parent's, guardian's, or custodian's signed statement as to the age of the child, and a record of age as given on the register of the school first attended by the child, or in any school census, if obtainable, shall be submitted with the physician's certificate showing physical age. No certificate shall be issued if the physician's certificate of physical age or the parent's statement or the register of the school first attended or the school census shows the child to be under the age of 14 if employment in a mill, cannery, workshop, factory, or manufacturing establishment is contemplated, or under the age of 16 if employment in a mine or quarry is contemplated. The agent issuing the age certificate for a child shall require the evidence of age stated in paragraph (a) in preference to that specified in any subsequent paragraph, and shall not accept evidence of age permitted by any later paragraph unless he shall receive and file evidence that the proof of age required by the preceding paragraph or paragraphs can not be obtained.29

Acceptance of State Certificates. States in which age certificates, or working or employment certificates, permits or other similar papers as to the age of the child are issued under State authority, substantially in accord with the requirements of this act and these regulations may be designated as States in which such certificates have the same force and effect as Federal age certificates, except as the acceptance for the purposes of the statute of individual certificates may be suspended or revoked. Certificates, permits, or other similar papers in States so designated shall have the same effect as Federal age certificates so long as they shall remain in force, the Commissioner or such person as he may designate possessing the right to suspend or revoke the acceptance for the purposes of this act of individual certificates at any time. Certificates imposing restrictions or conditions in addition to the requirements of the Federal law or of the regulations shall not be held inconsistent with the law.30

Mistake as to Age of Child. If a child has been employed or permitted to work under a mistake of fact as to the age of such child, and without intention to evade the tax, such employment will not cause the tax to be imposed.31

29 Reg. 46, Art. 9.

30 Reg. 46, Art. 10.

31 Revenue Act of 1918, § 1203 (b).

1

Inspection of Establishments. The Commissioner, or any person authorized by him, may enter and inspect at any time any mine, quarry, mill, cannery, workshop, factory or manufacturing establishment. The Secretary of Labor, or any person duly authorized by him, has like authority to make inspections for the purpose of complying with a request of the Commissioner.32

Basis and Rate of Tax. The statute imposes an excise tax which is in addition to all other taxes imposed by law at the rate of 10% on the entire net profits received or accrued during any taxable year in which child labor is employed for any period of time, as indicated in the law. The net profits are computed by deducting from the gross amount received or accrued during the taxable year from the sale or disposition of such products manufactured within the United States (a) the cost of raw materials entering into the production; (b) running expenses, including rentals, repairs, maintenance, heat, power, insurance, management, and a reasonable allowance for salaries and depreciation; (c) interest on money borrowed and used to meet the needs of the business; (d) taxes of all kinds paid during the taxable year with respect to the business or property relating to the production and (e) losses actually sustained within the taxable year in connection with the business of producing such products, including losses from fire, flood, storm or other casualties, not compensated for by insurance or otherwise. If the product is sold at less than the fair market price in such manner as to directly or indirectly benefit any person directly or indirectly interested in the business or with intent to cause such benefit, the tax is imposed on the gross amount received or accrued from the sale or disposition during the period that any such sales took place.

Returns to Be Filed. Every person subject to the provisions of the law (which seems to mean those who operate establishments of the kind enumerated in the law) is required to file a return annually showing the gross amount of income received or accrued during the year from the sale or disposition of the product of any mine, quarry, mill, cannery, workshop, factory or manufacturing establishment in which children have been employed subjecting him to the tax and the amounts allowed by the law to be deducted

32 Revenue Act of 1918, § 1206.

33 Revenue Act of 1918, §§ 1200, 1201, 1202; Reg. 46, Art. 3.

therefrom, and other particulars, in such form as the Commissioner may require. Such returns are to be filed on or before the first day of the third month following the close of each taxable year, with the local collector. Extension of time to file returns may be granted by the collector in case of sickness or absence.34

Tax Due. The collector transmits forthwith all returns to the Commissioner, "who shall,, as soon as practicable, assess the tax found due and notify the person making such return of the amount of tax for which such person is liable, and such person shall pay the tax to the collector on or before 30 days from the date of such notice." 35

