Court Opinion

ID: 9445957
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:42:14.276608+00
Date Added: 2024-06-11T17:30:28.116718
License: Public Domain

RIVES, Circuit Judge
(dissenting).
The holding in this case is, I think, contrary to the legislative policy that there can be no compromise of a tax claim by the Commissioner of Internal Revenue unless assented to by the Secretary of the Treasury. Sections 3760 and 3761, Internal Revenue Code of 1939, 26 U.S.C.A. §§ 3760, 3761; Sections 7121 and 7122 of the Internal Revenue Code of 1954, 26 U.S.C.A. §§ 7121, 7122; Botany Worsted Mills v. United States, 278 U.S. 282, 289, 49 S.Ct. 129, 73 L.Ed. 379. The Commissioner or his representative should not be permitted by indirection to usurp the functions which Congress has vested in the Secretary or his delegate. To allow that to be accomplished, first by tacit compliance of the parties with an agreement of compromise not approved *758by the Secretary and then by the device or theory that the taxpayer is estopped to deny the compromise or to file or prosecute a claim for refund contrary to his promise which had not been accepted by the Secretary, and hence was not legally binding, seems to me wholly impermissible.
No misrepresentation as to the value of the stock in question was made by the taxpayer or relied on by the Government. The only misrepresentation made by the taxpayer was his promise not to file or prosecute a claim for refund. Assuming that that was a misrepresentation of an existing fact, it was not a fact on which the Commissioner had a right to rely because he knew that the taxpayer’s promise had not been accepted by the Secretary and was not legally binding.
Suggestions have been made that it is necessary or desirable to relax the requirements of the statute,1 but that is a matter for the consideration of Congress,2 and administrative officials should not receive the approval of the courts for practices and policies which have the effect of defeating the clearly expressed will of Congress.
There is hardly any subject connected with our Government more necessary to be strictly limited, regulated and safeguarded than the authority to compromise tax claims. Congress is the only constitutional body which can delegate that authority. The statute is, of course, not subject to change by the administrative authorities or by the courts and it should not, I submit, be subjected to a process of administrative and judicial erosion. I therefore respectfully dissent.

. “There are several thousand cases each, year in which there are proposed deficiencies and which are suitable material for a formal closing agreement such as will preclude the reopening of the question of tax liability under § 3760 of the Internal Revenue Code, and there are numerous cases in which a final compromise agreement under § 3761 would be the ideal way of closing the matter, but the administrative burden placed on the Secretary and Undersecretary of the Treasury by these statutes mates it impossible for them to handle more than a small proportion of the cases and the remainder must be closed by agents not authorized by law to enter into binding agreements. The Commissioner has attempted to devise an informal type of agreement which will be binding on both parties and end controversies, but without success. See Dean Griswold’s article in 57 Harv.L.Rev. 912.” Annotation 11 A.L.R.2d 903, 913. Many cases are collected in that annotation and the supplement service thereto and in 9 Mertens Daw of Federal Income Taxation, Chap. 52.

. The sections were materially changed when brought forward into the 1954 Internal Revenue Code.