332 F.2d 657 | 5th Cir. | 1964
Lead Opinion
I. W. Thompson, his wife Charlie Thompson, and I. W. Thompson, as Trustee for Selected Minority Funds
On September 19, 1949, I. W. Thompson, referring to himself as Donor and naming himself as Trustee, executed an instrument establishing Selected. Subsequently the Thompsons executed a deed conveying to I. W. Thompson, Trustee, 9/10ths of all of the oil, gas and other minerals in and under approximately 86 acres of land in the Van Field in Van Zandt County, Texas. After June 1, 1951, the effective date of that deed, the oil and gas royalties attributable to the mineral interest conveyed were paid to Selected. Because the Thompsons did not consider the royalty income paid to Selected to be income accruing to them, they did not include this income in the returns filed by them for the years 1952-1956. The deficiencies assessed resulted from the determination by the Internal Revenue Service that the royalty amounts paid to Selected were taxable to the Thompsons.
The Government challenged the jurisdiction of the District Court to entertain the refund suit involving the years 1953, 1955, and 1956 on the ground that the Thompsons had filed no claims for refund for those years. Acknowledging that claims had been filed for the years 1952 and 1954, the Government nevertheless, but unsuccessfully, challenged the jurisdiction of the District Court to entertain the refund suit for these years on the theory that the claims failed adequately to set forth the grounds relied on for relief. The Government further urged various substantive theories under which the income paid to Selected was taxable to the Thompsons. The District Court decided that Selected is a trust organized and operated exclusively for charitable or educational purposes and thus exempt from the payment of income taxes under Int.Rev. Code of 1954, § 501, 26 U.S.C.A. § 501. It rejected the Government’s contentions that the royalty income was taxable to the Thompsons and that the claims were insufficient and thus rendered judgment for them for the years 1952 and 1954.
The position of the Government may be simply stated. It is that, assuming that the “claims” in all other respects complied with the Code and Regulations,
I.
The filing of a claim or demand as a prerequisite to a suit to recover taxes paid is a familiar provision of the revenue laws, compliance with which may be insisted upon by the Government. United States v. Felt & Tarrant Mfg. Co., 1931, 283 U.S. 269, 51 S.Ct. 376, 75 L.Ed. 1025. The Supreme Court has said that “[o]ne object of such requirements is to advise the appropriate officials of the demands or
A brief consideration of the peculiar facts of this case demonstrates that these important policies are not undermined by our decision for the Thompsons.
The 5 claims in issue in the Court below were transmitted in one bundle to the proper district director. Each claim showed the year for which it was made, the amount claimed as a refund, and the date the amount claimed as a refund was paid. The claims for the years 1952 and 1954 showed “I. W. and/or Charlie Thompson” as taxpayer and were signed by I. W. Thompson and Charlie Thompson. The claims for the years 1953, 1955, and 1956 showed “Selected Minority Fund” as taxpayer and were signed “Selected Minority Fund by I. W. Thompson, Trustee.” But with the receipt on March 27, 1959 of this bundle of refund claims, the district director had full and complete information. The bundle of claims themselves presented a full picture of the events which had transpired with relation to the Thompsons for the years 1952-1956.
In returning them the District Director’s action was similarly without any discriminating distinction. The claims for all 5 years were bundled up and sent back to I. W. Thompson in one envelope, under one cover letter. It is true, of course, that the Director returned the claims with the request that they be filed in the exact name shown on the original return. But to lump 1952 and 1954 with these other years (1953, 1955, 1956) was an error. That error is graphically demonstrated by the District Court’s determination adverse to the Government but from which it did not appeal.
This holding in no way brings into question the Supreme Court’s rejection in Angelus Milling Co. v. Commissioner, 1945, 325 U.S. 293, 299, 65 S.Ct. 1162, 89 L.Ed. 1619, of the taxpayer’s contention that the Commissioner is charged with knowledge of all he might learn from his vast files. Here the Director treated all together. All of the information was physically together and substantively related. He did not have to look elsewhere “somewhere under the Commissioner’s roof * * * ” for “information which might enable him to pass on [the] claim for refund.” 325 U.S. 293, 299, 65 S.Ct. 1162, 1165. It was all there. The Director did not have to look for. All he had to do was look at.
