Opinion
No. L-293.
May 31, 1932.
Suit by David Davidovitz against the United States.
Petition dismissed.
Plaintiff sues to recover $8,707.62, income tax for 1919, plus penalty and interest collected in the amount of $1,741.52, totaling $10,449.14, on the ground that collection thereof was made after the expiration of the statute of limitation and is refundable under section 607 of the Revenue Act of 1928 (26 USCA § 2607).
The tax of $8,707.62 represented a portion of the tax shown by the plaintiff to be due on the return filed by him for 1919. The Commissioner of Internal Revenue made an assessment thereof in September, 1924, and collected the same by distraint warrant levied April 27, 1927.
The question is whether the filing of a return constitutes the assessment of the tax shown thereon within the meaning of section 278(d) of the Revenue Act of 1924 ( 26 USCA § 1061 note), which section allows six years after a timely assessment within which to collect the tax.
Special Findings of Fact.1. March 15, 1920, plaintiff filed his income-tax return for the calendar year 1919 with the collector of internal revenue for the Second collection district of New York showing a total tax to be due for said year of $22,566.10. For some unknown reason the collector made no record of the receipt of plaintiff's return for 1919 until September, 1924. Prior to that time the return was not listed in the collector's office, nor was the amount of the tax shown to be due thereby listed on any assessment list by the collector or the commissioner nor was any assessment thereof made by the Commissioner of Internal Revenue nor were any proceedings instituted for the collection of the income tax of plaintiff for the calendar year 1919.
2. Plaintiff paid the amount of the tax shown to be due on the return for 1919 filed by him with the exception of $8,707.62. Payment of $13,858.48 of the total tax shown to be due by the return was made by the plaintiff to the collector of internal revenue for the Second district of New York in three installments of $2,575.44 on June 15, 1920, and $5,641.52 each on October 7, 1920, and January 22, 1921.
Inasmuch as the records of the collector did not show the receipt of plaintiff's return for 1919, these payments were recorded by the collector in the unidentified accounts section of his office until September, 1924.
3. The September, 1924, supplemental assessment list for the Second district of New York listed the plaintiff with an assessment for 1919 taxes in the amount of $22,566.10, being the amount of the tax shown by the plaintiff to be due upon the return filed by him. The assessment certificate accompanying said supplemental list was signed by the collector of internal revenue for the Second district of New York on October 8, 1924, and by the Commissioner of Internal Revenue January 20, 1925. Subsequently the payments which had been made by the plaintiff and carried by the collector in the unidentified accounts section of his office were transferred to the plaintiff's income-tax account and credited to the total tax assessed by the commissioner for 1919.
4. Thereafter, on April 4, 1927, the collector of internal revenue issued and delivered to a deputy collector for his district a warrant of distraint against the property of plaintiff for the collection of the balance of the 1919 tax shown to be due on the return of $8,707.62, plus penalty and interest in the amount of $1,741.52, totaling $10,449.14.
April 27, 1927, the deputy collector, acting under and by virtue of the warrant distraint, levied upon and seized plaintiff's bank account in the Chemical National Bank, New York, N Y, in the amount of $10,449.14. Thereafter on May 2, 1927, the Chemical National Bank delivered to the deputy collector at the request of the collector of internal revenue for the Second district of New York a cashier's check in the amount of $10,449.14 in satisfaction of the warrant of distraint, which check was duly accepted by the collector and the amount thereof was covered into the Treasury of the United States.
5. October 9, 1928, plaintiff filed a claim for refund of $10,449.14, taxes, penalty, and interest collected, as aforesaid, upon the ground, as set forth in the claim, "that more than five years (the period of limitation properly applicable thereto) had expired between the date of assessment (approximately March 15, 1920) and the date of collection (April 27, 1927)." This claim for refund was rejected by the Commissioner of Internal Revenue November 14, 1928, and notice of the rejection was mailed to the plaintiff on that date.
A.H. Frisch of New York City (George W. Newgass and Myron A. Finke, both of New York City, on the brief), for plaintiff.
Lisle A. Smith, of Washington, D.C., and Charles B. Rugg, Asst. Atty. Gen. (H.C. Clark, of Washington, D.C., on the brief), for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
Plaintiff contends that for the purpose of the statute of limitation the assessment of the tax in question, being a portion of the total tax shown by him to be due upon the return filed, was made on March 15, 1920, when he filed his return, without further action by the Commissioner of Internal Revenue, and that, therefore, the period within which collection by distraint or otherwise could be made expired March 15, 1925. He insists that the signing by the commissioner of an assessment list and certificate does not constitute the assessment of tax within the meaning of the various revenue acts and that for the purpose of the operation of the statute of limitations, as provided in the various taxing statutes, particularly section 278(d) of the Revenue Act of 1924 ( 26 USCA § 1061 note), the computation of tax upon the return filed by the taxpayer is the assessment thereof. It is contended, therefore, that the total amount collected constitutes an overpayment within the meaning of section 607 of the Revenue Act of 1928.
Section 250(d) of the Revenue Act of 1918 ( 40 Stat. 1083), provides that "the amount of tax due under any return shall be determined and assessed by the commissioner within five years after the return was due or was made." Every revenue act, beginning with the act of 1916, to and including the Revenue Act of 1928, specifically requires the Commissioner of Internal Revenue "to determine and assess" the amount of the taxes due under any return and specifies the time within which the commissioner should make the assessment.
Section 9(a) of the Act of 1916 ( 39 Stat. 763); section 250(d) of the Act of 1921 ( 42 Stat. 265); sections 271 and 277 of the Acts of 1924 ( 26 USCA §§ 1045, 1057 note) and 1926 ( 26 USCA §§ 1045, 1057); and section 57 of the Act of 1928 ( 26 USCA § 2057).
The assessment of the tax involved in this suit was made when the commissioner, on January 20, 1925, signed the assessment certificate which accompanied the supplemental assessment list of that date. The collection by distraint having been made within six years thereafter, as provided in section 278(d) of the Revenue Act of 1924 ( 26 USCA § 1061 note), was made within time, and plaintiff is therefore not entitled to recover. Until the commissioner acted no assessment was made. When he signed the assessment certificate on January 20, 1925, which was within five years from the date the return was filed, as provided in section 277(a)(2) of the Revenue Act of 1924 ( 26 USCA § 1057 note), the defendant had, under section 278(d) of the Revenue Act of 1924 ( 26 USCA § 1061 note), six years from that date within which to collect the tax. The tax was assessed after the enactment of the Revenue Act of 1924, and the case of Russell et al. v. United States, 278 U.S. 181, 49 S. Ct. 121, 73 L. Ed. 255, sustains the action of the defendant rather than the contention of the plaintiff. The cases cited by the plaintiff in support of its contention are not in point upon the question involved in this case.
The petition must be dismissed. It is so ordered.