classification.428 In construing the 1914 Law as imposing a tax upon the issue of certificates of shares issued by a manufacturing company organized in the form of a trust under the common law and deriving none of its rights, benefits or qualifications from any statute, and which was not an ordinary common law real estate trust, the Court has sustained the constitutionality of the law, holding it not invalid on the theory that it was inapplicable to other associations. The tax was stated to be merely on muniments of title so that, if other associations did not issue such muniments of title, they were accordingly not taxable.429 Payment Under Protest and Duress. The general rule of law, that a voluntary payment of money cannot be recovered, applies to stamp taxes. A person, theerfore, who wishes to recover the amount of any stamp tax, which he considers illegally exacted, should pay the tax under protest and such payment should be involuntary and under duress. Stamp taxes paid under protest or with notice that the payer contends that they are illegal and intends to institute suit to compel their repayment, may on occasion be recovered, although generally speaking even a protest or notice will not avail if the payment be made voluntarily with full knowledge of the circumstances and without any coercion by the actual or threatened exercise of power possessed by the party exacting or receiving the payment over the person or property of the party making the payment from which the latter has no other means of immediate relief than such payment. The rule is firmly established that stamp taxes voluntarily paid cannot be recovered back and that payments with knowledge and without compulsion are voluntary. Thus, in a case 430 in which certain stamps were purchased from the collector who was not informed when the purchase was made of the particular purpose and who was given no intimation of any claim that the purchaser was acting under duress, recovery was denied even though the purchaser affixed the stamps in order to complete the transaction between himself and the vendee named in the deed to be stamped and to obtain the consideration for the property transferred. It was held that this 428 Peo. v. Mensching, 187 N. Y. 8. transaction, while it might have constituted duress as between the parties to the deed, was a matter with which the collector had nothing to do and that the payment to the collector for the stamps was purely voluntary. The written application to the Commissioner to recover the amount paid for the stamps was held not to be the statutory equivalent of a common-law protest or notice of suit. While the Commissioner under the Revised Statutes 481 might have refunded the amount of such tax, an appeal was not permitted from his refusal to refund because it was not a ruling either specific or resulting from a demand, to which the taxpayer yielded under the protest and with notice, and from which he appealed to the Commissioner of Internal Revenue. Likewise, where a stamp tax was paid on manifests of cargoes on certain vessels bound to foreign ports as required by the 1898 Law, no information having been given to the person from whom the stamps were bought of the particular purpose, or claim made to the collector or. Commissioner that the tax was unconstitutional, and no claim having been made to the collector of the port of New York that the taxpayer was acting under restraint and yielding only to enable his ship to depart. recovery was denied because the tax was not paid under duress, even though clearance papers could not be procured without the delivery to the collector of the port of outward foreign manifests of cargo properly stamped, and even though the master of a vessel failing to deliver the proper manifest and to obtain a clearance, was subject to a penalty.432 Injunctive Relief. The general rule that a taxpayer may not resort to a suit to restrain the assessment or collection of any tax applies to stamp taxes and a taxpayer is not entitled to an injunction to restrain the Commissioner of Internal Revenue · from assessing the taxes on sales of grain to which no stamps have been affixed, the only remedy to the taxpayer in such case being by suit to recover the tax.433 431 R. S. § 3220. 432 U. S. v. N. Y. & Cuba etc. Co., 200 U. S. 488. 433 Calkins v. Smietanka, 240 Fed. 138. See R. S. §§ 3224, 3226. CHAPTER 46 TAX ON EMPLOYMENT OF CHILD LABOR This tax is a new feature of the internal revenue laws of the United States, designed to effect the abandonment of child labor in the establishments specified in the law.1 Effective Date of the Act. The tax goes into effect beginning sixty days after the passage of the Revenue Act of 1918. The Revenue Act of 1918 was signed by the President on February 24, 1919, and the effective date is therefore April 25, 1919. The first taxable year, that is, the taxable year 1919, consists of the period between April 25, 1919, and December 31, 1919, both inclusive, or any fiscal year ending within the same period. Persons to Whom the Tax Applies. The tax applies to any individual, corporation, partnership, association, joint-stock company, or insurance company operating a (1) mine, (2) quarry, (3) mill, (4) cannery, (5) workshop, (6) factory or (7) manufacturing establishment situated in the United States (except only a boys' or girls' canning club duly recognized by a State Agricultural Department or United States Agricultural Department).4 Mill, Cannery, Workshop, Factory or Manufacturing Establishment. In the case of these establishments the tax applies if (a) any child between the ages of 14 and 16 (presumably both ages inclusive) has been employed or permitted