From Casetext: Smarter Legal Research

Irving Bank-Columbia Tr. Co. v. United States

Court of Claims
Nov 3, 1930
44 F.2d 881 (Fed. Cir. 1930)

Opinion

No. H-495.

November 3, 1930.

Suit by Irving Bank-Columbia Trust Company, executor of the will of Artemus Ward, deceased, against the United States.

Petition dismissed.

This suit is for the recovery of $26,653.21 as additional interest on alleged overpayments of tax for 1915 to 1918, inclusive, under section 1324(a) of the Revenue Act of 1921 ( 42 Stat. 316), and for interest on the amount claimed at 6 per cent. per annum from July 9, 1923.

Special Findings of Fact.

1. Artemus Ward, a resident of New York, died testate March 14, 1925. The Irving Bank-Columbia Trust Company, a New York corporation, was appointed executor of the decedent's estate on April 4, 1925, and is still the sole executor thereof.

2. February 29, 1916, decedent filed his income tax return for 1915 showing a tax of $4,990.44, which was paid June 30, 1916. March 1, 1917, he filed a return for 1916 showing a tax of $15,373.41, which was paid May 23, 1917. May 1, 1918, he filed a return for 1917 showing an income and profits tax of $366,616.80, which was paid June 25, 1918. After a preliminary examination and an audit of the returns for 1915 and 1916, the Commissioner of Internal Revenue on June 28, 1918, notified the decedent that he had determined deficiencies of $11,518.05 for 1915 and $16,891.89 for 1916. The commissioner made an additional assessment of these deficiencies on October 16, 1918, and the amounts were paid to the collector by the decedent after notice and demand. After a similar examination and audit of the returns for 1917, the commissioner on August 18, 1919, notified decedent that he had determined an additional tax of $65,782.66. The commissioner made an additional assessment of this deficiency on October 30, 1919, and the decedent paid the amount of the additional assessment February 6, 1920, after notice and demand by the collector.

3. April 1, 1919, decedent filed a tentative return for 1918 showing an estimated tax of $120,000, which was paid on that date. June 19, 1919, he filed a completed return for 1918 showing a correct tax liability of $514,529.85. Inasmuch as $120,000 had been paid on April 1, 1919, the balance of $394,529.85 was paid in three installments of $137,264.92 on June 19, 1919, $128,632.47 on September 15, 1919, and $128,632.46 on December 15, 1919.

4. March 15, 1920, decedent filed an unsigned income tax return for 1919 which was accepted by both the collector and the commissioner as an original return and from which it appeared that the tax due thereon was $399,670, which amount was duly assessed. The first installment of $99,917.50 of the tax for 1919 as shown on said return was paid March 18, 1920.

5. June 10, 1920, decedent filed amended returns for 1915 and 1916 showing a tax liability for those years of $5,035.85 and $11,101.64, respectively. No assessment was made on these returns, inasmuch as the amounts shown thereon were less than the amounts theretofore assessed and paid on the original returns filed for said years.

6. June 15, 1920, decedent filed an amended income and profits tax return for 1917 and amended income tax returns for 1918 and 1919 showing a total tax for those years of $282,797.09, $491,720.56, and $204,769.90, respectively. No assessment was made of the tax shown on the amended returns for 1917 and 1918, nor were any payments made thereon, inasmuch as the amounts shown thereon were less than the amounts theretofore assessed and paid on the original returns. The tax shown on the amended return for 1919 was not assessed inasmuch as the amount thereof was less than the tax assessed on the original return for that year.

7. June 15, 1920, decedent filed a claim asking that the amount of $104,852.40, representing a portion of the tax claimed to have been overpaid for the years 1914 to 1918, inclusive, be credited against the unpaid installments of the tax for 1919, and asking that $105,791.18 of the alleged overpayments for the years mentioned be refunded.

8. June 24, 1920, decedent filed a claim for abatement of $194,900.10 of the tax reported and assessed on the return for 1919 claimed by him to have been assessed in error for that year.

9. After a further examination and audit of the returns for the years 1915 to 1918, inclusive, the commissioner on October 14, 1920, notified decedent that he had determined overassessments for the years 1915 to 1918, inclusive, in the amounts of $10,730.44, $19,829.86, $107,292, and $11,527.95, respectively.

Based upon additional information submitted subsequent to this determination and in conferences held in the income tax unit of the Bureau of Internal Revenue with decedent's representative, the overassessment for 1917 was adjusted from $107,292 to $131,004.55; the total of the overassessments thus determined being $173,092.80.

