The tax on shipment of parcels and packages by parcel post must be paid by the consignor.

473. SECONDARY LIABILITY.

Primary liability for tax has been referred to above but in nearly every case there is what might be termed a secondary liability. The law imposes penalty not only upon "whoever makes, signs and issues" any document or instrument or paper subject to tax without the tax being paid, but also upon "whoever accepts" such document or paper. This does not mean that the person primarily liable can leave payment of tax to another. It does mean that the Government can collect the tax wherever it finds, unstamped, a paper, document or instrument that should have been stamped; and it can assert the penalty as cir

cumstances warrant.

The person receiving a deed, or bond, or certificate of stock, or promissory note, or proxy or power of attorney, should, therefore, see that the law with respect to payment of the stamp tax has been complied with; otherwise, such person will become liable under the law.

474.-WHERE TO BUY STAMPS.

The adhesive stamps with which these documentary taxes are to be paid can be purchased from the office of the Collector of Internal Revenue, and at postoffices and United States depositary banks. It is likely also that a great many other banks will keep considerable stocks for the convenience of their depositors and customers, and that County Clerks and County Recorders will have them on hand.

475.-WITH REFERENCE TO CONVEYANCES.

The law provides that its language shall not be so construed as to impose a tax upon any instrument or writing given to secure a debt.

It also makes the measure of the tax upon a taxable instrument of conveyance the consideration or value of the interest or property conveyed in excess of any lien or encumbrance on the property at the time of sale. If there is no consideration capable of being expressed in money terms, there is no tax.

It follows, therefore, according to the Department's rulings under the stamp tax acts of June 13, 1898 and October 22, 1914, thatA deed of trust is not subject to tax, no matter in what form it is executed.

Escrow deeds are not subject to tax until final delivery of them. A mere contract for a deed, used in selling real estate, is not taxable.

When a partition deed merely defines boundary lines or shows each tenant in common's interest, there is no tax due.

tax.

A deed of gift, without valuable consideration, is not subject to

A conveyance of realty to trustees or other persons without valuable consideration is not taxable.

A quitclaim deed is taxable according to the value of the property interest conveyed.

476. WITH REFERENCE TO STOCKS AND BONDS.

A transfer of stock to a broker in order that he may sell it, or a transfer from a broker to a customer, is not subject to tax, but the law requires that each such delivery or transfer be accompanied by a certificate reciting the facts.

If a stockholder surrenders a certificate of stock and requests the issuance of several certificates, of smaller denomination but aggregating the same stock interest, there being no change of either interest or ownership, the new certificates issued by the corporation. have been held not subject to tax.

Certificates of stock of a foreign corporation when sold or delivered in the United States are liable to the same tax as the stock of a domestic corporation.

A bond is "issued," according to a ruling made under the law of 1898, "when there accrues to the corporation a benefit or consideration for issuing the same." Then it becomes subject to tax. As bonds issued on and after December 1, 1917 are subject to tax, it would seem proper to follow the old ruling, there being no later one to the contrary.

477.-BONDS REQUIRED IN

LEGAL PROCEEDINGS.

Bonds required in legal proceedings are not subject to tax under the present law. The same exemption was in the law of 1914. The Department then advised as follows as to the line of demarcation between bonds which are required in legal proceedings and bonds which are taxable :

"Bonds given by court officers under direction or authority of the

court to give proper effect to court proceedings and practically a part of the record of a suit or proceeding in court are not taxable. Bonds given in cases of appeal are not taxable. Bonds given by executors, administrators, guardians, and receivers appointed by the court are bonds required in legal proceedings and are not taxable."

478.-USE OF STOCK AS COLLATERAL

NOT SUBECT TO TAX.

A deposit of certificates of stock as collateral security for a loan does not call for payment of the tax imposed upon transfers of stock. This use of stock certificates is specifically exempted in the law.

CHAPTER XXX

TAX ON INSURANCE POLICIES

The War Revenue Act of October 3, 1917 imposes a new tax upon policies of insurance.

This tax became effective November 1, 1917 and any policy issued on or after that date is subject to it.

low.

With respect to the various lines of insurance the tax rates fol

479.-LIFE INSURANCE.

The tax is at the rate of 8 cents on each $100 or fractional part thereof of the amount for which any life is insured. In this case the basis of tax, it will be noted, is the amount of the insurance.

The one exception is that on a policy for life insurance only, issued on the industrial or weekly payment plan of insurance, and with the amount of insurance not in excess of $500, the tax rate is 40 per cent of the first weekly premium.

480.-MARINE, INLAND, FIRE INSURANCE.

The tax is at the rate of one cent on each dollar or fraction thereof of the premium charged on each policy by which insurance is made or renewed upon property of any description, including rents and profits. Here the basis of tax is the premium.

481.-CASUALTY INSURANCE.

The tax is at the rate of one cent on each dollar or fraction thereof of the premium charged on each policy or obligation of the nature of indemnity for loss, damage or liability, except bonds subject to the documentary stamp tax under Schedule A (to be found described in another chapter). This tax is broad in its application and affects any person, corporation, partnership or association engaged in the writing of any kind of insurance except life, marine, inland and fire insurance, which are subject to tax as noted in preceding paragraphs.

It also is imposed upon all policies or obligations issued, executed or renewed on or after November 1, 1917.

482.-REINSURANCE EXEMPT.

Policies of reinsurance are exempt from tax under all the provisions of the law.

483.-INSURERS EXEMPT.

The law also provides that any corporation or association which is exempt under the provisions of the Income Tax law of September 8, 1916 can write policies of insurance without having such policies subject to tax. A list of these corporations and associations can be found in the chapter headed "CORPORATIONS EXEMPT.”

483a.-COLLECTION OF THE TAX.

The tax is upon the issuance of the policies and must be paid by those who issue the policies.

Within the first 15 days of each month any person, corporation, partnership, or association issuing policies subject to tax, must make a return under oath, in duplicate, and pay the tax shown to be due to the Collector of Internal Revenue of the district in which the principal office or place of business of the insurer is located. This return, to be filed not later than the fifteenth of the month, is to cover tax liability for the preceding month.