Court Opinion

ID: 6861829
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:49:37.739218+00
Date Added: 2024-06-11T16:05:15.542047
License: Public Domain

BINGHAM, Circuit Judge
(dissenting).
. The tax in question is one assessed .against a transferee.
Section 280 (a) (1) of the Revenue Act of 1926 (26 USCA- § 1069 (a) (1) imposes .a liability upon the transferee for the tax imposed upon the taxpayer, .and subdivision (b) (1) of that section (26 USCA § 1069 (b) (1) .fixes .the period of limitation for the assessment of any such liability as follows :
“Within one year after the expiration of the period of limitation for assessment against .the taxpayer.”
• One of the material questions in the case is when the period of limitation for the assessment of the tax against the taxpayer ended, for the assessment of the tax against the transferee is required to be made within a year thereafter.
If this question is to be determined by the provisions of the waiver, then, as I construe them, the period for the assessment of the tax against the taxpayer was extended from December 31, 1926, by the period from February 20, 1926, the date of the deficiency notice, to May 29, 1930, the date the parties' have agreed upon as the date of the final decision of the Board, or for a period of 4 years, 3 months, and 9 days, which, added- to December 31, 1926 (the date fixed by the waiver to which the extension period was to be added), would extend the time within which the tax could be assessed to April 9, 1931. If the time for the assessment of the tax against the taxpayer is to be thus determined, then the assessment of the tax against the transferee under section 280 (b) (1) had to be made within one year after April 9, 1931, or on or before April 9, 1932. It therefore appears that, under the terms of the waiver and its provisos, the deficiency notice to transferee .of an assessment against it, on *465May 18, 1932, was too late. This is the contention of the Hoosac Mills, and its contention would be the solution of the problem unless Congress intended that the applicable provisions of the Revenue Act of 1926 should govern, in which case their application would, as I .construe and apply them, produce a different result.
Section 283 (c) of the Revenue Act of 1926 (26 USCA § 1064 (c) relates to the assessment of taxes imposed by prior acts, and provides:
“(c) If before the enactment of this Act [February 26, 1926], the commissioner has mailed to any person a notice under subdivision (a) of section 274 of the Revenue Act of 1924 [section 1048 of this title] (whether in respect of a tax imposed by Title II of such Act or in respect of so much of an income, war-profits, or excess-profits tax imposed by any of the prior Acts enumerated in subdivision (a) of this section as was not assessed before June 3, 1924), and if the 60-day period referred to in such subdivision has not expired before the enactment of this Act [February 26, 1926], and no appeal has been filed before the enactment of this Act [said date], such person may file a petition with the board in the same manner as if a notice of deficiency had been mailed after the enactment of this Act [said date] in respect of a deficiency in a tax imposed by this title [chapter]. In such cases the 60-day period referred to in subdivision (a) of section 274 of this Act [section 1048 of this title] shall begin on the date of the enactment of this Act [February 26, 1926], and the powers, duties, rights, and privileges of the commissioner and of the person entitled ■to file the petition, and the jurisdiction of ¡the board and of the courts, shall, whether or not the petition is filed, be determined, .and the computation of the tax shall be made in the same manner as provided in subdivision (a) of this section.”
In subdivision (a) of section 283 (26 USCA § 1064 (a), after pointing out how income and excess-profits taxes imposed by prior revenue acts should be computed and notice of a deficiency should be given, it is provided that “the amount so computed shall be assessed, * * * in the same -manner and subject to the same provisions and limitations * * * as in the case of a deficiency in the tax imposed by this title [chapter], except as otherwise provided in section 277 of this Act [section 1057 of this title].”
Section 277 (a) (3), 26 USCA § 1057 (a) (3), fixes the period of limitation upon the assessment of income and excess-profits taxes imposed by the Revenue Act of 1918 (the act imposing the tax here in question) and provides that the amount of such tax “shall be assessed within five years after the return was filed” except as provided in section 278 (c).
Section 278 (c), 26 USCA § 1060 note provides:
“(c) Where both the commissioner and the taxpayer have consented in writing to the assessment of the tax after the time prescribed in section 277 [section 1057 of this -title] for its assessment the tax may be assessed at any time prior to the expiration of the period agreed upon.”
And section 277 (b), 26 USCA § 1057 note provides:
“(b) The running of the statute of limitations provided in this section or in section 278 [section 1061 of -this title] on the making of assessments * * '* in respect of any deficiency, shall (after the mailing of a notice under subdivision (a) of section 274 [section 1048 of this title]) be suspended for the peripd during which the commissioner is prohibited from making the assessment, * * * and for 60 days thereafter.”
