Opinion
No. J-107.
November 3, 1930.
Suit by the Columbia Steel Shafting Company against the United States.
Petition dismissed.
This suit is for the recovery of $17,059.29 alleged by plaintiff to represent interest to which it is entitled under section 1324 of the Revenue Act of 1921 ( 42 Stat. 316) on an overpayment of $121,811.02 for 1917.
Special findings of fact:
1. The plaintiff, a Pennsylvania corporation with principal office at Pittsburgh, filed its income and profits tax return for 1917 on April 1, 1918, showing a tax of $1,774,807.18, which was paid June 15, 1918. September 6, 1919, the Commissioner of Internal Revenue made an additional assessment of $95,173.34 for 1917, and on October 25, 1919, plaintiff filed with the collector a claim for the abatement of the entire amount of the additional assessment. August 14, 1920, the Commissioner notified plaintiff of his decision allowing the claim for $26,532.12 and rejecting it for $68,641.22. Plaintiff paid the last-mentioned amount October 6, 1920.
2. August 25, 1919, the plaintiff requested the Commissioner to grant it relief by determining its profits tax for 1917 under the provisions of section 210 of the Revenue Act of 1917 ( 40 Stat. 307).
3. November 25, 1919, plaintiff filed a claim asking that $302,156.38 of the income and profits tax paid for 1917 be credited against the unpaid balance of the income and profits tax for 1918, based on plaintiff's claim that its profits tax for 1917 should be determined under section 210 of the Revenue Act of 1917 ( 40 Stat. 307) and that such determination would show an overassessment in that amount.
4. May 24, 1921, plaintiff filed a claim for refund of $279,285.38 requesting that its profits tax for 1917 be determined in accordance with the provisions of section 210, supra.
5. The Commissioner allowed the application of the plaintiff for determination of its profits tax under the provisions of section 210, and upon a computation of its profits tax under that section he determined an overassessment of $121,811.02.
6. August 25, 1922, the Commissioner approved the schedule entitled "Schedule of Reduction of Tax Liability" IT:A:2438, form 7777, embracing an overassessment of $121,811.02 in favor of plaintiff for 1917. This schedule was transmitted to the collector for his action in accordance with the directions appearing thereon. The collector complied, and on October 6, 1922, signed and returned this schedule to the Commissioner, together with a schedule of refunds, IT:R:2438, form 7777 — A. October 21, 1922, the Commissioner approved the schedule of refunds authorizing the disbursing clerk of the Treasury Department to issue checks for the amounts found by him to be refundable to the several taxpayers whose names appeared on the schedule. October 27, 1922, the Commissioner mailed to plaintiff a certificate of overassessment of $121,811.02 for 1917, together with a Treasury check for that amount.
7. The Commissioner determined that no interest was allowable on the overpayment for 1917, and he also refused, and still refuses, to compute and allow interest on the overpayment above mentioned for that year.
8. When the period of limitation has expired within which the Commissioner might allow an overassessment without the filing of a claim for refund, it is and has been the uniform practice in the Bureau of Internal Revenue to require the timely filing of a claim as a condition precedent to the allowance of an overassessment. This practice is applicable to claims for refund based on special assessment, as well as to all other claims.
9. April 19, 1920, plaintiff and the Commissioner, with the approval of the Secretary of the Treasury, entered into an agreement under and pursuant to the provisions of section 1312 of the Revenue Act of 1921, which agreement was as follows:
"This agreement, made this 17th day of April, 1923, under and in pursuance of section 1312 of the revenue act of 1921, by and between Columbia Steel Shafting Co., a taxpayer having its principal office or place of business at Pittsburgh, Pa. (hereinafter referred to as the 'taxpayer'), and the Commissioner of Internal Revenue (hereinafter referred to as the 'Commissioner'), with the approval of the Secretary of the Treasury:
"Whereas, on or about the first day of April, 1918, there was assessed against the taxpayer the sum of $1,843,448.40 as the amount of taxes due the United States of America from the taxpayer on account of 1917 income and excess profits taxes; and
"Whereas the taxpayer pursuant to such assessment, on or about the first day of June, 1918, paid the sum of $1,843,448.40 as taxes due the United States of America on account of said 1917 income and excess profits taxes; and
"Whereas there has been a determination by the commissioner that the sum of $1,721,637.38 is the correct amount for which the taxpayer was liable on account of said 1917 income and excess profit taxes; and
"Whereas, the commissioner has made a refund, based on such determination and such assessment, of the sum of $121,811.02, and the taxpayer has accepted such refund;
"Now this agreement witnesseth: That the taxpayer and the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, hereby mutually agree that such determination of the sum of $1,721,637.38 as the correct amount of taxes for which the taxpayer was liable on account of said 1917 income and excess profits taxes and such assessment as reduced by the amount refunded as aforesaid, shall be final and conclusive.
