Citizens or in accordance with the requirements of the statute. The recipient must include such income (on which tax has been withheld at the source) in his return, but is allowed to credit the amount of tax withheld against the total amount of his income tax. If the recipient pays any part of this tax it shall not be recollected from the withholding agent nor shall any penalty be imposed upon the recipient of the income or the withholding agent for failure to return or pay the same unless there was fraudulent intent. 97. A citizen or resident, on or before February 1st, following the tax year, may claim the benefit of the personal exemption allowed him by filing an appropriate statement with the withholding agent. A non-resident alien individual may receive the benefit of the same credits (in the discretion of the Commissioner and in accordance with other provisions of the statute), by filing a similar claim with the withholding agent. Presumably, there will be Treasury Department ruling along these lines. Information at the Source 98. "Information at the source," as a more or less independent part of the income tax administrative “machinery," was inaugurated for the first time in 1917. A report is required as to payments of $1,000 and more, in any taxable year, of interest, rent, salaries, wages, premiums, annuities, compensation or other fixed or determinable income. The statute provides that all persons, corporations, partnerships, no matter in what capacity they may act, including lessees or mortgagors of real or personal property, fiduciaries, employers, (and officers and employees of the United States having the information required) making any payments of such a character of $1,000 or over in a year to any other person, corporations or other organization,-are called upon to report the amount of such income and the name and address of the recipient. 99. Regardless of amount, returns giving "information" may be required concerning interest paid on (1) bonds, mortgages, etc., of corporations; (2) interest upon bonds of, and dividends on the stock of foreign corporations, and interest on bonds of foreign countries (not payable in the United States) collected as matter of business by any individual, corporation or partnership. 100. When so required by the Commissioner of Internal Revenue, every individual, corporation or partnership doing business as a broker shall report the names of customers for whom business has been transacted; the broker also shall report such details as to the profits, losses or other information which the Commissioner may require in respect to each of such customers. This is to enable the Commissioner to determine, so the statute says, whether all income tax has been paid on the profits or gains of such customers. Brokers' Returns Stockholders' Dividend 101. The Commissioner of Internal Revenue may require every corporation, subject to tax hereunder, and Lists and every personal service corporation to make a return of its payments of dividends, the name and address of each stockholder and the number of shares owned by him and the amount of dividends paid him. 102. Under penalty of fine or imprisonment or both, License for all persons, firms, or corporations, undertaking as a Foreign Collections Annual Individuals Citizens or Joint Return matter of business or for profit the collection of foreign payments of interest or dividends, shall obtain a license from the Commissioner of Internal Revenue and shall be subject to regulations enabling the Government to obtain the information required under the law. Return, Assessment and Payment 103. The Revenue Act of 1918 requires a return, it the net income is $1,000 or over in the case of unmarried persons, or married and not living with husband or wife, or $2,000 or over in the case of married persons, living with husband or wife; it shall state the items of the gross income and the allowable deductions and credits. The Law provides, in case of a husband and wife living together and having an aggregate (one or two incomes) income of $2,000 or over, each shall make a return unless the income of each is included in a single joint return. Apparently this joint return may be made with regard to the surtax as well as the normal tax. Heretofore, the Treasury Department has ruled that the separate incomes of husband and wife should not be combined in a return of income for the purpose of assessing the surtax. 104. Under the new Act, every individual must make a return if the income comes above the exempt amounts. The income of a minor or incompetent if derived from a separate estate under control of a guardian, trustee or other fiduciary, must be reported by his guardian or other legal representative. While there may have been some question under the previous law as to whether a minor having no legal representative was required to make a return, it seems that the present law contemplates the making of a return and payment of tax by such a minor without legal representative. Explanatory regulations may be issued later on this point. 105. If the taxpayer is unable (the new Law does not state for what reasons) to make his own return, it shall be made by a duly authorized agent or by the guardian or other person charged with the care of the person or property of the taxpayer. 106. A partnership must make a return, sworn to by one of the partners, stating specifically the items of its gross income and the allowable deductions and giving the names and addresses of the individuals who would have a right to share in the net income if distributed and amount of each share. A special income schedule has been provided for the farmer. This will include reports of income from salaries, rents, interests, sales of property, etc. The subject of returns by estates and trusts and the like is referred to in Sections 56 to 59, inclusive; reference to returns by non-resident aliens is in Sections 82 and 83. Accounting Period 107. Former laws required that an individual report on the basis of a calendar year even if he kept his books by a fiscal year. The Revenue Act of 1918 prescribes that he must report only on that basis on which his books are kept. A taxpayer makes his return for the period of his "taxable" year which means his fiscal year, or the calendar year if he has not established a fiscal year. The term "fiscal year," the Treasury Department says, means Returns by Agents Partnership Fiscal Year an accounting period of twelve months ending on the last day of any month other than December. No fiscal year will be recognized unless before its close it was definitely established as an accounting period by the taxpayer and his books were kept in accordance therewith. A taxpayer may have a fiscal year ending for example on June 30th, 1918 and have previously made a return for that part of the fiscal year falling in 1917. Nevertheless, he should under the new Act of 1918 make a complete return for the entire fiscal year. 108. If a taxpayer makes return for a fiscal year beginning in 1917 and ending in 1918, his tax for the first taxable year should be the sum of: (1) the same proportion of his tax for the entire period computed under the laws of 1916 as amended, and of 1917, as the period of time within the calendar year 1917 bears to the entire period; and (2) the same proportion as the tax for the entire period computed under the law of 1918 as the period in 1918 bears to the entire period. In the case of a personal service corporation only that amount given in (1) will apply. 109. Any amount paid for such fiscal year under the Act of 1916 as amended and of 1917 shall be credited towards the tax imposed by the Act of 1918. If an excess amount has been paid, the law provides for proper credit or refund. The same method of computing an income tax for 1919 is provided for a fiscal year beginning in 1918 and ending in 1919. 110. The Law directs how this different income shall be recorded on the form; and it is stated that in determining the income any deduction, exemption or credits not plainly and properly chargeable against the income |