Special tax of

renovated and

The 50 per cent penalty imposed by section 3176, Revised Statutes, does not apply to the taxes imposed by the oleomargarine act. (Schafer v. Craft, 144 Fed., 907; 153 Fed., 175; 154 Fed., 1002. Grier v. Tucker, 150 Fed., 658; 160 Fed., 611; T. D. 1455.)

Liability as wholesale dealer. (Judd O. Hartzell e. United States, T. D. 2; 83 Fed., 1002; Mitchell v. Cole, 226 Fed., 824.)

Liability of retail dealers in oleomargarine making loan of wholesale quantities to be returned. (T. D. 1192, modified by T. D. 1233.)

Manufacturers and wholesale dealers may sell oleomargarine only in original stamped packages of not less than 10 pounds. A retail dealer must sell only from original stamped packages in quantities of not more than 10 pounds, packed in new wooden or paper packages marked with his name and address, and the word "Oleomargarine" in large letters printed or branded thereon. (See sec. 6, act Aug. 2, 1886, p. 431.)

A sheriff or other officer who levies upon and sells the oleomargarine belonging to the stock of goods of a retail dealer in oleomargarine is not required to pay special tax therefor, inasmuch as he is acting in his official character, in the discharge of lawful duties. (T. D. 730.)

Retail dealers are not permitted to peddle oleomargarine on the streets. (T. D. 610.)

Liability of agents or brokers receiving and transmitting orders for oleomargarine to manufacturers. Unless sales are fully completed at the factory to the persons ordering, special tax is required to be paid at the place of delivery. (T. D. 18978.)

Parties selling oleomargarine are liable to special tax, although they are ignorant that the substance is oleomargarine. (Charge of Judge Jackson in Hubbard & Paul r. Collector Gilkeson, U. S. circuit court, district of West Virginia. T. D. 19246; Eagle v. Nowlin, 94 Fed., 646, T. D. 21228.)

Dealers in colored and uncolored oleomargarine.—Where a person pays special tax as a dealer in uncolored oleomargarine and thereafter desires to sell also colored oleomargarine, the only course for him to pursue is to pay the special tax at the higher rate for the entire period to the close of the year, and take out the requisite special-tax stamp, and then send in for redemption the special-tax stamp taken out at the lower rate. (T. D. 526.)

SEC. 4. [Act of May 9, 1902 (32 Stat., 195).] *
That special taxes are imposed as follows:

Manufacturers of process or renovated butter shall pay manufacturers, fifty dollars per year and manufacturers of adulterated adulterated butter shall pay six hundred dollars per year. Every person who engages in the production of process or renovated butter or adulterated butter as a business shall be considered to be a manufacturer thereof.

butter.

Special tax of

terated butter.

Coopersville Cooperative Creamery v. Lemon. (163 Fed.. 145; T. D. 1371.)

Wholesale dealers in adulterated butter shall pay a tax dealers in adul- of four hundred and eighty dollars per annum, and retail dealers in adulterated butter shall pay a tax of forty-eight dollars per annum. Every person who sells adulterated butter in less quantities than ten pounds at one time shall be regarded as a retail dealer in adulterated butter.

Every person who sells adulterated butter shall be regarded as a dealer in adulterated butter. And sections thirty-two hundred and thirty-two, thirty-two hundred and thirty-three, thirty-two hundred and thirty-four, thirty-two hundred and thirty-five, thirty-two hundred and thirty-six, thirty-two hundred and thirty-seven, thirty-two hundred and thirty-eight, thirty-two hundred and thirty-nine, thirty-two hundred and forty, thirty-two hundred and forty-one, and thirty-two hundred and fortythree of the Revised Statutes of the United States are, so far as applicable, made to extend to and include and apply to the special taxes imposed by this section and to the person upon whom they are imposed.

A dealer in adulterated butter is liable to the tax whether he "knowingly" engaged in the business or not. (Lawrence & Co. v. Seyburn, 202 Fed., 913; T. D. 1851.)

Dealer de

fined.

Manufacturers of filled cheese.

Wholesale dealers in filled

SEC. 3. [Act of June 6, 1896 (29 Stat., 253).] Manufacturers of filled cheese shall pay four hundred dollars for each and every factory per annum. Every person, firm, or corporation who manufactures filled cheese for sale shall be deemed a manufacturer of filled cheese. Wholesale dealers in filled cheese shall pay two hundred and fifty dollars per annum. Every person, cheese. firm, or corporation who sells or offers for sale filled cheese, in the original manufacturer's packages for resale, or to retail dealers as hereinafter defined, shall be deemed a wholesale dealer in filled cheese. But any manufacturer of filled cheese who has given the required bond and paid the required special tax, and who sells only filled cheese of his own production, at the place of manufacture, in the original packages, to which the taxpaid stamps are affixed, shall not be required to pay the special tax of a wholesale dealer in filled cheese on account of such sales.