"In testimony whereof, the parties to these presents have hereunto set their hands and seals the day and year first above written.
"Columbia Steel and Shafting Co., Taxpayer. "By Edward L. Parker, Pres. "C.R. Nash, Acting Commissioner. "[Seal.] "Approved: April 19, 1923. "A.W. Mellon, Secretary."
10. June 2, 1926, plaintiff requested the Commissioner to compute and allow interest on the overpayment for 1917, which request is attached to the petition as Exhibit G and, by reference, is made a part of this finding but need not be set out herein. June 23, 1926, the Commissioner notified the plaintiff that interest could not be allowed in view of the agreement hereinbefore set forth.
11. October 27, 1926, plaintiff filed a claim for interest on the overpayment for 1917 on the ground that the closing agreement had no bearing on the question of interest. On November 11, 1926, the Commissioner notified the plaintiff that, inasmuch as the case involving the year 1917 had been closed by the agreement, no further action could be taken in the matter.
Newell W. Ellison, of Washington, D.C. (Covington, Burling Rublee, of Washington, D.C., on the brief), for plaintiff.
Charles R. Pollard, of Washington, D.C., and Charles B. Rugg, Asst. Atty. Gen. (D.L. Bergeron, of Washington, D.C., on the brief), for the United States.
Before BOOTH, Chief Justice, and WILLIAMS, GREEN, and LITTLETON, Judges.
It is argued by plaintiff that this suit is not for the purpose of annulling, modifying, or setting aside the determination or assessment by the Commissioner, but is for the recovery of interest on an overpayment as to which no reference is made in the statute or in the closing agreement. Section 1312 of the Revenue Act of 1921 ( 42 Stat. 313), which is entitled "Final Determinations and Assessments," provides "that if after a determination and assessment in any case * * * an agreement is made in writing, * * * that such determination and assessment shall be final and conclusive, * * * no suit, action, or proceeding to annul, modify, or set aside such determination or assessment shall be entertained by any court. * * *" It will thus be seen that no attempt was made to define what should be included within the term "determination," and the term is in no way limited to any particular question or feature of the tax account with reference to the liability of the taxpayer to the government, or of the government to the taxpayer, with the decision of which the Commissioner is charged. The provision in the section "that if * * * the taxpayer has without protest paid in whole any tax or penalty, or accepted any abatement, credit, or refund based on such determination and assessment, and an agreement is made, * * *" is not a limitation upon the "determination," but is a condition prerequisite to the right to enter into the agreement and to its validity. If the taxpayer or the government is not willing to make the determination that has been made final and conclusive, neither is required to make the agreement, but once it is made neither the taxpayer nor the government can raise any further question or make any further claim with reference to any feature of the tax account for the particular taxable year involved.
We are of opinion, therefore, that, under the closing agreement and section 1312 of the Revenue Act of 1921 ( 42 Stat. 313) the plaintiff cannot recover, and that the court is without authority to annul, modify, or set aside the agreement. Parish Bingham Corp. et al. v. United States (Ct.Cl.) 44 F.2d 993, and Wilton Lloyd-Smith, Receiver, v. United States (Ct.Cl.) 44 F.2d 990, this date decided.
The petition must therefore be dismissed, and it is so ordered.
WHALEY, Judge, did not hear this case and took no part in the decision thereof.