Court Opinion

ID: 7218784
Source: CourtListenerOpinion
Date Created: 2022-07-25 03:45:38.170142+00
Date Added: 2024-06-11T16:17:08.490890
License: Public Domain

GREEN, Judge.
Plaintiff brings this action to recover an overpayment of income tax for 1916, and the ease turns on the question of whether the suit has been brought in time. The facts are not in dispute.
The plaintiff duly filed his income tax return for 1916 and paid the amount shown to be due thereby. Thereafter the Commissioner of Internal Revenue assessed a deficiency for that year of $7,658.85, which was *851paid July 30, 1920. November 25, 1921, the plaintiff filed a claim for refund in the sum of $5,975.23, and July 18, 1922, the Commissioner wrote plaintiff setting out the result of the audit of his tax for the years 1913 to 1919, inclusive. December 19, 1922, the Commissioner, after further consideration and audit of the returns for 1916 and 1917 together with other years, made a statement to plaintiff which showed an overassessment for 1916 of $5,322.25, and an additional tax for 1917 of $93,713.26. Both of these audits included consideration of the claim for refund filed November 25, 1921. March 28, 1923, the Commissioner assessed the additional tax for 1917 of $93,713.26, and a few days later signed a formal statement for the collector in which appeared an overassessment in favor of plaintiff for 1916 of $5,322.-25, and therein instructed the collector to apply the overpayment as a credit against the tax owing, if any, on the taxpayer’s account for subsequent periods. The collector complied with the Commissioner’s instructions by applying the 1916 overpayment as a credit against the 1917 additional assessment and forwarded to the Commissioner a schedule of refunds and credits duly signed, on which appeared the credit above referred to and an item of interest on the overpayment of $852.-43. July 19, 1923, the Commissioner mailed a certificate of overassessment to the plaintiff showing an overassessment for 1916 of $5,322.25 which had been credited to the 1917 additional assessment. This certificate contained the following statement:
“The balance (if any) of the overpayment is refunded to you by cheek of the Treasury Department, forwarded herewith.
“Included in the accompanying check is interest in the amount stated below, allowed on the credit, from the date of payment of the additional tax to the date of allowance of the claim.”
A check for the amount of interest was accordingly inclosed and the amount thereof paid to plaintiff.
Plaintiff, however, did not accept this conclusion of the Commissioner, and on April 16, 1926, filed a petition with the Board of Tax Appeals with reference to his taxes for 1917, alleging that the additional tax which had been assessed for that year was barred from collection since collection was not made within five years from May 1, 1918, when the return was filed. May 24, 1928, the plaintiff’s contention was sustained by the Board of Tax Appeals and a decision was entered that there was no deficiency for 1917.
June 21, 1928, plaintiff filed a claim for credit of the overpayment for 1916 which had been applied against the tax for 1917, asking that it be credited against an outstanding assessment due for 1927. The claim for credit was based on the fact that the overpayment for 1916 had been applied on a tax which was barred. Subsequently, the Commissioner advised the collector that his claim would not be accepted as a claim for credit but would be considered as a refund claim for 1916, and on November 22, 1928, the Commissioner rejected the claim. July 17,1936, the plaintiff began this suit.
The plaintiff’s petition sets out the facts upon which'the suit is predicated, but there is nothing in it to indicate whether the suit is brought upon the claim for refund, or the claim for credit, or upon an account stated, in which event the statutory period of limitations for mailing refunds would not apply. All three of these matters are discussed in the briefs of the respective counsel. We think it quite clear that the suit cannot be maintained upon either the claim for refund or upon the claim for credit. Manifestly, the suit upon the claim for refund is barred, and we think that this is equally true with reference to a suit upon the claim for credit unless, as is contended, the statutory provisions with reference to claims for refund and credit are abrogated by reason of the creation of an account stated. We think there was no account stated. In the case of David Daube v. United States, 53 S. Ct. 597, 598, 77 L. Ed. -, decided by the Supreme Court May 8, 1933, the Supreme Court said, as a reason why there was no account stated between the government and the taxpayer, that “no balance was arrived at as the result of computation and agreement,” that is, no balance arrived at by agreement between the government and the taxpayer. In the ease at bar, it would seem clear that no balance was agreed upon between the plaintiff and defendant as a result of the certificate of overassessment that was sent the plaintiff, for the certificate stated in substance that if any balance was due the plaintiff it would be refunded by cheek. The defendant did not agree to pay the amount for which suit is now brought, nor can any promise to pay it be implied. A blank was put opposite the words “Amount refunded,” and opposite the word “Interest,” “$852.43,” for which a cheek was inclosed. In fact the attorney for plaintiff in his brief concedes that no agreement was reached as to the balance due by this certificate of over-assessment, but argues that on the other hand the plaintiff repudiated it by commencing a *852suit before the Board of Tax Appeals to have the additional assessment for 1917 set aside as barred. But he contends that, when the Board of Tax Appeals rendered its decision and plaintiff accepted it, thereafter, at some indefinite date an account stated arose. To this we cannot agree. There was no account presented at that time, and, while the decision of the Board of Tax Appeals showed that the account presented to the plaintiff by the Commissioner was erroneous and this decision was binding upon the defendant in further court proceedings, it did not make a new account or bring the parties into agreement. We therefore hold that there was no account stated between the parties.
But, even if there had been an account stated, we do not think it would avail the plaintiff. If there was any such account, it was presented at the time the plaintiff received the certificate of overassessment, but this suit was not brought until more than six years after that date, and a suit upon an account stated is therefore barred (see 28 US CA § 41 (20). Nor does the fact that the claim for credit was filed within the period of limitations under the account stated, if the certificate of overassessment is to be considered an account stated, enable plaintiff to maintain a suit on the elaim for credit. This fact would not alter the statutory provisions with reference to the effect of filing a claim for credit, for a suit upon a claim for credit and one upon an account stated would be based upon altogether different and unrelated matters. Under the statutory provisions applicable to the elaim for credit filed in the ease at bar (section 284 (b) (1), Revenue Act of 1926, 26 USCA § 1065 (b) (1), no claim for credit could be allowed after four years from the time the tax was paid. This period had long expired when the elaim for credit was filed, consequently, even if it should be held that there was an account stated, the elaim for credit was not presented in time. Our conclusion is that the plaintiff’s suit is barred whether it be considered as based on the elaim for refund, or an account stated, or upon the elaim for credit.
It follows that the petition must be dismissed, and it is so ordered.
WHALEY and WILLIAMS, Judges, concur.
BOOTH, Chief Justice, did not hear this case on account of illness and took no part in its decision.