Court Opinion

ID: 4488002
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:01:04.866236+00
Date Added: 2024-06-11T07:58:40.728106
License: Public Domain

*349ORINION.
Trammell :
The first question to be decided is whether the collection of the taxes involved in this proceeding is barred by the statute of limitations.
The facts relevant to this question were stipulated and our findings of fact follow' the stipulation.
At the dates the additional assessments were made the Revenue Act of 1921 was in effect. Section 250 (d) of that Act, so far as pertinent, provides:
The amount of income, excess-profits, or war-profits taxes due * * * under prior income, excess-profits, or war-profits tax Acts * * * shall he determined and assessed within five years after the return was filed, unless both the Commissioner and the taxpayer consent in writing to a later determination, assessment, and collection of the tax; and no suit or proceeding for the collection of any such taxes * * * shall be begun, after the expiration of five years after the date when such return was filed * * *.
Under this provision, the collection of the additional assessments involved in this proceeding would have been barred on March 29, 1923, except for the agreements between petitioner and respondent, dated February 15, 1923, and February 11, 1924, respectively. The first agreement provided that the parties consented to the determination, assessment and collection of the taxes, irrespective of any period of limitation. On April 11, 1923, respondent publicly announced that all unlimited waivers for the year 1917, would expire on April 1, 1924. See Wirt Franklin, 7 B. T. A. 636. By the consent of February 11, 1924, the parties agreed to extend the time in which the taxes might be determined, assessed and collected, for a period of one year after the expiration of the statutory period of limitation or such period as extended by the previous waivers. There were no further agreements entered into and the question is whether the time for collection was extended by the provisions of the Revenue Acts of 1924 and 1926. The Revenue Act of 1924, section 278 (c), provided that where both the Commissioner and the taxpayer have consented in writing to the assessment of the tax after the time prescribed in section 277 for its assessment, the tax may be assessed at any time prior to the expiration of the time agreed upon. The tax was assessed prior to the expiration of the time agreed upon.
Section 278 (d) provides as follows:
Where the assessment of the tax is made within the time prescribed in section 277, or in this section, such tax may be collected by distraint or by a proceeding in court, begun within six years after the assessment of the tax. Nothing in this Act shall be construed as preventing the beginning, without assessment, *350of a proceeding in court for the collection of the tax at any time before the expiration of the period within which an assessment may be made.
Under section 278 (d) of the Revenue Act of 1924, the respondent has six years from the date of a timely assessment within which to collect the tax. An assessment is timely made if made within the five-year period provided in section 277 or within the extended period provided in section 278.
The assessment then being timely made, the question arises as to the effect of the Revenue Acts of 1924 and 1926 upon the collection of the tax in view of the consent in writing executed by the parties wherein it was agreed that the tax should be assessed and collected within a definite time which has expired, no proceeding in court or distraint proceeding having been instituted for the collection.
The Revenue Act of 1924, in providing that where the assessment of the tax is made within the period prescribed in section 277 or in section 278, the tax may be collected by distraint or by proceeding in court begun within six years after the assessment, contained no exceptions and we can not add exceptions which were omitted in the statute. In this connection the United States District Court for the. Western District of Louisiana in the case of Florshein Bros. Dry Goods Co. v. United States, 26 Fed. (2d) 505, said:
It must be remembered that the agreement was made both with respect to the law as it then existed and to the power of Congress to change it. In other words the Act of June 2, 1924, could have not only extended the right both to assess and collect the taxes, but might have removed all limitations thereon had Congress seen fit to do so.
This situation was discussed in the case of Sunshine Cloak & Suit Co., 10 B. T. A. 971, where we held that if the tax were assessed within the period prescribed by statute, including in that period the time as extended by consents in writing, the respondent had six years thereafter within which to institute proper proceedings for the collection thereof. The Revenue Act of 1924 gave the respondent six years from the date of the assessment within which to collect the deficiency. The statute might have provided that this extended period did not apply where the parties had agreed in writing for a different period for collection, but it did not do so. While Congress undoubtedly could have removed all limitations both as to assessments and collections, it did not go to that extent, but did extend the period of collection in all cases where the taxes had been assessed within the period provided in section 277 or section 278. Section 278 (d) of the Revenue Act of 1926, in recognizing consents in writing entered into by the Commissioner and a taxpayer, does not shorten, or authorize the Commissioner and the taxpayer to shorten, by a consent in writing, the six-year period. Florshein Bros. Dry Goods Co. v. United States, supra; Sunshine Cloak & Suit Co., supra.
*351In view of the foregoing, it is our opinion that the period of limitation does not bar the collection by distraint or by a proceeding in court of the taxes here involved.
The next question is whether the petitioner was engaged in business in 1917 with respect to the oil leases set out in the findings of fact and was subject to the individual excess-profits tax thereon for that year. On this question we are convinced by the testimony that he was engaged in the oil business during 1917 and being so engaged, the income from that business, consisting of making, buying and selling leases is subject to the excess-profits taxes.
Reviewed by the Board.
Judgment will be entered on 15 days’ notice, under Rule 50.