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sustained as constitutional, and not void for retroactivity, as applied to returns rendered in 1914, based upon individual income for a definite preceding period, even though partially prior to the date of the enactment. The Underwood Act was repealed in part in 1916 10 with the enactment of a new income tax. An additional tax and surtax were imposed in 1917,11 and the personal exemption provision was amended.
This act has been followed by the Revenue Acts of 191912 and 1921,13 and amendments of March 4, 1923.14 The Revenue Act of 1924,15 generally ameliorating the tax burden, repealed title II (Income Tax) of the Revenue Act of 1921 13 as of January 1, 1924.16
3. Activities and Description of Organization
1. Deputy Commissioner
The Deputy Commissioner, head of the unit, is directly responsible to the Commissioner of Internal Revenue for the Administration of the Income Tax Unit, and has in his office an Assistant Deputy Commissioner and such other personnel as is required to assist in handling all matters requiring the personal attention of the Deputy Commissioner, and to follow up and secure the accomplishment of all action directed by that official.
II. The Assistant Deputy Commissioner
The Assistant Deputy Commissioner assists and advises the Deputy Commissioner in the general supervision, control, and efficient co-ordination of all operations of the unit.
(1) The Rules and Regulations Section.-The duties of this section, which is directly under the office of the Deputy Commissioner, are:
(a) Originate and prepare regulations for the administration of the income. and profits tax laws;
(b) Furnish on the request of taxpayers or their representatives rulings and information relating to the law and regulations;
(c) Answer general correspondence, involving rulings or interpretations of the law and regulations;
(d) Prepare all office decisions;
(e) Prepare the Monthly Bulletins of Income Tax Rulings, the Semiannual Digests, the Annual Cumulative Bulletin, and special bulletins relating to income and profits taxes;
(f) Review proposed publications relating to income tax and war profits and excess profits taxes prepared in other divisions of the Income Tax Unit, or in
9 Edwards v. Keith (D. C.) 224 F. 585.
10 Act Sept. 8, 1916 (39 Stat. 756 [Comp. St. § 6336a et seq.]).
11 Act Oct. 3, 1917, tit. 1 (40 Stat. 300).
12 Act Feb. 24, 1919, c. 18 (40 Stat. 1057 [Comp. St. Ann. Supp. 1919, § 6336%a et seq.]). 13 Act Nov 23, 1921 (42 Stat. 227 [Comp. St. Ann. Supp. 1923, § 6336a]).
14 Chapters 280 and 294 (42 Stat. 1507, 1560).
15 Act June 2, 1924, title 2 (43 Stat. 254).
16 43 Stat. 352.
other offices of the government and referred to the Income Tax Unit for consideration; and
(g) Prepare special decisions in regard to questions of law upon request of the audit divisions.
(2) The Special Assessment Section, directly under the office of the Deputy Commissioner, audits all returns in connection with which claims are filed for assessment as provided in section 210 of the Revenue Act of 1917 and sections 327 and 328 of the Revenue Act of 1918, and adjusts related claims.
(3) The Special Adjustment Section, directly under the office of the Deputy Commissioner, which audits all returns and reports in which 100 per cent. penalty for 1917 and the 50 per cent. penalty for 1918 and subsequent years are involved, and adjust related claims.
(4) The Affiliations Section considers and decides all questions of affiliations as referred to in section 240 of the Income Tax Law of 1924, in connection with the filing of consolidated returns.
(5) Staff Division.-The Staff Division is responsible for the selection of technical personnel and the training and maintenance of all personnel of the Washington and field offices of the unit. It consists of three sections, the duties of which are shown:
(a) The Personnel Section, which
(a1) Interviews and selects all technical employees for original appointment; considers and recommends approval or disapproval of applications of former employees for reinstatement.
(a2) Assigns all personnel, arranges transfers, promotions, demotions, suspensions, removals, and reviews recommendations for the designation of supervisory officers.
(a3) Reviews all charges of inefficiency, misconduct, or violation of leave regulations and recommends appropriate disciplinary action.
(a4) Supervises the issuance of transportation requests and pocket commissions; reviews expense vouchers of employees of Washington office detailed in field; maintains records of leave of employees in field offices.
(a5) Controls relations of employees with the United States Veterans' Bureau, the United States Employees' Compensation Commission, and the United States Civil Service Commission.
(a6) Maintains a file of correspondence in relation to employees, applicants for employment, and others.
(b) The Personnel Research Section, which
(b1) Collects and records production data for the unit, both in Washington and in the field, and presents such data in the form of periodical reports to the head of the unit.
(b2) Determines the relative value of the services rendered by employees of the Unit, and supervises the preparation of the semiannual efficiency ratings made according to the method prescribed by the Personnel Classification Board, preparing such ratings for final action by the Review Board of the unit.
(b3) Maintains records of personal qualifications of employees of the unit.
(b4) Supervises the classification of jobs and allocates employees under the terms of the Classification Act of 1923; investigates changes in positions of personnel, and reallocates employees accordingly. (b5) Prepares periodical reports of personnel and payroll changes; analyzes and interprets performance and classification records of employees and furnishes information used in making permanent appointments of probationary employees, promotions, and demotions in position, salary adjustments, removals and other personnel changes.
