Court Opinion

ID: 9418999
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:44:37.427256+00
Date Added: 2024-06-11T17:22:14.202703
License: Public Domain

Mr. Justice Stone.
I think the judgment should be reversed.
The first transferee was a “taxpayer” within the meaning of § 280 (a) (1), since he was liable under the provisions of the revenue law to pay the tax and, like other taxpayers, was subject to assessment and distraint as well as to a suit for recovery of the tax. United States v. Updike, 281 U. S. 489, 494. Respondent, the second transferee, was therefore in the words of § 280 (a) (1), “ a transferee of property of a taxpayer,” and its tax liability was by that section to “be assessed, collected, and paid in the same manner and subject to the same provisions and limitations as in the case of a deficiency in a tax imposed by this title . . . including the provisions . . . authorizing distraint and proceedings in court for collection . . .’*
Under § 278 (d) the statute of limitations for collection of the tax from the first transferee did not expire until January, 1931, six years after assessment of the tax against the original taxpayer and first transferor. United States v. Updike, supra. By § 277 (b) the running of the six year statute is suspended, after the beginning of deficiency proceedings under § 274 (a), “for the period during which *408the Commissioner is prohibited from making the assessment or beginning distraint or a proceeding in court.” And by § 274 (a) it is provided that during the pendency of deficiency proceedings “no assessment of a deficiency in respect of the tax imposed by this title and no distraint or proceeding in court for its collection shall be made, begun, or prosecuted . . .” It follows that the running of the statute of limitations in favor of the first transferee was suspended during the pendency of the deficiency proceedings intiated with respect to him April 15, 1926, at least, as the opinion of the Court states, until the death of the first transferee in March, 1929, or for a period of nearly three years. The period of limitations for the collection of the tax from the first transferee was thus extended at least until 1933, within which time the present suit was brought against respondent. By virtue of the transfer, the transferee, to the extent of the property received, becomes subject to the tax liability of the transferor. Phillips v. Commissioner, 283 U. S. 589, 592, 593, and cases cited in footnote 1. Since the period of limitations and the provisions for its suspension under §§ 274 (a) and 277 (b), applicable to the first transferee and taxpayer, are by § 280 (a) (1) likewise applicable to his transferee, who is also a taxpayer, United States v. Updike, supra, 494, it follows that the statute of limitations applicable to respondent, the second transferee, had not expired when the present suit was brought in May, 1932.
No distinction was made by the revenue laws between the liability and the period of limitations applicable to a first transferee and those applicable to a second until the enactment of § 311 of the Revenue Act of 1928, which provided in subsection (b) (2) that the liability of a second transferee of the property of the taxpayer should not extend beyond three years after the expiration of the period of limitation for assessment against the original *409taxpayer, except that provision was made for an extension of the time if within that period “a court proceeding for collection of the tax or liability” had been begun against the original taxpayer or the last preceding transferee. In recommending these changes the report of the Senate Finance Committee, No. 960, 70th Congress, 1st Sess., p. 32, prepared before our decision in the Updike case, pointed out that § 280 of the 1926 Act did not specifically provide any limitation period in the case of a transferee of a transferee, and it stated that the purpose of the new provisions in § 311 (b) (2) was to shorten the period during which proceedings might be had against a second transferee. This legislative history is persuasive that under § 280 of the 1926 Act, as its language indicates, the second transferee is the transferee of a taxpayer and subject to the same period of limitations and provisions for its extension as is his transferor.
As a transferee is subject to the tax liability of his transferor, the second transferee under the 1926 Act is either subject to the same period of limitations as his transferor, or there is no statute of limitations applicable to him. But if the first transferee is a taxpayer, so as to avail himself of the benefit of the six year statute of limitations for collection of the tax, as held in the Updike case, his transferee is likewise a taxpayer, as well as the transferee of a taxpayer, so as to be subject to the burden of the provisions extending the period of limitation for collection of the tax. § 280 (a) (1).
Mr. Justice Black concurs.