State Of New York et al v. Mnuchin et al

Filing 47

DECLARATION of Owen T. Conroy in Support re: 44 CROSS MOTION for Summary Judgment .. Document filed by State Of Connecticut, State Of New York, State of Maryland, State of New Jersey. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59, # 60 Exhibit 60, # 61 Exhibit 61, # 62 Exhibit 62, # 63 Exhibit 63, # 64 Exhibit 64, # 65 Exhibit 65, # 66 Exhibit 66, # 67 Exhibit 67, # 68 Exhibit 68, # 69 Exhibit 69, # 70 Exhibit 70, # 71 Exhibit 71, # 72 Exhibit 72, # 73 Exhibit 73, # 74 Exhibit 74, # 75 Exhibit 75, # 76 Exhibit 76, # 77 Exhibit 77, # 78 Exhibit 78, # 79 Exhibit 79, # 80 Exhibit 80, # 81 Exhibit 81, # 82 Exhibit 82, # 83 Exhibit 83, # 84 Exhibit 84, # 85 Exhibit 85, # 86 Exhibit 86, # 87 Exhibit 87, # 88 Exhibit 88, # 89 Exhibit 89, # 90 Exhibit 90, # 91 Exhibit 91, # 92 Exhibit 92, # 93 Exhibit 93, # 94 Exhibit 94, # 95 Exhibit 95, # 96 Exhibit 96, # 97 Exhibit 97, # 98 Exhibit 98, # 99 Exhibit 99, # 100 Exhibit 100, # 101 Exhibit 101, # 102 Exhibit 102, # 103 Exhibit 103, # 104 Exhibit 104, # 105 Exhibit 105, # 106 Exhibit 106)(Conroy, Owen)

Exhibit 44

516

PUBLIC LAWS---cH. 419-JUNE 25, 1940
(CHAPTER 419)

i
(PublioNo,.i

(54 8STAT.

AN ACT

To provide for the expenses of national preparedness by raising revenue and
issuing bonds, to provide a method for paying for such bonds, and for other
purposes.

Be it enacted by the Senate and Houe of Representativee of the
Mited states of Amerlea in Congrees asembled,
SE, 1. SHORT
Revenue

1940.

Act of

TITI
TTLE.

This Act may be cited as the Revenue Act of 1940.

SEC. L SURTAX ON INDIVIDUALS.
53 Stat. 5.

SO U. 8. O., Supp.

Vt112(b.

'"w(b)

Section 12 (b) of the Internal Revenue Code is amended to read as
follows:

RArs or SmrAx.-There shall be levied, collected, and paid

for each taxable year upon the surtax net income of every mdividual
a surtax as follows:
"Upon a surtax net income of $4,000 there shall be no surtax;upon
surtax not incomes in excess of $4,000 and not in excess of $6,000,
4 per centum of such excess.
'$80 upon surtax net incomes of $6,000; and upon surtax net
incomes in excess of $6,000 and not in excess of $8,000, 6 per centum
in addition of such excess.
"$200 upon surtax net incomes of $8,000; and upon surtax net
incomes in excess of $8,000 and not in excess of $10,000, 8 per centum
in addition of such excess.
"$360 upon surtax net incomes of $10,000; and upon surtax net
incomes in excess of $10,000 and not in excess of $12,00, 10 per centum

in addition of such excess.
"$560 upon surtax net incomes of $12,000; and upon surtax net
incomes in excess of $12,000 and not in excess of $14,000, 12 per centum
in addition of such excess.
"$800 upon surtax net incomes of $14,000; and upon surtax net
incomes in excess of $14,000 and not in excess of $16,000, 15 per
centum in addition of such excess.
"$1,100 upon surtax net incomes of $16,000; and upon surtax net
incomes in excess of $16,000 and not in excess of $18,000, 18 per
centum in addition of such excess.
"$1,460 upon surtax net incomes of $18,000; and upon surtax net

incomes in excess of $18,000 and not in excess of $2,000, 21 per
centum in addition of such excess.
"$1,880 upon surtax net incomes of $20,000; and upon surtax net
incomes in excess of $20,000 and not in excess of $22,000, 24 per
centum in addition of such excess.
"$2,860 upon surtax net incomes of $22,000; and upon surtax net
incomes in excess of $22,000 and not in excess of $28,000, 27 per
centum in addition of such excess.
"$3,440 upon surtax net incomes of $26,000; and upon surtax net
incomes in excess of $26,000 and not in excess of $32,000, 80 per
centum in addition of such excess.
"$5,240 upon surtax not incomes of $32,000; and upon surtax net
incomes in excess of $82,000 and not in excess of $38,000, 88 per
centum in addition of such excess.
"$7,220 upon surtax net Incomes of $38,000; and upon surtax net
incomes mn excess of $8000 and not in excess of $44,000, 88 per
centum in addition of such excess.

m

54 BTA.]

70rik CONG., 3o ESS.--0.

