1949 - Internal Revenue Service

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10 REPORT OF COMMISSIONER OF INTERNAL REVENUE Public Law 137, approved June 28, 1949, amends sections 403(d)(3) and 452(c) of the Revenue Act of 1942 by extending to July 1, 1950, the period for releasing certain powers of appointment free of estate or t tax. It also amends section 283 of title 18 of the United States Code to provide that retired officers of the armed forces of the United States, while not on active duty, shall not by reason of their status be subject to such section,. which provides criminal penalties for the prosecution of claims against the United States by officers or employees thereof. ACCOUNTS AND COLLECTIONS UNIT The Accounts and Collections Unit is the central administrative organization for the 64 internal revenue collection districts and makes the administrative audit of all expenditures for the Internal Revenue Service. There were 92,841,730 tax returns filed in collectors' offices during the fiscal year 1949, as compared with 93,810,164 returns filed during the preceding year. Of the total returns filed, 72,247,919 were income tax and excess profits tax returns and declarations, as compared with 74,410,722 in the preceding year. A total of 20,707,066,479 revenue stamps, valued at $3,631,121,654, was issued to collectors of internal revenue and to the Postmaster General, compared with 20,765,825,608 stamps, valued at $3,735,- 387,804, issued during 1948. The face value of revenue stamps returned by collectors of internal revenue and by the Postmaster General and credited to their accounts amounted to $777,740,366. There were 31 applications allowed for restamping packages from which the original stamps had been lost, mutilated, or destroyed, compared with 39 applications in the preceding year. During the year, 785,711 individual income tax, 75,175 withholding tax, 91,590 miscellaneous tax, and 69,518 employment tax returns were verified by field deputy collectors. The total number of individual income tax returns disposed of by collectors' offices was approximately 53 million, comprised of over 2 million returns which received office audit or field investigation, and 51 million returns closed after survey, without detailed investigation. At the close of the year, more than 70 million returns remained on hand for survey and possible audit action. The additional taxes, interest, and penalties collected or reported for assessment during the year as the result of collectors' investigative operations totaled $340,168,000. Of this total $289,760,000 involved income and withholding taxes while the balance related to employment taxes, alcohol taxes, and other internal revenue taxes. These amounts reflect an increase as compared with the preceding year when the corresponding total was $330,991,000, of which $281,- 218,000 represented income and withholding taxes. For both periods, the figures are exclusive of amounts collected upon warrants for distraint (see following paragraph)• In enforcing the collections of overdue taxes, collectors of internal revenue issued 2,086,118 warrants for distraint during the year as compared with 1,752,449 warrants issued in the preceding year. The amount collected by field deputy collectors as a result of the issuance REPORT OF COMMISSIONER OF INTERNAL REVENUE 11 of warrants for distraint totaled $346,509,480 for the fiscal year 1949, representing a substantial increase over the 1948 total of $280,183,603. There were 1,010,810 warrants for distraint in custody of the collectors' field forces on June 30, 1949, as compared with 815,257 on hand June 30, 1948. An average of 8,451 deputy collectors made a total of 3,252,330 revenue-producing investigations, including the serving of warrants for distraint, as compared with 2,892,965 revenue-producing investgations made by an average of 8,228 field deputy collectors in the preceding fiscal year. The total amount collected and reported for assessment by deputy collectors was $608,368,524 as compared with $554,578,717 in the preceding year. The average number of investigations made per deputy and the average amount of tax collected and reported for assessment were 385 and $71,988, respectively, compared with 352 and $67,401, respectively, in 1948. Collectors of internal revenue, after having taken the necessary administrative action, transmitted to the Bureau or otherwise disposed of 693,291 claims, as compared with 787,900 claims in 1948, a decrease of 94,609. The number of claims on hand in collectors' offices at the end of the fiscal year was 156,721, compared with 128,537 at the close of the preceding fiscal year. The collectors of internal revenue certified for refund 36,554,135 overpayments of income tax. These overpayments resulted from the provisions of the Current Tax Payment Act and were reflected on individual income tax returns filed on Forms 1040 and 1040A for the taxable year 1948. The refunding operation was completed within the fiscal year in which the returns were filed and this accomplishment resulted in a substantial saving in interest payments, as will be noted upon reference to the following table: 1943 1944 1945 1946 1947 1948 Taxable year Number of refunds Principal Interest 16,059,028 22, 211, 755 30,472,926 30, 996, 723 3h 865, 584 36, 554, 135 $586, 596, 165 979,746,659 1, 384, 293, 318 1, 407,052, 911 1,476, 285,843 2,035, 793,715 Nom—These figures exclude refunds in excess of $1,000 which are certified by the Commissioner. $21,926, 678 17,186,337 4,708, 759 1,419,296 1,182,703 1,221,156 The Supervisors of Accounts and Collections submitted 77 reports covering their examinations of the accounts of collectors of internal revenue during the year, compared with 92 reports submitted during the year ended June 30, 1948. Eight new collectors and four acting collectors were installed by the supervisors during the fiscal year. The Processing Division was engaged in assembling and sorting the documents evidencing withholding or prepayment of income tax, associating and comparing them with annual returns filed by individuals, and in connection with overpayment returns filed in nine collection districts, prepared refund schedules for certification by the collectors concerned. During the fiscal year, approximately 131,000,- 000 information documents of all kinds were received and were in process.
