Florsheim Bros. Dry Goods Co. v. United States, 1623.

• Citation: 26 F.2d 505
• Decision Date: 04 February 1928
• Docket Number: No. 1623.,1623.
• Parties: FLORSHEIM BROS. DRY GOODS CO. v. UNITED STATES.
• Court: U.S. District Court — Western District of Louisiana

26 F.2d 505 (1928)

FLORSHEIM BROS. DRY GOODS CO. v. UNITED STATES.

No. 1623.

District Court, W. D. Louisiana, Shreveport Division.

February 4, 1928.

Wise, Randolph, Rendall & Freyer, of Shreveport, La., for plaintiff.

Philip H. Mecom and J. Fair Hardin, both of Shreveport La., for the United States.

DAWKINS, District Judge.

Plaintiff brings this suit to recover back from the government the sum of $11,517.57, paid under protest as income, war profit, and excess profit taxes for the year 1916. It made a tentative return before the 15th of March, 1919, and obtained an extension under which its final figures were submitted and filed on June 16th of that year. Subsequently there was a re-examination of the return and on March 1, 1924, an agreement was signed with the government, reading as follows:

"In pursuance of the provisions of subdivision (d) of section 250 of the Revenue Act of 1921, Florsheim Bros. Dry Goods Co., Ltd., of Shreveport, La., and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess profits, or war profits taxes due under any return made by or on behalf of the said Florsheim Bros. Dry Goods Co., Ltd., for the year 1918 under the Revenue Act of 1921, or under prior income, excess profits, or war profits tax acts, or under section 38 of the act entitled `An act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,' approved August 5, 1909. This waiver is in effect from the date it is signed by the taxpayer, and will remain in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by any waivers already on file with the Bureau, within which assessments of taxes may be made for the year or years mentioned."

On June 10, 1925, the Deputy Commissioner mailed to plaintiff the following letter, to wit:

"In accordance with the provisions of section 274 (d) of the Revenue Act of 1924, there has been assessed against you an income and profits tax amounting to $11,282.15 for the taxable year 1918, the details of which are set forth in the attached statements.

"Under the provisions of section 279 (a) of the act, you have the right to file with the collector of internal revenue, within ten days after notice and demand for payment, a claim for abatement of this tax or any part thereof. The claim should have attached to it all evidence and data upon which you rely for support thereof, and should be accompanied by a bond not exceeding double the amount of the claim, with such sureties as the Collector deems necessary. When the claim is received by the collector it will be transmitted to the Commissioner of Internal Revenue, Washington, D. C., who will notify you of the action taken."

Attached thereto was the following statement:

"Deficiency in Tax.

"Calendar Year 1916. $11,282.15.

"You are advised that, after careful consideration and review, your application under the provisions of section 327 for assessment of your profits tax as prescribed by section 328 of Revenue Act of 1918, has been allowed. Your profit tax is based upon a comparison with a group of representative concerns which in the aggregate may be said to be engaged in a like or similar trade or business to that of your company.

"The result of the audit under the above mentioned provisions is as follows:

                  Profits tax, section 328 ........................  $71,135 36
                  Net income, Bureau letter
                   dated May 21, 1924 ................  $132,648 81
                  Less additional depreciation
                   allowed on furniture and
                   fixtures, capitalized 10 per
                   cent. of $1,000.00 ................       100 00
                                                        ___________
                  Corrected net income ...............  $132,548 81
                  Less profits tax .......  $71,135 36
                  Exemption ..............    2,000 00    73,135 36
                                            __________  ___________
                  Balance taxable at 12 per cent. ....  $ 59,413 45    7,129 61
                                                                     __________
                  Total tax assessable ............................  $78,264 97
                  Tax previously assessed, account No
                   41732 ..........................................   66,982 82
                                                                     __________
                  Additional tax ..................................  $11,282 15"
                

Subsequently, under date of June 18, 1925, there was mailed to the taxpayer a green slip, reading:

"Notice and Demand for Income Tax, United States Internal Revenue Service.

"Notice is hereby given that there has been assessed against you the amount stated herein. Demand is hereby made for immediate payment of said tax. If payment is not made within ten days after date of this notice, the act provides that interest at the rate of 1 per cent. per month will accrue from the due date.

"Date: June 18, 1925.

"To the Collector of Internal Revenue at New Orleans.

                  ===================================================
                  Name and Address.         | Items. | Total Assmnt
                  --------------------------|--------|---------------
                  Florsheim Bros. Dry Goods |        |
                  Co., Ltd.,                |        |   $11,282.15
                  Shreveport, La.           |        |
                  518 Commerce St.          |        |
                  Jun OO C SPL No. 4.       |        |
                  ---------------------------------------------------
                

"Return this form with remittance."

Thereafter the sum claimed was paid in installments as follows:

                  August 31, 1925, paid on tax .........  $1,282.15
                  September 4, 1925, interest on tax ...     112.82
                  September 28, 1925, paid on tax ......   2,000.00
                  September 28, 1925, interest on tax ..      50.00
                  October 29, 1925, paid on tax ........   2,000.00
                  November 2, 1925, interest on tax ....      40.00
                  November 30, 1925, paid on tax .......   2,000.00
                  November 30, 1925, interest on tax ...      30.00
                  January 2, 1926, paid on tax .........     520.19
                  January 2, 1926, interest on tax .....       2.60
                

This suit was filed on October 15, 1926, for a refund.

The only issue is the one of prescription or limitations. It is contended that, because these additional taxes were collected upon the return for the year 1918, both the right to assess and collect would have expired on June 16, 1924, but for the stipulation of waiver signed by the taxpayer on March 1, 1924, above quoted, and that, inasmuch as the agreement was made under the law as it stood when executed, both its language and effect was to extend only the rights and remedies as they existed at that time; that is, the government was bound to assess and collect the taxes within the stipulated year of extension.

It is conceded by the government that, but for the extension, these additional taxes would...