June 13, 1898, one being a bond to the people of the State of Illinois, as demanded by statute for obtaining a license to keep a dramshop, and the other a bond to the city of Chicago, as required by ordinance of the city for like purpose. The contention on behalf of the defendant is twofold: (1) that the bonds in question are exempt under the terms of this act of Congress, and (2) if included within the terms of this act of Congress, the provision is unconstitutional in respect of such bonds as instrumentalities of the State and municipal government. I am of opinion that neither of these propositions is tenable. 1. For the first contention section 17 of the act is cited, but the exemption there provided relates exclusively to bonds and other instruments issued by the governmental authorities, and with the utmost liberality of construction are not applicable to bonds executed by individuals to the State or municipality for a license or other individual benefit. 2. If the bonds can be regarded as necessary means or "instrumentalities for the exercise of the functions of State or municipal government," as counsel insists, the second proposition is not without force. (State ex rel Lahey v. Garton, 13 Ind., 1; Jones v. Estate of Keep, 19 Wis., 369; Sayles v. Davis, 22 Wis., 225; Fifield v. Close, 15 Mich., 505.) But the business of saloon keeping is neither a governmental function nor essential to its administration, although good government may demand that the business be permitted only under regulations secured by bonds on the part of the applicant. The bond so exacted is a mere incident of the regulation. It is in no sense the act or obligation of the public or of a representative of the public, but is the applicant's individual undertaking to obtain a personal privilege, and as such is certainly not an immune in respect of stamp duties required of other citizens executing personal bonds or obligations. Neither the State nor its administration is affected directly or indirectly by the tax so imposed, as the bond must be executed and stamped when tendered; and if in any view an instrumentality of the State, it becomes such only when fully executed. The motion to quash the indictment is overruled, and an order will so enter. (72.) Stamp tax-Dramshop bonds. Conflicting decisions in the United States district courts. - The Commissioner of Internal Revenue will not change his ruling until the question has been decided by a higher court. TREASURY DEPARTMENT, SIR: Mr. E. A. Rozier, United States attorney, St. Louis, has furnished this office with a copy of the opinion rendered by Judge Adams in the United States district court in the case of United States v. J. L. Owens. This case involved the question whether the Government can require bonds given by a party making application for a license as saloon keeper to be stamped under the war-revenue act. The decision was against the United States. This is contrary to the opinion of Judge Seaman in the case of the United States v. Ambrosini, in which case the same question arose in the United States district court for the northern district of Illinois, which was published in TREASURY DECISIONS of February 15, 1900, internal-revenue decision No. 40. In view of these conflicting decisions, the ruling of this office holding such bonds taxable will not be changed. The decision of United States District Judge Adams will not be accepted by this office until the question has been decided by a higher court. You will continue to follow the ruling of this office, and insist that all such bonds shall be stamped by the principal at the rate of 50 cents each, and if in any case a fidelity or guaranty company becomes security on such bonds, additional stamps, at the rate of one-half of 1 cent on each dollar of the premium charged, are required. If the persons executing such bonds refuse to pay the tax by affixing the proper stamps, you will report them for assessment. The parties can make a test question, if they desire, by instituting a suit against you for the recovery of the tax after the same has been paid and a claim for refund has been made in the manner provided by the statutes. Respectfully, ROBT. WILLIAMS, Jr., Acting Commissioner. Mr. H. C. GRENNER, Collector First District, St. Louis, Mo. BROKERS' CONTRACT AND NOTES. (116.) Stamp tax-Brokers' contracts. Tax on brokers' contracts for the sale of real estate. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., May 1, 1900. SIR: I have to acknowledge the receipt of your letter of the 20th ultimo, in which you submit copies of a contract used by real estate brokers in your district in negotiating sales of real property, and ask if the said instrument is taxable under Schedule A. The instrument is in the following form : SAN FRANCISCO, Received of dollars, being deposit on account of dollars, United States gold coin, the purchase price of the property this day sold to h- subject to the owner's approval, and being in the city and county of San Francisco, and State of California, and described as follows: Terms of sale: days are allowed to examine title and consummate the sale. At the termination of said time the balance of said purchase money is due and payable upon tender of the deed of the property sold; if the title is defective, sixty days are allowed to perfect the same, and if, after the expiration of said term, unless extended by mutual consent, the title shall not have been perfected, the deposit is to be returned. The taxes on said property for the fiscal year ending June 30, -, to be prorated from date of deed, If the sale is not consummated according to the foregoing conditions, the deposit is to be forfeited. Time is the essence of this contract. The said hereby agrees to purchase said property accord ing to the foregoing terms. Sale to be consummated at the office of , Agents. You are advised that the above document requires a 10-cent stamp under paragraph 14 of Schedule A, as a contract, or broker's note, or memorandum of sale of real estate. The other instrument submitted (marked No. 2) is a copy of the above, except it has a blank on which the owner is to ratify the sale, and is to be retained by the broker. This blank No. 2 requires no stamp. Respectfully, G. W. WILSON, Commissioner. Mr. JOHN C. LYNCH, Collector Internal Revenue, San Francisco, Cal. (191.) Stamp tax-Brokers' notes. Clause 14 of Schedule A, act of June 13, 1898, relating to brokers' notes or memoranda of sale, construed. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., July 31, 1900. SIR: Referring to my letter to you of yesterday, relative to the liability of certain instruments to taxation as brokers' notes or memoranda of sale, I wish to add the following for your information and that of the Internal-Revenue Service generally: With a desire to secure uniformity of practice among collectors and revenue agents in respect to the clause of Schedule A numbered 14, the following ruling is made for the guidance of all concerned. This clause is as follows: Contract: Broker's note, or memorandum of sale of any goods or merchandise, stocks, bonds, exchange, notes of hand, real estate, or property of any kind or description issued by brokers or persons acting as such, for each note or memorandum of sale, not otherwise provided for in this Act, ten cents. The essential requirements of this clause are 1. The note or memorandum of sale to be stamped thereunder must be issued by a broker or a person acting as such. No memoranda of any other class of persons are taxable under this clause. 2. All notes or memoranda of sales of shares of stock, and all memoranda of sales of merchandise at any exchange, or board of trade, or other similar place, are not taxable under this clause, being otherwise provided for, viz, in paragraphs 1 and 2 of Schedule A. 3. The note or memorandum must constitute a broker's contract of sale, either executed or executory, issued to a purchaser, and no mere advice or order for delivery of goods not delivered to the purchaser, nor statement of account, can be construed as a contract of sale. 4. The issue of the broker's note or memorandum of sale, as above defined, is not compulsory under this clause, but if it is issued it requires a 10-cent stamp, regardless of the amount involved in the sale. Under clauses 1 and 2, herein referred to, the issue of some instrument evidencing the fact is compulsory, and the stamp tax is graduated according to the amount of the sale. Respectfully, G. W. WILSON, Commissioner. Mr. RICHARD YATES, Collector Eighth District, Springfield, Ill. |