APPEAL OF MATTEAWAN MANUFACTURING COMPANY
| Decision Date | 23 September 1926 |
| Docket Number | Docket No. 7923. |
| Citation | 4 BTA 953 |
| Parties | APPEAL OF MATTEAWAN MANUFACTURING COMPANY. |
| Court | U.S. Board of Tax Appeals |
Richard E. Dwight, Esq., for the petitioner.
P. S. Crewe, Esq., for the Commissioner.
KORNER, Chairman:
The Commissioner has moved to dismiss for lack of jurisdiction in the Board to hear and determine the appeal, on the ground that the tax, the claim for the abatement of which he proposes to reject in part, was assessed prior to the enactment of the Revenue Act of 1924, and that, since the passage of that Act, the Commissioner has not proposed to assert an additional tax as a deficiency. The evidence is meagre; but the facts upon which we base our opinion are those contained in the pleadings which are undisputed.
On or about March 15, 1919, the petitioner filed, with the collector of internal revenue for the second district of New York, a tentative income and profits-tax return for the year 1918, showing an estimated tax liability of $40,000, and paid to the collector the sum of $10,000, being the first quarterly installment of said estimated tax. This estimated tax liability of $40,000 was assessed against the petitioner on the collector's records on or about October 6, 1919, and it is this assessment in respect of which the petitioner filed a claim for abatement, the rejection of which in part is the cause of petitioner's appeal to this Board.
On or about March 15, 1919, the Henderson Estate Co. filed a tentative income and profits-tax return for the year 1918, showing an estimated tax liability of $4,000, and paid to the collector the sum of $1,000, being the first quarterly installment of said estimated tax. The estimated tax liability was not assessed against the Henderson Estate Co. on the collector's records.
On or about May 9, 1919, the petitioner and the Henderson Estate Co. filed a consolidated return of net income and invested capital, showing a total tax liability of $33,303.44, divided as follows:
Matteawan Manufacturing Co ________________________ $31,638.29
Henderson Estate Co _______________________________ 1,665.15
___________
Total consolidated tax ______________________ 33,303.44
The consolidated return contained all the information necessary for a correct determination of the tax liability of the separate companies.
The total tax liability shown on the consolidated return was, in accordance with the then existing practice, assessed on the collector's records against the company whose name first appeared upon the return, which, in this case, was the Henderson Estate Co.
Against the consolidated tax liability, as it stood charged on the collector's records against Henderson Estate Co., the collector credited the payments of $10,000 and $1,000, made by the petitioner and the Henderson Estate Co., respectively, at the time of filing their tentative returns. The total of these two payments, to wit, $11,000, was sufficient to cover the first installment of the consolidated tax liability and all but $5,651.72 of the second installment which would fall due on the following June 15th.
On June 15, 1919, the petitioner paid to the collector the sum of $5,651.72, being the balance due on the second installment of the consolidated tax liability. On September 15, 1919, and again on December 15, 1919, the petitioner paid to the collector the sum of $8,325.86, being the third and fourth installments, respectively, of the consolidated tax liability. At this point the entire consolidated tax liability had been paid, $32,303.44 by the petitioner and $1,000 by the Henderson Estate Co., and there was still pending on the collector's records an assessment of $40,000 against the petitioner which had been assessed on the tentative return.
Under date of August 19, 1921, in a letter bearing the symbols IT:SA:CR:AF HLW-9, the Commissioner advised the Henderson Estate Co. that it and the petitioner were not affiliated during the taxable year 1918. Under date of August 21, 1923, in a letter bearing the symbols IT:SA:CR:D CMG:AF, the Commissioner advised the Henderson Estate Co. that it and the petitioner were affiliated corporations during the taxable year 1918. Under date of June 21, 1924, in a letter bearing the symbols IT: E: AF CEL, the Commissioner advised the Henderson Estate Co. that it and the petitioner were not affiliated with each other during the taxable year 1918. The latter appears to have been the Commissioner's final ruling on the matter of affiliation.
By letter dated November 6, 1924, bearing symbols IT: CR: C JJMcD, the Commissioner advised the petitioner that an examination of its return for the year 1918 disclosed a deficiency as follows:
Total tax liability ______________________________ $35,147.96
Previously assessed ______________________________ None
___________
Tax to be assessed _________________________ 35,147.96
Said letter also advised the petitioner that it had 30 days within which to protest "against this determination of a deficiency."
On or about November 19, 1924, in accordance with a request of a representative of the collector of internal revenue for the second district of New York, the petitioner filed a claim for the abatement of the assessment of $40,000 which had been made on the basis of its tentative return. The rejection in part of this claim is the cause of petitioner's appeal to this Board.
On or about January 27, 1925, by letter bearing symbols IT: CR: C JJMcD, the Commissioner advised the Henderson Estate Co. of an overassessment of taxes for the years 1918 and 1919, and requested that company to file a claim for refund therefor. In compliance with that request, the Henderson Estate Co. filed a claim for refund of taxes for the year 1918, in the amount of $32,880.51, which amount appears to have been computed as follows:
Total consolidated tax liability paid ___________ $33,303.44
Less: Total tax liability of Henderson Estate Co
computed on separate basis ____________________ 422.93
___________
Amount of refund claimed __________________ 32,880.51
Certificate of overassessment in the amount of $32,880.51 was issued to the Henderson Estate Co., under date of January 25, 1925, and on or about June 10, 1925, said Henderson Estate Co. received a check on the Treasurer of the United States refunding to it the said sum of $32,880.51, together with interest.
Under date of August 10, 1925, by letter bearing the symbols IT: CR: C JDK, the Commissioner notified the petitioner that its claim for abatement of 1918 taxes, in the amount of $40,000, would be allowed for $4,852.04 and rejected for $35,147.96, in the next schedule to be approved by him. The petitioner received from the collector of internal revenue for the second district of New York a notice and demand for tax,...
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