Every evening, Wilmington daily commercial., 1922-06-13
ALFRED |. DU POINT
WINS FIRST POINT
IN INCOME TAX SUIT
Continued from page 1


ceived through the malls n notice ana
demand dated December 81. 1919. that
he pay to the defendant as collector OF
internal revenue on or before January
10, 1920, the sum OF $1,578. 0lb.s6 for
Income tax for tho yenr, 1915.
1t appears that on November ~.
1917. Income Tax Inspector du Ross
made a report TO the revenue agent
In charge at Baltimore, Maryland, In
which he reported among other things
that tho plaintiff had received as In
como, during tho year 1915. 200 per
cent in common stock dividends dis
tributed by the e. I. du Pont de
Nemours Co. previously omitted. du
Ross made further report on July
%. 1919, as a result OF which and
OF other Investigations. the Commits
sioner OF Internal Revenue made an
amended return upon such informa-
ton, as provided for by Section Pc
of tho act, OF October 8, 1913. The
evidence clearly shows that this
amended return was made not earlier
than July %. 1919. and that the as
sessment OF the additional tax claimed
was not made until December, 1919.
The plaintiff AYERS that the defend
ant intends to proceed to collect the
additional taxes referred to In the
notice and demand of December a.
1919. by distress and sale of the plain
tins lands and freehold in the District
OF Delaware: that the result would be
An irreparable injury to the plaintin
and deprive him OF any remedy for
contesting tho validity OF the assess
ment or tho amount thereof, and he
prays for an injunction restraining
tho defendant from distraining or at
tempting to distrain to collect the said
sum OF 31.576.o15.S6.
II IL claimed that under the provi-
sions OF Section Il OF the Income Tax
Act OF 1918. no return could be made
by the commissioner after the ex-
pratt OF three years from March /.
1916. and no assessment made thereon
after the expiration OF three years
from June 1, 1916. No return or az
sessment was made within the pre-
scribed time.
Further objections are that the al
legged return. not made until July
1919, or thereafter was not made by
the officials authorized by tho law
was not made according to the form
prescribed. and that the Assessment
was not based upon the alleged re-
turn.
Tho stock dividend upon which II IL
attempted to hold the defendant liabl,
has been held by the Supreme Court
20 be taxable income. u. =. Va. Phel
ia, 200 October Term, 1921, AZ Sup
| CT. 6S We have therefore a Lawful
| tax upon income for the year 1911
for which the plaintiff should have
made return for that year. But th'
plaintiff contends that the amended
return made for him by the commits
sion and the assessment thereon wer'
not made according to law and, there
fore. are invalid and that no suit o
proceeding may now be brought upol
such invalid return and assessment.
Section l. of tho Income Tax Ac
OF 1913. rs Stat. at Large 1863, afte
providing for assessment and motto
before Juno l of each successive yea
and that assessments shall be paid o
or before Juno 80 provides that, &
case OF refusal or neglect 10 max
such return aud cases OF false O
fraudulent returns, tho commissions
shall upon the discovery thereof. n
any time within three years after IN
return is due, make n return upon IN
formation obtained as provided for I
this action or by existing law, an
the assessment made by the commits
sioner OF Internal Revenue thereo
shall be paid by such person or per
sons Immediately upon notification
the amount OF such assessment"
II Is conceded that the plaintiff
return was incorrect. and was Their,
fore false" within the moaning
I the section above cited Woods V
Lewellyn. 252 Fed. I06 Eliot Nation
Bank We. Gill. 2ls Fed 500. Nation
= Bank OF Commerce vs.. Allen. 223 Fe
, 472.
The plaintiff therefore. urges tina
as the return prepared by the con
= missioner was not made within thr
= years after the plaintiffs return W.
due on March !. 1915. and the asses
ment was not made within three yea
from June !. 1916. no suit or procee
- ing may be begun by the collector 4
recovery OF the tax based thereon. tt
y question as TO whether the three yea
within which a return may be ma,
runs from the time OF the diecove
! or from the time when the return
due has been held against the plant
in a dlctum In Eliot National Bar
: vs.. GIL. 2ls Fed COO, but the poi
was not expressly before the cou
either in that case or in Woods '
Lewellyn. 252 Fed 10e. where the 1
ference IS to the contrary. The gu
ject Is discussed in Montgomery It
y. Procedure, Ed. 1921, page no, foe
! note IS, and the opinion OF the auth
!. Is that the punctuation conveys We
r clear meaning that the discovery a
u the assessment must be made with
IN three years from the time when I
10, return u due.
Il These considerations, however,
go TO the question OF the invalid
~ OF the return and assessment and ca
40 not be raised In this proceeding
r. view Of the inhibition of section 81
r. S. providing mo suit for the p,
pose Of restraining the assessment
OF collection or any tax shall be ma
er tanned In any court" and the rulir
OF the Supreme Court holding u
al Congress has provided a compl
''e system of corrective Justice In regs
to all taxes imposed by the gene
government. including provisions
recovering the tax after 1t has bt
~ paid. by suit against the Collector a
therefore, the tax payer has no
course to the courts until after
70 money Is paid" State Railroad
a! Cases. 81 q. 8. SIS, GLIB.
OK Therefore, It must be held that
" remedy by injunction will not lie. I
az less because the plaintiff through
ic threatened action Of the collector
ne collect through distraint Is depri'