Court Opinion

ID: 4487429
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:00:45.622895+00
Date Added: 2024-06-11T15:04:14.296975
License: Public Domain

*701Opinion.
Koener:
This Board has heretofore held, in Garneau’s Appeal, 1 B. T. A. 75, that if, subsequent to June 2, 1924, the Commissioner determined that a deficiency was due, jurisdiction of an appeal from such determination is conferred on this Board by the Revenue Act of 1924; and that if the Commissioner so determined prior to that date, this Board is without such jurisdiction. Therein this Board declined to hold that an assessment constitutes per se a determination.
By its very definition and etymology the word “ determination ” irresistibly connotes consideration, resolution, conclusion, and judgment. Webster’s New International Dictionary (1924 edition) defines “ determination ” as follows:
State of decision; a judicial decision, settling and ending a controversy; a conclusion. Act of coming to a decision; that which is determined upon; purpose ; conclusion; fixed resolution. A delimitation; a determining of bounds; a fixing of the extent, position or character of anything. A bringing or coming to an end; termination.
The same authority defines the transitive verb “ determine ” as follows:
To bring to a conclusion, as a question or controversy; to settle by authoritative or judicial sentence; to decide; as, the court has determined, the cause. To conclude or decide as the result of investigation, reasoning, etc.
The determination from which a taxpayer may appeal is one which fixes the amount of deficiency in tax. It is the final decision by which the controversy as to the deficiency is settled and terminated, and by which a final conclusion is reached relative thereto and the extent and measure of the deficiency defined. An assessment made without compliance with the statutory remedy of appeal contained in section 250 (d) of the Revenue Act of 1921, and against which a claim for abatement is received for consideration by the Commissioner, does not meet the definition of a determination above given. The listing of an assessment followed by a notice to the taxpayer that an abatement claim will be received and the correctness of the amount of the tax later settled on the merits of the controversy (or the acceptance of such a claim for consideration without such notice) effectually refutes the idea that the assessment is a determination as above defined. The statute, for the purpose of protecting the public revenue, authorizes the Commissioner under certain circumstances to assess taxes without benefit to the taxpayer of his statutory right to a determination prior to such assessment. Such assessments are familiarly referred to as summary, jeopardy, or noncompliance assessments.. These terms are loosely used and frequently interchangeably, though strictly speaking they are not the *702same. However, in any such case, where the Commissioner so assesses a tax and thereafter accepts an abatement claim in which are set up the contentions of the taxpayer against the deficiency assessed, the issue between the taxpayer and the Commissioner is then set up and it is then that a controversy arises between the parties. It must be apparent that to hold that the assessment constitutes the determination, or presupposes (under these circum-_ stances) a determination, is to hold that the issues are determined before they are raised and before the controversy arises. To so hold would necessarily deprive the taxpayer of a determination on the issues. A controversy settled and decided before there is a controversy is not a controversy at all. As defined above a determination must be a settling of an existing controversy susceptible of consideration, decision, and conclusion — and a termination thereof. That which has not begun can not be terminated.
In the case of an assessment made under such circumstances, the only object that can exist in accepting an abatement claim is to define, fix, and adjudicate the proper deficiency after a decision on the merits involved in the issue raised by the abatement claim. It follows that a determination of the deficiency thus in issue is the result of the consideration of the issues involved in such deficiency.
Section 250(d) of the Revenue Act of 1921, providing for appeal and determination of a deficiency before assessment, is as follows:
If upon examination of a return made under tlie Revenue Act of 1916, the Revenue Act of 1917, tlie Revenue Act of 1918, or this Act, a tax or a deficiency in tax is discovered, the taxpayer shall be notified thereof and given a period of not less than thirty days after such notice is sent by registered mail in which to file an appeal and show cause or reason why the tax or deficiency should not be paid. Opportunity for hearing shall be granted and a -final decision thereon shall be made as quickly as practicable. Any tax or deficiency in tax then determined to be due shall be assessed and paid, together with the penalty and interest, if any, applicable thereto, within ten days after notice and demand by the collector as hereinafter provided, and in such oases no claim in abatement of the amount so assessed shall be entertained: Provided, That in cases where the Commissioner believes that the collection of the amount due will be jeopardized by such delay he may make the assessment without giving such notice or awaiting the conclusion of such hearing. (Italics ours.)