Time Record. A time record should be kept daily by persons operating any mill, cannery, workshop, factory, or manufacturing establishment, showing the hours of employment for each and every child who has completed the fourteenth year but has not yet completed the sixteenth year of its age, whether employed on a time or a piece rate basis. Certificates of age for children employed in any mill, cannery, workshop, factory, or manufacturing establishment may be suspended or revoked for failure on the part of the person operating the same to keep time records as required by this regulation or for false or fraudulent entries made therein.36

Penalties. The general penalties apply for failure to file returns, or pay the tax, or for filing false or fraudulent returns.37 Refusal to permit entry or inspection of any establishment is punished by fine of not more than $1,000 or imprisonment for .not more than one year, or both fine and imprisonment.38 Any person who knowingly makes a false statement or presents false evidence in or in relation to any certificate of age or application therefor will be subject to a fine of not less than $100 nor more than $1,000, or to imprisonment for not more than three months, or to both such fine and imprisonment.39 Actions to enforce these pen

34 Revenue Act of 1918, § 1204; R. S., § 3176; Reg. 46, Art. 4.

35 Revenue Act of 1918, § 1205; Reg. 46, Art. 6.

36 Reg. 46, Art. 11.

37 See Revenue Act of 1918, §§ 1308 and 1317, containing R. S., § 3176, as amended.

38 Revenue Act of 1918, § 1206. 39 Revenue Act of 1918, § 1203.

alties will be brought in the federal courts by the United States District Attorney of the Federal Judicial District in which the offense occurs.40

Constitutionality of Child Labor Tax. The Supreme Court of the United States has declared unconstitutional the so-called Child Labor Law, which prohibited the transmission in interstate commerce of products of child labor. The present excise tax equivalent to 10% of the net profits received from the sale of products of establishments employing child labor is intended to accomplish the same object which the former law was unable to reach.42

40 Reg. 46, Art. 7.

41 Hammer v. Dagenhart, 247 U. S. 251. The Supreme Court was con siderably divided in this decision. Mr. Justice Day delivered the majority opinion which was concurred in by Mr. Justice Van Devanter, Mr. Justice Pitney, Mr. Justice McReynolds and Chief Justice White. Mr. Justice Holmes delivered a dissenting opinion which was concurred in by Mr. Justice McKenna, Mr. Justice Brandeis and Mr. Justice Clarke.

42 It has been decided by a Federal District Court that the Child Labor Title of the Revenue Act of 1918 is also unconstitutional and this case is now in process of appeal to the United States Supreme Court.

CHAPTER 47

CONSTRUCTION OF TAXING STATUTES

It is beyond the scope of this chapter to discuss at great length the numerous rules of statutory construction. The following paragraphs will indicate briefly rules especially applicable to revenue statutes which may be of assistance in the interpretation of such ambiguities as are encountered in our present system of income, excess-profits and other tax laws. Wherever possible the citation of authorities has been confined to cases arising under various revenue laws of the United States.

Although a statute may be construed contrary to its literal meaning when a literal construction would result in an absurdity, inconsistency, or in glaring inequality, and palpable injustice, where its language is susceptible of more reasonable, though perhaps less natural, construction which carries out its spirit rather than letter, it is a well-settled general rule that a legislative act must be interpreted according to the intention of the legislature apparent upon its face.2 Construction and interpretation have no place where the language of a statute is unambiguous and its meaning evident. Arguments as to the expediency of a tax law or the possible economic mistake or wrong involved in the tax imposed thereby or the inequality thereof, are beyond judicial cognizance. To ascertain the

1 Stratton's Independence v. Howbert, 231 U. S. 399; Knowlton v. Moore, 178 U. S. 41, 77; Treat v. White, 181 U. S. 264; Sesnon Co. v. U. S., 182 Fed. 573, writ of certiorari denied 220 U. S. 609.

2 Wilkinson v. Leland, 2 Pet. 627; U. S. v. Union Pacific R. R. Co., 91 U. S. 72.

3 U. S. v. Ninety-Nine Diamonds, 139 Fed. 961, writ of certiorari denied 201 U. S. 645.

4 Brushaber v. Union Pacific R. R. Co., 240 U. S. 1; Blunt v. U. S., 255 Fed. 332.

5 Billings v. U. S., 232 U. S. 261; 255 Fed. 332.

6 In Income Tax Cases, 148 Wis. 456, 134 N. W. 673, 135 N. W. 164, the Court said: "With the political or economic policy or expediency of the law