[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Credits.]
[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, All Other.]
Error to Circuit Court, Alleghany County.
Proceeding by the West Virginia Pulp & Paper Company against T. C. Karnes, Commissioner of the Revenue for Covington District of Alleghany County. Judgment for defendant, and plaintiff brings error. Affirmed.
This proceeding is an application by the plaintiff in error, the West Virginia Pulp & Paper Company (hereinafter called the plaintiff in error taxpayer), instituted in due time
under the statute, in such case made and provided, for the correction of certain alleged erroneous assessments for the years 1921 and 1922 of its capital employed in business in this state under subsection 2 of class "second" of Schedule C of the tax bill statute, approved March 6, 1918 (Acts 1918, p. 171 et seq.), being certain additional assessments for said years of capital of the taxpayer made by the commissioner of revenue, as appears from the hereinafter statement of facts.
That statute provides, among other things, as follows:
"First. Bonds (except bonds of the United States), notes and other evidences of debt.
After providing that the taxpayer shall furnish the commissioner of the revenue with a list of said bonds, etc., owned by the taxpayer, the statute continues as follows:
" * * * Deducting from the aggregate amount thereof all such bonds, demands or claims not otherwise deducted owing to others [by the taxpayer] as * * * principal debtor. * * * No credit shall be given for debts due, nor deductions made, unless such taxpayer shall append to said list an inventory showing the persons and address to whom said demands or debts are owing and the amount of each. * * *
"Second. All. capital of persons, firms and corporations employed in a trade or business not otherwise taxed; and, in case of a corporation when all of such capital is taxed by this state, the shares of its stock in the hands of individual shareholders shall not be further taxed for state purposes. But real estate belonging to such persons, firms and corporations shall not be held to be capital, but shall be listed and taxed as real estate.
"Capital as used in the tax laws shall be defined as follows:
"1. The inventory of stock on hand, which shall include all raw materials for use of the business, whether at the place of business, in storage, or elsewhere in the state.
"2. The excess of bills and accounts receivable over bills and accounts payable.
"3. All machinery and tools not taxed as real estate.
"4. Money on hand and on deposit.
"5. All other property of any kind whatsoever, including all choses in action, equities, demands and claims.
"Capital used or employed in business as above defined shall, wherever the laws of this state require a tax on capital, be taxed at the rate prescribed by law.
"Every person, firm and corporation engaged in a business whose capital is subject by the laws of this state to taxation, is hereby required to keep accounts showing the above items, which shall at all times be open to the inspection of the commissioners of the revenue, the examiners of records, local boards of review, and the state advisory board of taxation; and every such person, firm or corporation shall be required to make a return under oath to the commissioner of the revenue, on forms prescribed by the auditor of public accounts, show-ing the items of capital as above defined, and also the bills and accounts payable which were used as deductions in order to ascertain the amount under section 2 in the above definition of capital and the names, addresses, of the parties to whom said bills and accounts are due, and the various amounts constituting said indebtedness, and shall further certify that such indebtedness was made in the usual course of business of said company, firm or corporation." (Italics supplied,) * * *
"Third. The value of the principal of personal estate and credits other than tangible personal property and money under the control of a court receiver or commissioner, * * * or in the hands or under the control of an executor, administrator, guardian, trustee, agent, or other fiduciary; and the principal estate and credits other than tangible personal property and money deposited to the credit of any suit and not in the hands of a receiver or other fiduciary." (Italics supplied.)
The following facts appear from the final order of the court below, which is under review; |
"That for the tax years beginning February 1, 1921 and 1922 (the taxpayer) duly furnished to the commissioner for assessment, as required by law, proper lists of taxable property with all the information required by law, including a schedule showing the names, addresses, amounts, etc., of persons to whom bills and accounts payable were due. In its report of tangible and intangible personal property for the year 1921, it is reported, among other things, as capital invested in the state of Virginia, an item of $633,161.70, being the amount of bills and accounts receivable on its books at the beginning of the tax year for business done in the state of Virginia, and also reported an item of $445,095, being the amount of bill and accounts payable on its books as of the same date on account of business done in the state of Virginia, leaving an excess of bills and accounts receivable over bills and accounts payable of $188,066.70; that said amounts Of bills and accounts receivable were correct; that embraced in the aggregate amount of bills and accounts payable was an item of $364,327, being the balance due to the federal government for income and excess profits taxes on account of profits realized from business done in the state of Virginia during the fiscal year ending October 31, 1920; that under the federal Income Tax Law said tax became payable on or before January 15, 1921, with the option to the corporation of paying all or part of the tax on or before January 15, 1921; that the corporation exercised its option to pay only a part of the tax on or before the said date; that a portion of the tax was therefore paid prior to February 1. 1921, and the remaining $384,327 was paid subsequent thereto, and within the time prescribed by the federal law.
"That in its report of tangible and intangible personal property for the year 1922, it reported among other things, as capital invested in the state of Virginia, an item of $472,617.34, being the amount of bills and accounts receivable on its books at the beginning of the tax year for business done in the state of Virginia, and also reported an item of $106,848.70, being the amount of bills and accounts payable on its books as of the same date on account of busi
ness done in the state of Virginia, leaving an excess of bills and accounts receivable, over bills and accounts payable, of $365,708.64; that said amount o£ bills and accounts receivable was correct; that embraced in the aggregate of bills and accounts payable was an item of $19,778, being the balance due to the federal government for income and excess profits taxes on account of profits realized from business done in the state of Virginia during the fiscal year ending October 31, 1921; that under the federal Income Tax Law said tax became payable on or before January 15, 1922, with the option to the corporation of paying all or part of the tax on or before January 15, 1922; that the corporation exercised its option to pay only a part of the tax on or before the said date; that a portion of the tax was therefore paid prior to February 1, 1922, and the remaining $19,778 was paid subsequent thereto within the time prescribed by the federal law.
"That the reason why said tax bills for both said years became due prior to February 1st of each year was because the taxpayer reports to the federal government on the basis of its fiscal year, which ends October 31st each year.
"That the examiner of records for this circuit examined said taxpayer's report both for the years 1921 and 1922, and, after having done so, held that the item representing tax bills due the federal government above referred to, while conceded to be correct, were not items which could be deducted from bills and accounts receivable reported for taxation, and denied the taxpayer the right to such deductions on that ground alone.
"That in pursuance of the audit and report of the examiner of records, the commissioner made additional assessments against the said taxpayer for...