419-JUNE2,

190

"$9,880 upon surtax net incomes of $44,000; and upn surtax net
incomes in excess of $44,000 and not in excess of $5,000, 40 per
centum in addition of such excess.
"$11,780 upon surtax not incomes of $5,000; and upon surtax net
incomes in excess of $50,000 and not in excess of $60,000, 44 per
centum br addition, of such excess.
1
"$16,180 upon surtax net incomes of $60,000; and Upon surtax net
incomesinexcess-of $60,000 and not i excess of 0,000, 47 per
centum in addition of such excess.
'$20,880 upon surtax net incomes of 70,000; and upon surtax net
incomes in excess of $70,000 and hot, n excess of $80,000, 50 per
centum in addition of such excess.
' $25,880 upon suttax net incomes of $80,000; and upon surtax net
incomes in excess of $80000 and not in excess of $0,000, 58 per
centum in addition of suc excess.
"$31,180 upon surtax net incomes of $90,000; and upon surtax net
incomes in excess of $90 000 and not in excess of $100,0, 56 per
centum in addition of suc excess.
"$86,780 upon surtax net incomes of $100,000; and upon surtax
net incomes in excess of $100,000 and not in excess of $150,000,.58
per centum in addition of such excess.
"$85,780 upon surtax net incomes of $150,000; and upon Surtax
net M0ooesin excess of $150,000 and not in excess of 200,000, 60
per centum in addition of such excess.
"$95,780 upon surtax not incomes of $200,00; and uon surtax
net, imoomes in excess of $200,000 and not in excess of
,000, 62
per centum in addition of such excess.
"$126,780 upon surtax not incomes of $250,000; and upon surtax net
mncomesin excess of $250,000 and not in excess of $00,000, 64 per
centui pin addition of such excess.

. "$158,7,80 upon surtax net incomes of $800,000; and upon surtax net
incomes in excess of $800,000 and not in eaes of $400,000,.66 per
centumn in addition of such exceep.
"$224,780 upon surtax net incomes of $400,000; and upon surtax
net incomes in excess of $400,000 and not in excess of $500,000, 68 per
centum in addition of such excess.
"$292,780 upon surtax net incomes of $500,000; and un surtax
not incomes ia excessof $500,000 and noting excessof$750,0, 10per
centum in addition of such excess.
"$487,780 upon surtax net incomes of $50,000; and upon surtax net
incomes in excess of $750 000 and not in excess of $1,000,000, 72 per
centum in Additioi of sue excess.
'$647,780 upon surtax net incomes of $1,000,000; and upon surtax
net incomes imexcess of $1,000,000 and not in excess of $9,00,000, 78
per centum in addition of such excess.
"$1,877,780 upon surtax net incomes of $2,000,000; and upon surtax
net incomes in excess of $2,000,000 and not in excess of $5,000,000, 74
per centum in addition of such excess.
"13,597,180 upon surtax net incomes of $5,000,000; and upon surtax
net incomes in excess of $5,000,000, 75 per centum in addition of such
excess."
SEC. L CORPORATION TAX.
(a) iAx oN ConronArrows s

GENERAL.-Section 18 (b) of the
tat, a.
s
Internal Revenue Code is amended to read as follows:
VjWn e.,ap
"I)) Imb sION or TAx.-There shall be levied, collected, and
N
o Oita
paid or each taxable year upon the normal-tax net income of every
corporation the normal-tax net income of which is more than $25,000

5)17

NKOMO"

518

PoBLIo

2 8U.8.0'Supp
v 1114, 2314),j 201;
General rule.
Alternative tax.

Supp.
SU a.0.*
Vt 14 (note).
Corporations with
normaltax notminoomos of not more
than $26,00.

Foreign corporations.
rPW4,P. 074.

Nonresdeont foreign
corporations.
28 U.

Ve 1231 ()

.0 Supp.

Mutual investment
compaies.
83 Stat. g9.
26 U. S. 0., Supp.
of tax.
impVpiof
P04,P. 974.

Tax In neral.

M3 Stat 76
26u ~ 6BP.
V. 1 1 . 6 . (A.

Agge receipts
more than 824000.
83 Stat. M.
0iCSupp.
28
V, 1211 a().

Gross Inoome of
more than$_K000.
ig
v1 U.*S*Supp.
Vo 6 211 (o).

-

L&ws-cBM.

419--JUNE 25, 10O0

[54 STA.

(except a corporation subject to the tax imposed by section 14, section
231 (a), Supplement G, or Supplement Q) whichever of the following
taxes is thelesser:
"(1) GazwAr nuLE.-A tax of 19 per centum of the normal-tax
net income; or
a (2) AerEzRNATVE TAX (OORPORATIONS WrfIT
NORMALTAx Nwf
ImOME SWITLY MORE THAN $25,000),.-A tax of $8,7751 plus 88 per
centum of the amount of the normal-tax net income in excess of
$25,000."
(b)TAX ON SPEoAL CLASSES or CoRPORAToNs.-.Sections 14 (b) and
(1) of the Internal Revenue Code are amended to read as follows:
(b)

ConRAonSo

WIr

NORMArTAX NPr

INCOMES OF NoT! MOR

$25,000.--If the normal-tax net income of the corporation is
not more than $25,000, and if the corporation does not come within
one of the classes specified in subsection (e), (d), or (e) of this
section the tax shall be as follows:
"Upon normal-tax net incomes not in excess of $5,000, 18Y2 per
centum.
"$675 upon normal-tax net incomes of $5,000, and upon normaltax net incomes in excess of $5,000 and not in excess of $20,000, 15
per centum in addition of such excess.
"$2,925 upon normal-tax net incomes of $20,000, and upon normaltax net incomes in excess of $20,000, 11 per centum in addition of
such excess.
THAN

"(0)

