1949 - Internal Revenue Service

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REPORT OF COMMISSIONER OF INTERNAL REVENUE
REPORT OF COMMISSIONER OF INTERNAL REVENUE 9
INCOME TAX CONVENTIONS AFFECTING THE BUREAU OF INTERNAL REVENUE
PROMULGATED DURING THE FISCAL YEAR 1949
A convention between the United States of America and the Kingdom
of the Netherlands for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income and
certain other taxes was proclaimed by the President on December 8,
1948. This convention was effective as of January 1, 1947.
A convention between the United States and Denmark for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income was proclaimed by the President on
December 8, 1948. This convention was effective as of January 1,
1948.
IMPORTANT LEGISLATION ENACTED DURING THE FISCAL YEAR 1949 AFFECTING
THE BUREAU OF INTERNAL REVENUE
EIGHTIETH CONGRESS, SECOND SESSION
Public Law 864, approved July 1, 1948, amends Title III of the,
National Housing Act, as amended, so as to provide in section 304
thereof that the Federal National Mortgage Association, including its
franchise capital, reserves, surplus, mortgage loans, income, and
stock, shall be exempt from all taxation now or hereafter imposed by
the United States.
Public Law 869, approved July 1, 1948, amends section 812(e)(1)(G)
of the Internal Revenue Code (relating to the marital deduction for
estate tax purposes in the case of life insurance with power of appointment
in the surviving spouse) by expanding the application of
the provision to include cases where insurance proceeds are held by
the insured subject to an agreement to pay only interest thereon
annually or at more frequent intervals and cases where interest is to
be paid for a period and installments of the proceeds are to be paid
for a period. The amendment also extends the application of the
provision to annuity and endowment contracts, and to proceeds
under an insurance contract upon the life of a person other than the
decedent where the insured survives the decedent. The amendment,
which is applicable with respect to estates of decedents dying after
December 31, 1947, also makes certain clarifying and technical
changes in section 812 (e)(1)(G).
Public Law 899, approved July 3, 1948, amends section 3154(a) of
the Internal Revenue Code by adding thereto a provision requiring
the Commissioner of Internal Revenue to refund or credit to any
brewer taxes paid by him on beer, ale, and similar fermented malt
liquor which was lost in bottling operations, such refund or credit for
any calendar month not to exceed 2% percent of the tax paid by the
brewer on all beer, etc., removed during such month from his brewery
to his bottling house. It also amends section 3154(b) of the Code to
provide that no claim resulting from a loss from bottling operations
shall be allowed unless made within 90 days after the close of the
month within which such loss occurred. This amendment is applicable
only with respect to beer, etc., which is lost after July 1, 1948.
It also amends section 3404(d) of the Code so as to exempt from the
tax on musical instruments those sold for the use of religious or nonprofit
educational institutions for exclusively religious or educational_
purposes. Public Law 899 also amends section 3443(a)(3)(A)(i) of
the Code so as to permit the allowance of a refund or credit of the
tax on musical instruments to the manufacturer, producer, or importer
thereof where such instruments are resold by any person for
the use of any religious or nonprofit educational institution for
exclusively religious or educational purposes.
EIGHTY-FIRST CONGRESS, FIRST SESSION
Public Law 2, approved January 19, 1949, provides for expense
allowances for the President, the Vice President, and the Speaker of
the House of Representatives in the amounts of $50,000, $10,000, and
$10,000 per annum, respectively, and provides that no tax liability
shall accrue with respect to such allowances. These provisions are
effective at noon on January 20, 1949.
Public Law 4, approved February 3, 1949, extended through June
30, 1949, the applicability of Public Law 769 (Eightieth Congress),
approved June 25, 1948, which provides that certain articles donated
by the people or Government of France for sale for charitable purposes
in the United States may be entered, or withdrawn from warehouse,
for consunption free of customs duties and internal revenue taxes.
Public Law 33, approved March 31, 1949, provides that the import
tax imposed under section 3425 of the Internal Revenue Code shall
not apply with respect to articles (other than copper sulphate and
other than composition metal provided for in paragraph 1657 of the
Tariff Act of 1930, as amended, which is suitable for processing into
castings) entered for consumption or withdrawn from warehouse for
consumption during the period beginning April 1, 1949, and ending
with the close of June 30, 1950.
Public Law 35, approved March 31, 1949, amends section 3469(a)
of the Internal Revenue Code, relating to the tax on transportation of
persons, so as to provide that a port or station within Newfoundland
shall not be considered a port or station within Canada for the purposes
of the provision exempting from tax certain foreign travel except any
part thereof which is from any port or station within the United States,
Canada, or Mexico, to any other port or station within the United
States, Canada, or Mexico.
Public Law 72, approved May 24, 1949, by section 120 amends section
2411 of title 28, United States Code, so as to restore provisions
relating to interest on judgments against the United States or collectors
of internal revenue for overpayments of internal revenue taxes, which
provisions had been omitted when title 28 was enacted into law by
Pubhc Law 773 (Eightieth Congress), approved June 25, 1948.
Section 128 of Public Law 72 amends section 1141(a) of the Internal
Revenue Code by substituting "courts of appeals" for "circuit courts
of appeals and the United States Court of Appeals for the District of
Columbia."
Public Law 76, approved May 27, 1949, provides by section 144
that the Assessor of the District of Columbia, or his duly authorized
representatives, is authorized and empowered to request mformation
from the Bureau of Internal Revenue relative to any person for the
purpose of assessing the sales tax imposed by Title I of such law, and
that the Bureau is authorized and required to supply such information
as may be requested for such purpose.