Myles Salt Co. v. Commissioner of Internal Revenue

Decision Date21 April 1931
Docket NumberNo. 6050.,6050.
Citation49 F.2d 232
PartiesMYLES SALT CO., Limited, v. COMMISSIONER OF INTERNAL REVENUE.
CourtU.S. Court of Appeals — Fifth Circuit

E. Barrett Prettyman and Frederick R. Gibbs, both of Washington, D. C. (Preston B. Kavanagh, all of Washington, D. C., on the brief), for petitioner.

G. A. Youngquist, Asst. Atty. Gen., Sewall Key, Sp. Asst. to Atty. Gen., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and S. A. Suydam, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., and J. Louis Monarch, Sp. Asst. to Atty. Gen., for respondent.

Before BRYAN, FOSTER, and SIBLEY, Circuit Judges.

SIBLEY, Circuit Judge.

The sole question is limitation. On May 16, 1921 (May 15th was Sunday), Myles Salt Company filed its income tax return for its fiscal year ending February 28, 1921, and paid the tax shown by it, all according to the Revenue Act of 1918 then in force (40 Stat. 1057). On November 23, 1921, the Revenue Act of 1921 was approved, effective as to its income tax provisions as of January 1, 1921 (section 263), and repealing as of January 1, 1921, the corresponding provisions of the Revenue Act of 1918 (section 1400). No change was made affecting the tax of this taxpayer except that, because its net income exceeded $25,000, it was deprived since January 1st of the credit of $2,000 allowed by section 236 (42 Stat. 257), thus increasing its tax about $35. No new or amended return showing this changed computation was filed or requested. On September 17, 1926, the Commissioner sent out a deficiency notice preparatory to assessing an additional tax arising mainly from corrections in the deductions claimed for depletion and inventory losses. Before the Board of Tax Appeals the taxpayer claimed that the assessment was barred by the provisions then in force of the Revenue Act of 1926, § 277 (a) (2), 26 USCA § 1057 (a) (2), "The amount of income, excess-profits, and war-profits taxes imposed by the Revenue Act of 1921, and by such Act as amended, for the taxable year 1921 * * * shall be assessed within four years after the return was filed." By section 200 (1) of the Act of 1921 (42 Stat. 227) the taxable year 1921 included fiscal years ending during 1921. The Board held, three members dissenting, that no lawful return had been filed for the fiscal year in question, and no bar had attached because of section 278 (a) of the Act of 1926 (26 USCA § 1058), "In case of a false or fraudulent return with intent to evade tax or of a failure to file a return the tax may be assessed * * * at any time."

The return which will date the beginning of the limitation period, and lack of which will prevent limitation, is one made in substantial conformity to the law which required it. The act of 1918 and that of 1921 in section 239 (40 Stat. 1081, 42 Stat. 259) both require "every corporation * * * shall make a return, stating specifically the items of its gross income and the deductions and credits allowed by this title. The return shall be sworn to by the president, vice president, or other principal officer and by the treasurer or assistant treasurer." It is no return as respects limitation if made tentatively and not intended to be the basis of an assessment, Florsheim Brothers v. United States, 280 U. S. 453, 50 S. Ct. 215, 74 L. Ed. 542; or if not sworn to at all, Lucas v. Pilliod, 281 U. S. 245, 50 S. Ct. 297, 74 L. Ed. 829, 67 A. L. R. 1350. It must purport to cover the entire period involved, and must show the items of gross income, deductions, and credits of the taxpayer with such definiteness as to permit an assessment of the tax, if accepted as correct. United States v. National Tank & Export Co. (C. C. A.) 45 F.(2d) 1005. Perfect accuracy and completeness is not necessary, for there could rarely be an additional tax assessed except on some correction of the return, and, if the need of correction is held to make it no return, such deficiency assessments would never be barred. If, on the other hand, the return is so false as to show fraud and intent to evade the tax, there is by the special provision above quoted no limitation.

The Board found no fraud or bad intent in this return. If it had been filed or refiled the day after the Act of 1921 was passed, it would have been clearly good; the error in the deductible credit being easily remediable by the Commissioner without further information from the taxpayer. But it is said that, because it was filed before the act was passed, it cannot be a return under the act. The act itself, however, is retroactive, declaring itself to be effective as of January 1, 1921. If in effect on that date for...

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5 cases
  • Matter of IJ Knight Realty Corp., 27540.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • 11 Abril 1977
    ...limitations running, returns must be sufficiently complete to enable the I.R.S. to determine the correct tax liability. Myles Salt Co., Ltd. v. Commissioner, 49 F.2d 232 (5th Cir. (1931); Valentine-Clark Co. v. Commissioner, 52 F.2d 346 (8th Cir. 1931). Our tax system is based on self-asses......
  • McDonald v. United States
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • 6 Abril 1963
    ...that if a complete and perfect return was required, there would be no purpose of having a statute of limitations. Myles Salt Co. v. Commissioner, 49 F.2d 232 (C.A.5, 1931); Isaac Goldman Co. v. Burnet, 60 App. D.C. 265, 51 F.2d 427 (1931); Valentine-Clark Co. v. Commissioner, 52 F.2d 346 (C......
  • People v. Universal Film Exchanges
    • United States
    • California Supreme Court
    • 20 Enero 1950
    ...to satisfy the law. Zellerbach Paper Co. v. Helvering, 293 U.S. 172, 180, 55 S.Ct. 127, 79 L.Ed. 264; Myles Salt Co. v. Comm. of Internal Revenue, 5 Cir., 49 F.2d 232, 233. Otherwise there would practically be no period of limitation whatever operative in bar of a deficiency assessment. Cf.......
  • John D. Alkire Inv. Co. v. Nicholas
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • 6 Septiembre 1940
    ...v. National Tank & Export Co., 5 Cir., 45 F.2d 1005, certiorari denied, 283 U.S. 839, 51 S.Ct. 487, 75 L.Ed. 1450; Myles Salt Co. v. Commissioner, 5 Cir., 49 F.2d 232; National Contracting Co. v. Commissioner, 8 Cir., 105 F.2d Since the assessments were made within the period of limitation ......
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