CHAPTER TWElve. LEGACIES AND DISTRIBUTIVE SHARES OF PERSONAL [Sections 29 and 30. PROPERTY. Act of June 13, 1898. (30 Stat., 464.)] The tax on legacies (sec. 29) was repealed by section 7 of the act of April 12, 1902 (32 Stat., 96), taking effect July 1, 1902. No legacy tax accrued where the testator died prior to the act of June 13, 1898. (Penn. Co. for Insurance on Lives and Granting Annuities v. Collector McClain, 105 Fed. Rep., 367, T. D. 343.) Legacy tax constitutional. (Knowlton et al. v. Moore, col- Vanderbilt v. Eidman. (196 U. S., 480; T. D., 868; Decision in SAVING CLAUSE. SEC. 8. [of the act of April 12, 1902 (32 Stat., 96).] That all taxes or duties imposed by section twenty-nine of the Act of June thirteenth, eighteen hundred and ninetyeight, and amendments thereof, prior to the taking effect of this Act, shall be subject, as to lien, charge, collection, and otherwise, to the provisions of section thirty of said Act of June thirteenth, eighteen hundred and ninetyeight, and amendments thereof, which are hereby continued in force, as follows: "SEC. 30. That the tax or duty aforesaid shall be due and payable in one year after the death of the testator may lien on testator's ecutor, etc. and shall be a lien and charge upon the property of every Legacy tax a person who die as aforesaid for twenty years, or until property. the same shall, within that period, be fully paid to and discharged by the United States; and every executor, administrator, or trustee having in charge or trust any legacy or distributive share, as aforesaid, shall give notice Notice by exthereof, in writing, to the collector or deputy collector of the district where the deceased grantor or bargainer last resided within thirty days after he shall have taken charge of such trust, and every executor, administrator, or trustee, before payment and distribution to the legatees, or any parties entitled to beneficial interest therein, shall pay Payment. to the collector or deputy collector of the district of which the deceased person was a resident, or in which the property was located in case of nonresidents, the amount of the duty or tax assessed upon such legacy or distributive share, and shall also make and render to the said collector Receipts. Schedules, etc. or deputy collector a schedule, list, or statement, in duplicate, of the amount of such legacy or distributive share, together with the amount of duty which has accrued, or shall accrue, thereon, verified by his oath or affirmation, to be administered and certified thereon by some magistrate or officer having lawful power to administer such oaths, in such form and manner as may be prescribed by the Commissioner of Internal Revenue, which schedule, list, or statement shall contain the names of each and every person entitled to any beneficial interest therein, together with the clear value of such interest, the duplicate of which schedule, list, or statement shall be by him immediately delivered, and the tax thereon paid to such collector; and upon such payment and delivery of such schedule, list, or statement said collector or deputy collector shall grant to such person paying such duty or tax a receipt or receipts for the same in duplicate, which shall be prepared as hereinafter provided. Such receipt or receipts, duly signed and delivered by such collector or deputy collector, shall be sufficient evidence to entitle such executor, administrator, or trustee to be credited and allowed such payment by every tribunal which, by the laws of any State or Territory, is, or may be, empowered to decide upon and settle the accounts of executors and administrators. And in case such executor, administrator, or trustee shall refuse or neglect to pay the aforesaid duty or tax to the collector or deputy collector, as aforesaid, within the time herein before provided, or shall neglect or refuse to deliver to said collector or deputy collector the duplicate of the schedule, list, or statement of such legacies, property, or personal estate, under oath, as aforesaid, or shall neglect or refuse to deliver the schedule, list, or statement of such legacies, property, or personal estate, under oath, as aforesaid, or shall deliver to said collector or deputy collector a false schedule or statement of such legacies, property, or personal estate, or give the names and relationship of the persons entitled to beneficial interetc., by collector ests therein untruly, or shall not truly and correctly set forth and state therein the clear value of such beneficial interest, or where no administration upon such property or personal estate shall have been granted or allowed under existing laws, the collector or deputy collector shall make out such lists and valuation as in other cases of neglect or refusal, and shall assess the duty thereon; and the Legal proceed-collector shall commence appropriate proceedings before any court of the United States, in the name of the United States, against such person or persons as may have the actual or constructive custody or possession of such property or personal estate, or any part thereof, and shall ject such property or personal estate, or any portion of the same, to be sold upon the judgment or decree of such court, and from the proceeds of such sale the amount of such tax or duty, together with all costs and expenses of every description to be allowed by such court, shall be first Assessment, on failure of executor, etc. ings to recover. purchaser. Exhibition of paid, and the balance, if any, deposited according to the order of such court, to be paid under its direction to such person or persons as shall establish title to the same. The deed or deeds, or any proper conveyance of such property or personal estate, or any portion thereof, so sold under such judgment or decree, executed by the officer lawfully charged with carrying the same into effect, shall vest in the purchaser thereof all the title of the delinquent to the Title vested in property or personal estate sold under and by virtue of such judgment or decree, and shall release every other portion of such property or personal estate from the lien or charge thereon created by this Act. And every person or persons who shall have in his possession, charge, or custody any record, file, or paper containing, or supposed to contain, any information concerning such property or personal estate, as aforesaid, passing from any person who may die, as aforesaid, shall exhibit the same at the request papers, etc. of the collector or deputy collector of the district, and to any law officer of the United States, in the performance of his duty under this Act, his deputy or agent, who may desire to examine the same. And if any such person, Penalty for rehaving in his possession, charge, or custody any such records, files, or