Stern Brothers & Co. v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 9254.

• Decision Date: 10 October 1929
• Docket Number: Docket No. 9254.
• Parties: STERN BROTHERS & CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

17 B.T.A. 848 (1929)

STERN BROTHERS & CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 9254.

Board of Tax Appeals.

Promulgated October 10, 1929.

Paul R. Stinson, Esq., W. H. Hays, Esq., and Frank A. Boys, Esq., for the petitioner.

A. H. Fast, Esq., for the respondent.

The Commissioner determined a deficiency of $59,262.56 for 1918. At the hearing the parties stipulated that the correct deficiency is $11,892.25 and the only question for decision is whether assessment and collection of this deficiency are barred by the statute of limitation.

FINDINGS OF FACT.

Petitioner is a Delaware corporation with office and place of business at Kansas City, Mo. On March 15, 1919, it filed a tentative return and request for extension of time within which to file its return for the year 1918. The return showing the items of gross income, deductions, net income and invested capital was filed June 16, 1919. In this return the claim was made that $136,666.66 of the earnings reported were earned under such conditions as to entitle the corporation to a computation of its tax as a part personal service corporation under the provisions of section 303 of the Revenue Act of 1918. November 21, 1923, the claim for "classification as a part personal service corporation" was denied and petitioner was notified that an audit of the return disclosed an additional tax of $59,262.56. In this notice petitioner was advised that:

In accordance with the provisions of Section 250 (d) of the Revenue Act of 1921, you are granted thirty days within which to file an appeal and to show cause or reason why this tax or deficiency should not be paid. The appeal, if filed, must be addressed to the Commissioner of Internal Revenue, Washington, D. C., for the specific attention of IT: CA: PU-2303-2-App.

Treasury Decision No. 3492, setting forth the privileges of taxpayers in cases of appeal, is attached for your information and guidance.

January 7, 1924, the Commissioner wrote the petitioner as follows:

Reference is made to your appeal dated December 18, 1923, wherein you take exceptions to the proposed assessment of taxes in the amount of $59,262.56, as set forth in office letter of November 21, 1923, for the year 1918.

You are informed that inasmuch as your appeal has been submitted of your own volition, it will be necessary in order that the collection of the tax for the year 1918 may not be jeopardized by the delay incident to giving consideration to your appeal that a waiver for the year 1918 be signed by two officers of the corporation and the seal affixed thereto and returned immediately to this office for which purpose the enclosed form may be used.

With this letter to the petitioner the Commissioner enclosed an unsigned and undated written consent form. This consent was executed by the petitioner on January 9, 1924, by its president and vice president, with the seal of the corporation affixed, and was returned by mail to the Commissioner and was signed by him. This consent follows:

JANUARY 9, 1924.

In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Stern Bros. & Co. of Kansas City, Mo., and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said corporation for the year 1918 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes," approved August 5, 1909. This waiver is in effect for one year from the date it is signed by the taxpayer.

STERN BROTHERS & COMPANY Taxpayer. By SIGMUND STERN, Pres. By MORRIS STERN, V. P. (SEAL) Signed D. H. BLAIR Commissioner.

On January 14, 1924, the Commissioner mailed to petitioner the following letter:

Receipt is acknowledged of your appeal sworn to on December 18, 1923, containing a request for a conference in connection with the proposed assessment of additional tax for the year 1918.

No conference has been arranged at this time for the reason that the appeal does not meet the requirements of Treasury Decision 3492. The appeal should be addressed to the Commissioner of Internal Revenue and should be signed and sworn to by an officer of the corporation.

In order that the interests of the Government may be protected, it is necessary as a condition precedent to a consideration of the appeal that the enclosed waiver for the year 1918 be executed and returned to this office.

A final extension of time not to exceed fifteen days from the date of this letter is hereby granted in which to submit a completed appeal and a properly executed waiver.

Upon receipt of this additional data, further consideration will be given to the request for a conference before the Income Tax Unit, which under no circumstances can be held sooner than five days subsequent to the receipt of the completed appeal.

There are enclosed copies of Department Circular #230, Conference Memorandum #1185, and Treasury Decision 3492, which govern the recognition of agents before the officers of the Treasury Department and outline the conference procedure relative thereto.

With this letter the Commissioner enclosed an unsigned and undated written consent form. This consent was executed by petitioner on January 19, 1924, by its president and vice president with the seal of the corporation affixed. It was returned by mail to the Commissioner with the following letter:

In accordance with the requirements set forth in your letter of January 14th, we are submitting herewith a corrected appeal on behalf of Stern Brothers & Co., in the matter of their income and excess profits tax liability for the period ending December 31, 1918. You will please note that this appeal is addressed to the Commissioner of Internal Revenue, that it is sworn to by the president of Stern Brothers & Co., and certifies to the fact that this appeal is not taken for the purpose of delaying a collection of tax justly due by this corporation.

There is also submitted herewith a waiver for the year 1918, properly executed by the officers of the corporation. You are further advised that this is the second waiver executed for the year 1918.

Under date of January 7th, we requested that an oral conference be granted in order that we might present further arguments in connection with the appeal filed herewith. In as much as the appeal will not be received in time to hold a conference on January 28th as...