Under the circumstances of this case we hold that claims were filed for the years 1953, 1955, and 1956.
II.
Whatever doubt there might be in the unitary treatment of the refund claims for the 5 years as a sufficient basis for upholding the validity of the claims discussed in Part I, we would nevertheless be forced to hold with the Thompsons for another reason. The notice of levy served on the bank for the years 1953, 1955, and 1956 was on the usual Form 668-A.
The Government for the purposes of levy and collection of the taxes here in question denominated Selected as taxpayer. The money representing the taxes was collected from Selected and no one else. We think Selected, and the Thompsons for it, was entitled to accept this designation of it as the taxpayer whatever might be its technical position as the one from whom a tax is owing.
III.
Having established that a claim was filed for the years 1953, 1955, and 1956, we now face the remaining question of the sufficiency of the claims insofar as they — in the words of the regulations — “[are required to] set forth in detail each ground upon which a-credit or refund is claimed and facts-sufficient to apprise the Commissioner of the exact basis thereof.” The text of the ground in the claims for these years does not differ significantly from the-text of the ground held sufficient by the District Court for the years 1952 and-1954,
As we pointed out in Carmack v. Scofield, 5 Cir., 1953, 201 F.2d 360,. 361-362 and reiterated in United States v. Henderson Clay Prod., 5 Cir., 1963,. 324 F.2d 7, 17, “the principal requirement of the statute * * * and regulations supplementary thereto, is that, the Commissioner be apprised by the-timely filing of a claim of the exact, basis upon which the claim for a refund is predicated.” Perhaps the statement
For the foregoing reasons, the judgment of the District Court insofar as it dismissed the complaint related to the years 1953, 1955, and 1956 is reversed, and the case remanded for further and not inconsistent proceedings.
Reversed and remanded.
. Hereinafter referred to as Selected.
. Collected by Levy on Account of Tear Thompson Selected 1952 $42,806.48 ? 1953 49,153.40
Note: The only items now in dispute.
. The Internal Revenue Service determined a deficiency based on additional interest income of $1,740.50 for 1954 which the Thompsons agreed to and paid. The Service also disallowed a deduction of $1,209.71 in 1954 for a contribution to Selected. The District Court decided this issue in favor of Thompsons, and the Government has not appealed from this decision.
. The Government has not appealed from these determinations.
. Int.Rev.Code of 1954, § 7422(a) provides :
“(a) No suit prior to filing claim for refund. — -No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary or his delegate, according to the provisions of law in that regard, and the regulations of the Secretary or his delegate established in pursuance thereof.” The 1939 Code, Int.Rev.Code of 1939, § 3772(a) (1), 53 Stat. 465, contained a like requirement.
. Treas.Reg. § 301.6402-2 (1954), as amended, T.D. 6585, 1962-1 Cum.Bull. 290 provides:
“(a) Requirement that claim be filed. (1) Credits or refunds of overpayments may not be allowed or made after the expiration of the statutory period of limitation properly applicable unless, before the expiration of such period, a claim therefor has been filed by the taxpayer. Furthermore, under section 7422, a civil action for refund may not be instituted unless a claim has been filed within the properly applicable period of limitation.
“ (2) The claim, together with appropriate supporting evidence, must be filed in the office of the district director for the internal revenue district in which the tax was paid. * * *.
“(b) Grounds set forth in claim. (1) No refund or credit will be allowed after the expiration of the statutory period of limitation applicable to the filing of a claim therefor except upon one or more of the grounds set forth in a claim filed before the expiration of such period. The claim must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof. The statement of the grounds and facts must be verified by a written declaration that it is made under the penalties of perjury. A claim which does not comply with this paragraph will not be considered for any purpose as a claim for refund or credit. *( sj: tj:
“(c) Form for filing claim. Claims by the taxpayer for the refunding of overpayment of taxes, interest, penalties, and additions to tax shall be made on Form 843. * * *.
“(d) Separate claims for separate taxable periods. In the case of income, gift, and Federal unemployment taxes, a separate claim shall be made for each type of tax for each taxable year or period.”