to work more than eight hours in any day or more than six days in any week or before six o'clock a. m. or after seven o'clock p. m.; and (b) if any child under the age of fourteen has been employed or permitted to work at all. The term "workshop, factory, or manufacturing establish 5 Revenue Act of 1918, § 1200; Reg. 46, Art. 3. The term "under the age of fourteen years" is meant to include all children who have not yet reached their fourteenth year. The term "eight hours in any day" means the actual ment" includes bakeries, blacksmith shops, boxmaking establishments, steam laundries, and stonecutting. The term "manufacturing establishment" includes bottling plants, gas companies, ice factories, meat markets engaged in the manufacture of meats for local trade, newspaper publishing plants or companies, timber cutting in woods and logging force operations connected with the operation of a manufacturing establishment.10 The following are not included within these terms: drug stores (retail); express companies; grocery stores (retail); mercantile stores not connected with taxable establishments; moving picture business, either in studio or out of doors; telegraph offices, in respect of boys and messengers; telephone companies; trust and title companies; tobacco plantations (cutting and stringing tobacco leaves); commissaries operated by sawmills.11 Some additional rulings in particular industries are indicated below. EMPLOYMENT IN GENERAL AND FACTORY OFFICES. The terms workshop, factory, or manufacturing establishment as used in the period of employment and shall be reckoned from the time the child is required or allowed to be at the place of employment until he or she stops work for the day, exclusive of one continuous period of a definite length of time during which the child is off work and not subject to call for duty of any kind. The term "six days in any week" means six consecutive days, no one of which shall consist of more than eight hours of working time. A "day" must not begin before 6 o'clock a. m. and must not extend beyond 7 o'clock p. m. (Reg. 46, Art. 1.) 6 Letters from Treasury Department dated June 14, 1919; April 1, 1919; April 1, 1919; June 9, 1919; and August 2, 1919, respectively. 7 The employment of boys between 14 and 16 years to light and extinguish street lamps does not render a gas company subject to tax if their presence in and about the gas factory premises is not required or permitted. 8 This ruling refers to the employment of boys to accompany delivery wagons and carry ice into houses. 9 The employment of children in the distribution of papers outside and away from the manufacturing establishment does not come within the purview of the statute. 10 Letters from Treasury Department dated May 28, 1919; May 21, 1919; April 12, 1919; May 5, 1919; and May 27, 1919 respectively. 11 Letters from Treasury Department dated May 2, 1919; May 1, 1919; May 15, 1919; May 2, 1919; June 14, 1919; June 21, 1919; April 1, 1919; May 31. 1919; May 7, 1919; May 8, 1919; June 20, 1919; May 21, 1919. The presence of child employees of the company, however, in or about a sawmill premises contrary to the standards laid down by the statute would subject the person operating the mill to the tax. Child Labor Tax Law, clearly mean the premises on which the manufacturing business is conducted, including the buildings and grounds. The terms in their ordinary sense include whatever is necessary to carry on the mechanical operation or process. Any part essential to the conduct of a manufacturing business is as much a part of a manufacturing establishment as the buildings in which the machinery is housed, or the ground occupied by the buildings. A factory office, therefore, is a part of the establishment and no distinction can be made in employment in different departments. The duties of office employees frequently take them into and often require their presence in the plant or manufacturing part of such establishments when they are accessible. Actual employment in the manufacturing or production part of a plant is not necessary, and it is not possible to exempt from the application of the law any occupation or class of employment connected with the operation of the establishment specified. The law applies if children are employed in or about the establishment. An office which occupies the top floor of a factory building of a manufacturing and selling company would come within the application of the law, and if children under 14 years are employed, or if children between 14 and 16 years are permitted to work more than eight hours in any day or more than six days in any week, or before 6 a. m., or after 7 p. m., the person operating the establishment would be subject to the imposition of the tax. Office employees as a class and apart from the operation of the establishments specified are not believed to be within the taxation intent of the Child Labor Tax, and the provisions of this act do not apply to the employment of children in a general office, a main office, or district office established purely for office purposes, in no way a part of the manufacturing establishment as defined, but conducted solely as a city office whose employees under the age of 16 years are never required or permitted or suffered to be in or about the manufacturing establishment. 12 AGRICULTURAL AND FORESTRY OPERATIONS. The statute does not apply to the agricultural industry, even though it may be part of a complete industrial cycle, or to forestry operations. A sugar-mill and sugar-cane plantation may be operated as a unit, but the law 12 Letters from Treasury Department dated May 31, 1919; May 2, 1919; and June 26, 1919. |