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GIFT or 
 
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 SEP 8 1919 
 
 Federal Stamp Tax6s on 
 
 Drafts, Checks 
 
 and Promissory Notes 
 
 1919 
 
 Guaranty Trust Company 
 of New York 
 
GIFT 
 
Federal Stamp Taxes on 
 
 Drafts, Checks 
 
 and Promissory Notes 
 
 Imposed by 
 Title XI of the Revenue Act of 1918 
 
 1919 
 
 Guaranty Trust Company of New York 
 
 - 140 B roadway 
 
 FIFTH AVENUE OFFICE LONDON OFFICE PARIS OFFICE 
 
 Fifth Avenue and 43rd Street 32 Lombard St., E. C. Rue des Italiens, 1 & 3 
 
 MADISONAVENUE OFFICE LIVERPOOL OFFICE BRUSSELS OFFICE 
 
 Madison Avenue and 60th Street 27 Exchange Buildings 158 Rue Royale 
 

 COPYRIGHT, 1919, BY 
 GUARANTY TRUST COMPANY OF NEW YORK 
 
 • • • • • . 
 
 :.:.•: ...GIFT 
 
 • "•' • • •«• , 
 
Stamp Taxes on Drafts, Checks 
 and Promissory Notes* 
 
 THE Revenue Act of 1918 imposes a tax 
 on drafts and cheeks, payable otherwise 
 than at sight or on demand, upon their ac- 
 ceptance or dehvery, whichever is prior, with- 
 in the territorial jurisdiction of the United 
 States, and on promissory notes, except those 
 listed below as exempt, and on each renewal 
 of the same. The term "United States" in- 
 cludes the states, the District of Columbia, 
 Hawaii and Alaska. 
 
 The tax is at the rate of 2 cents on each 
 $100 or fractional part thereof. On amounts 
 not in excess of $100 the tax is 2 cents. 
 
 Any instrument or writing operating as a 
 renewal of a promissory note is taxable, but the 
 mere suspension of payment or forbearance 
 does not constitute a taxable renewal within 
 the meaning of the law, nor does pay- 
 ment of interest on a demand note, without 
 any agreement in writing extending the note. 
 
 •Based on Treasury Regulations No. 55. 
 
 [3] 
 
 4-20057 
 
The payment, however, of interest in advance, 
 after maturity of a promissory note, eviden- 
 ced by an indorsement, constitutes a taxable 
 renewal. 
 
 Liability to tax and the amount thereof, 
 is determined by the form and face of a check 
 or draft and cannot be affected by proof of 
 facts or instructions outside of the instrument. 
 Payment for the stamp is a matter for ad- 
 justment between the parties, but obligation 
 rests upon the drawee, payee, or indorsee of 
 a draft to see that the tax is paid before or 
 at the time of acceptance or delivery and both 
 parties to a promissory note are responsible 
 for affixing and cancelling stamps in the re- 
 quired amount. 
 
 Checks and Drafts 
 
 The following instruments payable other- 
 wise than at sight or on demand are included 
 among taxable drafts and checks: 
 
 1. Trade and bankers' acceptances. 
 
 2. Post-dated checks expr«essly payable after their 
 date. 
 
 3. Time drafts drawn against the proceeds of 
 drafts exempt under (4) below. 
 
 [4] 
 
4. Drafts stating no time for payment which are 
 accepted for payment at a certain future date. 
 
 5. Time drafts drawn on a domestic bank for the 
 purpose of securing money to purchase goods 
 to be exported. 
 
 6. Time drafts, not covering exports, drawn and 
 delivered or accepted in the United States and 
 payable in foreign countries. 
 
 7. Time drafts covering articles shipped from the 
 United States, Hawaii aiid Alaska to the Canal 
 Zone, if such drafts are delivered within the 
 United States, Hawaii or Alaska. 
 
 8. Time drafts drawn against shipments from the 
 Virgin Islands, the Philippines and Porto Rico 
 into the United States, if delivery or accept- 
 ance of such drafts first takes place within the 
 United States, Alaska or Hawaii. 
 
