Florsheim Bros Drygoods Co v. United States White v. Hood Rubber Co

• Decision Date: 24 February 1930
• Docket Number: Nos. 118 and 414,s. 118 and 414
• Parties: FLORSHEIM BROS. DRYGOODS CO., Limited, v. UNITED STATES. WHITE, Collector, v. HOOD RUBBER CO
• Court: U.S. Supreme Court

280 U.S. 453

50 S.Ct. 215

74 L.Ed. 542

FLORSHEIM BROS. DRYGOODS CO., Limited,

v UNITED STATES.

WHITE, Collector,

v. HOOD RUBBER CO.

Nos. 118 and 414.

Argued Jan. 13, 14, 1930.

Decided Feb. 24, 1930.

Messrs. James Craig Peacock, of Washington, D. C., and E. H. Randolph, of Shreveport, La., for the Drygoods Company.

The Attorney General and Mr. Harold C. Haskell, of Watertown, Mass., for the Rubber Company.

Mr. Claude R. Branch, of Providence, R. I.,

[Argument of Counsel from page 454 intentionally omitted] for the United States and white.

Mr. Justice BRANDEIS delivered the opinion of the Court.

These cases, which were argued together, present the same questions. In each case, the taxpayer seeks to recover with interest an amount assessed and collected, after March 15, 1925, as an additional income and excess-profits tax for 1918 under the Revenue Act of 1918 (40 Stat. 1057). In each, the claim is that both the assessment and the collection were made after the expiration of the time allowed therefor. In a long line of cases arising out of similar facts, the Board of Tax Appeals has held consistently that neither the assessment nor the collection was made too late.¹ In No. 414 the action was brought in the federal court for Massachusetts against the collector to recover $39,043.99. The District Court, without passing on the timeliness of the assessment, held that the collection was barred and entered judgment for the plaintiff, 28 F.(2d) 54. The Circuit Court of Appeals for the First Circuit affirmed the judgment on the ground that the assessment was barred, and expressed no opinion on the question decided by the District Court, 33 F.(2d) 739. In No. 118, the action was brought in the federal court for western Louisiana against the United States to recover $11,282.15. That court, deciding both questions in favor of the Government, entered a judgment for the defendant, 26 F.(2d) 505, which was affirmed, on both grounds, by the Circuit Court of Appeals for the Fifth Circuit, 29 F.(2d) 895. In other federal courts, also, there has been diversity of opinion.² This court granted writs of certiorari, 280 U. S. 539, 50 S. Ct. 17, 74 L. Ed. —.

First. Whether the assessment was barred depends upon whether the period of limitation was started by the filing before March 15, 1919, of a so-called 'tentative return,' or by the later filing of a so-called 'completed return.' The question arises in this way: The Revenue Act of 1918 was not approved until February 24, 1919, c. 18, 40 Stat. 1057. Section 241(a) required that returns on the basis of the calendar year should be made on or before the 15th day of March. Section 239 required that a corporation's return should state 'specifically the items of its gross income and the deductions and credits allowed.' The form of return prescribed by the Commissioner of Internal Revenue for giving this information, known as Form 1120, is an elaborate document composed of a 'summary' in four schedules, with eleven supporting schedules and twenty-six subschedules. The 'summary' calls for the specification of some 93 items. The supporting schedules and subschedules call for the specification of some 357 items; and of as many more items to be stated in appendices as the circumstances of the particular taxpayers might require. ³

