Court Opinion

ID: 6841878
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:20:38.925218+00
Date Added: 2024-06-11T16:04:52.613899
License: Public Domain

LITTLETON, Judge
(dissenting).
I think the plaintiff should recover. If it made an informal claim, the Commissioner had a right to make the refund. The Commissioner held that an informal claim had been made on May 23, 1925, and allowed the refund of $10,866.43, which was an overpayment found to have been made on the original return, and at no time did he ever change his decision.
It appears from the exhibits filed that the plaintiff made a return for the fiscal year ending January 31, 1919, showing a tax of $57,871.16, which was duly paid. On the April, 1924, special list, the Commissioner made a jeopardy assessment of an additional tax of $167,294.59 for the fiscal year 1919. Plaintiff filed a claim for abatement. This claim is not in evidence. Thereafter an internal revenue agent made an investigation and an examination of the plaintiff’s records and on May 31, 1924, made a report to the Commissioner of the result of his examination with reference to plaintiff’s tax liability for the fiscal year 1919. As a result of the report of the revenue agent, which was made the basis of the Commissioner’s final determination, the Commissioner finally determined that the correct amount of the total tax due for the fiscal year 1919 was $47,-004.73; resulting in a total overassessment of $178,161.02, which overassessment was made up of $10,866.43 of the tax reported and paid on the original return and the total of the jeopardy assessment of $167,294.-59 which, had not been paid. On November 19, 1924, the Commissioner mailed plaintiff a notice of this determination and advised it that the total of the additional jeopardy assessment would be abated, but that, inasmuch as no claim for refund had been filed within the time required by section 281 of the Revenue Act of 1924 (26 USCA § 1065 note) the overassessment of $10,866.43 could not be refunded or an overassessment allowed in respect thereon. In accordance with this determination, the Commissioner, on or about November 19, 1924, prepared a certificate of overassessment and approved a schedule of overassessment of $167,294.59, being the total overassessment of $178,161.-02, less $10,866.43, which at that time was not refundable.
Subsequently Congress passed the Act of March 3, 1925 (26 USCA § 1065, note), amending section 281(e) of the Revenue Act of 1924. This amendatory act provided that, “if the taxpayer has, on or before June 15, 1925, filed * * * a waiver in respect of the taxes due for the taxable year 1919, * '* * credit or refund relating to the taxes for the taxable year 1919 shall be allowed or made if claim therefor is filed * * * on or before April 1,' 1926. * * * ” Thereupon the Commissioner, on May 16, 1925, sent to the plaintiff a notice on a form prepared for that purpose, in which he referred to his determination of an overassessment for 1919, and stated: “It appears that the ovetassessment cannot now be allowed due to the limitation of time for allowance thereof provided by section 281 of the revenue act of 1924, unless an income and profits tax maimer is filed on or before June 15, 1925, as provided by an act of Congress dated March 3, 1925, amending section 281 (e) of the revenue act of 1924.” With this notice the Commissioner sent the plaintiff two waivers, and suggested that one of them be executed and returned. The waiver was executed by plaintiff on May 22, 1925, and its counsel returned the same to the Commissioner with a letter stating: “In accordance with your request, we inclose herewith waiver.” This letter and the waiver were received and filed by the Bureau of Internal Revenue on May 23, 1925. The Bureau of Internal Revenue indorsed upon the letter *738of plaintiff’s counsel returning the waiver as follows: “Inferential demand for the refund upon basis of schedule sent taxpayer under date of November 19, 1924 (IT: CR: A: JML). Rules and Regulations. Mulligan.” A further indorsement appears on this letter as follows: “Approved by Mr. Mulligan and Mr. Sherwood for scheduling as' is. O. Allen. 4/4/27.” On February 5, 1927, the Bureau executed another certificate of overassessment for $10,866.43, and the certifications set forth in finding 10 were made on the Bureau’s copy thereof, and the correspondence set forth in the findings of fact took place. On March 8, 1927, a schedule of overassessment for the $10,866.43 was signed by the Commissioner and transmitted to the collector at New York. The collector made his report to the Commissioner, and thereafter the Commissioner sent plaintiff the certificate of overassessment for the $10,-866.43, showing that $9,846.06 thereof had been credited against a 1917 tax and the balance of $1,020.37 refunded, together with $442.62 interest. The Bureau wrote on this certificate the following: “Waiver filed May 23, 1925. Refund claim filed May 23, 1925.”