10. July 14, 1921, decedent filed a second amended return for 1919 showing a total tax due for that year of $390,899.23. Inasmuch as he had filed his first amended return on June 14, 1920, showing a tax liability of $204,769.90, and on June 24, 1920, had filed a claim for the abatement of $194,900.10, this second amended return showed an underpayment of tax for said year 1919 of $186,129.33, which was supported by a claim asking that $112,220.37, alleged overpayments for 1914 to 1918, be credited against the underpayment of tax for 1919, leaving a balance of $73,908.96 which was not paid at the time of filing the amended return and no assessment was made on the amended return for 1919.

11. March 10, 1923, the Acting Commissioner of Internal Revenue approved a schedule designated Schedule IT:A-5072, Form 7777. This schedule embraced overassessments in favor of the decedent of $10,730.44 for 1915, $19,829.86 for 1916, $131,004.55 for 1917, and $11,527.95 for 1918. The schedule was transmitted to the collector at New York for his action in accordance with directions appearing thereon. The collector complied, and on June 6, 1923, returned this schedule properly signed and certified, together with schedule of refunds and credits, IT:R:5072, Form 7805-A. The overassessments for 1915 to 1918, inclusive, were found to be overpayments and the schedule of refunds and credits, Form 7805, prepared and certified by the collector, was signed and approved by J.G. Bright, Deputy Commissioner of Internal Revenue, December 18, 1923. The overpayments for the years mentioned were credited against the original tax assessed and due for 1919, as follows:

========================================================================================== | | Year | | Due date of Year | Overpayment | to which | Year and account | 1919 tax against | | credited | | which credited ---------------|-------------|----------|------------------------------|------------------ 1915 ......... | $10,730 44 | 1919 | Annual 1920 #326445 ........ | 12/15/20 1916 ......... | 19,829 86 | 1919 | " ........ | " 1917 ......... | 131,004 55 | 1919 | " ........ | " 1918 ......... | 11,527 95 | 1919 | " ........ | " |-------------| | | | $173,092 80 | | | ------------------------------------------------------------------------------------------ 12. The commissioner allowed and paid interest, as follows: ======================================================================================= | | Amount on | Interest Allowed | Year | Overpayment | which interest |----------------------| Amount of | | allowed | From — | To — | interest ----------------------|-------------|----------------|-----------|----------|---------- 1915 ................ | $10,730 44 | $10,730 44 | 10/16/18 | 12/15/20 | $1,392 46 1916 ................ | 19,829 86 | 16,891 89 | 10/16/18 | 12/15/20 | 2,192 01 1917 ................ | 131,004 55 | 65,782 66 | 2/6/20 | 12/15/20 | 3,386 45 1918 ................ | 11,527 95 | ............. | ......... | ........ | ......... ---------------------------------------------------------------------------------------- No interest has been allowed or paid on the overassessments of the original tax for 1916, 1917, and 1918.

No interest has been assessed or paid on the additional assessments of tax for the years 1915, 1916, and 1917, hereinbefore referred to, neither was there any statutory authority for the assessment and collection of interest on said additional assessments.

Laurence Graves, of Washington, D.C. (Elwood W. Kemp, Jr., of New York City, on the brief), for plaintiff.

Charles R. Pollard, of Washington, D.C., and Herman J. Galloway, Asst. Atty. Gen. (Chas. F. Kincheloe and J.S. Franklin, both of Washington, D.C., on the brief), for the United States.

Before BOOTH, Chief Justice, and GREEN, LITTLETON, and WILLIAMS, Judges.


Plaintiff seeks to recover additional interest of $26,653.21 on overpayments totaling $173,092.80 for the years 1915 to 1918, inclusive, credited against original tax for 1919 as shown in finding 11.

The credits were allowed and made under section 1324(a) of the Revenue Act of 1921. The Commissioner of Internal Revenue allowed and paid interest as shown in finding 12. He computed and allowed interest to the due date of the unpaid original tax for 1919 (December 15, 1920) instead of to the date of the allowance of the claim for credit on the ground that after that date plaintiff was liable for interest on the 1919 tax.

Plaintiff claims that as to the amounts credited arising from overpayments of the original tax, interest should have been paid from the dates of payments to the date of allowance of the claim for credit, and, as to the amounts credited arising from overpayments of additional assessments, interest should have been allowed from six months after the claim for credit was filed to the date of the allowance of such claim.

The character of the overassessments and the amounts of overpayments credited were as follows:

========================================================== Year | Overpayment | Amount ---------------------|---------------|-------------------- 1915 ............... | $10,730 44 | $10,730 44 | | | 16,891 89fn1 1916 ............... | 19,829 86 | | | | 2,937 97 | | | 65,782 66fn1 1917 ............... | 131,004 55 | | | | 65,212 89fn2 1918 ............... | 11,527 95 | 11,527 95fn2 ----------------------------------------------------------

Additional assessment.

Original assessment.