Section 274 (a), 26 USCA § 1048, defines the time during which the Commissioner is prohibited from assessing the tax. It provides:
“Sec. 274. (a) If in the case of any taxpayer, the commissioner determines that there is a deficiency in respect of the tax imposed by this title [chapter], the commissioner is authorized to send notice of such .deficiency to the taxpayer by registered mail. Within 60 days after such notice is mailed (not counting Sunday as the sixtieth day), the taxpayer may file a petition with the Board of Tax Appeals for a redetermination of the deficiency. Except as otherwise provided [which exceptions are not here material] no'/assessment of a deficiency in respect of the tax imposed by this title * * * shall be made * * * until such notice has been mailed to the taxpayer, nor until the expiration of such 60-day period, nor, if a petition has been filed with the board, until the decision of the board has become final. * * * ”
Section 1005 (a), 26 USCA § 1228 (a), fixes the date on which the Board’s decision becomes final, as follows:
*466“(a) The decision of the board shall become final—
(1) Upon the expiration of the time allowed for filing a petition for review, if no such petition has been duly filed within such time.”
And by section 1001 (a), 26 USCA § 1224 (a), the time allowed for filing a petition for review by a Circuit Court of Appeals expires “within six months after the decision is rendered.”
In this case the income and excess-profits taxes in question had not been assessed prior to June 3, 1924, and the 60-day period following the mailing of the deficiency notice to the taxpayer had not expired before the enactment of the Revenue Act of 1926 (February 26, 1926), and no appeal had been taken by the taxpayer to the Board of Tax Appeals before that time. And it seems to me that it must be conceded that by section 283 (c) Congress intended to make and made the other provisions of that act, as to the assessment of a tax imposed by the Revenue Act of 1918, applicable to its assessment.
The deficiency notice, as to the tax imposed upon the taxpayer by the Act of 1918, was given February 20, 1926; an appeal was seasonably taken and the decision of the Board was rendered May 29, 1930, and, pursuant to an agreement of the parties, became final on that day. It thus appears that the Commissioner was prohibited by the statute from assessing the tax from February 20, 1926, to May 29, 1930, or for a period of 4 years, 3 months, and 9 days. It also appears that, at the time the notice of deficiency was given (February 20; 1926) the Commissioner had 5 years from the making of the return (section 277 (a) (3), plus the period as extended by statute (section 278 (c) read in connection with the waiver), or 10 months and 11 days, within which he could have assessed the tax but for the prohibition imposed by section 274 (a). But section 277 (b) suspended the availability of that period of 10 months and 11 days until the expiration of 4 years, 3 months, and 9 days and for 60 days thereafter. This being so, ■ it seems to me that, in computing the period within which the tax might have been assessed, the period of 10 months and 11 days should be added to the 60-day period after the final decision of the Board; that section 277 (b), at the time of the mailing of the deficiency notice to the taxpayer, tolled the statute of limitations for the unexpired period of 10 months and 11 days covered by the waiver and for that time only, because, at the time of mailing the notice, that was the only unexpired period remaining for the assessment of the tax.
This would carry the period of assessment against the taxpayer down to June 9, 1931, and the transferee, having been notified of the assessment of the tax against it on May 18, 1932, and within one year after June 9, 1931, the assessment was seasonable.
Section 277 (b) of the Act of 1924 (26 USCA § 1057 note) had to do-with the extension of the time within which a deficiency tax could be assessed after notice, where the deficiency notice was sent prior to the expiration of the 5-year period provided for in section 277 (a) (2) of that act (26 USCA § 1057 note). Section 277 (b) of that act did not apply, as does section 277 (b) of the Act of 1926, to an extension under a waiver authorized by section 278 (c) of both acts. Consequently, under the act of 1924, any unexpired period that remained under a waiver could not be availed of after the date the waiver expired, in the absence of an agreement to that effect. But, under that act, if the deficiency notice was given before the expiration of the 5-year period (section 277 (a) (2), the 5-year period was extended by the time between the giving of the deficiency notice and the date of the final decision of the Board, and the time within which the tax could be assessed was extended after the date of final decision by the duration of the unexpired period.
In determining the time within which the tax may be assessed under the act of 1926, where there is left an unexpired portion of the 5-year period, then under the provisions of that act, a like extension is effected and 60 days besides. And also, under the act of 1926, where a waiver has been given, the balance of the unexpired waiver is added to the 60 days after the date of the final decision, which could not have been done under the act of 1924, where a waiver had been given.
It has been suggested that, inasmuch as the act of 1926 gives the Commissioner 60 days after final decision in which to assess the tax, there was no occasion for that provision if the Commissioner was to have the unexpired period under a waiver in which to assess the tax after the date of the final decision. The answer to this is that if the deficiency notice were given on the last day of the period covered by the waiver the *467Commissioner would have no time in which to assess the tax but for the 60-day period given by the act of 1926. This contention, however, in no wise militates against the construction of the act allowing the Commissioner the unexpired period of the waiver also in which to assess the tax, when there is such an unexpired period. By so doing effect is given to the express wording of the act (section 277 (b), 26 USCA § 1057 note), which suspends “the running of the statute of limitations provided * * * in section 278 [section 1061 of this title]” (the period of the unexpired waiver) for the time “during which the commissioner is prohibited from making the assessment, * * * and for 60 days thereafter,” but which does not extinguish such unexpired period.