Opinion · United States Court of Claims
Sugar Land Ry. Co. v. United States
Sugar Land Ry. Co. v. United States, 48 F.2d 973 (Ct. Cl. 1931)
- Type
- Opinion
- Court
- United States Court of Claims
- Jurisdiction
- Federal
- Date
- 1931-04-06
- Topic
- bankruptcy
LITTLETON, Judge. Plaintiff’s return for the calendar year 1918 was due under the statute March 15, 1919. Its return was filed June 15, 1919. The original return showed a tax of $9,-740.19, which was paid in four installments throughout 1919. Later an additional assessment of $1,798.77 was paid July 8,1921, and an additional tax of $368 shown .on the amended return filed by plaintiff was paid February 9,1922.
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SUGAR LAND RY. CO. v. UNITED STATES,48 F.2d 973(Ct.Cl. 1931)
SUGAR LAND RY. CO. v. UNITED STATES.
No. H-394.
Court of Claims.
April 6, 1931.
Petition dismissed.
This suit is to recover $2,417.79, an alleged overpayment of income and profits tax for 1918, with interest from the dates of payment. The suit originally sought to recover alleged overpayments for 1919 and 1920, but those years are not now in controversy. There is no dispute as to the overpayment.
The question is whether plaintiff filed a timely claim for refund.
Special Findings of Fact.
1. Plaintiff, a Texas corporation, is engaged in the operation of a steam railroad with its principal office at Sugar Land, Tex. It filed its income and profits tax return for the calendar year 1918 on June 15, 1919, showing a tax of $9,740.19. This tax was duly assessed by the Commissioner of Internal Revenue and, in order to avoid the imposition of penalties against it and distraint of property, the amount was paid to the collector of internal revenue in four installments of $2,250.00, $2,622.89, $2,433.65, and $2,433.65 on March 17, June 17, September 19, and December 18, 1919, respectively. The commissioner audited this return March 23, 1921, and determined an additional tax of $1,798.77 which was assessed on the May, 1921, list and was paid by plaintiff July 8, 1921. January 7, 1922, plaintiff filed an amended return and schedules for 1918 showing an additional tax of $368 which it paid February 9, 1922. These payments were made in order to avoid the imposition of penalties and distraint of plaintiff's property.
2. March 19, 1922, the Commissioner of Internal Revenue assessed a delinquent penalty of $92 on the amended return, and on October 16, 1922, the commissioner refunded said penalty and, in addition, $38.40 of the tax.
3. March 8, 1924, plaintiff filed a claim for refund of $11,906.96 of the tax paid for 1918. The grounds stated in this claim were as follows: "This claim for refund of the total taxes paid for the year 1918 is filed for the purpose of protecting our interests against the running of the statute of limitations under the revenue act of 1921. This claim is also filed in accordance with 14 Opin. Atty. Gen. 615." This claim is attached to the stipulation and is made a part hereof by reference.
This claim for refund was denied and rejected by the Treasury Department in a letter from the office of the Commissioner of Internal Revenue, April 16, 1924. The letter of rejection was as follows:
"Your claim for refund of taxes of $11,906.96 for the year 1918 has been considered.
"You are advised that the information on file in this office does not warrant a change in tax liability for the year in question. No additional information was submitted with your claim for refund.
"Your claim is, therefore, rejected and the collector of internal revenue for your district will be notified immediately of this adjustment."
4. On June 6, 1924, plaintiff filed a claim for refund of $11,906.96, income and profits tax paid for 1918. This claim, as was the one previously filed March 8, 1924, was on standard Form 843 of the Treasury Department and was headed "Claim for Refund of Taxes Illegally Collected." This claim in all respects, except the grounds stated therein, was identical and contained the same conditions and figures as the claim previously filed and rejected. The grounds stated in this claim and the reasons given therein by plaintiff in support thereof were as follows: "The tax, if assessed without benefit of section 327 of the Revenue Act of 1918 will work an undue hardship upon this taxpayer evidencedPage 974by the gross disproportion between the tax assessed without benefit of this section and the tax assessed by reference to representative concerns engaged in a like or similar trade or business. Brief in support of this claim is being filed with the Commissioner of Internal Revenue at Washington, D.C." This claim is attached to the stipulation and is made a part of this finding by reference.
Thereafter, on July 23, 1924, plaintiff filed with the commissioner an application under section 327 for assessment of its profits tax for 1918 under section 328 of the Revenue Act of 1918. The Commissioner of Internal Revenue upon a reaudit of the tax liability notified plaintiff by letter dated October 7, 1925, that assessment under section 328 of said act resulted in an overpayment of tax for 1918 in the amount of $4,584.56. This letter, so far as material here, stated:
"Reference is made to your corporation income and profits tax return for the calendar year 1918.
