Document: 348 U.S. 254 75 S.Ct. 268 99 L.Ed. 302 The UNITED STATES, Petitioner,v.KOPPERS COMPANY, Inc., Successor on Merger to Koppers United Company and Subsidiaries. PREMIER OIL REFINING COMPANY OF TEXAS, Petitioner, v. STATES of America. Nos. 29, 41. Argued Nov. 10, 12, 1954. Decided Jan. 31, 1955. Rehearing Denied March 14, See 965, 521. Mr.Hilbert P. Zarky, Washington, D.C., for the States. Mr. Wm. A. Sutherland, petitioner, Premier Oil Refining Co. Texas. David W. Richmond, Washington-D.C., respondent Company, Inc. Justice BURTON delivered opinion Court. 1 issue in these cases is whether, years 1940 through 1945, abatements federal excess profits taxes, application I.R.C. § 722,1 are retroactive. For reasons hereafter stated, we hold that they not relieve taxpayers from payment interest deficiencies such taxes time abatements, rather than original due dates abated. 2 In No. States Co., taxpayer, therein,2 reported paid $6,512.76 1940, $1,781,288.14 1941.3 computing it used credits based upon invested capital.4 1943 applied under 722 relief all or part claiming were 'excessive discriminatory'.5 accordance with usual administrative practice, Commissioner determined amount without regard 722. doing so, he found necessary proceed 713, using taxpayer's income, its capital. As a result above as returned by taxpayer reference 722, had been understated following existed their dates, 15, 1941, 1942: 1941 3 Excess tax §§ 710(a) 713 $466,921.67 $2,208,019.09 Payments........___6,512.76._1,781,288.14 Deficiencies.... 460,408.91. 426,730.95 4 computed at 6%, deficiencies, amounting $217,376.07 $230,504.86 1941.6 5 After extended investigations negotiations conducted authority agreed 'constructive average base period net income' which fixed question and, result, available this agreement was approved Profits Tax Council Bureau Internal Revenue, above-stated benefit should be reduced $260,554.39 $95,749.33 1941. consented assessment provided law. Whereupon, issued formal determination them assessed against taxpayer. He also charges, full deficiencies. 6 so but claimed refunds $94,358.71 $178,784.48 Those sums represented made When disallowed claims, sued Court Claims recover amounts. With one judge dissenting, court deducted setoff rendered judgment favor $270,216.34. 126 Ct.Cl. 847, 117 F.Supp. 181. To resolve resulting conflict Cir., 209 F.2d 692, granted certiorari, 347 74 775, 98 1122. 7 41, States, petitioner therein, shown returns amounts: 1943, $564,167.70 (adjusted $560,484.84); 1944, $353,292.15 $313,639.13); $45,679.67. Thereafter, several deductions income disallowed, resulting, 1948, dates: 8 DEFICIENCIES WITHOUT THE APPLICATION 1944 1945 9 Deficiencies tax, 10 713. $78,359.80 $55,529.92 $190,785.32 11 tax.___9,060.07 __9,178.01 ____(90.00) 12 Total 87,419.87. 64,707.93 190,695.32 13 interest, follows: 14 1943—on $78,359.80, June 23, 1948................ $20,084.79 15 1944—on $55,529.92, 1948................. 10,901.36 16 1945—on $190,785.32, 1946, 19, 1948................._25,869.26 Total.......................... 56,855.41 17 meantime, seeking acceptance $357,000 each issue. figure credit lieu $93,150.36 $116,437.95 1945. This far taxable abate entirely, $366.52.7 Accordingly, Commissioner's remainder only $366.52. However, case, supra, charges 18 deficiency totaling $56,855.41. That sum those brought instant action amounts, District Northern Texas, 28 U.S.C. 1346(a)(1), U.S.C.A. 1346(a)(1). taxpayer.8 107 837. Appeals reversed. 692. We certiorari supra. 987, 851, 1107.9 19 underlying same case year, shall discuss relation case. There, procedure, return 1940. course Commissioner, have $466,921.67, therefore, $460,408.91 53(a), 56(a). If no there doubt would remained until that, when paid, refundable. true if finally denied. contends, however, because has abated reduction necessarily retroactive accordingly, entitled refund other hand, contends current abatement effective made. 20 Congress could prescribed either treatment did expressly specify either. Our answer our consideration statutory scheme whole related provisions statute, legislative history interpretation given statute. 21 1. whole. 22 device initiated Congress, late great quick collection large needed Government national emergency. sought obtain funds abnormally high corporate while available. end, proscribed computations unusual required prompt them.10 23 From beginning, statute provided, means subsequent adjustment special instances where normal computation inequity. after pending consideration, eliminate otherwise required. Until 1942, permit even postponement any standard tax. Indeed, soon an express condition adjustment. 722(d). stated overpayments attributable taxpayer.11 At least extent, recognized owed usable Government. 24 significance further appears received additional time. use money, charge, during crucial war years. Correspondingly, money period. Instead, fact, retained own now need compensate substantial it. 25 While underpay actually return, contemplated 294(a), thus withheld question. detriment same—the eight distinction, emphasized may helped initiating 722(d) establish least, 'the return'. supplies ground different results once determined. find implication self-serving error understatement entitles greater ultimate advantage does size underpayment A fortiori nothing justify underpays correct over pays due. 26 2. here controversy I.R.C., 292(a).12 27 292(a) paid. it, must sustain proposition retroactive, extinguishing date eliminating corresponding emphasizes statement 722(a) securing procedure 'results excessive discriminatory tax' 'what fair just representing earnings constructive income'. Once done subchapter.' Standing alone, directive language elastic. It can read consistently new replaces abates old currently, assessed, retroactively date. leaves open disposition effect clauses relating more specifically looking forward, backward.13 added 710(a)(5), conditionally authorizing partial deferment benefits 'adjusted (computed section 722)' exceed 50% year. Even then, limited 33% amendment, successfully deferred avoided taken cases, could, deferred, incurring relief. little 710(a)(5). 