 The following checks and drafts are exempt 
 from tax: 
 
 1. Demand checks. 
 
 2. Post-dated checks not expressly payable after 
 their date. 
 
 3. Time drafts covering shipments to the Virgin 
 Islands, the Philippines and Porto Rico. 
 
 4. Time drafts directly covering exports to a for- 
 eign country, and constituting an inherent, 
 necessary and bona fide part of the actual 
 process of exportation. 
 
 5. Time drafts drawn on domestic banks against 
 export shipments delivered to the first carrier 
 for transportation, covering the period of 
 transit from the interior point to the seaboard, 
 
 [5] 
 
6. Drafts drawn abroad on a foreign drawee with 
 a foreign payee, passing through a bank in the 
 United States in the course of collection unless 
 delivered by an agent of the drawer to an 
 agent of the payee within the United States. 
 
 Promissory Notes 
 
 The following proniissory notes and renew- 
 als of the same are included among instru- 
 ments taxable: 
 
 1. Notes given for security only. 
 
 2. Notes payable on demand or after date. 
 
 3. Promissory notes accompanying mortgages of 
 joint-stock land banks. 
 
 4. Promissory notes secured by bonds of the War 
 Finance Corporation. 
 
 5. Promissory notes executed and mailed in the 
 United States to a payee in Canada. 
 
 6. Extensions or renewals of promissory notes 
 brought about by extension of mortgages by 
 which such notes are secured. 
 
 7. Instruments in the form of promissory notes, 
 representing the interest upon promissory 
 notes, not included under (6) below, and either 
 separate from or prepared in a form and for 
 the purpose of being separated from the 
 principal note. 
 
 8. Policy loan and premium extension agreements 
 containing an unqualified promise to pay a 
 specified sum of money at a certain date, ex- 
 cept where the sole remedy of the payee in case 
 
 [6] 
 
of non-payment of the premiums or loans is to 
 reduce or cancel the rights of the insured. 
 
 The following instruments are exempt : 
 
 1. Certificates of deposit. 
 
 2. Bank notes issued for circulation. 
 
 3. Promissory notes executed and mailed in Can- 
 ada to a payee within the United States. 
 
 4. Promissory notes issued directly by foreign 
 governments and placed in this country for 
 sale. 
 
 5. Promissory notes secured by certificates of in- 
 debtedness issued by the Director General of 
 Railroads. 
 
 6. Coupons and interest notes which are attached 
 to a principal obligation and are substantially 
 repetitions of the promise to pay interest con- 
 tained in the principal obligation. 
 
 7. Promissory notes secured by United States 
 bonds or obligations issued after April 24, 
 1917 or secured by the pledge of a promissory 
 note which itself is secured by the pledge of 
 such bonds or obligations. Such bonds must 
 have a par value of not less than the amoimt 
 of such notes to exempt the latter. 
 
 Cancellation of Stamps 
 
 Any person using or aflSxing stamps must 
 
 so deface the same as to render them unfit 
 
 for further use by writing or stamping his 
 
 initials and the date thereon with ink, or by 
 
 [7] 
 
cutting and canceling such stamp with a 
 machine or punch, which will aflBx the initials 
 and date. The cancellation should not so de- 
 face the stamp as to prevent its denomination 
 and genuineness from being readily deter- 
 mined. 
 
 In addition to the above, stamps of the 
 value of 10 cents or more must have three 
 parallel incisions made by some sharp instru- 
 ment lengthwise through the stamp after the 
 same has been attached to the document, ex- 
 cept where the stamps are cancelled by per- 
 foration. 
 
 Use of Cancelled Stamps — Refunds 
 
 A stamp affixed to an instrument and can- 
 celled cannot lawfully be removed and at- 
 tached to another instrument. Refund will 
 be made by the collector of internal revenue 
 for amounts paid for stamps used in excess 
 of requirements, or on instruments not actu- 
 ally effective and for which a substitute is 
 prepared and stamped, or on instruments not 
 subject to tax. 
 
 [s: 
 
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 ON LAST DATE STAMPED BELOW 
 
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 General Library 
 
 University of California 
 
 Berkeley 
 
4-20057 
 
 UNIVERSITY OF CALIFORNIA LIBRARY