Lee Wilson & Co. v. Commissioner of Internal Revenue

• Decision Date: 22 April 1940
• Docket Number: No. 461,461
• Parties: LEE WILSON & CO. v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Eighth Circuit

111 F.2d 313 (1940)

LEE WILSON & CO. v. COMMISSIONER OF INTERNAL REVENUE.

No. 461, Original.

Circuit Court of Appeals, Eighth Circuit.

April 22, 1940.

Geo. E. H. Goodner, of Washington, D. C. (Helen Goodner, of Washington, D. C., on the brief), for petitioner.

F. E. Youngman, Sp. Asst. to Atty. Gen. (Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key, Sp. Asst. to Atty. Gen., on the brief), for respondent.

Before GARDNER, WOODROUGH, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

This is a petition to review an order of the United States Processing Tax Board of Review. It involves a claim for refund of the sum of $2,218.61 collected from the petitioner as a tax on the domestic processing of hogs pursuant to the provisions of the Agricultural Adjustment Act, c. 25, 48 Stat. 31, 7 U.S.C.A. § 601 et seq. The Commissioner of Internal Revenue disallowed the petitioner's claim on the grounds (1) that the claim is not founded on the basis that petitioner had borne the burden of the tax; (2) that no evidence was submitted to establish that the burden of the tax was borne by the petitioner; (3) that the claim as filed does not conform to the provisions of sections 902 and 903 of Title VII of the Revenue Act of 1936, c. 690, 49 Stat. 1747, 7 U.S.C.A. §§ 644, 645; and (4) that the claim as filed afforded no basis for the Commissioner to consider it on its merits.

The petitioner thereupon sought a review of the decision of the Commissioner before the Board of Review created by the Act, praying that it be granted a hearing; that the decision of the Commissioner be reversed; and alleging that Title VII of the Revenue Act of 1936 is unconstitutional, null, and void, in so far as it purports to condition refund of the tax upon proof that the taxpayer bore the burden of the tax, or in so far as it requires proof based upon records not theretofore required to be kept by the taxpayer.

Upon motion of the respondent the Board dismissed the petition on the ground that "the claim for refund, the disallowance by the respondent of which is sought to be reviewed, fails to comply with the requirements of Title VII of the Revenue Act of 1936 and of the Treasury Regulations promulgated thereunder."

The appeal is before this court pursuant to Section 906(g) of the Revenue Act of 1936, c. 690, 49 Stat. 1648, 1750, 7 U.S.C.A. § 648(g). The single question presented is the propriety of the Board's order. The petitioner contends: (1) That the claim filed by it was a good claim under the law; (2) that the petition filed with the Board stated a good cause of action; (3) that the Board is without power to dismiss a properly drawn petition and thus refuse a hearing on the merits; and (4) that if Title VII of the Revenue Act of 1936 is to be construed as respondent urges, it is null and void as an infringement of the petitioner's constitutional rights.

The respondent denies each of the petitioner's contentions and urges that the petitioner, by proceeding upon a claim properly rejected by the Commissioner as defective, failed to comply with an essential prerequisite to the maintenance of its cause of action before the Board.

The validity of the claim must be determined in the light of the relevant statute and the regulations promulgated thereunder. The pertinent sections of the Revenue Act of 1936 are set out in the margin.¹

Section 916 of the Revenue Act of 1936, 7 U.S.C.A. § 658, empowers the Commissioner to prescribe "such rules and regulations as may be deemed necessary to carry out the provisions of sections 644 to 659 of this title." Proceeding under this grant of authority the Commissioner promulgated Treasury Regulations 96 designed to prescribe the essentials of the claim required by Section 903 of the Act, and intended to provide the necessary information requisite to the allowance of a refund under the conditions set forth in Section 902 of the Act. The pertinent Articles of Treasury Regulations 96 promulgated under the Revenue Act of 1936 will be found in the footnote.²