FOREIGN CORPORATIONS.-

"(1) In the case of a foreign corporation engaged in trade or
business within the United States or having an office or place of
business therein, the tax shall be an amount equal to 19 per centum
of the no)rmal-tax net income, regardless of the amount thereof."
(0) TAX oN NoNREswNT FOREIGN CORPORATnoNS.-Sectioii 281 (a)
(1) of the Internal Revenue Code is amended by striking out "except
that in the case of dividends the rate shall be 10 per centum, and"
and by striking out "of 10 per centum".
(d TAX ON MrMTAL INVESTMENT COMPANE.-Section 362 (b) of
the Internal Revenue Code is amended to read as follows:
"(b) ImosmtroN or TAX.-There shall be levied, collected, and paid
for each taxable year upon the Supplement Q net income of every
mutual investment company a tax equal to 19 per centum of the
amount thereof."
SEC. 4. TAX ON NONRESIDENT ALIEN INDIVIDUALS.
(a) TAX xx GENERAL.-Section 211 (a) (1)'(A) of the Internal
Revenue Code (relating to tax on nonresident alien individuals not
engaged in trade or business within the cited States and not having
an orfce or place of business therein) is amended by striking out "10
per centum' and insertifig in lieu thereof "15 per centum".
(b) AGGREGATE REomvirS MoRn TIAN $24,000.-Section 211 (a) (2)
of the Internal Revenue Code is amended to read as follows:
"1(2) AGGREGATE MORE THAN $24,0oo.-The tax imposed by para-

graph (1) shall not apply to, any individual If the aggregate
amount received during the taxable year from the sources therein
specified is more than $24,000."
(c) TAx WHERE GROSS INcOME OF MORE THAN $24,000.-Section
211 (e) of the Internal Revenue Code (relating to tax on certain
nonresident alien individuals) is amended by striking out "$21600"
wherever occurriing therein and inserting in lieu thereof "$24,6"*
and by striking out "10 per centum" and inserting in lieu thereof
"18 per centum

-

54 STAT.]

76TH CONG.,

519

D SESS.-CH. 419-JUNE 25, 1940

SEC. 5. WITHHOLDING OF TAX AT SOURCE.

(a) Section 148 of the Internal Revenue Code is amended by
striking out "10 percentum" wherever occurring therein and inserting
in lieu thereof 15 per centum".
(b) Section 144 of the Internal Revenue Code is amended by
striking out "except that in the case of dividends the rate'hall be 10
per celitum, and" and by striking out "of 10 per centum".
(c) The amendments made by this section shall take etect on
June 26, 1940.

Withholding of tax
at source.
63 Stat. 00 82
28 U. 8. 6., Supp.

V, i 143,144.

SEC. 6. PERSONAL EXEMPTION.

(a) Section 25 (b) (1) of the Internal Revenue Codu is amended
t6 read as follows:
EXmMHON.-In the case of a single person or
"(1) PERoALrr
a married person not living with husband or wife, a personal
exemption of $800; or in the case of the head of a fanuly or a
married person living with husband or wife, a personal exemption
of $2,000. A husband and wife living together shall receive but
Mhe personal exemption. The amount of such personal exemption
shall be $2,000. If such husband and wife make separate returns,
the personal exemption may be taken by either or divided between
themn."
(b) Section 214 of the Internal Revenue Code (relating to personal
exemption of nonresident alien individuals) is amended by striking
out "$1,000" and inserting in lieu thereof "$800".
(a) Section 251 (f),of the Internal Revenue Code (relatin to
personal exemption of citizens entitled to benefits of section 251 is
amended by striking out "$1,000" and inserting in lieu thereof
"$800,,.

Personalezemption.
83Sata Co
2 a s 186a
.supp.
v 126(b)(I;-#

53 Stat. 77.
28 U.Se. 0., supp.
V 1214.
8 Stat. 80.
28 U. B. 0., SUppe
Ve 1251 (f).

SEC. 7. RETURNS OF INCOME TAX.

(a) INDIVMUAL Rwrans.- action 51 (a) of the Internal Revenue
Code is amended to read as follows:
"(a) R uEwME'.-The following individuals shall each make
under oath a return stating specifbsally the items of his gross income
and the deductions and credits allowed under this chapter and such
other information for the purpose of carrying out the provisions of
this chapter as the Commissioner with the approval of the Secretary
may by regulations prescribe"(1) Every individual who is single or who is marked but not
living with husband or wife, if having a gross income for the taxable
year of $800 or over.
"(2) Every individual who is married and living with husband
or wi if no joint return is made under subsection (b) and if'A
Such individual has for the taxable year a gross income
of $2 000 or over, and the other spouse has no gross income; or
"(E) Such individual and his spouse each has for the taxable
year a gross income and the aggregate gross income is $2,000 or
over."
(b) FuIrY Rwronws.-Section 142 (a) of the Internal Revenue
Code is amended to read as follows:
"(a) RzQuInxmrr or Rrn.-Every fiduciary (except a receiver
appointed by authority of law in possession of part only of the property of an individual) shall make under oath a return for any of the
following individuals, estates, or trusts for which he acts stating specifically the items of gross income thereof and the deductions and
credits allowed under this chapter and such other information for the
purpose of carrying out the provisions of this chapter as the Commis-

,

M

IW,

Individual returns.
53 Stat. 27.
28 U. S. 0., Supp.
Rohunent.

Fiduciar

returns.