12 REPORT OF COMMISSIONER OF INTERNAL REVENUE The Planning Division was expanded with a view to more nearly conforming its size to the increasing responsibilities devolving upon it in connection with the decentralization program and the implementation of the recommendations made by the management engineering firm which surveyed a number of representative collectors' offices during the year. Successful pilot installations conducted under the direction of the division led to the delegation to all collectors of responsibility for adjusting special employment tax refund claims not in excess of $1,000, and paved the way for adoption on a national scale, effective with the quarter beginning January 1, 1950, of a combined return form for use in reporting both income tax collected at source on wages and taxes under the Federal Insurance Contributions Act. Other tests, stemming from the engineers' recommendations, will be undertaken on a wide scale beginning January 1, 1950. One of these experiments which will be viewed with particular interest will be to determine the feasibility of using ledger cards in lieu of assessment sheets to permit the grouping of all tax accounts receivable of the same taxpayer. A number of different types of remittance control machines, cash registering devices, and other labor-saving equipment endorsed by the engineers also will be tested and a further trial of tabulating procedures and equipment will be conducted. Other recommendations of the engineers with respect to forms design, staffing standards, verification of income and prepayment credits, and taxpayer education are receiving continuing study. In administering the personnel of the several collection districts, the provisions of the Classification Act of 1923 and amendatory Acts, and decisions of the Comptroller General relating thereto, have been closely adhered to. The policy has been continued of making such appointments as have been authorized in the field collection service at the minimum salary rate of the appropriate grade, and all applications for positions have been carefully scrutinized and investigated with a view of maintaining the usual high standard of requirement for employment. The Disbursement Accounting Division administratively examined and recorded 1,568 monthly accounts of the collectors of internal revenue, internal revenue agents in charge, district supervisors, heads of Technical Staff Divisions, foreign account (Paris, France), including the San Juan, Puerto Rico Branch of the District of Maryland, comprising a total of 145,350 vouchers. In addition, 12,514 travel expense vouchers of employees and 23,295 vouchers covering passenger and freight transportation and miscellaneous expenses were audited and passed to the Chief Disbursing Officer, Treasury Department, or to the General Accounting Office for payment, making a total of 181,159 vouchers handled during the 1949 fiscal year. EMPLOYMENT TAX UNIT The Employment Tax Unit administers the employment taxes imposed under Subchapters A, B, and C of Chapter 9 of the Internal Revenue Code. Subchapter A (Federal Insurance Contributions Act) relates to the taxes with respect to employment by persons other than carriers; Subchapter B (Railroad Retirement Tax Act) relates to the taxes with respect to employment by carriers; and Subchapter C REPORT OF COMMISSIONER OF INTERNAL REVENUE 13 (Federal Unemployment Tax Act) relates to the tax on employers (other than carriers) of eight or more individuals. These provisions of law were formerly Titles VIII and IX of the Social Security Act and the Carriers Taxing Act of 1937. Collections of employment taxes for the fiscal year 1949 were $2,476,112,762, an increase of $94,770,409 compared with collections for the preceding year. Assessments of employment taxes.—During the year, 5,617 assessment lists, consisting of 13,617,219 items totaling $3,125,026,287, an increase of $1,021,937,308 over the previous year, were approved by the Commissioner. These lists included original and additional assessments of employment taxes. Included in this total were 2,114 lists prepared by the collectors' offices and adjusted by the Bureau, consisting of 13,583,302 items totaling $3,118,479,816, and 3,503 lists prepared in the Bureau, consisting of 33,917 items totaling $6,546,471, as further analyzed in the following tabulations: Analysis of employment tax assessments appearing on collectors' lists Source Items Tax and penalty Interest Total Federal Insurance Contributions Act___ Federal Unemployment Tax Act Railroad Retirement Tax Act Total 12, 914, 563 940, 555 28,184 22, 152,841, 198. 99 279,668,691. 65 684, 873,652.88 2736,943. 14 319, 553.46 9, 736.20 $2, 153, 678, 182. 13 280,018, 245.11 684, 883,389.08 13, 583, 302 3, 117,383, 543. 52 1, 096, 272.80 3, 118,479, 816.32 Analysis of employment tax assessments appearing on Commissioner's lists Source Items Tax Penalty Interest Total Federal Insurance Contributions Act__ 9,125 $927, 403.44 $203, 598.07 $58, 291.32 $1,194. 292.83 Federal Unemployment Tax Act 24, 749 4,619,280. 83 351,216. 54 377, 769.54 5,348, 266.91 Railroad Retirement Tax Act 43 2, 572.16 49.96 1, 288. 75 3, 910.87 Total 33, 917 5, 549, 256.43 569,864. 57 437,349.61 6, 546, 470.61 Taxes under the Federal Insurance Contributions Act.—Collections of taxes imposed under the Federal Insurance Contributions Act amounted to $1,687,150,996 for the year, as compared with $1,612,- 720,919 for 1948, an increase of $74,430,077. These amounts include both the employees' tax and the employers' tax, each of which was imposed at the rate of 1 percent of taxable wages paid. Returns under the Act are required on a quarterly basis, 11,282,734 being filed during the fiscal year, as compared with 10,680,002 filed in the preceding year. The complete and final audit of returns under the Act is conducted in the offices of collectors of internal revenue. The following table sets forth information relative to claims disposed of under the Federal Insurance Contributions Act and/or Title VIII of the Social Security Act:
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1949 - Internal Revenue Service

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