Abe M. Katz Co. v. United States

• Decision Date: 18 January 1952
• Docket Number: No. 13513.,13513.
• Citation: 193 F.2d 510
• Parties: ABE M. KATZ CO. v. UNITED STATES.
• Court: U.S. Court of Appeals — Fifth Circuit

193 F.2d 510 (1951)

ABE M. KATZ CO. v. UNITED STATES.

No. 13513.

United States Court of Appeals Fifth Circuit.

December 14, 1951.

Rehearing Denied January 18, 1952.

Samuel E. Ziegler, J. Manuel Hoppenstein, Dallas, Tex., for appellant.

S. Dee Hanson, Special Asst. to the Atty. Gen., Brian S. Odem, U. S. Atty., Washington, D. C., Bruce R. Merrill, Asst. U. S. Atty., Theron Lamar Caudle, Asst. Atty. Gen., Ellis N. Slack, Special Asst. to the Atty. Gen., Houston, Tex., for appellee.

Before HUTCHESON, Chief Judge, and HOLMES and STRUM, Circuit Judges.

HOLMES, Circuit Judge.

This is an action against the Collector of Internal Revenue to recover interest paid by appellant on his excess-profits-tax deficiency for the fiscal year ending August 31, 1943. The said deficiency represented an amount as to which the appellant had deferred payment as authorized by Section 710(a) (5) of the Internal Revenue Code. 26 U.S.C. § 710(a) (5). Extensions were granted; thereafter, the taxpayer filed a bona fide application for relief, which application was denied on January 19, 1949. Prior to the denial, the taxpayer paid in full the excess-profits tax plus interest thereon, and brought this suit to recover the interest paid on that portion of the excess-profits tax as to which payment had been deferred.

The sole issue presented in the case is whether interest was legally chargeable upon the amount of the deferred payment from March 15, 1943, to the date of payment. The trial court held that it was; and our conclusion is in accord with that holding, because, we think, despite the deferral of payment of excess-profits taxes under Section 710(a) (5) of the Internal Revenue Code, the taxpayer is nevertheless liable for statutory interest thereon where, as here, its application for relief has been denied by the Commissioner. This identical question was before the Court of Appeals for the Ninth Circuit in Squire v. Puget Sound Pulp & Timber Co., 181 F.2d 745, and we are in agreement with the holding in that case. See also, to the same effect, Jones v. Johnson, 176 F.2d 693, by the Tenth Circuit. Cf. Manning v. Seeley Tube & Box Co., 338 U.S. 561, 568, 70 S.Ct. 386, 94 L.Ed. 346.

The basic reason for our decision in the instant case is the plain language of the statute, properly construed, which excludes from the no-interest exemption only such portion of a deficiency as may be determined by the Commissioner to exceed any refund or credit of excess-profits tax arising from the operation of Section 722 of the Internal Revenue Code, 26 U.S.C.A. § 722. The pertinent part of the controlling statute is the second sentence of subdivision (b) of Section 292 of Title 26 U.S.C.A., as amended by the Act of December 17, 1943. Subdivision (a) of said Section 292 states the general rule to be that interest shall be collected from the date prescribed for the payment of the tax. The first sentence of subdivision (b) thereof provides that no interest shall be assessed or paid upon any...