Music Trade Review

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THE MUSIC TRADE REVIEW
Government Holds Gold-Plated Hardware
on Phonographs Is Non-Taxable Under Law
Music Industries Chamber of Commerce Wins Long Controversy in Receiving Definite Official
Ruling From Treasury Department Upholding Its Contentions on All Points
^ T H R O U G H the efforts of the Music Indus-
tries Chamber of Commerce the Treasury
Department has reversed its previous decision
that all phonographs and gold-plated hardware
are taxable at 5 per cent on the retail price under
Section 905 of the Revenue Act of 1921, and as
the tax under the original order would have
been retroactive until January, 1921, and applied
to all sales since then, it is estimated that the
new ruling has resulted in a saving to the music
industry of over five million dollars in taxes.
The definite official ruling of the Treasury
Department has not yet been published, but
notice of it has been received by the Chamber
in a letter of May 24 which reads in part as
follows:
"Reference is made to your letters . . . pro-
testing against the position taken by the Collec-
tors of Internal Revenue in Indiana and Illi-
nois, holding that phonographs, victrolas, etc.,
are taxable under Section 905 of the Revenue
Act of 1921, if they are ornamented, mounted, or
fitted with precious metals, or imitations there-
of. Reference is also made to your recent brief
regarding the matter involved.
"The question of the taxability of such articles
under Section 905 has been given very careful
reconsideration, and the conclusion has been
reached that they are not taxable under that
section of the Act."
Several days previous the Chamber had re-
ceived intimation of the favorable decision in a
Pratt Read
Products
Piano Ivory
P i a n o Keys
Piano Actions
Player Actions
Established in
1806
at Deep River, Conn.
Still There
Standard Service and Highest Quality
Special Repair Departments
Maintained for Convenience
of Dealers
PRATT, READ & CO.
PRATT READ PLAYER ACTION CO.
Oldest and Best
copy of a letter of May 21, 1924, from Com-
missioner I). H. Blair to Senator Walter I.
Edge, of New Jersey, from which the follow-
ing is a quotation:
".As a result of conferences recently held in
the bureau with Alfred L. Smith, general man-
ager of the Music Industries Chamber of Com-
merce, and upon consideration of additional
evidence submitted by him, the conclusion has
been reached that instruments of that character
(that is, phonographs having gold-plated hard-
ware), are not subject to the tax in question.
Accordingly, the former ruling has been re-
versed and the new conclusion will be com-
municated to those interested in the near future."
This important and favorable decision is the
result of three years' activity on the part of the
Music Industries Chamber of Commerce. Al-
most immediately upon the repeal of the 5 per
cent tax on pianos and phonographs, the Cham-
ber was asked if phonographs with gold-plated
hardware would not then be subject to the jew-
elry tax as articles "made of, ornamented or
fitted with gold and silver"; and very soon com-
plaints reached the Chamber that collectors of
the Internal Revenue Bureau were actually im-
posing the tax. In every case the Chamber was
able to convince local collectors that they should
not collect the tax. While there was no definite
ruling from the Treasury Department, neverthe-
less, letters were received indicating that it had
made favorable informal rulings. However, in
the latter part of 1923 many merchants, partic-
ularly in the States of Indiana and Illinois, re-
ported that demands had been made to file a
return showing all phonographs with gold-plated
hardware sold since January 1, 1921, upon which
the 5 per cent tax was to be imposed. In many
cases the demands of the collectors were very
insistent, the controversy between local dealers,
backed by the Chamber, and the local collectors
was taken to Washington, and local collectors
were definitely notified by the Treasury Depart-
ment that phonographs with gold-plated parts
were subject to the tax.
The matter was then referred to the solicitor
of the bureau for a legal opinion. Alfred L.
Smith conferred with the solicitor and gave oral
arguments on several occasions. The solicitor
finally requested that a definite brief be com-
piled and filed with him, which was done on
May 13. This brief went thoroughly into every
phase of the question and contended that the
so-called jewelry tax did not apply because:
1. Congress did not intend this tax to apply
to articles in which gold or silver is used in such
an incidental way as in phonographs.
2. The Treasury Department has recognized
this intention of Congress and made regulations
which exempt products similar to phonographs
with gold-plated hardware.
