Court Opinion

ID: 8593995
Source: CourtListenerOpinion
Date Created: 2022-11-23 15:59:38.521006+00
Date Added: 2024-06-11T16:54:46.459395
License: Public Domain

Skelton, Judge,
dissenting:
I respectfully dissent. In my opinion, the decision of the majority reaches an unconscionable result that I cannot agree with.
I start with the fact that when the estate tax returns were filed, they stated plainly and unequivocally that the New Jersey Transfer Inheritance Tax in the sum of $850,000 was Estimated. This was notice to the Government that this amount was not final and that an adjustment would have to *619be made when the final tax was determined. This fact was acknowledged in both of the 890-B forms that it sent to the plaintiffs. Both forms plainly stated:
It is understood that evidence of payment of estate, inheritance, legacy, or succession taxes to any state, * * *, will be filed with the District Director of Internal Revenue as promptly as practicable. * * *.
Both the first and second forms 890-B required this report of state taxes to be filed by May 1, 1966. Thus, the Government was not only put on notice that the state inheritance figure was only an estimate and the final figure would have to be adjusted, but also the Government acknowledged this fact when it issued the first form 890-B on December 10,1965, and again when it issued the second form 890-B on February 18, 1966. In the face of these facts, any internal revenue agent handling the case who did not know that the state inheritance tax was only an estimate and was to be adjusted before final settlement, would not be able “to see an elephant in a snowbank.”
Proceeding, then, from the fact that the Government had knowledge that the state inheritance tax figure was only tentative and estimated and would have to be adjusted in the final settlement, I next consider the first form 890-B that the Government sent to the taxpayer. This form showed on over-assessment of $37,450.85. The taxpayer signed it and returned it to the Government. The filing of this form served as a valid claim by the taxpayer for a refund, as provided by Revenue Ruling 68-65,1.R.B. 1968-6,25. Of course, the Government contends that the form diid not put the Government on notice that the state inheritance taxes were involved, notwithstanding the fact that on the face of the form there was printed and typed a statement that the state inheritance taxes were to be reported by May 1, 1966, which was printed and typed by the Government itself. It would seem that the “elephant” was not only plainly visible in the snowbank, but that he also left his tracks all over the place. In simple terms, the Government knew the state inheritance tax was only 'an estimate and that when the final figure was determined, it *620would -have to be taken into consideration in. the final settlement.
The state inheritance taxes were an integral part of taxpayer’s claim from the beginning. They were involved in every calculation made by the Government with reference to taxpayer’s taxes. For the Government to now say the state taxes were not a part of-the taxpayer’s claim is like saying “the hide and tallow are not a part of the cow.”
At this point, it is established, in my opinion, that the taxpayer had filed a legal claim for a refund, which included the state inheritance taxes. The Government then recalculated the taxes due. The reviewer’s memorandum is shown as defendant’s Exhibit “A” attached to the Government’s brief, and states that in computing the amount of the charitable deduction the taxes due the state must be subtracted from the corpus .of the second trust. Yet, the Government piously asserts that •it was:wholly unaware that the state taxes were involved.
■ After recalculating the taxes, the Government sent the taxpayer a second form 890-B showing a deficiency of $4,950.63. This was in the form of a waiver and stated specifically that it was not a final closing agreement, but that its filing by the taxpayer would expedite the adjustment of the tax liability. The taxpayer signed and filed this form on this basis. The majority has not considered what effect, if any, this second form 890-B has on this case. In my opinion, the signing and filing of this form in no way prejudices the taxpayer’s claim. If it could be said that the sending of this second form by the Government to the taxpayer was a rejection of the- claim filed on the first form 890-B, then taxpayer is still in court on his first form 890-B claim because this .suit was filed within two years after the second form was issued. .
• The Government acknowledges that it has collected $65,000 more taxes from this taxpayer than it is entitled to. This, amounts to a legal extortion that should not be countenanced. The taxpayer has only sued for $31,450.85, which is slightly more than one-half of what he is entitled to.
For all of these reasons, I cannot agree with the majority opinion. I would grant the plaintiffs’ motion for summary judgment and deny defendant’s motion.