Court Opinion

ID: 8590801
Source: CourtListenerOpinion
Date Created: 2022-11-23 15:48:06.543953+00
Date Added: 2024-06-11T16:54:27.135879
License: Public Domain

MaddeN, Judge,
dissenting:
For the reasons which I gave in dissenting from the opinion of the court in Koppers Company, Inc. v. United States, 126 C. Cls. 847, I respectfully dissent.
Judge Laramore took no part in the consideration or decision of this case.
FINDINGS OP PACT
The court makes the following findings of fact upon the record, the stipulation by the parties, and the arguments and briefs of counsel:
1. The taxpayer is a corporation with its principal office in Landis, North Carolina, and files its tax returns on a calendar year basis.
2. March 15, 1942, the taxpayer filed an excess profits tax return on Form 1121 reporting an average base-period net income of $66,051.23 which produced a credit against taxable income of only $62,748.07 and an excess profits tax liability for the year of $95,102.03, which amount was paid in four installments during the year 1942.
*644■ 3. June 24, 1943, the taxpayer filed, on Form 991, which was an application for determination and computation of its profits tax under section 722 of the Internal Revenue Code, claiming a refund of a portion of the excess profits tax paid for the year 1941. The basis of the application was a claimed constructive average base period net income of $143,354.09. On September 9, 1944, taxpayer filed a claim for refund (Form. 843) for 1941 grounded upon its application for determination of its tax under section 722;
4. By letter dated July 27, 1945, the Internal Revenue Agent in Charge, Greensboro, North Carolina, informed the taxpayer that the revenue officer examining the taxpayer’s •1941 and 1942 tax returns had recommended the assertion of a deficiency in excess profits tax for 1941 in the amount of $3,562.13 and had recommended the denial of the taxpayer’s claim under section 722. The proposed deficiency arose from adjustments unrelated to the computation of the taxpayer’s excess'profits credit under section 722. On or about September 27,1945, a protest was filed by the taxpayer objecting to these adjustments and objecting to the denial of its claim under section 722.
After a conference in the office of the Revenue Agent in Charge, certain adjustments were made in taxable income for 1941 and the deficiency in excess profits tax was reduced to$3,308.52, but the denial of the taxpayer’s claim under section 722 was sustained. The taxpayer did not agree to the determination and requested that the entire matter for both the years 1941 and 1942 be referred to the Technical Staff, Atlantic Division, of the Bureau of Internal Revenue for consideration. This was in accordance with usual practicé and procedure. September 26, 1946, the taxpayer was advised that under' established procedure jurisdiction for handling claims under section 722 was under the Excess Profits Tax Council formed about April 1946, and was further advised that its claim had been returned to the Field Committee of the Excess Profits Tax Council operating in the office of the Revenue Agent in Charge at Greensboro, North Carolina. The Technical Staff continued consideration of the standard issues concerning the determination of taxable income for both years and, after conferences, an agreement was finally *645reached whereby the taxpayer, in order to settle the question -of' its income signed a waiver on assessment of a deficiency in excess'profits tax for 1941 in the amount of $3,083.11 without application of section 722. Under date of December 23, 1947, the taxpayer filed an Offer of Waiver of Restrictions on Assessments and Collection of Deficiency in Tax specifically reserving its rights under section 722. ■ By reason of the waiver of restrictions, the deficiency in excess profits of $3,083.11, together with interest thereon of $1,082.63, was assessed against the taxpayer on the February 27, 1948, Assessment List for North Carolina, and the taxpayer paid both sums on March 11,1948.
5. On August 15, 1947, the Internal Revenue Agent in Charge, Greensboro, North Carolina, mailed the taxpayer a copy of the Revenue Agent’s Report dated June 30, 1947, concerning the examination of the taxpayer’s claims under section 722 for 1941. The report was submitted after conferences with representatives of the taxpayer, at which conferences requests were made for submission of data in support of the application for determination of the profits tax under section 722. Thereafter, the revenue agent, on the basis of the data assembled by him, recommended a constructive average base period net income of $69,544.09 instead of the $66,051.23 used on the filed excess profits tax return. The credit against income thus recommended by the revenue agent was 95% of the $69,544.09. September 30, 1947, the taxpayer filed a protest objecting to the conclusions set forth in the August 15, 1947, letter from the Internal Revenue agent and asserting that the taxpayer- was entitled to a substantially higher excess profits credit than that recommended by the Revenue Agent’s report.
6. After consideration of the protest and evidence submitted by the taxpayer, the Excess Profits Tax Council, under date of January 20, 1948, decided and held that the taxpayer qualified for relief under section 722 (b) (4) of the Internal Revenue Code and thereby granted a constructive average base period net income of $75,219.48, which produced a credit thereunder of $71,458.51. The taxpayer’s tax liability resulting therefrom was a deficiency in income tax of $1,350.02 to which the taxpayer makes no objection, and an *646overpayment of excess profits tax of $4,354.92, of which the taxpayer was notified by letter from the Internal Revenue Agent in Charge, Greensboro, North Carolina, dated March 11,1948. March 29,1948, the taxpayer filed a Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of the overpayment thus determined.
7. On April 29, 1948, the Commissioner of Internal Revenue approved the decision of the Excess Profits Tax Council and issued a formal notice to the taxpayer by registered mail advising that the determination of its final excess profits tax liability, for 1941, disclosed an overpayment in the amount of $4,354.92 and the disallowance of the balance of its claim for refund filed September 9, 1944.
8. The Commissioner of Internal Revenue thereafter refunded the overpayment referred to in finding 7 above (Schedule No. 135571) in the amount of $4,354.92 but did not refund the interest paid in the amount of $1,082.63, which had previously been collected. This interest payment, made pursuant to the assessment described in finding 4 above, was the interest collected on the “potential” deficiency in excess profits taxes for 1941 after the Excess Profits Tax Council had held and decided that section 722 of the Internal Revenue Code was applicable.
9. August 25, 1949, the taxpayer filed a claim for refund demanding refund of the interest of $1,082.63, on the grounds that payment of this interest on the 1941 excess profits tax deficiency, determined while the case was under consideration by the Excess Profits Tax Council, was illegally and erroneously collected and retained.
10. March 1,1951, the taxpayer was notified by registered mail of the disallowance of its claim for refund of $1,082.63.
CONCLUSION OK LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law plaintiff is entitled to recover.
The entry of judgment is suspended to await the filing of a stipulation by the parties showing the amount due plaintiff, computed in accordance with this opinion.