28 U.n . 6., Supp.
V 1A).n
Rqu'reent.

-Mm

520

PUBMO LAWS--OH. 419--JUNE 25 1940

,(04 STAr.

sioner with the approval of the Secretary may by regulations
prescribe"(1) Every inividual having a gross income for the taxable year
of $800 or over, if single, or if married and not living with hu and
or wife;
"(2) .Every individual- having a gross income for the taxable
year of $2,000. or over, if married and living with husband or
wife*

"(s)

Information ro.
53 Stat. 64.
2v U. .O0.,
V 17ati).

Supp.

Treaty obligations.

Taxable yea
which applicable.

to

Every estate the gross income of which for the taxable year

is $800 or over;
"(4) Every trust the net income of which for the taxable
year is $100 or over, or the gross income of which for the taxable
year is $800 or over, regardless of the amount of the net income;
and
N
Every estate or trust of which any beneficiary is a nonresident alien."
(o) tRxATioN Rrmns.--Section 147 (a) of the Iteinal
Revenue Code (relating to information at the source) is amended
wherever occurring therein and inserting
by striking out "$10"
m liu thereof $0
SEC. 8. TREATY OBLIGATIONS.
No amendment made by this title shall apply in any case where its
appcation wouldbe contrary to any treaty obligation of the United
SEC. 0. TAXABLE YEARS TO WHICH APPLICABLE.
The amendment made by this title, except the amendments made
by section 5 shall be applicable only with respect to taxable years
beginning after December 81, 1989.

TITLE II

83 Stat. &.
28 U. a. C., Sapp.
V,1 14.

Defense tax.
Post, p. 974.

63 Stat. 00.
28 U. S. 0., Sapp.
v 1143.
wG
4Suntil January
1943.

Ij4~(

-~

~P&~-

~A~~*M~t

SEC. 201. INCOME TAX.
Chapter 1 of the Internal Revenue 'Code is amended by inserting
after section 14 the following new section:
"SEC. 1. DEFENSE TAX FOR FIVE YEARS.
"In the case of any taxpayer, the amount of tax under this chapter
for any taxable year beginning after December 81, 1989, and before
January 1, 1945, shall bi 10 per centum greater than the amount of
tax computed without regar o this section. In no case shall the
effect of this section be to increase the tax computed without regard
to this section by more than 10 per centum of the amount by which
the net income exceeds such tax. For the purposes of this section,
the tax computed without regard to this. section shall be such tax
before the application of the credit provided in section 81 ('foreign
tax credit'), and the credit provided in section 82 (taxes withheld
at the source)."
SEC. 202. RATES OF WITHHOLDING.
Section 148 of the Internal Revenue Code is amended by inserting at the end thereof the following new subsection:
(h) RAs Uxn JANUARY 15.-For th period after June
25, 1940, and before January 1, 1945, the rate pro ded in this section
and section 144, of 15 per centum shall be 16% per centum. This
subsection or section 15 shall not apply in any case where its operation would be contrary to any treaty obligation of the United States,

r~i~~W

-~

5 STAT.]

70rH CO(G., 8D

ESS.-OH. 419-JUN

521

2, 1s40

nor to a resident of, or a corporation organized under the laws of,
a contiguous country so long as there is in effect with such country
a treaty, ratified prior to August 26, 1987, relating to rates of income

tax"

SEC. 20. PERSONAL HOLDING COMPANIES.
Section 500 of the Internal Revenue Code is amended by inserting
"(a) Gzwma Rvza.-" before the first paragraph and inserting at
the end thereof the following new subsection:
"(b) DrNsE TAX

on FIv

YAiRs-In the case of ever

per-

sonal holding compa, the amount of surtax under this subehapter
for any taxable year -begiing after December 81, 1989, and before
January 1, 1945, shall be.10 per centum greater than the amount
of surtax computed without regard to this subsection."
SEC. 204. EXCESS-PROFITS TAX.
Section 600 of the Internal Revenue Code is amended by inserting
"(a) Gwnw Ruz.-" before the first paragraph and by inserting
at the end of such section the following new susection:
"(b) DurasE TAx FoR Fiva Yni.-In the case of any taxpayer,
the amount of tax payable under this section for any income-tax
taxable year ending after June 80, 1940, and before July 1, 1945
shall be 10 per centum greater than the amount of tax which would
be payable if computed without regard to this subsection."
SEC. 205. CAPITAL STOCK TAX.
Section 1200 of the Internal Revenue Code is amended by insertinf at the end thereof the following new subsection:U
(c) Daznsa TAx ron Frys Yzans.-For the
r ending June
80, 1940, and for the four succeeding years eng June 80 the
rates provided in subsections (a) and(b) shall be $1.10 in lieu oi $1."
SEC. 20. ESTATE TAX.
Chapter 8 of the Internal Revenue Code is amended by inserting
at the end thereof the following new subchapter:

53 stat. 104.
28 U. S. 0., Bupp.
Gen"

rule.

Deensetax.

53 Stat. 111.
28 U. S. 0., Supp.
Veromral rule.
Defense tax.

63 Stat. 189.
28 U.
0., Supp.
:.
v.i I
.
Dofensetfa.

v3 Stat. 119.
26 U. S. 0., SUpp.
V, 1800).