papers, shall refuse or neglect to exhibit the same on request, as aforesaid, he shall forfeit and pay the sum of five hundred dollars: Provided, That in all legal controversies where such deed or title shall be the subject of judicial investigation, the recital in said deed shall be Effect of recital prima facie evidence of its truth, and that the requirements of the law had been complied with by the officers of the Government: And provided further, That in case of Penalty for negwillful neglect, refusal, or false statement by such executor, administrator, or trustee, as aforesaid, he shall be liable to a penalty of not exceeding one thousand dollars, to be recovered with costs of suit. Any tax paid under the provisions of sections twenty-nine and thirty shall be deducted from the particular legacy or distributive share on account of which the same is charged. Effect of the repealing act. The war revenue act of June 13, 1898, as amended, provided for a tax on legacies to become due and payable in one year after the death of the testator, and to be a lien and charge on his property for 20 years. Such provisions were repealed by the act of April 12, 1902, with a saving clause as to all taxes imposed thereby prior to July 1, 1902, when the repeal took effect. The act of June 27, 1902, prohibited the further assessment or imposition of any tax under said act "upon or in respect of any contingent beneficial interest which shall not become absolutely vested in possession or enjoyment" prior to July 1, 1902, and required the refunding of taxes previously collected on any such interests. Held, that where a testator who died in December, 1901, bequeathed a share of his residuary estate in trust, the income to be paid to a son during his life, the life estate of the son in the income of the trust property became absolutely vested in enjoyment at once on the death of the testator, and subject to the tax; that the tax was "imposed" by the statute itself at the time of such vesting without reference to the time when it became due and payable or to any act of assessment by the internal revenue officers, which was merely an administrative fusal. Provisos. of deed. lect, etc. Deduction. detail necessary to fix the amount but not affecting the time when the tax was imposed or became a lien. (Westhus et al. v. Union Trust Co., 164 Fed. Rep., 795; 168 Fed. Rep., 617; petition for rehearing denied. Contra Lynch v. Union Trust Co., 164 Fed. Rep., 161.) The fact that the testator dies within one year prior to the taking effect of the repealing act of April 12, 1902, does not relieve from taxation legacies otherwise taxable under sections 29 and 30 of the act of June 13, 1898, as amended by the act of March 2, 1901, being saved by the saving clause of the repealing act. (Hertz, Collector, v. Woodman (218 U. S., 205), T. D. 1636, overruling decision in Eidman v. Tilghman (136 Fed. Rep., 141).) In Disston v. McClain, collector (1906), it was held that an annuity passing as a legacy prior to repeal of the act, payable in quarterly installments out of the income of personal property during the life of the beneficiary was taxable, only as to so much of the income as was vested in the actual possession of the legatee prior to the 1st day of July, 1902, when the law was repealed. (147 Fed. Rep., 114, reversing 143 Fed. Rep., 191; T. D. 976). A petition was filed in the United States Supreme Court for a writ of certiorari in this case, but the court refused to issue the writ. (207 U. S., 587.) REFUND OF TAX ON LEGACIES AND BEQUESTS FOR USES OF A RELIGIOUS, CHARITABLE, OR EDUCATIONAL CHARACTER; REFUND OF TAX ON CONTINGENT BENEFICIAL INTERESTS, WHICH HAD NOT BECOME VESTED JULY 1, 1902. NO TAX TO BE ASSESSED ON CONTINGENT BENEFICIAL INTERESTS NOT VESTED JULY 1, 1902. AN ACT To provide for refunding taxes paid upon legacies and bequests for uses of a religious, charitable, or educational character, for the encouragement of art, and so forth, under the Act of June thirteenth, eighteen hundred and ninety-eight, and for other purposes, approved June 27, 1902. (32 Stat., 406.) SEC. 1. That the Secretary of the Treasury, under appropriate rules and regulations to be prescribed by him, be, and he is hereby, authorized and directed to pay, out of any money in the Treasury not otherwise appropriated, to the corporations, associations, societies, or individuals as trustees or executors, such sums of money as have been paid by them as taxes upon bequests or legacies for uses of a religious, literary, charitable, or educational character, or for the encouragement of art, or legacies or bequests to societies for the prevention of cruelty to children, under the provisions of section twenty-nine of the Act entitled "An Act to provide ways and means to meet war expenditures, and for other purposes," approved June thirteenth, eighteen hundred and ninety-eight. SEC. 2. (See p. 340.) SEC. 3. That in all cases where an executor, administrator, or trustee shall have paid, or shall hereafter pay, any tax upon any legacy or distributive share of personal property under the provisions of the act approved June thirteenth, eighteen hundred and ninety-eight, entitled "An Act to provide ways and means to meet war expenditures, and for other purposes," and amendments thereof, the Secretary of the Treasury be, and he is hereby, authorized and directed to refund, out of any money in the Treasury not otherwise appropriated, upon proper application being made to the Commissioner of Internal Revenue, under such rules and regulations as may be prescribed, so much of said tax as may have been collected on contingent beneficial interests which shall not have become vested prior to July first, nineteen hundred and two. And no tax shall hereafter be assessed or imposed under said Act approved June thirteenth, eighteen hundred and ninety-eight, upon or in respect of any contingent beneficial interest which shall not become absolutely vested in possession or enjoyment prior to said July first, nineteen hundred and two. Circular No. 627, relative to refunding legacy taxes as provided in the first paragraph. July 3, 1902. T. D. No. 543. The act of June 27, 1902, relative to the refund of tax collected on contingent beneficial interests not vested prior to July 1, fixes no time within which the claim for refund must be filed with the collector. If the two years' limit is applicable under section 3228, R. S., it must be two years from the passage of the act and not two years from payment of the tax. Thacher v. United States. (United States Circuit Court, District of Massachusetts, 149 Fed. Rep., 902; 26 Op. Atty. Gen., 194.) Attorney General's opinion as to vested interests, August 1, 1902. (T. D. 570, modifying Circular No. 630, T. D. 552; 24 Op. Atty. Gen., 98.) |