A-87224, JULY 14, 1937, 17 COMP. GEN. 28

A-87224: Jul 14, 1937

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THE COMPENSATING TAXES COLLECTED ON COMMODITIES IMPORTED FROM POSSESSIONS OF THE UNITED STATES HAVE BEEN HELD IN SEPARATE TRUST ACCOUNTS FOR EVENTUAL PAYMENT INTO THE TREASURIES OF THE RESPECTIVE POSSESSIONS. THE BUREAU OF INTERNAL REVENUE HAS REPORTED TO THIS DEPARTMENT THAT THE COLLECTIONS DERIVED UNDER THE PROVISIONS OF SECTION 15 (E) OF THE ABOVE MENTIONED ACT AGREE WITH THE AMOUNTS WHICH ARE AT PRESENT HELD IN TRUST BY THE TREASURY DEPARTMENT UNDER THE RESPECTIVE ACCOUNTS. THIS DEPARTMENT IS DESIROUS OF CLOSING THEM OUT AT AN EARLY DATE. ADVICE IS REQUESTED AS TO WHAT ACTION THIS DEPARTMENT SHOULD TAKE IN MAKING A PROPER DISPOSITION OF THE FUNDS IN QUESTION. " WAS NOT UNDER CONSIDERATION IN THE BUTLER CASE.

A-87224, JULY 14, 1937, 17 COMP. GEN. 28

UNCONSTITUTIONALITY OF FEDERAL PROCESSING TAXES - EFFECT ON PAYMENTS TO UNITED STATES POSSESSIONS OF COMMODITY IMPORT TAXES TAXES COLLECTED UNDER SECTION 15 (E) OF THE AGRICULTURAL ADJUSTMENT ACT APPROVED MAY 12, 1933, 48 STAT. 31, AS AMENDED, ON COMMODITIES IMPORTED FROM POSSESSIONS OF THE UNITED STATES FOR EVENTUAL PAYMENT INTO THE TREASURIES OF THE RESPECTIVE POSSESSIONS "TO BE USED AND EXPENDED BY THE GOVERNMENTS THEREOF FOR THE BENEFIT OF AGRICULTURE" MAY BE PAID OVER AS CONTEMPLATED BY SAID SECTION, NOTWITHSTANDING THE DECISION OF THE SUPREME COURT OF THE UNITED STATES IN UNITED STATES V. BUTLER, 297 U.S. 1, THE PROCESSING AND FLOOR TAXES INVOLVED IN THAT CASE HAVING BEEN EXACTED UNDER SECTIONS 9 AND 16 OF SAID ACT, AND HAVING BEEN HELD UNCONSTITUTIONAL BECAUSE THEIR USE, AS PROVIDED BY THE STATUTE, INVOLVED A "PLAN TO REGULATE AND CONTROL AGRICULTURAL PRODUCTION" WHICH "INVADES THE RESERVED RIGHTS OF THE STATES.'

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, JULY 14, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF JUNE 23, 1937, AS FOLLOWS:

UNDER THE TERMS OF SECTION 15 (E) OF THE AGRICULTURAL ADJUSTMENT ACT (48 STAT. 31) APPROVED MAY 12, 1933, AS AMENDED BY THE ACTS APPROVED AUGUST 9, 1934 (48 STAT. 676) AND AUGUST 24, 1935 (49 STAT. 750), THE COMPENSATING TAXES COLLECTED ON COMMODITIES IMPORTED FROM POSSESSIONS OF THE UNITED STATES HAVE BEEN HELD IN SEPARATE TRUST ACCOUNTS FOR EVENTUAL PAYMENT INTO THE TREASURIES OF THE RESPECTIVE POSSESSIONS.

THE BUREAU OF INTERNAL REVENUE HAS REPORTED TO THIS DEPARTMENT THAT THE COLLECTIONS DERIVED UNDER THE PROVISIONS OF SECTION 15 (E) OF THE ABOVE MENTIONED ACT AGREE WITH THE AMOUNTS WHICH ARE AT PRESENT HELD IN TRUST BY THE TREASURY DEPARTMENT UNDER THE RESPECTIVE ACCOUNTS, AS FOLLOWS:

CHART

"3T559. PHILIPPINE TRUST FUND (PROCESSING TAXES,

MISCELLANEOUS) ---------------------------------- $813,811.42

"3T560. VIRGIN ISLANDS TRUST FUND (PROCESSING TAXES,

MISCELLANEOUS) ---------------------------------- 929.94

"3T561. AMERICAN SAMOA TRUST FUND (PROCESSING TAXES,

MISCELLANEOUS) ---------------------------------- 1,613.82

"3T562. ISLAND OF GUAM TRUST FUND (PROCESSING TAXES,

MISCELLANEOUS) ---------------------------------- 83.30

"3T563. CANAL ZONE TRUST FUND (PROCESSING TAXES,

MISCELLANEOUS) ---------------------------------- 21,218.38"

AS NO FURTHER COLLECTIONS REMAIN TO BE COVERED INTO THE FOREGOING ACCOUNTS, THIS DEPARTMENT IS DESIROUS OF CLOSING THEM OUT AT AN EARLY DATE. HOWEVER, IN VIEW OF THE DECISION OF THE SUPREME COURT OF THE UNITED STATES INVALIDATING CERTAIN PROVISIONS OF THE FOREGOING ACT, ADVICE IS REQUESTED AS TO WHAT ACTION THIS DEPARTMENT SHOULD TAKE IN MAKING A PROPER DISPOSITION OF THE FUNDS IN QUESTION.

IN UNITED STATES V. BUTLER, 297 U.S. 1, THE SUPREME COURT OF THE UNITED STATES HAD UNDER CONSIDERATION THE MATTER OF THE LEGALITY OF PROCESSING AND FLOOR TAXES LEVIED UNDER THE PROVISIONS OF SECTIONS 9 AND 16 OF THE AGRICULTURAL ADJUSTMENT ACT, SUPRA, AND DETERMINED THEIR EXACTION TO BE IN CONTRAVENTION OF THE CONSTITUTION BECAUSE THE USE FOR WHICH LEVIED AND APPROPRIATED UNDER THE ACT INVOLVED A "PLAN TO REGULATE AND CONTROL AGRICULTURAL PRODUCTION" WHICH "INVADES THE RESERVED RIGHTS OF THE STATES.'

SECTION 15 (E) OF THE ACT WHICH PROVIDES THAT THE COMPENSATING TAXES COLLECTED UNDER SAID SECTION ON COMMODITIES IMPORTED FROM POSSESSIONS OF THE UNITED STATES "SHALL NOT BE COVERED INTO THE GENERAL FUND OF THE TREASURY OF THE UNITED STATES BUT SHALL BE HELD AS A SEPARATE FUND AND PAID INTO THE TREASURY OF THE SAID POSSESSIONS, RESPECTIVELY, TO BE USED AND EXPENDED BY THE GOVERNMENTS THEREOF FOR THE BENEFIT OF AGRICULTURE," WAS NOT UNDER CONSIDERATION IN THE BUTLER CASE, AND THE PRINCIPLE THEREIN INVOLVED IS NOT APPLICABLE TO THE FUNDS HERE UNDER CONSIDERATION.

ACCORDINGLY, YOU ARE ADVISED THAT THE FUNDS ARE FOR DISPOSITION AS PROVIDED FOR IN SECTION 15 (E) OF THE AGRICULTURAL ADJUSTMENT ACT, AS AMENDED. IN THIS CONNECTION, SEE HASKINS BROS. AND CO. V. MORGENTHAU, ET AL., 85 FED./2D) 677, CERTIORARI DENIED 299 U.S. 588.