Retail dealers.

Retail dealers in filled cheese shall pay twelve dollars per annum. Every person who sells filled cheese at retail, not for resale, and for actual consumption, shall be regarded as a retail dealer in filled cheese, and sections thirty-two hundred and thirty-two, thirty-two hundred and thirty-three, thirty-two hundred and thirty-four, thirty-two hundred and thirty-five, thirtytwo hundred and thirty-six, thirty-two hundred and thirty-seven, thirty-two hundred and thirty-eight, thirty-two hundred and thirty-nine, thirty-two hundred and forty, thirty-two hundred and forty-one, thirty-two hundred and forty-three of the Revised Statutes of the United States are, so far as applicable, made to extend to and include and apply to the special taxes imposed by this section and to the persons, firms, or corporations upon whom they are imposed: Provided, That all special Taxes, when taxes under this Act shall become due on the first day of July in every year, or on commencing any manufacture, trade, or business on which said tax is imposed. In the

due..

Penalties.

latter case the tax shall be reckoned proportionately from the first day of the month in which the liability to the special tax commences to the first day of July following.

SEC. 4. (Same.) That every person, firm, or corporation who carries on the business of a manufacturer of filled cheese without having paid the special tax therefor, as required by law, shall, besides being liable to the payment of the tax, be fined not less than four hundred dollars and not more than three thousand dollars; and every person, firm, or corporation who carries on the business of a wholesale dealer in filled cheese without having paid the special tax therefor, as required by law, shall, besides being liable to the payment of the tax, be fined not less than two hundred and fifty dollars nor more than one thousand dollars; and every person, firm, or corporation who carries on the business of a retail dealer in filled cheese without having paid the special tax there for, as required by law, shall, besides being liable for the payment of the tax, be fined not less than forty nor more than five hundred dollars for each and every offense. Manufacturers SEC. 36. [Act of June 13, 1898 (30 Stat., 448).] That mixed flour. every person, firm, or corporation, before engaging in the business of making, packing, or repacking mixed flour, shall pay a special tax at the rate of twelve dollars per annum, the same to be paid and posted in accordance with the provisions of sections thirty-two hundred and forty-two and thirty-two hundred and thirty-nine of the Revised Statutes, and subject to the fines and penalties therein imposed for any violation thereof.

and packers of

Penalties.

Special tax not to apply to vint

caries in certain cases.

SEC. 3245. [Obsolete.]

SEC. 3246. Amended by sec. 5, act of March 1, 1879 ners or apothe (20 Stat., 327), and act of March 3, 1915 (38 Stat., 893).] Nothing in this chapter shall be construed to impose a special tax upon vintners who sell wine of their own growth, or manufacturers who sell wine produced from grapes grown by others, at the place where the same is made or at the general business office of such vintner or manufacturer: Provided, That no vintner or manufacturer shall have more than one office for the sale of such wine that shall be exempt from special tax under this act; nor shall any special tax be imposed upon apothecaries as to wines or spirituous liquors which they use exclusively in the preparation or making-up of medicines.

Nor shall any special tax be imposed upon manufacturing chemists or flavoring extract manufacturers for recovering tax-paid alcohol or spirituous liquors from dregs or marc of percolation or extraction if said recovered alcohol or spirituous liquors be again used in the manufacture of flavoring extracts.

Limitation of a druggist's right to sell liquors without paying special tax. (34 Int. Rev. Rec., 157.)

An apothecary, who bona fide uses spirituous liquors in the preparation of a medicine to be used as such and not as a beverage, does not violate section 3242, by not paying the special tax required of a retail liquor dealer. States v. Calhoun, 39 Fed., 604.)

Druggists compounding medicines. 1514.)

(United

(T. D. 933; T. D.

The fact that a person is an authorized liquor dealer under the internal-revenue laws does not prevent him from engaging also in the compounding of medicines; and if he does so, using spirits in combination with roots, herbs, or drugs, and sells the compound only under a label specifying the diseases for which it is held out as a remedy, he is an apothecary within the exempting provision of section 3246. (T. D. 19412.)

