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Senator King. How many persons do you know of who were working there as auditors in the department and who are now practicing before it?

Mr. BARBER. Practically every one that has ever left it.
Senator King. How many of them are there, Mr. Barber?

Mr. BARBER. Well, I am sorry, Senator, I can not answer that question. I understand that there are 27,000 people practicing down here before the bureau.

Senator COUZENS. Did you ever hear of any prosecution of anybody for violating that statute which prohibited that?

Mr. BARBER. It was considered obsolete, I think.
Senator COUZENS. Who considered it obsolete—the bureau ?
Mr. BARBER. Everybody, I guess.
The CHAIRMAN. That is to say, there was no penalty to it?
Mr. BARBER. There was no penalty to it.

The CHAIRMAN. There is no penalty attached, because it makes it unlawful in view of the general policy of the country.

Mr. BARBER. It is construed to ean any case of which you have knowledge, and I do not suppose there are many people admitting that they have knowledge, but it is a benefit to the taxpayer and the Government to have these men who have experience and who have worked on this, instead of having fellows who knows nothing about the filing of tax claims, in every way imaginable, having no merit, and, as I said before, I do not file a claim unless it has merit. I think they tightened up there recently. I seldom ever got a denial. If I did, I took it to the committee, and, of course, I will take them to the committee. I think it is just a flurry, and will be over in a short time, and things will be normal again.

Senator COCZENS. What do you suppose caused this tightening up?

Mr. BARBER. Well, that is another conjecture. Now, I do not say that it is absolutely attributable to this investigation. I think a good deal of it is because of the new men that have been employed that are inefficient. They have to train up to this and learn the business, just like anything else. They go in there, and they don't know anything about the tax game.

The CHAIRMAN. Do you know whether or not they have recently improved the general situation of the Internal Revenue Bureau ?

Mr. BARBER. No, Senator; because they don't recogniz I understood--one of the secret service men told me they wouldn't even allow me on the premises.

The CHAIRMAN. So you have had no opportunity to find out whether they have bettered the organization there!

Mr. BARBER. But there is nothing to that.
Senator KING. When you were there, did you discover inefficiency?

Mr. BARBER. No, sir; I can't say that I did, and the only reason that I say that-it must be inefficiency now, or it is either that or the desire to expedite action. I might dispose of 20 cases a day, and you would only dispose of one, and I would get credit for greater efficiency, because I can turn out more cases. But those cases will all come out, and the denial of it does not mean anything to the man who knows the tax game.

Senator KING. Were you an expert bookkeeper or an auditor or anything like that?

Mr. BARBER. I do not consider that I was any expert. I think my efficiency record showed up pretty good in the department. I have understood that it did.

Senator KING. Was your work there that of an auditor?

Mr. BARBER. Yes, sir; resident auditor. In other words, I functioned on the adjustment of the books. They would say to the resident auditor, “Make up this case," and I would write my opinion or write a brief in this case, and that would go to my section unit auditor, the head of five men. He would pass on it, and he would send it back to me if there was anything wrong with it. Now, when he finished that, it would go to the conferee, who scrutinizes these cases, and if he passed it, he would initial it, and it would go to the assistant chief. He is supposed to go through the case, and from there it would go to the chief. He is supposed to go through it. Of course, I imagine it touches the higher places as it goes on. Then. from the chief it goes to the reviewing section. They have to go over it. Then, if it is in excess of $60,000, it would go to the solicitor's office. Any one of those individuals to whom it was passed has a right, and it is a duty, if there is anything wrong with the case, to return it for reaudit and a refinding a new finding.

The CHAIRMAN. Are a good many of them returned that go along that way?

Mr. BARBER. Oh, yes.
Senator Couzens. Did you ever try to buy a taxpayer's claim?
Mr. BARBER. No, sir; not in my life.

Senator CouZENS. Did you ever hear of anybody buying a taxpayer's claim?

Mr. BARBER. Never.
Senator COUZENS. I think that is all I have to ask, Mr. Chairman.

The CHAIRMAN. Did you ever know of any fraud or corruption in the department?

Mr. BARBER. I never did; no, sir.
The CHAIRMAN. In any way?

