Washington Coal & Coke Co. v. Heiner
| Decision Date | 16 June 1930 |
| Docket Number | No. 5865.,5865. |
| Citation | 42 F.2d 681 |
| Parties | WASHINGTON COAL & COKE CO. v. HEINER, Collector of Internal Revenue. |
| Court | U.S. District Court — Western District of Pennsylvania |
This is an action in assumpsit to recover $142,561.48, taxes alleged to have been illegally collected from plaintiff by defendant, together with interest thereon. Jury trial was waived and the facts were nearly all agreed upon. The court finds the following findings of fact and conclusions of law:
1. The plaintiff at all times hereinafter mentioned was and is a domestic corporation organized and existing under the laws of the state of Pennsylvania, maintaining its office and principal place of business in the borough of Dawson in said state.
2. D. B. Heiner, the defendant, is, and ever since on or about the 1st day of August, 1921, has been, the duly commissioned, qualified, and acting collector of internal revenue in and for the Twenty-Third district of Pennsylvania.
3. On or about the 15th day of March, 1919, the plaintiff filed with the then collector of internal revenue in and for the said Twenty-Third district of Pennsylvania, without fraud or willful error, its tentative, consolidated income, war profits, and excess profits tax return for the calendar year 1918, and on June 16, 1919, filed, without fraud or willful error, its final consolidated return for said year showing an aggregate tax liability, computed on the basis of the net income set forth in said return, of $1,738,879.51. Attached to said return was an addendum captioned, "Petition of the Washington Coal and Coke Company for assessment under the provisions of Section 328 of the Revenue Act of 1918," which set forth the facts and circumstances which the plaintiff alleged entitled it to the benefits of section 328 of the Revenue Act of 1918 (40 Stat. 1093).
4. On or about September 3, 1919, the commissioner assessed against the plaintiff as income, war profits, and excess profits taxes for the calendar year 1918, the total aggregate amount of tax as computed on the net income set forth in the above-mentioned final return, to wit, the said sum of $1,738,879.51.
5. The plaintiff paid under protest to the then collector of internal revenue in and for said Twenty-Third district of Pennsylvania, income, war profits, and excess profits taxes amounting to $1,492,967.16, itemized as follows:
Date Amount
---- ------
March 17, 1919 $408,278.42
June 17, 1919 338,205.16
Sept. 15, 1919 373,561.40
Dec. 12, 1919 372,922.18
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Total $1,492,967.16
The amount of excess and war profits tax paid equaled 50 per cent. of the plaintiff's net income for 1918.
6. On or about January 17, 1924, the plaintiff was advised by the commissioner that an audit of its return by his office resulted in an overassessment of $60,062.01 for the calendar year 1918. He issued a certificate of overassessment for this amount and transmitted it to the defendant, who on or about July 24, 1924, abated this amount of the 1918 tax.
7. On or about March 28, 1924, the commissioner determined that plaintiff had overpaid its 1919 income and profits taxes in the amount of $8,703.06. The commissioner accordingly issued a certificate of overassessment for that amount. On or about July 7, 1924, the defendant credited the said overpayment against the outstanding assessment of 1918 tax.
8. On or about June 14, 1926, the plaintiff was notified by the commissioner that its tax liability for 1918 had been further reduced by the amount of $80,221.44. The commissioner accordingly issued a certificate of overassessment for that amount, which he transmitted to the defendant, who in turn abated this additional amount of 1918 tax.
9. On or about June 14, 1926, the plaintiff was notified by the commissioner that it had overpaid its tax for 1919 in the further sum of $7,743.81. The commissioner issued a certificate of overassessment and transmitted it to the defendant, who in turn credited this overpayment on or about October 15, 1926, against the outstanding balance of 1918 tax.
10. On June 28, 1926, the plaintiff paid to the defendant under protest the balance of the tax outstanding on its books for 1918, to wit, $89,182.03.
