which were not payable on demand, but only when funds were on hand, and after all previous demands were paid. The entry of the deposit was made in a pass book, and when depositors were paid the pass book was presented and a receipt given on it, or an order might be presented without a pass book. Five per cent. of the net profit was set aside as a reserve fund, and ten per cent. of the remainder was reserved for stockholders, who did not otherwise participate in dividends. The reserve fund and interest thereon was lent out the same as deposits, and kept with the capital stock as a security for deposits. The deposits were loaned out and repaid to depositors with dividends arising from interest. This bank claimed to be exempt under the proviso, but the court held that it was not an institution without capital, and that it was not carried on solely for the benefit of the depositors. The entry of the amount on the pass book constituted it a deposit, and the fact that in cases of emergency it was not payable immediately did not deprive it of its character of a deposit payable by check, draft or order.1 By the act of June 18, 1874, just such a savings institution as that described is exempt, with the restriction that the dividend to stockholders shall not exceed eight per cent., and that the dividend to depositors shall not fall below four and a half per cent., to be made good if necessary from the capital stock. Savings institutions, recognized as such by the laws of the States in which they are, although they may have a capital stock, or give bond for additional security to their depositors, and pay a dividend, are exempt, just as if they had no capital stock.2 This statute seems made to meet the case of Oulton v. Savings Institution. By the act of June 22d of the same year, savings banks having no capital, doing no other business than receiving deposits to be loaned out for the benefit of depositors, are exempt from taxation entirely. Heretofore the exemption applied only to such deposits as were invested in United States securities, or did not exceed $2,000 in the name of any one person. The taxes which have been considered apply only to State banks. There is another tax on the circulation of State banks, of ten per cent. on the amount of the notes of any person or State bank used for circulation and paid out. This tax is to be paid by every bank whether State or national. There is the same tax on the amount of the notes of any town, city, or municipal corporation paid out.* 1 Oulton v. Savings Institution, 17 Wall. 109. 3 Ibid. p. 194. 218 U. S. Stat. p. 80. 4 R. S. U. S. §§ 3412, 3413, 3414, 3417. All banks when they make their returns, are required to make a statement of the amount of these notes so paid out. These sections are amended by the act of 1875,1 and it is claimed, and the department has acquiesced in the claim, that the ten per cent. tax does not apply to a person, firm, association or corporation not engaged in banking, issuing or paying notes used as circulation, unless the notes are their own. But all banks and bankers, when paying out notes used as circulation other than national bank notes or treasury notes of the United States, are to pay the ten per cent. on the notes thus paid out.2 National Banks.-These banks are taxed one-half of one per cent. on their circulation, one-fourth of one per cent. on their deposits, and one-fourth of one per cent. on their capital beyond the amount invested in United States bonds. The tax is paid half yearly upon the average amount of circulation, deposits, and capital beyond the amount invested in United States bonds for the previous half-year. These taxes are paid to the treasurer of the United States, and to enable him to assess the tax, the banks make a return to him on the first days of January and July of each year, verified by the oath of their president or cashier, of the average amount of their deposits, the average amount of their notes in circulation, and the average amount of the capital stock beyond the amount invested in United States bonds, for the next preceding six months. If the returns are not made, the tax is assessed on the amount of notes delivered by the comptroller of the currency, and on the highest amount of its deposits and capital stock, to be ascertained in such manner as the treasurer may deem best. This tax may be collected in the manner in which taxes are collected from other corporations, or the treasurer may reserve it out of the interest as it becomes due on the bonds deposited to secure circulation. Any penalty is collected in the same way. Stamp Tax on Specific Objects.-Formerly the number of objects subject to the stamp tax was very great, but now it is confined to a few, such as bank checks, patent medicines, perfumery and cosmetics, friction matches, and playing cards. Bank Checks.-There is a tax of two cents "on every bank check, draft, or order for the payment of money drawn upon any bank, banker, or trust company, at sight or on demand," to be paid by the person who issues, or the person for whose benefit it is issued. 1 18 U. S. Stat. p. 311. 3 R. S. U. S. § 5214. 5 R. S. U. S. § 5216. R. S. U. S. § 3418. 221 Int. Rev. Rec. 346, 347. 4 R. S. U. S. § 5215. This section has been amended so that it now reads on every "bank check, draft, order, or voucher for the payment of money whatsoever, drawn upon any bank, banker, or trust company, two cents." 1 There are two very marked differences between the present and previous forms of the statute. It now includes not only a bank check, draft, or order, but it also includes any voucher for the payment of money. Formerly it was necessary that the instrument should be payable "at sight or on demand;" now that is not essential. The object of the change was said to be to prevent the use of time checks and other devices to evade the payment of this tax. All substitutes for checks and anything that can be used as evidence of the payment by the bank of a portion or the whole of the deposit at the request of the depositor, such as time checks, receipts for the payment of money deposited, and all other vouchers, are now taxable. so notes, drafts, and acceptances payable at a bank, when paid in pursuance of an understanding to that effect, and charged to the maker, drawer, or acceptor, are liable to tax. Checks drawn by a bank upon itself in the payment of its own dividends, or the dividends, coupons, or interest of other corporations, are taxable. Inland bills of exchange, or bills drawn in a foreign country upon a bank, banker, or trust