"You are advised that after careful consideration of your protest dated March 2, 1925, together with the evidence submitted at a conference held under date of April 1, 1925, your application under the provisions of section 327 for assessment of your profits tax as prescribed by section 328 of the Revenue Act of 1918 has been allowed. Your profits tax is based upon a comparison with a group of representative concerns which, in the aggregate, may be said to be engaged in a like or similar trade or business to that of your company."
The letter then set forth in detail the computation and advised the plaintiff of an overassessment of $4,584.56 and proceeded:
"In accordance with the above conclusions, your claim for the refund of $11,906.96 will be rejected for $7,322.40.
"The collector of internal revenue for your district will be officially notified of the rejection at the expiration of thirty days from the date of this letter.
"The overassessment shown will be made the subject of a certificate of overassessment which will reach you in due course through the office of the collector for your district and will be applied by that official in accordance with section 281(a) of the Revenue Act of 1924."
Thereafter, on November 28, 1925, the commissioner prepared a certificate of over-assessment of $4,584.56 for 1918 and listed the same on a schedule, No. 17408, which was forwarded to the collector. Upon receipt the collector entered the overassessment mentioned as refundable on a schedule of refunds and credits, No. 17408, which he returned to the commissioner. Upon receipt of this schedule from the collector, the commissioner approved and allowed claim for $4,584.56 and computed interest due and payable to the plaintiff of $1,425.09 from the date of payment of the tax to November 28, 1925. Following this action, the commissioner issued to plaintiff a certificate of overassessment for 1918 for the tax and interest mentioned in which certificate he stated in part, as follows: "An audit of your income-tax return, Form 1120, and a consideration of all the claims (if any) filed by you for the year 1918 indicates that the tax assessed for this year was in excess of the amount due. * * *"
This certificate is made a part of this finding by reference.
5. January 15, 1926, the commissioner certified the item of $6,009.65, being the total of the overpayment of tax with interest, to the Comptroller General of the United States with instructions to pay the same to plaintiff as an allowance for overpayment of taxes for 1918 with interest. Payment of the amount allowed and certified by the commissioner was withheld by the Comptroller General on February 6, 1926, on the ground that plaintiff was indebted to the United States in excess of the overpayment and interest allowed by the commissioner. The Comptroller General returned the schedule of allowance to the commissioner for withdrawal of the refund to the plaintiff with request that that item be forwarded to the General Accounting Office for direct settlement by supplemental schedule. This was done and the plaintiff did not receive the check referred to in the certificate of overassessment issued by the commissioner.
6. August 17, 1928, the General Accounting Office returned the supplemental schedule mentioned in the preceding finding to the Commissioner of Internal Revenue, stating that: "The matter of indebtedness now having been otherwise adjusted, the schedules are forwarded for your consideration and for further transmittal to the disbursing clerk, Treasury Department, for payment."
7. Thereafter, in August, 1928, the Commissioner of Internal Revenue held that no sufficient claim for refund had been filed within the time required by law and that the refund of $2,417.79, being that portion of the total overpayment determined for 1918 represented by the tax paid on the originalPage 975return, was barred by the statute of limitations. Accordingly the commissioner issued a new certificate of overassessment reducing the overassessment allowable by the amount held by him to be barred by the statute of limitations.
8. On September 11, 1928, the Treasury Department issued and the plaintiff received check for $3,081.83 covering that portion of the tax for 1918 represented by the additional assessment of $1,798.77 paid July 8, 1921, and the additional tax of $368 paid on the amended return February 9, 1922, with interest thereon of $915.06. The interest allowed and paid was computed at 6 per cent. on $1,798.77 from July 8, 1921, to August 24, 1928, and on $368 from February 9, 1922, to August 24, 1928.
9. The plaintiff filed a claim for refund of certain of the taxes paid for 1919 and the commissioner allowed the claim for $5,225.66 with interest of $2,260.80, and the total of these amounts was paid to plaintiff September 5, 1928. The claim with respect to the tax for 1919 is therefore eliminated from this suit.