11. On November 13, 1926, pursuant to notice and demand from the defendant, the plaintiff paid under protest interest in the amount of $36,932.47 on the above-stated balance of tax for 1918.
12. The following is a summary of the assessments, collections, credits applied, and abatements:
Sept. 3, 1919. Original assessment $1,738,879.51
Nov. 13, 1926. Interest assessment 36,932.47
_____________
Total assessment $1,775,811.98
Mar. 17, 1919. Paid ........................ $408,278.42
June 17, 1919. Paid ........................ 338,205.16
Sept. 15, 1919. Paid ........................ 373,561.40
Dec. 12, 1919. Paid ........................ 372,922.18
July 24, 1924. Abated ...................... 60,062.01
July 7, 1924. 1919 Credit Applied ......... 8,703.06
Oct. 15, 1926. Abated ...................... 80,221.44
Oct. 15, 1926. 1919 Credit Applied ......... 7,743.81
June 28, 1926. Paid ........................ 89,182.03
Nov. 13, 1926. Interest Paid ............... 36,932.47
_____________
$1,775,811.98
13. The commissioner reduced invested capital for 1918 by the sum of $97,004.76 by assuming a tentative income, excess and war profits tax, prorating it to the dates of payment of dividends, and deducting such assumed pro rata accrual from tentative pro rata earnings in order to determine the amount of earnings available for dividends. By this method the plaintiff's tax liability was increased in the sum of $6,829.14, with interest thereon of $2,881.90, or a total of $9,711.04.
14. On or about July 5, 1928, the plaintiff filed with the commissioner, on the form prescribed by him for that purpose, a written claim for the refund of $6,829.14, with interest, on the ground that the collection thereof by the defendant was erroneous, illegal, and void, and specified therein that the commissioner had erroneously reduced invested capital for 1918 by the amount of $97,004.76, by applying a tentative tax for 1918 against current earnings, thus reducing current earnings available for dividends. Under Commissioner v. Pittsburgh Knife & Forge Company (C. C. A.) 30 F.(2d) 522, defendant concedes that plaintiff is entitled to recover said $9,711.04 with interest on $6,829.14 from June 28, 1926, and on $2,881.90 from November 13, 1926, as provided by law.
15. On or about May 24, 1928, the plaintiff filed with the commissioner, on the form prescribed by him for that purpose, written claim for the refund of $6,829.14, with interest, on the ground that the collection thereof by the defendant was erroneous, illegal, and void, and specified therein that the commissioner had erroneously reduced invested capital for 1918 by the amount of $97,004.76, by applying a tentative tax for 1918 against current earnings, thus reducing current earnings available for dividends. Under Commissioner v. Pittsburgh Knife & Forge Company (C. C. A.) 30 F.(2d) 522, defendant concedes that plaintiff is entitled to recover said $9,711.04 with interest on $6,829.14 from June 28, 1926, and on $2,881.90 from November 13, 1926, as provided by law.
16. On or about May 24, 1928, the plaintiff filed with the commissioner, on the form prescribed by him for that purpose, written claim for the refund of $133,858.42, with interest, on the ground that the collection thereof by the defendant was erroneous, illegal, and void, and specified therein that the tax was not due and owing to the United States, because at the time of the collection the time in which to collect said tax had long since expired, and that the tax had been extinguished. Although more than six months had expired since the claim was filed, the commissioner has neither allowed nor rejected said claim.
17. On February 7, 1924, plaintiff and the Commissioner of Internal Revenue entered into an agreement in writing, known as an income and profits tax waiver for 1918, on Form 672M, reading as follows:
18. Defendant forwarded the plaintiff's claim for special assessment to the Commissioner of Internal Revenue in due course. The defendant did not collect the outstanding unpaid assessment until after the plaintiff's claim for special assessment had been finally acted upon by the Commissioner of Internal Revenue. The commissioner advised the plaintiff under date of April 16, 1925, that its claim for special assessment had been denied. The commissioner notified plaintiff of his final determination of plaintiff's income, war...
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