Bonwit Teller & Co. v. United States
| Decision Date | 14 April 1930 |
| Docket Number | No. H-554.,H-554. |
| Parties | BONWIT TELLER & CO. v. UNITED STATES. |
| Court | U.S. Claims Court |
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Arthur B. Hyman, of New York City, for plaintiff.
George H. Foster, of Washington, D. C., and Herman J. Galloway, Asst. Atty. Gen. (Frank J. Ready, Jr., of Washington, D. C., on the brief), for the United States.
Before BOOTH, Chief Justice, and GREEN, WILLIAMS, LITTLETON, and GRAHAM, Judges.
The plaintiff brings this suit to recover the amount of a refund alleged to be due from defendant on taxes paid by plaintiff for the fiscal year 1919. The defendant alleges that no claim for refund was filed until after the expiration of the period of limitations, and by way of counterclaim also alleges that part of the amount claimed by plaintiff was wrongfully paid to it and defendant therefore is entitled to judgment for the amount so paid.
The evidence shows without dispute that plaintiff made its return for the year 1919 and paid taxes accordingly, but the Commissioner assessed $167,294.59 in addition thereto. The plaintiff filed a claim for abatement of the amount of this additional assessment, which was allowed, and in recomputing the tax the Commissioner found that the plaintiff had been overassessed $10,866.43. The plaintiff was notified of this overassessment about November 19, 1924, and at the same time was advised that, "inasmuch as the provisions of section 281 of the revenue act of 1924 have not been complied with regard to the full amount of the above overassessment, a portion in the amount of $10,866.43 cannot be allowed."
Later, the section above referred to having been amended, the Commissioner, on May 16, 1925, wrote plaintiff that
In response to this letter, the plaintiff, on May 23, 1925, mailed to the Commissioner a waiver which was duly accepted by the Commissioner. Nothing further was done until December 11, 1926, when plaintiff's counsel wrote a letter to the Commissioner calling attention to the proceedings which have been above recited and the letters to which reference has been made, stating, in substance, that it was the custom in such cases to make immediate refund, and that in the letter of the Commissioner there was no suggestion that anything further was necessary than the filing of the waiver, and concluding with a statement to the effect that it would be expected the taxpayer would receive that to which it was entitled. On February 9, 1927, a letter was written by the Commissioner to counsel for plaintiff requesting that a claim be filed on the form inclosed in order that the overassessment might be allowed and in response thereto a claim for refund of $10,866.43 was filed with the Bureau about February 19, 1927. Prior to the filing of this claim for refund, about February 5, 1927, the head of the consolidated returns audit division of the Income Tax Unit approved and recommended for allowance a certificate of overassessment and overpayment of $10,866.43 under the plaintiff's original income tax return for the fiscal year ending January 31, 1919. The record of the case was thereupon checked in the claims control section of the clearing division to determine whether the plaintiff had filed a claim for refund prior to the expiration of the period of limitation applicable thereto, and it was determined with the approval of Mr. W. T. Sherwood, the head of the clearing division, that the documents on file, which included those to which reference has been made hereinabove, would be treated by the Bureau as an informal claim for refund filed May 23, 1925. Notations were made on the Bureau's record copy of the proposed certificate of overassessment to the effect that an informal claim for refund had been filed May 23, 1925, with waiver perfected by claim Form 843. This bore the signature "O. Allen," with this further notation as follows: "This C. of O. approved for scheduling as is by W. T. S. (Signed) O. Allen." After these proceedings, the Commissioner of Internal Revenue allowed plaintiff's claim of refund, and approved and scheduled to the collector of internal revenue a certificate of overassessment in plaintiff's favor. Thereafter the Commissioner credited $9,846.06 of the amount allowed on the schedule on taxes due for 1917 and sent plaintiff a check for $1,462.99, which included the balance of the overassessment and interest thereon. This check has never been presented by plaintiff, and, as the taxes upon which the credit was made were at the time barred by the statute of limitations, the action of the Commissioner in making this credit makes no defense herein.
