281 U.S. 489 (1930), 340, United States v. Updike

Docket Nº:No. 340
Citation:281 U.S. 489, 50 S.Ct. 367, 74 L.Ed. 984
Party Name:United States v. Updike
Case Date:May 19, 1930
Court:United States Supreme Court

Page 489

281 U.S. 489 (1930)

50 S.Ct. 367, 74 L.Ed. 984

United States



No. 340

United States Supreme Court

May 19, 1930

Argued April 15, 1930




1. Under §§ 278(d) and 280 of the Revenue Act of 1926, a suit in equity against stockholders of a dissolved corporation to charge them, as distributees of its assets, with the amount of a tax assessed against the corporation, is a proceeding to collect the tax and is barred if not brought within six years after the assessment. P. 492.

2. Where, under the Revenue Act of 1926 in a "no return" case, an assessment which, under § 278(a), may be made at any time, has in fact been made, a proceeding to collect must be begun within six years thereafter; but where there has been no assessment, the proceeding may be begun at any time. P 494.

3. The provision of § 278(d) of the Revenue Act of 1926, that,

Where the assessment . . . has been made . . . within the statutory period of limitation properly applicable thereto, such tax may be collected . . . by a proceeding in court . . . but only if begun (1) within six years after the assessment of the tax,

applies to an assessment in 1920 of 1917 taxes, notwithstanding that, in 1920, when the assessment was made, there was, and had been, no provision of law which in any form limited the time for assessing or collecting taxes. P. 495.

4. The saving clause, "within the statutory period of limitation properly applicable thereto," in § 278(d) of the Revenue Act of 1926 was inserted solely for the protection of the taxpayer -- that is to say, in order to preclude collection of the tax even within six years after the assessment, if that assessment, when made, was barred by the applicable statutory limitation. P. 496.

5. Taxing acts, including provisions of limitation embodied therein, are to be construed liberally in favor of the taxpayer. Id.

32 F.2d 1 affirmed.

Page 490

Certiorari, 280 U.S. 543, to review a decree of the circuit court of appeals which affirmed a decree of the district court, 25 F.2d 746, against the United States in a suit brought against stockholders of a dissolved corporation to recover a tax.

SUTHERLAND, J., lead opinion

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

Prior to the passage of the Revenue Act of 1917, the Updike Grain Company, a Nebraska corporation, filed its income tax and excess profits tax returns for the eleven months ending June 30, 1917, that being the end of the fiscal year which the corporation had selected as its annual period for federal taxation. The returns in form complied with the provisions of the law then in force, and were correct in point of fact. The full amount of the tax, as shown by the returns, was paid. In August, 1917, the corporation was lawfully dissolved, and its assets, after payment of all debts, were distributed among its stockholders. Shortly after the passage of the Revenue Act of October 3, 1917, which, among other changes, increased the rate of taxation, the Commissioner of Internal Revenue issue a regulation providing that corporations which had dissolved in 1917 prior to the date of that act should file tax returns in accordance with its provisions for the period preceding dissolution. A blank form for that purpose was mailed to the corporation, but was returned by

Page 491

its former secretary unexecuted, with the information that the corporation, prior to its dissolution, had filed tax returns and paid all...

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