prosecution of the war effort. No change in the basic policy of the social-security laws is involved.

Representatives of the War Shipping Administration and of the Social Security Board appeared before the committee in support of the bill.

The following letters and attachments set forth more in detail the purpose of the bill:

The Honorable SAM RAYBURN,

Speaker of the House of Representatives.

JANUARY 5, 1945.

MY DEAR MR. SPEAKER: The War Shipping Administration respectfully submits proposed legislation to permit the War Shipping Administration and the United States Maritime Commission to pay the employer's tax imposed on wages under section 1410 of the Internal Revenue Code, without regard to the $3,000 limitation in section 1426 (a) (1) of the Internal Revenue Code. This legislation will continue in force until the termination of title I of the First War Powers Act, 1941, and will apply to the employer's tax imposed on wages paid for services performed after September 30, 1941, and prior to the termination of title I of the First War Powers Act, on or in connection with any vessel by an officer or member of the crew as an employee of the United States employed through the War Shipping Administration, or the United States Maritime Commission in case of employment by it prior to establishment of the War Shipping Administration. Section 1426 (a) (1) of the Internal Revenue Code defines wages, taxable under the Federal Insurance Contributions Act, to mean the first $3,000 of remuneration paid to an individual by an employer with respect to employment during any calendar year. It is the view of the War Shipping Administration that the operation of this statute should be suspended for the war period because of the substantial cost required to apply it to wages paid by the War Shipping Administration and the Maritime Commission as employers of seamen.

In order to enforce the statute in its present form, the War Shipping Adminis tration will have to set up a central unit at which it will maintain the personnel records of all seamen in the employ of the War Shipping Administration and the Maritime Commission. This central unit will also have to prepare the returns under the Federal Insurance Contributions Act covering the employer's and the employee's taxes on the wages paid to seamen in the employ of those agencies. This will necessarily involve a duplication of work at a cost which, in our opinion, will greatly exceed the amount of additional taxes which the War Shipping Administration and the Maritime Commission may have to pay, should the proposed legislation be adopted. Administrative and bookkeeping personnel engaged in such work could be released for duties more directly connected with the war effort and with the movement of vessels and vital war cargoes.

The proposed legislation also excuses the War Shipping Administration and the Maritime Commission from applying for refunds of the employer's taxes paid on wages in excess of the $3,000 limitation. The applications for refunds would, in our opinion, necessitate as much work and the application of as much time and effort as the proper enforcement of section 1426 (a) (1) would require at the present time.

There is attached a copy of (1) a draft of a bill to carry out the above purposes, and (2) an explanatory statemen: thereon.

The Director of the Bureau of the Budget has advised that there is no objection to the submission of this proposed legislation to Congress for its consideration.

Sincerely yours,

E. S. LAND, Administrator.

A BILL To permit the Administrator, War Shipping Administration, and the United States Maritime Commission, during the national emergency, to pay the tax imposed under section 1410 of the Internal Revenue Code without regard to the $3,000 limitation in section 1426 (a) (1) of the Internal Revenue Code

Be it enacted by the Senate and House of Representatives of the United States o America in Congress assembled, That (a) section 1426 (i) of the Internal Revenue Code is amended by adding at the end thereof the following: "The Administrator, War Shipping Administration, and the United States Maritime Commission, and their agents or persons acting on their behalf or for their account, may, for convenience of administration, make payments of the tax imposed under section 1410 without regard to the $3,000 limitation in section 1426 (a) (1), but they shall not

be required to obtain a refund of the tax paid under section 1410 of the Internal Revenue Code on that part of the remuneration of seamen in their employ not included in wages by reason of section 1426 (a) (1) of the Internal Revenue Code." (b) The amendments made by this Act shall be effective as if made by section 1 (b) (1) of the Act entitled "An Act to amend and clarify certain provisions of law relating to functions of the War Shipping Administration, and for other purposes," approved March 24, 1943 (Public Law 17, Seventy-eighth Congress; 57 Stat. 45).

STATEMENT TO ACCOMPANY PROPOSED BILL TO PERMIT THE WAR SHIPPING ADMINISTRATION AND THE UNITED STATES MARITIME COMMISSION TO PAY THE TAX IMPOSED ON WAGES UNDER SECTION 1410 OF THE INTERNAL REVENUE CODE WITHOUT REGARD TO THE $3,000 LIMITATION IN SECTION 1426 (▲) (1) OF THE INTERNAL REVENUE CODE

The proposed bill, if enacted, will permit the War Shipping Administration and the United States Maritime Commission to pay the employer's tax, levied under section 1410 of the Internal Revenue Code (the Federal Insurance Contributions Act), on wages paid to seamen in their employ without regard to the $3,000 limitation contained in section 1426 (a) (1) of the Internal Revenue Code. The proposed bill, if enacted, will remain in force until the termination of Title I of the First War Powers Act, 1941, and will apply to the employer's taxes imposed on wages paid for services, performed after September 30, 1941, and prior to the termination of Title I of the First War Powers Act on or in connection with any vessel by an officer or member of the crew as an employee of the United States employed through the War Shipping Administration, or in respect of such services performed after February 11, 1942, the United States Maritime Commission.