(c) The Training Section, which
(cl) Provides an efficient faculty and prepares courses of training for the instruction of employees, including members of the field force, in the income tax law, accountancy, and other subjects relating to the work of the unit; maintains records of efficiency of all students; and
(c2) Controls and records all special courses of instruction given in the
(6) Records Division.-The Head of the Records Division supervises and is responsible for conducting all official conferences with the public and the operation of the following sections:
(a) The Proving Section has to:
(a1) Prove and verify income and profits taxes disclosed by returns with
(a2) Assess all original and additional income and profits taxes;
(a6) Conduct general correspondence pertaining to the administrative
(b) The Sorting Section has to:
(b1) Secure direct from payers of income all returns of information and make necessary check of such returns;
(b2) Receive and audit withholding returns, showing bond interest and moneys paid to aliens, and receive and file alien certificates indicating residence;
(b3) Assemble certificates of information and ownership for use in the audit of personal returns and in securing delinquent returns by collectors;
(b4) Examine partnership and fiduciary returns and furnish information of income to Personal Audit Division; and
(b5) Receive and adjust all claims and reports of revenue agents relating entirely to the withholding features of the law, and initiate the adjustment of all claims and reports of revenue agents, when withholding and additional features are involved.
(c) The Registration Section, which receives and codes all returns for filing, and prepares control cards for all returns.
(d) The Claims Control Section has to:
(d1) Receive, record, and route to proper section for adjustment, all claims, with related papers and returns, and maintain records necessary to control and locate them;
(d2) Review (as to procedure) and schedule certificates of overassessment; adjust 25 per cent. penalty claims; and
(d3) Administer section 1324-A of the Revenue Act of 1921.
(e) The Unaudited Returns Section has to:
(el) Maintain and have custody of all files of income tax returns and card records for 1918 and subsequent years and of 1917 corpora
tion returns, conducting all correspondence with collectors' offices relating to the procuring of returns; and
(e2) Assemble all papers necessary for the adjustment of claims, revenue agents' reports, and other audit cases, and obtain compliance with T. D. 3329, section 250D, and other priority regulations.
(f) The Correspondence Section has to:
(f1) Maintain and have custody of correspondence files, closed revenue agents' reports and related papers, 1917 individual returns, and all returns for prior years; and
(f2) Furnish copies of returns to taxpayers, except returns in the course of audit.
(g) The Distribution Section has to:
(gl) Control the supply of work to Audit Sections and co-ordinate the work of the Records Subdivision with that of the Audit Sections; and
(g2) Receive returns, requisitions, revenue agents' reports, correspondence, etc., intended for filing, and sort the same by form, year, and collection district, preparatory to filing in the Records Subdivision.
(7) Personal Audit Division.-The head of the Personal Audit Division supervises and is responsible for the operations of the following sections:
(a) Personal Sections 1 to 5 initiate the audit of returns received from individuals, determine the correct tax liability in such cases as can be settled on the basis of office audit, adjust related claims, and refer all other returns for special consideration elsewhere within the unit or for field audit.
(b) Personal Section 6 initiates the audit of returns from fiduciaries and partnerships, determines the correct tax liability in such cases as can be settled on the basis of office audit, adjusts related claims, and refers all other returns for special consideration elsewhere within the unit or for field audit.
(c) The Review Section has to make a complete review of the work of the other sections of the division.
(d) Files Audit Section, Personal Audit Division, Income Tax Unit, examines all individual income tax returns immediately upon receipt in the unit, audits and closes such cases as are found to be correct as filed, or subject only to correction in computations.
(8) Corporation Audit Division.-The Corporation Audit Division (a) audits all corporation income tax returns, except those involving consolidated or special assessment features, and (b) adjusts all claims based on returns as outlined in (a) above. This division is organized under a Head of Division with a Production Committee, Conference Unit, six Audit Sections, and a Review Section. (9) The Consolidated Returns Audit Division audits all consolidated returns of affiliated corporations and consists of the following sections:
(a) Sections A, C, D, and E audit all cases of consolidated returns, other than those falling in the specialized groups handled by the Railroad Section and Section G, and adjust related claims.
(b) The Railroad Section, specializes on transportation and public utilities cases and adjusts related claims.
(c) The Administrative Section is responsible for the administrative operations of the subdivision.
(d) Section G, Consolidated Returns Audit Division, audits consolidated corporation returns in which any natural resource industry is a major operation, and adjusts claims arising in similar cases.
(e) The Review Section reviews all cases completed in the Consolidated Division, both as to subject-matter and procedure. The approval of this section. is necessary before an assessment letter, certificate of overassessment, claim rejection letter, or brief to the Review Division, Solicitor's Office, issues from the division.
(10) Engineering.-The Head of the Engineering Division supervises and is responsible for the operation of the following sections:
(a) The Oil and Gas Valuation Section determines the value of oil and gas property as of dates significant under the law, and reasonable amounts allowable as deductions from income on account of depletion.
(b) The Timber Valuation Section determines the value of timber property as of dates significant under the law, and reasonable amounts allowable as deductions on account of depletion.
(c) The Metals Valuation Section determines the value of metals property. as of dates significant under the law, and reasonable amounts allowable as deductions from income on account of depletion.
(d) The Non-Metals Valuation Section determines the value of non-metals. property, such as clay and clay products, gypsum, sulphur, quarries and quarry products, sand, gravel, cement rock, salt, salt mines and wells, phosphate deposits, kaolin and all other non-metallic minerals as of dates significant under the law, and reasonable amounts allowable as deductions on account of depletion. (e) The Coal Valuation Section determines the value of coal property as of date significant under the law, and reasonable amounts allowable as deductions from income on account of depletion.
(f) Appraisal Section.