Mr. BARBER. No, sir. I think it would be mighty hard in my section for fraud to be practiced. I think there might be some little discrimination, but it could not be in favor of the taxpayer, unless specific orders should be handed down to "give this man a certain rate,” and I may not have the comparatives in a certain case, and I would give the man a certain tax. If he had instructions to fix the rate, it could be done, but I don't think there is a chance for the taxpayer to get back more money than he is entitled to.

The CHAIRMAN. That is all.

Mr. HARTSON. I would like to inquire if anybody is associated with you, Mr. Barber, who is admitted to practice ?

Mr. BARBER. I have not any associates.
Mr. Hartson. You are operating alone?
Mr. BARBER. Yes, sir.

Mr. Hartson. You have dissolved arrangements with this real estate man that you speak of?

Mr. BARBER. We only stayed together six months, and he decided I had taught him all there was to the tax business, and he would go out for himself.

Mr. HARTSON. Mr. Chairman, I would like to call the committee's attention to the testimony that was given here on the first day with respect to the reorganization of the bureau.

The shake-up that Mr. Barber has referred to here had reference to this special assessment section, which he served in. That is one of those involved in the so-called shake-up last fall. It was started in the summer, and was consummated finally in October, and taken out of the zone organization. This section was placed directly under the supervision of Mr. Bright, the deputy commissioner. I think that is the tightening up that Mr. Barber has referred to, and it occurred last fall.

TESTIMONY OF MR. JUNIOR OWENS, WASHINGTON, D. C. (The witness was sworn by the chairman.)

Senator COUZENS. State your full name and address for the record, please.

Mr. OWENS. Junior Owens, 1619 R Street, NW.

Senator COUZENS. Where did you come from before you came to Washington?

Mr. OWENS. Detroit.
Senator COUZENS. What business were you in in Detroit !

Mr. OWENS. Publicity. Oh, no; when I came here, I was in my present position.

Senator COUZENS. No; I say what business were you in in Detroit!
Mr. OWENS. The same thing I am doing now.
Senator COUZENS. Publicity?

Mr. OWENS. Oh, no; secretary of the American Bottlers of Car-
bonated Beverages-soft drinks.
Senator COUZENS. When did you come to Washington?
Mr. OWENS. December, 1921.
Senator COUZENS. You never worked for the Internal Revenue
Bureau ?

Mr. OWENS. No. Senator COUZENS. Do you know anybody in the department by the name of H. J. Schermerhorn?

Mr. OWENS. Yes, sir.
Senator COUZENS. What is his position in the bureau !
Mr. OWENS. I do not know what it is now.
Senator COUZENS. What was it?
Mr. Owens. They had a reorganization down there.
Senator COUZENS. What was it when you first knew him?
Mr. OWENS. He was assistant to the head of the sales tax unit.
Senator COUZENS. You do not follow the profession of tax expert!
Mr. OWENS. No; not at all.

Senator COUZENS. Have you ever had anything to do with getting refunds in the Internal Revenue Bureau ?

Mr. OWENS. Yes, sir; for our members.
Senator COUZENS. For the members of your association!
Mr. OWENS. That is all.
Senator COUZENS. Did you have anything to do with getting a
refund for the Champion Spark Plug Co.?

Mr. OWENS. No.
Senator COUZENS. You never had anything to do with that?

Mr. OWENS. Nothing but refunds for the bottlers, that is all; just the members of the organization.

Senator Couzens. Did you take any part in securing a reversal in the bureau of a prior opinion, in which it was held that the excise

tax imposed by section 900-3 of the revenue act in 1918 and 1921 does not apply to spark plugs, piston rings, leaf springs, miniature incandescent light bulbs, etc.?

Mr. Owens. I know nothing about it. I have had no connection whatsoever with anything except carbonated beverages.

Senator COUZENS. You had nothing to do with getting a reversal in the bureau, then, on that?

Mr. OWENS. No, sir.

Senator COUZENS. How many cases have you had in which you have gotten refunds there at the bureau?

Mr. OWENS. About 375.
Senator COUZENS. Three hundred and seventy-five cases?
Mr. OWENS. Yes, sir.

Senator COUZENS. Do you practice in the bureau, so that you were able to get those refunds?