1942 restrictions, fairly meant circumstances, existing due, subjected delinquency 292(a). 4. denial 3771(g).15 29 Although 3771(g) enacted then applicable before, well after, January 1, 1942. denied beginning denials first year filing periods prior September 16, (two amendment), whichever later.16 30 authorized overpaid reason precludes amounts treats between overpayment abatement. Equity demands comparable underpayments. Where unpaid receives release obligation pay having entitled, up time, collect abated, receive sum, use. natural counterpart Government's freedom paying refunded overpayments. 31 5. 32 54 Stat. 975 et seq. reflecting profits. Computation basis capital 714. standardized abnormalities 721. addition, 'to make adjustments adjust affecting capital'. 986. formalized Amendments 55 23—25, put final form Revenue Act 56 914—917, amended, 57 601—602. technical discretionary nature provision most reviewable division constituted occasion agency. 26, 917, 59 295, 673, 732, 732. never permitted file S.Rep. 75, 77th Cong., 1st Sess. 13; H.R. Rep. 146, 13. 33 interpreted claim preceded long complicated followed develop mutually satisfactory 710 complete itself subject, application, accepted 722.17 purpose penalties defaults paying, errors computing, taxes. On contrary, suggested considered relieving duty due.18 34 regulations do deal before us but, Treasury Regulations 109, consistent 30.722—5, T.D. 5264, Cum.Bull. 761, 5393, 415. addition practice record undisputed affidavit Department reviewer policy Bureau: 35 'It extinguished Section Code assess portion deficiency. thirtieth day agreement, Form 874, filed assessment, earlier.' (Emphasis supplied.) 36 Manning Seeley Tube & Box 338 561, 70 386, 94 346, relates carry-back Code, thoroughly principle discussion. There upheld later carrying back loss occurred treated previously determined, characterizing 'abatement' 565. 3771(e), help much recognize 3771(g), here. 567—568. announced 'In absence clear expression who properly possess right answered Government.' Id., page 566, 389.19 37 separately such. because, $260,554.39. latter $460,408.91, correctly adequately paid.20 38 foregoing reasons, conclude Government, retain controversy. Therefore, reversed affirmed. 39 29—Reversed. 40 41—Affirmed. 41 REED DOUGLAS dissent. 'Sec. General Relief—Constructive Average Base Period Net Income. '(a) Rule. establishes subchapter (as seq.) (without section) dicriminatory what purposes comparison period, subchapter. * '(d) Application section. compute section, except (5). allowed unless within 322 subject limitation makes therefor approval Secretary. may, Secretary, prescribe extent limitations subsection waived determining year.' 914—915, 601—602, 722(a, d), d). apply December 1939. 602. is, successor subsidiaries, consolidated convenience, corporations referred pursuant 975, amended. November 8, became inapplicable calendar 568. Two methods authorized: method 714, By timely consents, profits, 30, 1951. ran 28, 1949, payment; 1951, days waiver consenting 292(a), infra, note 12. ABATEMENT EXCESS PROFITS TAX UNDER without.1943.1944 722.$ 78,359.80 $ 55,529.92 $190,785,32 (Decrease) 722.(175,307.78) (175,174.49) (190,418.80) Resulting (credits) deficiency........(96,947.98).(119,644.57) 366.52&#149; reducing automatically left surtax. increases consequences us. $56,855.41 modified $52,292.40 reflect adjustments, including deduction $49.72, unabated $366.52 conceded chargeable. grant petition: "Where liable (hereinafter called 'potential deficiency') 722?" U.S., 988, 851. 713—on 714—on 721, allowances specified abnormalities. No permissible. discussed 274, infra. 292. Interest Deficiencies. rule. deficiency, notice demand collector, collected rate per centum annum (or, installments, installment) or, 272(d), 53 88, 602, 710. Imposition Of Tax. '(5) Deferment abnormality. adjusted proffits 722) claims 50 26(e) (relating income), payable equal claimed. 271, reduced, return.' see also, amendment indicated Senate Committee Finance Report accompanying 798, stated: 'Although believed advisable require some inequitable compel entire therefore amended provide quoted).' S.Rep.No.1631, 2d 205. looks forward provides waivers section's automatic, whereas might expected correction credit. 3. permits defer exceeds income. 3771. Overpayments. '(g) respect overpayment. later.' 465, 3771(g). 292(b), containing prohibiting 292(b). applied, example, ordinary Such leave larger corporation's increase, decrease caused appropriately charged none belated Act, payments determinations applications relief, unequivocally. 1950, 64 1137, adding 430—472, formulas substitute 442—446, filed, 447(e). 2679, 81st 17—21, discussing general relationship experience gained outlined American Coast Line 159 665, Pohatcong Hosiery Mills 162 146. '* difference invitum. argument perhaps persuasive, 'benefits' regarded constituent factor itself, example conditions detailed 722; contrary favor; presupposed taking into account ameliatory ex gratia blow softened; tempering wind shorn lamb.' Circuit Judge Learned Hand, court, 668. Ideal Packing T.C. 349; Uni-Term Stevedoring 918. instance (722) hypothetical 'tailor made' particular certain assumptions connection Each problem recase. legal generally intertwined accounting economic problems. Almost every influence business pertinent expense involved reconstructing tremendous.' S.Rep.No. 17. Standard Roofing Material 199 607; Rodgers 123 108 727; Cumberland Portland Cement 101 577, affirmed, 202 152. supra;

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