"Subehapter C-Defense Tax for Five Years
"SEC. 95 DEFENSE TAX FOR FIVE YEARS.
"In the case of a decedent dying after the date of the enactment
of the Revenue Act of 1940 and before the expiration of five years
after such date, the total amount of tax payable under this chapter
shall be 10 per centum greater than the amount of tax which would
be payable if computed without regard to thiis section. For the purposes of this section, the tax computed without regard to this section
shall be such tax after the application of the credits provided for
in section 818 and section 986.'
SEC. 207. GIFT TAX.
Section 1001 of the Internal Revenue Code is amended by adding
at the end thereof the following new subsection:
"(d) DErENSE Tx FOn 1940-1945.-Despite the provisions of subsection (a)"4(11 The tax for each of the calendar years 1941 to 1945, both

inclusive shall be an amount equal to the excess of"(AS 110 per centum of a tax, computed in accordance with
the Rate Schedule hereinbefore set forth, on the aggregate sum

Defense taL

63 Stat. 144.
28 U. 8.0., Supp.
V, 11001.
Defense tax for IW1945.
Calendar years 1941194&.

522

PUBLIO LAWS-OH. 419--JUNE 25o 1940

[54 BrAr.,

of the net gifts for such calendar year and for each of the preceding calendar years, over
"(B) 110 per centum of a tax, computed in accordance with
the said Rate Schedule, on the aggregate sum of the net gifts
for each of the preceding calendar years.
Calendar year 190."
"(2) The tax for the calendar year 1940 shall be the sum of (A)
the tax computed under subsection (a), plus (B) an amount which
bears the same ratio to 10 per centum of the tax so computed as
the amount of gifts made after the date of the enactment of the
Revenue Act of 1940 bearsto the total amount of gifts made during
the year. For the purposes of thisIparagra
the term 'gifts' does
not elude gifts which, under section 100 b(2), are not to be
included in computing the total amount of gi made during the
calendar year 1940, or gifts which, in the case of a citizen or resident are allowed as a deduction by section 1004 (a) (2), or gifts
which, in the case of a nonresident not a citizen of the United
States, are allowed as a deduction by section 1004 (b)."
SEC. 208. TAX ON TRANSFERS TO AVOID INCOME TAX.
63 Stat. 172.
Section 1250 of the Internal Revenue Code is amended by inserting
v6 U.o . 0., Supp.
"(a) GENERAL Rui~w.-" before the first paragraph and inserting at
V11250.
general rule.
the end thereof the following new subsection:
Defenetax.
"(b) DzFSU TAx ron Five YwAn.-In the caseof any transfer
during the period after the date of the enactment of the Revenue
Act of 1940 and before July 1, 1945, the rate provided in subsection
(a) shall be 27 / per centum in lieu of 25 per centum."
Continuation of excise taxes.
63 tat. 195,18, 411,
420,.421 422, 425
20 U. V.U0., SKip. V.

SEC. 209. CONTINUATION OF EXCISE TAXES.
Sections 1801, 1802, 8403 (f) (1), 8452, 8460 (a) 8465, 8481 (b),

and 3482 of the Internal Revenue Code are amended by striking out
"1941" wherever appearing therein and inerting i lieu thereof
"1945".
SEC. 210. MISCELLANEOUS EXCISES.

83 stat. 176.
26 U. S. O., Supp. V,
11400.

Defense tax.

The Internal Revenue Code is amended by inserting at the end of
chapter 9 the following new chapter:
"CHAPTER 9A-DEFENSE TAX FOR FIVE YEARS
"SEC. 1650. DEFENSE TAX FOR FIVE YEARS.
"(a) In lieu of the rates of tax seified in such of the sections of
this title as are set forth in the following table, the rates
liable
with respect to the period after June 30, 1940, and before[uly1,
1945, shall be the rates set forth under the heading 'Defense-Tax
Rate':

U

*aection
1700.
1700

523

70rFK CQNG., So 8E88.-OI. 419-JUNE 25, 1940

54STAT.]

Description of tax
Boxs.

Old rate

Defeneatax rae

10 percent....-.I1I-percent.

10 perc-nt- - 11 percent.
Sales outside box ofi---- 2 cents.
1700 (e)------Cabaret--------------.1%cents.
------------------ 10 percent-- 11 percent.
1710 aD1-----11 percent.
2-----Initiation fees------------10 percent.
1710
1801..----------Corporate securities--10 cents-----11Icents.
11 cents.
stockissues--------10 cents...
1802 a--------Cap
1802 a.-.---Capital stock issues--------2 cents-----8 cents.
1802 b-..----Capital stock transfers------4 cents-----5 cents.
1802 b--------Capital stock transfers------5 cents-----6 cents.
cents---4 cent.
Insurance policies--------1804--------Paage tickets-----------$1---------$1.10.
1800-- ---passage tickets-----------$3--------$30.
----1806.
P---- sagetickets-----------$5-------$5.60.
1806
e-depostboxes---------10 percent --- 11percent.
1850 ---P..) -and-revolvers-------10percent-.I.I1percent.
2700
$110.
Wholesalers In liquor-------$100----8250 a)(1).-.
3250 b.....-.Retailers.I. lquor---------$25--------$27.50.
-

3250 o)Br...wers...----------------$100-------$110.
$55.
3252 ).........Brewers----------------$60----