From tbe foregoing it is apparent that the -final decision upon which the deficiency is then determined does not contemplate an assessment, but on the contrary means a determination as defined above in this opinion. Because the determination is final and constitutes a termination of the controversy on the issues it is provided that in suoh eases no claim in abatement shall be entertained. The provision for the entertainment of abatement claims is entirely superfluous and meaningless otherwise. What then is the meaning of this provision? It must be clear that it means that where there is not that final decision and a deficiency then determined, a claim in abatement will be entertained. If then a final decision and determination is predicated on a hearing and consideration of the issues, when does such final decision and determination take place when assessment is made under the proviso without notice to the taxpayer or without awaiting the conclusion of a hearing on an appeal already filed ? It must take place after the assessment; and, upon the issues then raised as to the correctness of the deficiency, the determination will be made *703and the controversy terminated. We are constrained to believe that Congress intended that in such cases the practice should be “ assess first and hear and determine the correctness of the deficiency after-wards ” instead of “ assess first and sue afterwards to recover taxes erroneously paid under such assessment.” In our opinion this intention on the part of Congress was one of the underlying reasons for the creation of this Board as part of a general system of remedial legislation.
What is the application of the foregoing to the facts of the instant appeal? The Commissioner assessed an additional tax on January 10, 1923, without notice to the taxpayer and without benefit to it of section 250(d) of the Revenue Act of 1921. This was conceded by the Commissioner to have been a jeopardy assessment within the contemplation of that section. The taxpayer filed a claim in abatement on March 9, 1923, which was received and entertained by the Commissioner. The abatement claim was accompanied by a statement of its contentions and an argument in support of them. The contentions and argument were considered by the Commissioner. (See letter to taxpayer dated November 15, 1923.) As a result of such consideration the Commissioner determined to reject the abatement claim and notified the taxpayer by letter of November 15, 1923, of such determination. He further advised the taxpayer' that the collector at Boston, Mass., would be officially notified of his (the Commissioner’s) determination at the expiration of 30 days after November 15, 1923, unless prior to that date evidence should be furnished showing the adjustments to be incorrect.
In response to this letter, one of the partners of the taxpayer forwarded to the Commissioner a letter, dated November 21, 1923, in which he restates his contentions, and reviews the facts and repeats the argument set-out in the statement attached to the claim in abatement filed by taxpayer on March 9, 1923. The taxpayer argues that the effect of the eighth paragraph of the Commissioner’s letter of November 15, 1923, is to negative the idea that such letter was a notification of a determination by the Commissioner. We are unable to agree with the taxpayer in this respect. That letter clearly conveys notice to the taxpayer that the Commissioner had decided the issues raised by its claim for abatement and had determined to reject the abatement claim. The eighth paragraph can be read to mean nothing more than that if taxpayer should, prior to the Commissioner’s notification to the collector of his determination, file evidence showing the determination of the Commissioner to be in error, such evidence would receive consideration. We do not believe there is tenable ground for holding that this letter does not evidence a determination and a termination of the controversy. Under given conditions the Commissioner might have reconsidered his determination. Such condition would necessarily depend on the introduction of evidence within the specified time. The taxpayer failed to do this. The letter forwarded by it, dated November 21,'1923, can not be said to have contained any matters of an evidentiary nature. The determination of the Commissioner, therefore, remained undisturbed and final. No further correspondence or communications passed between the parties relative to this issue. On July 18, 1924, *704the collector called upon the taxpayer to pay the assessment. This was not a determination by the Commissioner of a deficiency, nor was it such a notice to the taxpayer of a determination as was contemplated by Congress in section 274 of the Revenue Act of 1924 as constituting the basis for an appeal to this Board.
In our opinion the filing of a refund claim by the taxpayer on December 9, 1923, and its rejection by the Commissioner, as evidenced by his letter to taxpayer dated April 1, 1924, does not affect the decision of this case. As we view it, this was a separate transaction. In so far as it involves a claim for refund, this Board would be without jurisdiction in any event. To the extent that it was argued that it involved the same issues as those in the claim in abatement and that the rejection of the refund claim was a determination of the whole issue involved here, it can not affect the result, since the rejection of the refund claim occurred in April, 1924, two months before the enactment of the Revenue Act of 1924.
On consideration by the Board, Littleton, Marquette, Smith, and Teammell concurred in the result only.