Source: https://caselaw.findlaw.com/us-supreme-court/288/62.html
Timestamp: 2019-04-22 19:18:10+00:00

Document:
[288 U.S. 62, 63] Messrs. William D. Mitchell, Atty. Gen., and Chas. B. Rugg, Asst. Atty. Gen., for the United States.
[288 U.S. 62, 64] Mr. Walter E. Barton, of Washington, D.C., for respondent.
Respondent, the plaintiff in the court below, brought suit against the United States in the Court of Claims to recover overpayments of income taxes for the years 1922 and 1923. The government opposed recovery upon the ground that the claims filed with the Commissioner of Internal Revenue for the refund of the tax were too general and indefinite to comply with the provisions of the statutes and regulations, and that amendment came too late. The Court of Claims gave judgment in favor of the taxpayer. 59 F.( 2d) 276. A writ of certiorari ( 287 U.S. 585 , 53 S.Ct. 87, 77 L.Ed. --) brings the case here.
In the refund claim for 1922 there was a statement of the amount of the tax paid $25,626.25), a statement of the correct amount due ($24,296. 56), a statement that there had been overpaid in error $1,329.69, and a request for refund of that amount with interest as provided by law, or such greater amount as might be legally refundable. Attached to the claim was the following summary [288 U.S. 62, 65] of the method of computation: Net income, $194,372.46; 12 1/2 per cent., $ 24,296.56; previously paid, $25,626.25; overpaid, $1,329.69. There was no other specification of supporting facts or reasons.
Upon receipt of these claims, the Commissioner of Internal Revenue, in order to pass upon the merits, made an investigation and an audit of the claimant's books and records for 1922 and 1923 through a duly appointed agent. The agent reported to the Commissioner that there had been overassessments for both years; the excess being fixed at $1,660.70 for 1922 and $4,835.76 for 1923. Thereupon a deputy commissioner notified the taxpayer in writing under date of October 13, 1928, that its refund claims had been considered, that the taxes had been readjusted in accordance with the new audit, and that the overassessments for the two years would be made the subject of certificates of overassessment, which would be transmitted in due course through the office of the appropriate collector. Nothing further was said or done as to the matter till January 26, 1929, when the same deputy commissioner who had signed the notice last mentioned transmitted to the taxpayer another notice that the claims were defective in form in that they failed to satisfy the requirements of the Treasury Regulations. After quoting the pertinent provisions, he stated: 'Since the information on file with the claims does not meet the requirements' of the regulations, 'and the claims do not indicate (i.e., apart from the investigations of the Revenue Agent) that the taxes have been illegally assessed, they will be rejected. The rejection will officially appear in a schedule to be approved by the Commissioner.' Thereupon the claim- [288 U.S. 62, 66] ant, protesting that an amendment was unnecessary, filed a new claim with the Commissioner on April 2, 1929, in which the facts were set forth in detail. The Commissioner gave final notice of rejection on October 23, 1929, placing his ruling on the ground that the claims as first presented were defective and irregular. In this suit by the taxpayer, the Court of Claims has given judgment for the moneys overpaid.
With this background of analogy, we reach the specific problem that calls for answer here. The respondent filed a claim for taxes overpaid, a claim for money had and received to his use by the agents of the government. The identity of the cause of action may be said in one aspect to depend upon the mere fact of overpayment, the existence of a net balance owing to the taxpayer after the ascertainment of all items of debit and of credit. In another aspect it may be said to depend upon the identity of the items illegally exacted, and hence upon the particular grounds that determine illegality. Choice between these meanings must avoid a doctrinaire adherence to abstract definitions. It must keep in view the realities of administrative practice, for its effect will be to regulate the conduct of administrative officers. Definitions and analogies borrowed from pleadings in a lawsuit will have their place and recognition, but in due subordination to differences of end and aim. Viewing the problem thus, we must say whether a statement by the taxpayer of supporting facts [288 U.S. 62, 70] and reasons is to be assimilated to a bill of particulars explanatory of a claim, or is something so essential that there can be no claim without it.
Our decision in Lewis v. Reynolds, 284 U.S. 281 , 52 S.Ct. 145, 146, goes far to point the answer. The court there ruled that, upon a claim for the refund of a tax because of the disallowance of a particular deduction, the Commissioner might sustain the result by the disallowance of another deduction, and this though the time had gone by within which he would have been at liberty, if a claim had not been filed, to make a new assessment. The court applied the analogy of a common-law action for money had and received. 'The ultimate question presented for decision, upon a claim for refund, is whether the taxpayer has overpaid his tax. This involves a redetermination of the entire tax liability.' No matter though the claim for refund be specific and limited, the Commissioner is at liberty to audit the return afresh and to strike a new balance as the facts may then appear. Commonly, though, it seems, not always, a general audit will be necessary or will be at least a wise precaution, whether the claim is broad or narrow, if the government is to have the benefit of any compensating adjustments. 8 There is little doubt that this conception of duty and of prudence has had recognition and emphasis in administrative practice.
