Source: https://supreme.justia.com/cases/federal/us/288/420/
Timestamp: 2019-04-24 15:52:41+00:00

Document:
"This section shall not (1) authorize the assessment of a tax or the collection thereof by distraint or by a proceeding in court if, at the time of the enactment of this Act, such assessment, distraint, or proceeding was barred by the period of limitation then in existence, or (2) affect any assessment made or distraint or proceeding in court begun, before the enactment of this Act,"
does not render invalid waivers executed after the date of the Act with respect to income taxes, the assessment and collection of which had become barred before that date. P. 288 U. S. 422.
2. The purpose of paragraph (d) of § 250 of the Revenue Act of 1921 and paragraph (c) of § 278 of the Revenue Act of 1924 was not to grant authority for waivers or to limit their effect, but to remove doubt of their validity by expressly recognizing them. P. 288 U. S. 423.
3. Paragraph (e) of § 278 of the 1924 Act does not qualify paragraph (c). P. 288 U. S. 424.
75 Ct.Cls. 155; id. 186; 59 F.2d 290, affirmed.
Certiorari, 287 U.S. 589, to review a judgment rejecting claims for the recovery of money paid under income tax assessments.
These cases arose out of the same transaction, and present, on substantially the same facts, the same question of law. Reference will be made in the opinion only to the McDonnell case.
The action was brought by McDonnell in the Court of Claims on November 4, 1929 to recover $4,549.03, with interest from the date of payment, October 23, 1926. McDonnell filed his individual income tax return for 1917 on April 1, 1918, and paid the amount shown thereon to be due. The sum now sought to be recovered was paid to the collector of internal revenue for the Second district of New York pursuant to an assessment of an additional income tax for the year 1917, which was made by the Commissioner of Internal Revenue on October 9, 1926. There had been a waiver on February 23, 1926, of the statutory limitation upon the time for making the assessment. Claims for refund were made on December 27, 1928, and May 31, 1929, alleging that the waiver was invalid and that the amount claimed was collected after the running of the statute. The claims for refund were rejected on March 6, 1929, and July 25, 1929. The Court of Claims entered judgment for the defendant. 59 F.2d 290. Because of conflict of the decision with that in Uncasville Manufacturing Co. v. Commissioner, 55 F.2d 893, certiorari was granted, limited to the question of the validity of the waiver under § 278(e) of the Revenue Act of 1924. 287 U.S. 589.
assessment and collection of an additional tax -- the Commissioner made a jeopardy assessment against the firm of $100,005.14. On November 30, 1925 -- that is, after the expiration of the statutory period for making an additional assessment against the plaintiff -- the Commissioner notified the plaintiff that the amount payable by the firm for additional tax should, because of errors, be reduced to $24,863.28, but that a reduction of the liability of the partnership necessitated additional taxes to the individual members of the firm, and that he would not make the reduction to the firm unless plaintiff and his partner would waive the statute of limitations so as to permit additional individual taxes, and would pay the amounts assessed against them. Each gave the waiver requested, and paid the amount now sought to be recovered.
It is conceded by McDonnell that the tax was payable unless it was barred by the period of limitations prescribed in § 250(d) of the Revenue Act of 1921 or § 277(a)(2) of the Revenue Act of 1924. It is conceded by the government that it was so barred unless the limitation was removed by the waiver signed by McDonnell on February 23, 1926, which, by its terms, purported to extend to December 31, 1926, the time within which the Commissioner could assess additional taxes for the year 1917.
period of limitation then in existence, or (2) affect any assessment made, or distraint or proceeding in court begun, before the enactment of this Act. [Footnote 1]"
The contention of the petitioner, expressed in different terms, is that waivers executed subsequent to June 2, 1924, are invalid where the date of filing the return was such that the five-year period for assessment elapsed before June 2, 1924. Obviously, the waiver would have been good if executed before June 2, 1924, the period of limitation expiring when it did, for, in that event, the assessment would not have been "barred by the period of limitation" at the time of the enactment of the 1924 Act. The fact that the waiver was executed after the running of the statute of limitations does not render it invalid. Burnet v. Chicago Railway Equipment Co., 282 U.S.
295, 282 U. S. 298-299; Stange v. United States, 282 U. S. 270, 282 U. S. 273-275. And, confessedly, the waiver would have been good, executed when it was, if the period of limitation had expired after June 2, 1924.
which were authorized by § 278 only in the sense that they were made pursuant to an agreement by the taxpayer of the kind which the act continued to recognize and sanction.
* Together with No. 331, Truda v. United States.
"(a) In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment at any time."
"(b) Any deficiency attributable to a change in a deduction tentatively allowed under paragraph (9) of subdivision (a) of § 214, or paragraph (8) of subdivision (a) of § 234, of the Revenue Act of 1918 or the Revenue Act of 1921, may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment at any time."
"(c) Where both the Commissioner and the taxpayer have consented in writing to the assessment of the tax after the time prescribed in § 277 for its assessment, the tax may be assessed at any time prior to the expiration of the period agreed upon."
"(d) Where the assessment of the tax is made within the period prescribed in § 277 or in this section, such tax may be collected by distraint or by a proceeding in court, begun within six years after the assessment of the tax. Nothing in this Act shall be construed as preventing the beginning, without assessment, of a proceeding in court for the collection of the tax at any time before the expiration of the period within which an assessment may be made."
See H.Rep. No. 179, 68th Cong., 1st Sess., p. 26; S.Rep. No. 398, 68th Cong., 1st Sess., p. 32.
See Hearings on H.R. 6715 before the Senate Committee on Finance, 68th Cong., 1st Sess., p. 41 (Statement of A. W. Gregg, Treasury draftsman).

References: § 250
 § 278
 § 278
 v. 
 § 278
 § 250
 § 277
 v. 
 v. 
 § 278
 v. 
 § 214
 § 234
 § 277
 § 277