Cumberland Portland Cement Co. v. United States

• Citation: 104 F. Supp. 1010,122 Ct. Cl. 580
• Decision Date: 03 June 1952
• Docket Number: No. 48905.,48905.
• Parties: CUMBERLAND PORTLAND CEMENT CO. et al. v. UNITED STATES.
• Court: U.S. Claims Court

104 F. Supp. 1010

122 Ct. Cl. 580

CUMBERLAND PORTLAND CEMENT CO. et al. v. UNITED STATES.

No. 48905.

United States Court of Claims.

June 3, 1952.

Cecil Sims, Nashville, Tenn., (Bass, Berry & Sims, Nashville, Tenn., were on the briefs), for plaintiff.

J. A. Rees, Washington, D. C., with whom were Theron Lamar Caudle, Asst. Atty. Gen., and Ellis N. Slack, Acting Asst. Atty. Gen. (Andrew D. Sharpe, A. F. Prescott, and H. S. Fessenden, Washington, D. C., on the briefs), for defendant.

Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and HOWELL, Judges.

HOWELL, Judge.

This action is brought to recover an overpayment in income tax, excess profits tax, and declared value excess profits tax for 1943 in the amount of $22,514.14. The question presented is whether recovery of this overassessment and overpayment is barred by the failure of the taxpayer to file a formal claim for refund within three years from the time the tax return was filed or within two years from the time the tax was paid, under 26 U.S.C. § 322(b) (1), or whether the taxpayer filed a sufficient informal claim for refund within the statutory period.

The plaintiffs are the Cumberland Portland Cement Co., hereinafter referred to as the taxpayer, and its successor corporation, Cumberland Portland Cement Company, which came into existence in December 1946, by virtue of a merger of the Cumberland Portland Cement Co. and the Tennessee Portland Cement Corporation. On January 24, 1947, the Acting Internal Revenue Agent in Charge at Nashville, Tennessee, sent the taxpayer a statutory 90-day notice containing a statement of deficiencies in tax for the years 1941 and 1942, totalling $25,629.08, and of over-assessments in tax for the years 1941 to 1944, inclusive, totalling $40,057.25 (Finding 3). This letter informed the taxpayer of its right to file a petition in the Tax Court of the United States within 90 days for a redetermination of the deficiencies, and requested that if the taxpayer did not desire to file such a petition, it execute the enclosed Form 874 entitled "Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment."¹ The letter also contained the following statement regarding the repayment of the overassessments:

"The overassessments for the taxable years 1943 and 1944 will be made the subject of certificates of overassessment which will reach you in due course through the office of the collector of internal revenue and will be applied by that official in accordance with Section 322 of the Internal Revenue Code, provided that you fully protect yourself against the running of the statute of limitations by filing with the Collector of Internal Revenue, Nashville, Tennessee, claims for refund on Form 843, copies of which are enclosed, the basis of each of which may be as set forth herein. A separate claim should be filed for each taxable year."

On March 13, 1947, the taxpayer executed the Waiver (Form 874) and returned it to the Revenue Agent in Charge at Nashville, Tennessee, with the following letter of transmittal:

"This acknowledges receipt of your letter, dated January 24, 1947, with which you enclosed statements and reports covering the determination of our income tax liability for the years 1941-42-43-44.

"We have signed and herewith return Form 874, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment.

"In view of the fact that the stock of Cumberland Portland Cement Company was acquired by Marquette Cement Manufacturing Company, Chicago, Illinois, in January, 1947, it is very desirable that a prompt settlement be made in this matter of over-assessment, and it is further desirable that the examination of the income tax return of this corporation for the year 1945 be reported and agreed upon promptly.

"We are herewith enclosing an unsigned copy of Form 1120 return of this Company for the year 1946, as filed, with the hope that same may be forwarded to your Examiner, Mr. Eastland, Chattanooga, Tennessee, for prompt examination. From this letter, you will realize that it is desirable that prompt action be taken in the final determination of the tax adjustments for years prior to 1946 and that an early examination of the 1946 return be made.

