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40.

No Constructive Bonded Warehouses for Cigars.

No constructive bonding of cigars is allowable. When the tax does not accrue on cigars until after a sale has been effected, the actual price received must be returned for taxation. (Letter of Commissioner, Nov. 5, 1866.)

41.

What Deductions may be made from the Finished Locomotive. Under the amendment of 1866, the builder of a finished locomotive, may deduct, the taxes previously paid on the boiler tubes, wheels, tire, axles, bell shafts, cranks, wrists, or head lights, that is to say, the taxes paid on these articles as separate and distinct manufactures in themselves, but not on the materials out of which they are constructed; but not on any casting used in the construction of a boiler engine, locomotive or cars: nor upon any wheels, springs, tire or axles, made of steel. (Letter of Commissioner, Sept. 19, 1866.)

42.

Tax on Iron, Brass, Steel and Copper Wire and CastingsDeductions for Freight and Commission.

OFFICE OF INTERNAL REVENUE,
Washington, Aug. 27, 1866.

SIR :-In answer to your letter of the 23d inst., I have to say that the tax on wire, whether made of iron, steel, brass or copper, is 5 per cent ad valorem as a manufacture not otherwise provided for. There is, however, in the 10th section of the new law, a provision exempting wire made from wire less than No. 20 wire gauge, upon which a tax has been assessed and paid as wire, and also a proviso that no man ufactured wire shall pay a greater tax than that imposed on No. 20 wire gauge.

When wire less than No. 20 on which a tax of five per cent ad valorem has been paid, is afterwards drawn to a greater degree of fineness, no additional tax is to be assessed thereon. Wire, however, on which no tax has been previously paid as wire, is liable to a tax of five per cent upon the price at which it is sold, whether that price is sixty cents, one dollar or two dollars per pound. The law imposes a tax of five per cent ad valorem. The assessment of the tax must be at that rate. The amount of tax depends upon the value of the wire. This is a variable quantity, subject to the fluctuations of the market, supply and demand. The rate is fixed, being imposed by the law, at 5 per cent ad valorem-it cannot be changed except by a change of the law. You are not to assess the same amount only of tax on wire sold at one dollar per pound as on wire sold at sixty cents per pound.

The tax on the former is 5 cents and on the latter 3 cents, unless in the one case the wire has been re-drawn from wire less than No. 20 wire gauge on which a tax has been previously paid as wire.

Castings of iron of all descriptions not otherwise provided for, are subject to a tax of $3 per ton under the new law.

The castings otherwise provided for are (1) malleable iron castings, unfinished, and (2) castings made specially for locks, safes, looms, spinning machines, steam engines, hot air and hot water furnaces, and sewing machines.

These castings when not sold or used for any other purpose, and when a tax is assessed and paid on the article of which the casting is a part, are exempt from taxation.

Castings of all descriptions made for articles, machines or instruments, other than those specially enumerated are liable to tax.

The words "castings of all descriptions" includes castings of brass and other metals or combinations of metals, as well as castings of iron. No deductions for freight, commissions, or other expenses of sale are allowed under the act of July 13th, 1866.

Yours respectfully,

THOMAS HARLAND,

Dep. Commissioner.

43.

Additional Tax upon Clothing from Taxed Cloth made from Yarn and Warps.

When a party manufactures cloth from yarn and warps, and makes such cloth into garments he is liable to tax; first on the cloth manufacture and then upon the garments made from it.

The same principle applies to wire cloth and articles manufactured from it. (Letter of Commissioner, Sept. 28, 1866.)

44.

Tax upon Sprays, Branches, and Wreaths.

Sprays, branches or wreaths made from buds and flowers, on which no tax or duty has been paid, are taxable at the rate of five per cent on their full value when sold or used, otherwise when the tax has been previously paid.

The proviso of section 94 as amended by act of July, 1866, is not applicable to sprays of artificial flowers. (Letter of Commissioner, Sept. 27, 1866)

45.

Value of Spools are Liable to Tax upon Spooled Thread. The value of spools on which tax has been paid, cannot be deducted from sales of thread on spools. (Letter of Commissioner, Oct. 6, 1866.)

46.

Increased Value on Dyed Yarns and Warps.

Yarn or warp exempted from tax by law are not liable to any tax, when dyed or colored. But yarn and warp, and thread, and twine, on

which a tax or duty has been previously paid are taxable on increased value when dyed or otherwise more completely finished or fitted for use or sale. (Letter of Commissioner, Nov. 21, 1866.)

47.

What is Regarded as Taxable Building Stone.

By the act of July 13, 1866, building stone of all kinds is exempted from tax: but doors and window-caps and sills are regarded as manufactures of stone, liable to tax when sold or used: but caps and bases for pillars and cornice (though ornamental) are regarded as building stones and exempt from tax. (Letter of Commissioner, Oct. 25, 1866.)

48.

Payment of Tax by Parties who furnish Materials. Under the provisions of act of July 13, 1866, relative to the pay ment of the tax by the parties who furnish the material in the manufac ture of clothing or other articles of dress which are taxable at the rate of 2 per cent., it is held not applicable to cases, when materials are furnished for the manufacture of constituent parts of clothing: but the manufacturer is held liable to the tax, and not the parties who furnished the materials. (Letter of Commissioner, Jan. 4, 1867.)