Section 1426 (i) of the Internal Revenue Code, added by Public Law 17, Seventyeighth Congress, first session, provided for the inclusion within the scope of the term "employment," as used in the Federal Insurance Contributions Act, of services performed on or in connection with any vessel by an officer or member of the crew as an employee of the United States, employed through the War Shipping Administration or of the United States Maritime Commission. The statute covered retroactively wages paid for such services performed after September 30, 1941. The term "wages" was defined to mean such amount of remuneration as was determined by the Administrator of the War Shipping Administration to be paid to the seamen, to whom the section applied, for such services. The Administrator of the War Shipping Administration and such agents as he would designate were authorized and directed to comply with the provisions of the internal-revenue laws on behalf of the United States as the employer of individuals whose services constituted employment by reason of section 1426 (i) of the Internal Revenue Code.

Section 1426 (a) (1) of the Internal Revenue Code is the source of the difficulty which the proposed bill seeks to remedy. The section defines wages taxable under the Federal Insurance Contributions Act to mean “all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash; except that such term shall not include (1) that part of the remuneration which, after remuneration equal to $3,000 has been paid to an individual by an employer with respect to employment during any calendar year, is paid to such individual by such employer with respect to employment during such calendar year."

The War Shipping Administration has no means at its disposal to determine when a seaman in its employ has reached the $3,000 limit with respect to employment in a particular calendar year. The manner in which the War Shipping Administration operates its vessels makes it impossible for such a determination to be made without the expenditure of a large sum of money; larger, in fact, than the additional employer's tax which the War Shipping Administration would have to pay if the proposed bill were enacted.

Members of crews of vessels which are either owned by or bare-boat chartered to the United States, through the War Shipping Administration, are employees of the United States. Section 1426 (i) relates specifically to these individuals and to none other. The vessels upon which they serve are operated by the War Shipping Administration through designated agents referred to as general agents. The general agents are principally companies which had engaged in the water transportation business prior to December 7, 1941, and prior to the creation of the War Shipping Administration. The general agent, through his organization, operates the vessels assigned to him under the general agent's form of service agreement. He arranges to crew the vessel, to supply it with food, fuel, and other

vessel supplies, and to load and unload the cargo. He pays off the crew at the termination of the voyage after making all necessary tax deductions. The crew members he hires are not his employees; they are the einployees of the War Shipping Administration.

Under the present method of handling the employer's and employee's taxes imposed by the Federal Insurance Contributions Act, the general agent at the conclusion of each voyage deducts the employee's tax from the wages paid to the seamen for services performed during the voyage, and arranges to turn over to the collector of internal revenue the taxes so deducted, together with the tax levied on the War Shipping Administration as employer. There is no assurance that a seaman, who signs off, will sign articles on the same vessel for a subsequent voyage, or that he will sign articles on another War Shipping Administration vessel operated by the same general agent. A vessel may come into port in need of repairs, and it may be laid up for a considerable period of time. Crew members, on signing off such a vessel, will, in all probability, seek employment on another vessel which may be operated by a private owner under a time charter arrangement with the War Shipping Administration, or by some other general agent for the War Shipping Administration. In the latter case they will continue to be employees of the War Shipping Administration.

Technically the $3,000 limitation in section 1426 (a) (1), Internal Revenue Code, applies to the wages paid or reported with respect to employment during the calendar year by the War Shipping Administration to an individual seaman whether he serves, during the calendar year, on one or several vessels operated for the War Shipping Administration through its general agents. It is, however, practically impossible for one general agent of the War Shipping Administration to obtain accurate information regarding the wages a seaman received with respect to employment during a particular calendar year for services performed on other War Shipping Administration vessels operated by general agents. The most that one general agent can possibly know with respect to such prior payments would take care of wages that the seaman might have earned on the same vessel or another vessel operated by the particular general agent.

In order to properly apply the $3,000 limitation to seamen employed by the War Shipping Administration, it would, in our opinion, be necessary to install a separate unit in Washington, charged with the responsibility of maintaining the personal wage records of every seaman in the employ of the War Shipping Administration through the general agents. In addition, the War Shipping Administration would have to take upon itself the duty of preparing, at this central office, the necessary returns required under the Federal Insurance Contributions Act. This would require the receipt of reports from all general agents of the War Shipping Administration, and the expenditure of substantial sums of money to maintain a unit to handle this particular job. It would involve a duplication of records and of work, since the general agent would have to maintain its own personnel records covering the same seamen, and would likewise have to make calculations of the amount of the employee's tax to be deducted from a seaman's wages before he signs off.

The proposed bill takes care of this situation by eliminating the application of the $3,000 limitation to wages paid to War Shipping Administration employees serving on War Shipping Administration vessels operated under the general agent's form of service agreement. The general agent, when calculating the employer's tax, will figure the tax on the wages paid or reported with respect to employment during the particular calendar year or quarter and it will not be Decessary for him to consider the wages paid in previous quarters of the same calendar year to make sure that the $3,000 limit has not been reached. This may involve the payment of the employer's tax in excess of what the War Shipping Administration would have to pay if section 1426 (a) (1) continues in force insofar as War Shipping Administration seamen are concerned. This sum, however, is relatively small compared to the very substantial cost which would be incurred in order to properly apply section 1426 (a) (1).

