American Powder Mills v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 5487.

Decision Date01 June 1928
Docket NumberDocket No. 5487.
Citation12 BTA 305
PartiesAMERICAN POWDER MILLS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
CourtU.S. Board of Tax Appeals

Kenneth Howes, Esq., for the petitioner.

Harold Allen, Esq., for the respondent.

The petitioner appeals from an alleged deficiency of $21,741.86 income and profits tax for the fiscal year ended September 30, 1917. The hearing before the Board was limited to the question as to whether the deficiency was barred by the statute of limitations.

FINDINGS OF FACT.

The petitioner is a Massachusetts corporation. It filed its income and profits-tax return for the fiscal year ended September 30, 1917, on or before April 1, 1918, with the collector of internal revenue at Boston, Mass. This return showed taxes due from the petitioner of $161,466.09, which were duly assessed and collected.

On February 12, 1921, the petitioner executed and mailed to the revenue agent in charge at Boston, Mass., a form of consent which had been tendered to it for execution by such revenue agent in charge.

This waiver read as follows:

American Powder Mills, a corporation organized under the laws of the State of Massachusetts, in consideration of the assurance given it by officials of the Income Tax Unit of the Bureau of Internal Revenue that its liability for all Federal taxes imposed by the Act of Congress, approved September 8, 1916, as amended by the Act of Congress, approved October 3, 1917, for the year ended December 31, 1917, on its net income received from all sources in said year, shall not be determined except after deliberate, intensive and thorough consideration, hereby waives any and all statutory limitations as to the time within which assessments based upon such liability may be entered. It is understood, however, that the above corporation does not, by the execution of this waiver, admit in advance the correctness of any assessment which may be made against it for said year by the officials of the Income Tax Unit.

Executed this 12th day of February 1921. (Signed) AMERICAN POWDER MILLS Corporation. By EDWARD B. DRAKE (Title) Vice Pres. and Treas.

This waiver by its terms purported to waive any and all statutory limitation as to the time in which assessments might be entered based upon the petitioner's liability for all Federal taxes imposed by the Act of Congress approved September 8, 1916, as amended by the Act of Congress approved October 3, 1917, for the year ended December 31, 1917, on the petitioner's net income received from all sources in said year. The consent contained no specific limitation as to the period during which it should continue in effect.

The consent above referred to is the only one ever executed by or on behalf of the petitioner in connection with any taxes for the year 1917. By Commissioner's Mimeograph 3085 published April 11, 1923, it expired April 1, 1924.

Under date of February 20, 1924, the petitioner received from the respondent an audit letter advising it of an alleged additional income and excess-profits tax for the fiscal year ended September 30, 1917, of $27,111.99 and requesting the petitioner to file a new form of consent enclosed in said audit letter within 10 days. This letter stated that unless said consent was so filed the alleged additional tax would be assessed without the usual 30-day notice, but in that event a claim in abatement could be filed by the petitioner.

The petitioner did not file the new consent requested by the respondent in his letter of February 20, 1924, and as a result the respondent in March, 1924, assessed the alleged additional tax of $27,111.99 against the petitioner for the fiscal year ended September 30, 1917, as a so-called "jeopardy" assessment.

Under date of March 18, 1924, the petitioner filed with the respondent an appeal from his determination as set forth in the audit letter of February 20, 1924, and protested the additional assessment upon several grounds, one being that the statute of limitations had already run against the respondent's right to assess further taxes against the petitioner for the year 1917. The petitioner likewise set forth its claim with regard to the running of the statute of limitations in its brief filed with the respondent under date of May 28, 1924.

On August 13, 1924, the petitioner received a notice and demand from the collector of internal revenue at Boston for the payment of the additional assessment of $27,111.99 income and profits tax for the fiscal year ended September 30, 1917. The petitioner, under date of August 13, 1924, filed with the collector at Boston a claim in abatement of the additional assessment incorporating in said claim the same grounds of protest set forth in its letter of March 18, 1924, and in its brief of May 28, 1924.

On December 23, 1924, the respondent allowed the petitioner's claim in abatment to the extent of $5,370.13 and rejected it to the extent of $21,741.86. Petitioner first received notice of this action of the respondent on May 20, 1925, when it received from the collector at Boston a certificate of overassessment for $5,370.13 taxes for the fiscal year ended September 30, 1917, and a notice and demand for the payment of $21,741.86, being the amount of the additional assessment of $27,111.99 for the fiscal year in question less the $5,370.13 represented by the certificate of overassessment.

The petitioner filed its appeal with this Board on July 13, 1925.

In February, 1926, the collector at Boston notified the petitioner that he proposed to proceed with the collection of the additional assessment of $21,741.86 for the fiscal year ended September 30, 1917, unless the petitioner would furnish him a surety-company bond. The petitioner expressed his willingness to furnish him with such bond, conditioned for its payment upon the final determination of its appeal to the United States Board of Tax Appeals. The collector at Boston was unwilling to accept such a bond owing to the uncertainty then existing as to whether this Board had jurisdiction over appeals in the case of assessments made prior to June 2, 1924, the date of the enactment of the Revenue Act of 1924. A summary collection of the tax in question, however, whether legal or not, would have...

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1 cases
  • Shaffer v. Commissioner of Internal Revenue
    • United States
    • U.S. Board of Tax Appeals
    • June 1, 1928
    ... ... COMMISSIONER OF INTERNAL REVENUE, RESPONDENT ... Docket No. 9872 ... Board of Tax Appeals ... Promulgated June 1, ... ...

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