1949 - Internal Revenue Service

REPORT OF -COMMISSIONER OF INTERNAL REVENUE
ing ; new claims totalingt 1,272 were received; 214 were disposed of
during the year, leaving 3,033 pending on June 30, 1949, an increase
of 1,058. Of the dolma disposed of, 93 were allowed and 4 partially
allowed in a total sum of $449,984 84 and paid during the fiscal year.
The claims pending at the end of the year are awaiting the closing of
the tax cases to which they relate, the receipt of recommendations of
the field officers'of the Bureau, or administrative action in Washington.
REVIEW Divisiow.—This division reviews overpayments (and in
some cases overassessments of unpaid taxes) of income, excess profits,
estate, gift, and miscellaneous taxes proposed for allowance, and allowances
already made of tentative amortization and carry-back adjustments
of income and excess profits taxes (also deficiencies when conpled
with tax reductions under review), where the net amount of the
tax reduction in a particular case, whether abatement, credit, or
refund, exceeds $75,000. It prepares the reports to the Joint Committee
on Internal Revenue Taxation required by section 3777 of the
Internal Revenue Code, where the net overpayments of income,
excess profits, estate, or gift taxes exceed $75,000. It also examines
and reviews special cases referred to it by the Chief Counsel for the
Bureau.
During the fiscal year 1949, there were reported to the Joint Committee
on Internal Revenue Taxation 625 cases involving total overassessments
in the amount of $286,499,597.58. Both of these figures
represent large increases over previous years, the corresponding
figures for the fiscal year 1948 being 467 cases reported to the Joint
Committee and $150,108,733.23 in total overassessments.
In addition to the above work performed by the respective divisions
of the office, legal advice and assistance were rendered to the head of
the Salary Stabilization Office, Income Tax Unit, and to other officials
on questions involving the interpretation and construction of the Act
of October 2, 1942 (Public Law 729, 77th Cong., 2d sees.), as amended,
the regulations and rulings of the Commissioner of Internal Revenue
promulgated under the Act, and, since Executive Order 9809, dated
December 12, 1946, the regulations, rulings, orders, and directives
promulgated by the National Wage Stabilization Board. The legal
work performed in connection with the enforcement of the Act of
October 2, 1942, in the office of the legal advisor to the Salary Stabilization
Office includes representing the Commissioner in formal hearings
before a hearing officer appointed for the purpose of making
findings of fact and recommendations with respect to contravention
of the Act; preparation of briefs; preparation of memoranda and
opinions relating to such Act and the regulations, rulings, orders, and
directives promulgated thereunder; the review of letters involving
• legal questions; and the preparation of letters for the signature of the
Deputy Commissioner of the Income Tax Unit, the Commissioner of
Internal Revenue, and the Chief Counsel. The year was begun with
one case pending, 23 new cases were received, and 23 cases were
disposed of, leaving a single case pending at the close of the year.
The Chief Counsel maintains at several of the larger tax collection
centers a small group of special attorneys who furnish legal advice and
assistance to the internal revenue officials in the area as well as to the
United States attorneys. A considerable volume of work, mostly
of an advisory nature, was handled by this group during the year.
REPORT OF COMMISSIONER OF INTERNAL REVENUE 59
INTELLIGENCE UNIT
The Intelligence Unit is principally concerned with the investigation,
in cooperation with revenue agents and deputy collectors, of
cases involving alleged evasion of taxes, investigation of charges of a
serious nature against employees of the Internal Revenue Service, and
investigation of applications of attorneys and agents to practice
before the Treasury Department, as well as applications of individuals
seeking employment within the Bureau.
During the fiscal year 1949, 2,962 investigations were completed
which involved alleged evasion of income and miscellaneous taxes,
resulting in the recommendation for prosecution in 848 cases involving
1,208 individuals. There were 356 individuals tried, of whom 346
were convicted and 10 acquitted. The percentage of convictions
was 97. Investigation of these cases resulted in recommendation for
assessment of additional taxes and penalties totaling $271,831,308.
There were 4,793 investigations of applications of attorneys and agents
to practice before the Treasury Department, and 32 investigations of
charges against enrolled agents and attorneys. Character investigations
were completed on 2,704 applicants for positions in the Bureau.
During the fiscal year 75 cases of charges against employees of the
Bureau of Internal Revenue were investigated, resulting in the separation
from the Service of 40 employees and the prosecution and conviction
of 3. Forty cases of a miscellaneous nature were investigated,
resulting in the prosecution of 10 and conviction of 9 individuals.
CONCLUSION
In submitting this report for the fiscal year ended June 30, 1949, I
am pleased to state that every branch of the Internal Revenue Service
has given its full cooperation to the administration of the internal
revenue laws.
GEO. J. SCEOENEMAN,
Commissioner of Internal Revenue;