49.

Mattresses and Palliasses Exempt.

All mattresses and palliasses, whether made with spiral springs or otherwise, are, under the amendment of 1866, exempt from tax. (Letter of Commissioner, Dec. 14, 1866.)

50.

Curtains Not Taxable on Increased Value on Account of Addition of Tax Paid Tassels.

Tassels on which the tax has been paid, and which are not made part of the curtain, need not be returned for taxation as part of such curtain. (Letter of Commissioner, Nov. 17, 1866.

51.

Exemption of Articles of Dress, &c.

All articles of dress for the wear of women and children, made or trimmed by dressmakers or milliners, are exempt from the two per cent. tax, though the products of such dressmakers or milliners may exceed $1000 per year. (Letter of Commissioner, Oct. 17, 1867.)

52.

Provisions in Relation to Tax on Photographs.

Under amendment of July, 1866, photographs or other sun pictures, not specially exempted, are subject to ad valorem tax of 5 per cent.

And sun pictures on which the tax has been paid, when more completely finished, by painting, &c., are liable to a tax of 5 per cent. on their increased value. When an artist takes a photograph, as the outline of the picture he designs to paint, subsequently destroying such photograph, he substantially produces a "work of art," and is not liable to any tax. (Letter of Commissioner, Oct., 1866.)

53.

Cheese Boxes under the Act of 1866 are not "Packing Boxes."

Cheese boxes necessary to put the cheese into market cannot be regarded as "packing boxes," and are not exempt. (Letter of Commissioner, Oct. 12, 1866.)

54.

Photograph Albums are not " Books."

Photograph albums cannot be regarded as Books," and are therefore not exempt as such. (Letter of Commissioner, Aug. 18, 1866.)

55.

Tax on Printed Envelopes.

Printed envelopes are not exempt as "printed matter," but are liable to tax on entire value. If printed after made and sold, they are liable to additional tax on increased value. (Letter of Commissioner, Sept. 27, 1866.)

56.

What is included under term "Packing Boxes."

Under the term "packing boxes," exempt from tax, may be included all that class of boxes in which goods, before or after sale, are commonly transported or shipped, and which are not for transportation enclosed in other packages. (Letter of Commissioner. Nov. 1, 1866.)

57.

Tax on Brass and Composition Castings.

Brass and composition castings, not specially exempted, are liable to an ad valorem tax of 5 per cent. under section 94 of amended law of 1866. (Letter of Commissioner, Oct. 31, 1866.)

58.

Liability to Tax of Cloths Dyed and Printed-Increase value under Sec. 94-Repairs.

OFFICE OF INTERNAL REVENUE, 37.}

WASHINGTON, January 15, 1867.

SIR :-Your letter of the 11th inst., calling my attention to a communication of yours under date of October 29th, on the subject of

cloths dyed and printed, and asking for a decision as to their liability to tax, has been received.

Samples of different kinds of cloths accompanied your letter, grouped under four different heads, with descriptions of each; but there seems to be but one question raised, viz: whether the dyeing or printing of cloths which have become unsaleable on account of changes in style or fashion, or which have depreciated in value from the length of time they have been on hand, renders such cloths liable to taxation either under Sec. 94 or Sec. 95 (act of June 20, 1864, as amended).

In answer to the question thus raised I have to say, that the taxing of increased value under Sec. 95, is limited to articles, &c., which are not specially provided for. Cloths made or manufactured, and cloths dyed, printed, or bleached, are specially provided for in Sec. 94; therefore, whatever liability there may be in the case is to be found in Sec. 94.

Originally Sec. 94 provided for taxing repairs, as well as for taxing manufacturing. Dyeing, printing and bleaching may be either, according to the article to which the process is applied and the end to be secured. The coloring or bleaching of dresses, shawls, bonnets and other articles of clothing or dress which have become impaired by use, accident or decay, is clearly a repair, and therefore exempt from taxation under the amendatory act of July 13th, 1866, which exempts repairs of articles of all kinds.

The dyeing, printing, or bleaching of cloths or articles which have never been used, nor suffered decay, waste, injury, or partial destruction thereby, is a process of manufacturing, and taxable by express provision, on the increased value added by the process provided a tax or duty shall have been paid on the cloths or articles before the same were re-dyed, printed or bleached.

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The cloths, &c., may be domestic fabrics or foreign manufactures; and the tax previously paid may have been upon cloths merchantable, but which have not been subjected to the final or finishing process of dyeing, printing, &c., or they may already have been once dyed, printed or bleached. The liability is the same in either case; and the increased value, whether it is more or less, is taxable.

That there is some increased value, I presume no one would seriously pretend to deny. It is contrary to reason and experience for persons to incur the expense of dyeing, printing, bleaching, &c, unless, there was a probability, amounting nearly to a certainty, that the owners would realize more for the goods after they were colored and printed, than they would otherwise receive.

The question is not whether they may realize the original value of the goods, or whether their sale involves to the owners profits or losses. The law taxes the manufacturer or producer on his goods, wares and articles upon their value, or increased value, whether he makes or loses

money.

The increased value given to cloths, &c, by dyeing, printing o

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