The exemption from special tax granted druggists for use of spirits or wine by this section relates only to medicines in which the spirits or wine used have been changed in nature and made clearly medicinal by the addition of drugs. (T. D. 1019.)

What alcoholic compounds may be classed as medicinal. (T. D. 1510.)

A manufacturer of medicinal compounds, by the use of tax-paid spirits in combination with drugs, is entitled to the exemption when he sells such compounds only under labels specifying the diseases for which they are held out as remedies, and his use of a pharmaceutical still in the preparation of these medicines does not involve him in liability under the internal-revenue laws. (T. D. 19347.)

A compound of medicinal roots and distilled spirits, if held out not merely as a remedy for disease, but also as "bitters for mixed drinks," is not to be regarded as made in good faith for medicinal use only, and the manufacturer who sells it under such a label is not entitled to the exemp tion, and is required to pay special tax as a rectifier and liquor dealer. (T. D. 19442.)

Where grapes are pressed at one place and the juice is then carried to another place and there fermented, the latter is the place of manufacture of the wine, and the manufacturer is there permitted by the provisions of section 3246 to sell it without paying special tax. (T. D. 19410.)

A person who sells blackberry wine (a fermented liquor made from blackberry juice) is required to pay special tax as a liquor dealer for selling the wine, unless he is the manufacturer of it and has made it from berries grown by himself or gathered wild by himself or by persons in his employ, and the wine is sold by him only at the place of manufacture or at his one general business office." (T. D. 20366.)

66

A person who buys elderberries and makes wine therefrom is not within the exempting provision, and is required to pay special tax for selling such wine, even when he sells it at the place of manufacture. (T. D. 20541.)

Where grapes are sent to be crushed and the wine returned to grower special tax required. (T. D. 1556.)

Defining standards for determining special tax liability. (T. D. 1843.)

The recovery of alcohol by an apothecary which has been used in making up medicine to be again used by him for the same purpose is permissible. Where the alcohol is not used exclusively for the preparation of medicines exemption does not apply. (United States v. Hance et ai., 184 Fed., 528; T. D. 1683; affirmed, 191 Fed., 593; T. D. 1732.)

140184°-20-12

Medicinal compounds.

Wine.

tax.

Capital stock (See Regu

29, 1919.)

Use of alcohol recovered from dregs, etc., in any other manner than that prescribed, without payment of special tax, not permitted. (T. D. 2760.)

Standard to which manufacturer of and dealer in alcoholic medicinal compound must conform in order to be exempt from tax stated. (T. Ds. 2760, 2767.)

Manufacturers of extract of ginger as a flavoring not entitled to exemption. (T. D. 1684.)

SEC. 1000. [Act of February 24, 1919 (40 Stat., 1057).] (a) That on and after July 1, 1918, in lieu of the tax imposed by the first subdivision of section 407 of the Revenue Act of 1916

(1) Every domestic corporation shall pay annually a lations 50, April special excise tax with respect to carrying on or doing business, equivalent to $1 for each $1,000 of so much of the fair average value of its capital stock for the preceding year ending June 30, as is in excess of $5,000. In estimating the value of capital stock the surplus and undivided profits shall be included;

(2) Every foreign corporation shall pay annually a special excise tax with respect to carrying on or doing business in the United States, equivalent to $1 for each $1,000 of the average amount of capital employed in the transaction of its business in the United States during the preceding year ending June thirtieth.

(b) In computing the tax in the case of insurance companies such deposits and reserve funds as they are required by law or contract to maintain or hold for the protection of or payment to or apportionment among policyholders shall not be included.

(e) The taxes imposed by this section shall not apply in any year to any corporation which was not engaged in business (or in the case of a foreign corporation not engaged in business in the United States) during the preceding year ending June 30, nor to any corporation enumerated in section 231 [p. 496]. The taxes imposed by this section shall apply to mutual insurance companies, and in the case of every such domestic company the tax shall be equivalent to $1 for each $1,000 of the excess over $5,000 of the sum of its surplus or contingent reserves maintained for the general use of the business and any reserves the net additions to which are included in net income under the provisions of Title II [p. 473], as of the close of the preceding accounting period used by such company for purposes of making its income tax return: Provided, That in the case of a foreign mutual insurance company the tax shall be equivalent to $1 for each $1,000 of the same proportion of the sum of such surplus and reserves, which the reserve fund upon business transacted within the United States is of the total reserve upon all business transacted, as of the close of the preceding accounting period used by such company for purposes of making its income tax return.