NAB reports (Jan-Dec 1942)

any salary payments other than those specified in para¬ graph (b) of section 4001.2 of these regulations are made in contravention of the Act, or any regulations or rulings promulgated thereunder. Any such determination by the Commissioner, made under such regulations, that a pay¬ ment is in contravention of the Act, or any rulings or regulations promulgated thereunder, shall be conclusive upon all Executive Departments and agencies of the Gov¬ ernment in determining the costs or expenses of any employer for the purpose of any law or regulations, either heretofore or hereafter enacted or promulgated, including the Emergency Price Control Act of 1942 or any maximum price regulation thereof, or for the purpose of calculating deductions under the revenue laws of the United States, or for the purpose of determining costs or expenses under any contract made by or on behalf of the United States. Any determination of the Commissioner made pursuant to the authority conferred on him shall be final and shall not be subject to review by The Tax Court of the United States or by any court in any civil proceedings. No in¬ crease in a salary rate approved by the Commissioner shall result in any substantial increase of the level of costs or shall furnish the basis either to increase price ceilings of the commodity or service involved or to resist otherwise justifiable reductions in such price ceilings. Sec. 4001.5. Rules and Regulations of Commissioner — The Commissioner may prescribe such regulations with the approval of the Secretary of the Treasury, and make such rulings as he deems necessary, to enforce and otherwise carry out the provisions of these regulations. Sec. 4001.6. Salary Increases — In the case of a salary rate of $5,000 or less per annum existing on the date of the approval of these regulations by the President and in the case of a salary rate of more than $5,000 per annum existing on October 3, 1942, no increase shall be made by the employer except as provided in regulations, rulings, or orders promulgated under the authority of these regula¬ tions. Except as herein provided, any increase made after such respective dates shall be considered in contravention of the Act and the regulations, rulings, or orders pro¬ mulgated thereunder from the date of the payment if such increase is made prior to the approyal of the Board or the Commissioner, as the case may be. In the case, howeyer, of an increase made in accordance with the terms of a salary agreement or salary rate schedule and as a result of (a) individual promotions or reclassifications, (b) individual merit increases within established salarv rate ranges, (c) operation of an established plan of salary in¬ creases based on length of service, (d) increased productivity under incentive plans, (e) operation of a trainee system, or ( f ) such other reasons or circumstances as may be prescribed in orders, rulings, or regulations, promul¬ gated under the authority of these regulations, no prior approyal of the Board or the Commissioner is required. No such increase shall result in any substan¬ tial increase of the level of costs or shall furnish the basis either to increase price ceilings of the commodity or serv¬ ice involved or to resist otherwise justifiable reductions in such ))rice ceilings. Sec. 4001.7. Decreases m salaries of less than $5,000. — In the case of a salary rate existing as of the close of October 3, 1942, under which an employee is paid a salary of less than $5,000 per annum for any particular work, no decrease shall be made by the employer below the highest salary rate paid for such work between January 1, 1942, and September 15, 1942, unless to correct gross inequities or to aid in the effective prosecution of the war. Any decrease in such salary rate after October 3, 1942, shall be considered in contravention of the Act and the regulations, rulings, or orders promulgated thereunder 620 — October 30, 1942 if such decrease is made prior to the approval of the Board or the Commissioner, as the case may be. Sec. 4001.8. Decreases in salaries of over $5,000. — In the case of a salary rate existing as of the close of Octo¬ ber 3, 1942, under which an employee is paid a salary of $5,000 or more per annum, no decrease in such rate made by the employer shall be considered in contravention of the Act and the regulations promulgated thereunder (see section 5 (b) of the Act) ; provided, however, that if by virtue of such decrease the new salary paid to the em¬ ployee is less than $5,000 per annum, then the validity of such decrease below $5,000 shall be determined under the provisions of section 4001.7 of these regulations. Sec. 4001.9. Limitation on Certain Salaries. — (a) No amount of salary (exclusive of any amounts allowable under paragraphs (b) and (c) of this section) shall be paid or authorized to be paid to or accrued to the account of any employee or received by him during the taxable year which, after reduction by the Federal income taxes on the amount of such salary, would exceed $25,000. The amount of such Federal income taxes shall be determined (1) by applying to the total amount of salary (exclusive of any amounts allowable under paragraphs (b) and (c) of this section) paid or accrued during the taxable year, undiminished by any deductions, the rates of taxes im¬ posed by Chapter 1 of the Code (not including section 466) as if such amount of salary were the net income (after the allowance of credits applicable thereto), the surtax net income, and the Victory tax net income, respec¬ tively, and (2) without allowance of any credits against any of such taxes. (b) In any case in which an employee establishes that his income from all sources is insufficient to meet pay¬ ments customarily made to charitable, educational or other organizations described in section 23 (o) of the Code, without resulting in undue hardship, then an addi¬ tional amount sufficient to meet such payments may be paid or authorized to be paid to or accrued to the account of any employee or received by him during the taxable year even though it exceeds the amount otherwise com¬ puted under paragraph (a). (c) In any case in which an employee establishes that, after resorting to his income from all sources, he is un¬ able, without disposing of assets at a substantial financial loss resulting in undue hardship, to meet payments for the following: (1) Required payments (excluding accelerated pay¬ ments) by the employee during the taxable year on any life insurance policies on his life which were in force on October 3, 1942, (2) Required payments (excluding accelerated pay¬ ments) made by the employee during the taxable year on any fixed obligations for which he was obligated on October 3, 1942, (3) Federal income taxes of the employee for prior taxable years which are paid during the taxable year, not including Federal income taxes on the allowance under paragraph (a) for any prior year, an additional amount sufficient to meet such payments may be paid or authorized to be paid to or accrued to the account of any employee or received by him during the taxable year, even though it exceeds the amount otherwise com¬ puted under paragraph (a). (d) In the case of an individual who is an employee of more than one person, the aggregate of the salaries re¬ ceived by such individual shall, under such circumstances as may be set forth in regulations promulgated under the authority of these regulations, be treated as if paid by a single employer. (e) No amount of salary shall be paid or authorized to be paid to or accrued to the account of any employee or received by him after the date of approval of these regu¬ lations by the President and before January 1, 1943, if the