Austin Co. v. Commissioner of Internal Revenue
35 F.2d 910
6th Cir.
1929
Check Treatment

*2 profit taxes for under section the Revenue Act of Stat. In August of commissioner allowed the application, determined the amount liability, petitioner a allowed taxes, interest, amounting refund of $327,593.74. Later, paid. This refund was commissioner, on March with- requested being so, out to do and without any making pe- further examination of the books, titioner’s assessed additional tax liability petitioner for 1917 $39,938.79: sum of Board on thereto af- firmed action of commissioner, petition ease is here on to review action of the Board. petitioner' contends that when the application commissioner allowed its a special assessment under section and de- thereunder, its liability termined a refund of taxes paid, that it had theretofore there was final and conclusive assessment binding upon the taxpay- and the er, and the commissioner was with- thereafter dissenting. Judge, Jones, District further assessment. In Kales, (6 Woodworth v. 26 F.(2d) 178 C. A.), C. upon by relied petitioner, it affirm- atively appeared that the aetion of com- missioner was not upon any fraud upon mistake of law fact, changed inference of fact from evidentiary facts, or what thought commissioner was “a new better view the same facts.” Additional considerations were that the assessment there complained of was made Horn, Cleveland, (W. B. C. M. Ohio succeeding commissioner and after ac- two Cleveland, Ohio, Stewart, brief), on the approving tions original. Giving to that for appellant. case possible construction, broadest Shelby Faulkner, Sp. Atty., yet true, there held, that the action of the Revenue, Washington, D. C. Internal upon commissioner here subject relied Atty. (Mabel Willebrandt, Walker Asst. to revision for fraud or mistake of If faet. Gen., Louis Monarch and John G-. and J. either of these orig- elements entered into the Remey, Atty. Gen., Sp. Assts. to and M. C. inal we do not upon doubt that Charest, Counsel, Bureau of Gen. Internal discovery thereof the commissiener C., Revenue, Washington, brief), D. right to correct a reassess- appellee. ment. Before MOORMAN HICKEN- here, un LOOPER, Judges, and JONES, Circuit Dis- der entirely section upon riot based Judge. trict facts contained taxpayer’s return, earnings this, authority in comparative upon of do lack of depended upon also but relied a the engaged in commissioner representative corporations further business, though data for which sessment. Even lack of like or similar tbe there was either had his office to make such assessment facts, corporations changed obtaining as such other view the same there was not *3 lack of authority There was make where made their returns. no to it there orig- the upon what fraud or mistake of before Board to show law or fact the inal addition- assessment. In bur- acted in the this situation the commissioner den petitioner and fur- was on the to that upon al new show the assessment—whether conceivably grew commissioner’s action which he received out of circum- ther facts comparative corpora- stances which it. reports from did not warrant later question law upon corrected view of the A tions, made in this court but not presented conclusion, up- or Appeals which the should control his to Tax is Board that by on a the is different fact-inference from barred the statute evidentiary right placed facts. make of limitations. He Reliance is on Rus States, 181, con- sell v. United such an assessment under the first two 278 U. S. 49 S. Ct. 121, 73 L. tingencies, having right, ques- and Ed. 255. We do not think that applicable. to he to his decision it is tion arises: What effect is What holds any the section 278 of (26 action in the absence of evidence of the Aet of 1924 § USCA acted, note), fixing he 1061 upon years or as to the law which a limitation of six facts collecting commission- for pro that- was the burden on the a tax “distraint or a is, ceeding court,” apply does assess er to show that reassessment was ments passage o-ffact or first made before the aet. because of mistake law the proceeding is not a to This or in petitioner was it on the distraint tax, upon admittedly dif- court collect and the lim a new and show that it was made 1918, 1057, itations of the Act of 40 con Stat. ferent view of the same facts? 