Court Opinion

ID: 9449142
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:58:40.049337+00
Date Added: 2024-06-11T17:31:43.698714
License: Public Domain

LEVIN, District Judge
(dissenting).
I respectfully dissent from the interpretation of the applicable statute of limitations, 1939 I.R.C. § 3312. The Court today in effect holds that a composite return on a form prescribed by the Commissioner pursuant to 1939 I.R.C. § 1716(a) constitutes in legal contemplation a series of separate returns, each of which covers a single taxable item. Consequently, under this holding, the failure to report a taxable item in a composite return constitutes a failure to file a “return” within the meaning of 1939 I.R.C. § 3312(b), which tolls the excise tax statute of limitations until a “return” has been filed.
A composite return, according to the rationale of the opinion of the Court, must be completely accurate in order to start the running of the statute of limitations on all transactions occurring during the period covered by the return.
The Court concedes that a good faith income tax return, although erroneously excluding certain includable items of income, nevertheless suffices to start the running of the income tax statute of limitations. But in refusing to apply that good faith rule to the excise tax statute of limitations, the Court holds that no statute of limitations applies to unreported taxable items erroneously omitted from a composite excise tax return.
Federal excise taxes apply to innumerable goods and services. Literally hun*802dreds of other particular items, otherwise taxable, might arguably fall within the many statutory exemptions of various classes of such items. See 26 U.S.C.A. §§ 4001-5801.
Even excise tax experts might disagree as to whether particular items are taxable. For example, the determination of whether the instant bonds are taxable has required a formal opinion by the District Court and a full discussion by this Court. The annotations to the excise tax provisions in Volume 26 of the United States Code Annotated refer to hundreds of decisions determining the taxability of particular goods and services. Yet the Court holds that the filing of a composite return does not start the running of the statute of limitations as to the transactions occurring within the period covered by that composite return unless that return reports every single transaction which might at any future time be held to be taxable.
No practical distinction flows from the variance between the language of the income tax statute of limitations and the excise tax statute of limitations. An income tax return filed prior to the last day for filing is deemed to have been filed on that last day (1939 I.R.C. § 275 (f)), which happens to be the same day on which payment is due (1939 I.R.C. §§ 53, 56). Thus, like the excise tax statute of limitations (1939 I.R.C. § 3312), the income tax statute of limitations begins to run on the day the taxes become due.
I would hold that the filing of a composite return erroneously omitting certain items in good faith constitutes the filing of a “return” within the meaning of 1939 I.R.C. § 3312(b) and, consequently, the filing of such a good faith return suffices to start the running of the statute of limitations on those erroneously omitted items.