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CERTIFICATES.
(9.)

Stamp tax-Certificates.

Certificates attached to depositions to be used in legal proceedings not taxable. TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., January 8, 1900.

SIR: Under date of the 2d instant, this office received a letter from O. G. Eckstein, attorney-at-law, No. 107 South Main street, Wichita, Kans., in which this gentleman asks if notarial certificates attached to depositions of witnesses to be used in cases pending in court require to be stamped in the amount of 10 cents as certificates required by law not specifically mentioned in the act.

Please inform Mr. Eckstein that these certificates are not subject to taxation, no matter in what form they are executed. They are required in a legal proceeding and are exempt from taxation.

Respectfully,

G. W. WILSON, Commissioner.

Mr. M. W. SUTTON, Collector Internal Revenue, Leavenworth, Kans.

(23.)

Stamp tax-Commission certificates.

Nonnegotiable commission certificates used by thrashing-machine companies and the like are not subject to taxation.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., January 24, 1900. SIR Referring to office letter addressed to you under date of December 22, 1899, which was in reply to a letter received from you under date of December 12, 1899, in which you submitted two forms of commission certificates issued by the Keating Implement and Machine Company, which were held by this office to be subject to taxation as orders for the payment of money, you are advised that this office, after further consideration, holds the so-called commission certificates not to be subject to taxation.

The following is a copy of one of the instruments submitted by you:
KEATING IMPLEMENT AND MACHINE COMPANY,
(WHOLESALE FARM MACHINERY AND VEHICLES),
Dallas, Tex., December 12, 1899.

This nonnegotiable, noninterest-bearing commission certificate evidences that there will be due to John Jones, on demand, after payment of note No. 44281, the sum of thirty dollars. Said note is made by Jim Davis, and matures October 1, 1900.

KEATING I. & M. Co.,
By Secretary or President.

The ruling contained in office letter addressed to you under date of December 22, 1899, is hereby revoked.

Respectfully,

G. W. WILSON, Commissioner.

Mr. P. D. HUNT, Collector Internal Revenue, Dallas, Tex.

(122.)

Stamp tax-Certificates of notaries to depositions.

A notary public, when engaged in taking depositions to be used as evidence before some judicial tribunal, being a judicial officer, the certificate authenticating his official acts as such officer is not within the internal-revenue act of June 13, 1898 (30 Stat., 455), Schedule A requiring a 10-cent stamp to be affixed on a "certificate of any description required by law not otherwise specified in this Act."

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., May 11, 1900.

To collectors of internal revenue and others concerned :

The following extract from an opinion of the circuit court of appeals for the eighth judicial circuit, in the case of Stirneman v. Smith et al., relating to stamps on notarial certificates, is published for the information of internal-revenue officers and others concerned.

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A more important inquiry is whether, under Schedule A of the recent revenue act of June 13, 1898 (30 Stat., 455, 460, ch. 448), the notary before whom the depositions were taken was required to affix to his certificate a 10-cent revenue stamp. One clause of Schedule A requires a 10-cent stamp to be affixed on a "certificate of any description required by law not otherwise specified in this Act;" and notarial certificates, such as the one involved in the present case, are not referred to by any other provision of the act. Section 14 of said act declares "that hereafter no instrument, paper, or document required by law to be stamped, which has been signed or issued without being duly stamped, or with a deficient stamp, nor any copy thereof, shall be recorded or admitted, or used as evidence in any court until a legal stamp or stamps, denoting the amount of tax, shall have been affixed thereto, as prescribed by law." * * * Section 15 of the act makes it unlawful to record or register any instrument, paper, or document required by law to be stamped unless a stamp or stamps of the proper amount shall have been affixed and canceled in the manner prescribed by law," and further provides that "the record, registry, or transfer of any such instruments upon which the proper stamp or stamps aforesaid shall not have been affixed and canceled as aforesaid shall not be used in evidence." Section 17 of the act declares "that all bonds, debentures, or certificates of indebtedness issued by the officers of the United States Government, or by the officers of any State, county, town, municipal corporation, or other corporation exercising the taxing power shall be, and hereby are, exempt from the stamp taxes required by this act: Provided, That it is the intent hereby to exempt from the stamp taxes imposed by this Act such State, county, town, or other municipal corporations in the exercise only of functions strictly belonging to them in their ordinary governmental, taxing, or municipal capacity." * * *

In the proviso last quoted is found an explicit declaration on the part of Congress that it was not its purpose to impose a stamp tax on any instruments or documents which might at any time be executed for or in behalf of a State, county, town, or other municipal corporation, to enable it to perform its ordinary governmental or municipal functions; and, if there had been no such a declaration, the same result would doubtless have been reached by judicial construction. In the absence of a definite expression on that subject, it would have been inferred, we think, that Congress intended to exempt from taxation all the instrumentalities that a State or any of its municipal subdivisions might find it expedient to employ in the discharge of their ordinary governmental functions, and that its purpose was to impose stamp taxes on those instruments only which have their origin in the private transactions of individuals and corporations, or to such instruments and writings as are executed mainly for their benefit, rather than for the benefit of the public. (Carpenter v. Snelling, 97 Mass., 452, 458; Green v. Holway, 101 Mass., 243; Knox v. Rossi (Nev.), 57 Pac., 179, and cases there cited.)

