Buttolph v. Commissioner of Internal Revenue

• Decision Date: 28 November 1928
• Docket Number: No. 4028.,4028.
• Citation: 29 F.2d 695
• Parties: BUTTOLPH v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Seventh Circuit

29 F.2d 695 (1928)

BUTTOLPH v. COMMISSIONER OF INTERNAL REVENUE.

No. 4028.

Circuit Court of Appeals, Seventh Circuit.

November 28, 1928.

Frank H. T. Potter, of Chicago, Ill., for petitioner.

Morton P. Fisher, of Baltimore, Md., for respondent.

Before ALSCHULER, EVAN A. EVANS, and PAGE, Circuit Judges.

ALSCHULER, Circuit Judge.

In March, 1923, petitioner filed a joint federal income tax return for himself and his wife for the taxable year 1922, and paid the tax as returned. About a year thereafter he filed purported amended tax returns for same year, separately for himself and wife, with a view of recovering the excess of the tax as computed on the joint return over the tax payable on the basis of the separate returns.

The Commissioner declined to permit the substitution of the amended returns, and on appeal to the Board of Tax Appeals the Commissioner's action was sustained. This proceeding challenges the ruling of the Board of Tax Appeals.

Under section 223 of the Revenue Act of 1918 (40 Stat. 1074), the Commissioner had been accepting such joint returns and computing the tax on the basis thereof, although it appears that doubt was entertained as to the right, under the statute, to predicate the tax upon such joint returns. It was the practice, also, to permit the filing of amended returns, changing joint to separate and separate to joint returns. Indeed, at the same time that the separate returns here in question were tendered, there were also tendered by the same taxpayer similar amended returns for the years he had made joint returns under the 1918 act, and these substitutions were allowed. The assigned reason in each case for failure to file the separate returns was that the taxpayer did not know the law permitted the filing of separate returns for husband and wife.

The language of the Revenue Act of 1918 is:

"If a husband and wife living together have an aggregate net income of $2,000 or over, each shall make such a return unless the income of each is included in a single joint return."

The Revenue Act of 1921 is, in this respect, somewhat different, at least in form, the applicable language being:

"If a husband and wife living together have an aggregate net income for the taxable year of $2,000 or over, or an aggregate gross income for such year of $5,000 or over —

"(1) Each shall make such a return, or —

"(2) The income of each shall be included in a single joint return, in which case the tax shall be computed on the aggregate income."

42 Stat. 250.

After the passage of the 1921 act, there was published by the Commissioner, June 26, 1922, income tax ruling No. 1372, which is:

"Where husband and wife for 1921, or a subsequent year, have elected to file a joint return or separate returns, they may not, after the filing of such return, file amended returns on the other basis."

This ruling was subsequently modified somewhat, but in no way affecting returns filed for the taxable year 1922 and subsequently.

No reason appears to us why the making of such a ruling was not fairly within the powers of the Commissioner. It deprives no taxpayer of the right to file an amended return...