George H. Foster, of Washington, D.C., and Charles B. Rugg, Asst. Atty. Gen., for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
March 8 plaintiff filed a claim for refund which stated no basis or grounds for the alleged overpayment but contained the statement that it was filed to protect plaintiff against the statute of limitations. This claim was considered by the commissioner and denied and rejected April 16, 1924. This claim was filed within five years after the return for 1918 was due, as permitted by section 252 of the Revenue Act of 1921 (42 Stat. 268). It was rejected by the commissioner after the time for filing a claim for refund had expired. Thereafter, on June 6, 1924, plaintiff filed the claim for refund referred to in finding 4 for the same amount which had been specified in the earlier rejected claim. This claim gave as the ground and reason for the allowance thereof that plaintiff was entitled to have its profits tax computed under the provisions of section 328, special assessment provision, of the Revenue Act of 1918 (40 Stat. 1093). Subsequent to the filing of this claim, plaintiff duly filed an application for assessment of its profits tax under the special assessment provisions. The application for special assessment was allowed by the commissioner, as a result of which, on October 7, 1925, he determined that there had been an overpayment of $4,492.56 for 1918. The Comptroller General directed that payment of the overpayment allowed by the commissioner be withheld, and when he subsequently certified to the commissioner, in August, 1928, that there was no longer any reason to withhold payment, the Commissioner of Internal Revenue decided that since the claim for refund filed March 8, 1924, stated no grounds and had been considered and rejected upon the record before him, the claim filed by the plaintiff June 6, 1924, was governed by the provisions of section 281(b) of the Revenue Act of 1924 (26 USCA § 1065 note) and of section 1012 of that act amending section 3228 of the Revised Statutes (26 USCA § 157), and such claim having been filed more than four years after a portion of the tax going to make up the total overpayment determined had been paid, only a portion of the overpayment could be refunded. Accordingly, the commissioner issued a new certificate of overassessment and refunded to the plaintiff only $2,166.77 of the total overpayment representing the amount of the last two payments above mentioned on July 8, 1921, and February 9, 1922, these two payments falling within a period of four years prior to the filing of the claim of June 6, 1924. The commissioner refused to refund the balance of the overpayment, amounting to $2,417.79, with interest.
This suit is to recover the above-mentioned amount, with interest on $2,189.31 from September 19, 1919, and on $228.48 from December 18, 1919, and the question is whether the plaintiff made and maintains this suit upon the claim for refund filed.
Plaintiff contends that the original claimPage 976of March 8, 1924, was filed within five years after the return was due and, therefore, in time, and that it was enlarged by a "supplemental" claim for refund filed June 6, 1924, based upon special assessment, and under the provisions of section 281(a) of the Revenue Act of 1924 (26 USCA § 1065 note), the commissioner allowed the claim on the ground of special assessment and determined an overpayment of $4,492.56.
On the other hand, the defendant contends that since the refund claim filed March 8, 1924, was rejected on April 16, 1924, which was prior to the enactment of the Revenue Act of 1924, the saving clause of section 281(b)(f) of that act is not applicable; that the claim of June 6, 1924, must be considered an original claim subject to the four-year period of limitation provided by the Revenue Act of 1924.
Unless the refund claim filed June 6, 1924, can be treated as a part of and an amendment of the first claim filed March 8, 1924, the plaintiff cannot maintain this suit, for the last-mentioned claim was filed after the expiration of the period for the filing of claims in respect of the overpayment in controversy. We are of opinion from the facts that the claim of June 6, 1924, was not an amendment or supplement to the claim of March 8, 1924. Although counsel in the stipulation of facts stipulate that "On June 6, 1924, the claimant filed a supplemental claim for refund of income and profits taxes paid for the year 1918 in the sum of $11,906.96, as follows," the fact is that the claim of March 8, 1924, was not in existence and could not be amended nor supplemented. It had been considered and rejected by the Commissioner of Internal Revenue, and it could not subsequently, after the statute of limitations had expired, be enlarged or supplemented so as to give the taxpayer any greater right than existed under an original claim filed at such time. The facts definitely establish that the claim of March 8, 1924, had been duly considered and rejected by the Commissioner of Internal Revenue before the claim of June 6, 1924, was filed. We, therefore, decline to follow the stipulation and to find as a fact that the last-mentioned claim was supplemental to the first. (See Finding 4.) The claim for refund of June 6, 1924, was therefore an original claim and subject to the limitation provisions of the Revenue Act of 1924, approved June 2, 1924. Cf. Altman Co. v. United States,40 F.2d 781, 69 Ct. Cl. 721.
We need not here consider whether the Commissioner of Internal Revenue, having considered a timely claim for refund and duly rejected it after the expiration of the statute of limitation for filing a claim, might legally reconsider his action and vacate his decision rejecting the claim so as legally to permit an amendment or supplement to such claim. There are no facts in the record to show that the commissioner ever reconsidered or vacated his decision of April 16, 1924, denying and rejecting the claim for refund theretofore filed by the plaintiff March 8, 1924. The claim of June 6, 1924, was governed by the provisions of section 281(b) of the Revenue Act of 1924 (26 USCA § 1065 note). The commissioner correctly declined to make a refund to the plaintiff of that portion of the overpayment of tax which had been paid more than four years prior to the filing of the refund claim of June 6, 1924.
The petition must be dismissed, and it is so ordered.