)------Wholesalers In malt liquors-$5$5
- $22.
e--Retailers-------------.--..0
-$2--------$2.20.
. Special
e (8
------- $200-------$220.
)-----Rectifiers-f (1)---Rectifiers--------------.$100-------$110.
$50--------$55.
s-...-.S...--..
20--------22.
......
825
3400 1).2..cents.2cents.
cents...-...4. cents.
8400 2)------Tbes.4
3401...........Toilet preparations-10percen---11Ipercent.
2 percent.
.Automobile truck chassis, etc- 2 percent3403
eent.
Automobilesetc----------...8.percent_.._ 8
.
8403 (b)
Parts............------2 percent-.- 2 percent.
....
3403
Radios----------------....5 percent...;6$ percent.
.
3404---Mechanical refrigerators--..5 percen.-.- 5 percent.
.
8405-.-.
---- Firearms----------------10percent.....1.percent.
8407-.-.
cent-----5 cents.
3409----------Matches----------------5
8
8 percent ---- percent.
3411............Electrical energy-----3412............Gasoline----------------1cent------1cents.
-4cents.
4centsoils..........
3413.Lubricating
percent.....451percent.
i..---4
() (2),
846 0 346 1(), (),(2) I 'rnportiono
ino
1..::
and .3
cents.
-4cents3481 (a.........Transferof'bonds....
-.......... -- 0 cents----5 cents.
3482----------..Convya
325
8250
8250
3260
8250
8250

to the articles with
11"(b) In the application of section 844
this section, where
re
respect; to which the rate of tax is
the lease contract of sale, or conditional sa andeliverthereunder,
was maAe before July 1, 1940 e total tax refe d to in such
section shall be the tax at the rate in force on June 80, 1.4.nd n.t
at the increased rate"f
SEC. 211. ADMISSIONS TAX.
Section 1100 (a (1) of the Internal Revenue Code is amended by

striking out "until July 1,1941, is less than 41 cents" and iserting
thereof "until July 1,1940, isless thn 41 cents, and after June
lieuW
80, 1940,( and before July 1, 1945, is less than 21 cents" and by striking out "is less than 41 "is than until until 1, 1941"1 and insertingi
lieWu
thereof cents, 41 cents July
less
Jul1 1940, and Is
21 cents after June 80, 194, and before Jul y) 1 15".es

416.
26 U. A.t.o Supp.

83Bstat

V,Iam4 ().

Admlalons tax.

v et0 .a1
Vol noo(aU

.

524

PUBLIC LAWS-OH. 419-JUNE 25, 1940

[54 STAT.

SEC. 212. CIGARETTES.
Olmartte,.
53 Stat. 219.
2o U. 8. O., Supp.

V,I Doo.

Detonse tax.

Subehapter A of chapter 15 of the Internal Revenue Code is
amended by inserting at the end thereof the following new sections:
"SEC. 2004. DEFENSE TAX FOR FIVE YEARS.
"In lieu of the rates of tax specified in section 2000 (c) (2), the
rates of tax for the period after June 30, 1940, and before July 1,
1945, shall be $3.25 and $7.80, respectively.
"SEC. 2005. FLOOR STOCKS TAX.

Floor stocks tax.

Return.

Laws applicable.

63 Stat. 298.
26 U. S. 0., Supp.
V o n280.
Deftnse tax.

"(a) FLooR SiTOOS TAx.-Upon cigarettes subject to tax under
section 2000 (e) (2) which on July 1, 1940, are held by any person for
sale, there shall be levied, assessed, collected and paid a floor stocks
tax at a rate equal to the increase in rate of tax made applicable to
such articles by section 2004.
"(b) RruuNs.-Every person required by this section to pay any
floor stocks tax shall, on or before August 1, 1940, under such regulations as the Commissioner with the approval of the Secretary shall
prescribe, make a return and pay such tax, except that in the case of
articles held by manufacturers and importers the Commissioner may
collect the tax with respect to all or part of such articles by means
of stamp rather than return, and in such case may make an assessment against such manufacturer or importer having tobacco tax
stamps on hand July 1, 1940, for the difference between the amount
paid for such stamps and the increased rates specified in section 2004.
"(c)LAws APPLICABLE.-All provisions of law, including penalties,
applicable in respect of the taxes imposed by section 2000 shall, insofar as applicable and not inconsistent with this section, be applicable
with respect to the floor stocks tax imposed by subsection (a)."
SEC. 213. DISTILLED SPIRITS.
(a) Section 2800 of the Internal Revenue Code is amended by
inserting at the end thereof the following new subsections:
"(g) DEFNrsE TAX FOR FIVE YEAR.-In lieu of the rates of tax
specified in such of the sections of this title as are set forth in the following table, the rates applicable with respect to the period after
June 30, 1940 and before July 1, 1945, shall be the rates set forth
under the heading 'Defense-Tax Rate':
"Section

2800
2800
2800

Floor stocks tax.

Lted

all,
-v-'.

o emD*

Description of tax

Old rate

Defense-tax rate

Distilled spirits generally...-. $2.25-..- ...- $3.
1)....-- .-$2 .... Brandy......-------) ..
.--- ..- $2.75.
Imported perfumes...-......- $2.25-.-.-.-- $3.
3.. ..