A notary public, when engaged in taking depositions to be used as evidence before some judicial tribunal, is a judicial officer, his duty being to assist the court under whose commission he acts in administering justice. While employed in such work a notary can not be regarded as the agent of the person or persons in whose behalf the testimony happens to be taken; but his duties are of an official nature, and in most respects analogous to those of a referee or an examiner or a master in chancery, whose functions are clearly judicial. Moreover, depositions which are taken before a notary or other inferior magistrate in a pending case are neither private papers nor private property, since they must be returned into court and lodged with the clerk, there to remain permanently as a part of the proceedings in the case.

We are of opinion, therefore, that the certificate of a notary, under his hand and seal, authenticating his official acts while serving in the capacity aforesaid, does not fall within the provisions of the recent internal-revenuc act, but that such a certificate is exempt from taxation for the reason that while so engaged a notary is performing public duties devolved upon him by law, which are intimately connected with the administration of justice. The same conclusion was reached with respect to such certificates under the internal-revenue act of June 30, 1864. Schedule B of that act (13 Stat., 223, 299, ch. 173), after enumerating several kinds of certificates to which internal-revenue stamps should be affixed, further provided in general terms that an internal revenue stamp of 5 cents should be affixed to a 66 certificate of any other description than those specified." It was held, however, that the general language employed in that act did not require a revenue stamp to be affixed to a notarial certificate authenticating depositions, because they were legal documents and constituted a part of a legal proceeding. (Prather v. Pritchard, 26 Ind., 65, 70. See, also, Cardell v. Bridge, 9 Allen, 355, 357.)

(219.)

Stamp tax-Certificates of indebtedness.

Taxation on certificates of indebtedness issued by mutual deposit or investment

companies.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., September 28, 1900.

SIR: I have to acknowledge the receipt of your letter of the 14th instant, and in reply will instruct you as follows:

In regard to the taxation of the certificate issued by the Industrial Mutual Deposit Company, of Lexington, Ky., the ruling of this office has been, as to this and similar instruments, that they must bear stamps as certificates of indebtedness at the rate of 5 cents for each $100 or fractional part thereof of the face value, and the face value is to be determined by ascertaining the highest possible value of the coupons attached to the certificates.

The terms of payment of these coupons are stated as follows in the conditions annexed to the certificate:

The company reserves the right to redeem said coupons, or any of them, at any time, in the manner provided for by the by-laws of said company and upon the payment of the amount hereinbefore promised, and binds itself to redeem all coupons within one hundred and four weeks upon which 104 weekly payments have been made.

The weekly payments are 5 cents for each coupon, and as each certificate bears 10 coupons, the weekly payment on each certificate is 50 cents, provided none of the coupons have been redeemed. In the body of the certificate is a promise and agreement on the part of the company to pay to the holder on the redemption of each of said coupons $1.60 on every dollar paid to keep said coupons in force to the date of redemption, less 10 cents on each coupon when redeemed. There is a financial schedule attached to the certificate showing the value of each coupon at the end of each week, and at the end of one hundred and four weeks or two years, the period of ultimate redemption promised, the value is $8.22 for each coupon. This is simply the amount of dues paid in on the coupon, viz, $5.20, with 60 per cent added and less 10 cents, to be deducted at the time of redemption. The coupons at this rate amount to $82.20, and make the taxation on this certificate, of course, 5 cents.

What this company is asking from this office is a ruling that the highest value of these coupons is $4.06, the amount of the weekly payments for one year, adding 60 per cent and deducting 10 cents. This would enable the company to attach 24 coupons to the certificate at the same rate of taxation now paid.

This request is supported by the statement that the coupons have been redeemed by the company with such rapidity of late that the

average value of the coupons when redeemed was only 73 cents. The number of coupons redeemed was 39,707, none of which were over twelve weeks old, and this was nearly half of the coupons issued up to July 31, 1900.

In further support of this request, affidavits of officers of the company are filed with the collector, stating that in their "opinion and belief” no coupon issued by this company will ever reach an age exceeding fifty-two weeks, when its redemption value will be $4.06.

It will be seen that this is a matter of opinion, and an opinion can not furnish a safe basis for computing taxes. The main fact is that the company is not bound to redeem these coupons until one hundred and four weeks have elapsed. It is true that it reserves the right, and exercises it, to redeem the coupons at a much earlier date, but its ability to do this depends upon the prompt payment of dues by all members and the acquisition of new members, so that money may pour into the treasury freely and abundantly.

In the not improbable contingency of financial depression, the redemption of coupons might be very much retarded. At any rate, in the opinion of this office, it is impossible to give any certain time of redemption other than that limited in the contract itself, which is one hundred and four weeks, with a value accruing of $8.22 on each coupon, and this basis of taxation will be adhered to with respect to the certificates of the Industrial Mutual Deposit Company under its present contract. Neither will any change be made in this ruling if the company refrains from printing and attaching hereafter the financial schedule to the certificate, as it proposes to do. This schedule is a mere mathematical statement of the value of the coupons when redeemed at certain periods, and in no manner varies the terms of the contract or its legal obligations.

Respectfully,

G. W. WILSON, Commissioner.

Mr. S. J. ROBERTS, Collector Internal Revenue, Lexington, Ky.

(228.)

Stamp tax-Certificates of nomination.

Certificates of nomination and all papers relating to the exercise of elective franchise exempt from stamp tax.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., October 11, 1900.

SIR: I have to acknowledge the receipt of your letter of the 8th instant, in which you inquire whether a certificate of nomination for public office, such as is required by the laws of West Virginia, for electors and other officers, requires a revenue stamp.

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