Independent Exhibitors Film Bulletin (Sep 1935 - Aug 1936)

2 INDEPENDENT EXHIBITORS :F I L M BULLETIN FEDERAL PAYROLL TAX REQUIRES ALL EMPLOYERS MAINTAIN ACCURATE RECORDS OF HELP FROM JAN. 1 Even Those Employing Less Than 3 Workers Should Keep Records Of All Employment To Prove Exclusion From Tax The announcement in last week's FILM BULLETIN of the basic requirements of the new Federal tax on payrolls for unemployment compensation brought a flood of requests from theatremen for additional information on this subject. Paragraph A Section 901, of the Social Security Act, enacted by the last session of Congress, provided, in part, that "On and after January 1, 1936, every employer (as defined in section 907) shall pay for each calendar year an excise tax with respect to having individuals in his employ . . ." The tax for 1936 is to be one per cent of the total payrolls of such employers who, during the year, employ eight (8) or more individuals for at least twenty days over a period of at least twenty weeks throughout the year. For 1937, the tax will be two per cent, one per cent to be paid by the employer and one per cent by the employes. There is another increase the following year. All employers, whether subject to the tax or not, are required to maintain such records of employment as may be necessary to prove the correctness of the amount of tax they pay, or their exclusion therefrom. Following are those details of the new law, which apply to theatre operation made available to FILM BULLETIN by the Treasury Department: PAYROLL TAX DETAILS Paragraph B Section 902, of the Social Security Act, in part: "The taxpiyer may credit against the tax imposed bisection 901 the amount of contributions, with respect to employment during the taxable year, paid by him (before the date of filing his return for the taxable year) into an unemployment fund under a state law. The total credit allowed to a taxpayer under this section for all contributions paid into unemployment funds with respect to employment during such taxable year shall not exceed 90 per centum of the tax against which it is credited, and credit shall be allowed only for contributions made under the laws of States certified for the taxable year as provided in section 903. [Thus far, only nine states and the District of Columbia have passed unemployment compensation laws These are New York. Massachusetts, New Hamsphire, Alabama. Wisconsin, Utah, California, Oregon and Washington. In many other states, however, this legislation is scheduled to be among the first orders of business as soon as the legislatures reconvene. If a state does not enact any unemployment compensation legislation, employers in that state merely pay the full one per cent tax to the Federal Government.] Paragraph C Section 905, in part: "(a) The tax imposed by this title shall be collected by the Bureau of Internal Revenue under the direction of the Secretary of the Treasury and shall be paid into the Treasury of the United States as internal revenue collections . . • "(b) Not later than January 31, next following the close of the taxable year, each employer shall make a return of the tax under this title for such taxable year. Each such return * * * shall contain such information and be made in such manner as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulations prescribe." Paragraph D Section 907, in part: "When used in this title "(a) The term 'employer' does not include any person unless on each of some twenty days during the taxable year, each day being in a different calendar week, the total number of individuals who were in his employ for some portion of the day (whether or not at the same moment of time" was eight or more. "(b) The term 'wages' means all remuneration for employment, including the cash value of all remuneration paid in any medium other than cash. "(c) The term 'employment' means any service, of whatever nature, performed within the United States by an employee for his employer, except — Service performed by an individual in the employ of his son. daughter, or spouse, and service performed by a child under the age of twenty-one in the employ of his father or mother." * * * Paragraph H Section 1114 (a) (Title XI) of the Revenue Act of 1926 provides: "(a) Any person required under this Act to pay any tax, or required by law or regulations made under authority thereof to make a return, keep any records, or supply any information, for the purpose of the computation, assessment, or collection of any tax im posed by this Act; who willfully fails to pay such tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and. upon conviction thereof, be fined not more than $ 10,000, or imprisoned for not more than one year, or both, together with the costs of prosecution." Pursuant to the above quoted provisions of law, the following regulations are hereby prescribed with respect to the records to be maintained for the purpose of the excise tax imposed by Title IX of the Social Security Act: "(a) Every person subject to tax under the Act shall, during the calendar year 1936 or any calendar year thereafter, for each such calendar year, keep such permanent records as are necessary to establish: "(1) The total amount of remuneration payable to his employees in cash or in a medium other than cash, showing separately, (a) total remnueration payable with respect to services excepted by section 907 ( c ) . * * * "(2) The amount of the contributions with respect to employment during the calendar year paid by him into any State unemployment fund, showing separately, (a) payments made and not deducted (or deductible) from the remuneration of employees, (b) payments made and deducted (or deductible) from the remuneration of employees, (c) payments made with respect to services excepted by section 907(c). "(3) Such other information as will enable the Commissioner to determine whether such person is subject to the tax, and, if subject to the tax, the amount [hereof. "(a) No particular method of accounting or form of record is prescribed. Each person may adopt such records and such methods of accounting as may best meet the requirements of his own business, provided that they clearly and accurately show the information required above, and enable him to make a proper return on the prescribed form. "(b) Records are not required to show the number of individuals employed on any days, but must show the total amount of remuneration actually paid during each calendar month and the number of individuals employed during each calendar month or during each such lesser period as the employer may elect. "(c) Any person who employs individuals during any calendar year but who considers that he is not an employer subject to the tax (see Paragraph D, above), should be prepared to establish by proper records (including, where necessary, records of the number of persons employed each day) that he is not an employer subject to the tax. "(d) All records required by these regulations shall be kept safe and readily accessible at the principal place of business of the person required to keep such records, or at such other place or places as the Commissioner, upon written application by the person concerned, may approve. Such records shall at all times be open for inspection by internal revenue officers, and shall be preserved for a period of at least four years from the due date of the tax for the calendar year to which they relate." A HAPPY NEW YEAR to Film Bulletin "Just the Sort of Trade Paper this Industry Needs Badly" AN EXHIBITOR FRIEND