227, 1921, tinued 42 are Act of Stat. settled of the Su It is decisions applicable. provide that Those acts commis preme Court that shall be assessed the commissioner within correct, prima sioner are facie and that the years return, after and “no suit five taxpayer' complains has the who of them any proceeding for collection Tax burden before the Board of begun” expiration of the shall be after the they wrong. showing that are Wickwire v. years. pe Except five for a waiver which 101, Reinecke, 43, 48 72 L. 275 S. S. Ct. U. and commis titioner executed filed with the said, however, that the pre Ed. 184. It is sioner, expired, limitation have under would sumption arose from the fact of this which statutes, 1, April these The waiver overcome like additional assessment was February 15,1923, and was un was executed presumption attaching assess to the. limited, an order of ment, that the burden was on the com and 11, 1925, all such April directed that later issued missioner show that his action was expire April be held waivers should authorized in the Wood- taken for reasons Giving full to this order effect concur in that worth We cannot view. Case. commissioner, had the he nevertheless question concerned the before the Board prior time assessment at assessment, not earlier one. additional 1, 1924. The assessment April commissioner in The action gov 1924. Whether the made March The law him the was under attack. aft collected this tax ernment could have right make under certain circumstances. years, and what performed expiration er of the five presumption that he There is pe given the action of the is, upon all the effect is to be duty, that that he acted his ruling of the appealing from the him, including new and different titioner facts before Tax Board of Founda commissioner to the United States v. Chemical ones. before us. 1, 14, questions that are not 47 71 L. Ed. are tion, 272 U. S. S. Ct. expiration of did after the presumption petitioner of the existence of 131. This years, before and did not raise is inconsistent the five facts with the such new or of the question of limitation attaching first assess Board presumption passed collectibility upon all The Board ment, commissioner acted the tax. only it, that Moreover, question presented him. before the facts then validity the-action of the commis power is, to obtain within through assessing propriety the tax. of both assessments sioner in facts us, and we Appeals. Tax is the before processes of the that action Co., are repeat Machine 275 U. S. that we not here concerned Blair v. Oesterlein tax, power means collect the L. Ed. 249. did not S. Ct. with, entertaining “The only acted Commissioner whether the commissioner according granting taxpayer’s application be as- his to law within profits before sessed income and under the making the assessment. On the record provisions of section 210 of Revenue say we cannot not. Act us did deter- his aetion thereunder in Petition dismissed. mining lawfully of taxes to be the amount (dissenting). JONES, Judge District taxpayer, exercised assessed Act of Under section 210 of the Revenue 1917, Congress, and conferred said Act of taxpayer, the case of fully finally determined said matter. discretionary powers in the commissioner had directing ref- premises His order in the liability (Williams determination of its tax taxpayer, fund to be made to and the actual States, port Rope 277 U. Wire Co. United Government, refund thereof closed 985) Ed. S. Ct. 72 L. *4 transaction, ended the and said Commission- finality somewhat more to his conclu authority, er of Internal Revenue had no sions than in eases he was bound where jurisdiction again or reconsider said percentages. Having statutory of rule fixed Taxpayer proceed- matter. contends all having determined the tax and ings the Commissioner of Internal and authorized a refund of overassessment after said of Revenue determination táx paid accepted which was to and 27, August au- were are without and payer, the commissioner’s aetion and the ac thority of law and null and void.” ceptance taxpayer of the refund ex petition To this the commissioner an- liability. tinguished tax for Save fraud admitting swered petition the facts contained mistake, taken; or no further aetion could be averring propositions and that the government might in sue that event the (1) of law were: assessment made money for to recover as bad and received scope the commissioner was made within the through mistake, and such fraud or the bur authority a represented of his and and valid rightfully den would be where should be. legal assessment; (2!) the States United seems to me reason dictates such re It jurisdiction Appeals of Tax has no pro and that the contains no quirement, law 16). (Transcript Record, p. this case of implication or otherwise. vision hearing before the Board of Tax After strong- Taxing laws to. be construed are Appeals, the Commissioner moved to dismiss ly government in favor against the of proceeding upon that he had Gould, taxpayer. v. 245 U. Gould S. deficiency not determined a> within the meam- L. 38 S. Ed. 211. The com- Ct. statute, ing and the Board is with- of cannot, my view, guise missioner under the jurisdiction raised. to determine the issue deficiency or of additional assessment assess- might been (I think this motion well have ment, accepted refunded and recover taxes sustained, since not in the tax assessed was conclusion, as in this ease. Under this deficiency represented changed a fact taxpayer immaterial that the failed of course commissioner.) Board of view of negative mistake of fact or law as to the made of Appeals Tax faet which proceedings before first by