We have set out these facts at length because it is necessary to consider them in determining two issues presented in the case which are:
First, whether the determination of the Commissioner that a claim for refund had been filed is final and conclusive.
Second, if the decision of the Commissioner is not conclusive, whether an informal claim for refund was in fact filed and made sufficient by the formal claim treated as an amendment thereto.
The plaintiff contends that the decision of the Commissioner that an informal claim for refund had been filed and perfected by the one later filed in regular form was final and conclusive. We think it was no more final and conclusive than if he had made a decision that no claim for refund had been filed and for that reason rejected the claim for refund. The decision of the Commissioner on such a matter was not a mere administrative act, and, even if it had been, it could be impeached for fraud or mistake. We think it is reviewable in this court on the question of whether it was erroneous under the law, and therefore is not conclusive.
The plaintiff contends that the court does not have all the facts before it upon which the Commissioner acted, but the findings show what was considered by a clerk in the office in coming to the conclusion that an informal claim for refund had been filed, and that the decision of this clerk was subsequently approved by the Deputy Commissioner. We cannot assume that there were any other matters which were taken into consideration. If the plaintiff or its attorney had presented to the Commissioner anything further than appears in the findings in the way of making a claim, formal or informal, for this refund, obviously the plaintiff would have it in its power to produce evidence thereof. As it has produced no such evidence, although such evidence would be in its favor if produced, the court under well-settled principles has the right to conclude that no such evidence exists.
The record in the case shows that the Commissioner and his officials took unusual pains to advise the plaintiff of its rights and gave it both notice and opportunity in abundant time to avail itself of them. The refund now sought is of taxes paid in December, 1919, and as the law then stood a claim for refund had to be filed by December, 1923. No claim was filed, and in April, 1924, an additional assessment for the year 1919 was made by the Commissioner. A claim for abatement of this additional assessment was filed by the taxpayer in May, 1924, but no claim was then made that the amount originally paid was too large. The Commissioner, however, in November, 1924, found that the plaintiff had been overassessed for 1919 in the sum of $10,866.43. Plaintiff was advised of this overassessment, but also notified that it could not be allowed, as the time for filing a claim had expired. Doubtless with the intention of giving plaintiff and other taxpayers in a similar situation further opportunity to file claims for refund, on March 3, 1925, Congress passed an amendment to the revenue law (26 USCA § 1065 note) relating especially to the taxes of 1919, providing in effect that, if the taxpayer should before June 15, 1925, file a waiver in respect to such taxes, a claim for refund thereof might be filed on or before April 1, 1926, thus making a special exception in favor of taxpayers who had failed to file a claim for refund on taxes of 1919 within the time required by law. The plaintiff having taken no action under this provision of the statute for more than two months, the Bureau wrote a letter to plaintiff calling attention to the statute and stating it would be necessary that a waiver be filed, and inclosing a form of waiver. The plaintiff thereupon executed a waiver and filed it with the Department, but still did nothing in the way of filing a claim. In fact it was not until December 11, 1926, that the Bureau heard from plaintiff again, when its counsel wrote a letter reviewing the correspondence that had passed between the Bureau and the plaintiff and stating in effect that it was assumed that the amount of the overassessment would be refunded. This, it will be observed, was over eight months after the limitation had expired for filing claims under the amended statute. It is upon this record that the Bureau finally held that an informal claim of refund had been filed on May 23, 1925, when the waiver was filed. In other words, the Bureau held that the filing of the waiver constituted an informal claim for refund under the circumstances, but there was nothing in the circumstances to justify any such conclusion. It was simply a case where the plain provisions of the statute were utterly ignored by the plaintiff....
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Cumberland Portland Cement Co. v. United States
...as an informal refund claim is found in Bonwit Teller & Co. v. United States, 283 U.S. 258, 51 S.Ct. 395, 75 L.Ed. 1018, reversing, 39 F.2d 730, 69 Ct.Cl. 638, where the Supreme Court concluded that the taxpayer's waiver and the letter transmitting it, together with what went before, amount......