Court Opinion

ID: 9694059
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:19:50.027353+00
Date Added: 2024-06-11T18:19:54.869695
License: Public Domain

LITTLETON, Judge
(dissenting).
I am of opinion that plaintiff states a cause of action under paragraphs 7, 8, and 9 of the petition for the amount claimed as an illegal collection for 1917 and that it is entitled to recover under the provisions of the Revenue Act of 1928 (26 USCA § 2901 et seq.). The petition might have been demurrable because it did not allege the filing of a claim for 1917, but the proof has corrected any defect in this regard since it shows the filing of a lawful and timely claim for refund for the illegal collection by credit of the additional assessment for 1917 plus interest.
1. Upon further consideration of sections 697 and 609 (a) and (c) of the Revenue Act of 1928, 26 USCA §§ 2607, 2609 (a, e), in the light of recent decisions in this court in Leisenring et al. v. United States, 3 F. Supp. 853, 78 Ct. Cl. 171, and Daube v. United States, 5 F. Supp. 769, 78 Ct. Cl. 754, and the decision in United States v. Swift & Co., 282 U. S. 468, 51 S. Ct. 202, 75 L. Ed. 464, I am of opinion that the conclusion reached in Parks & Woolson Machine Co. v. United States, 58 F.(2d) 868, 75 Ct. Cl. 204, was erroneous. In that case the taxpayer filed a timely claim for refund of taxes collected by a credit made after the expiration of the period of limitation and instituted suit within two years after its rejection, but the decision in the ease proceeded on the theory that an attempted credit of an allowed overpayment was void and ineffectual for any purpose and, in such case, the taxpayer’s cause of action was for the allowed overpayment, evidenced by the certificate of overassessment delivered after the refund schedule had been signed. Por this reason the suit was dismissed. Plaintiff also contended that there was an account stated with reference to the overpayment credited to the barred tax, but, as to this, the court pointed out that the petition was not filed within six years after the date of delivery of the certificate of overassessment.
Section 607 of the 1928 Act (26 USCA § 2697) declares that any tax paid after the expiration of the period of limitation shall constitute an overpayment and shall be refunded if a claim is filed; and section 609, 26 USCA § 2609, declares that collection of a barred tax by credit shall likewise constitute an overpayment. United States v. Swift & Co., supra, held that a credit of an overpayment for one year against an unpaid tax for another year constituted a collection of such tax on the date on which the Commissioner signed the schedule of refunds and credits and that if the tax was barred on that date, it could be recovered if a claim was filed within four years thereafter. ■
2. In the ease at bar collection of the 1917 tax became barred April 1, 1924, when the unlimited waiver filed for that year expired, and the collection by credit on July 8, 1924, when the Commissioner signed the schedule of refunds, was illegal under sections 607 and 609 of the 1928 act. On June 27,1928, within four years after such collection by credit, plaintiff filed a claim for refund thereof for 1917 on the grounds (1) that the additional assessment for 1917 against which the 1918 overpayment was credited was made without compliance with section 259 (d) of the Revenue Act of 1921 (which was true); and (2) that the statute of limitation had run against the collection of the tax. This claim set forth that the amount 'of the tax assessed, for whieh the claim for refund was being filed, was $36,230.67 for the calendar year 1917 on the assessment list of March 11, 1924. The exact language of the claim, so far as material here, was that “Deponent verily believes that this application should be allowed for the following reasons: The statute of limitation had run against the collection of the tax; the full amount of tax with interest should be refunded.” This claim was disallowed and rejected by the Commissioner, October 20, 1928, on the ground that the effective date of the credit was March 14,1924, when he signed the first schedule of overassessment for 1918. This suit was instituted April 24, 1929, within six months after rejection.