opinion denied dispute were not and Appeals. Stripped the Board of Tax of all motion to dismiss the commissioner’s form, money seeking recapture is jurisdiction and stat- lack of proceedings for adjudged belong taxpayer, p. be has to- the (Transcript Record, opinion ed as its open 20): by a method not to. him. petition In the taxpayer, filed with hasi “The Board heretofore had occasion the Board of Tax January 15,1926, question to. raised consider the it, paragraph 4, averred (Transcript relating authority to the of the Commissioner Record, 2): p. having reconsider his aetion after made “The determination of the tax taxpayer, contained sim- to a under a refund deficiency in the said letter is facts, the ilar state of and has held that the Com- following error: statutory may period, missioner withih “The erroneously period Commissioner assumed statutory period or or such within authority jurisdiction may agreed upon to make such be between the Commis- as sioner sessment which taxpayer, under the follow- and the assess such tax as * * '* ” ing facts and circumstances: he determines to be due.” And then follows a statement of all the seems to me that a of law Thus it facts before us. authority of the commissioner was as By Paragraph Record, 6 (Transcript definitely specifically raised before p. 4) taxpayer Board, adversely asserts that it relies for to which decided appeal on the following proposition taxpayer. words, appel- In other to this law: taxpayer, con- Ap acquiesced in paid Tax lant the Board contended before au- adjudication; unless stituted and that without peals commissioner acted is thority, express by clearly implied, authority. admitted or The commissioner re- reopened statute cannot petition, denied he was without facts in ap- government dis assessed. In that ease tax, and moved to authority assess the advanced, claim, justifica^ pears reason jurisdiction lack for the have miss for of the same deficiency in tion that “a and better view he had new not determined faets,” Ap and better resulted from a matured In this situation the Board tax. peals judgment, of fraud or me claim It seems to made no decided both. evidence, misrepresentation taxpayer or of new there could be no burden undertaking mistake do I see how prove law or Nor that the commissioner was fact. do; implication authority arise clearer can to do what he had no lawful is, deficiency after out -of fact same commissioner is extinguished. endeavoring here is do what was liability had been held do. commission the Kales a successor could to assert the Case by ap reason impeach judgment his me to be no more er’s mistake There would seem to Kaufman, propriate permitting commissioner to action. United States 792; than L. Ed. circumstances 96 U. S. United verse himself under such Savings Bank, permitting reverse him. Real U. a successor to States v. Estate finality findings of The of the action is 26 L. Ed. 908. The *5 may making case. assessments same in either the commissioner correctness, prima, taxpayer appealed not facie of their If them, the as- Appeals, paid if but had he has the lawful protest action sessment under then previously where has taken lawful sued (a it, been involving administrative cover the situation would have determination further same as in the Kales Case. discretion)', preeludes such If the findings, they at all. commissioner had the have no force deficiency assessment, make the I do not Assuming jurisdiction the Board had deprived of think the should be decide the au- commissioner’s just ac- taxes because of the unwarranted thority, clearly legal question it was of the the so- tion all the essential faets conceded before it. appar- jeopardy called under an showing No other assessment necessary. pre- misapprehension taxpayer’s char- validity ent of the sumption of the commission- acter or intention. er’s fails if he had no lawful author- Under, assumption validity ity deficiency determine assessment. The assessment, agree I with the conclusion taxpayer Ap- to the Board of Tax peals majority respecting court action, assailed the commissioner’s question of statute of limitations. erroneous, wrong, illegal of an because sessment, but because he had no lawful au- thority assessment. conceded faets before the Board HOTCHKISS, JOHNSON v. United States legal question of the commission- raised Marshal. authority. No other neces- er’s sary. evidence was Circuit Court of Ninth Circuit. I have heretofore taken this view November case, analogous Sterling Spring somewhat No. 5905. Routzahn, Law, Company No. orally. No decided review this case was government. taken legislation Subsequent statutory has made rule and had there- law which respecting applied been the courts tofore finality commissioner’s determina- taxpayer’s tion of the assessment and ac- therein, legislation quiescence does transform an absence of into valid therefor. supported I think the view here is Case, by the Kales wherein affirmance was proposition commis- determining action sioner’s