company, are to be stamped before being accepted, negotiated or paid.3 And Ordinary negotiable notes payable at a bank, made in the usual course of business, are not to be stamped. It is only when used as a substitute for checks in pursuance of an understanding with the bank, that they are taxable. All checks by officers of the United States government, or the officers of any State, county or city, are exempt, when drawn in the exercise of their functions as governmental officers. The receipt of a depositor in a pass-book of a savings bank, having no capital and doing no other business than receiving deposits to be loaned or invested for the sole benefit of depositors, is not taxable as a bank check or voucher for the payment of money. The stamps on bank checks, and all stamps on specific objects, are to be canceled by the person who uses them, writing on them the initials of his name and the date thereof. The commissioner is authorized to make additional regulations as to cancellation of stamps, which he may make imperative as to patent medicines." 118 U. S. Stat. p. 310, § 15. 221 Int. Rev. Rec. 50, 65, rulings of commissioner. 3 21 Int. Rev. Rec. 83, 105, rulings of commissioner. 4 Ibid. 618 U. S. Stat. p. 340, § 6. R. S. U. S. § 3420. R. S. U. S. §§ 3423, 3424. The rate of tax on patent medicines, perfumery, cosmetics, friction matches, and playing cards, will be found in schedule A. The medicinal preparations subject to tax are (a) where the person making the same has or claims to have any private formula, or occult secret or art for making the same. (b) Where such person claims to have any exclusive right or title to making, or which are made and vended under any letters patent. (c) Where they are made and recommended to the public as remedies or specifics for any disease of the human or animal body. By the act of 1875, where no proprietorship is claimed in the article, if prepared by any manufacturing chemist or druggist, in accordance with a formula published in any standard dispensatory or medical journal, and such formula and where found is distinctly referred to on a printed label attached to the article, it is exempt. And where the formula is printed on the label, and no proprietorship is claimed, it is exempt. It will be noted that the articles exempt are those in which no exclusive right is claimed under letters patent or otherwise. The classes of medicines subject to tax other than this class, are those mentioned as (a) and (c), where there was a private formula, or occult secret, and where they were recommended as a specific for certain diseases. The act making the exemption says that as to these two classes, they shall be exempt, 1st, when they are prepared according to a formula in a standard dispensatory, and in addition, the label which is printed refers to the formula and the work in which it is found; 2d, where the formula itself is printed on the label. The rulings of the department on the subject have varied, but the conclusion arrived at seems to be, that when prepared according to a formula in a standard work, and there is no reference to the disease for which it is a remedy, or the dose, it is not even necessary to refer to the formula, but if the label does refer to the disease, state the dose or give other directions as to the use of it, then it must state that it is compounded according to a published formula, and state the book or journal where found. When prepared not in accordance with any standard formula, then on the label the exact formula must. be printed to entitle the article to exemption from tax.3 Medicines, friction matches, or other proprietary articles in schedule A, intended for export, may be manufactured in a bonded warehouse and exported without stamp under regulations prescribed by the commissioner, and they may be removed to the Pacific coast for export, without stamp, under similar regulations." 'R. S. U. S. Schedule A, p. 681. 3 21 Int. Rev. Rec. 88, 113. 18 U. S. Stat. p. 312, § 22. 4 R. S. U. S. §§ 3433, 3434, 3460. The stamp is to be affixed, as in the case of other manufactures, before sale or removal for consumption or sale from the place of manufacture, and if the articles are removed or sold without the stamp, the commissioner may at any time within two years, estimate and assess the tax on such articles, which assessment is certified to the collector as other taxes.1 Articles of foreign manufacture are subject to the same tax as if they were manufactured in the United States, and this tax is in addition to the import duty, and every person who offers for sale any article in schedule A, whether it be of foreign or domestic manufacture, is considered as the manufacturer of it, and is liable to all the penalties imposed upon the sale of such articles without a stamp.2 § 173. Legacy and Succession Tax-Remedy for Erroneous and Illegal Tax-Collection of Deficiency Tax-Lien-Collector's Liabilities. The legacy tax is imposed on any legacy or distributive share arising from personal property passing after June 30, 1864, either by will or by the intestate laws of any State or territory; or by deed, sale, or gift intended to take effect, in possession or enjoyment, after the death of the grantor. The succession tax is imposed on the disposition of real estate, past: or future, by deed, will, or the laws of descent, whereby any person becomes beneficially entitled, in possession or expectancy, to real estate, or the income thereof, upon the death of any person after June 30, 1864.4 Where property was devised before the act to one for life, remainder to another, and the tenant for life died after the act, the tax accrues on the interest of the remainderman at that time, for the reason that there is a succession or devolution of title as to the remainderman at that time. And so when a deed was made before the act to a person for his life, and after his death to his children, the tax accrues so soon as the act is passed as to the life tenant and remainderman, although as to the latter it is not payable until after the death of the life tenant. If the real estate is in the United States, the residence of the devisor does not affect the tax. E. devised his estate to his wife and children, and a large portion of it was invested by the trustees, under the direction of the court, in real estate. The wife of E. married S., and at her death she devised her portion of the estate, 1 R. S. U. S. §§ 3430, 3427. 32 Brightley's Dig. Laws, p. 366, § 306. Blake . McCartney, 10 Int. Rev. Rec. 131. 2 R. S. U. S. § 3435. 6 Int. Rev. Rec. 173. |