Substantially identical provisions appeared in the Regulations under the 1939 Code. Treas.Reg. § 39.322-3.
. The Thompsons filed a separate claim on Form 843 for each year in question within the applicable period of limitation in the office of the district director for the internal revenue district in which the tax was paid, setting forth in each a verified statement of the ground upon which the refund was claimed, all as required by the Regulations. See note 6, supra.
. The following information was obtainable by reference to the claims alone:
. The statement of the 1952/1954 ground was as follows:
“The claim indicated herein is without cause. All royalty payments for the year indicated were paid directly to Selected Minority Funds authorized by Deed of Record. Payments directly to these trust accounts automatically became $1,000 trusts untaxable. This levy was unjustified in two ways.”
Essentially the same legal theory was asserted in a slightly different language in the 1953/1955/1956 claim:
“The claim above indicated herein*661 against the Selected Minority Trust is unjustified in one all-sufficient way. By authority of the trust and deeds creating them, all royalty checks automatically became $1,000 untaxable trusts, not a part of one trust, and without income and only one purpose to serve. They have persistently tried to serve that purpose.”
. Whether the claims sufficiently stated the reason, for the requested refund is another question resolved in Part III.
. Form 66S-A is the official form of the U. S. Treasury Department — Internal Revenue Service entitled “NOTICE OF LEVY”
. The word “taxpayer” is defined in Int. Rev.Code of 1954, § 7701(a) (14) :
“Taxpayer. — The term ‘taxpayer’ means any person subject to any internal revenue tax.”
The Thompsons make a strong argument that Selected was certainly “subject to” a tax, either directly or as a transferee of identifiable income. Status as one subject to a tax need not necessarily require unquestioned liability for it. That might turn on intricate legal-factual questions, e. g., status as a charitable trust, etc.
. The relevant provisions of the Code and regulations are set forth in notes 5 and 6, supra.
. The text of the ground for each group of years is sot out in note 9, supra.
. “The claim above indicated herein against the Selected Minority Trust is-unjustified in one all-sufficient way. By authority of the trust and deeds creating them, all royalty checks automatically became $1,000 untaxable trusts, not a part of one trust, and without income- and only one purpose to serve. They have persistently tried to serve that purpose.”
Concurrence Opinion
(concurring).
It is clear to me that the law of income taxation is one branch of the law where equity and justice, as distinguished from strict law, have little place and that when one is given a statutory right to sue for a refund, he must bring himself within the reach of that right. It is certainly true that the courts have settled it that a claim for refund showing specifically the what and why of the claim must be filed by the taxpayer before he can sue for a refund. It is also true that substance must prevail •over form and that an approach which, like that of the scribes, Pharisees and ■hypocrites, tithes mint, anise and cum-min and leaves unconsidered the weightier things of the law, is not acceptable. I, therefore, am delighted to concur in the statesmanlike opinion of my brother, Brown, in this case which it seems clear to me is, under the undisputed evidence, in full accordance with the substance and right of the case.
Dissenting Opinion
(dissenting).
With deference to the views of the majority and to the theory skillfully developed in Parts I and II of Judge Brown’s Opinion that jurisdiction exists, I think that the District Judge, for the reasons set forth in his opinion (209 F.Supp. 530, at page 537) was correct in his determination that he was without power or authority to entertain this action with respect to the claims for the years 1953, 1955 and 1956.
I do so with deference also to Judge Hutcheson’s suggestion that a dissent will align me, not only with the District Judge and the tax-gatherers, but also with the scribes, Pharisees and hypocrites. (See, Matthew XXIII, 23-25).
If it is appropriate to cite Chapter and Verse, I suggest turning to Mark XII, 14-17, and the admonition of the 17th Verse, “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” (See also, Luke XX, 24-25.)
The tax-gatherers were omnipresent and omnivorous two thousand years ago, as they are now, and as little concerned with “weightier things of the law, judgment, mercy and faith.” (Matthew XXIII, 23, supra.)
Sadly, the taxpayers, for the years in question, never filed a refund claim. In my view, this is fatal to jurisdiction, as the Court below held.
I respectfully dissent.