Interest was allowed and paid as follows:

================================================================================================== | | Amount | | | Year | Overpayment | on which | Interest | Allowed | Amount | | interest | from — | to — | | | allowed | | | -----------------------|-------------|-------------|----------------|-----------------|----------- 1915 ................. | $ 10,730 44 | $10,730 44 | Oct. 16, 1918 | Dec. 15, 1920 | $1,392 46 1916 ................. | 19,829 86 | 16,891 89 | ...... do .... | ...... do .... | 2,192 01 1917 ................. | 131,004 55 | 65,782 66 | Feb. 6, 1920 | ...... do .... | 3,386 45 |-------------|-------------| | |----------- | $161,564 85 | $93,404 99 | | | $6,970 92 -------------------------------------------------------------------------------------------------- Interest was disallowed as follows:

================================================ | | Amount on Year | Overpayment | which | | interest was | | disallowed ------------------|--------------|-------------- 1916 ........... | $ 19,829 86 | $ 2,937 97 1917 ........... | 131,004 55 | 65,221 89 1918 ........... | 11,527 95 | 11,527 95 |--------------|-------------- | 162,362 36 | 79,687 71 ------------------------------------------------

The plaintiff did not pay all of the original tax shown due and assessed on the returns for 1919, and claims for credit and abatement were filed. Under section 250(e) of the Revenue Act of 1918 ( 40 Stat. 1083) and section 250(e) and (h) of the Revenue Act of 1921 ( 42 Stat. 266, 267), plaintiff became liable for interest upon the unpaid 1919 tax. Andrews Steel Company v. United States (Ct.Cl.) 42 F.2d 573. Plaintiff filed a claim for abatement for an amount of the 1919 original tax in excess of the amount of the overpayments for prior years credited against the 1919 tax, and also filed a claim for credit. It is immaterial whether the commissioner computed interest to the date of the allowance of the claim for credit, since, if he had, plaintiff would have been required to pay the same rate of interest upon the amount of the unpaid 1919 original tax, and such interest from the due date of such tax to the date of the credit would have exceeded the additional interest claimed by plaintiff by $6,850.07.

No interest was payable upon the amounts set forth in the last column of the last tabulation above for the reason that they were additional assessments and the due date (December 15, 1920) of the installment of the 1919 tax against which they were credited came within the six months' period following the filing of the claim for credit on June 15, 1920. No interest was paid by plaintiff to the defendant on $173,092.80 of the original 1919 tax returned and assessed, and later satisfied by a credit of the overpayments for the years 1915 to 1918, inclusive, upon the allowance of the claim for credit from the due dates of the installments of the 1919 tax to the date of the allowance of the claim for credit.

Interest was allowed on the full amount of the overassessment for 1915 from the date the additional assessment was paid, October 16, 1918, to the due date of the last installment of the unpaid 1919 tax, December 15, 1920, against which it was applied. On the amount of $16,891.89 of the 1916 overassessment, which was an additional assessment, interest was allowed from the date of the payment of the additional assessment, October 16, 1918, to December 15, 1920, the due date of the last installment of the 1919 tax against which it was credited; no interest was allowable on the credit of the remainder of the 1916 overassessment of $2,937.97 for the reason that this amount grew out of the overpayment of the original tax, which was not paid under protest, and claim for credit was filed June 15, 1919, and six months from that date was the due date of the 1919 tax. Interest was allowed on $65,782.66 of the overassessment for 1917 from February 8, 1920, the date of the payment of the additional assessment, to December 15, 1920, the due date of the unpaid installment of the 1919 tax against which it was credited, but no interest was allowable on the remaining $65,221.89 of the overpayment because the due date of the 1919 tax against which it was credited came within the six months' period after the filing of the claim for credit.

No interest was allowable on the credit growing out of the 1918 overpayment for the reason that the due date of the 1919 tax against which it was credited also came within the six months' period following the filing of the claim for credit on June 24, 1920. It therefore appears that all the interest to which the plaintiff is entitled has been allowed and paid before the filing of the petition in this case, and it follows that no recovery can be had.

The petition must therefore be dismissed, and it is so ordered.


Summaries of

Irving Bank-Columbia Tr. Co. v. United States

Court of Claims
Nov 3, 1930
44 F.2d 881 (Fed. Cir. 1930)
Case details for

Irving Bank-Columbia Tr. Co. v. United States

Case Details

Full title:IRVING BANK-COLUMBIA TRUST CO. v. UNITED STATES

Court:Court of Claims

Date published: Nov 3, 1930

Citations

44 F.2d 881 (Fed. Cir. 1930)

Citing Cases

Old Colony Trust Co. v. Malley

"It levies a sum equal to a certain percentage of the value of the net estate, and provides the criteria by…

In re Glover's Estate

The estate tax itself is not one of these deductions, as held even before the specific statutory provision,…