COMMISSIONER OF INT. REVENUE v. Kilpatrick's EstateCOMMISSIONER OF INT. REVENUE v. Kilpatrick's Estate
Nо. 9477. The Commissioner’s petition to review presents substantially the same quеstion considered in Commissioner v. Estate of Frederick L. Alldis, 6 Cir.,
No. 9478. A seсond question is raised by the petition for review filed by Kilpatrick’s executor. By letter dated March 11, 1941, the Commissioner notified petitioner of his final determination of a deficiency of $39,-364.13 in the income tax liability of Kilpatrick for the year ending December 31, 1937. On June 7, 1941, the executor filed with thе Board of Tax Appeals its petition for a re-determination of the deficiency.
The parties stipulated, and the Board found, that оn or about June 12, 1941, the executor “solely for the purpose of рreventing the accumulation of interest upon the deficiency, if any, redetermined by the final decision of this Board * * * paid to the Colleсtor * * * under protest, the aforesaid sum of $39,364.13, together •with interest thereon in the amount of $7660.37, or the aggregate amount of $47,-024.50. * * * ” (Italics ours.) In its decision the Board ignored the “interest” item, deciding, simply, that there was “an overpayment of income tax in the amount оf $39,364.13 for the calendar year 1937, which amount was paid after the mailing оf the deficiency notice. * * * ”
The executor’s motion, filed with the Boаrd for a revision of its decision, to show an overpayment in income tax of $47,024.-50, being the total sum including the “interest” paid was denied by the Board without opinion; and the executor thereupon filed its petition for review here.
The petition for review raises the question of the jurisdiction of the Board over interest. The Board has consistently held that it has no jurisdiction, and we think its position is in accord with the Act. Sec. 272(a)(1) of Title 26, U.S.C.A. Int.Rеv. Code, provides that if a petition for redetermination is filed with the Bоard by the taxpayer, following a notice of a determination of deficiency by the Commissioner, “No assessment of a deficiency in respect of the tax imposed * * * and no distraint or proceeding in court for its cоllection shall be made, begun or prosecuted * * * until the decision оf the Board has become final.” (Italics ours.) Sec. 272(b) provides, “If the tаxpayer files a petition with the Board, the entire amount redetermined as the deficiency by the decision of the Board which has beсome final shall be assessed and shall be paid upon notice and demand from the сollector.” (Italics ours.) And Sec. 292 provides, “Interest upon the amount determined as a deficiency shall be assessed at the same time as the deficiency, shall be paid upon notice and demand from the collector, and shall be collected as a part of the tax.” (Italics ours.)
In the procedural sequences outlined by the Act for the determination and redeterminatiоn of tax deficiencies, the subject of interest does not occur, prior to a redetermination by the Board. In other words, where therе is review by the Board of the Commissioner’s determination, no assessment оf tax or distraint may be had until its decision becomes final, whereupon thе amount determined by the Board plus interest at the statutory rate must be assessed by the Commissioner. In this type of case interest is assessable under the statute only after the Board has acted. This view is consistent with the authorities. United States v. Globe Indemnity Co., 2 Cir.,
The so-called “interest” item of $7,660.37 ■was not involved in the Commissioner’s determination, being a gratuitous payment made subsequent to the petition to the Board, and wаs not subject to redetermination by the Board as an overpayment of tax. Whether the taxpayer might have a •claim for refund of the item by way of suit in the District Court or the Court of Claims, we do not now decide.
The decision of the Board of Tax Appeals in No. 9478 is also affirmed.