Source: https://caselaw.findlaw.com/us-supreme-court/365/753.html
Timestamp: 2019-04-18 13:41:07+00:00

Document:
When the Court of Claims has awarded a judgment against the United States to a taxpayer for an overpayment of excess profits taxes, plus interest thereon "as provided by law," determination of the allowance of interest on so much of the overpayment as was attributable to an unused excess profits credit carry-back is governed by 3771 (e) of the Internal Revenue Code of 1939, dealing specifically with interest on overpayments resulting from carrybacks, rather than by 28 U.S.C. 2411 (a), relating to interest on judgments for tax overpayments generally. Pp. 753-761.
Bernard Weiss argued the cause and filed a brief for petitioner.
Oscar H. Davis argued the cause for the United States. On the briefs were former Solicitor General Rankin, Solicitor General Cox, Assistant Attorney General Rice, Assistant Attorney General Oberdorfer, Acting Assistant Attorney General Heffron, Meyer Rothwacks and A. F. Prescott.
Acting in accordance with the provisions of 3771 (e) of the Internal Revenue Code of 1939, the Commissioner computed and allowed statutory interest on the latter sum from June 14, 1945, the date on which petitioner filed its claim for refund, to April 25, 1959 - 30 days prior to issuance of the refund check - in the amount of $124,784.72. Thereafter, petitioner moved the Court of Claims for relief from the Commissioner's interpretation of the judgment, contending that interest should be computed, under the provisions of 28 U.S.C. 2411 (a), from the earliest date the overpayment could have been determined (the end of the fiscal year subsequent to the year involved, i. e., March 31, 1943), rather than from the date it filed its claim for refund (June 14, 1945) as provided in 3771 (e), and that it was thus entitled to the further sum of $51,252.69. The motion was denied, without opinion.
Because of the importance of the question involved to the proper administration of the internal revenue laws, and to settle a conflict between the lower federal courts upon the question, 1 we granted certiorari. 364 U.S. 861 .
Petitioner contends that, because refund of the tax was not awarded administratively but by the "judgment of [a] court," the date from which interest runs is governed by the provisions of 2411 (a), and that it is thus entitled to interest from "the date of the payment" on the "overpayment" which, it argues, became ascertainable, [365 U.S. 753, 756] and hence should be regarded as made, on March 31, 1943. 4 The Government, on the other hand, contends that 3771 (e) is a special statute relating exclusively to tax refunds attributable to the carry-back provisions of the internal revenue laws, and hence prevails, as respects the special subject of carry-backs, over the general provisions of 2411 (a). After a careful review of these and other statutes and their legislative history, we have concluded that the Government is right.
Petitioner further contends that 2411 (a) is a later enactment than 3771 (e) and, for that reason, should take precedence over it. We do not believe that 2411 (a) can fairly be regarded as a later enactment than 3771 (e), for at the time 3771 (e) was enacted, in 1942, a predecessor provision of 2411 (a) had long been on the books. Save for the word "hereby" - of no possible significance - that predecessor provision ( 177 (b) of the Judicial Code, 28 U.S.C. (1940 ed.) 284 (b)) was identical with the present 2411 (a). 7 But even if petitioner were correct in concluding that 2411 (a) is to be regarded as the later enactment, it would not necessarily take precedence over 3711 (e), for it is familiar law that a specific statute controls over a general one "without regard to priority of enactment." Townsend v. Little, 109 U.S. 504, 512 . See, e. g., Ginsberg & Sons v. Popkin, 285 U.S. 204, 208 ; MacEvoy Co. v. United States, 322 U.S. 102, 107 ; Fourco Glass Co. v. Transmirra Corp., 353 U.S. 222, 228 -229.
Section 3771 (e) specifically fixes the date from which interest shall run on carry-back refunds. It came into the law with the Revenue Act of 1942, which authorized carry-backs. A carry-back is an exceptional relief measure [365 U.S. 753, 759] in that it permits a departure from the basic annual accounting rule. The carry-back provisions "were enacted to ameliorate the unduly drastic consequences of taxing income strictly on an annual basis. They were designed to permit a taxpayer to set off its lean years against its lush years, and to strike something like an average taxable income computed over a period longer than one year." Libson Shops, Inc., v. Koehler, 353 U.S. 382, 386 .
The significant feature of a carry-back is that it permits an adjustment of an earlier liability upon the basis of subsequent events. It contemplates that the initial tax obligation was not incorrectly or mistakenly imposed but was actually due, but that an adjustment may be made upon the basis of the taxpayer's gain or loss in the succeeding year or years, and it is evident from the very terms of 3771 (e) that Congress thought it would be unfair to the Government to require it to pay interest on a claim brought about by such a retroactive adjustment prior to the time when the taxpayer took affirmative steps to bring home to the Commissioner that he is now in position to claim, and claims, a readjustment of his past admittedly correct tax liability. Section 3771 (e) does not, of course, deny interest on carry-back refunds. It only prohibits the accrual of interest prior to the time the taxpayer's claim therefor is filed with, and thus made known to, the Commissioner.