It was obvious that many corporations would be unable, in the short interval between February 24 and March 15, to prepare their returns in time. Sections 227(a) and 241(a) authorized the Commissioner to 'grant a reasonable extension of time for filing returns whenever in his judgment good cause exists.' But section 250(a) provided that 'where an extension of time for filing a return is granted the time for payment of the first installment shall be postponed until the date of the expiration of the period of the extension.' The necessities of the Government made it undesirable that payments on account of the first installment of taxes be postponed. To meet this situation, the following policy was announced in a public statement issued by the Commissioner: 'Although no general extension of time will be authorized for filing the Federal Income Tax returns due March 15, the Commissioner of Internal Revenue has approved a novel feature of tax collection which will serve for all practical purposes as a possible extension of forty-five days for the filing of corporation income and excess profits tax returns. * * * If a corporation finds that * * * it is impossible to complete its return by March 15, it may make a return of the estimated tax due and make payment thereof not later than March 15. If meritorious reason is shown,' the completed return could be filed within forty-five days after that date. The statement continued: 'Provision for systematically handling this new feature will be made in the construction of the new return blanks * * * embodied in which is a detachable letter of remittance. Any corporation which finds that, for sufficient reasons, it cannot complete its return by March 15, may detach and fill out the letter of remittance, and forward same to the collector on or before March 15, together with a check * * * for the tax due on that date. * * * A statement in writing of the reasons why it is impossible for the corporation to complete the return by the specified date must accompany every such remittance.'⁴ The device was modified by a further statement on February 27, 1919. A separate blank, known as Form 1031T, and entitled 'Tentative Return and Estimate of Corporation Income and Profits Taxes and Request for Extension of Time for Filing Return,' was to be used instead of the detachable letter of remittance. This blank was in the form of a letter to the collector and contained, besides instructions and the oath of the president and treasurer, only a statement that one-fourth of the estimated amount of taxes was remitted therewith and that an extension of time to file the complete return was requested for the reasons stated.

Each corporation executed the tentative return, Form 1031T, and sent it, with a remittance of one-quarter of the estimated tax, to the collector on or before March 15, 1919. The Florsheim Company filed its complete return Form 1120, on June 16, 1919; the Hood Company, on July 14, 1919. Section 250(d) of the Revenue Act of 1918 (40 Stat. 1083) provided that 'the amount of tax due under any return shall be determined and assessed by the Commissioner within five years after the return was due or was made * * *.' This period was extended under the Revenue Act of 1921, November 23, 1921, c. 136, § 250(d), 42 Stat. 227, 265, 266, which provided that the amount of the tax under the 1918 Act should be 'determined and assessed within five years after the return was filed, unless both the Commissioner and the taxpayer consent in writing to a later determination, assessment, and collection of the tax.'⁵ In each of the cases at bar, the Commissioner and the taxpayers executed, prior to March 15, 1924, an instrument called 'Income and Profits Tax Waiver.' The waivers stated that 'In pursuance of the provisions of subdivision (d) of section 250 of the revenue act of 1921,' the Commissioner and the taxpayer 'consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made. * * * 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. * * *' In each case, the assessment was made more than six years after March 15, 1919, but within six years after the filing of the completed return on Form 1120. If Form 1031T was 'the return' within the meaning of the above provisions as to limitation, then the assessments were made too late.

We are of opinion that the filing of the document known as Form 1031T, duly executed, did not start the running of the period of limitation. Form 1031T is not an instrument expressly provided for in the act. It is not in the nature of a 'list,' 'schedule,' or 'return,' commonly required by tax statutes. It was an invention of the Commissioner designed to meet a peculiar exigency. Its purpose was to secure to the taxpayer a needed extension of time for filing the required return, without defeating the Government's right to prompt payment of the first installment. As Form 1031T made no reference to income, or to deductions or credits, it could not have been intended as the return 'stating specifically the items of * * * gross income, and the deductions and credits'-the return required to satisfy the statute.

Section 3182 of the Revised Statutes, U. S. C. tit. 26, § 102 (26 USCA § 102), provides that the Commissioner shall 'make the inquiries, determinations, and assessments of all taxes * * * and shall certify a list of such assessments * * * to the proper collectors.' Section 250(b) of the 1918 Act (40 Stat. 1083) required that 'as soon as practicable after the return is filed, the Commissioner shall examine it. If it then appears that the correct amount of the tax is greater or less than that shown in the return, the installments shall be recomputed.' It was to serve these purposes that section 239 required all corporations to make returns 'stating specifically the items of * * * gross income and the deductions and credits.' The burden of supplying by the return the information on which assessments were to be based was thus imposed upon the taxpayer. And, in providing that the period of limitation should begin on the date when the return was filed, rather than when it was due, the statute plainly manifested a purpose that the period was to commence only when the taxpayer had supplied this information in the prescribed manner. Form 1120 provided for furnishing the data which would enable the Commissioner to make a determination, assessment, and recomputation. Form 1031T furnished no data which could, in any way, aid...