S roOKs TAX.
"(1) Upon all distilled spirits produced in or imported into the
United States upon which the internal-revenue tax imposed by law
has been paid, and which on July 1, 1940, are held and intended for
sale or for use in the manufacture or production of any article
intended for sale, there shall be levied, assessed collected, and
paid a floor stocks tax of 15 cents on each proof-gallon, and a proportionate tax at a like rate on all fractional parts of such proofgallon. The wine imposed b this subsection shall not apply to
one hundred tax gallons of the retail stocks of distilled spirits
held by a person on premises as to which such person has ihcurred
occupational tax as a retail dealer in liquors for the period begin"(h) FLOOR

Im

154

525

76TH CONG., 3D SE8.--OH. 419-JUNE 25, 1940

8rAT.]I

nin on July 1 1940, and as to which no other occupational tax
wi respect to dealing in distilled spirits has been incurred by such
person for a period beginning on such date.
"(2) Every person required by this subsection to pay any floor
stocks tax shall, on or before August 1, 1940, under such regulations as the Commissioner, with the approval of the Secretary,
shall prescribe make 4 return and pay such tax. Payment of the
tax shown to be due may be extended to a date not later than
February 1, 1941, upon the filing of a bond for payment thereof in
such form and amount and with such surety or sureties as the
Commissioner with the approval of the Secretary, may prescribe.
Every retail dealer in liquors (even though not liable to pay such
tax) shall make the return required by this paragraph.
"(3) All provisions of law, including penalties, applicable in
respect of internal-revenue taxes on distilled spirits shall, insofar
as applicable and not inconsistent with this subsection, be applicable
in respect of the floor stocks tax imposed hereunder."
(b) The third paragraph of section 2887 of the Internal Revenue
Code (relating to drawback on distilled spirits) is amended by striking out "but shall not exceed a rate of $2.25 (or, in the case of
brandy, $2) " and inserting in lieu thereof "but shal not exceed a rate
of $3 (or, in the case of brandy, $2.75)1".
SEC. 214. WINES AND FERMENTED MALT LIQUORS.

Chapter 26 of the Internal Revenue Code is amended by inserting
at the end thereof the following new subchapter:
"Subehapter F-Defense Tax for Five Years
"SEC. 3190. DEFENSE TAX FOR FIVE YEARS.
"In lieu of the rates of tax specified in such of the sections of this
title as are set forth in the following table, the rates applicable with
respect to the period after June 30, 1940, and before July 1, 1945, shall
be the rates set forth under the heading 'Defense-tax Rate':
DescriptIon of tax

"Section

Old rate

Returns.

Extension of pay.
nent; bond.

JAws applicable.

Drawback on dis*
tilled spirits.
63 Stat. 839. Supp.
28 U. a. 0.,
Vo 1 2887.

33 Stat. 208. Supp.
28 U. 8. 0.,
v. 29e0.

Dezesetai.
Ante, pp. 8131,814.

Defense-tax rate

Still wines---------------5 cents.----- 6 cents.
Still wines---------------15 cents-----18 cents.
Still wines---------------25 cents-----80 cents.
8 cents.
2 cents.-Sparkling wines.--------.-. ....
1 cents.
1 cents.---Sparkling wines-------.-.-. a)()l
1 cents.
1y cents...
.
cordials etc
....
-Liqueurs,
2a--------Fermented malt lquors....-$5.--------$6.

8030 a1A
8030 a1A
3030 a.A
8030
8030

8030
3150

-

"SEC. $191. FLOOR STOCKS TAX ON FERMENTED MALT LIQUORS.

"(a) FLOOR STOoKS TAx.-Upon all fermented malt liquors upon

which the internal-revenue tax imposed by law has been paid, and
which on July 1, 1940, are held by any person and intended for sale
there shall be levied, assessed, collected, and paid a floor stocks tax
at a rate equal to the increase in rate of tax made applicable to such
articles by section 3190. The tax imposed by this subsection shall
not apply to the retail stocks of fermented malt liquors held by a
person on premises as to which such person has incurred occupational
tax as a retail dealer in liquors or a retail dealer in malt liquors for
the period beginning on July 1, 1940, and as to which no other occupational tax with respect to dealing in distilled spirits, wines, or malt
liquors, has been incurred by such person for a period beginning on
such date.

".141! l
pelo

W "M
M,

Floor stocks ta.

of
MeAUlstocks.
tamExemption

oe

V.

526

-~ -' ~

-~

.L~.p

-

-

-,

PUBLIC LAWS-CH. 419-JUNE 25, 1940

Returns.

Extension

of pay*

ment; bond.

Laws applicable.
So U.
vs Im.i

.

o.,

Supp.

[54

STAT.

"(b) Rscronts.-Every person required by subsection (a) to pay
any floor stocks tax shall, on or before August 1, 1940 under such
regulations as the Commissioner with the approval of the Secretary
shall prescribe, make a return and pay such tax. Payment of the
tax shown to be due may be extended to a date not later than
February 1, 1941, upon the filing of a bond for payment thereof in
such form and amount and with such surety or sureties as the Commissioner, with the approval of the Secretary, may prescribe.
" (e) LAWS APPLICABLE.-All provisions of law, including penalties,
applicable in respect of the tAxes imposed by section 3150 (a) shall,
insofar as applicable and not inconsistent with this subsection, be
applicable with respect to the floor stocks tax imposed by sub.
section (a)."
SEC. 215. PLAYING CARDS.

53 Stat. 199

28 U.
*.*d.meSupp.
Go"rule.
Defense tax.

Credit on tax on
automobiles, eto.
53 Stat 410.
28 U. 6. 0., Supp.
vs I um (0).

Section 1807 of the Internal Revenue Code is amended by inserting
"(a) GENERAL RuLE.-" before the first paragraph and inserting at
the end thereof the following new subsection:
(b) DEFENSE TAX FOR FIVE EzARu.-In lieu of the rate of tax
specified in subsection (a), the rate of tax for the period after June
80, 1940, and before July 1, 1945, shall be 11 cents.
SEC. 216. CREDITS ON TAX ON AUTOMOBILES, ETC.
Section 3403 (e) of the Internal Revenue Code is amended by
adding at the end thereof the following new sentence: "With respect
to the period after June 30, 1940, and before July 1, 1945, the rates
of the credits above provided shall, in lieu of 2 per centum and 3 per
centum, be 2y2 per centum and 31/2 per centum, respectively.".