The proposed bill will suspend the operation of section 1426 (a) (1) of the Internal Revenue Code, insofar as it affects the War Shipping Administration as the employer of seamen, until the termination of title I of the First War Powers Act, 1941, and it applies not only currently but to the employer's tax due with respect to wages paid to crew members for services performed since September 30, 1941, as an employee of the United States Maritime Commission and since February 11, 1942, as an employee of the War Shipping Administration. It will eliminate a substantial amount of detailed bookkeeping by the War Shipping Administration and its General Agents in the application of section 1426 (a) (1) of the Internal Revenue Code. Employees who must now devote their time to

such tasks can be released for work more directly connected with the effective prosecution of the war effort.

The proposed bill specifically provides that neither the United States Maritime Commission nor the War Shipping Administration need apply for refunds of the employer's tax paid on remuneration in excess of $3,000. The filing of such claims would require as much bookkeeping and administrative work by the agencies concerned as would be necessary in order to apply section 1426 (a) (1). The proposed bill appropriately provides that claims for refunds will not be necessary.

SUMMARY

The operation of section 1426 (a) (1) of the Internal Revenue Code may very well be suspended during the national emergency with respect to the payment of the employer's tax by the War Shipping Administration and the United States Maritime Commission, for the following reasons:

1. The amount of employer's tax which the War Shipping Administration and the United States Maritime Commission will pay as a result of such suspension will, in our opinion, be relatively small in comparison with the cost of complying with section 1426 (a) (1).

2. A substantial amount of administrative and bookkeeping work by the War Shipping Administration and the United States Maritime Commission, and by shipping companies, as general agents of the War Shipping Administration, necessarily required in the enforcement and application of section 1426 (a) (1) will be dispensed with, and employees now engaged in such tasks will be released for work more directly connected with the effective prosecution of the war effort.

CHANGES IN EXISTING LAW

In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill are shown as follows (existing law proposed to be omitted is enclosed in black brackets; existing law in which no change is made is in roman; and new language is in italics):

Section 1426 (i) of the Internal Revenue Code (subsec. (i) in sec. 1 (b) (1) of Public Law 17, 78th Cong., 1st session, as amended by Public Law 285, 78th Cong., 2d session) (sec. a of H. R. 1429):

(i) The term "employment" shall include such service as is determined by the Administrator, War Shipping Administration, to be performed after September 30, 1941, and prior to the termination of title I of the First War Powers Act, 1941, on or in connection with any vessel by an officer or member of the crew as an employee of the United States employed through the War Shipping Administration, or, in respect of such service performed before February 11, 1942, the United States Maritime Commission, but shall not include any such service performed (1) under a contract entered into without the United States and during the performance of which the vessel does not touch at a port in the United States, or (2) on a vessel documented under the laws of any foreign country and bare-boat chartered to the War Shipping Administration. The term "wages" means, with respect to service which constitutes employment by reason of this subsection, such amount of remuneration as is determined (subject to the provisions of this section) by the Administrator, War Shipping Administration, to be paid for such service. The Administrator and such agents as he may designate for the purpose are authorized and directed to comply with the provisions of the internal revenue laws on behalf of the United States as the employer of individuals whose service constitutes employment by reason of this subsection, but the Administrator and his agents shall not be liable for the tax on any employee imposed by section 1400 (unless the Administrator or his agent collects such tax from the employee) with respect to service performed before the date of enactment of this subsection which constitutes employment by reason of the enactment of this subsection. Administrator, War Shipping Administration, and the United States Maritime Commission, and their agents or persons acting on their behalf or for their account, may, for convenience of administration, make payments of the tax imposed under section 1410 without regard to the $3,000 limitation in section 1426 (a) (1), but they shall not be required to obtain a refund of the tax paid under section 1410 of the Internal Revenue Code on that part of the remuneration of seamen in their employ not included in wages by reason of section 1426 (a) (1) of the Internal Revenue Code.

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The

DISPOSING OF SUNDRY PAPERS

January 23, 1945.-Ordered to be printed

Mr. ELLIOTT, from the Joint Committee on the Disposition of Executive Papers, submitted the following

REPORT

The joint select committee of the Senate and House of Representatives appointed on the part of the Senate and House of Representatives, and acting in compliance with the provisions of the act approved July 7, 1943 (57 Stat. 380), respectfully reports to the Senate and House of Representatives that it has received and examined the report of the Archivist of the United States No. 45-20, dated January 15, 1945, to the Seventy-ninth Congress, first session, submitting the following lists or schedules, or parts of lists or schedules, covering records proposed for disposal by the Government agencies indicated:

Your committee reports that the records proposed for disposal in the said lists or schedules, or parts of lists or schedules, reported by the Archivist of the United States do not, or will not after the lapse of the period specified, have sufficient administrative, legal, research, or other value to warrant their continued preservation by the Government and recommends that their disposal be accomplished, subject to the provi