"We appreciate the cooperation which your Department has given us in the past and we assure you that we will be glad to work with you for an early and final determination of all tax liability of the old Cumberland Portland Cement Company through December 31, 1946."

The Commissioner of Internal Revenue thereafter made assessments against the taxpayer for the deficiencies in income tax for the years 1941 and 1942, with interest thereon, and applied as a credit against these amounts the determined overassessments for 1941, 1942, and 1944, leaving a net deficiency of $22,337.62. This sum was paid by the taxpayer during July 1947, pursuant to a notice and demand for payment from the Collector of Internal Revenue. Following the payment of this net deficiency, the counsel for the taxpayer on July 26, 1947, wrote to the Commissioner requesting information as to why it had not received credit on the deficiencies in the sum of $22,514.14, representing the overassessments for 1943. The Commissioner replied on September 9, 1947, and stated that the taxpayer had been put on notice by the 90-day letter of January 24, 1947, to protect its rights against the running of the Statute of Limitations by filing claims for refund for 1943, that the Form 874 could not be construed as a claim for refund, and that since it had failed to file a claim for refund in compliance with Section 322 of the Internal Revenue Code, there was no basis upon which to predicate the allowance of the proposed overassessments.

On November 7, 1947, the taxpayer and its successor corporation attempted to perfect their claim by filing formal claims for refund on Form 843 for 1943 in the amount of $22,514.14, consisting of an overassessment in income tax of $14,882.28, an overassessment in declared value excess profits tax of $5,584.84, and an overassessment in excess profits tax of $2,047.02. These claims were disallowed in full on June 29, 1948, by the Commissioner on the ground that they had not been filed within the period of time provided by Section 322 (b) of the Internal Revenue Code.

It is plaintiff's position that the execution and filing of the Waiver on March 13, 1947, accompanied by the letter quoted in Finding 6, which was within the statutory period of limitations, constituted the filing of an informal claim for refund which was perfected after the running of the statutory period by the filing on November 7, 1947, of formal claims for refund on Form 843 on behalf of both plaintiffs. Plaintiffs insist that the Waiver (Form 874) and letter sufficed to put the Government on notice that the taxpayer claimed and expected refund of the overassessment for 1943.

Defendant contends that the Waiver cannot be construed to be an informal claim for refund and consequently, that no claim for refund, formal or informal, was filed within the period prescribed by Section 322 (b) (1) of the Internal Revenue Code, i. e., by March 15, 1947.

We fully agree with defendant's argument that Form 874, standing alone, cannot be regarded as constituting an informal claim for refund. The Form itself precludes any inference to this effect as it bore upon its face a statement, set forth in Footnote 1, that execution of the Waiver did not extend the statutory period of limitation for refunds. True Bros. Inc., v. United States, D.C., 93 F.Supp. 107, 111. Even assuming that the Waiver was sufficient to constitute an informal claim for refund, it was rejected as such by the Commissioner prior to the filing of the formal claim for refund, and consequently it could not thereafter be perfected as the Statute of Limitations had run. Newport Industries, Inc., v. United States, 60 F. Supp. 229, 104 Ct.Cl. 38, 44; Cuban-American Sugar Co., Inc., v. United States, 27 F.Supp 307, 89 Ct.Cl. 215, 224; Sugar Land Railway Co. v. United States, 48 F.2d 973, 71 Ct.Cl. 628, 635; cf. United States v. Memphis Cotton Oil Co., 288 U.S. 62, 71, 53 S.Ct. 278, 77 L.Ed. 619.

However, we are of the opinion that the March 13, 1947, letter of transmittal accompanying the executed Waiver was, when viewed in the surrounding circumstances, a sufficient informal claim for refund filed within the prescribed statutory period for presenting such claims. Section 322(b) (1) of the Internal Revenue Code provides as follows:

"Unless a claim for credit or

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