The claim for refund filed with the Collector was made on P. T. Form 79 prescribed by the regulations. The claimant filled in the blanks on the first page, stating its name and address, the name of the commodity processed, and the amount of the tax and of the refund claimed. Following these blanks on the first page of the form is a printed affidavit to be executed by the claimant. The affidavit sets out in seven numbered paragraphs the essential elements of a claim to conform to the provisions of the statute with an averment that they are true and correct. The claimant crossed out paragraph number 4 of the affidavit. The deleted paragraph reads as follows: "4. (a) That the amount of the burden of the processing tax on the processing of the commodity named above which was borne by the claimant as set forth in column 2 above is true and correct; that the claimant has not been relieved thereof nor reimbursed therefor nor shifted such burden, directly or indirectly, (1) through inclusion of such amount by the claimant, or by any person directly or indirectly under his control, or having control over him, or subject to the same common control, in the price of any article processed from such commodity; (2) through reduction of the price paid for such commodity; or (3) in any manner whatsoever; and that no understanding or agreement, written or oral, exists whereby he may be relieved of the burden of such amount, be reimbursed therefor, or may shift the burden thereof; and (b) that the data and statements submitted in and made a part of Schedule D are true and correct;"

The remaining seven pages of the prescribed form contain Schedules A, B, C, D, E, and a detailed set of instructions as to the information desired. Schedule A requires the date, place and amount of each tax payment. Schedules B and C call for information as to amounts of the tax refunded to, or for which credit has been taken by, the claimant or by others. Schedule D provides for data relative to the computation of the average margin for the tax period necessary to the prima facie showing referred to in section 907 of the Act and in Article 605 of the Regulations. Schedule E asks for information as to vendees to whom the processing tax was repaid and who bore the burden of such tax.

The petitioner filled in Schedule A and left the remaining schedules blank without explanation. In lieu, apparently, of its failure to provide the desired information, it appended to the claim the following statement:

"It is impossible to determine and prove how much of the tax, if any, was not absorbed by claimant and claimant believes and therefore asserts that it absorbed all the tax.

"Claimant demands refund of the entire amount paid because the Supreme Court has held that it was illegally assessed and collected and because any attempt to condition or restrict the refund thereof, by requiring proof that the tax was absorbed by the claimant, is unconstitutional and void."

It is obvious that the petitioner did not file a claim for refund that met the requirements of Section 903 of the statute. The unsworn statement that the entire amount of the tax was borne by the petitioner and not shifted to others is not supported by a single statement of fact that would have permitted the Commissioner to determine the merits of the petitioner's right to a refund under Section 902. The regulations, the substance of which is set forth in the instructions accompanying the form, are disregarded without other explanation than that the conditions imposed by the Act and required by the regulation are unconstitutional.

The function of the facts called for by the schedules is to facilitate research; and the Commissioner was entitled to insist upon compliance with their directions as to the desired information. A claim that refers to no facts upon which it may be founded is ineffective and "will not supply a basis for a suit against the government when there has been neither waiver by the Commissioner nor amendment by the taxpayer." United States v. Memphis Cotton Oil Co., 288 U.S. 62, 72, 53 S.Ct. 278, 282, 77 L.Ed. 619; United States v. Felt & Tarrant Co., 283 U.S. 269, 272, 51 S. Ct. 376, 75 L.Ed. 1025; Maas & Waldstein Co. v. United States, 283 U.S. 583, 589, 51 S.Ct. 606, 75 L.Ed. 1285; United States v. Andrews, 302 U.S. 517, 521, 58 S.Ct. 315, 82 L.Ed. 398; Dascomb v. McCuen, 2 Cir., 73 F.2d 417, 419; Continental-Illinois Nat. Bank & Trust Co. v. United States, 7 Cir., 67 F.2d 153, 155; Snead v. Elmore, 5 Cir., 59 F.2d 312, 314; Taber v. United States, 8 Cir., 59 F.2d 568, 571; Weagant v. Bowers, 2 Cir., 57 F.2d 679, 680.

It will be observed that section 903 of the Act provides that no refund of any processing tax shall be allowed unless a claim therefor shall have been filed in accordance with regulations prescribed by the Commissioner prior to July 1, 1937. There is then added: "All evidence relied upon in support of such claim shall be clearly set forth under oath." It is apparent from the second paragraph of the statement attached to the claim, supra, that at the time the claim was filed the petitioner was of the impression that Congress could not "condition or restrict" the refund of processing taxes, and that the claimant could not be required to furnish evidence to support the burden cast upon it by paragraph 4 which it deleted from the affidavit on the first page of the claim. The Act was subsequently held to be valid by the Supreme Court in Anniston Mfg. Co. v. Davis, 301 U.S. 337, 57 S. Ct. 816, 81 L.Ed. 1143. Now it is claimed the requirement of the statute that the evidence relied upon to support the claim must be set forth under oath is not subject to the limitation of time for filing the claims provided in the first sentence of section 903. The argument is opposed to the plain mandate of the statute. This section of the statute provides for filing claims, and requires that "All evidence relied upon in...