TITLE III
Special fund for ret rment of certain obligations.

53 Stat. 189.

28 U.S.T 0. Supp.

v1

o1700(a) (.

62 Stat. 447.
31 U. a. 0.0 Bupp.
lasuanos of addi.
tional obligations for
national defense oxpenditures.

SEo. 801. The Secretary of the Treasury shall, as soon as practicable after the end of each quarter, determine the additional amount
of taxes collected attributable to the increases in taxes made, and to
the floor stocks taxes imposed, by the amendments to the Internal
Revenue Code in title II of this Act (not including the amount of
taxes attributable solely to section 209 and not including any amount
collected under section 1700 (a) (1) of the Internal Revenue Code
attributable to a basic admission charge of more than 40 cents) 8
and the amounts so determined shall be set aside as a special fund
which shall be available only for the retirement of any of the obligations issued pursuant to the authority contained in section 21
of the Second Liberty Bond Act, as amended. If at any time the
amounts in the fund are not sufficient for such purpose, the Secretary
of the Treasury is authorized and directed to transfer to the fund
moneys out of the general fund of the Treasury. Any amounts in
the special fund not necessary for the retirement of such obligations
shall be deposited in the general fund of the Treasury.
SEO. 302. Section 21 of the Second Liberty Bond Act as amended,
is hereby further amended by inserting "(a)" after 1'21. and by
adding at the end of such section a new paragraph as follows:
(b) In addition to the amount authorized by the preceding
paragraph of this section, any obligations authorized by sections
5 and 18 of this Act as amended, not to exceed in the aggregate
$4,000,000,000 outstanAing at any one time, less any retirements made
from the special fund made available under- section 801 of the

nationala l Defense

Revenue Act of 1940, may be issued under said sections to provide
the Treasury with funds to meet any expenditures made, after June
80, 1940 for the national defense, or to reimburse the general fund
of the frasury therefor. Any such obligations so issued shall be
designated 'National Defense Series'."
-.
-

-

-~

~4

-.

-~

r-,

PAZit #A

54 STAT.]

527

76r CONG., 8D BESS.--HS. 419, 420-JUNIO 25, 194o

TITLE IV
Sa. 401. Section 205 of the Public Salary Tax Act of 1939 is
amended by adding at the end thereof a new sentence to read as
follows:"If the amount of the deficiency in income tax for any
taxable year beginning before January 1, 1939, attributable to compensation paid indirectly by the United States, or any agency or
instrumentality thereof, for personal service as an officer or employee
of a State, or any political subdivision thereof, or any agency or
instrumentality of any of the foregoing, is paid on or before March
15, 1941, then with respect to failure to pay such amount or make
return of such compensation: (a) No criminal penalty shall apply;
and (b) the additions to tax provided in sections 291 and 293 of the
Internal Revenue Code shall not apply."
Approved, June 25, 1940, 11:45 a. m., E. S. T.

Deficiency in in.
cometax.
63 Stat. 678,
28 U.
S. 0., Supp.
V 122 (note).

vs Stat. 88.
28 U. 0. 0., Bupp.
V. It 291o 293.

[CHAPTER 4201

AN ACT
To transfer the active list of the Construction Corps to the line of the Navy,
and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congrees asembled, That the Construction Corps of the Navy is hereby abolished, but nothing herein shall
affect the status, rights, or obligations of any officer now on the retired list of the Construction Corps.

June 25, 1940

(8.4027

[Publo, No. 6571

Construction Corps
of the Navy, abolsh.
ea
ot.
Retired officers not
affected.

NAVAL CONSTRUCTORS TRANSFERRED TO THE LINE: STATUS UPON TRANSFER

SEo. 2. Officers now on the active list of the Construction Corps
are hereby transferred to the line of the Navy, and shall be commissioned accordingly. Each officer so transferred shalla Be designated for engineering duty only.
b Occupy the rank and grade corresponding to those held by
him in the Construction Corps.
(c) Continue amenable to disciplinary action to the same extent in
all respects as if not transferred.
(d) Be an additional number in the grade to which transferred
and in any grade to which he may thereafter be promoted.
(e) Have the lineal position and precedence in the line which a
board of naval officers finds that he would have had if he had
remained in the line or if his original appointment had been in the
line and the finding of such board when approved by the Secretary
of te Navy shall be conclusive for all purposes: Prvided, That the
existing relative rank, precedence, or seniority among themselves of
officers transferred by this Act shall not be altered by such transfer.
(f) Except as herein otherwise provided, be governed by the provisions of existing laws and of laws hereafter enacted relating to line
officers assigned to engineering duty only.

Transfer of officers
on active list to the
line
Designation, rank,
etc.

AI3USTMENT OF STATUS

SEO. 8. For the purpose of adjusting the status in the line of the
officers transferred thereto by this Act, the following shall govern
with respect to such officers:
(a) Each officer shall become eligible for consideration b a line
selection board as of the date the next junior line officer becomes
eligible therefor, subject to the provisions of section I (a) of this
Act, and the same eligibility rule shall apply to all other officers
designated for engineering duty only.

VIP"im-MV0M-awww",

Adjustment of status In theIWO.
Eligibility for con.
siderationd lue so
lection boat