[ Footnote 1 ] In Carter v. Liquid Carbonic Pacific Corp., 97 F.2d 1, the Court of Appeals for the Ninth Circuit reached a result contrary to that reached by the Court of Claims in this case.
[ Footnote 2 ] Internal Revenue Code of 1939: " 3771. Interest on Overpayments.
"(a) Rate. - Interest shall be allowed and paid upon any overpayment in respect of any internal revenue tax at the rate of 6 per centum per annum.
"(1) Credits. - In the case of a credit . . . . [365 U.S. 753, 755] "(2) Refunds. - In the case of a refund, from the date of the overpayment to a date preceding the date of the refund check by not more than thirty days . . . .
"(e) [as added by 153 (d), Revenue Act of 1942, c. 619, 56 Stat. 798, 847] Claims Based on Carry-Back of Loss or Credit. - If the Commissioner determines that any part of an overpayment is attributable to the inclusion in computing the net operating loss deduction for the taxable year of any part of the net operating loss for a succeeding taxable year or to the inclusion in computing the unused excess profits credit adjustment for the taxable year of any part of the unused excess profits credit for a succeeding taxable year, no interest shall be allowed or paid with respect to such part of the overpayment for any period before the filing of a claim for credit or refund of such part of the overpayment or the filing of a petition with the Tax Court, whichever is earlier."
" 2411 [as amended by 120, Act of May 24, 1949, c. 139, 63 Stat. 89, 106]. Interest.
"(a) In any judgment of any court rendered (whether against the United States, a collector or deputy collector of internal revenue, a former collector or deputy collector, or the personal representative in case of death) for any overpayment in respect of any internal-revenue tax, interest shall be allowed at the rate of 6 per centum per annum upon the amount of the overpayment, from the date of the payment or collection thereof to a date preceding the date of the refund check by not more than thirty days, such date to be determined by the Commissioner of Internal Revenue. The Commissioner is authorized to tender by check payment of any such judgment, with interest as herein provided, at any time after such judgment becomes final, whether or not a claim for such payment has been duly filed, and such tender shall stop the running of interest, whether or not such refund check is accepted by the judgment creditor."
[ Footnote 4 ] It will be noted that petitioner stops short of claiming that it is entitled to interest from the date it paid its 1942 excess profits tax. It claims, rather, that interest runs from the end of the succeeding tax year that gave rise to the carry-back (i. e., March 31, 1943). The Government's position, on the other hand, is that the interest runs from June 14, 1945, the date on which the refund claim was first presented.
[ Footnote 5 ] Petitioner points to the fact that in Lasky v. Commissioner, 352 U.S. 1027 , the Tax Court was held to be an administrative agency.
[ Footnote 6 ] Petitioner does not in fact claim interest from the date it actually paid its excess profits taxes for the year 1942 but, rather, from the end of the succeeding tax year that gave rise to the carry-back, i. e., March 31, 1943. See n. 4.
[ Footnote 7 ] The history of 28 U.S.C. 2411 (a) and its predecessor provisions goes back to 1911. See 177 (b) of the Judicial Code, enacted in 1911 (c. 231, 36 Stat. 1141), as amended by the Revenue Act of 1921 (c. 136, 42 Stat. 227, 1324 (b)), as further amended by the Revenue Act of 1926 (c. 27, 44 Stat. 9, 1117). Further amendments occurred in 1928 (45 Stat. 791, 615) and in 1936 (49 Stat. 1648, 808). The 1948 codification omitted from the Judicial Code all reference to interest on tax overpayments, but, by a correction Act in 1949 (c. 139, 63 Stat. 89, 120), Congress restored the section to the Judicial Code as 2411 (a). The only difference between 177 (b) as it stood in 1942, and 2411 (a) as it stands today, is that the word "hereby" no longer appears. Thus, 3771 (e) is not only the specific enactment designed to control the subject of interest in carry-back cases, but it is also a later enactment than 2411 (a).
[ Footnote 8 ] S. Rep. No. 1631, 77th Cong., 2d Sess., pp. 123-124.
[ Footnote 9 ] That Congress did not propose to allow interest for any period prior to presentment of the claim is further confirmed by the provisions of 6 of the Tax Adjustment Act of 1945, c. 340, 59 Stat. 517, amending 3771 (e). Section 4 of that Act added a new section to the Internal Revenue Code, 3780, providing for tentative carry-back adjustments. The concurrent amendment of 3771 (e) specifies that interest shall not start to run prior to the date application is made for the tentative carry-back adjustments.
[ Footnote 10 ] H. R. Rep. No. 1337, 83d Cong., 2d Sess., p. A418.

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