On June 3, 1927, counsel for plaintiff wrote the Commissioner a letter with reference to the overpayment of $10,866.43 calling his attention to the fact that the tax for 1917 against which $9,846.06 of the overpayment had been credited was barred by the statute of limitation at the time the credit was made, and that the entire amount should be refunded, and asking that this be done. On October 26, 1927, the Commissioner replied, and, after conceding that the credit against the 1917 tax was made after the expiration of the statutory period of limitation within which the 1917 tax could be collected, and after referring to the decision of the Supreme Court in Bowers v. New York & Albany Lighterage Company, 273 U. S. 346, 47 S. Ct. 389, 71 L. Ed. 676, stated: “You are advised that the question of the proper action to be taken in eases where an overassessment for one year has been credited against an additional tax for another year after the expiration of the statutory period of limitation on the collection of tax for such year is now under consideration by the general counsel of the bureau in connection with the position taken by the Government in the case of the Peerless Paper Box Company v. Routzahn [(D. C.) 22 F.(2d) 459]. * * * As soon as a decision is reached on this question you will be further advised.” No further advice was given plaintiff, and it instituted this suit to recover the portion of the overpayment allowed which had been credited against an outlawed 1917 tax. The petition was filed January 7, 1928, and a general traverse was entered February 4,1928. The case was referred to a commissioner for hearing and report. The hearing was held before the commissioner who filed his report April 4, 1929. Plaintiff filed its brief May 18, 1929. Thereafter, on May 24, 1929, the defendant filed a counterclaim insisting, for the first time, that no claim had been made in time, and asking for the recovery of that portion of the overpayment and interest for 1919 that had been refunded.
In view of all the facts and circumstances, I am of opinion that the Commissioner of Internal Revenue was justified in holding that the execution and filing of the waiver with the letter dated May 22, which waiver and letter were received and filed by the Bureau on May 23, 1925, constituted an informal claim for refund made in time, which informal claim was perfected by a formal claim later filed. This view does not give the taxpayer, who has made an informal claim, and who perfects such claim by the filing of a formal one, any greater right than a taxpayer who has filed a claim on the form prescribed by the Commissioner’s regulations which fails to state the grounds for the claim. The general rule is that an informal claim may be perfected by a formal claim and that a claim filed on the proper form, but which does not state the grounds for the refund, may also be perfected by an amendment specifically setting forth the grounds or that this defect may be waived by the Commissioner. For these reasons I think the counterclaim should be denied and that judgment should be given for the plaintiff.
The situation here is different from the ordinary ease involving the sufficiency of the grounds of a claim, such as was before the court in Tucker v. Alexander, 275 U. S. 228, 48 S. Ct. 45, 72 L. Ed. 253, or where the plaintiff has taken no steps whatever toward obtaining a refund, as was the case in Kings County Savings Institution v. Blair, 116 U. S. 200, 6 S. Ct. 353, 29 L. Ed. 657. The allowance of the refund by the Commissioner is equivalent to an account stated between private parties, which is good until impeached for fraud or mistake, and the fact of fraud or mistake must be clearly established by competent evidence. United States v. Kaufman, 96 U. S. 567, 24 L. Ed. 792; United States v. Savings Bank, 104 U. S. 728, 26 L. Ed. 908. There is here no question of *739fraud. The burden is upon the government to establish that the Commissioner of Internal Revenue made a mistake when he held that an informal claim had been made. In my opinion the record does not sustain this claim of the defendant. The statute does not specify the form or contents of a claim for refund upon which the Commissioner may act. He has considerable discretion in the matter. The purpose of requiring the claim is either definitely to end the controversy if none is filed or to keep the matter of the tax liability alive by the filing and to give the Commissioner the right to pay the amounts erroneously collected. The decision of the Commissioner as to the sufficiency of the claim under the peculiar circumstances existing in the particular ease should be given considerable weight. In cases such as this, any documents filed by the taxpayer in an effort and for the purpose of obtaining a refund, and which satisfy the Commissioner that the taxpayer is asking for a refund of an admitted overpayment, are sufficient under the statute to' constitute an informal claim that might be perfected as this claim was.
GRAHAM, Judge, concurs.