3. The Treasury Department has already ruled
that phonographs are not subject to the jewelry
tax irrespective of the materials of which they
are made.
4. If the jewelry tax is now applied to phono-
graphs it will impose on them double the tax
they were subject to when they were taxed
specifically, instead of exempting them from ex-
cise taxation as Congress intended.
Fire Damages Lumber Stocks
BUFFALO, N. Y., May 26.—Two fires, both be-
lieved to have been of incendiary origin, caused
between $40,000 and $50,000 loss in the lumber
district of North Tonawanda on the night of
May 19. The fires were in the yards of White,
Gratwick & Mitchell and on the dock of the
Daily Newsprint Corp. The yards of White,
Gratwick & Mitchell are the largest in the ex-
tensive Tonawanda lumber district. This firm
MAY
31, 1924
ships thousands of feet of lumber to musical
instrument manufacturers in the East every year.
Stieff Harrisburg Store
Wins Gup in Firm's Contest
Branch Store in Pennsylvania Capital Cele-
brates Winning of Cup for First Time in
Entertainment to Staff
HARRISBURC, PA., May 26.—The branch store
of Chas. M. StielT, Inc., was successful in
winning the Kquity Contest conducted by the
home office between the thirteen branch stores
of Chas. M. Stieff, Inc. The contest ended
April 26, having run since the first of the year.
Manager O. B. Lank feels highly elated over
winning the contest and the silver loving cup,
as this is the first time that Harrisburg has
won, although the contest has been conducted
for the past three years. The prizes offered in
connection with the contest go to the manager,
C). B. Lank; office manager, Miss Pearl Kllen-
berger, and her assistant, Miss Mary Kllenber-
ger.
The firm and the local manager entertained
the employes, their wives and sweethearts at a
banquet Friday evening at the Beach Front
Hotel. Mr. Lank congratulated the sales force
on keeping the business ahead of last year, as
the sales at the end of April showed an increase
of over 30 per cent, compared with the same
period of 1923. The prizes were distributed to
the successful salesmen in a sales contest, which
has been conducted by the branch for the first
four months of this year. P. B. Malarkey won
first prize, while A. M. Klugh won the second
prize. Mr. Klugh also took the first prize for
the most cash business and I!. M. Crawford
won the second prize.
A very pleasing and entertaining program
followed the dinner. S. P. Walker, treasurer
and general manager of the firm, attended, and
in addition to Mr. Walker the following were
present: Mr. and Mrs. (). B. Lank, Mr. and
Mrs. J. C. Shafer, Mr. and Mrs. E. B. Carpenter,
Mr. and Mrs. A. C. Hit/., Mr. and Mrs. C. H.
Day, Mr. and Mrs. D. R. Kumberger, Mr. and
Mrs. A. M. Klugh, Mr. and Mrs. G. O. Thomas,
Mr. and Mrs. Geo. L. Weirick, Mr. and Mrs.
B. M. Crawford, P. B. Malarkey, Miss Pearl
Ellenberger, P. S. Miller, Miss mary Ellenberger,
C. V. Hoar, W. A. Greiner and John Day.
Merchants Warned to Guard
Against Thefts of Radio
New Type of Thief Steals Sets Out of Stores
and Offices Almost Under the Noses of Pro-
prietors—Constant Watchfulness Needed
Several of the larger radio manufacturers have
been bothered lately by a band of thieves who
are specializing on stealing radio sets off their
delivery trucks, out of their storerooms and in
some cases right out of their demonstration
rooms. One case that has come to light lately
is that of the Knabe Warerooms, Newark, N. ].,
where thieves broke in the front window and
ran off with a portable radio set valued at $286.
The thieves have a preference for portable
sets, or sets that can be carried easily without
attracting undue suspicion. Where a set is
stolen from a manufacturer or a jobber it is
comparatively easy to locate it, but, neverthe-
less, it warrants the dealer's care in the safe-
guarding of the merchandise. Also, do not deal
with unknown people in buying radio.
Knabes for S. S. Republic
A fine Knabe grand has just been placed on
board the S. S. "Republic" of the Shipping
Board Emergency Fleet, and two Knabe up-
rights supplied for the general rooms of the
same ship. The sale of these instruments -was
arranged by Howard H. Wood, of the Knabe
Warerooms in Norfolk, Va.