Mr. OWENS. Yes, sir; I am admitted to practice before the bureau, and I hold a power of attorney for our members.

Senator COUZENS. You are an attorney?
Mr. OWENS. Oh, no.
Senator COUZENS. Who prepares these cases for the bureau ?
Mr. OWENS. We do, in our office.
Senator COUZENS. You have an office in Washington?
Mr. OWENS. Yes.
Senator COUZENS. How big a staff have you got?

Mr. Owens. Nine people. For your information, I might say that these claims averaged about $800 apiece. There are not any of these large figures that you have been talking about.

Senator COUZENS. So you do not work for any fees?
Mr. OWENS. No; no fees at all.
Senator COUZENS. You are on a salary basis?
Mr. OWENS. Absolutely.

Senator COUZENS. This association that you work for puts through the bureau all the claims of its members ?

Mr. Owens. If they wish us to, we prepare them; that is, we type them and get them in shape. They send us the facts, whatever the facts might be, and if the facts are relevant, and we figure that there is anything to them, we put them in shape for them. That is the service that we render; that is all.

Senator Couzens. Yes. Did you ever hear of anybody buying taxpayers' claims?

Mr. OWENS. No.
Senator COUZENS. You never heard of any such practice? ?
Mr. OWENS. No.

Senator COUZENS. Do you know Professor Adams, who was connected with the bureau for some time?

Mr. OWENS. I met him. I do not know him well at all. I rode from here to Boston with him one night, and we discussed tax matters.

Senator COUZENS. You have not had any experience with him at all?

Mr. OWENS. No, sir; except that I talked with him at various times while revenue bills were under consideration here very formally.

Senator COUZENS. Do you know any other heads of sections in that bureau, and when I say “other” I do not mean to say that

Professor Adams is one of them, but he used to be in the bureau at one time.

Mr. OWENS. I met Mr. Estes, I think, on two occasions; that is all.

Senator COCZENS. Have your dealings with the bureau been satisfactory?

Mr. Owens. Perfectly. Senator COUZENS. Would you say that your claims have been efficiently handled?

Mr. Owens. From a bureau standpoint; yes.

Senator Couzens. From a taxpayer's standpoint, what would you say?

Mr. Owens. Oh, yes; absolutely from a taxpayer's standpoint. Sometimes we would have a little differences of opinion. Sometimes I thought they should have been allowed, when they were not, but that is all a matter of conjecture, of course.

Senator COUZENS. That is all.
The CHAIRMAN. You are excused.
(Witness excused.)
The CHAIRMAN. Is that all we have for to-day?

Mr. Nash. Here is the list of persons authorized to practice before the department, and then a subsidiary list, showing those that were formerly employed by the Internal Revenue Bureau.

Senator COUZENS. Does that show how soon they began to practice after they left the bureau?

Mr. Nash. It shows the name, position held, and the date of leaving the service.

Mr. HARTson. By reference to the other list, the 27,000 list, you can get the date that they left the service and the date that they were admitted to practice.

Mr. Nash. Yes. Here is the list of persons with applications pending to practice before the department, with a subsidiary list of ex-employees who have applied to practice. A list of suspensions, disbarments, disapprovals, and rejections, with a subsidiary list of employees who have been suspended and disbarred.

A request was made for a memorandum showing the proportion of persons who have been disbarred from practice before the Treasury since 1922, and information as to the general reasons employed by the Treasury Department for disbarring people from practice, or refusing to permit them or to allow them to practice.

Senator Couzens. Do you happen to know anything about the Barber case?

Mr. Nash. Just by gossip. I am not familiar with the details. Senator COUZENS. Do you know Mr. Hartson?

Mr. HARTSON. I have had no personal connection with it at all. I heard a great deal about it, though, in the bureau, in an informal way, and in discussion with the commissioner.

Mr. Nash. Do you wish me to read this memorandum, or just submit it, Senator?

Senator COUZENS. You might identify it by reading what is on it, and then give us the substance of it.

Mr. Nash. This is short, and I will read it: In reply to your verbal inquiry you are advised that during the fiscal year ended June 30, 1922, applications for enrollment to practice before the Treasury Department were received from 4,947 persons. Of these 4,866 were approved

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