Opinion
No. K-47.
April 30, 1930.
Action by the Second National Bank of Saginaw, Mich., trustee of the estate of Wellington R. Burt, deceased, against the United States.
Petition dismissed.
This case having been heard by the Court of Claims, the court, pursuant to the stipulation of the parties, makes the following special findings of fact:
Plaintiff is a corporation, and executor and trustee of the estate of Wellington R. Burt, who died March 2, 1919. On April 1, 1918, he made an income-tax return showing a tax due in the sum of $65,428.51 for the calendar year 1917, which was paid during the same year. Afterwards the Commissioner of Internal Revenue audited and revised this return and in January, 1921, assessed additional taxes against said Burt in the sum of $28,336.07. On February 17, 1921, the plaintiff, as executor of the estate of said Burt, filed a claim in abatement of the said tax of $28,336.07 on several grounds. On November 23, 1922, the commissioner credited against said assessment the sum of $804.91, being the amount of an overpayment of income taxes for the year 1920, leaving a balance of $27,531.16 still due and unpaid. On May 24, 1923, the commissioner rejected the claim for abatement of said tax, and on October 2, 1923, demanded of plaintiff the balance of the additional assessment for 1917, to wit, $27,531.16, together with interest thereon amounting to $4,198.50, a total of $31,729.66, and plaintiff, under protest, on October 12, 1923, paid said amount to the collector of internal revenue.
On October 25, 1923, the plaintiff filed a claim for refund of taxes assessed against said Burt for 1917 and 1918 in the sum of $109,054.56, and on October 1, 1925, plaintiff filed a second claim for refund, claiming a reduction of tax liability for the year 1917 in the sum of $17,538.50 and a refund of the sum of $97,963.08 on the taxes for the year 1917. No evidence was introduced to support the specifications made in either of these claims for refund.
On March 31, 1926, the commissioner rejected the claim for refund for the year 1917 in its entirety, and on July 11, 1927, the plaintiff filed a third claim for refund of the taxes of 1917 in the sum of $32,534.57, being the amount of the said additional assessment, together with interest paid thereon, on the ground that the same had been illegally collected after the statute of limitations had expired, and stated that, "This claim amends and supplements all claims for refund previously filed for this year."
On September 1, 1928, the commissioner rejected the third claim for refund.
The parties have stipulated and the court finds that if the plaintiff is entitled to recover anything in this action, the plaintiff is entitled to recover no greater sum than $31,729.26, with interest thereon from October 12, 1923, and also: Upon receipt of a claim in abatement it was the common practice to hold up the collection of an additional assessment. The collector of internal revenue acted in accordance with this practice in this case and in the exercise of his discretion actually held up the collection of the additional assessment and forwarded the said claim to the Commissioner of Internal Revenue in due course. The collector made no further endeavor to collect the amount covered by the claim in abatement in this case until after the claim had been finally adjusted by the Commissioner of Internal Revenue.
Theodore B. Benson, of Washington, D.C., for plaintiff.
Lisle A. Smith and Charles F. Kincheloe, both of Washington, D.C., for defendant.
Before BOOTH, Chief Justice, and GRAHAM, GREEN, LITTLETON, and WILLIAMS, Judges.
This is an action to recover taxes which the evidence shows were collected after the period of limitations had expired.
Three claims for refund were filed, but the case turns entirely upon the third claim for refund, which was based on the fact that the taxes sought to be refunded had been collected after the expiration of the period of limitations.
The facts as stipulated by the parties and set out in the findings show that the taxes in controversy were assessed within the period of limitations, that a plea of abatement was then filed by plaintiff, and a little over two years thereafter the claim for abatement was denied. In the meantime a credit had been made on the tax in question of an overpayment on a tax for a later year.
The findings further show that upon receipt of a claim in abatement it was the common practice to hold up the collection of an additional assessment, and that the collector of internal revenue acted in accordance with the practice in this case and made no endeavor to collect the amount covered by the claim in abatement until after the claim had been finally adjusted by the Commissioner of Internal Revenue.
The facts bring the case squarely within the rules announced by this court in the Oak Worsted Mills Case, 36 F.2d 529, decided December 2, 1929, and the Gotham Can Co. Case, 37 F.2d 793, decided January 20, 1930. Following the rules laid down in these cases, it is ordered that plaintiff's petition be dismissed.