Court Opinion

ID: 7220139
Source: CourtListenerOpinion
Date Created: 2022-07-25 03:47:36.010741+00
Date Added: 2024-06-11T16:17:12.125847
License: Public Domain

BOOTH, Chief Justice.
This is a tax case. The plaintiff, a Massachusetts corporation, on April 1,1918, filed its income tax return for the calendar year 1917, disclosing a tax liability of $235,975.08. On July 29, 1920, plaintiff filed an amended return for 1917 increasing its tax liability to $290,856.78, and on August 28, 1922, filed its third return disclosing a tax liability of $279,526.61. For the calendar year 1919 plaintiff’s return disclosed a tax liability of $832,205.16. The taxes were paid.
On March 30, 1923, the Commissioner of Internal Revenue signed a schedule of reductions of tax liability in accord with his adjustments made of plaintiff’s taxes. This schedule showed an overpayment of the 1919 tax of- $121,323.33, and a credit of $50,725.19 of this sum was applied by the Commissioner to deficiencies for the years 1915, 1916, and 1917, refunding to the plaintiff on August 20, 1923, the sum of $43,545.-64; the Commissioner -having signed the schedule of refunds and credits on July 23, 1923. The plaintiff received and accepted the amount refunded.
Thereafter the plaintiff did nothing with • respect to the Commissioner’s adjustments of its taxes for the years 1915, 1916, 1917, and 1919, until July 24, 1929, six years and one day after the signing of the schedule of refunds and credits nojed above. On this date, when the statute of limitations had barred a suit for the recovery of any of the taxes assessed and paid, the plaintiff filed a claim for refund of the sum of $50,725.19 theretofore credited to the 1915, 1916, and 1917 deficiencies, on the ground that said credits were void, being barred by limitation under sections 607 and 609 of the Revenue Act of 1928 (26 USCA §§ 2607, 2609). The Commissioner, out of time, received the refund claim, reopened and reconsidered plaintiff’s tax liability for the years involved, and refunded $6,648.67, with interest, theretofore applied as a credit against the deficiencies for 1915 and 1916, but denied the refund claim as to $44,076.52, credited to the 1917 deficiency, on the ground that the 1915 and 1916 deficiencies were barred by the statute of limitations when made, but the 1917 deficiency was not, the refund being made over nine years after the payment of the last installment of the 1919 tax, and over ten years after the return for 1919 was filed.
The plaintiff sues to recover $44,076.52 with interest, the sum applied by the Commissioner to the 1917 deficiency, alleging that it, like the other deficiency, was not collectible because barred by the statute of limitations.
The plaintiff accepted the second refund and did not commence this suit until October 27, 1932, three years and eleven days after the refund for the amount herein claimed, credited to the 1917 deficiency, had been denied on October 16, 1929. We have then a situation where the plaintiff, ten years after filing its tax return for 1917 and over thirteen years after its return for 1919, as well as a delay of over nine years from the signing of the first schedule of refunds and credits, is suing to recover on the theory that the six-year statute of limitations (Jud. Code § 156, 28 USCA § 262) did not begin to run until October 8, 1929, and that in any event section 3226 of the Revised Statutes, as amended (26 USCA § 156) has no application to this case.
In order to sustain the contention advanced and toll if possible the running of the statute of limitations, plaintiff insists that the account stated by the Commissioner .on August 20, 1923, has been by the facts successfully impeached. Obviously, the plaintiff took no action to impeach it until after the statute of limitations had precluded plaintiff from doing so. Whatever may have *511been plaintiffs rights to impeach it, they were not indefinite as to time. Bonwit Teller Case, 283 U. S. 258, 51 S. Ct. 395, 75 L. Ed. 1018.
Doubtless the passage of section 609 of the Revenue Act of 1928 suggested to plaintiff the possibility of recovering the tax involved, and the ingenious arguments advanced clearly indicate that plaintiff appreciated the obstacles to be encountered, and hence strives to characterize this litigation as a proceeding foreign to one to recover a tax illegally assessed and paid. We are unable to follow the contention. The plaintiff, we think, has received a second refund to which it was not legally entitled, and, even so, it was accepted without protest or objection and no action whatever taken until more than three years thereafter. We think the plaintiff was conscious of having paid taxes and of the additional fact that it was suing to recover a portion of the payments so made. Stearns v. United States, 291 U. S. 54, 54 S. Ct. 325, 78 L. Ed. 647; United States v. Updike, 281 U. S. 489, 50 S. Ct. 367, 74 L. Ed. 984.
The petition will be dismissed. It is so ordered.