The practice is portrayed in action in the pages of this record. We are there informed in a striking way of the actual procedure where a notice, general in its terms, is not rejected at the beginning for irregularity of form, but is considered on the merits. At once upon the filing of the claim for refund, there was an order for the complete examination of the business of the taxpayer, to the end [288 U.S. 62, 71] that the net amount of its tax liability might be reported to the Bureau. Every claim put forward in its amended notice has been investigated, every fact alleged in its behalf has been verified and found. The files of the Bureau contain the report of an examiner informing his superior that the tax has been overpaid, and the files of the taxpayer contain an official notice that the overassessment is recognized and that justice will be done. Of a sudden, at the end, the discovery is made that the inquiry is mere futility because the notice starting it in motion has departed in form from the requirements of a rule.
The cases in this court are not at all at variance with the conclusion now arrived at, though they leave the problem open. Tucker v. Alexander, 275 U.S. 228 , 48 S.Ct. 45, holds that it is within the power of the Commissioner to waive the objection that the supporting facts or reasons have not been stated in the claim. United States v. Felt & Tarrant [288 U.S. 62, 72] Co., 283 U.S. 269 , 51 S.Ct. 376, holds that a defective claim for refund will not supply a basis for a suit against the government when there has been neither waiver by the Commissioner nor amendment by the taxpayer. Bonwit Teller & Co. v. United States, 283 U.S. 258 , 51 S.Ct. 395, holds that a letter from the taxpayer, accompanied by a form of waiver requested by the Bureau, will be the equivalent of a notice of claim if the Commissioner has so treated it.
One other question, less general in its significance, is yet to be considered. An argument is made that at the time of this amendment the claim had been finally rejected and the proceeding thereby ended. If so, it was too late. McKesson & Robbins v. Edwards, supra; Solomon v. United States (C.C.A.) 57 F.(2d) 150. When correction is thus postponed, there is no longer anything to amend, any more than in a lawsuit after the complaint has been dismissed. We think the matter was still in fieri. True the deputy commissioner had given notice to the taxpayer that the claims would be rejected, and that the rejection would be officially announced in a schedule to be approved thereafter. No reason is apparent why at any time before such approval the Commissioner or his deputy was not at liberty to recall the first announcement, and dispose of the case otherwise. Michel v. United States (C.C.A.) [288 U.S. 62, 73] 37 F.(2d) 38, reversed, but on other grounds, 282 U.S. 656 , 51 S.Ct. 284. We are not now considering what the practice ought to be if there were need to open the proceeding for the submission of other evidence extrinsic to the claims themselves. Neither in the record nor in the argument do we find a suggestion of that need. Long before the amendment the Commissioner had ascertained the facts and had even notified the taxpayer of the justice of its claims and of the ruling of the Bureau that adjustments would be made accordingly. The dismissal of the claims, when finally announced, was for defects of form only. The defects had been corrected, and the dismissal may not stand.
[ Footnote 1 ] A later regulation, different in form, is applicable to claims filed on or after May 1, 1929. Treasury Decision 4265, Cumulative Bulletin VIII-1, p. 110.
[ Footnote 2 ] Official statistics indicate that 'eight-five 20/100 per cent of all the overassessments are attributable to clerical or bookkeeping adjustments or to causes beyond the control of either the Treasury or the taxpayer, that is to adjustments after the payment of taxes based upon causes which could not fairly be considered prior to the payment.' Refunds and Credits of Internal Revenue Taxes, Report of the Joint Committee on Internal Revenue Taxation, 1929, pursuant to section 710 of the Revenue Act of 1928, H. Doc. No. 43, Supplement to part II, p. 29. Cf. H. Doc. No. 478, 71st Cong., 2d Sess. (1930). These statistics, covering adjustments of taxes under the act of 1928, give support to the conclusion that in determining the application of a statute of limitations the word 'claim' should be interpreted with reasonable liberality.
[ Footnote 3 ] The uncertainties of the phrase have been well developed by Dean Clark with full citation of the decisions in his treatise on Code Pleading, pp. 75-87, 501-508.
[ Footnote 4 ] Clark, Code Pleading, p. 81, and cases there cited; Pomeroy, Code Remedies (4th Ed.) 347.
[ Footnote 5 ] Clark, supra, p. 502, and cases there cited.
[ Footnote 6 ] Clark, supra, pp. 83, 84, 505, and cases there cited.
[ Footnote 7 ] Other cases are collected by Clark, supra, pp. 504, 505.
[ Footnote 8 ] Compare Report of the Joint Committee on Internal Revenue Taxation, 1928, pursuant to section 1203 of the Revenue Act of 1926, vol. III, pp. 25, 30.

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