for in Section 1000 of the proposed Act), in cases in which the commissioner determines that there is a deficiency. Section 274 (b). The first sentence is similar to that of the third sentence of the second paragraph of Section 250 (d) of the existing law, preceding the proviso. The subdivision further empowers the Commissioner to proceed in court to collect amounts determined by him to be a deficiency, but disallowed by the Board. In other words, the section authorizes the Commissioner to resort to the courts in the event of an adverse decision by the Board. A specific provision has been added for interest at the rate of six per cent per annum from the time the tax fell due, on the amount of any deficiency in tax recovered in court. The subdivision has been partially rewritten to secure greater clarity. Section 274 (c) and (d). The substance of these provisions is similar, with changes made necessary by the provision for a Board of Tax Appeals, to those now contained in the second paragraph of subdivision (d) of Section 250. Section 274 (e). This subdivision clarifies the provisions contained in the first sentence of the second paragraph of subdivision (b) of Section 250 of the existing law. Section 274 (f). The period during which interest on a deficiency shall be assessed is fixed as that between the date for the payment of the tax and the date the deficiency is assessed. Under the existing law, no date is specified upon which the period shall end. Section 274 (g). The Commissioner is given the power with the approval of the Secretary to extend the time for payment of a deficiency for not more than eighteen months. If an extension is granted, the Commissioner may require a bond not in excess of twice the amount of the deficiency. Interest runs at the rate of six per cent during the time of such extension, on the amount so extended, and thereafter at the rate of one per cent a month on any amounts remaining unpaid. There are similar provisions for extension in Section 250 (f) of the existing law, but these expired by the terms of that subdivision eighteen months after the passage of the Act. It is desirable to provide for an extension of time for payment by the Commissioner with the approval of the Secretary in cases of un usual hardship. The immediate collection of additional taxes for prior years may cause great hardship to the taxpayer and in extreme cases may force him into bankruptcy. Section 279 (a). If the Commissioner has assessed a deficiency immediately, because of his belief that the assessment or collection of the deficiency would be jeopardized by delay, the taxpayer may within ten days file with the collector a claim for abatement, accompanied by a bond in such an amount not to exceed double the claim as the collector deems necessary. The filing of the claim and bond stays the collection of the amounts covered thereby until the disposition of the claim. Under the existing law, the only limitation upon the filing of claims in abatement is that no such claim may be filed where the taxpayer has had an opportunity to appeal and be heard prior to the date of the assessment. The bill reaches a substantially similar result, since in all other cases than that provided for here either the taxpayer will have had the opportunity of presenting his contentions to the Board of Tax Appeals or the assessment is based upon a return as submitted by him. In either of these cases there is no persuasive reason for an additional delay in the collection of the tax. The proposed subdivision affords the taxpayer the safeguard, not provided in the existing law, of a stay of proceedings by the collector to collect the tax, until a decision is reached on the claim. The interests of the Government are adequately protected during this stay by the requirement of a bond to secure the payment of amounts not abated. Section 279 (b). This subdivision provides for action upon the claim in abatement by the Commissioner, for appeal from his decision to the Board of Tax Appeals, and for collection of such amounts as are found to be due. Section 279 (c). The provisions herein are similar to those of subdivision (e) of Section 250. The provision for a five per cent addition to the tax in the event that it was not paid within ten days after notice and demand has been omitted, since the addition of interest at one per cent per month on such unpaid amounts appears to be an adequate preventive of default. (See explanation under Sections 274 (g) and 275 (a) supra.) Section 308 (a), (b), (c), and (d). Under the provisions of the bill the taxpayer will be notified upon the discovery of a deficiency by the commissioner and given sixty days in which to appeal to the Board of Tax Appeals, provided for in Section 1000. If no appeal is filed, the deficiency as determined by the Commissioner will be assessed and collected on notice and demand from the collector; if an appeal is filed, the amount of the deficiency as determined by the Board will be assessed and collected in the same manner. If the deficiency or any part thereof is disallowed by the Board, it may only be collected by the Commissioner by proceeding in court within one year after the final decision of the Board. If the Commissioner believes the assessment and collection of the deficiency will be jeopardized by delay, the deficiency shall be assessed immediately. In this event, the taxpayer may, under the provisions of Section 312 of the bill, file a claim for abatement with a bond for payment of the amount assessed, and if such claim is denied by the Commissioner, may appeal to the Board of Tax Appeals. Section 308 (e). No similar provisions for interest upon amounts determined as a deficiency from the due date of the tax until the assessment of the deficiency are contained in the present law. Since the estate has had the use of the amount of the deficiency during this period, it may fairly be required to pay a reasonable rate of interest upon it. Section 308 (f). The Commissioner is empowered to grant, with the approval of the Secretary, an extension of not over two years for the payment of the deficiency or any part of it. Interest at six per cent per year runs during the period of the extension. The Commissioner may require a bond for the payment of the tax at his discretion. There is no provision in the existing law for an extension of time for the payment of the deficiency. Section 308 (g). There is no similar provision in the present law for the assessment and collection of the fifty per cent addition to the tax provided by Section 3176, Revised Statutes, in case a false or fraudulent estate tax return is wilfully made. The provision, in addition to clarifying the procedure for the department, will give the taxpayer the opportunity of an appeal and hearing before the Board of Tax Appeals. Section 312. These provisions for a claim in abatement by the taxpayer, in the event of the immediate assessment of a tax whose collection the Commissioner believes will be jeopardized by delay, has been discussed under Section 308, supra. Similar provisions as to the income tax are contained in Section 279 of the bill. Section 312 (d). Since in cases other than those provided for in Section 312, either the assessment of the tax will be based on the taxpayer's own return, or the taxpayer will have had the opportunity of being heard, there is no reason for permitting a further delay in the collection of the tax by the filing of a claim in abatement. Section 280. This section provides for the assessment and collection of taxes found to be due under prior revenue acts in the manner provided in the bill. PART IV FORMS OF BUREAU LETTERS Number 1. 30-Day Letter-Income Tax 2. 60-Day Letter-Income Tax 3. Consent Agreement ... 4. Jeopardy Assessment Letter-Income Tax LETTERS ISSUED WHERE DECEDENT DIED PRIOR Page 170 172 173 174 175 6. "Usual" 30-Day Letter-Estate Tax 176 ..... 7. 30-Day Letter Where Deficiency is $50.00 or Less -Estate Tax 179 8. 30-Day Letter Where There Are Six or Less Ad You are granted thirty days from the date of this letter within which to present a protest, supported by additional |